64668 Federal Register / Vol. 73, No. 211 / Thursday, October 30, 2008 / Rules and Regulations 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Parts 260, 261, and 270 

[EPA–HQ–RCRA–2002–0031; FRL–8728–9] 

RIN 2050–AG31 

Revisions to the Definition of Solid 

Waste 

AGENCY: Environmental Protection 

Agency. 

ACTION: Final rule. 

SUMMARY: The Environmental Protection 

Agency (EPA) is publishing a final rule 

that revises the definition of solid waste 

to exclude certain hazardous secondary 

materials from regulation under Subtitle 

C of the Resource Conservation and 

Recovery Act (RCRA). The purpose of 

this final rule is to encourage safe, 

environmentally sound recycling and 

resource conservation and to respond to 

several court decisions concerning the 

definition of solid waste. 

DATES: This final rule is effective on 

December 29, 2008. 

ADDRESSES: EPA has established a 

docket for this action under Docket ID 

No. EPA–HQ–RCRA–2002–0031. All 

documents in the docket are listed on 

the http://www.regulations.gov Web 

site. Although listed in the index, some 

information is not publicly available, 

e.g., Confidential Business Information 

(CBI) or other information whose 

disclosure is restricted by statute. 

Certain other material, such as 

copyrighted material, is not placed on 

the Internet and will be publicly 

available only in hard copy form. 

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 3334, 1301 Constitution Ave., 

NW., Washington, DC. The Public 

Reading Room is open from 8:30 a.m. to 

4:30 p.m., Monday through Friday, 

excluding legal holidays. The telephone 

number for the Public Reading Room is 

(202) 566–1744, and the telephone 

number for the OSWER Docket is 202– 

566–0270. 

FOR FURTHER INFORMATION CONTACT: For 

more detailed information on specific 

aspects of this rulemaking, contact 

Marilyn Goode, Office of Solid Waste, 

Hazardous Waste Identification 

Division, MC 5304P, Environmental 

Protection Agency, 1200 Pennsylvania 

Ave., NW., Washington, DC 20460, (703) 

308–8800 (goode.marilyn@epa.gov) or 

Tracy Atagi, Office of Solid Waste, 

Hazardous Waste Identification 

Division, MC 5304P, Environmental 

Protection Agency, 1200 Pennsylvania 

Ave., NW., Washington, DC 20460, at 

(703) 308–8672 (atagi.tracy@epa.gov). 

SUPPLEMENTARY INFORMATION: 

A. Does This Action Apply to Me? 

Entities potentially affected by today’s 

action include approximately 5,600 

facilities in 280 industries in 21 

economic sectors that generate or 

recycle hazardous secondary materials 

that are currently regulated as RCRA 

Subtitle C hazardous wastes (e.g., 

secondary materials, such as industrial 

co-products, by-products, residues, and 

unreacted feedstocks). Approximately 

60% of these affected facilities are 

classified in NAICS code economic 

sectors 31, 32, and 33 (manufacturing). 

The remaining economic sectors, which 

have more than ten affected industries 

each, are in NAICS codes 48 

(transportation), 42 (wholesale trade), 

and 56 (administrative support, waste 

management and remediation). About 

1.5 million tons per year of hazardous 

secondary materials generated and 

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 liquid 

hazardous secondary materials for 

recovery as solvents. Today’s action is 

expected to result in regulatory and 

materials recovery cost savings to these 

industries of approximately $95 million 

per year. Taking into account impact 

estimation uncertainty factors, today’s 

action could result in cost savings 

ranging from $19 million to $333 

million per year to these industries in 

any future year. More detailed 

information on the potentially affected 

entities, industries, and industrial 

materials, as well as the economic 

impacts of this rule (with impact 

uncertainty factors), is presented in 

section XXI.A of this preamble and in 

the ‘‘Regulatory Impact Analysis’’ 

available in the docket for this final 

rule. 

B. Why Is EPA Taking This Action? 

There are two primary purposes of 

this action. One purpose is to respond 

to a series of seven decisions by the U.S. 

Court of Appeals for the DC Circuit 

(1987 to 2000), which, taken together, 

have provided EPA with additional 

direction regarding the proper 

formulation of the RCRA regulatory 

definition of solid wastes for purposes 

of Subtitle C. A second purpose is to 

clarify the RCRA concept of ‘‘legitimate 

recycling,’’ which is a key component of 

EPA’s approach to recycling hazardous 

secondary materials. 

This action is not intended to bring 

new wastes into the RCRA hazardous 

waste regulatory system and it does not 

do so. By removing unnecessary 

controls over certain hazardous 

secondary materials, and by providing 

more explicit and consistent factors for 

determining the legitimacy of recycling 

practices, EPA expects that today’s 

action will encourage and expand the 

safe, beneficial recycling of additional 

hazardous secondary materials. Today’s 

action is consistent with EPA’s 

longstanding policy of encouraging the 

recovery, recycling, and reuse of 

valuable resources as an alternative to 

disposal (i.e., landfilling and 

incineration), while at the same time 

maintaining protection of human health 

and the environment. It also is 

consistent with the resource 

conservation goal of the Congress in 

enacting the RCRA statute (as evidenced 

by the statute’s name), and with EPA’s 

vision of how the RCRA program could 

evolve over the long term to promote 

economic sustainability and more 

efficient use of resources. EPA’s longterm vision of the future of the RCRA 

waste management program is discussed 

in the document ‘‘Beyond RCRA: 

Prospects for Waste and Materials 

Management in the Year 2020,’’ which 

is available on EPA’s Web site at: http:// 

www.epa.gov/epaoswer/osw/vision.htm. 

Preamble Outline 

I. Statutory Authority 

II. Which Revisions to the Regulations Is EPA 

Finalizing? 

III. What Is the History of These Rules? 

IV. How Do the Provisions in the Final Rule 

Compare to Those Proposed on March 

26, 2007? 

V. How Does the Concept of Discard Relate 

to the Final Rule? 

VI. When Will the Final Rule Become 

Effective? 

VII. Exclusion for Hazardous Secondary 

Materials That are Legitimately 

Reclaimed Under the Control of the 

Generator 

VIII. Exclusion for Hazardous Secondary 

Materials That are Transferred for the 

Purpose of Legitimate Reclamation 

IX. Legitimacy 

X. Non-Waste Determination Process 

XI. Effect on Other Exclusions 

XII. Effect on Permitted and Interim Status 

Facilities 

XIII. Effect on CERCLA 

XIV. Effect on Imports and Exports 

XV. General Comments on the Proposed 

Revisions to the Definition of Solid 

Waste 

XVI. Major Comments on the Exclusion for 

Hazardous Secondary Materials 

Legitimately Reclaimed Under the 

Control of the Generator 

XVII. Major Comments on the Exclusion for 

Hazardous Secondary Materials 

Transferred for the Purpose of Legitimate 

Reclamation 


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XVIII. Major Comments on Legitimacy 

XIX. Major Comments on the Non-Waste 

Determination Process 

XX. How Will These Regulatory Changes Be 

Administered and Enforced in the 

States? 

XXI. Administrative Requirements for This 

Rulemaking 

I. Statutory Authority 

These regulations are promulgated 

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. 6912, 6921, 6922, 

6923, 6924, 6927, 6930, and 6938. These 

statutes, combined, are commonly 

referred to as ‘‘RCRA.’’ 

II. Which Revisions to the Regulations 

Is EPA Finalizing? 

In today’s rule, EPA is revising the 

definition of solid waste to exclude from 

regulation under Subtitle C of RCRA (42 

U.S.C. 6921 through 6939(e)) certain 

hazardous secondary materials which 

are being reclaimed. We have defined 

hazardous secondary materials as those 

which would be classified as hazardous 

wastes if discarded. We are also 

promulgating regulatory factors for 

determining when recycling is 

legitimate. The Agency first proposed 

changes reflecting the court decisions 

on the definition of solid waste rules on 

October 28, 2003 (68 FR 61558). We 

then published a supplemental proposal 

on March 26, 2007 (72 FR 14172). 

Today’s preamble is organized as 

follows: This section of the preamble 

(Section II) describes the three principal 

regulatory revisions that are finalized in 

this rule: (1) An exclusion for certain 

hazardous secondary materials 

legitimately reclaimed under the control 

of the generator within the United States 

or its territories; (2) a conditional 

exclusion for hazardous secondary 

materials that are transferred for the 

purpose of legitimate reclamation; and 

(3) a case-by-case non-waste 

determination procedure. Section II also 

discusses EPA’s treatment of legitimacy 

in the final rule. Section III describes 

the history of these revisions, including 

relevant court cases and the original 

proposal (October 28, 2003, 68 FR 

61558). Section III also describes the 

Agency’s independent analyses of 

successful recycling practices, 

environmental problems associated with 

recycling of hazardous secondary 

materials, and potential effects of 

market forces on the management of 

such materials, and provides an 

overview of the March 26, 2007, 

supplemental proposal (72 FR 14172). 

Section IV explains the ways in which 

the March 2007 supplemental proposal 

differs from today’s rule. Section V 

discusses how this rule is related to the 

concept of ‘‘discard,’’ and section VI 

indicates the effective date of the rule. 

Sections VII–X contain detailed 

descriptions of all regulatory provisions 

promulgated today. Sections XI–XIV 

describe the effect of this rule on other 

exclusions, permitted and interim status 

facilities, Superfund, and imports/ 

exports. Sections XV–XIX contain a 

discussion of all major public comments 

received on the March 26, 2007, 

supplemental proposal, along with the 

Agency’s responses to these comments. 

Section XX describes how this rule will 

be administered and enforced in the 

states, and section XXI describes the 

administrative requirements for this 

rulemaking. 

Below is a summary of the principal 

regulatory revisions promulgated today. 

A. Exclusion for Hazardous Secondary 

Materials That Are Legitimately 

Reclaimed Under the Control of the 

Generator in Non-Land-Based Units 

This provision—40 CFR 

261.2(a)(2)(ii)—would exclude certain 

hazardous secondary materials (i.e., 

listed sludges, listed by-products, and 

spent materials) that are generated and 

legitimately reclaimed within the 

United States or its territories under the 

control of the generator, when such 

materials are handled only in non-landbased units (e.g., tanks, containers, or 

containment buildings). This provision 

applies to hazardous secondary 

materials that are not spent lead-acid 

batteries or listed wastes K171 or K172, 

or otherwise subject to the specific 

management conditions under 40 CFR 

261.4(a). Under this provision, the 

hazardous secondary materials must be 

contained in such units and are subject 

to the speculative accumulation 

requirements of 40 CFR 261.1(c)(8), as 

well as the provisions for legitimate 

recycling at 40 CFR 260.43. In addition, 

under 40 CFR 260.42, the generator (and 

the reclaimer, if the generator and 

reclaimer are located at different 

facilities) must send a notification prior 

to operating under the exclusion and by 

March 1 of each even numbered year 

thereafter to the EPA Regional 

Administrator or, in an authorized state, 

to the state director. 

Hazardous secondary materials would 

be considered ‘‘under the control of the 

generator’’ under the following 

circumstances: 

(1) They are generated and then 

reclaimed at the generating facility; or 

(2) They are generated and reclaimed 

at different facilities, if the generator 

certifies that the hazardous secondary 

materials are sent either to a facility 

controlled by the generator or to a 

facility under common control with the 

generator, and that either the generator 

or the reclaimer has acknowledged 

responsibility for the safe management 

of the hazardous secondary materials; or 

(3) They are generated and reclaimed 

pursuant to a written agreement 

between a tolling contractor and toll 

manufacturer, if the tolling contractor 

certifies that it has entered into a tolling 

contract with a toll manufacturer and 

that the tolling contractor retains 

ownership of, and responsibility for, the 

hazardous secondary materials 

generated during the course of the 

manufacture, including any releases of 

hazardous secondary materials that 

occur during the manufacturing process. 

This exclusion does not include the 

recycling of hazardous secondary 

materials that are inherently waste-like 

under 40 CFR 261.2(d), hazardous 

secondary 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)), 

or hazardous secondary materials 

burned to recover energy or used to 

produce a fuel or otherwise contained in 

fuels (40 CFR 261.2(c)(2)). 

B. Exclusion for Hazardous Secondary 

Materials That Are Legitimately 

Reclaimed Under the Control of the 

Generator in Land-Based Units 

This provision—40 CFR 

261.4(a)(23)—contains requirements 

that are identical to those that apply to 

hazardous secondary materials 

generated and legitimately reclaimed 

under the control of the generator 

within the United States or its territories 

and are handled in non-land-based units 

in 40 CFR 261.2(a)(2)(ii), described 

above. Land-based units are defined in 

40 CFR 260.10 as an area where 

hazardous secondary materials are 

placed in or on the land before 

recycling, but this definition does not 

include land-based production units. 

Examples of land-based units are 

surface impoundments and piles. This 

provision applies to hazardous 

secondary materials that are not spent 

lead-acid batteries or listed wastes K171 

or K172, or otherwise subject to the 

specific management conditions under 

40 CFR 261.4(a). 

C. Exclusion for Hazardous Secondary 

Materials That Are Transferred for the 

Purpose of Legitimate Reclamation 

This conditional exclusion—40 CFR 

261.4(a)(24), hereinafter referred to as 


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the ‘‘transfer-based exclusion’’—applies 

to hazardous secondary materials (i.e., 

spent materials, listed sludges, and 

listed by-products) that are generated 

and subsequently transferred to a 

different person or company for the 

purpose of reclamation. As long as the 

conditions and restrictions to the 

exclusion are satisfied, the hazardous 

secondary materials would not be 

subject to Subtitle C regulation. 

Hazardous secondary material 

generators, reclaimers, and intermediate 

facilities (i.e., other facilities storing 

hazardous secondary materials for more 

than 10 days) must all submit a 

notification prior to operating under the 

exclusion and by March 1 of each even 

numbered year thereafter to the EPA 

Regional Administrator or, in an 

authorized state, to the state director 

(see 40 CFR 260.42). In addition, 

hazardous secondary materials managed 

at such facilities may not be 

speculatively accumulated as defined in 

§ 262.1(c)(8) (see 40 CFR 261.4(a)(24)(i)) 

and must be legitimately recycled as 

specified in § 260.43 (see 40 CFR 

261.4(a)(24)(iv)). 

Conditions applicable to generators of 

hazardous secondary materials are 

found at 40 CFR 261.4(a)(24)(v) and 

include containment of such materials, 

reasonable efforts to ensure that the 

intermediate facility or reclaimer 

intends to manage or recycle the 

hazardous secondary material properly 

and legitimately, and retention of 

records of off-site shipments for three 

years. Conditions applicable to 

intermediate facilities and reclaimers of 

hazardous secondary materials are 

found at 40 CFR 261.4(a)(24)(vi) and 

include containment of such materials, 

transmittal of confirmations of receipt to 

generators, maintenance of records for 

hazardous secondary materials received 

and sent off-site, financial assurance, 

and (for reclaimers) proper management 

of residuals. In addition, if any of the 

hazardous secondary materials excluded 

under 40 CFR 261.4(a)(24) are generated 

and then exported to another country 

for reclamation, the exporter must notify 

and obtain consent from the receiving 

country, and file an annual report. This 

requirement is codified in 40 CFR 

261.4(a)(25). 

Like the previously discussed 

exclusion for hazardous secondary 

materials reclaimed under the control of 

the generator, this exclusion would not 

apply to hazardous secondary materials 

that are inherently waste-like under 40 

CFR 261.2(d), hazardous secondary 

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)), or 

hazardous secondary materials burned 

to recover energy or used to produce a 

fuel or are otherwise contained in fuels 

(40 CFR 261.2(c)(2)). 

D. Codification of Legitimacy 

Under the RCRA Subtitle C definition 

of solid waste, certain hazardous 

secondary materials, if recycled, are not 

solid wastes and, therefore, are not 

subject to RCRA’s ‘‘cradle to grave’’ 

management system. The basic idea 

behind this principle is that recycling of 

these materials often closely resembles 

industrial manufacturing rather than 

waste management. However, due to 

economic incentives for managing 

hazardous secondary materials outside 

the RCRA regulatory system, there is a 

potential for some handlers to claim that 

they are recycling the hazardous 

secondary materials when, in fact, they 

are conducting waste treatment and/or 

disposal. 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 discussed the definition 

of solid waste (50 FR 638, January 4, 

1985) and continuing through today’s 

final rule. 

In the October 28, 2003, proposed rule 

(68 FR 61581–61588) on the definition 

of solid waste, we proposed codifying 

four criteria (called ‘‘factors’’ in today’s 

rule) to determine when recycling of 

hazardous secondary materials is 

legitimate. In the March 26, 2007, 

supplemental proposal in section XI of 

the preamble (72 FR 14197), we refined 

our original proposal in response to 

public comments. In today’s final rule, 

we are codifying the factors to be used 

in determining whether recycling under 

the provisions finalized in this rule is 

legitimate, applying the structure 

basically as proposed in March 2007 

(proposed at 40 CFR 261.2(g)). The 

legitimacy provision is finalized in 40 

CFR 260.43. 

E. Non-Waste Determinations 

Today’s rule establishes a non-waste 

determination process that provides 

persons with an administrative process 

for receiving a formal determination that 

their hazardous secondary materials are 

not discarded and, therefore, not solid 

wastes when legitimately reclaimed. 

This process is voluntary and is 

available in addition to the two selfimplementing exclusions included in 

today’s rule. There are two types of nonwaste determinations: (1) A 

determination for hazardous secondary 

materials reclaimed in a continuous 

industrial process; and (2) a 

determination for hazardous secondary 

materials indistinguishable in all 

relevant aspects from a product or 

intermediate. 

For hazardous secondary materials 

reclaimed in a continuous industrial 

process, the non-waste determination 

will be based on the following four 

criteria: (1) The extent that the 

management of the hazardous secondary 

material is part of the continuous 

primary production process; (2) whether 

the capacity of the production process 

would use the hazardous secondary 

material in a reasonable time frame; (3) 

whether the hazardous constituents in 

the hazardous 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 production process; and 

(4) other relevant factors that 

demonstrate the hazardous secondary 

material is not discarded. 

For hazardous secondary materials 

which are indistinguishable in all 

relevant aspects from a product or 

intermediate, the non-waste 

determination will be based on the 

following five criteria: (1) Whether 

market participants treat the hazardous 

secondary material as a product or 

intermediate rather than a waste; (2) 

whether the chemical and physical 

identity of the hazardous secondary 

material is comparable to commercial 

products or intermediates; (3) whether 

the capacity of the market would use the 

hazardous secondary material in a 

reasonable time frame; (4) whether the 

hazardous constituents in the hazardous 

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 

production process; and (5) other 

relevant factors that demonstrate the 

hazardous secondary material is not 

discarded. 

The process for the non-waste 

determination is the same as that for the 

solid waste variances found in 40 CFR 

260.30. 

III. What Is the History of These Rules? 

A. Background 

RCRA gives EPA the authority to 

regulate hazardous wastes (see, e.g., 

RCRA sections 3001–3004). The original 

statutory designation of the subtitle for 

the hazardous waste program was 

Subtitle C and the national hazardous 

waste program is referred to as the 

RCRA Subtitle C program. Subtitle C is 

codified at 42 U.S.C. 6921 through 


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6939e. ‘‘Subtitle C’’ regulations are 

found at 40 CFR Parts 260 through 279. 

‘‘Hazardous wastes’’ are the subset of 

solid wastes that present threats to 

human health and the environment (see 

RCRA 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 

not subject to regulation as hazardous 

wastes under RCRA Subtitle C. Thus, 

the definition of ‘‘solid waste’’ plays a 

key role in defining the scope of EPA’s 

authorities under Subtitle C of 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)). 

Since 1980, EPA has interpreted 

‘‘solid waste’’ under its Subtitle C 

regulations to encompass both materials 

that are destined for final, permanent 

treatment and placement in disposal 

units, as well as certain materials that 

are destined for recycling (45 FR 33090– 

95, May 19, 1980; 50 FR 604–656, Jan. 

4, 1985 (see in particular pages 616– 

618)). EPA has offered three arguments 

in support of this approach: 

• The statute and the legislative 

history suggest that Congress expected 

EPA to regulate as solid and hazardous 

wastes certain materials that are 

destined for recycling (see 45 FR 33091, 

citing numerous sections of the statute 

and U.S. Brewers’ Association v. EPA, 

600 F. 2d 974 (DC Cir. 1979); 48 FR 

14502–04, April 3, 1983; and 50 FR 

616–618). 

• Hazardous secondary materials 

stored or transported prior to recycling 

have the potential to present the same 

types of threats to human health and the 

environment as hazardous wastes stored 

or transported prior to disposal. In fact, 

EPA found that recycling operations 

have accounted for a number of 

significant damage incidents. For 

example, hazardous secondary materials 

destined for recycling were involved in 

one-third of the first 60 filings under 

RCRA’s imminent and substantial 

endangerment authority, and in 20 of 

the initial sites listed under the 

Comprehensive Environmental 

Response, Compensation and Liability 

Act (CERCLA) (48 FR 14474, April 4, 

1983). Congress also cited some damage 

cases which involve recycling (H.R. 

Rep. 94–1491, 94th Cong., 2d Sess., at 

17, 18, 22). More recent data (i.e., 

information on damage incidents 

occurring after 1982) included in the 

rulemaking docket for today’s final rule 

corroborate the fact that recycling 

operations can result in significant 

damage incidents. 

• 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 hazardous secondary 

material intended to do with them. This 

seems inconsistent with the mandate to 

track hazardous wastes and control 

them from ‘‘cradle to grave.’’ 

Hence, 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)). Also Connecticut 

Coastal Fishermen’s Association v. 

Remington Arms Co., 989 F.2d 1305, 

1315 (2d Cir. 1993) holds 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).) 

EPA has always asserted that 

hazardous secondary 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 on the Definition of Solid 

Waste 

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)). 

The Court held that certain of the 

materials EPA was seeking to regulate 

were not ‘‘discarded materials’’ under 

RCRA section 1004(27). The Court also 

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 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 recycled materials could not 

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)). In 

addition, the Court held that it is 

reasonable for EPA to consider as 

discarded (and solid wastes) listed 

wastes managed in units that are in part 

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)). 

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 


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a reclaimer have been ‘‘discarded once’’ 

by the entity that sent the battery to the 

reclaimer)). In addition, 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)). 

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 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 

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 in ABR 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). 

Notably, 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 (‘‘Safe 

Food’’), 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, July 24, 2002). 

EPA determined that if these conditions 

are met, the hazardous secondary 

materials used to make the fertilizer 

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 EPArequired conditions in the rule, would 

treat the exempted materials more like 

valuable products than like negativelyvalued 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 virgin raw 

materials. The Court held that this 

interpretation of ‘‘discard’’ was 

reasonable and consistent with the 

statutory purpose. The Court 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 nondiscard 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 hazardous secondary 

materials and fertilizers are not 

discarded. 

C. October 2003 Proposal To Revise the 

Definition of Solid Waste 

Prompted by concerns articulated in 

various Court opinions decided up to 

that point, in October 2003, EPA 

proposed a rule that material generated 

and reclaimed in a continuous process 

within the same industry is not 

discarded for purposes of Subtitle C, 

provided the recycling process is 

legitimate (68 FR 61558, October 28, 

2003). ‘‘Same industry’’ was defined as 

industries sharing the same 4-digit 

North American Industry Classification 

System (NAICS) code. 

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 onsite (as defined in 40 CFR 260.10), even 

if different industries were involved. 

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 that is intimately familiar 

with both the generation and 

reclamation of the hazardous secondary 

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. 

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 contracts 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 first chemical 

manufacturer for reclamation. 

The third alternative would have 

provided a broader conditional 

exclusion from the RCRA hazardous 

waste regulations for essentially all 

hazardous secondary materials that are 

legitimately recycled by reclamation. 

The purpose of this broader exclusion 


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would have been to encourage 

reclamation by lowering costs of 

recycling, 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 broader 

exclusion, compared to the sameindustry exclusion that we proposed. 

Examples of such additional conditions 

could include recordkeeping and 

reporting requirements, along with 

safeguards on storage or handling. 

In response to the October 2003 

proposal, a number of commenters 

criticized the Agency specifically for not 

having conducted a study of the 

potential impacts 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 

state authorities. Some of the 

commenters further cited a number of 

examples of environmental damage that 

were attributed to hazardous secondary 

material recycling, including a number 

of sites listed on the Superfund National 

Priorities List (NPL). 

However, other commenters to the 

October 2003 proposal 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 hazardous secondary 

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 secondary materials 

recycling. 

D. Recycling Studies 

In light of these comments on the 

October 2003 proposal, and in 

deliberating on how to proceed with 

this rulemaking effort, the Agency 

decided that additional information on 

hazardous secondary material recycling 

would benefit the regulatory decisionmaking process, and would provide 

stakeholders with a clearer picture of 

the hazardous secondary material 

recycling industry in this country. 

Accordingly, the Agency examined 

three basic issues that we believed were 

of particular importance to informing 

this rulemaking effort: 

• How do responsible generators and 

recyclers of hazardous secondary 

materials ensure that recycling is done 

in an environmentally safe manner? 

• To what extent have hazardous 

secondary material recycling practices 

resulted in environmental problems in 

recent years, and why? 

• Are there certain economic forces or 

incentives specific to hazardous 

secondary material recycling that can 

explain why environmental problems 

can sometimes originate from such 

recycling activities? 

Reports documenting these studies 

have been available for comment in the 

docket for this rulemaking, under the 

following titles: 

• An Assessment of Good Current 

Practices for Recycling of Hazardous 

Secondary Materials (EPA–HQ–RCRA– 

2002–0031–0354 ) (‘‘successful 

recycling study’’). 

• An Assessment of Environmental 

Problems Associated With Recycling of 

Hazardous Secondary Materials (EPA– 

HQ–RCRA–2002–0031–0355) 

(‘‘environmental problems study’’). 

• A Study of Potential Effects of 

Market Forces on the Management of 

Hazardous Secondary Materials 

Intended for Recycling (EPA–HQ– 

RCRA–2002–0031–0358) (‘‘market 

forces study’’). 

The results of these three studies have 

informed and supported EPA’s decision 

making in today’s final rule. 

The successful recycling study has 

provided information to the Agency that 

has helped us determine what types of 

controls would be appropriate for 

hazardous secondary materials sent for 

reclamation to determine that they are 

handled as commodities rather than 

wastes. 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 hazardous 

secondary material to determine 

whether the entity to which it is sending 

such material is equipped to responsibly 

manage it 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 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. 

As discussed later in today’s 

preamble, these findings helped inform 

EPA’s decision to require that a 

hazardous secondary material generator 

conduct reasonable efforts to ensure its 

materials are properly and legitimately 

recycled, and to require certain 

recordkeeping requirements. 

The goal of the environmental 

problems study was to identify and 

characterize environmental problems 

that have been attributed to some types 

of hazardous secondary material 

recycling activity that are relevant for 

the purpose of this rulemaking effort. To 

address commenters’ concerns that 

historic damages are irrelevant to 

current practices, EPA only included 

cases where damages occurred after 

1982 (post-RCRA and -CERCLA 

implementation). The study identifies 

208 cases in which environmental 

damages of some kind occurred from 

some type of recycling activity and that 

otherwise fit the scope of the study. The 

Agency believes that the occurrence of 

certain types of environmental problems 

associated with current recycling 

practices shows that discard has 

occurred. In particular, instances where 

materials were abandoned (e.g., in 

warehouses) and which required 

removal overseen by a government 

agency and expenditure of public funds 

clearly demonstrate that the hazardous 

secondary material was discarded. Of 

the 208 damage cases, 69 cases (33%) 

involve abandoned materials. The 

relatively high incidence of abandoned 

materials likely reflects the fact that 

bankruptcies or other types of business 

failures were associated with 138 (66%) 

of the cases. 

In addition, the pattern of 

environmental damages that resulted 

from the mismanagement of recyclable 

materials (including contamination of 

soils, groundwater, surface water and 

air) is a strong indication that the 

hazardous secondary materials were 

generally not managed as valuable 

commodities and were discarded. Of the 

208 damage cases, 81 cases (40%) 

primarily resulted from the 


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mismanagement of recyclable hazardous 

secondary materials. Mismanagement of 

recycling residuals was the primary 

cause in 71 cases (34%). Often, in the 

case of mismanagement of recycling 

residues, reclamation processes 

generated residuals in which the toxic 

components of the recycled materials 

were separated from the non-toxic 

components, and these portions of the 

hazardous secondary material were then 

mismanaged and discarded. 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. 

As discussed later in today’s 

preamble, these findings helped inform 

EPA’s decision to require that the 

hazardous secondary material be 

contained in the unit and managed in a 

manner that is at least as protective as 

an analogous raw material (where there 

is an analogous material), that the 

recycling residuals be properly 

managed, and that the reclamation 

facility and any intermediate facilities 

have financial assurance. In addition, 

the relatively small proportion of cases 

of damages from on-site recycling (13 of 

the 208 cases (6%)) lends support for 

EPA’s decision to include fewer 

limitations on the exclusion for 

hazardous secondary materials recycled 

under the control of the generator. 

The market forces study uses accepted 

economic theory to describe how 

various market incentives can influence 

a firm’s decision-making process when 

the recycling of hazardous secondary 

materials is involved. This study helps 

explain some of the possible 

fundamental economic drivers of both 

the successful and unsuccessful 

recycling practices, which, in turn, 

helped the Agency to design the 

exclusions being finalized today. 

As pointed out by some commenters 

to the October 2003 proposed rule, the 

economic forces shaping the behavior of 

firms that recycle hazardous secondary 

materials are often different from those 

at play in manufacturing processes 

using virgin materials. The market 

forces 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 

that 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 either use or recycle 

hazardous secondary materials obtained 

from other firms, with the objective of 

reducing the cost of their production 

inputs. The report looks at how the 

outcome from each model is 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. 

While an individual firm’s decisionmaking process is based on many factors 

and attempting to extrapolate a firm’s 

likely behavior from a few factors could 

be an over-simplification, when used in 

conjunction with other pieces of 

information, the economic theory can be 

quite illuminating. For example, 

according to the market forces study, the 

industrial intra- and inter-company 

recyclers have more flexibility in 

adjusting to unstable recycling markets 

(e.g., during price fluctuations, these 

companies can more easily switch from 

recycling to disposal or from recycled 

inputs to virgin inputs). Therefore, they 

would be expected to be less likely to 

have environmental problems from 

over-accumulated materials. 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 be more susceptible to 

environmental problems from the overaccumulation of hazardous secondary 

materials, especially when compared to 

recycling by a well-capitalized firm that 

yields a product with high value. In 

both cases, these predicted outcomes 

appear to be supported by the results of 

the environmental problems study, 

which show the majority of problems 

occur at off-site commercial recyclers. 

However, as shown by the successful 

recycling study, 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 that they 

are technically and financially capable 

of performing the recycling. In addition, 

we have seen that successful recyclers 

(both commercial and industrial) have 

often taken advantage of mechanisms, 

such as long-term contracts to help 

stabilize price fluctuations, allowing 

recyclers to plan their operations better. 

Further discussion of the recycling 

studies, including the methodology and 

limitations of the studies, can be found 

in the March 2007 supplemental 

proposal (72 FR 14178–83), and the 

studies themselves can be found in the 

docket for today’s rulemaking. 

E. March 2007 Supplemental Proposal 

To Revise the Definition of Solid Waste 

To provide public notice on the 

recycling studies discussed above, in 

March 2007, EPA published a 

supplemental proposal (72 FR 14172, 

March 26, 2007). In addition, based on 

the comments received on the October 

2003 proposal, EPA also decided to 

restructure our approach to revising the 

definition of solid waste to more 

directly consider whether particular 

materials are not considered 

‘‘discarded’’ and thus are not solid and 

hazardous wastes subject to regulation 

under Subtitle C of RCRA. We agreed 

with the many commenters on the 

October 2003 proposal 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 

hazardous secondary 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)). 

Instead, in March 2007, EPA proposed 

two exclusions for hazardous secondary 

materials recycled under the control of 

the generator (one exclusion would 

apply to hazardous secondary materials 

managed in non-land-based units, 

whereas the other exclusion would 

apply to hazardous secondary materials 

managed in land-based units) and an 

additional exclusion for hazardous 

secondary materials transferred to 

another party for reclamation. 

For the exclusions for hazardous 

secondary materials reclaimed under 

the control of the generator, EPA 

described three circumstances under 

which we believe that discard does not 

take place and where the potential for 

environmental releases is low to nonexistent. The three situations involve 

legitimate recycling of hazardous 

secondary materials that are generated 

and reclaimed at the generating facility, 

at a different facility within the same 


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company, or through a tolling 

arrangement. Under all three 

circumstances, the hazardous secondary 

materials must be generated and 

reclaimed within the United States or its 

territories. Because the hazardous 

secondary material generator in these 

situations still finds value in the 

hazardous secondary materials, has 

retained control over them, and intends 

to use them, EPA proposed to exclude 

these materials from being a solid waste 

and, thus, from regulation under 

Subtitle C of RCRA if the recycling is 

legitimate and if the hazardous 

secondary materials are not 

speculatively accumulated. 

In those cases, however, where 

generators of hazardous secondary 

materials do not reclaim the materials 

themselves, it often may be a sound 

business decision to ship the hazardous 

secondary materials to a commercial 

facility or another manufacturer for 

reclamation in order to avoid the costs 

of disposing of the material. In such 

situations, the generator has 

relinquished control of the hazardous 

secondary materials and the entity 

receiving such materials may not have 

the same incentives to manage the 

hazardous secondary materials as a 

useful product, especially if they are 

paid a fee for managing the hazardous 

secondary materials. 

Accordingly, for the exclusion for 

hazardous secondary materials 

transferred to another party for 

reclamation, the Agency proposed 

conditions that, when met, would 

indicate that these hazardous secondary 

materials are not discarded. One of the 

conditions would require the generator 

to make reasonable efforts to determine 

that its hazardous secondary materials 

will be properly and legitimately 

recycled (thus demonstrating the 

hazardous secondary material is not 

being discarded). Another condition 

would require the reclamation facility to 

have adequate financial assurance (thus 

demonstrating that the hazardous 

secondary material will not be 

abandoned). In addition, EPA proposed 

that both the generator and reclaimer 

would need to maintain shipping 

records (to demonstrate that the 

hazardous secondary material was sent 

for reclamation and was received by the 

reclaimer), and the reclaimer would be 

subject to additional storage and 

residual management standards (to 

address the instances of discard 

observed at off-site reclamation facilities 

in the damage cases). 

In addition, in March 2007, EPA’s 

supplemental proposal included a caseby-case petition process to allow 

applicants to demonstrate that their 

hazardous secondary materials are not 

discarded and therefore are not solid 

wastes. 

Finally, in EPA’s March 2007 

supplemental proposal, EPA proposed a 

definition of legitimate recycling that 

restructured the legitimacy factors 

originally proposed in October 2003. 

The proposed legitimacy factors would 

be used to determine whether the 

recycling of hazardous secondary 

materials is legitimate. 

IV. How Do the Provisions in the Final 

Rule Compare to Those Proposed on 

March 26, 2007? 

EPA is finalizing the exclusions 

largely as proposed in March 2007, with 

some revisions and clarifications. The 

following is a brief overview of the 

revisions to the proposal, with 

references to additional preamble 

discussions for more detail. 

For the exclusion for hazardous 

secondary materials that are legitimately 

reclaimed under the control of the 

generator, we are clarifying the scope of 

the exclusion, including addressing 

issues with defining ‘‘on-site,’’ ‘‘same 

company,’’ and ‘‘tolling arrangement.’’ 

We have also added additional data 

elements to the notification 

requirement, clarified that the 

hazardous secondary materials must be 

contained when managed in non-landbased units, as well as in land-based 

units, because hazardous secondary 

materials that are released to the 

environment and not immediately 

recovered are discarded, and added a 

reference to the new legitimacy 

provision in § 260.43. We have also 

revised the definition of land-based unit 

to be ‘‘an area where hazardous 

secondary materials are placed in or on 

the land before recycling,’’ while also 

clarifying that the definition does not 

include production units. For further 

discussion of the generator-controlled 

exclusion, see section VII of this 

preamble. 

For the exclusion for hazardous 

secondary materials that are transferred 

for the purpose of reclamation, we are 

clarifying that hazardous secondary 

materials held at a transfer facility for 

less than 10 days will be considered to 

be in transport. We are also allowing the 

use of intermediate facilities that store 

hazardous secondary materials for more 

than 10 days, provided the facilities 

comply with the same conditions 

applicable to reclamation facilities. In 

addition, the hazardous secondary 

material generator must select the 

reclamation facility (or facilities) that 

can be used and must perform 

reasonable efforts on both the 

intermediate facility and reclamation 

facility (or facilities), and the 

intermediate facility must send the 

hazardous secondary material to the 

reclamation facility that the generator 

selected. For the reasonable efforts 

condition, we have included specific 

questions in the regulatory language, 

and are requiring both documentation 

and certification. We are also clarifying 

how the financial assurance condition 

applies to reclamation and intermediate 

facilities excluded under the transferbased exclusion, including tailored 

regulatory language for financial 

assurance specific to these types of 

facilities. We have also added a 

reference to the new legitimacy 

provision in § 260.43. For further 

discussion, see section VIII of this 

preamble. 

Regarding legitimacy, we are adding 

legitimacy as a condition of the 

exclusions and the non-waste 

determinations in this rule, but are not 

finalizing the language proposed in 

§ 261.2(g) for all recycling. The new 

legitimacy provision can be found at 

§ 260.43. For further discussion, see 

section IX of this preamble. 

Finally, for the non-waste 

determination process, we have limited 

the categories for non-waste 

determinations to materials reclaimed in 

a continuous industrial process and 

materials indistinguishable from 

products and we have revised the 

criteria to make them more consistent 

across the two categories of non-waste 

determinations. Furthermore, we are not 

finalizing the non-waste determination 

for materials reclaimed under the 

control of the generator via a tolling 

arrangement or similar contractual 

arrangement. For further discussion, see 

sections X and XIX of this preamble. 

V. How Does the Concept of Discard 

Relate to the Final Rule? 

In the March 2007 supplemental 

proposal, EPA explained how the 

concept of ‘‘discard’’ is the central 

organizing idea behind the revisions to 

the definition of solid waste being 

finalized today (72 FR 14178). Basing 

the revisions on ‘‘discard’’ 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 final rule, a key issue is 

the circumstances under which a 

hazardous secondary material that is 

recycled by reclamation is or is not 

discarded. 


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The March 2007 supplemental 

proposal represented a shift from the 

approach taken in the October 2003 

proposal, which proposed to exclude 

from the definition of solid waste any 

hazardous secondary 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 NAICS code. 

The basis for that proposed 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 in a 

continuous process by the generating 

industry are not discarded (68 FR 

61563, 61564–61567). 

Commenters critical of the October 

2003 proposal argued, among other 

things, that EPA failed to present a 

reasoned analysis of the indicia of 

discard (72 FR 14184–14185). In 

evaluating these comments, EPA 

determined that the effect of our 

October 2003 proposal would be that 

some hazardous secondary materials 

generated and reclaimed under the 

control of the generator would not be 

excluded, even though the generator 

had not abandoned the material and had 

every opportunity and incentive to 

maintain oversight of, and responsibility 

for, the hazardous secondary material 

being reclaimed. Under these 

circumstances, we determined in March 

2007 that discard has generally not 

occurred (72 FR 14185). Therefore, in 

the March 2007 supplemental proposal, 

EPA decided to examine the concept of 

discard, which is the driving principle 

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 (see 72 

FR 14175). 

EPA continues to believe that the 

concept of discard is the most important 

organizing principle governing the 

determinations we have made in today’s 

final rule. 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.’’ Today’s final rule is consistent 

with that definition. Below is a 

discussion of each provision of the final 

rule with an explanation of how it 

relates to discard. Further discussion of 

the concept of discard and its 

relationship to specific provisions and 

ways of implementing this rule is found 

in sections V.A through V.D, below. 

The Agency also incorporates in this 

preamble to the final rule all 

determinations in the March 2007 

supplemental proposal, except to the 

extent they are inconsistent with the 

determinations in this preamble, 

regarding the conditions for the solid 

waste exclusions. In addition, EPA 

notes that it did not reopen the specific 

details of the speculative accumulation 

regulation regarding the time periods 

under which materials are to be 

recycled, since these periods have been 

part of the Agency’s regulations for 

many years and are familiar to persons 

who are affected by the regulations. 

A. Discard and the Generator-Controlled 

Exclusions 

In the March 2007 supplemental 

proposal, EPA determined that if the 

generator maintains control over the 

recycled hazardous secondary material, 

the material is legitimately recycled 

under the standards established in the 

proposal, and the material is not 

speculatively accumulated within the 

meaning of EPA’s regulations, then the 

hazardous secondary material is not 

discarded. This is because the 

hazardous secondary 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 hazardous secondary materials 

are not discarded (see ABR 208 F.3d 

1051 (‘‘Rather than throwing these 

materials [destined for recycling] away, 

the producer saves them; rather than 

abandoning them, the producer reuses 

them.’’)) (72 FR 14178). 

EPA continues to believe that when a 

generator legitimately recycles 

hazardous secondary material under its 

control, the generator has not 

abandoned the material and has every 

opportunity and incentive to maintain 

oversight of, and responsibility for, the 

hazardous secondary material that is 

reclaimed. 

In determining when recycling occurs 

‘‘under the control’’ of the generator, 

EPA looked at three scenarios: 

Recycling performed on-site, recycling 

performed within the same company, 

and recycling performed under certain 

specific tolling arrangements. 

In the March 2007 supplemental 

proposal, EPA noted that, of the 208 

recycling cases that caused 

environmental damage, only 13 

(approximately 6%) occurred as a result 

of on-site recycling. We also agreed with 

commenters on the October 2003 

proposal who asserted 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’’ (72 FR 14185). 

EPA also determined that this 

rationale applies to legitimate 

reclamation taking place within the 

same company. In the case of samecompany recycling, both the generating 

facility and the reclamation facility (if 

they are different) would be familiar 

with the hazardous secondary materials 

and the 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 unlikely. 

In the case of certain tolling 

operations, EPA determined in the 

March 2007 supplemental proposal that 

a certain specific type of tolling 

arrangement provides equivalent 

assurance that recycling is performed 

‘‘under the control of the generator’’ and 

does not constitute discard. Under this 

type of arrangement, one company (the 

tolling contractor) contracts with a 

second company (the toll manufacturer) 

to produce a specialty chemical from 

specified unused materials identified in 

the tolling contract. The toll 

manufacturer produces the chemical 

and the production process generates a 

hazardous secondary material (such as a 

spent solvent) which is routinely 

reclaimed at the tolling contractor’s 

facility. The typical toll manufacturing 

contract 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, 

because 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 essence, the tolling 

contractor has outsourced a step in its 

manufacturing process, but continues to 

take responsibility and maintain control 

of the process as a whole, including 

both the unused materials going into the 

process and the product and hazardous 

secondary materials resulting from the 

process. 

For all three of these generatorcontrolled exclusions—reclamation 

performed on-site, within the same 

company, and via certain tolling 

arrangements—EPA continues to find 

that the facility owner still finds value 

in the hazardous secondary materials, 

has retained control over them, and 

intends to reclaim them. Therefore, EPA 


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1As discussed in section VII.C., persons taking 

advantage of the generator-controlled option must 

also notify the regulatory authority. This 

notification requirement is needed to enable 

credible evaluation of the status of hazardous 

secondary materials under RCRA and to ensure the 

terms of the exclusions are being met by generators 

and reclaimers. These types of notification 

requirements in this rule are being promulgated 

under the authority of RCRA section 3007. 

is finalizing an exclusion for these 

materials, with certain restrictions 

discussed below. 

In the March 2007 supplemental 

proposal, EPA also noted that 

management in a land-based unit does 

not automatically indicate a hazardous 

secondary material is being discarded. 

As long as the hazardous secondary 

material is contained and is destined for 

recycling under the control of the 

generator, it would still meet the terms 

of the exclusion. However, if the 

hazardous secondary material is not 

managed as a valuable product and, as 

a result, a significant release to the 

environment from the unit occurs and is 

not immediately recovered, the 

hazardous secondary material in the 

land-based unit would be considered 

discarded (72 FR 14186). Thus, EPA 

proposed that the hazardous secondary 

material must be contained in the landbased unit in order for the exclusion to 

be applicable. 

However, in making this finding that 

hazardous secondary materials managed 

in a land-based unit must be contained 

in order to retain the exclusion, EPA did 

not intend to imply that hazardous 

secondary materials managed in nonland-based units do not need to be 

contained. Hazardous secondary 

materials released to the environment 

are not destined for recycling and are 

clearly discarded whether they 

originated from a land-based unit or not. 

Because non-land-based units do not 

involve direct contact with the land, in 

the March 2007 supplemental proposal, 

EPA did not include an explicit 

‘‘contained’’ restriction for these units. 

However, as commenters noted, it is 

still possible for non-land-based units to 

leak or otherwise release significant 

amounts of hazardous secondary 

materials to the environment, even if 

they are not in direct contact with the 

land, resulting in those materials being 

discarded. Thus, for today’s final rule, 

EPA is requiring that hazardous 

secondary materials must be contained 

(whether it is managed in land-based 

units or non-land-based units) in order 

to identify the hazardous secondary 

materials that are not being discarded 

and, therefore, are not solid wastes. 

Another restriction on the generatorcontrolled exclusions is the prohibition 

against speculative accumulation. As 

noted in the March 2007 supplemental 

proposal, restrictions on speculative 

accumulation (40 CFR 261.1(c)(8)) have 

been an important element of the RCRA 

hazardous waste recycling regulations 

since they were promulgated on January 

4, 1985. Historically, 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 

unlikely to be recycled and therefore 

discarded. According to this regulatory 

provision, a hazardous secondary 

material is accumulated speculatively if 

the person accumulating it cannot show 

that the material is 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. As noted in the March 2007 

supplemental proposal, 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 closedloop production process, or unlisted 

sludges and by-products being 

reclaimed (72 FR 14188). Given that a 

significant portion of the damage cases 

stemmed from over-accumulation of 

hazardous secondary materials, EPA 

continues to believe that a restriction on 

speculative accumulation is needed to 

determine that the hazardous secondary 

material is being recycled and is not 

discarded. 

In addition, as with all recycling 

exclusions under RCRA, the excluded 

hazardous secondary materials must be 

recycled legitimately. As discussed in 

section IX of this preamble, 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 October 2003 proposed codification 

of criteria for identifying legitimate 

recycling. Because there can be a 

significant economic incentive to 

manage hazardous secondary materials 

outside the RCRA regulatory system, 

there is a 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. While the legitimacy 

construct applies to both excluded 

recycling and the recycling of regulated 

hazardous wastes, hazardous secondary 

materials that are not legitimately 

recycled (i.e., that are being treated and/ 

or disposed in the guise of recycling) are 

discarded materials and, therefore, are 

solid wastes. 

A final restriction on the generatorcontrolled exclusion from the definition 

of solid waste is that the hazardous 

secondary material must be generated 

and recycled within the United States.1

Because hazardous secondary materials 

that are exported for recycling passes 

out of the regulatory control of the 

federal government, making it difficult 

to determine if these activities are 

‘‘under the control of the generator’’ and 

because, as noted in the March 2007 

supplemental proposal, we do not have 

sufficient information about most 

recycling activities outside of the United 

States to decide whether discard is 

likely or unlikely (72 FR 14187), EPA 

continues to find that this restriction is 

needed to properly define when the 

hazardous secondary material is not 

being discarded. 

B. Discard and the Transfer-Based 

Exclusion 

As EPA noted in the March 2007 

supplemental proposal, in cases where 

generators of hazardous secondary 

materials do not reclaim the materials 

themselves, it often may be a sound 

business decision to ship the hazardous 

secondary materials to be reclaimed to 

a commercial facility or another 

manufacturer in order to avoid the costs 

of disposing of the material. 

In such situations, EPA determined 

that the generator has relinquished 

control of the hazardous secondary 

materials and the entity receiving such 

materials may not have the same 

incentives to manage them as a useful 

product (72 FR 14178). This is 

evidenced by the results of the 

environmental problems study, found in 

the docket of today’s final rule. Of the 

208 damage cases EPA identified for the 

March 2007 supplemental proposal, 195 

(about 94%) were from off-site thirdparty recyclers, with clear instances of 

discard resulting in risk to human 

health and the environment, including 

cases of large-scale soil and ground 

water contamination with remediation 

costs in some instances in the tens of 

millions of dollars. 

In addition, the market forces study in 

the docket for today’s rulemaking 

supports the conclusion that the pattern 

of discard at off-site, third party 

reclaimers is a result of inherent 

differences between commercial 


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2These are conditions beyond the prohibition on 

speculative accumulation, the requirement that the 

hazardous secondary material be contained, and the 

requirement that the materials be legitimately 

recycled, as described in section VII.C., which 

would also apply to the transfer-based exclusion. 

The transfer-based exclusion also includes a 

notification requirement, which is needed to enable 

credible evaluation of the status of hazardous 

secondary materials under section 3007 of RCRA 

and to ensure the terms of the exclusions are being 

met by generators, intermediate facilities, and 

reclaimers. 

recycling and normal manufacturing. 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, hazardous secondary 

materials recycling can involve 

generating revenue primarily from 

receipt of the hazardous secondary 

materials (72 FR 14182). Recyclers of 

hazardous secondary materials in this 

situation may thus respond differently 

from traditional manufacturers to 

economic forces and incentives, 

accumulating more inputs (hazardous 

secondary materials) than can be 

processed (reclaimed). In addition, 

commercial recyclers appear to have 

less flexibility than in-house recyclers 

(e.g., during price fluctuations, in-house 

recyclers can more easily switch from 

recycling to disposal or from recycled 

inputs to virgin inputs, which 

commercial recyclers cannot) (72 FR 

14183). 

After reviewing public comments on 

the recycling studies (see section XV.D. 

of today’s preamble), EPA continues to 

believe that conditions are needed 

under the transfer-based exclusion for 

the Agency to determine that these 

hazardous secondary materials are not 

discarded.2

One key condition that reflects the 

basic premise underlying the exclusion 

is the condition that the hazardous 

secondary material generator perform 

and document reasonable efforts to 

ensure that its hazardous secondary 

material will be properly and 

legitimately recycled. As EPA explained 

in the March 2007 supplemental 

proposal, in order to demonstrate that 

hazardous secondary materials will not 

be discarded, generators who transfer 

their hazardous secondary materials to a 

third party must 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 (72 FR 

14194). In order for a generator to 

determine whether its hazardous 

secondary materials are not solid wastes 

because they are not discarded, the 

generator must make a reasonable effort 

to ensure that the reclaimer intends to 

legitimately recycle the material and not 

discard it, and that the reclaimer (and 

any intermediate facility) will properly 

manage the material. 

EPA continues to find that the 

reasonable efforts condition is critical in 

determining when hazardous secondary 

materials sent to another party for 

reclamation are not discarded. 

According to the successful recycling 

study found in the docket for today’s 

rulemaking, generators of hazardous 

secondary materials frequently perform 

audit activities and inquiries to 

determine whether the entity to which 

they are sending hazardous secondary 

materials is equipped to responsibly and 

legitimately reclaim and 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 materials markets. 

As noted in the March 2007 

supplemental proposal, EPA’s 

successful recycling study quotes one 

large recycling and disposal vendor as 

stating that of its new customers, 60% 

of the large customers and 30–50% of 

the smaller customers now perform 

audits on them (72 FR 14191). Thus, 

although these practices are not 

universal, they do indicate that there are 

currently many generators who 

recognize the risk of third-party 

recyclers discarding their hazardous 

secondary materials and who take 

responsibility to ensure that this discard 

does not occur. By codifying the 

reasonable efforts condition of the 

transfer-based exclusion, EPA believes 

that hazardous secondary materials 

generated by companies who take this 

type of responsibility are not being 

discarded. 

EPA has developed a reasonable 

efforts condition that is objective and is 

based on the types of information that 

are typically gathered in environmental 

audits currently performed by 

generators. However, one piece of 

information that is not included under 

the reasonable efforts provision being 

finalized today is the financial health of 

the reclamation facility. While EPA 

agrees with comments received that 

state that evaluating the financial health 

of a company can be a useful exercise, 

and encourages companies to do so, it 

is not an activity that lends itself to an 

objective standard that would be 

workable in a solid waste identification 

regulation. 

However, the financial health of a 

reclamation facility can still be a crucial 

consideration in determining whether 

discard is taking place. According to the 

successful recycling study, an 

examination of a company’s finances is 

an important part of many 

environmental audits. In addition, the 

environmental problems study showed 

that bankruptcies or other types of 

business failures were associated with 

138 (66%) of the damage cases, and the 

market forces study identified a low net 

worth of a firm as a strong indication of 

a sub-optimal outcome of recycling. 

To address the issue of the correlation 

of financial health with the absence of 

discard, EPA proposed in the March 

2007 supplemental proposal to require 

that reclamation facilities obtain 

financial assurance. The financial 

assurance requirements are designed to 

help EPA determine that the hazardous 

secondary material generator is not 

discarding the hazardous secondary 

material by sending it to a reclamation 

facility that is financially unsound. 

In addition, by obtaining financial 

assurance, the owner/operator of the 

reclamation facility (or intermediate 

facility) is making a direct 

demonstration that it will not abandon 

the hazardous secondary material. 

Discard through abandonment was a 

major cause of damages identified in the 

environmental problems study. Of the 

208 damage cases, 69 (33%) cases 

involved abandoned materials. By 

obtaining financial assurance, a 

reclaimer (or intermediate facility) is 

demonstrating that even if events 

beyond its control make its operations 

uneconomical, the hazardous secondary 

material will not be abandoned. 

Another major cause of damages 

identified in the environmental 

problems study was mismanagement of 

recyclable materials, constituting the 

primary cause of damage in 81 (40%) of 

the 208 cases. Accordingly, in the 

March 2007 supplemental proposal, 

EPA proposed a condition for reclaimers 

that they must manage the hazardous 

secondary materials in at least as 

protective a manner as they would an 

analogous raw material, and in such a 

way that the hazardous secondary 

materials would not be released into the 

environment (72 FR 14195). After 

reviewing the comments, EPA continues 

to find that such a condition is needed 

for the Agency to determine that the 

hazardous secondary materials are not 

discarded. 

The third major source of damages 

identified in the environmental 

problems study was mismanagement of 

residuals generated from the 

reclamation activity, constituting the 

primary cause of damage in 71 (34%) of 

the 208 cases. As discussed in the 

March 2007 supplemental proposal, 

EPA found that in many cases, the 


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3See, 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 a 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 final rule, which applies 

across industries, there are far larger and more 

diverse processes. While EPA believes it is 

establishing a reasonable set of principles, they 

must still be applied to the details of the industrial 

processes in question. 

residuals were comprised of the most 

hazardous components of the hazardous 

secondary materials (e.g., 

polychlorinated biphenyls (PCBs) from 

transformers) and were simply disposed 

of in on-site landfills or piles, with little 

regard for the environmental 

consequences of such mismanagement 

or possible CERCLA liabilities 

associated with cleanup of these 

releases. Therefore, EPA proposed that 

‘‘any residuals that are generated from 

reclamation processes will be properly 

managed. 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’’ (72 FR 17195). EPA 

continues to find that this condition is 

important to clarify the regulatory status 

of these waste materials, and to 

emphasize in explicit terms that the 

residuals generated from reclamation 

operations must be managed properly 

(i.e., consistent with federal and state 

requirements). 

Finally, other provisions of the 

transfer-based exclusion help ensure 

that the hazardous secondary material is 

properly transferred to the reclamation 

facility for recycling. Only the 

hazardous secondary material generator, 

transporter, intermediate facility and 

reclaimer can handle the material. (Note 

that, as with hazardous waste, a 

hazardous secondary material can be 

held up to 10 days at a transfer facility 

and still be considered as being in 

transport.) The hazardous secondary 

material generators, intermediate, and 

reclamation facilities claiming the 

exclusion must keep records of the 

hazardous secondary material 

shipments, and reclamation and 

intermediate facilities must send 

confirmations of receipt back to the 

hazardous secondary material generator. 

Thus, all parties responsible for the 

excluded hazardous secondary materials 

will be able to demonstrate that the 

materials were in fact sent for 

reclamation and arrived at the intended 

facility and were not discarded in 

transit. For hazardous secondary 

material generators who are exporting to 

other countries for reclamation, notice 

and consent must be obtained, thus 

facilitating oversight of the hazardous 

secondary material when sent beyond 

the borders of the United States, helping 

to ensure that it is recycled rather than 

discarded. 

C. Discard and Non-Waste 

Determinations 

In addition to the exclusions 

discussed above, the Agency is also 

finalizing a process for obtaining a casespecific non-waste determination for 

certain hazardous secondary materials 

that are recycled. This process allows a 

petitioner to receive a formal 

determination from EPA (or the state, if 

the state is authorized for this provision) 

that its hazardous secondary material is 

not discarded and therefore is not a 

solid waste. The procedure allows EPA 

or the authorized state to take into 

account the particular fact pattern of the 

reclamation operation to determine that 

the hazardous secondary material in 

question is not a solid waste. 

The determination is available to 

applicants who demonstrate (1) that 

their hazardous secondary materials are 

reclaimed in a continuous industrial 

process, or (2) that the materials are 

indistinguishable in all relevant aspects 

from a product or intermediate. 

As discussed earlier, court decisions 

have made it clear that hazardous 

secondary materials reclaimed in a 

continuous industrial process are not 

discarded and, therefore, are not solid 

waste. As discussed in the March 2007 

supplemental proposal, EPA believes 

that the generator-controlled exclusion 

also excludes from the definition of 

solid waste hazardous secondary 

materials recycled in a continuous 

industrial process (72 FR 14202). In 

effect, hazardous secondary materials 

reclaimed in a continuous process are a 

subset of the hazardous secondary 

materials reclaimed under the control of 

the generator that are excluded under 

today’s rule. 

However, EPA also recognized in the 

March 2007 supplemental proposal that 

production processes can vary widely 

from industry to industry. Thus, in 

some cases, EPA may need to evaluate 

case-specific fact patterns to determine 

whether an individual hazardous 

secondary material is reclaimed in a 

continuous industrial process, and 

therefore not a solid waste.3 EPA 

continues to believe that this is best 

done through a case-by-case procedure 

and is, therefore, finalizing the nonwaste determination process today. 

In addition to ruling that hazardous 

secondary materials recycled within a 

continuous industrial process are not 

discarded and therefore not solid waste, 

the courts have also said that hazardous 

secondary materials destined for 

recycling in another industry are not 

automatically discarded. In the Safe 

Food decision, the Court stated, 

‘‘[n]obody 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 Safe Food, the court 

accepted EPA’s determination that the 

‘‘relevant respects’’ were that ‘‘market 

participants treat the * * * materials 

more like valuable products rather than 

like negatively-valued wastes managing 

them in ways inconsistent with discard, 

and that the fertilizers derived from 

these recycled feedstocks are chemically 

indistinguishable from analogous 

commercial products made from virgin 

materials.’’ Id. As a result, EPA 

recognized in the March 2007 

supplemental proposal, and continues 

to believe today, that there may be some 

instances that would benefit from a nonwaste determination (72 FR 14203). 

Thus, we are also finalizing the nonwaste determination process for 

hazardous secondary materials 

indistinguishable in all relevant aspects 

from a product or intermediate. 

VI. When Will the Final Rules Become 

Effective? 

This final rule is effective on 

December 29, 2008. Section 3010(b) of 

RCRA allows EPA to promulgate a rule 

with a period for the effective date 

shorter than six months where the 

Administrator finds that the regulated 

community does not need additional 

time to come into compliance with the 

rule. This rule does not impose any 

requirements on the regulated 


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community; rather, the rule provides 

flexibility in the regulations with which 

the regulatory community is required to 

comply. The Agency finds that the 

regulatory community does not need six 

months to come into compliance. 

VII. Exclusion for Hazardous 

Secondary Materials That Are 

Legitimately Reclaimed Under the 

Control of the Generator 

A. What Is the Purpose of This 

Exclusion? 

Sections 261.2(a)(2)(ii) and 

261.4(a)(23), being finalized today, 

excludes from the definition of solid 

waste those hazardous secondary 

materials which remain under the 

control of the generator when 

legitimately reclaimed. By maintaining 

control over, and potential liability for, 

the hazardous secondary materials and 

the reclamation process, the generator 

ensures that such materials have not 

been discarded. When reclaimed under 

the control of the generator, the 

hazardous secondary materials are being 

treated as a valuable commodity rather 

than a waste. However, if such 

hazardous secondary materials are 

released into the environment and are 

not recovered immediately, they have 

been discarded and the generator is 

subject to all applicable federal and 

state regulations, as well as applicable 

cleanup authorities. 

B. Scope and Applicability 

EPA is today excluding from the 

definition of solid waste those 

hazardous secondary materials that are 

legitimately reclaimed under the control 

of the generator, provided they are not 

speculatively accumulated and they are 

reclaimed within the United States or its 

territories. In addition, the generator 

must submit a notification of the 

exclusion to EPA or the authorized state 

and the hazardous secondary material 

must be contained in the units in which 

it is stored. The provision excluding 

hazardous secondary materials that are 

under the control of the generator and 

that are managed in land-based units is 

found at 40 CFR 261.4(a)(23), while the 

provision excluding such materials that 

are managed in non-land-based units is 

found at 40 CFR 261.2(a)(2)(ii). A landbased unit is defined in 40 CFR 260.10 

as an area where hazardous secondary 

materials are placed in or on the land 

before recycling, but this definition does 

not include land-based production 

units. Examples of land-based units 

include surface impoundments and 

piles. 

The definition of ‘‘hazardous 

secondary material generated and 

reclaimed under the control of the 

generator’’ is finalized in 40 CFR 260.10 

and consists of three parts. The first part 

applies to hazardous secondary 

materials generated and legitimately 

reclaimed at the generating facility. For 

purposes of this exclusion, ‘‘generating 

facility’’ means all contiguous property 

owned, leased, or otherwise controlled 

by the hazardous secondary material 

generator, and ‘‘hazardous secondary 

material generator’’ means any person 

whose act or process produces 

hazardous secondary materials at the 

generating facility. A facility that 

collects hazardous secondary materials 

from other persons (for example, when 

mercury-containing equipment is 

collected through a special collection 

program) is not the hazardous secondary 

material generator of those materials. 

Under this definition, if a generator 

contracts with a different company to 

reclaim hazardous secondary materials 

at the generator’s facility, either 

temporarily or permanently, the 

materials would be considered under 

the control of the generator. However, 

generators sometimes contract with a 

second company to collect hazardous 

secondary materials at the generating 

facility and the materials are 

subsequently reclaimed at the facility of 

the second company. In that situation, 

the hazardous secondary materials 

would no longer be considered ‘‘under 

the control of the generator’’ and would 

instead be managed under the exclusion 

for materials transferred for reclamation. 

The second part of the definition 

applies to hazardous secondary 

materials generated and legitimately 

reclaimed at different facilities if the 

reclaiming facility is controlled by the 

generator or if a person as defined in 

§ 260.10 controls both the generator and 

the reclaimer. For purposes of this 

exclusion, ‘‘control’’ means the power to 

direct the policies of the facility, 

whether by the ownership of stock, 

voting rights, or otherwise, except that 

contractors who operate facilities on 

behalf of a different person as defined 

in § 260.10 shall not be deemed to 

‘‘control’’ such facilities. Thus, when a 

contractor operates two facilities, each 

of which is owned by a different 

company, hazardous secondary 

materials generated at the first facility 

and reclaimed at the second facility are 

not considered ‘‘under the control of the 

generator’’ and must use the exclusion 

for such materials that are transferred 

for reclamation. 

Under the definition promulgated in 

today’s final rule, the generating facility 

must provide one of two certifications: 

(1) That the generating facility will send 

the indicated hazardous secondary 

materials to the reclaiming facility, 

which is controlled by the generating 

facility, and that either the generating 

facility or the reclaiming facility has 

acknowledged full responsibility for the 

safe management of such hazardous 

secondary materials; or (2) that the 

generating facility will send the 

hazardous secondary materials to the 

reclaiming facility, that both facilities 

are under common control, and that 

either the generating facility or the 

reclaiming facility has acknowledged 

full responsibility for the safe 

management of such hazardous 

secondary materials. This certification 

should be made by an official familiar 

with the corporate structure of both the 

generating and the reclaiming facilities. 

The certification should be retained at 

the site of the generating facility. 

The third part of the definition 

applies to hazardous secondary 

materials that are generated pursuant to 

a written contract between a tolling 

contractor and a toll manufacturer and 

legitimately reclaimed by the tolling 

contractor. For purposes of this 

exclusion, a tolling contractor is a 

person who arranges for the production 

of a product or intermediate made from 

specified unused materials through a 

written contract with a toll 

manufacturer. The toll manufacturer is 

the person who produces a product or 

intermediate made from specified 

unused materials pursuant to a written 

contract with a tolling contractor. Under 

today’s final rule, the tolling contractor 

must certify that it has a written 

contract with the toll manufacturer to 

manufacture a product or intermediate 

made from specified unused materials, 

and that the tolling contractor will 

reclaim the hazardous secondary 

materials generated during the 

manufacture of the product or 

intermediate. The tolling contractor 

must also certify that it retains 

ownership of, and liability for, the 

hazardous secondary materials that are 

generated during the course of the 

manufacture, including any releases of 

hazardous secondary materials that 

occur during the manufacturing process 

at the toll manufacturer’s facility. This 

certification should be made by an 

official familiar with the terms of the 

written contract and should be retained 

at the site of the tolling contractor. 

C. Restrictions and Requirements 

Hazardous secondary materials must 

be contained. The regulations at 40 CFR 

261.2(a)(2)(ii) and 40 CFR 261.4(a)(23) 

apply to hazardous secondary materials 

that are generated and legitimately 

reclaimed under the control of the 

generator in the United States or its 


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territories. Under these provisions, the 

hazardous secondary materials must be 

contained, whether they are stored in 

land-based units or non-land-based 

units. Generally, such material is 

‘‘contained’’ if it is placed in a unit that 

controls the movement of the hazardous 

secondary material out of the unit and 

into the environment. These restrictions 

support EPA’s determination that 

materials managed in this manner are 

not discarded. 

In the event of a release from a unit 

to the environment, the hazardous 

secondary materials that remain in the 

unit may or may not meet the terms of 

the exclusion. They would be 

considered solid wastes if they are not 

managed as a valuable raw material, 

intermediate, or product, and as a result, 

a ‘‘significant’’ release of hazardous 

secondary materials from the unit to the 

environment were to take place and the 

materials were not immediately 

recovered. If such a significant release 

were to occur, the hazardous secondary 

materials remaining in the unit would 

be considered solid and hazardous 

wastes and the unit would be subject to 

the appropriate hazardous waste 

regulations. For example, an acidic 

hazardous secondary material 

undergoing reclamation could be stored 

in a tank that experienced a failure. A 

facility might fail to monitor the 

structural integrity of the tank, as most 

product tanks are monitored, or the tank 

might not be constructed to contain 

acidic hazardous secondary materials, 

causing a significant release of such 

materials into the environment that is 

not immediately recovered. The unit 

itself would consequently be considered 

a hazardous waste management unit 

because the hazardous secondary 

materials were not being managed as a 

valuable raw material, intermediate, or 

product, as evidenced by the failure to 

monitor it for structural integrity, 

resulting in the release. Thus, the unit 

and any remaining waste would be 

subject to Subtitle C controls because 

the hazardous secondary materials in 

the unit have been discarded. In 

addition, any of the released materials 

that were not immediately recovered 

would also be considered discarded 

and, if hazardous, subject to appropriate 

federal or state regulations and 

applicable authorities. Thus, to be 

excluded from the definition of solid 

waste, the facility has an obligation to 

manage the material as it would any raw 

material, intermediate or product 

because of its value. This includes, for 

example, operating and maintaining 

storage units in the same manner as 

product units. In the above example, 

whether by mismanagement of the 

hazardous secondary materials or by 

storing acidic materials in a tank not 

constructed to handle them or because 

of the failure to monitor the structural 

integrity of the unit, the result is that the 

unit would come under Subtitle C 

regulation. 

Conversely, a tank or a surface 

impoundment in good condition may 

experience small releases resulting from 

normal operations of the facility. 

Sometimes a material may escape from 

primary containment and may be 

captured by secondary containment or 

some other mechanism that would 

prevent the material from being released 

to the environment or would allow 

immediate recovery of the material. In 

that case, the unit would retain its 

exclusion from RCRA hazardous waste 

regulation and the hazardous secondary 

materials in the unit would still be 

excluded from the definition of solid 

waste, even though any such materials 

that had been released would be 

considered discarded if not immediately 

recovered and would be subject to 

appropriate regulation. One specific 

example of ‘‘contained’’ hazardous 

secondary materials would be furnace 

bricks collected from production units 

and stored on the ground in walled bins 

before being used as feedstocks in the 

metals production process. If there were 

very small releases from the walled bins 

due to precipitation runoff, such 

releases would not cause the storage 

bins to be subject to Subtitle C controls. 

It should be noted that a ‘‘significant’’ 

release is not necessarily large in 

volume. Such a release could include an 

unaddressed small release to the 

environment from a unit that, if allowed 

to continue over time, could cause 

significant damage. Any one release 

may not be significant in terms of 

volume. However, if the cause of such 

a release remains unaddressed over time 

and hazardous secondary materials are 

managed in such a way that the release 

is likely to continue, the materials in the 

unit would not be contained. For 

example, a rusting tank or containers 

that are deteriorating may have a slow 

leak that, if unaddressed, could, over 

time, cause a significant environmental 

impact. Similarly, a surface 

impoundment with a slow, unaddressed 

leak to groundwater could result, over 

time, in significant damage. Another 

example would be a large pile of leadcontaminated finely ground dust 

without any provisions to prevent wind 

dispersal of the dust. Such releases, if 

unaddressed over time and likely to 

continue, would mean that the 

hazardous secondary materials 

remaining in the unit were not being 

managed as a valuable raw material, 

intermediate, or product and that the 

materials had been discarded. As a 

result, the hazardous secondary 

materials in the unit would be 

hazardous wastes and these units would 

be subject to the RCRA hazardous waste 

regulations. 

Speculative accumulation. In addition 

to the containment provision, hazardous 

secondary materials that are generated 

and legitimately reclaimed under the 

control of the generator are subject to 

the speculative accumulation provisions 

of 40 CFR 261.1(c)(8). If these materials 

are speculatively accumulated, they are 

considered discarded. EPA did not 

propose changes to the speculative 

accumulation provisions in its March 

26, 2007 proposal. 

Legitimate Recycling. Under this 

exclusion, hazardous secondary 

materials under the control of the 

generator must be legitimately 

reclaimed, as specified under 40 CFR 

260.43. Legitimate recycling must 

involve a hazardous secondary material 

that provides a useful contribution to 

the recycling process or product and the 

recycling process must produce a 

valuable product or intermediate. In 

addition, as part of a legitimacy 

determination, persons must consider 

whether the hazardous secondary 

material is managed as a valuable 

product and must consider the levels of 

toxics in the product of the recycling 

process as compared to analogous 

products made from virgin materials. 

The details of the legitimacy provision 

are discussed in section IX of this 

preamble. 

Notification. Under today’s rule, 

hazardous secondary material 

generators, tolling contractors, toll 

manufacturers, and reclaimers (where 

the generator and reclaimer are part of 

the same company, but located at 

different facilities) managing hazardous 

secondary materials reclaimed under 

the control of the generator are required 

to submit a notification prior to 

operating under this exclusion and by 

March 1 of each even numbered year 

thereafter to the EPA Regional 

Administrator using EPA Form 8700– 

12. In states authorized by EPA to 

administer the RCRA Subtitle C 

hazardous waste program, notifications 

may be sent to the state Director. The 

notice must include: 

• The name, address and EPA ID 

number (if applicable) of the facility; 

• The name and telephone number of 

a contact person; 

• The NAICS code of the facility; 

• The exclusion under which the 

hazardous secondary materials will be 

managed (e.g., 40 CFR 261.2(a)(2(ii) 


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and/or 40 CFR 261.4(a)(23) for 

hazardous secondary materials managed 

in a land-based unit); 

• When the facility expects to begin 

managing the hazardous secondary 

materials in accordance with the 

exclusion; 

• A list of hazardous secondary 

materials that will be managed 

according to the exclusion (reported as 

the EPA hazardous waste numbers that 

would apply if the hazardous secondary 

materials were managed as hazardous 

waste); 

• For each hazardous secondary 

material, whether the material, or any 

portion thereof, will be managed in a 

land-based unit; 

• The quantity of each hazardous 

secondary material to be managed 

annually; and 

• The certification (included in EPA 

Form 8700–12) signed and dated by an 

authorized representative of the facility. 

Generators and reclaimers are 

required to notify on a per facility basis. 

In other words, facilities managing 

hazardous secondary materials will 

need to submit a notification form in 

accordance with the exclusion. One 

notification cannot cover two or more 

facilities. Furthermore, each facility 

need only use one notification form to 

list all of the hazardous secondary 

materials to be managed under the 

exclusion (i.e., facilities need not file 

separate notifications for each 

hazardous secondary material). 

We are also requiring facilities that 

stop managing hazardous secondary 

materials in accordance with the 

exclusion to notify the Regional 

Administrator within 30 days using the 

same EPA Form 8700–12. Notification 

in this instance serves two objectives: 

(1) It allows states to follow up with the 

facility to verify that the hazardous 

secondary material has not been 

discarded; and (2) it maintains the 

usability of the database to enable states 

to monitor compliance and, for today’s 

transfer-based exclusion, to assist 

generators with performing reasonable 

efforts on potential reclaimers. We 

consider a facility to have ‘stopped’ 

managing hazardous secondary 

materials when a facility no longer 

generates, manages and/or reclaims 

hazardous secondary materials under 

the exclusion and does not expect to 

manage any amount of hazardous 

secondary material under the exclusion 

for at least one year. This includes if the 

facility chooses to manage the 

hazardous secondary materials as 

hazardous waste or the facility chooses 

to temporarily suspend management of 

hazardous secondary materials and does 

not expect to manage any amount of 

hazardous secondary materials for at 

least one year. For example, a facility 

that has previously notified it is 

managing hazardous secondary 

materials under the exclusion, but then 

subsequently chooses to stop managing 

all hazardous secondary materials for a 

period of at least one year, must notify 

the Regional Administrator. However, if 

this same facility only stopped 

managing one type of hazardous 

secondary material (but continued to 

manage another type of hazardous 

secondary material under the exclusion) 

it would not need to notify, and could 

just update its list of hazardous 

secondary materials during the next 

periodic re-notification submitted every 

two years. Additionally, if a reclaimer or 

intermediate facility managing 

hazardous secondary materials under 

the transfer-based exclusion requests 

release of financial assurance under 40 

CFR 261.143(h), it is clear the facility 

has ‘stopped’ managing hazardous 

secondary materials, and, therefore, 

must notify the Regional Administrator 

(for additional clarification, notification 

does not ‘trigger’ the process for 

releasing financial assurance; instead, a 

facility wishing to be released from 

financial assurance obligations must 

notify it has ‘stopped’ managing 

hazardous secondary materials). Of 

course, a facility could certainly choose 

to begin managing hazardous secondary 

materials again and would simply have 

to submit a notification in compliance 

with 40 CFR 260.42. 

We note that the requirement to 

provide this notification is not a 

condition of the exclusion. Thus, failure 

to comply with the requirement 

constitutes a violation of RCRA, but 

does not affect the excluded status of 

the hazardous secondary materials. 

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 hazardous secondary 

materials under section 3007 of RCRA 

and to ensure that the terms of the 

exclusions are being met by generators 

and reclaimers. EPA further believes 

that RCRA section 3007 allows us to 

gather information about any material 

when we have reason to believe that it 

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 finalized today could 

substantially affect the universe of 

facilities in the Subtitle C system, we 

believe the notifications are appropriate. 

The intent of this notification 

requirement is to provide basic 

information to the regulatory agencies 

about who will be managing hazardous 

secondary materials under the 

exclusion. The specific information 

included in today’s notification 

requirement will enable regulatory 

agencies to monitor compliance 

adequately and to ensure hazardous 

secondary materials are managed 

according to the exclusion and not 

discarded. For example, in the 

notification, EPA requires facilities to 

include the quantity of hazardous 

secondary materials that will be 

managed according to the exclusion and 

whether certain types of hazardous 

secondary materials will be managed in 

land-based units. This information can 

be used to assist RCRA inspectors in 

determining which facilities may 

warrant greater oversight and provides a 

basis for setting enforcement priorities. 

Furthermore, requiring facilities to 

notify when they have stopped 

managing hazardous secondary 

materials allows states to follow-up and 

ensure that hazardous secondary 

materials were not discarded. 

Notification information is collected in 

EPA’s RCRAInfo database, which is the 

national repository of all RCRA Subtitle 

C site identification information, 

whether collected by a state authority or 

EPA. EPA provides public access to this 

information through EPA’s public Web 

site at http://www.epa.gov/enviro/html/ 

rcris/ (or other successor Web site). 

This notification requirement is the 

same as the notification requirement for 

today’s transfer-based exclusion found 

in section VIII.C. of today’s preamble. 

Sending to an intermediate facility. We 

note that under this exclusion, 

hazardous secondary materials may not 

be sent to an intermediate facility as 

defined in 40 CFR 260.10 (i.e., a facility, 

other than a generator or reclaimer, that 

stores hazardous secondary materials for 

more than 10 days). If hazardous 

secondary materials are sent to 

intermediate facilities, they would not 

meet the definition of hazardous 

secondary materials reclaimed under 

the control of the generator, and they are 

subject to the conditions of the transferbased exclusion, discussed below. 


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D. Terminating the Exclusion 

Units managing excluded hazardous 

secondary materials are not subject to 

the closure regulations in 40 CFR parts 

264 and 265 subpart G. However, when 

the use of these units is ultimately 

discontinued, all owners and operators 

must manage any remaining hazardous 

secondary materials that are not 

reclaimed and remove or decontaminate 

all hazardous residues and 

contaminated containment system 

components, equipment structures, and 

soils. These hazardous secondary 

materials and residues, if no longer 

intended for reclamation, would also no 

longer be eligible for the exclusion 

(which only applies to materials that 

will be reclaimed). Failure to remove 

these materials within a reasonable time 

frame after operations cease could cause 

the facility to become subject to the full 

Subtitle C requirements if the Agency 

determines that recycling is no longer 

feasible. While this final rule does not 

set a specific time frame for these 

activities, the Agency believes that they 

typically should be completed within 

the time frames established for 

analogous activities. For example, the 

requirements for product tanks under 40 

CFR 261.4(c) allow 90 days for removal 

of hazardous material after the unit 

ceases to be operated for manufacturing. 

This time frame should serve as a 

guideline for regulators in determining 

on a case-by-case basis whether owners 

and operators have completed these 

activities within a reasonable time 

frame. In any event, these hazardous 

secondary materials remain subject to 

the speculative accumulation 

restrictions in 40 CFR 261.1(a)(8), which 

includes both a time limitation and a 

requirement that the facility be able to 

show there is a feasible means of 

recycling the hazardous secondary 

material. 

E. Enforcement 

Under today’s rule, hazardous 

secondary materials generated and 

legitimately reclaimed within the 

United States under the control of the 

generator are excluded from RCRA 

Subtitle C regulation, but are subject to 

certain restrictions, principally 

speculative accumulation, legitimate 

recycling, and containment. Persons 

that handle these hazardous secondary 

materials are responsible for 

maintaining the exclusion by ensuring 

that these restrictions are met. If the 

hazardous secondary materials are not 

managed pursuant to these restrictions, 

they are not 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 their point of generation. Persons 

operating under the exclusion are also 

required to notify EPA or the authorized 

state. 

Persons taking advantage of today’s 

exclusion that fail to meet the 

requirements may be subject to an 

enforcement action. EPA could choose 

to bring an enforcement action under 

RCRA section 3008(a) for violations of 

the hazardous waste requirements 

occurring from the time the hazardous 

secondary materials are generated 

through the time they are ultimately 

disposed of or reclaimed. The Agency 

affirms in this preamble that § 261.2(f) 

applies to claims that hazardous 

secondary materials are not solid waste 

because they are being legitimately 

recycled. Respondents in enforcement 

cases should be prepared to demonstrate 

that they meet the terms of the 

exclusion or exemption, which includes 

demonstrating that the recycling is 

legitimate. Appropriate documentation 

must be provided to the enforcing 

agency to demonstrate that the material 

is not a solid waste or is exempt from 

regulation. In addition, the recycler of 

the hazardous secondary materials 

should be prepared to show they have 

the necessary equipment to perform the 

recycling operation. Furthermore, any 

release of the hazardous secondary 

materials to the environment that is not 

immediately cleaned up would be 

considered discarded and, thus, the 

hazardous secondary materials that 

were released would be a solid waste 

and potentially subject to the RCRA 

hazardous waste regulations. 

The Agency believes that this 

approach provides hazardous secondary 

material generators with an incentive to 

handle or (in the case of tolling) to 

ensure that their contractors handle the 

hazardous secondary materials pursuant 

to the requirements. It also encourages 

each hazardous secondary material 

generator to take appropriate steps to 

ensure that such materials are properly 

handled and legitimately reclaimed 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 

and cleanup authorities. 

VIII. Exclusion for Hazardous 

Secondary Materials That Are 

Transferred for the Purpose of 

Legitimate Reclamation 

Today, EPA is also finalizing 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 

(i.e., ‘‘transfer-based exclusion’’), 

provided that certain conditions are 

met. Reclamation that conforms to these 

conditions would not involve discard, 

and therefore the hazardous secondary 

materials would not be regulated as 

solid waste. As with all recyclingrelated exclusions and exemptions, such 

excluded hazardous secondary materials 

would also need to be recycled 

legitimately. For further discussion on 

how the transfer-based exclusion relates 

to the concept of discard, see section 

V.B. of this preamble. 

The conditions that must be met for 

this exclusion are based on our analysis 

of how successful third-party recycling 

currently operates (and, conversely, 

how unsuccessful third-party recycling 

practices can result in recyclable 

hazardous secondary materials being 

discarded), and are supported by the 

information contained in the 

rulemaking record, including the 

recycling studies found in the public 

docket for today’s rulemaking and 

discussed previously in section III.D. of 

today’s preamble and in the preamble to 

the March 2007 supplemental proposal 

at 72 FR 14178–14183. For example, the 

successful recycling study indicates that 

many responsible generators examine 

the recycler’s technical capabilities, 

business viability, environmental track 

record, and other relevant questions 

before sending hazardous secondary 

materials for recycling. Currently, 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 the 

release of material to the environment. 

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 materials 

recycling. Thus, we believe that there is 

sufficient basis for the Agency to place 

certain conditions on this exclusion for 

the generator to determine that the 

hazardous secondary material is not 

discarded, particularly since we expect 

that this rulemaking could encourage 


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some companies that are currently not 

involved with hazardous secondary 

materials recycling to enter the 

business. 

A. What Is the Purpose of This 

Exclusion? 

In finalizing this conditional 

exclusion, EPA’s objectives are to 

encourage the reclamation of hazardous 

secondary materials and reduce 

unnecessary regulatory compliance 

costs to industry, while still maintaining 

protection of human health and the 

environment. After considering the 

entire rulemaking record, including 

comments submitted by the public, we 

continue to believe that this exclusion is 

a workable, common-sense approach to 

meeting these objectives; is well 

supported by the record for this 

rulemaking, including the recycling 

studies that EPA has conducted; and, in 

important ways, reflects current good 

industry practices that are used by 

responsible generators for recycling 

hazardous secondary materials. 

B. Scope and Applicability 

The conditional exclusion for the 

transfer-based approach applies to 

hazardous secondary materials that are 

currently regulated as hazardous wastes 

because their recycling involves 

reclamation—specifically, spent 

materials, listed sludges, and listed byproducts. It would not be available for 

hazardous secondary 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 conditional exclusion also does not 

apply to materials that are currently 

excluded from the definition of solid 

waste according to other, existing 

provisions of 40 CFR part 261. For 

example, the exclusion for broken 

cathode ray tubes requires them to be 

transported in closed containers per 40 

CFR 261.4(a)(22). Today’s exclusion 

does not supersede or otherwise affect 

these other exclusions, and such 

hazardous secondary materials will 

need to be managed in accordance with 

those existing exclusions. For a 

discussion of how this exclusion relates 

to particular existing exclusions and 

additional details involving these 

exclusions, see section XI of today’s 

preamble. 

This exclusion is available to 

hazardous secondary material 

generators, transporters, intermediate 

facilities, or reclaimers. In the March 

2007 supplemental proposal, EPA 

proposed that the hazardous secondary 

material must be transferred directly 

from the generator to the reclaimer and 

not be handled by anyone else other 

than a transporter. Thus, as proposed, a 

generator that wished to maintain the 

excluded status of its hazardous 

secondary materials would not be able 

to ship those materials to a middleman, 

such as a broker. We said that we 

believed that 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 (72 FR 

14189). However, we requested 

comment on allowing middlemen to 

participate in the exclusion. 

Comments on the proposal disputed 

the assumption that the generator does 

not know the final destination when 

shipping to an intermediate facility, 

saying, that in certain cases, the 

generator works with an intermediate 

facility to choose the reclamation 

facility and the final destination is 

arranged by contract before the 

hazardous secondary materials are 

shipped. Commenters also asserted that 

such arrangements allow for 

consolidation of shipments, making 

recycling economical for small 

businesses who generate hazardous 

secondary materials. 

EPA agrees with the comments that 

some types of intermediate facilities 

could participate in the exclusion, while 

still allowing the hazardous secondary 

material generator to perform reasonable 

efforts to ensure that the hazardous 

secondary material is properly and 

legitimately recycled. Thus, in the final 

rule, EPA has determined that 

intermediate facilities will be allowed 

under the transfer-based exclusion. 

However, to limit the exclusion to those 

intermediate facilities where discard 

will not occur, if the hazardous 

secondary material will be passing 

through an intermediate facility, the 

hazardous secondary material generator 

must make contractual arrangements 

with the intermediate facility to ensure 

that the hazardous secondary material is 

sent on to the reclamation facility or 

facilities identified by the generator and 

must perform reasonable efforts on the 

intermediate facility, as well as on the 

reclamation facility. Also, the 

intermediate facility must send the 

hazardous secondary material to the 

reclaimer(s) designated by the generator. 

In addition, the intermediate facility 

must meet the same conditions as the 

reclamation facility for the same reasons 

the reclamation facility must meet them. 

Section VIII.C.4. below discusses 

additional details as to why these 

conditions need to apply to the 

reclamation facilities and this reasoning 

applies equally to intermediate facilities 

involved in the process. Of the 208 

damage cases in the environmental 

problems study, 45 (22%) cases were 

from intermediate facilities. Therefore, 

EPA believes the record for requiring 

the conditions for the reclamation 

facility also supports promulgation of 

the same conditions for intermediate 

facilities. 

In addition, in the March 2007 

supplemental proposal, the Agency 

recognized 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 

secondary material, might have a 

relatively high moisture content and a 

somewhat variable chemical 

composition. Such materials might 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 continues to see 

no reason to discourage this kind of 

recycling. The transfer-based exclusion 

finalized today is available for 

hazardous secondary materials that are 

recycled by means of one or more 

reclamation processes, including when 

they occur at more than one reclamation 

facility. 

The conditions for generators and 

reclaimers 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. For example, if the 

excluded hazardous secondary material 

was 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 involved in the reclamation 

process to ensure that the hazardous 

secondary materials would be properly 

and legitimately recycled. We believe 

that this is a consistent application of 

the idea of requiring ‘‘reasonable 

efforts’’ as a condition of this exclusion. 

Where recycling of a hazardous 

secondary material involves more than 

one reclamation step at more than one 

facility, generators should be well 

informed as to how the materials will be 

reclaimed, and by whom, throughout 

the recycling process. Additionally, 

each reclaimer (including ‘partial 

reclaimers’) managing hazardous 

secondary materials must meet all the 

reclaimer conditions listed under 40 

CFR 261.4(a)(24), as well as the 

recordkeeping requirements. 


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C. Conditions and Requirements 

1. Provisions Applicable to the 

Hazardous Secondary Materials 

Generator, the Reclamation Facility, and 

Any Intermediate Facility 

Prohibition on speculative 

accumulation. As a condition of the 

transfer-based exclusion, hazardous 

secondary materials cannot be 

speculatively accumulated (40 CFR 

261.1(c)(8)) at the hazardous secondary 

material generator, reclamation facility, 

or intermediate facility. Restrictions on 

speculative accumulation have been an 

important element of the RCRA 

hazardous waste recycling regulations 

since they were promulgated on January 

4, 1985. According to this regulatory 

provision, hazardous secondary 

materials are accumulated speculatively 

if the person accumulating them cannot 

show that the material is 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 is at least 75% by weight or 

volume of the amount of the hazardous 

secondary material present at the 

beginning of the period. It is also the 

same prohibition that is being 

promulgated today for the generatorcontrolled exclusions. 

Legitimate recycling. Under the 

transfer-based exclusion, hazardous 

secondary materials must be 

legitimately reclaimed, as specified 

under 40 CFR 260.43. Legitimate 

recycling must involve a hazardous 

secondary material that provides a 

useful contribution to the recycling 

process or product and the recycling 

process must produce a valuable 

product or intermediate. In addition, as 

part of a legitimacy determination, 

persons must consider whether the 

hazardous secondary material is 

managed as a valuable product and 

must consider the levels of toxics in the 

product of the recycling process as 

compared to analogous products made 

from virgin materials. The details of the 

legitimacy provision are discussed in 

section IX of this preamble. 

Notification. Under today’s transferbased exclusion, hazardous secondary 

material generators, reclaimers, and 

intermediate facilities are required to 

send a notification prior to operating 

under this exclusion and by March 1 of 

each even numbered year thereafter to 

the EPA Regional Administrator using 

EPA Form 8700–12. In states authorized 

by EPA to administer the RCRA Subtitle 

C hazardous waste program, 

notifications may be sent to the state 

Director. The notice must include: 

• The name, address, and EPA ID 

number (if applicable) of the facility; 

• The name and telephone number of 

a contact person; 

• The NAICS code of the facility; 

• The exclusion under which the 

hazardous secondary materials will be 

managed (e.g., whether the hazardous 

secondary materials are managed under 

the transfer-based exclusion in 40 CFR 

261.4(a)(24) and/or under the exclusion 

for hazardous secondary materials 

exported for reclamation in 40 CFR 

261.4(a)(25)); 

• For reclaimers and intermediate 

facilities managing hazardous secondary 

materials, whether the reclaimer or 

intermediate facility has financial 

assurance for the management of such 

hazardous secondary materials (not 

applicable for hazardous secondary 

material generators); 

• When the facility expects to begin 

managing the hazardous secondary 

materials in accordance with the 

exclusion; 

• A list of hazardous secondary 

materials that will be managed 

according to the exclusion (reported as 

the EPA hazardous waste numbers that 

would apply if the hazardous secondary 

materials were managed as hazardous 

waste); 

• For each hazardous secondary 

material, whether the material, or any 

portion thereof, will be managed in a 

land-based unit; 

• The quantity of each hazardous 

secondary material to be managed 

annually; and 

• The certification (included in EPA 

Form 8700–12) signed and dated by an 

authorized representative of the facility. 

If a facility has submitted a 

notification, but then subsequently 

stops managing hazardous secondary 

materials in accordance with the 

exclusion, the facility must re-notify the 

Regional Administrator within 30 days 

using the same EPA Form 8700–12. We 

consider a facility to have ‘stopped’ 

managing hazardous secondary 

materials when a facility no longer 

generates, manages and/or reclaims 

hazardous secondary materials under 

the exclusion and does not expect to 

manage any amount of hazardous 

secondary material under the exclusion 

for at least one year. Of course, a facility 

could certainly choose to begin 

managing hazardous secondary 

materials again and would simply have 

to submit a notification in compliance 

with 40 CFR 260.42. 

The requirement to provide this 

notification is not a condition of the 

exclusion. Thus, failure to comply with 

the requirement constitutes a violation 

of RCRA, but does not affect the 

excluded status of the hazardous 

secondary materials. 

This notification requirement is the 

same as the notification requirement for 

the generator-controlled exclusion. For 

further discussion on the notification, 

including examples of when a facility 

must re-notify that it has stopped 

managing hazardous secondary 

materials, see section VII.C. of today’s 

preamble. 

Hazardous secondary materials must 

be contained. Another condition of the 

transfer-based exclusion applicable to 

hazardous secondary material 

generators, reclamation facilities, and 

intermediate facilities is that the 

hazardous secondary materials must be 

contained in their management units. 

Hazardous secondary materials released 

to the environment from any unit are 

discarded and would be subject to the 

hazardous waste regulations, unless 

they are immediately cleaned up. 

Hazardous secondary materials 

remaining in a unit that experiences a 

release may also be considered 

discarded in certain cases. This is the 

same as the restriction that is being 

promulgated for the generatorcontrolled exclusions. For further 

discussion on the containment 

provisions, including examples of how 

they might be applied in case-specific 

situations, see section VII.C. of today’s 

preamble. 

2. Provisions Applicable to the 

Hazardous Secondary Material 

Generator 

Reasonable efforts. Today’s final rule 

requires generators to make reasonable 

efforts to ensure that their hazardous 

secondary materials are properly and 

legitimately recycled before shipping or 

otherwise transferring them to a 

reclamation facility or any intermediate 

facility. As discussed previously, this 

condition effectively requires that 

generators perform a type of 

environmental ‘‘due diligence’’ on a 

reclaimer or any intermediate facility to 

ensure that those facilities intend to 

properly manage the hazardous 

secondary materials as commodities and 

legitimately recycle rather than discard 

them. We believe that this condition 

reflects the existing best practices of 

many responsible generators who audit 

and assess recyclers to maintain their 

commitment to sound environmental 

stewardship, minimize their potential 

regulatory and liability exposures, and 

make decisions about with whom they 

should do business. 

Our successful recycling study quotes 

one large recycling and disposal vendor 


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as stating that with respect to its new 

customers, 60% of its large customers 

and 30%–50% of its 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.) Through the codification of 

this condition, we want to reinforce this 

best practice among all generators who 

use the transfer-based exclusion to send 

hazardous secondary materials to 

reclamation and intermediate facilities. 

We believe that this condition is critical 

for generators who currently may not 

evaluate reclaimers and intermediate 

facilities because this condition 

provides these generators with a 

framework for making reasonable efforts 

to ensure their hazardous secondary 

materials are properly managed and 

reclaimed, and not discarded. 

Currently, under 40 CFR part 262, a 

generator must make a hazardous waste 

determination and, thus, already has an 

obligation to determine whether the 

waste is subject to regulation as a 

hazardous waste. EPA believes that to 

make a parallel determination under 40 

CFR 261.4(a)(24) that hazardous 

secondary materials are not solid wastes 

because they are destined for 

reclamation and are not discarded, the 

generator must meet the reasonable 

efforts condition. A reasonable efforts 

inquiry by the hazardous secondary 

material generator ensures that the 

reclaimer intends to recycle the 

hazardous secondary material 

legitimately pursuant to 40 CFR 260.43 

and not discard it, and that the 

reclaimer or any intermediate facility 

will manage the hazardous secondary 

materials in compliance with 40 CFR 

261.4(a)(24)(vi). 

The reasonable efforts condition for 

generators applies when hazardous 

secondary materials are transferred to 

intermediate facilities (as defined in 40 

CFR 260.10) and reclamation facilities 

operating without a RCRA Part B permit 

or under the interim status standards 

that extend to management of the 

hazardous secondary materials in 

question. If the permit or interim status 

standards address the units being used 

to manage the hazardous secondary 

materials, we do not require generators 

to conduct reasonable efforts because 

we believe that a Part B permit or the 

interim status standards provide some 

assurance to generators that the facility 

has a measure of financial stability and 

that the hazardous secondary materials 

will be well managed. RCRA permitted 

or interim status facilities where the 

permit or interim status standards 

extend to the management of the 

hazardous secondary materials being 

reclaimed are already subject to 

stringent design and operating 

standards, must demonstrate financial 

assurance, and are subject to the 

corrective action requirements in the 

event of environmental problems. Not 

requiring reasonable efforts for 

generators that transfer hazardous 

secondary materials to these RCRA 

permitted or interim status recycling or 

intermediate facilities would likely be of 

particular benefit to relatively smaller 

volume generators who may not have 

the resources required to satisfy this 

condition. 

Of course, if a permitted facility later 

modifies its permit terms in a way that 

the permit no longer extends to the 

management of the hazardous secondary 

materials, the generator would need to 

perform reasonable efforts in accordance 

with this exclusion. EPA recommends 

that any hazardous secondary material 

generator transferring hazardous 

secondary materials to a permitted 

facility request that it get placed on the 

facility mailing list, so they can then 

receive notice of changes to the permit 

status of the reclaimer or intermediate 

facility (see 40 CFR 270.42 and 40 CFR 

124.10). 

In contrast, if the permit or interim 

status standards do not extend to the 

hazardous secondary materials being 

reclaimed, the same level of assurance 

is not guaranteed. Therefore, if a 

reclamation or intermediate facility only 

has a RCRA permit or complies with the 

interim status standards for another onsite operation unrelated to the 

hazardous secondary materials of 

interest to the generator, then the 

hazardous secondary material generator 

is required to make a reasonable efforts 

inquiry of the facility as if it were a nonpermitted facility. 

EPA believes that a generator should 

be allowed to use any credible evidence 

available in making reasonable efforts, 

including information gathered by the 

generator, provided by the reclaimer or 

intermediate facility, and/or provided 

by a third party, in lieu of personally 

performing an assessment. For example, 

the hazardous secondary material 

generator might hire an independent 

auditor to review the operations, 

produce audit reports as a consortium of 

generators, or rely on an assessment of 

a recycler or intermediate facility by a 

parent corporation or trade association 

that is used by several generating 

facilities. In fact, EPA believes that 

many reputable third-party auditors, 

parent companies, and trade 

associations already assemble the types 

of information based on credible 

evidence that would be needed for a 

generator to satisfy the reasonable 

efforts condition. EPA would encourage 

this type of pooling of information to 

reduce the burden on generators and to 

take advantage of specialized technical 

expertise. 

EPA is also finalizing in the 

regulatory text a series of questions, 

which together represent a minimum 

standard for reasonable efforts, to 

provide generators and overseeing 

agencies with regulatory certainty 

regarding fulfillment of the condition. 

We believe that these questions are 

objective and must be answered 

affirmatively. Hazardous secondary 

material generators wishing to take 

advantage of the exclusion must be able 

to answer all questions affirmatively to 

determine that their hazardous 

secondary materials are or will be 

properly and legitimately recycled and 

will not be discarded. The reasonable 

efforts questions are straight-forward by 

design and will allow generators to use 

a common sense approach in answering 

the questions and satisfy the condition. 

These questions can be found at 40 CFR 

261.4(a)(24)(v)(B) and are discussed 

below. 

Of course, a generator could choose to 

seek additional information or ask 

additional questions to determine that 

its hazardous secondary materials will 

not be discarded due to concerns about 

CERCLA liability. One example of 

additional information that many 

responsible generators currently seek 

from recyclers, but that EPA is not 

including in today’s final rule, is 

information about a reclamation 

facility’s financial health. Based on 

EPA’s successful recycling study and 

comments on the proposed rule, we 

know that responsible generators often 

inquire about a reclamation facility’s 

financial health. These inquiries can 

include reviews of liability insurance 

coverage, company annual reports, 

bankruptcy filings, investments in 

capital improvements, markets for 

recycled products, and business reports, 

such as Dun & Bradstreet reports. EPA 

believes that evaluating the financial 

health of a company can benefit a 

generator’s reasonable efforts inquiry of 

a reclamation or intermediate facility 

and encourages generators to do so, 

although we acknowledge that it is not 

an activity that lends itself to an 

objective standard that would be 

appropriate for regulation. Instead, EPA 

is requiring that, under the transferbased exclusion and reasonable efforts 

condition, reclamation and intermediate 


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facilities have financial assurance and 

generators affirm that facilities have 

notified the appropriate authorities that 

the financial assurance condition is 

satisfied. 

EPA intends that if a hazardous 

secondary material generator has met 

the reasonable efforts condition prior to 

transferring hazardous secondary 

materials to the reclamation or 

intermediate facility, then the reclaimer 

or intermediate facility, not the 

generator, would be liable under RCRA 

if the materials were discarded (i.e., not 

properly and legitimately recycled). 

However, if the generator does not meet 

the reasonable efforts condition, then 

the generator is ineligible for the 

transfer-based exclusion and would be 

potentially liable in the event its 

hazardous secondary materials were 

discarded by a reclamation or 

intermediate facility. (See section VIII.E. 

for more information.) EPA 

acknowledges that meeting this 

condition will not affect CERCLA 

liability. (See section XIII for more 

information on CERCLA liability.) 

The following five questions represent 

a minimum standard for satisfying the 

reasonable efforts condition: 

(1) Does the available information 

indicate that the reclamation process is 

legitimate pursuant to § 260.43? In 

answering this question, the hazardous 

secondary material generator can rely on 

its existing knowledge of the physical 

and chemical properties of the 

hazardous secondary material, as well 

as information from other sources (e.g., 

the reclamation facility, audit reports, 

etc.) about the reclamation process. (By 

responding to this question, the 

hazardous secondary material generator 

has also satisfied its requirement in 

§ 260.43(a) to be able to demonstrate 

that the recycling is legitimate.) 

(2) Does the publicly available 

information indicate that the 

reclamation facility and any 

intermediate facility that is used by the 

hazardous secondary material generator 

have notified the appropriate authorities 

of hazardous secondary materials 

reclamation activities pursuant to 40 

CFR 260.42 and have they notified the 

appropriate authorities that the financial 

assurance condition is satisfied per 40 

CFR 261.4(a)(24)(vi)(F)? In answering 

these questions, the hazardous 

secondary material generator can rely on 

the available information documenting 

the reclamation facility’s and any 

intermediate facility’s compliance with 

the notification requirements per 

§ 260.42, including the requirement in 

§ 260.42(a)(5) to notify EPA whether the 

reclaimer or intermediate facility has 

financial assurance. 

(3) Does publicly available 

information indicate that the 

reclamation facility or any intermediate 

facility that is used by the hazardous 

secondary material generator has not 

had any formal enforcement actions 

taken against the facility in the previous 

three years for violations of the RCRA 

hazardous waste regulations and has not 

been classified a significant 

noncomplier with RCRA Subtitle C? In 

answering this question, the hazardous 

secondary material generator can rely on 

the publicly available information from 

EPA or the state. If the reclamation 

facility or any intermediate facility that 

is used by the hazardous secondary 

material generator has had a formal 

enforcement action taken against the 

facility in the previous three years for 

violations of the RCRA hazardous waste 

regulations and has been classified as a 

significant non-complier with RCRA 

Subtitle C, does the hazardous 

secondary material generator have 

credible evidence that the facilities will 

manage the hazardous secondary 

materials properly? In answering this 

question, the hazardous secondary 

material generator can obtain additional 

information from EPA, the state, or the 

facility itself that the facility has 

addressed the violations, taken remedial 

steps to address the violations and 

prevent future violations, or that the 

violations are not relevant to the proper 

management of the hazardous secondary 

materials. 

(4) Does the available information 

indicate that the reclamation facility 

and any intermediate facility that is 

used by the hazardous secondary 

material generator have the equipment 

and trained personnel to safely recycle 

the hazardous secondary material? In 

answering this question, the generator 

may rely on a description by the 

reclamation facility or by an 

independent third party of the 

equipment and trained personnel to be 

used to recycle the generator’s 

hazardous secondary material. 

(5) If residuals are generated from the 

reclamation of the excluded hazardous 

secondary materials, does the 

reclamation facility have the permits 

required (if any) to manage the 

residuals? If not, does the reclamation 

facility have a contract with an 

appropriately permitted facility to 

dispose of the residuals? If not, does the 

hazardous secondary material generator 

have credible evidence that the 

residuals will be managed in a manner 

that is protective of human health and 

the environment? In answering these 

questions, the hazardous secondary 

material generator can rely on publicly 

available information from EPA or the 

state, or information provided by the 

facility itself. 

Question (1) focuses on whether the 

reclamation facility receiving hazardous 

secondary materials from a generator 

legitimately recycles such materials. 

EPA believes that any generator 

‘‘regulated under § 260.34 or claiming to 

be excluded from the hazardous waste 

regulations under § 261.2(a)(2)(ii), 

§ 261.4(a)(23), (24), or (25) because they 

are engaged in recycling, must be able 

to demonstrate that the recycling is 

legitimate’’ (40 CFR 260.43). 

Determining whether a recycling 

operation is legitimate is a fundamental 

basis for establishing that a generator’s 

hazardous secondary materials will not 

be discarded after being transferred to a 

reclamation facility. 

Since reclaimers must also be able to 

demonstrate that the recycling is 

legitimate under 40 CFR 260.43, EPA 

believes that generators can work with 

the owner or operator of the reclamation 

facility to verify that they have made a 

determination that the recycling is 

legitimate, which would answer 

question (1) for the purposes of 

satisfying the condition. We would 

expect that a reclaimer would be willing 

and able to adequately explain to the 

hazardous secondary material generator 

how the recycling activity satisfies the 

legitimacy requirements pursuant to 40 

CFR 260.43, such that we would not 

expect that a generator would have to 

examine in detail the legitimacy factors. 

Of course, in order to answer question 

(1), a generator may also rely on its 

existing knowledge of the physical and 

chemical properties of the hazardous 

secondary material. Based on our 

discussions with the generating 

industry, we would expect that a 

hazardous secondary material generator 

that produces and manages a material 

that is more like an ingredient (i.e., a 

hazardous secondary material to be 

recycled) than a waste to be discarded 

would have a good understanding of the 

material’s valuable components and 

useful contribution to a process. Since 

the generator manages the process that 

generates the hazardous secondary 

material, it would be knowledgeable 

about the makeup of the material and 

the value and usefulness of its 

components. 

However, if questions or concerns 

remain regarding the legitimacy of the 

recycling activity, a generator could 

request additional information on how 

the definition of legitimacy is met. (See 

section IX of this rulemaking preamble 

for a discussion of determining 

legitimacy.) 

Question (2) concentrates on whether 

the recycler or intermediate facility (to 


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the extent that the hazardous secondary 

material generator uses an intermediate 

facility) has met the following 

obligations under the exclusion before 

accepting hazardous secondary 

materials: Notification of the 

appropriate regulatory authorities that it 

plans to reclaim (or, in the case of the 

intermediate facility, properly store the 

hazardous secondary material) excluded 

hazardous secondary materials, and 

notification of the appropriate 

regulatory authorities that the facility 

has the necessary financial assurance to 

cover the costs of managing any 

hazardous secondary materials that 

remain if the facility closes. If a facility 

was found to have failed to meet the 

notification requirement and condition 

to have financial assurance, then it also 

would have failed to show a good faith 

effort towards demonstrating that it 

intends to recycle the hazardous 

secondary materials (or, in the case of 

the intermediate facility, properly store 

the hazardous secondary material) and 

not discard them. 

For the purposes of reasonable efforts, 

generators will be able to determine that 

a facility has satisfied both the 

notification requirement and financial 

assurance condition if the reclamation 

or intermediate facility has submitted a 

notification. The notification form will 

include a section indicating the facility 

has satisfied the financial assurance 

condition. Generators may access the 

notification information, including the 

facility’s notification that it has 

financial assurance, through EPA’s 

public Web site at http://www.epa.gov/ 

enviro/html/rcris/ or other successor 

Web sites. 

Question (3) focuses on the 

compliance history of the recycler or the 

intermediate facility (to the extent that 

the hazardous secondary material 

generator uses an intermediate facility). 

Although consideration of compliance 

data is an imperfect tool for determining 

whether a recycler would properly 

manage the hazardous secondary 

materials, we believe that publicly 

available compliance data are a 

reasonable starting point for evaluating 

a facility’s environmental performance. 

Facility-specific enforcement data on 

compliance status, ongoing enforcement 

actions by both EPA and states, and 

specific case information for formal 

enforcement actions are readily 

available on EPA’s public Web site at 

http://www.epa.gov/echo. ‘‘Formal 

enforcement’’ is a written document that 

mandates compliance and/or initiates a 

civil or administrative process, with or 

without appeal rights before a trier of 

fact that results in an enforceable 

agreement or order and an appropriate 

sanction. For EPA, formal enforcement 

action is a referral to the U.S. 

Department of Justice for the 

commencement of a civil action in the 

appropriate U.S. District Court, or the 

filing of an administrative complaint, or 

the issuance of an order, requiring 

compliance and a sanction. For states, 

formal enforcement action is a referral 

to the state’s Attorney General for the 

commencement of a civil or 

administrative action in the appropriate 

forum, or the filing of an administrative 

complaint, or the issuance of an order, 

requiring compliance and a sanction. 

‘‘Significant non-complier’’ is a defined 

term in EPA’s Hazardous Waste Civil 

Enforcement Response Policy and 

means the violators have caused actual 

exposure or a substantial likelihood of 

exposure to hazardous waste or 

hazardous waste constituents; are 

chronic or recalcitrant violators; or 

deviate substantially from the terms of 

a permit, order, agreement, or from the 

RCRA statutory or regulatory 

requirements. In evaluating whether 

there has been actual or likely exposure 

to hazardous waste or hazardous waste 

constituents, EPA and the states 

consider both the environmental and 

human health concerns, including the 

potential exposure of workers to 

hazardous waste or hazardous waste 

constituents. For both terms, see EPA’s 

Hazardous Waste Civil Enforcement 

Response Policy (Dec. 2003) at http:// 

www.epa.gov/compliance/resources/ 

policies/civil/rcra/finalerp1203.pdf. 

We do not believe that evaluating this 

publicly available information, which a 

generator would likely already be 

familiar with based on its own regulated 

activities, is difficult for a generator, nor 

is interpreting the data and deriving 

conclusions about facilities, since the 

database specifically notes whether a 

facility is alleged to be a ‘‘significant 

non-complier’’ (i.e., identified as a 

‘‘SNC’’ or in ‘‘significant noncompliance’’). We also note that since 

many states already provide compliance 

information to EPA and the public 

through the EPA Web site, we do not 

believe that requiring hazardous 

secondary material generators to review 

such information would pose a 

significant new burden for state 

agencies. 

While a facility designated as a 

significant non-complier and the subject 

of a formal enforcement action does not 

mean that the facility would not reclaim 

the hazardous secondary materials 

properly, it does raise questions that we 

believe the hazardous secondary 

material generator should investigate. 

That is, if any formal enforcement 

actions were taken against the facility in 

the previous three years for such noncompliance and the facility was alleged 

to be a significant non-complier, we 

would expect that the reclaimer would 

adequately explain to the hazardous 

secondary material generator how it has 

resolved any issues or how the 

reclamation facility will properly 

manage the hazardous secondary 

materials to avoid future violations and/ 

or enforcement actions. Additionally, if 

the generator obtains reasonable 

information that the enforcement 

matters are unrelated to the facility’s 

commitment to manage the hazardous 

secondary materials properly 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 

generator also may wish to make a 

similar investigation of facilities 

designated as significant non-compliers 

by EPA or a state even if no formal 

enforcement action has been taken. 

Question (4) concentrates on the 

technical capability of the recycler or 

intermediate facility, the most basic 

requirement for ensuring proper and 

legitimate recycling of hazardous 

secondary materials. If a reclamation or 

intermediate facility was found to have 

no equipment or inadequate equipment 

for storing the hazardous secondary 

material or was found to have personnel 

who have not been trained for 

reclaiming the hazardous secondary 

materials, it raises serious questions as 

to whether the facility would properly 

manage such materials and avoid 

discarding them to the environment. 

In public comments on this question, 

which was included in the preamble to 

the proposed rule, commenters pointed 

out that a determination of what specific 

equipment and training would be 

appropriate to safely recycle hazardous 

secondary materials may be beyond the 

expertise of some generators. EPA agrees 

that, as drafted in the proposed rule, 

answering this question may require 

specialized knowledge and expertise. 

Accordingly, EPA is changing this 

question to allow the generator to rely 

on the reclamation facility to explain 

why its equipment and personnel are 

appropriate. Of course, the generator 

must have an objectively reasonable 

belief based on this information that the 

reclamation facility’s equipment and 

trained personnel are adequate for safe 

recycling. Accordingly, if the equipment 

and personnel described by the 

reclamation facility would be, to an 

objective and reasonable person, clearly 

inadequate for safe recycling of the 

generator’s hazardous secondary 

material, then the generator would not 

have met this condition. However, EPA 


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does not require or expect the generator 

to have specialized knowledge or 

expertise of the recycling process. 

Of course, generators of hazardous 

secondary materials also are already 

familiar with equipment and personnel 

needed to manage their hazardous 

secondary materials properly at their 

own site. Therefore, a generator may 

also choose to answer question (4) using 

its existing knowledge of the physical 

and chemical properties of the 

hazardous secondary materials, 

technologies involved with managing 

and recycling such materials, and 

applicable regulations or industry 

standards based on the generator’s 

experience producing and managing 

such materials. 

Generators may also at their 

discretion use relevant third-party 

information sources to answer questions 

about a facility’s equipment and 

personnel, including audit reports; 

information provided by industry or 

waste management associations related 

to the reclamation or intermediate 

facility; documents provided by the 

reclaimer or intermediate facility; and as 

noted in the successful recycling study, 

an evaluation by a qualified engineer. 

Question (5) focuses on another major 

cause of environmental problems from 

recycling hazardous secondary 

materials: The management of residuals. 

This question relates to discard through 

the concept that a generator or reclaimer 

may actually be discarding hazardous 

secondary materials through the release 

of residuals from the recycling process. 

While the product made from recycling 

may be a legitimate product, the whole 

recycling process could be considered a 

discard activity if hazardous 

constituents from the recycled 

hazardous secondary materials are 

released to the environment. Roughly 

one-third of the damage cases 

documented in EPA’s environmental 

problems study 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 hazardous secondary 

material generator understands how a 

reclamation facility will manage any 

residuals generated. 

Many generators of hazardous waste 

already understand and comply with 

the requirements for residuals 

management. Therefore, they may rely 

on their existing knowledge to answer 

question (5) and we do not anticipate 

that answering it will pose a significant 

challenge to them. We also anticipate 

that new generators will use the same 

resources that are publicly available to 

current hazardous secondary material 

generators for determining applicable 

regulatory requirements. In addition, a 

reclamation facility would likely assist 

the generator in understanding any 

requirements applicable to residuals 

management. For example, the 

reclamation facility could identify the 

types of residuals generated by the 

recycling process and explain to the 

generator how they are managed, 

whether any requirements apply, and 

how the requirements are met. 

To answer question (5), a generator 

should determine that the reclamation 

facility has practices in place to ensure 

that residuals are managed in a manner 

that is protective of human health and 

the environment and according to 

applicable federal or state standards. For 

example, residuals may or may not be 

regulated hazardous wastes. If a residual 

is a hazardous waste, generators could 

access information about a facility’s 

permit for managing the material on 

EPA’s public Web site at http:// 

www.epa.gov/enviro/html/rcris (or 

successor Web sites) or through a state 

Web site if such information is made 

publicly available. If a residual is a nonhazardous waste, a generator could 

access permit information from state 

agencies or a state Web site if available. 

A reclamation facility may also send its 

residuals to a waste management 

facility, in which case, a generator could 

ask about contracts with appropriately 

permitted disposal facilities. If a 

reclamation facility does not have 

permits for managing residuals or 

disposal contracts with permitted 

facilities, then the generator should 

determine that a reclamation facility has 

a system in place for managing residuals 

in a manner that is protective of human 

health and the environment. 

Any inquiry into a reclamation 

facility’s system for analyzing options 

for residuals management should 

acknowledge that various options do 

exist and that price fluctuations may be 

a determining factor for selecting an 

option. 

In today’s final rule, EPA is requiring 

that hazardous secondary material 

generators make reasonable efforts every 

three years, at a minimum, in order to 

ensure that the generators adequately 

manage their risk and are attune to 

changes at reclamation and intermediate 

facilities with which they are partners. 

We believe that this schedule reflects an 

average time frame for re-evaluating 

facilities, based on public comments, 

although we acknowledge that shorter 

time frames could be appropriate for 

certain industries, as suggested by some 

commenters. By specifying periodic 

updates for reasonable efforts every 

three years at a minimum, EPA in no 

way intends to limit a generator to 

conducting evaluations only every three 

years. In fact, EPA expects that any 

generator who has concerns about a 

reclamation or intermediate facility, or 

who gains new knowledge of significant 

changes or extraordinary situations at 

such facilities, would conduct 

reasonable efforts regardless of the 

required schedule. For example, if a 

hazardous secondary material generator 

conducted reasonable efforts in the first 

year it took advantage of the exclusion, 

prior to transferring materials to an 

intermediate facility, and then again 

conducted reasonable efforts in the 

second year upon learning about a 

significant change at the intermediate 

facility (such as bankruptcy), the 

hazardous secondary material generator 

would be required to update reasonable 

efforts three years later during the 

generator’s fifth year of taking advantage 

of the exclusion. 

EPA is requiring that generators 

maintain documentation showing that 

they satisfied the reasonable efforts 

condition under 40 CFR 

261.4(a)(24)(v)(B) prior to transferring 

the hazardous secondary materials to 

the intermediate facility or the 

reclamation facility. Such records could 

include copies of audit reports and/or 

other relevant information that was used 

as the basis for affirmatively responding 

to inquiries about a reclamation or 

intermediate facility. Specifying that 

hazardous secondary material 

generators document these questions 

helps EPA and authorized states 

determine whether the generator made 

reasonable efforts to ensure that the 

hazardous secondary materials were not 

discarded. Documenting reasonable 

efforts is also beneficial for generators 

because EPA intends that if a generator 

has met the reasonable efforts condition 

prior to transferring the hazardous 

secondary materials to the reclamation 

or intermediate facility, then the 

reclaimer or intermediate facility, not 

the generator, would be liable under 

RCRA if the materials were discarded 

(see section VIII.E. for more 

information). 

Generators are also required to certify 

for each reclamation and intermediate 

facility that reasonable efforts were 

made to ensure that hazardous 

secondary materials will be properly 

and legitimately recycled, and not 

discarded. This certification should be 

signed and dated by an authorized 

representative of the generating 

company prior to transferring the 

excluded hazardous secondary materials 

to a reclamation or intermediate facility 

under 40 CFR 261.4(a)(24). The 


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certification should also incorporate the 

certification language in 40 CFR 

261.4(a)(24)(v)(C)(2). EPA believes that 

requiring a certification creates a 

necessary level of oversight from an 

authorized representative, who can be 

any appointed company representative, 

and who must affirm that the condition 

is met and that hazardous secondary 

materials will not be discarded. 

Documentation and certification are 

both necessary requirements of the 

reasonable efforts condition. 

Documentation of questions (1)–(5) will 

support a hazardous secondary material 

generator’s assertion that it affirmatively 

answered the questions and is in 

compliance with the regulations. It will 

also facilitate any review by regulatory 

authorities investigating whether the 

conditions of the transfer-based 

exclusion are satisfied and help 

delineate liability under RCRA if the 

materials were discarded. Having an 

authorized representative certify 

reasonable efforts is critical for 

guaranteeing accountability at the 

generator facility for meeting the 

condition and for ensuring that the act 

of making reasonable efforts is in fact 

genuine. The certification is also 

necessary in order to allow for the 

‘‘flexible’’ documentation requirement 

that does not specify a particular format. 

Since individual generators may use any 

form of documentation, we believe it is 

critical for all generators to uniformly 

certify that the condition is satisfied. 

Furthermore, we find both reasonable 

efforts requirements (documentation 

and certification) to be appropriate 

based on our understanding that thirdparty auditors do not generally draw 

any conclusions based on their audits, 

but simply report the results to 

generators. While a generator may use 

any information for making reasonable 

efforts, the certification statement would 

affirm that a generator used information 

that is gathered and documented during 

the reasonable efforts inquiry, similar to 

how generators currently draw 

conclusions based on third-party audit 

documents. 

The requirement for documentation 

and certification of reasonable efforts is 

not unlike existing forms of RCRA 

documentation that incorporate 

certifications, such as the RCRA Site ID 

Form, RCRA financial assurance 

requirements, and the Uniform 

Hazardous Waste Manifest. 

Documentation of reasonable efforts 

and the certification statement must be 

maintained by the generator for a 

minimum of three years and it must be 

made available upon request by a 

regulatory authority within 72 hours, or 

within a longer period of time as 

specified by the regulatory authority. 

Requiring documentation will help EPA 

and authorized states to determine that 

hazardous secondary material 

generators have made reasonable efforts 

to ensure that hazardous secondary 

materials were reclaimed and not 

discarded. We understand that many 

generators may maintain this kind of 

documentation and certification at their 

company headquarters or at another offsite facility; therefore, we are not 

requiring that they be maintained onsite. However, we do believe that 

generators, having satisfied the 

reasonable efforts condition and 

certified reasonable efforts prior to 

transferring the hazardous secondary 

materials, should be able to produce the 

documentation and certification readily. 

Moreover, we understand that since 

generators today conduct business in an 

age of near-instantaneous 

communication, retrieving 

documentation from company 

headquarters or another off-site facility 

should be relatively easy. EPA also 

notes that time frames for producing 

documentation are generally determined 

by regulatory authorities on a case-bycase basis and time frames are clearly 

outlined by authorities within RCRA 

section 3007 information request letters. 

Recordkeeping. In addition to 

documentation and certification of 

reasonable efforts (discussed above in 

section VIII.C.2.), EPA is requiring 

hazardous secondary material 

generators to maintain at the generating 

facility certain records that document 

off-site shipments (i.e., transfers) of 

hazardous secondary materials for a 

period of three years. Specifically, for 

each shipment of hazardous secondary 

material, the generator must maintain 

documentation of when the shipment 

occurred, who the transporter was, the 

name and address of the reclaimer(s) 

and, if applicable, each intermediate 

facility, and the type and quantity of the 

hazardous secondary materials in the 

shipment. This recordkeeping 

requirement may be fulfilled by 

ordinary business records, such as bills 

of lading. 

In addition, hazardous secondary 

material generators are required to 

maintain confirmations of receipt from 

each reclaimer and intermediate facility 

for all off-site shipments of hazardous 

secondary materials in order to verify 

that the hazardous secondary materials 

reached their intended destination and 

were not discarded. These receipts must 

be maintained at the generating facility 

for a period of three years. Specifically, 

the hazardous secondary material 

generator must maintain documentation 

of receipt that includes the name and 

address of the reclaimer or intermediate 

facility, the type and quantity of 

hazardous secondary materials received, 

and the date which the hazardous 

secondary materials were received. The 

Agency is not requiring a specific 

template or format for confirmations of 

receipt and anticipates that routine 

business records (e.g., financial records, 

bills of lading, copies of Department of 

Transportation (DOT) shipping papers, 

electronic confirmations of receipt) 

would contain the appropriate 

information sufficient for meeting this 

requirement. 

We recognize that, in some cases, 

reclamation of a hazardous secondary 

material may involve more than one 

reclamation step. In these cases, the 

recordkeeping conditions for generators 

and reclaimers under the terms of the 

exclusion applies for each reclaimer and 

intermediate facility, regardless of how 

many reclamation steps were involved. 

For example, if a hazardous secondary 

material generator transferred hazardous 

secondary materials to one reclaimer for 

partial reclamation and then arranged 

for the partially-reclaimed material to be 

subsequently transferred to another 

reclaimer for ‘final’ reclamation, the 

generator must maintain confirmations 

of receipt from each reclaimer involved 

in the reclamation process. 

The Agency believes that the 

recordkeeping requirements in today’s 

rule comprise the minimum information 

needed to enable effective oversight to 

ensure the hazardous secondary 

materials were transferred for 

reclamation and were not discarded. 

3. Provisions Applicable to the 

Transportation of Hazardous Secondary 

Materials 

Hazardous secondary materials may 

be stored for up to 10 days at a transfer 

facility and still be considered in transit. 

The 10-day storage standard for defining 

transfer facilities is the same as that 

used for hazardous waste transportation, 

and EPA has revised the definition of 

‘‘transfer facility’’ at 40 CFR 260.10 to 

clarify that such facilities may store 

hazardous secondary materials, as well 

as hazardous waste. However, if the 

facility stores the hazardous secondary 

materials for more than 10 days, then it 

would be considered an intermediate 

facility and subject to the conditions in 

40 CFR 261.4(a)(24)(vi). While at the 

transfer facility, the hazardous 

secondary materials must continue to 

meet all applicable DOT standards. 

Hazardous secondary materials may be 

consolidated for shipping, but cannot be 

intermingled in a way that would 

constitute waste management. 


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4. Provisions Applicable to the 

Reclamation Facility and Any 

Intermediate Facilities 

Recordkeeping. Reclaimers and 

intermediate facilities who operate 

under the transfer-based exclusion must 

maintain certain records, similar to the 

records we are requiring for hazardous 

secondary material generators. 

Specifically, reclaimers and 

intermediate facilities must maintain at 

their facilities for a period of three years 

records of all shipments of hazardous 

secondary materials that were received 

at the facility and, if applicable, of all 

shipments of hazardous secondary 

materials sent off-site from the facility. 

For hazardous secondary materials 

received at the reclamation and 

intermediate facility, such records must 

document the name and address of the 

hazardous secondary material generator, 

the type and quantity of hazardous 

secondary materials received at the 

facility, any intermediate facilities that 

managed the hazardous secondary 

materials, the name of the transporter 

that brought the hazardous secondary 

materials to the facility, and the date 

such materials were received at the 

facility. 

For hazardous secondary materials 

that, after being received by the 

reclaimer or intermediate facility, are 

subsequently transferred off-site for 

further reclamation, reclaimers and 

intermediate facilities must document 

the name and address of the hazardous 

secondary material generator, when the 

shipment occurred, who the transporter 

was, the name and address of the 

(subsequent) reclaimer and, if 

applicable, each (subsequent) 

intermediate facility, and the type and 

quantity of hazardous secondary 

materials in the shipment. This 

recordkeeping requirement may be 

fulfilled by ordinary business records, 

such as bills of lading. 

Reclaimers and intermediate facilities 

must also send confirmations of receipt 

to the hazardous secondary material 

generator for all off-site shipments of 

hazardous secondary materials received 

at the facility in order to verify for the 

hazardous secondary material generator 

that their materials reached the 

intended destination and were not 

discarded. Specifically, the reclaimer (or 

each reclaimer, when more than one 

reclamation step is required) and, if 

applicable, each intermediate facility, 

must send documentation of receipt to 

the hazardous secondary material 

generator that includes the name and 

address of the reclaimer or intermediate 

facility, the type and quantity of the 

hazardous secondary materials received 

and the date which the hazardous 

secondary materials were received. The 

Agency is not requiring a specific 

template or format for confirmations of 

receipt and anticipates that routine 

business records (e.g., financial records, 

bills of lading, copies of DOT shipping 

papers, electronic confirmations of 

receipt) would contain the appropriate 

information sufficient for meeting this 

requirement. 

In addition, reclaimers and 

intermediate facilities must also meet 

the recordkeeping requirements under 

financial assurance discussed below in 

this section. 

Storage of Recyclable Hazardous 

Secondary Materials. In addition to the 

condition that the hazardous secondary 

materials must be contained (40 CFR 

261.4(a)(24)(v)(A)), reclamation facilities 

and intermediate facilities must also 

manage the hazardous secondary 

materials in a manner that is at least as 

protective as that employed for the 

analogous raw material, where there is 

an analogous raw material. An 

‘‘analogous raw material’’ is a material 

for which a hazardous secondary 

material substitutes and which 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, 

hazardous secondary materials with 

high levels of toxic volatile chemicals 

would not be considered analogous to a 

raw material that does not have these 

volatile chemicals or that has only 

minimal levels of volatile chemicals. 

Storage conditions for reclamation 

facilities and intermediate facilities that 

operate under today’s exclusion will 

show that the materials are not 

discarded, but instead are treated as 

commodities which the handler 

considers valuable and would be used 

and not be lost to the environment. The 

great majority of damage cases 

documented in the environmental 

problems study occurred at commercial 

reclamation and intermediate storage 

facilities, and mismanagement of 

hazardous secondary materials was 

found to be a cause of environmental 

problems in 40% of the incidents. 

Accordingly, EPA believes that this 

condition for storage is necessary and 

appropriate for reclamation facilities 

and intermediate facilities that take 

advantage of this exclusion to show that 

storage of these materials is not just 

another way of disposing of them. In 

addition, it will establish an expectation 

for the owner/operators of such facilities 

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. 

Management of recycling residuals. 

Another condition of the transfer-based 

exclusion is that any residuals that are 

generated from the reclamation 

processes must 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 273. 

The purpose of this condition is to 

clarify the regulatory status of these 

waste materials and to emphasize in 

explicit terms that residuals that are 

generated from the reclamation of 

hazardous secondary materials must be 

managed properly so that the 

reclamation operation does not become 

another way of avoiding waste 

management and simply becomes 

another way of discarding unwanted 

material. The study of recent (i.e., postCERCLA and post-RCRA) recyclingrelated 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 the 

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 of on-site with little regard for 

the environmental consequences of such 

mismanagement or possible CERCLA 

liabilities associated with cleanup of 

these releases. By making proper 

management of the recycling residuals a 

condition of the exclusion, EPA ensures 

that the reclamation operation is not just 

another way of discarding hazardous 

constituents. This has the added benefit 

of ensuring that the reclamation 

operation does not pose a significant 

risk to human health and the 

environment. 


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EPA notes that the ‘‘derived from’’ 

rule articulated in 40 CFR 261.3(c)(2) 

does not apply to residuals from the 

reclamation of hazardous secondary 

materials excluded under today’s rule. 

These residuals are a new point of 

generation for the purposes of applying 

the hazardous waste determination 

requirements of 40 CFR 262.11. If the 

residuals exhibit a hazardous 

characteristic, or they themselves are a 

listed hazardous waste, they would be 

considered hazardous wastes (unless 

otherwise exempted) and would have to 

be managed accordingly. If they did not 

exhibit a hazardous characteristic, or 

were not themselves a listed hazardous 

waste, they would need to be managed 

in accordance with applicable state or 

federal requirements for non-hazardous 

wastes. 

Financial Assurance 

For the transfer-based exclusion, EPA 

proposed in its March 2007 

supplemental proposal that reclamation 

facilities comply with the 40 CFR part 

265 subpart H financial assurance 

requirements as a condition of the 

exclusion. As discussed in section V.B 

of this preamble, by obtaining financial 

assurance, the reclamation or 

intermediate facility is making a direct 

demonstration that it will not abandon 

the hazardous secondary materials, it 

will properly decontaminate equipment, 

and it will clean up any unacceptable 

releases, even if events beyond its 

control make its operations 

uneconomical. Moreover, financial 

assurance also addresses the issue of the 

correlation of the financial health of a 

reclamation or intermediate facility with 

the absence of discard. In essence, 

financial assurance will help 

demonstrate that the reclamation or 

intermediate facility owner/operators 

who would operate under the terms of 

this exclusion are financially sound and 

will not discard the hazardous 

secondary materials. 

An implementation issue for the 

financial assurance condition stems 

from the fact that the 40 CFR part 265 

subpart H financial assurance 

requirements directly reference and rely 

on the provisions of the 40 CFR part 265 

subpart G closure requirements. For 

example, in 40 CFR part 265 subpart H, 

a facility owner uses the ‘‘closure plan’’ 

in 40 CFR part 265 subpart G to 

calculate closure cost estimates, which 

then set the amount of financial 

assurance required under subpart H. 

Similarly, the financial assurance 

requirements remain in place until EPA 

has reviewed the closure plan, and the 

facility has closed according to the plan. 

At that point, EPA releases the financial 

assurance instruments. Commenters 

expressed some confusion on this issue 

and requested that EPA clarify that the 

provisions of subpart G which are 

required to implement financial 

assurance be made explicit. 

Thus, in today’s final rule, for the 

convenience of the regulated 

community, EPA has detailed the 

applicable requirements in a separate 

regulation, subpart H of 40 CFR part 

261, using terminology appropriate for 

excluded facilities, that specifically 

identifies the processes by which a 

facility determines the amount of 

financial assurance required and by 

which it secures release of financial 

assurance when it no longer wishes to 

operate under the transfer-based 

exclusion. The financial assurance 

requirements detailed in 40 CFR part 

261 subpart H incorporate those aspects 

of the hazardous waste closure and 

financial assurance regulations as they 

apply to the financial assurance 

condition for excluded hazardous 

secondary material reclamation and 

intermediate facilities. However, since 

these facilities are not regulated 

hazardous waste facilities, new subpart 

H does not include a stand-alone 

closure requirement, although some 

aspects of the closure process (described 

below) are included as being necessary 

for the implementation of the financial 

assurance condition. 

Substantively, these requirements 

generally mirror the interim status 

standards in 40 CFR part 265 for 

hazardous waste treatment, storage and 

disposal facilities (TSDFs), but have 

been tailored for hazardous secondary 

material reclamation and intermediate 

facilities. The provision in the new 

subpart H in 40 CFR part 261 are linked 

to equivalent provisions under 40 CFR 

part 265, which, as we noted in the 

March 2007 supplemental proposal, 

‘‘outline how owners and operators 

should determine cost estimates, 

explain the acceptable mechanisms for 

providing financial assurance, and set 

the minimum amounts of liability 

coverage required’’ (see 72 FR 14196). 

In addition to the closure 

requirements, 40 CFR part 265 subpart 

H includes requirements for postclosure care. Post-closure care (e.g., 

groundwater monitoring, maintenance 

of waste containment systems) only 

applies to land disposal units, where 

hazardous waste remains in the unit or 

other contamination is present after 

Subtitle C closure. However, the 

conditional exclusion being 

promulgated today only applies to 

hazardous secondary materials intended 

for reclamation. In no cases should the 

storage of these materials be designed or 

managed with the intent of leaving these 

hazardous secondary materials in place. 

Unlike the need for closure, which 

could occur at a reclamation or 

intermediate facility which meets all the 

conditions of the exclusion, but then 

becomes subject to forces beyond its 

control (such as a sudden downturn in 

the market for its recycled product), the 

need for post-closure care would only 

apply to a facility that does not meet the 

condition that the hazardous secondary 

materials are contained in the unit. 

Thus, the Agency has determined that 

the issue of post-closure care is most 

appropriately dealt with by enforcement 

of the condition that the hazardous 

secondary materials must be contained. 

If, during the life of the unit, there is a 

significant release that indicates that the 

hazardous secondary materials are 

discarded, and thus are wastes, then 

such waste is subject to the RCRA 

Subtitle C requirements, including the 

post-closure care requirements. See 

discussion of the condition that the 

hazardous secondary materials must be 

‘‘contained’’ found in section VII.C. 

Cost Estimate 

Under subpart H of 40 CFR part 261, 

as it is under subpart H of 40 CFR part 

265 for hazardous waste treatment 

storage and disposal facilities, the first 

step in obtaining financial assurance is 

to develop a detailed written estimate 

on the amount of financial assurance 

required. The cost estimate determines 

the amount of financial assurance that 

will be available to the state or EPA for 

a third party to close a facility if the 

owner or operator fails to do so. The 

requirements for a cost estimate in 40 

CFR 261.142 generally tracks the 

procedures in 265.142 with changes to 

accommodate the absence of a closure 

plan. Because hazardous secondary 

materials that lose the exclusion may 

have to be disposed of as a hazardous 

waste and the facility may have to be 

closed as a hazardous waste facility in 

accordance with the requirements of 40 

CFR part 265, the owner or operator 

must have a detailed written estimate in 

current dollars of performing this work. 

The detailed cost estimate should 

include all necessary information which 

will allow the state or EPA to assess 

whether the assumptions underlying the 

estimate are consistent with what could 

be required to close the facility. For 

example, do the estimates for disposal, 

including transportation charges, reflect 

the distance to available disposal 

facilities? What level of personal 

protective equipment is needed to 

protect workers? Is there sufficient 

sampling of equipment to determine 

that it has been decontaminated? Where 


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there is uncertainty about the scope of 

the work, is there a reasonable 

contingency factor included? While not 

required by this rule for developing a 

cost estimate, some owners or operators 

may find that developing a plan similar 

to the requirements in 40 CFR 265.112 

would be beneficial for assessing the 

potential costs of closing the facility. 

(Note, however, that the cost estimate 

must reflect the costs of closure under 

the Subtitle C hazardous waste 

requirements, and any remaining 

hazardous secondary material must be 

managed as a hazardous waste, and 

therefore the procedures used as the 

basis of the cost estimate may differ 

from the actual procedures a compliant 

facility will carry out when it completes 

operations and exits from the 

exclusion.) The owner or operator can 

be required to provide the 

documentation of the cost estimate 

upon request. 

The cost estimating requirements in 

40 CFR 265.142 and 40 CFR 261.142 are 

designed so that if a state or EPA must 

close a facility because of an owner or 

operator’s failure, there will be adequate 

funds to do so. The requirements for the 

cost estimate are therefore based upon 

the point when the extent and manner 

of the facility’s operation would make 

these activities the most expensive. 

The cost estimate must, at minimum, 

be based on the costs of hiring a third 

party or parties to conduct these 

activities. The cost estimate may not 

include any salvage value for the 

hazardous secondary materials as 

hazardous waste or non-hazardous 

waste and the owner or operator may 

not incorporate a zero cost for such 

materials that might have economic 

value. 

The financial assurance provisions are 

intended, in part, to demonstrate that 

the owner and operator is not discarding 

the hazardous secondary materials. As 

noted earlier, 69 of the 208 incidents of 

environmental damage identified in 

EPA’s environmental problems study 

involve abandonment of the hazardous 

secondary materials as the primary 

cause of damage. These cost estimate 

provisions, found in 40 CFR 261.142(a) 

are equivalent to those required to 

estimate financial assurance under 40 

CFR 265.142(a). 

In addition, the financial assurance 

cost estimate must be revised and 

additional financial assurance must be 

obtained to adjust annually for inflation 

or in the event that changes in the 

reclaimer’s or intermediate facility’s 

operations or unexpected events result 

in an increase in the cost of managing 

any hazardous secondary materials that 

are not reclaimed and the cost of 

removing or decontaminating all 

hazardous residues. These cost estimate 

provisions, found in 40 CFR 261.142(b) 

and 40 CFR 261.142(c) are equivalent to 

those required under 40 CFR 265.142(b) 

and 40 CFR 265.142(c), and incorporates 

language from 40 CFR 265.112(c)(2) 

requiring the owner or operator to 

amend the estimates at least 60 days 

prior to a planned change in facility 

design or operation or no later than 60 

days after an unexpected event has 

occurred that affects cost estimates. The 

financial assurance cost estimate must 

be documented and this documentation 

maintained at the facility. This 

information must be furnished upon 

request, and made available at all 

reasonable times for inspection. The 

requirement in 40 CFR 261.142(d) to 

maintain documentation at the facility 

is from the requirement in 40 CFR 

265.142(d) and 40 CFR 265.73(b)(7), and 

the responsibility to make it available 

upon request, which will allow Agency 

representatives to review the cost 

estimate, is from 40 CFR 265.74(a) 

which covers information required in 40 

CFR 265.73. 

Interaction of the Cost Estimate and the 

Financial Assurance Instruments 

As with the interim status regulations 

in 40 CFR part 265 subpart H, the 

interaction of the cost estimating 

requirements in 40 CFR 261.142 and the 

instrument requirements in 40 CFR 

261.143 result in adjustments in the 

amount of financial assurance as facility 

operations change. If changes in the 

reclaimer’s or intermediate facility’s 

operations result in a reduction in the 

cost estimate, the owner or operator may 

submit a new cost estimate. If the new 

cost estimate is less than the amount of 

financial assurance provided, the 

amount of the financial assurance 

instrument may be reduced to the 

amount of the new cost estimate 

following written approval by the 

Regional Administrator (see, for 

example, 40 CFR 261.143(b)(7)). For 

example, a facility with three units 

managing hazardous secondary 

materials that use a single surety bond 

could close one unit according to the 

plan in 40 CFR 261.143(h). With a new 

cost estimate submitted by the facility 

that reflects the lower costs for the two 

remaining units, the Regional 

Administrator can approve a reduction 

in the value of the surety bond. On the 

other hand, a change in the facility’s 

operating plan or design that increases 

the cost of closing necessitates a new 

cost estimate (40 CFR 261.142(c)) and an 

increase in the amount of financial 

assurance (see, for example, 40 CFR 

261.143(b)(7)). 

Establishment of the Instrument, Plan 

for Removal of All Hazardous 

Secondary Material Residues, and 

Release From Financial Assurance 

Under 40 CFR 261.4(a)(24)(vi)(F), an 

owner or operator of a reclamation or 

intermediate facility must establish 

financial assurance as a condition of the 

exclusions under 40 CFR 261.4(a)(24) 

and 261.4(a)(25). The same general 

types of instruments that are available 

for interim status facilities under 40 

CFR part 265 subpart H are also 

available to owners or operators of 

reclamation or intermediate facilities. 

Owners or operators may use trust 

funds, payment surety bonds, letters of 

credit, insurance, or a financial test and 

corporate guarantee to demonstrate 

financial assurance. 

The regulations governing the 

financial assurance instruments that an 

owner or operator must provide to 

qualify for the exclusions have been 

modified to reflect that they apply to 

hazardous secondary materials and not 

hazardous wastes. The financial 

assurance instruments for the trust fund, 

surety bond, letter of credit, and 

corporate guarantee have been revised 

so that EPA can direct the financial 

assurance funds at the point the 

hazardous secondary material 

reclamation or intermediate facility no 

longer meets the exclusion and, 

therefore, is managing a hazardous 

waste. As long as a facility is operating 

under the transfer-based exclusion so 

that the hazardous secondary material is 

not being discarded, there would be no 

need to invoke the financial assurance 

instruments. 

The regulations allow the same 

flexibility as in 40 CFR part 265 subpart 

H for using a combination of trust funds, 

surety bonds, letters of credit and 

insurance at a single facility (see 40 CFR 

261.143(f)), and allow the use of a single 

mechanism for multiple facilities (see 

40 CFR 261.143(g)). 

The provisions for releasing the 

reclamation or intermediate facility 

from the financial assurance 

requirements, found in 40 CFR 

261.143(h), are functionally equivalent 

to those under 40 CFR 265.143(h). 

‘‘Within 60 days after receiving 

certifications from the owner or operator 

and a qualified Professional Engineer 

that all hazardous secondary materials 

have been removed from the unit and 

the unit has been decontaminated in 

accordance with the approved plan per 

paragraph (i), the Regional 

Administrator will notify the owner or 

operator in writing that he is no longer 

required under § 261.4(a)(24)(vi)(F) to 

maintain financial assurance for that 


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unit, unless the Regional Administrator 

has reason to believe that that all 

hazardous secondary materials have not 

been removed from the unit or that the 

unit has not been decontaminated in 

accordance with the approved plan.’’ 

Under 40 CFR part 265 subpart H, the 

provisions for releasing financial 

assurance rely on receiving a 

certification that the unit was closed per 

the approved closure plan in 40 CFR 

265.112. However, as noted earlier, 

under today’s exclusion, units managing 

hazardous secondary materials are not 

subject to closure. Thus, the provision 

for releasing financial assurance for 

these units adapts language from the 

closure plan requirement found in 40 

CFR 265.112 and from the certification 

requirement found in 40 CFR 265.115. 

Instead of a hazardous waste ‘‘closure 

plan,’’ the 40 CFR 261.143(i) provisions 

for releasing financial assurance require 

submission of a plan for removing 

hazardous secondary materials and 

decontaminating the unit at least 180 

days prior to the date that owner or 

operator expects to cease operating 

under the exclusion. The contents of the 

plan are detailed in 40 CFR 261.153(i)(2) 

and have been tailored to reflect the fact 

that, although the hazardous secondary 

material management units are not 

subject to closure, when reclamation 

operations or storage operations (in the 

case of an intermediate facility) ceases, 

the hazardous secondary materials must 

be removed or the unit would become 

subject to the Subtitle C hazardous 

waste requirements (see section VIII.D). 

Briefly, the plan must include, at least, 

(a) a description of how all excluded 

hazardous secondary materials will be 

reclaimed or sent for reclamation and 

how all residues, contaminated 

containment systems (liners, etc), 

contaminated soils, subsoils, structures, 

and equipment will be removed or 

decontaminated as necessary to protect 

human health and the environment (for 

guidance, see the March 16, 1998, 

memorandum entitled ‘‘Risk-Based 

Clean Closure,’’ from Elizabeth 

Cotsworth, Acting Director, Office of 

Solid Waste, to RCRA Senior Policy 

Advisors. Available at http:// 

www.epa.gov/correctiveaction/resource/ 

guidance/risk/cclosfnl.pdf; (b) a 

description of the steps necessary to 

remove or decontaminate all hazardous 

secondary material residues and 

contaminated containment system 

components, equipment, structures, and 

soils including, but not limited to, 

procedures for cleaning equipment and 

removing contaminated soils, methods 

for sampling and testing surrounding 

soils, and criteria for determining the 

extent of decontamination necessary to 

protect human health and the 

environment; (c) a description of any 

other activities necessary to protect 

human health and the environment 

during this time frame, including, but 

not limited to, leachate collection, runon and run-off control, etc.; and (d) a 

schedule for conducting the activities. 

This plan, which is essentially the 

subset of information required in a 40 

CFR part 265 closure plan that would 

apply to excluded hazardous secondary 

material units, would still need to be 

reviewed by the Regional Administrator 

(or State Director, in authorized states) 

because that would ensure that EPA 

would agree that the hazardous 

secondary materials, or equipment 

contaminated with hazardous secondary 

materials, will not remain unregulated 

at the facility after it is no longer 

operating under an exclusion and no 

longer maintains financial assurance. As 

with the financial assurance release 

provision of 40 CFR part 264, the 

Regional Administrator will provide 

notice to the owner or operator and the 

public and an opportunity to submit 

written comments on the plan and 

request modifications to the plan. The 

Regional Administrator will approve, 

modify, or disapprove the plan within 

90 days of its receipt. 

Once residuals (and any hazardous 

secondary materials) have been removed 

and the unit has been decontaminated 

according to the plan, the facility would 

send a certification to that effect from 

the owner or operator and a qualified 

Professional Engineer to the regulatory 

agency, and that agency would then 

authorize the release of the financial 

assurance for those specific units, 

unless there is reason to believe that the 

hazardous secondary materials and 

residues were not removed (in which 

case the regulatory authority would 

send a written explanation of this fact). 

Again, this process is similar to that 

required under 40 CFR 265.115, as 

referenced in 40 CFR part 265 subpart 

H. 

Operation of the Instruments if the 

Exclusion Is No Longer Applicable 

As noted above, as long as a facility 

is operating under the transfer-based 

exclusion and the hazardous secondary 

material is not being discarded, there 

would be no need to invoke the 

financial assurance instruments. 

However, if the exclusion is no longer 

applicable, then the hazardous 

secondary material is a hazardous waste 

subject to the Subtitle C requirements 

and the Regional Administrator can 

invoke the instruments consistent with 

RCRA 3004(t) and related laws. 

Similarly, as in 40 CFR part 265, if an 

owner or operator fails to obtain an 

approved replacement instrument 

within 90 days after a notice of 

cancellation from a surety, issuer of a 

letter of credit, insurer, or guarantor, the 

Regional Administrator can invoke the 

instrument. The following descriptions 

of the instruments contain additional 

information on how the instruments 

operate under this rule. 

Trust Funds 

If facilities choose to use a trust fund, 

they must fully fund the trust before 

they can rely on it for financial 

assurance. This is consistent with the 

proposal, which was based on the payin provisions under 40 CFR part 265. In 

part 265, the pay-in period for trust 

funds is limited to the remaining 

operating life of a facility or 20 years 

from the effective date of the 40 CFR 

part 265 regulations, which became 

effective in 1982. Thus, under the 

exclusion, the pay-in period, which 

would allow a trust to build over time, 

is not available. This means that 

facilities that are not financially strong 

enough to qualify for the financial test 

and that cannot obtain a guarantee, such 

as a surety bond or a letter of credit from 

a third party (potentially because the 

surety or bank is not confident that it 

will be repaid if the instrument is called 

upon) will need to fully fund the trust 

before qualifying for the exclusion. 

While the hazardous secondary 

materials retain the exclusion, EPA has 

no access to these funds. The trustee 

must meet the qualifications in 40 CFR 

261.143(a)(1) and the wording of the 

trust agreement must be identical to the 

wording specified in § 261.151(a)(1). 

The trust agreement must include a 

Schedule A that lists each facility, 

including the units with hazardous 

secondary materials, and the amounts of 

the current cost estimates, or portions 

thereof, for which financial assurance is 

demonstrated by the trust. Schedule A 

of the trust agreement must be updated 

within 60 days after a change in the 

amount of the current cost estimate 

covered by the agreement. 

Whenever the current cost estimate 

changes, the owner or operator must 

compare the new estimate with the 

trustee’s most recent annual valuation of 

the trust fund. If the value of the fund 

is less than the amount of the new cost 

estimate, the owner or operator, within 

60 days after the change in the cost 

estimate, must either (1) deposit an 

amount into the trust fund so that its 

value after this deposit at least equals 

the amount of the current cost estimate, 

or (2) obtain other financial assurance, 


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such as a letter of credit, to cover the 

difference. 

There are also circumstances when 

the owner or operator may request a 

release of funds from the trust fund. If 

the value of the trust fund is greater 

than the total amount of the current cost 

estimate, the owner or operator may 

submit a written request to the Regional 

Administrator for release of the amount 

in excess of the current cost estimate. 

This could occur as a result of the 

closing of a unit at the facility and the 

submission of a revised cost estimate. 

Alternatively, the earning of the trust 

fund could exceed the increase in the 

cost estimate due to inflation. Further, 

if an owner or operator substitutes other 

financial assurance as specified in the 

regulations for all or part of the trust 

fund, he may submit a written request 

to the Regional Administrator for release 

of the amount in excess of the current 

cost estimate covered by the trust fund. 

Within 60 days after receiving a 

request from the owner or operator for 

release of funds, the Regional 

Administrator will instruct the trustee 

to release to the owner or operator such 

funds that exceed the amount of the 

current cost estimate, as the Regional 

Administrator deems appropriate and 

specifies in writing. Alternatively, in the 

event that the owner or operator begins 

final closure of the unit under subpart 

G of 40 CFR part 264 or 265, an owner 

or operator may request reimbursements 

for partial or final closure expenditures 

by submitting itemized bills to the 

Regional Administrator. 

The Regional Administrator will agree 

to termination of the trust fund when 

the owner or operator substitutes 

alternate financial assurance, such as 

receiving approval for an insurance 

policy to replace the trust, or if the 

owner or operator demonstrates that he 

meets the requirements of the financial 

test. It should be noted that both surety 

bonds and letters of credit require a 

standby trust, as discussed below. The 

Regional Administrator will also agree 

to the termination of the trust fund 

when he releases the owner or operator 

from the requirements of this section in 

accordance with 40 CFR 261.143(i). 

The preceding discussion explained 

the operation of the regulations during 

the exclusion. The regulations also 

address the situation where the 

hazardous secondary materials lose 

their exclusion. The requirements in 40 

CFR 261.151(a) for the trust fund 

provide that if the hazardous secondary 

materials lose their exclusion, EPA 

becomes the beneficiary of the trust, 

consistent with RCRA section 3004(t) 

and federal law. The trust fund also 

receives the proceeds of a payment 

surety bond or letter of credit if the 

hazardous secondary materials lose the 

exclusion. The trustee shall make 

payments from the Fund as the EPA 

shall order or direct, in writing, to 

provide for the payment of the costs of 

the performance of closure activities 

required under subpart G of 40 CFR 

parts 264 or 265 for the facilities 

covered by the trust agreement. This 

provision allows funds from the trust to 

be used to close facilities as hazardous 

waste facilities. 

An owner or operator whose 

hazardous secondary materials have lost 

their exclusion, but subsequently meets 

the requirements for the exclusion, 

including establishing financial 

assurance in accordance with the 

provisions of 40 CFR 261.143, may 

request a reduction in the amount of the 

trust fund and the Regional 

Administrator may instruct the trustee 

to return funds to the owner or operator 

under Section 4 of the trust agreement 

in 40 CFR 261.151(a). For example, 

hazardous secondary materials could 

lose their exclusion and the Regional 

Administrator could draw upon a letter 

of credit being used to establish 

financial assurance and have it 

deposited into the trust fund. If the 

hazardous secondary materials regained 

their exclusion and the owner or 

operator substituted a new approved 

letter of credit, the Regional 

Administrator may direct the trustee to 

refund funds to the owner or operator. 

Surety Bonds 

The surety bond operates similarly to 

the payment surety bond in 40 CFR part 

265, with some modifications to reflect 

the differences between a conditionally 

exempt hazardous secondary material 

and a hazardous waste. The surety bond 

must conform to the requirements of 40 

CFR 261.143(b) and the owner or 

operator must submit the bond to the 

Regional Administrator. The surety 

company issuing the bond must, at a 

minimum, be among those listed as 

acceptable sureties on federal bonds in 

Circular 570 of the U.S. Department of 

the Treasury. The wording of the surety 

bond must be identical to the wording 

specified in 40 CFR 261.151(b). 

The owner or operator who uses a 

surety bond must also establish a 

standby trust fund and submit an 

originally signed duplicate of the trust 

agreement with the surety bond. Under 

the terms of the bond, all payments 

made thereunder will be deposited by 

the surety directly into the standby trust 

fund in accordance with instructions 

from the Regional Administrator. This 

standby trust fund must meet the 

requirements specified in § 261.143(a), 

except that until the standby trust fund 

is funded pursuant to the requirements 

of this section, the following are not 

required by these regulations: 

(A) Payments into the trust fund as 

specified in § 261.143(a); 

(B) Updating of Schedule A of the 

trust agreement (see § 261.151(a)) to 

show current cost estimates; 

(C) Annual valuations as required by 

the trust agreement; and 

(D) Notices of nonpayment as 

required by the trust agreement. 

The penal sum of the bond must be 

in an amount at least equal to the 

current cost estimate, except as 

provided in 40 CFR 261.143(f). The 

regulations at 40 CFR 261.143(f) allow 

the use of certain combinations of 

instruments so long as their sum is at 

least equal to the total cost estimates. 

Whenever the current cost estimate 

increases to an amount greater than the 

penal sum, the owner or operator, 

within 60 days after the increase, must 

either cause the penal sum to be 

increased to an amount at least equal to 

the current cost estimate and submit 

evidence of such increase to the 

Regional Administrator or obtain other 

financial assurance as specified in the 

regulations in 40 CFR 261.143 to cover 

the increase. Whenever the current cost 

estimate decreases, the penal sum may 

be reduced to the amount of the current 

cost estimate following written approval 

by the Regional Administrator. So long 

as the owner or operator meets the 

exclusion, the Regional Administrator 

will not access the bond. 

The Regional Administrator will agree 

to termination of the surety bond when 

the owner or operator substitutes 

alternate financial assurance, such as an 

approved insurance policy to replace 

the surety bond, or if the owner or 

operator demonstrates that he meets the 

requirements of the financial test. The 

Regional Administrator will also agree 

to the termination of the surety bond 

when he releases the owner or operator 

from the requirements of this section in 

accordance with 40 CFR 261.143(i). 

Under 40 CFR 261.151(b), the Principal 

may terminate this bond by sending 

written notice to the Surety(ies), 

provided, however, that no such notice 

shall become effective until the 

Surety(ies) receive(s) written 

authorization for termination of the 

bond by the EPA Regional 

Administrator(s) of the EPA Region(s) in 

which the bonded facility(ies) is (are) 

located. 

Under 40 CFR part 261, the surety 

becomes liable for funding the trust if 

the owner or operator has failed to fund 

the trust before the loss of the exclusion. 

The cancellation provisions for the 


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surety bond in 40 CFR part 261 operate 

similarly to the provisions in 40 CFR 

part 265. If the surety has issued a 

notice of cancellation, and the owner or 

operator has not funded the trust or 

obtained approval by the Regional 

Administrator of a replacement 

instrument within 90 days, the surety 

becomes liable for payment into the 

trust fund. Under the hazardous waste 

rules, if the surety issues a notice of 

cancellation and the owner or operator 

does not fund the trust or obtain 

approved alternative financial assurance 

within 90 days, the Regional 

Administrator may access the funds. 

Reclamation and intermediate 

facilities, as under 40 CFR part 265, may 

not use a performance surety bond 

because there is no closure plan that has 

undergone review under the permitting 

process. The performance surety bond, 

which is allowed under the permitting 

standards in 40 CFR part 264 subpart H, 

requires the surety, in the event of a 

failure by the owner or operator to 

comply with the requirements of the 

closure requirements of 40 CFR part 

264, to perform closure in accordance 

with the closure plan and permitting 

requirements or to deposit the penal 

sum of the bond into the standby trust. 

Closure plans for permitted facilities 

undergo detailed review as part of the 

permitting process, so it is appropriate 

to allow a surety to perform closure in 

this circumstance. However, like 

interim status facilities, reclamation and 

intermediate facilities do not have 

closure plans that undergo this type of 

review. ‘‘During interim status, the 

closure and post-closure plans for a 

facility are generally not reviewed by 

the Regional Administrator until shortly 

before the time of closure. Upon such 

review, the Regional Administrator may 

find that major changes are needed in 

the plans. The Agency believes a 

performance bond is not appropriate 

when the actual required performance 

for the particular facility may not be 

specified in any detail during most of 

the term of the bond’’ (47 FR 15040). 

Letters of Credit 

The letter of credit requirements 

generally operate similarly to the 

requirements in 40 CFR part 265, except 

that they reflect the status of 

conditionally exempt hazardous 

secondary materials. An owner or 

operator may satisfy the requirements of 

40 CFR 261.143 by obtaining an 

irrevocable standby letter of credit 

which conforms to the requirements of 

40 CFR 261.143(c) and submitting the 

letter to the Regional Administrator. The 

issuing institution must be an entity 

which has the authority to issue letters 

of credit and whose letter-of-credit 

operations are regulated and examined 

by a federal or state agency. 

The wording of the letter of credit 

must be identical to the wording 

specified in § 261.151(c). As with the 

surety bond, an owner or operator who 

uses a letter of credit must also establish 

a standby trust fund and submit to the 

Regional Administrator an originally 

signed duplicate of the trust agreement 

with the letter of credit. Under the terms 

of the letter of credit, all amounts paid 

pursuant to a draft by the Regional 

Administrator will be deposited by the 

issuing institution directly into the 

standby trust fund in accordance with 

instructions from the Regional 

Administrator. This standby trust fund 

must meet the requirements specified in 

§ 261.143(a), except that until the 

standby trust fund is funded pursuant to 

the requirements of this section, the 

requirements, as noted above, that are 

not necessary for a surety bond are also 

not required for a letter of credit. 

The letter of credit must be issued in 

an amount at least equal to the current 

cost estimate, except as provided in 40 

CFR 261.143(f). The regulations in 40 

CFR 261.143(f) allow the use of certain 

combinations of instruments so long as 

their sum is at least equal to the total 

cost estimates. 

Whenever the current cost estimate 

increases to an amount greater than the 

amount of the letter of credit, the owner 

or operator, within 60 days after the 

increase, must either cause the amount 

of the letter of credit to be increased so 

that it at least equals the current cost 

estimate and submit evidence of such 

increase to the Regional Administrator 

or obtain other financial assurance as 

specified in the regulations in 40 CFR 

261.143 to cover the increase. Whenever 

the current cost estimate decreases, the 

amount of the letter of credit may be 

reduced to the amount of the current 

cost estimate following written approval 

by the Regional Administrator. 

The Regional Administrator will 

return the letter of credit to the issuing 

institution for termination when an 

owner or operator substitutes alternate 

financial assurance as specified in 40 

CFR 261.143, or when the Regional 

Administrator releases the owner or 

operator from the requirements of this 

section in accordance with § 261.143(i). 

So long as the owner or operator 

meets the exclusion and maintains 

financial assurance, the Regional 

Administrator will not access the letter 

of credit. Access to the letter of credit 

only occurs upon the loss of the 

exclusion. For the letter of credit, in the 

event that the hazardous secondary 

materials at the covered reclamation or 

intermediate facilities no longer meet 

the conditions of the exclusion, EPA 

may draw upon the letter of credit. If the 

owner or operator does not establish 

alternate financial assurance and obtain 

written approval of such alternate 

assurance from the Regional 

Administrator within 90 days after a 

notice from the issuing institution that 

it has decided not to extend the letter of 

credit beyond the current expiration 

date, the Regional Administrator will 

draw on the letter of credit. When the 

Regional Administrator draws on the 

letter of credit, the proceeds are 

deposited into the standby trust fund, 

and the funds in the trust become 

available for the payment of the costs of 

closure in compliance with subpart G of 

40 CFR parts 264 or 265. 

Insurance 

Insurance operates similarly to the 

insurance instrument in 40 CFR part 

265, with some modifications to reflect 

differences between conditionally 

exempt hazardous secondary materials 

and hazardous wastes. An owner or 

operator may satisfy the requirements of 

40 CFR 261.143 by obtaining insurance 

that conforms to the requirements of 40 

CFR 261.143(d) and submitting a 

certificate of such insurance to the 

Regional Administrator At a minimum, 

the insurer must be licensed to transact 

the business of insurance or be eligible 

to provide insurance as an excess or 

surplus lines insurer, in one or more 

states. 

The wording of the certificate of 

insurance must be identical to the 

wording specified in § 261.151(d). As 

part of the certificate, the insurer 

warrants that the policy conforms in all 

respects with the requirements of 40 

CFR 261.143(d), as applicable, and 

agrees that any provision of the policy 

inconsistent with 40 CFR 261.143(d) is 

hereby amended to eliminate such 

inconsistency. The insurer also agrees to 

furnish to the EPA Regional 

Administrator(s) a duplicate original of 

the policy listed above, including all its 

endorsements, whenever requested by 

the Regional Administrator. 

The insurance policy must be issued 

for a face amount at least equal to the 

current cost estimate, except as 

provided in § 261.143(f), which allows 

the use of certain combinations of 

instruments so long as their sum is at 

least equal to the total cost estimates. 

Whenever the current cost estimate 

increases to an amount greater than the 

face amount of the policy, the owner or 

operator, within 60 days after the 

increase, must either cause the face 

amount to be increased to an amount at 

least equal to the current cost estimate 


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4For current EPA guidance for companies using 

the financial test in 40 CFR part 264 or 265, please 

see the February 27, 1997 Memorandum from 

Elizabeth Cotsworth to Senior RCRA Policy 

Advisors entitled ‘‘Obsolete Language in the 

Financial Test for Subtitle C Treatment Storage and 

Disposal Facilities,’’ at http://yosemite.epa.gov/osw/ 

rcra.nsf/ea6e50dc6214725285256bf00063269d/ 

C68C99D730932BE28525670F006C2B4A/$file/ 

14066.pdf. 

and submit evidence of such increase to 

the Regional Administrator or obtain 

other financial assurance as specified in 

40 CFR 261.143 to cover the increase. 

Whenever the current cost estimate 

decreases, the face amount may be 

reduced to the amount of the current 

cost estimate following written approval 

by the Regional Administrator. 

In 40 CFR 261.143(d)(4), the 

insurance policy must guarantee that 

funds will be available to pay the cost 

of removal of all hazardous secondary 

materials from the unit, to pay the cost 

of decontamination of the unit, and to 

pay the costs of the performance of any 

activities required under subpart G of 40 

CFR parts 264 or 265 for the facilities 

covered by this policy, if they become 

necessary. This provision, as that in 40 

CFR part 265, allows the owner or 

operator to recover the costs of 

removing hazardous secondary 

materials and is similar to the 

provisions in § 265.143(d) that allow the 

owner or operator of a facility to be 

reimbursed for the costs of closure. This 

provision also allows the Regional 

Administrator to allow reimbursement 

for the same activities that are allowed 

under the trust fund. The insurance 

provisions that allow for reimbursement 

for the cost of removal of hazardous 

secondary materials are broader than the 

provisions in 40 CFR 261.151(a) for 

payment from the trust fund. This 

difference is due to the fact that the 

monies in the trust fund are returned to 

the owner or operator once the facility 

exits the exclusion, but there is no such 

provision for insurance; in order to 

make the insurance provisions 

functionally equivalent to their 

counterparts in 40 CFR part 265, the 

insurance provisions must cover the 

cost of removing the hazardous 

secondary materials when the unit exits 

the exclusion. However, the owner or 

operator may request reimbursements 

only if the remaining value of the policy 

is sufficient to cover the maximum costs 

for the facility. 

The Regional Administrator will give 

written consent to the owner or operator 

that he may terminate the insurance 

policy when the owner or operator 

substitutes alternate financial assurance 

as specified in § 261.143, or the 

Regional Administrator releases the 

owner or operator from the 

requirements of this section in 

accordance with § 261.143(i). 

Under 40 CFR 261.143(d)(8), 

cancellation, termination, or failure to 

renew may not occur and the policy will 

remain in full force and effect in the 

event that on or before the date of 

expiration, the conditional exclusion 

terminates or is revoked. This is 

analogous to the provisions for surety 

bonds and letters of credit that ensure 

that payments under those instruments 

will occur if the conditionally excluded 

hazardous secondary materials lose the 

exclusion. 

Under the insurance provisions of 

§ 265.143, failure of the owner or 

operator to pay the premiums of a 

policy without the substitution of an 

alternative mechanism constitutes a 

significant violation of the regulations. 

EPA was faced with a decision of how 

to implement that provision here. Since 

the exclusion relies upon compliance 

with the conditions, failure to pay the 

premium is significant and may result 

in loss of the exclusion. Similarly, loss 

of the exclusion will preclude the 

cancellation or termination of the 

policy. Under the circumstances, EPA 

recognizes that insurers may carefully 

screen applicants to ensure that they 

will meet the requirements of the 

exclusion and establish premiums, 

possibly with a substantial portion up 

front or collateralized, that reduce the 

insurer’s risk of non-payment. 

In 40 CFR 265.143(d)(1), there is a 

provision allowing an owner or operator 

of a treatment, storage, and disposal 

facility an additional 90 days from the 

effective date of the regulations to 

provide a certificate of insurance. The 

effective date of the interim status 

regulations was in 1982, and therefore 

this provision is no longer applicable 

and today’s rule does not allow this 

additional 90 days. In keeping with the 

proposal to use requirements in subpart 

H of 40 CFR part 265, the additional 90- 

day period has been deleted from these 

regulations. 

Financial Test 

EPA had solicited comment on 

whether to use the financial assurance 

provisions in the standardized permit 

rule rather than those in 40 CFR part 

265, but commenters generally did not 

support the standardized permit rule 

alternative. Therefore, certain 

provisions that are available under the 

standardized permit rule will not be 

available to reclamation and 

intermediate facilities, with one 

exception. The financial test provision 

referenced by subpart H of 40 part CFR 

265 includes an obsolete requirement 

that the Certified Public Accountant’s 

report state that ‘‘[i]n connection with 

that procedure, no matters came to his 

attention which caused him to believe 

that the specified data should be 

adjusted.’’ This is referred to by the 

auditing profession as a ‘‘negative 

assurance.’’ However, the American 

Institute of Certified Public 

Accountants, Inc.’s (AICPA’s) Statement 

on Auditing Standards no longer 

permits independent auditors to express 

negative assurance. Thus, to ensure that 

today’s final rule conforms with current 

professional auditing standards, EPA is 

using the language from the 

standardized permit rule for this aspect 

of the financial test.4

As noted in the March 2007 

supplemental proposal, the Agency 

currently has underway a review of the 

subpart H financial assurance 

regulations, which will address this 

issue among others in the broader 

context of 40 CFR parts 264 and 265. As 

part of any rulemaking that addresses 

the results of that review, EPA will 

include any necessary changes to the 

financial assurance condition being 

finalized today. 

In today’s regulation, the letter from 

the chief financial officer (see 

§ 261.151(e) or (f)) contains a 

requirement to account for obligations 

assured through a financial test or 

corporate guarantee for facilities 

handling conditionally excluded 

hazardous secondary materials. This 

addition is necessary because the chief 

financial officer’s letter required in the 

40 CFR part 265 regulations does not 

anticipate these obligations. 

The financial test and the letter from 

the chief financial officer use 

accounting terms, such as current assets, 

current liabilities, and liabilities. Under 

40 CFR 261.141, which defines the 

terms used in this subpart, these and 

other accounting terms follow their 

definition in 40 CFR 265.141(f). As 

noted in 40 CFR 265.141(f), ‘‘The 

definitions are intended to assist in the 

understanding of these regulations and 

are not intended to limit the meanings 

of terms in a way that conflicts with 

generally accepted accounting 

practices.’’ This is an important 

provision of the financial assurance 

regulations because it allows the terms 

used in the test to reflect evolving 

definitions. For example, if the 

accounting standards covering retiree 

obligations change, this provision 

ensures that the accounting in the 

financial test submission to EPA reflects 

the new standards. Companies may not 

use an obsolete definition of these 

terms. 

Like the 40 CFR part 265 regulations, 

this regulation includes a provision 


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5Hazardous secondary material generators may 

choose, in the notice of export, to designate 

alternate reclaimers or alternate intermediate 

facilities to which the hazardous secondary 

materials may be exported in the event that delivery 

to the primary reclaimer or intermediate facility 

cannot take place. Hazardous secondary material 

generators, of course, must comply with all 

conditions (e.g., reasonable efforts) for each 

alternate reclaimer and alternate intermediate 

facility as with a primary reclaimer and 

intermediate facility. 

6The Office of Enforcement and Compliance 

Assurance (OECA) is the office within EPA that 

implements the notice and consent process for 

exports. 

allowing an owner or operator to obtain 

a corporate guarantee as a method of 

complying with the financial assurance 

requirements. The provisions governing 

who may extend a guarantee are the 

same as those in 40 CFR part 265. Since 

there is no requirement for an up-front 

closure plan, the text of the guarantee in 

40 CFR part 261 differs somewhat from 

the language in 40 CFR part 265. In 

§ 261.151(g)(1), the guarantor 

‘‘guarantees that in the event of a 

determination by the Regional 

Administrator that the hazardous 

secondary materials at the owner or 

operator’s facility covered by this 

guarantee do not meet the conditions of 

the exclusion under § 261.4(a)(24), the 

guarantor will manage any hazardous 

secondary material in accordance with 

applicable regulations and close the 

facility in accordance with closure 

requirements found in parts 264 and 

265 of this chapter or establish a trust 

fund as specified in § 261.143(a) in the 

name of the owner or operator in the 

amount of the current cost estimate.’’ 

Liability Requirements 

The liability coverage requirements 

for sudden and nonsudden accidental 

occurrences in subpart H of 40 CFR part 

261 are essentially the same as those for 

TSDFs in 40 CFR 265.147, with revised 

terminology so that the regulatory 

language applies to hazardous 

secondary material reclamation and 

intermediate facilities. Sudden 

accidental coverage for bodily injury 

and property damage to third parties is 

required for all units, and nonsudden 

accidental coverage is required for landbased units. Land-based units are 

defined in 40 CFR 260.10 as an area 

where hazardous secondary materials 

are placed in or on the land before 

recycling and are functionally 

equivalent to the units required to have 

nonsudden accidental coverage under 

40 CFR 265.147(b) (e.g., surface 

impoundments). In addition, the 

provisions for requesting a variance or 

adjusting the coverage are the same as 

40 CFR 265.147(c) and (d) respectively, 

except the reference that ties these 

procedures to the Subtitle C permit 

modification procedures under 40 CFR 

270.41(a)(5) and 40 CFR 124.5 has been 

removed, because these provisions 

would not apply to excluded hazardous 

secondary material. 

Other Financial Assurance Provisions 

Finally, the provisions for incapacity 

of owners or operators, guarantors, or 

financial institutions (40 CFR 261.148), 

use of state-required mechanisms (40 

CFR 261.149), and state assumption of 

responsibility (40 CFR 261.150) are 

essentially the same as their 

counterparts in 40 CFR part 265, with 

one exception. The state-required 

mechanism provisions have been 

expanded to indicate that states may 

allow facilities to use their existing 

Subtitle C financial assurance policies 

to address the financial assurance 

condition of 40 CFR 261.4(a)(24)(vi)(F), 

provided they can ensure that the 

instruments actually cover the financial 

assurance cost estimate. 

5. Provisions Applicable to Hazardous 

Secondary Materials That Are Exported 

and Imported 

Under today’s final rule, generators 

who export hazardous secondary 

materials are required to notify the 

receiving country through EPA and 

obtain consent from that country before 

shipment of the hazardous secondary 

materials takes place (see 40 CFR 

261.4(a)(25)). These notice and consent 

requirements provide notification to the 

receiving country so that it can ensure 

that the hazardous secondary materials 

are reclaimed rather than disposed of or 

abandoned. As an additional benefit, 

these requirements allow the receiving 

country the opportunity to consent or 

not consent based on its analysis of 

whether the reclamation facility can 

properly recycle the hazardous 

secondary materials and manage the 

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. 

Specifically, hazardous secondary 

materials that are exported from the 

United States and its territories and 

recycled at a reclamation facility located 

in a foreign country are not solid wastes, 

provided the hazardous secondary 

material generator complies with the 

requirements of 40 CFR 261.4(a)(25), 

including notifying EPA of the proposed 

export and obtaining subsequent 

consent from the receiving country. 

Included by reference in 40 CFR 

261.4(a)(25), the generator must comply 

with the requirements of 40 CFR 

261.4(a)(24)(i)–(v), which comprise the 

hazardous secondary material generator 

requirements under the transfer-based 

exclusion, such as speculative 

accumulation and reasonable efforts. 

However, hazardous secondary material 

generators who export hazardous 

secondary materials for reclamation are 

not required to comply with 40 CFR 

261.4(a)(24)(v)(B)(2) for foreign 

reclaimers and intermediate facilities 

because, as part of satisfying reasonable 

efforts, this question requires the 

generator to affirmatively answer if the 

reclaimer or intermediate facility has 

notified the appropriate authorities 

pursuant to § 260.42 and if the reclaimer 

or intermediate facility has financial 

assurance as required under 

§ 261.4(a)(24)(vi)(F). Since foreign 

reclaimers and foreign intermediate 

facilities are not subject to U.S. 

regulations, they cannot comply with 

the notification and financial assurance 

requirements under today’s rule 

(however, hazardous secondary material 

generators must affirmatively answer 

this question for domestic intermediate 

facilities). 

The provisions that we are finalizing 

today in 40 CFR 261.4(a)(25) require 

hazardous secondary material 

generators to notify EPA of an intended 

export 60 days before the initial 

shipment is intended to be shipped offsite. The notification may cover export 

activities extending over a 12-month or 

shorter period. The notification must 

include contact information for the 

hazardous secondary material generator, 

as well as for the reclaimer and 

intermediate facility, including any 

alternate reclaimer or alternate 

intermediate facilities.5 The notification 

must also include a description of the 

type(s) of hazardous secondary 

materials and the manner in which the 

hazardous secondary materials will be 

reclaimed, 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 hazardous 

secondary materials will pass. 

Notifications must be sent to EPA’s 

Office of Enforcement and Compliance 

Assurance,6 which will then notify the 

receiving country and any transit 

countries. For purposes of 40 CFR 

261.4(a)(25), the terms 

‘‘Acknowledgement of Consent,’’ 

‘‘receiving country,’’ and ‘‘transit 

country’’ are used as defined in 40 CFR 

262.51 with the exception that the terms 

in this section refer to hazardous 


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secondary materials, rather than 

hazardous waste. 

When the receiving country consents 

(or objects) to the receipt of the 

hazardous secondary materials, EPA 

will inform the hazardous secondary 

material generator, through an 

Acknowledgement of Consent, of the 

receiving country’s response, as well as 

any response from any transit countries. 

For exports to Organization for 

Economic Cooperation and 

Development (OECD) Member 

countries, the receiving country may 

choose to respond to the notification 

with tacit, rather than written, consent. 

With respect to exports to such OECD 

Member countries, if no objection has 

been lodged by the receiving country or 

transit countries to a notification within 

30 days after the date of issuance of the 

acknowledgement of receipt of 

notification by the competent authority 

of the receiving country, the U.S. 

understands that an export may 

commence at that time. In such cases, 

EPA will send an Acknowledgment of 

Consent to inform the hazardous 

secondary material generator that the 

receiving country and any relevant 

transit countries have not objected to 

the shipment, and are thus presumed to 

have consented tacitly. Tacit consent 

expires one calendar year after the close 

of the 30-day period; re-notification and 

renewal of all consents is required for 

exports after that date. This tacit 

consent procedure for exports of 

hazardous secondary materials to OECD 

Member countries in this rule is similar 

to the tacit consent procedure for 

hazardous waste exports to OECD 

Member countries under 40 CFR part 

262 subpart H. We note that Canada and 

Mexico, though they are OECD Member 

countries, typically require written 

consent for exports to their countries. 

The hazardous secondary material 

generator may proceed with the 

shipment of the hazardous secondary 

materials only after it has received an 

Acknowledgment of Consent from EPA 

indicating the receiving country’s 

consent (actual or tacit). If the receiving 

country does not consent to the receipt 

of the hazardous secondary materials or 

withdraws a prior consent, EPA will 

notify the hazardous secondary material 

generator in writing. EPA also will 

notify the hazardous secondary material 

generator of any responses from transit 

countries. Hazardous secondary 

material generators must keep copies of 

any notifications and consents for a 

period of three years following receipt 

of the consent. 

Hazardous secondary material 

generators must also file with the 

Administrator, no later than March 1 of 

each year, a report containing its name, 

mailing and site address, and EPA ID 

number (if applicable); the calendar year 

covered by the report; the name and site 

address of each reclaimer and 

intermediate facility; and, for each 

hazardous secondary material exported, 

a description of the hazardous 

secondary material, the type of 

hazardous secondary material (reported 

as the EPA hazardous waste numbers 

that would apply if the hazardous 

secondary materials were managed as 

hazardous wastes), the DOT hazard 

class, the name and U.S. EPA ID number 

(where applicable) for each transporter 

used, the total amount of hazardous 

secondary material shipped and the 

number of shipments pursuant to each 

notification. Hazardous secondary 

material generators must also sign a 

certification statement (found under 40 

CFR 261.4(a)(25)(xi)(E)). These 

procedures are similar to those required 

for exports of hazardous waste under 40 

CFR part 262 subpart E, except for the 

use of the hazardous waste manifest 

which is not required under today’s 

exclusions. 

Imports of hazardous secondary 

materials are eligible for today’s 

transfer-based exclusion, provided that 

the person who imports the hazardous 

secondary material fulfills all 

requirements and conditions (e.g., 

notification, reasonable efforts, 

recordkeeping) for a hazardous 

secondary material generator under 40 

CFR 261.4(a)(24) of today’s rule. Persons 

who import hazardous secondary 

materials are not eligible for today’s 

generator-controlled exclusion since 

EPA would not be able to ensure the 

close management and monitoring of 

the hazardous secondary materials by a 

single entity in a foreign country. 

D. Termination of the Exclusion 

As with the generator-controlled 

exclusion, units managing hazardous 

secondary materials excluded under the 

transfer-based exclusion are not subject 

to the closure regulations in 40 CFR 

parts 264 and 265 subpart G. However, 

when the use of these units is ultimately 

discontinued, all owners and operators 

must manage any remaining hazardous 

secondary materials that are not 

reclaimed and remove or decontaminate 

all hazardous residues and 

contaminated containment system 

components, equipment structures, and 

soils. These hazardous secondary 

materials and residues, if no longer 

intended for reclamation, would also no 

longer be eligible for the exclusion 

(which only applies to hazardous 

secondary materials that will be 

reclaimed). Failure to remove these 

materials within a reasonable time 

frame after operations cease could cause 

the facility to become subject to the full 

Subtitle C requirements if the Agency 

determines that reclamation is no longer 

feasible. While this final rule does not 

set a specific time frame for these 

activities, the Agency believes that they 

typically should be completed within 

the time frames established for 

analogous activities. For example, the 

requirements for product tanks under 40 

CFR 261.4(c) allow 90 days for removal 

of hazardous material after the unit 

ceases to be operated for manufacturing. 

This time frame should serve as a 

guideline for regulators in determining, 

on a case-by-case basis, whether owners 

and operators have completed these 

activities within in a reasonable time 

frame. In any event, these hazardous 

secondary materials remain subject to 

the speculative accumulation 

restrictions in 40 CFR 261.4(a)(8), which 

includes both a time limitation of 

recycling 75% of the hazardous 

secondary material within a year and a 

requirement that the facility be able to 

show there is a feasible means of 

recycling the hazardous secondary 

material. 

In addition, as described in section 

VIII.C. above, in order to be released 

from the financial assurance condition, 

intermediate and reclamation facilities 

will need to submit for approval a plan 

for removing the hazardous secondary 

material and decontaminating the unit, 

and then, when the work is completed, 

submit a certification from a qualified 

Professional Engineer that all hazardous 

secondary materials have been removed 

from the unit and the unit has been 

decontaminated. 

E. Enforcement 

Hazardous secondary materials 

transferred to a third party for the 

purpose of reclamation are excluded 

from RCRA Subtitle C regulation under 

certain conditions and restrictions. If a 

hazardous secondary material generator 

fails to meet any of the above-described 

conditions that are applicable to the 

generator, then the hazardous secondary 

materials would be considered 

discarded by the generator and would 

be subject to the RCRA Subtitle C 

requirements from the point at which 

such material was generated. In 

addition, if a reclaimer or an 

intermediate facility failed to meet any 

of the above-described conditions, then 

the hazardous secondary materials 

would be considered discarded by the 

reclaimer or intermediate facility and 

would be subject to the RCRA Subtitle 

C requirements from the point at which 

the reclaimer or intermediate facility 


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7 As an example of sham recycling, in a recent 

case the owner of a facility in Mississippi was 

found to be illegally burying hazardous waste on 

his property, where it was leaching into the 

surrounding soil and groundwater, while he was 

telling regulators and customers that he was 

recycling it into a salable product (Department of 

Justice, ‘‘Mississippi Hazardous Waste Operator 

Sentenced to 41 Months in Prison for 

Environmental Crimes,’’ news release, February 7, 

2008, http://www.epa.gov/compliance/resources/ 

cases/criminal/highlights/2008/pridemore-02-07- 

08.pdf). 

failed to meet a condition or restriction, 

thereby discarding the material. 

It should be noted that the failure of 

the reclaimer or intermediate facility to 

meet the conditions of the exclusion 

does not mean that the hazardous 

secondary material was considered 

waste when handled by the generator, as 

long as the generator can adequately 

demonstrate that it has met its 

obligations, including the obligation 

under 40 CFR 261.4(a)(24)(v)(B) to make 

reasonable efforts to ensure that the 

hazardous secondary material will be 

reclaimed legitimately and properly 

managed. A hazardous secondary 

material generator that met its 

reasonable efforts obligations could, in 

good faith, ship its excluded materials 

to a reclamation facility or intermediate 

facility where, due to circumstances 

beyond its 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 or intermediate facility is 

based on an objectively reasonable 

belief that the hazardous secondary 

materials would be reclaimed 

legitimately and otherwise managed in 

a manner consistent with this 

regulation, the generator would not have 

violated the terms of the exclusion. 

In addition, the Agency affirms in this 

preamble that § 261.2(f) applies to all 

claims that hazardous secondary 

materials are not solid waste because 

they are being legitimately recycled, 

including those that are not specifically 

addressed in this final rule. 

Respondents in enforcement cases 

should be prepared to demonstrate that 

they meet the terms of the exclusion or 

exemption, which includes 

demonstrating that the recycling is 

legitimate. Appropriate documentation 

must be provided to the enforcing 

agency to demonstrate that the material 

is not a solid waste or is exempt from 

regulation. In addition, the recycler of 

the hazardous secondary material 

should be prepared to show it has the 

necessary equipment to perform the 

recycling operation. Furthermore, any 

release of the hazardous secondary 

materials to the environment that is not 

immediately cleaned up would be 

considered discarded and, thus, the 

hazardous secondary material that was 

released would be a solid waste and 

potentially subject to the RCRA 

hazardous waste regulations. 

IX. Legitimacy 

As part of this final rulemaking, EPA 

has decided to codify in 40 CFR 260.43 

the requirement that materials be 

legitimately recycled as a requirement 

for the exclusion for hazardous 

secondary materials that are legitimately 

reclaimed under the control of the 

generator (40 CFR 261.2(a)(2)(ii) and 40 

CFR 261.4(a)(23)) and as a condition of 

the exclusion for hazardous secondary 

materials that are transferred for the 

purpose of legitimate reclamation (40 

CFR 261.4(a)(24) and 40 CFR 

261.4(a)(25)). EPA is also requiring that 

hazardous secondary materials must be 

legitimately recycled under the final 

non-waste determinations (40 CFR 

260.34) for hazardous secondary 

materials that are (a) reclaimed in a 

continuous industrial process and (b) 

indistinguishable in all relevant aspects 

from a product or intermediate. 

In addition, in Section IX.B.3, EPA 

has included a discussion of how the 

current legitimacy policy continues to 

apply to existing exclusions and how 

the four factors being added to 40 CFR 

260.43 are substantively the same as the 

current legitimacy policy. 

A. Background of Legitimacy 

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 a significant economic 

incentive to manage hazardous 

secondary materials outside the RCRA 

regulatory system, there is a 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.7 To 

guard against this, EPA has long 

articulated the need to distinguish 

between ‘‘legitimate’’ (i.e., true) 

recycling and ‘‘sham’’ (i.e., fake) 

recycling, beginning with the preamble 

to the 1985 regulations that established 

the definition of solid waste (50 FR 638, 

January 4, 1985). 

In the October 28, 2003, proposal at 

68 FR 61581–61588, EPA discussed its 

position on the relevance of legitimacy 

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 the supplemental proposal 

of March 26, 2007, at 72 FR 14197– 

14201, we proposed two changes to the 

2003 proposed legitimacy criteria and 

asked for public comment on those 

changes. The changes were (1) a 

restructuring of the proposed criteria, 

called ‘‘factors’’ in this proposal, to 

make two of them mandatory, while 

leaving the other two 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. 

The concept of legitimacy being 

finalized in today’s rule as a restriction 

or a condition for the final exclusions 

and the non-waste determinations is not 

substantively different from the 

Agency’s longstanding policy that has 

been expressed in our earlier preamble 

discussions and policy statements. The 

October 28, 2003, definition of solid 

waste proposal discussed the history of 

the guidance EPA has provided to the 

regulated community on the question of 

what it means to legitimately recycle. To 

summarize that discussion, the January 

4, 1985, preamble to the final rule that 

promulgated the original definition of 

solid waste regulations established 

EPA’s concept of legitimacy and 

described several indicators of sham 

recycling. A similar discussion that 

addressed legitimacy as it pertains to 

burning hazardous secondary materials 

for energy recovery was presented in the 

preamble to the January 8, 1988, 

proposed amendments to the definition 

of solid waste (53 FR 522). 

On April 26, 1989, the Office of Solid 

Waste (OSW) issued a memorandum 

that consolidated preamble statements 

concerning legitimate recycling that had 

been articulated previously into a list of 

criteria to be considered in evaluating 

legitimacy [OSWER directive 

9441.1989(19)]. This memorandum, 

known to many as the ‘‘Lowrance 

Memo,’’ has been a primary source of 

guidance for the regulated community 

and for implementing agencies in 

distinguishing between legitimate and 

sham recycling for many years. 

The legitimacy provision applicable 

to these exclusions and non-waste 

determinations is based on the October 

2003 proposal and March 2007 

supplemental proposal and all relevant 

information available to EPA as 

contained in the rulemaking record. The 

basis for how the legitimacy 

requirement in 40 CFR 260.43 works 


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8Under the transfer-based exclusion being 

finalized in today’s rule, a reclaimer should also 

anticipate that a hazardous secondary material 

generator may inquire as to whether the reclamation 

process is legitimate (40 CFR 261.4(a)(24)(v)(B)(1)). 

Reasonable effort inquiries will vary by generator 

and may include a request for information or 

documentation of legitimacy. 9Letter. Elizabeth Cotsworth, Director Office of 

Solid Waste, to Amy Blankenbiller, American 

Foundry Society, March 28, 2001. http:// 

yosemite.epa.gov/osw/rcra.nsf/0c994248c239947e

85256d090071175f/4C9A2EEE6E5F859B

85256AC5004FC1C2/$file/14534.pdf 

10 One of the profiles in the docket shows that 

from 1997–1998, a horticultural nursery purchased 

approximately 375 tons of foundry sand that 

contained lead above the regulatory limits and 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). 

includes the reasoning in the October 

2003 and March 2007 preambles to the 

proposal and supplemental proposal, 

respectively, and consideration of all 

significant public comments as 

discussed in section XVIII of this 

preamble, as well as in the response to 

comment document. 

Following the detailed discussion of 

the structure of the 40 CFR 260.43 

legitimacy factors and each individual 

factor in this preamble, EPA has 

included a discussion of how the 

current legitimacy policy continues to 

apply to existing exclusions and how 

the four factors being added to 40 CFR 

260.43 compare to the questions in the 

Lowrance Memo and the discussions in 

the preambles identified above. 

B. How To Determine When Recycling Is 

Legitimate 

1. What Is the Purpose of Legitimacy? 

As discussed in the October 2003 

proposal and the March 2007 

supplemental proposal to this 

rulemaking, the Agency has a longstanding policy that all recycling of 

hazardous secondary materials must be 

legitimate, including both excluded 

recycling and the recycling of regulated 

hazardous wastes. The legitimacy 

provision in today’s final exclusions 

and non-waste determinations is 

designed to distinguish between real 

recycling activities—legitimate 

recycling—and ‘‘sham’’ recycling, an 

activity undertaken by an entity to avoid 

the requirements of managing a 

hazardous secondary material as a 

hazardous waste. Because of the 

economic advantages in managing 

hazardous secondary materials as 

recycled materials rather than as wastes, 

there is an incentive for some handlers 

to claim they are recycling when, in 

fact, they are conducting waste 

treatment and/or disposal. 

2. Legitimacy Requirements 

In this action, EPA is finalizing 

requirements that reclamation being 

undertaken under the exclusions at 

§ 261.2(a)(2)(ii), § 261.4(a)(23), (24), and 

(25) and the non-waste determinations 

at § 260.30(d) and (e) be legitimate. 

These requirements can be found in the 

final regulatory text at § 260.34(b), 

§ 261.2(a)(2)(ii), § 261.4(a)(23)(v), and 

§ 261.4(a)(24)(iv). Each of these 

provisions refers to § 260.43, where the 

full requirements for determining the 

legitimacy of the reclamation operation 

can be found. 

The design of legitimacy in the final 

rule has two parts. The first is a 

requirement that hazardous secondary 

materials being recycled provide a 

useful contribution to the recycling 

process or to the product of the 

recycling process and a requirement that 

the product of the recycling process is 

valuable. These two legitimacy factors 

make up the core of legitimacy and, 

therefore, a process that does not 

conform to them cannot be a legitimate 

recycling process, but would be 

considered sham recycling. 

The second part of legitimacy is two 

factors that must be considered when a 

recycler is making a legitimacy 

determination. EPA believes that these 

two factors are important in determining 

legitimacy, but has not made them 

factors that must be met because the 

Agency knows that there will be some 

situations in which a legitimate 

recycling process does not conform to 

one or both of these two factors, yet the 

reclamation activity would still be 

considered legitimate. EPA does not 

believe that this will be a common 

occurrence, but in recognition that 

legitimate recycling may occur in these 

situations, EPA has made management 

of the hazardous secondary materials 

and the presence of hazardous 

constituents in the product of the 

recycling process to be factors that must 

be considered in the overall legitimacy 

determination, but not factors that must 

always be met. 

Structure of legitimacy provision. 

Under the first paragraph of 40 CFR 

260.43, hazardous secondary materials 

that are not legitimately recycled are 

discarded materials and, therefore, are 

solid wastes. This paragraph also states 

that anyone claiming an exclusion at 

§ 261.2(a)(2)(ii), § 261.4(a)(23), 

§ 261.4(a)(24), or § 261.4(a)(25) or using 

a non-waste determination at 

§ 260.30(d) or (e) must be able to 

demonstrate that its recycling activity is 

legitimate. The Agency has included the 

language ‘‘In determining if their 

recycling is legitimate, persons must 

address the requirements of § 260.43(b) 

and must consider the requirements of 

§ 260.43(c)’’ to make it clear that the 

factors in paragraph (b) must be met, 

while the factors in paragraph (c) must 

be considered and evaluated in 

determining whether the recycling 

activity overall is legitimate. 

Although there is no specific 

recordkeeping requirement that goes 

with the ability to demonstrate 

legitimacy, EPA would expect that in 

the event of an inspection or an 

enforcement action by an implementing 

agency, the recycler would be able to 

show how it made the overall legitimacy 

determination per § 261.2(f).8 In the 

event that the process does not conform 

to one of the two factors under 

§ 260.43(c), the facility should be able to 

show that it considered that factor and 

why the recycling activity overall 

remains legitimate. For example, under 

existing exclusions from the definition 

of solid waste, reuse of lead 

contaminated foundry sands may or 

may not be legitimate, depending on the 

use. The use and reuse of foundry sands 

for mold making in a facility’s sand loop 

under normal industry practices has 

been found to be legitimate because the 

sand is part of an industrial process 

where there is little chance of the 

hazardous constituents being released 

into the environment or causing damage 

to human health and the environment 

when it is kept inside, because there is 

lead throughout the foundry’s process, 

and because there is a clear value to 

reusing the sand.9 However, in the case 

of lead contaminated foundry sand used 

as children’s play sand, the same high 

levels of lead would disqualify this use 

from being considered legitimate 

recycling.10 the same result would be 

reached when applying Factor 4. 

Factor 1—Useful Contribution. 

‘‘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 * * * The hazardous 

secondary material provides a useful 

contribution if it (i) contributes valuable 

ingredients to a product or intermediate; 

or (ii) replaces a catalyst or carrier in the 

recycling process; or (iii) is the source 

of a valuable constituent recovered in 

the recycling process; or (iv) is 

recovered or regenerated by the 

recycling process; or (v) is used as an 

effective substitute for a commercial 

product’’ (40 CFR 260.43(b)(1)). 

This factor, one of the two core 

legitimacy factors, expresses the 

principle that hazardous secondary 

materials should contribute value to the 

recycling process. This factor is an 


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essential element to legitimate recycling 

because real recycling is not occurring 

if the hazardous secondary materials 

being added or recovered do not add 

anything to the process. This factor is 

intended to prevent the practice of 

adding to or recovering hazardous 

secondary materials from a 

manufacturing operation simply as a 

means of disposing of them, or 

recovering only small amounts of a 

constituent, which EPA would consider 

sham recycling. 

In response to comments received on 

this factor asking for more clarification 

on what useful contribution means, the 

regulatory text includes an explanation 

of how useful contribution might be 

achieved in (i) through (v) of 

§ 260.43(b)(1). EPA stresses that the 

ways in which hazardous secondary 

materials can add value and be useful in 

a recycling process are (i) contributing 

valuable ingredients to a product or 

intermediate; (ii) replacing a catalyst or 

carrier in the recycling process; (iii) 

providing a valuable constituent to be 

recovered; (iv) being regenerated; or (v) 

being used as an effective substitute for 

a commercial product. The preamble to 

the October 2003 proposed rule gave 

full descriptions of these five situations 

(68 FR 61585), but the Agency has also 

included them in the regulatory text to 

clarify this factor for the regulated 

community. 

The Agency also wants to restate for 

clarification that for hazardous 

secondary materials to meet the useful 

contribution factor, not every 

constituent or component of the 

hazardous secondary material has to 

make a contribution to the recycling 

activity. For example, a legitimate 

recycling operation involving precious 

metals might not recover all of the 

components of the hazardous secondary 

material, but would recover precious 

metals with sufficient value to consider 

the recycling process legitimate. In 

addition, the recycling activity does not 

have to involve the hazardous 

component of the hazardous secondary 

materials if the value of the contribution 

of the non-hazardous component 

justifies the recycling activity. One 

example of this factor from an existing 

exemption is where hazardous 

secondary materials containing large 

amounts of zinc, a non-hazardous 

component, are recycled into zinc 

micronutrient fertilizers. In cases where 

the hazardous component is not being 

used or recycled, the Agency stresses 

that the recycler is responsible for the 

management of any hazardous residuals 

of the recycling process. 

In a situation where more than one 

hazardous secondary material is used in 

a single recycling process and the 

hazardous secondary materials are 

mixed or blended as a part of the 

process, each hazardous secondary 

material would need to satisfy the 

useful contribution factor. This 

requirement prevents situations where a 

worthless hazardous secondary material 

could be mixed with valuable and 

useful hazardous secondary materials in 

an attempt to disguise and dispose of it. 

In addition, a situation in which 

hazardous secondary materials that can 

be useful to a process are added to that 

process in much greater amounts than 

are needed to make the end-product or 

to otherwise provide its useful 

contribution would also be sham 

recycling. 

Another way the usefulness of the 

hazardous secondary material’s 

contribution could be demonstrated is 

by looking at the efficiency of the 

material’s use in the recycling process— 

that is, how much of the constituent in 

a hazardous secondary material is 

actually being used. As an example, if 

there is a constituent in the hazardous 

secondary material that could add value 

to the recycling process, but, due to 

process design, most of it is not being 

recovered but is being disposed of in the 

residuals, this would be a possible 

indicator of sham recycling. However, 

there are certainly recycling scenarios 

where a low recovery rate could still be 

legitimate. For example, under an 

existing exclusion, if the concentration 

in a metal-bearing hazardous secondary 

material is low (2%–4%) and a 

recycling process was able to recover a 

large percentage of the target metal, this 

factor could be met and the recycling 

may be legitimate (depending on the 

outcome of the analysis of the other 

legitimacy factors). 

One way to use the efficiency of the 

recycling process to evaluate legitimacy 

is to compare the process to typical 

industry recovery rates from raw 

materials to determine if the recycling 

process is reasonably efficient. This 

method should involve an examination 

of the overall process, not just a single 

step of the process. For example, if one 

step in the process recovers a small 

percentage of the constituent, but the 

overall process recovers a much larger 

percentage, the Agency would consider 

the overall efficiency of the recycling 

process in determining whether 

hazardous secondary materials are 

providing a useful contribution. 

There are various ways in which 

hazardous secondary materials can be 

useful to a recycling process and various 

ways are laid out in this discussion of 

how a facility might demonstrate 

conformity with this factor. In addition, 

we provided a number of different ways 

a material could contribute to the 

process in the regulatory text describing 

this factor. Any one of these would be 

sufficient to demonstrate that the 

hazardous secondary material provides 

a useful contribution. Overall, the 

Agency considers this factor to be a 

critical element in determining 

legitimacy and any recycling process 

that does not meet this factor cannot be 

considered legitimate recycling. 

Factor 2—Valuable Product or 

Intermediate. ‘‘The recycling process 

must produce a valuable product or 

intermediate * * * The product or 

intermediate is valuable if it is (i) sold 

to a third party or (ii) used by the 

recycler or the generator as an effective 

substitute for a commercial product or 

as an ingredient or intermediate in an 

industrial process’’ (40 CFR 

260.43(b)(2)). 

This factor, one of the two core 

legitimacy factors, expresses the 

principle that the product or 

intermediate of the recycling process 

should be a material of value, either to 

a third party who buys it from the 

recycler, or to the generator or recycler 

itself, who can use it as a substitute for 

another material that it would otherwise 

have to buy or obtain for its industrial 

process. This factor is also an essential 

element of the concept of legitimate 

recycling because recycling cannot be 

occurring if the product or intermediate 

of the recycling process is not of use to 

anyone and, therefore, is not a real 

product. This factor is intended to 

prevent the practice of running a 

hazardous secondary material through 

an industrial process to make something 

just for the purpose of avoiding the costs 

of hazardous waste management, rather 

than for the purpose of using the 

product or intermediate of the recycling 

activity. Such a practice would be sham 

recycling. 

Most commenters on the proposed 

rule for this factor stated that this is a 

useful way of gauging whether recycling 

is actually taking place, but requested 

that the Agency clarify the meaning of 

the term valuable, as it is used in the 

regulatory text. EPA is repeating and 

clarifying today that for the purpose of 

this factor, a recyclable product may be 

considered ‘‘valuable’’ if it can be 

shown to have either economic value or 

a more intrinsic value to the end user. 

Evaluations of ‘‘valuable’’ for the 

purpose of this factor should be done on 

a case-by-case basis, but one way to 

demonstrate that the recycling process 

yields a valuable product would be the 

documented sale of a product of the 

recycling process to a third party. Such 

documentation could be in the form of 


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receipts or contracts and agreements 

that establish the terms of the sale or 

transaction. This transaction could 

include money changing hands or, in 

other circumstances, may involve trade 

or barter. A recycler that has not yet 

arranged for the sale of its product to a 

third party could establish value by 

demonstrating that it can replace 

another product or intermediate that is 

available in the marketplace. A product 

of the recycling process may be sold at 

a loss in some circumstances, but the 

recycler would have to be prepared to 

show how the product is clearly 

valuable to the purchaser. 

However, many recycling processes 

produce outputs that are not sold to 

another party, but are instead used by 

the generator or recycler. A product of 

the recycling process may be used as a 

feedstock in a manufacturing process, 

but have no established monetary value 

in the marketplace. Such recycled 

products or intermediates would be 

considered to have intrinsic value, 

though demonstrating intrinsic value 

may be less straightforward than 

demonstrating value for products that 

are sold in the marketplace. 

Demonstrations of intrinsic value could 

involve showing that the product of the 

recycling process or intermediate 

replaces an alternative product that 

would otherwise have to be purchased 

or could involve a showing that the 

product of the recycling process or 

intermediate meets specific product 

specifications or specific industry 

standards. Another approach could be 

to compare the product’s or 

intermediate’s physical and chemical 

properties or efficacy for certain uses 

with those of comparable products or 

intermediates made from raw materials. 

Some recycling processes may consist 

of multiple steps that may occur at 

separate facilities. In some cases, each 

processing step will yield a valuable 

product or intermediate, such as when 

a metal-bearing hazardous secondary 

material is processed to reclaim a 

precious metal and is then put through 

another process to reclaim a different 

mineral. When each step in the process 

yields a valuable product or 

intermediate that is salable or usable in 

that form, the recycling activity would 

conform to this factor. 

Like the other factors, this factor 

should be examined and evaluated on a 

case-by-case basis looking at the specific 

facts of a recycling activity. If, for 

instance, a recycling activity produces a 

product or intermediate that is used by 

the recycler itself, but does not serve 

any purpose and is just being used so 

that the product or intermediate appears 

valuable, that would be an indicator of 

sham recycling. An example of this 

would be a recycler that reclaims a 

hazardous secondary material and then 

uses that material to make blocks or 

building materials for which it has no 

market and then ‘‘uses’’ those building 

materials to make a warehouse in which 

it stores the remainder of the building 

materials that it is unable to sell. 

Factor 3—Managed as a Valuable 

Commodity. ‘‘The generator and the 

recycler should manage the hazardous 

secondary material as a valuable 

commodity. Where there is an 

analogous raw material, the hazardous 

secondary material should be managed, 

at a minimum, in a manner consistent 

with the management of the raw 

material. Where there is no analogous 

raw material, the hazardous secondary 

material should be contained. 

Hazardous secondary materials that are 

released to the environment and are not 

recovered immediately are discarded’’ 

(40 CFR 260.43(c)(1)). 

The first of the additional factors that 

must be considered expresses the 

principle that hazardous secondary 

materials being recycled should be 

managed in the same manner as other 

valuable materials. This factor requires 

those making a legitimacy 

determination to look at how the 

hazardous secondary material is 

managed before it enters the recycling 

process. In EPA’s view, a recycler will 

value hazardous secondary materials 

that provide an important contribution 

to its process or product and, therefore, 

will manage those hazardous secondary 

materials in a manner consistent with 

how it manages a valuable feedstock. If, 

on the other hand, the recycler does not 

manage the hazardous secondary 

materials as it would a valuable 

feedstock, that behavior may indicate 

that the hazardous secondary materials 

may not be recycled, but rather released 

into the environment and discarded. 

This factor may be particularly 

appropriate in the case where a recycler 

has been paid by a generator to take its 

materials as a result of the economic 

incentives in the hazardous secondary 

materials market. By looking at the 

management of the hazardous secondary 

material before it enters the recycler’s 

process, the entity making the 

legitimacy determination can tell that a 

material being managed like an 

analogous raw material is, in fact, 

valued by the recycler. If the hazardous 

secondary material is not being 

managed like a valuable raw material 

because it is uncontrolled or is being 

released, that indicates that the fee the 

recycler obtains for taking the hazardous 

secondary material may be its only 

value to that recycler. If the fee received 

were the only value to the recycler, it 

would mean that discard was taking 

place. 

This factor addresses the management 

of hazardous secondary materials in two 

distinct situations. The first situation is 

when a hazardous secondary material is 

analogous to a raw material which it is 

replacing in the process. In this case, the 

hazardous secondary material should be 

managed prior to recycling similarly to 

the way the analogous raw materials are 

managed in the course of normal 

manufacturing. EPA expects that all 

parties handling hazardous secondary 

materials destined for recycling— 

generators, transporters, intermediate 

facilities and reclamation facilities— 

will handle them in generally the same 

manner in which they would handle the 

valuable raw materials they might 

otherwise be using in their process. 

‘‘Analogous raw material,’’ as defined 

elsewhere in this preamble, is a raw 

material for which the hazardous 

secondary material substitutes and 

which serves the same function and has 

similar physical and chemical 

properties as the hazardous secondary 

material. 

The second situation the factor 

addresses is the case where there is no 

analogous raw material that the 

hazardous secondary material is 

replacing. This could be either because 

the process is designed around a 

particular hazardous secondary 

material—that is, the hazardous 

secondary material is not replacing 

anything—or it could be because of 

physical or chemical differences 

between the hazardous secondary 

material and the raw material that are 

too significant for them to be considered 

‘‘analogous.’’ 

Hazardous secondary materials that 

have significantly different physical or 

chemical properties when compared to 

the raw material would not be 

considered analogous even if they serve 

the same function because it may not be 

appropriate to manage them in the same 

way. In this situation, the hazardous 

secondary material would have to be 

contained for this factor to be met. A 

hazardous secondary material is 

‘‘contained’’ if it is placed in a unit that 

controls the movement of that material 

out of the unit. This requirement is 

consistent with the idea that normal 

manufacturing processes are designed to 

use valuable material inputs efficiently 

rather to than allow them to be released 

into the environment. 

For example, if a manufacturer has an 

ingredient that is a dry raw material 

managed in supersacks, the Agency 

would expect that a hazardous 

secondary material that is a similar dry 


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material also would be managed in 

supersacks or in a manner that would 

provide equivalent protection. If, on the 

other hand, the hazardous secondary 

material was instead managed in an 

outdoor pile without appropriate 

controls in place to address releases to 

the environment, it may indicate that it 

was not being handled as a valuable 

commodity. If, however, the 

manufacturer decided to replace the dry 

raw material in its process with a liquid 

having the same constituents, it would 

not be sufficient, nor would it make 

sense, for the liquid to be managed in 

supersacks. Instead, the liquid would 

have to be ‘‘contained’’ (for example in 

a tank or surface impoundment). 

An important part of this factor is the 

statement in the regulatory text 

clarifying that hazardous secondary 

materials that are released to the 

environment and not recovered 

immediately are discarded. Valuable 

products should not be allowed to 

escape into the environment through 

poor management and this factor 

clarifies that those hazardous secondary 

materials that do escape (and are not 

immediately recovered) are clearly 

discarded. Either a large release or 

ongoing releases of smaller amounts 

could indicate that, in general, the 

hazardous secondary material is not 

being managed as a valuable product, 

which could potentially lead to the 

recycling process being found not to be 

legitimate. Hazardous secondary 

materials that are immediately 

recovered before they disperse into the 

environment—air, soil, or water—and 

are reintroduced in the recycling 

process are not discarded. This 

determination must be made on a caseby-case basis, however. 

EPA has determined that it is 

appropriate that this factor is one of the 

two that must be considered rather than 

a factor that must be met because there 

are situations in which this factor is not 

met, but recycling appears to be 

legitimate. An example of this kind of 

situation is described in the March 2007 

supplemental proposal (72 FR 14199). 

In the example, a hazardous secondary 

material that is a powder-like material is 

shipped in a woven super sack and 

stored in an indoor containment area, 

whereas the analogous raw material is 

shipped and stored in drums. A strict 

reading of this factor may determine 

that the hazardous secondary material is 

not being managed in a manner 

consistent with the raw material even if 

the differences in management are not 

actually impacting the likelihood of a 

release. By designing the legitimacy 

factors so that this one has to be 

considered, but not necessarily met, the 

individual facts of situations like the 

one described here can be evaluated on 

a case-by-case basis to determine if they 

affect the legitimacy of the recycling 

activity. 

In summary, given the nature of the 

legitimacy factors and their need to 

apply to all the practices covered by the 

exclusions in this final rule, it is not 

appropriate or practicable for EPA to 

develop a specific management 

standard. In the absence of such a 

management standard, EPA is using this 

factor: materials must be managed as 

analogous raw materials or, if there are 

no analogous raw materials, the 

materials must be contained. EPA’s 

intent with this factor is that hazardous 

secondary materials are managed in the 

same manner as materials that have 

been purchased or obtained at some 

cost, just as raw materials are. Just as it 

is good business practice to ensure that 

raw materials enter the manufacturing 

process rather than being spilled or 

released, we would expect hazardous 

secondary materials to be managed 

effectively and efficiently in order that 

their full value to the manufacturing 

process would be realized. 

Factor 4—Comparison of Toxics in 

the Product. ‘‘The product of the 

recycling process does not (i) contain 

significant concentrations of any 

hazardous constituents found in 

Appendix VIII of part 261 that are not 

found in analogous products; or (ii) 

contain concentrations of any hazardous 

constituents found in Appendix VIII of 

part 261 at levels that are significantly 

elevated from those found in analogous 

products; or (iii) exhibit a hazardous 

characteristic (as defined in part 261 

subpart C) that analogous products do 

not exhibit’’ (40 CFR 260.43(c)(2)). 

The second of the additional factors 

that must be considered requires those 

making a legitimacy determination to 

look at the concentrations of the 

hazardous constituents found in the 

product made from hazardous 

secondary materials and compare them 

to the concentrations of hazardous 

constituents in analogous products. Any 

of the following three situations could 

be an indicator of sham recycling: a 

product that contains significant levels 

of hazardous constituents that are not 

found in the analogous products; a 

product with hazardous constituents 

that were in the analogous products, but 

contains them at significantly higher 

concentrations; or a product that 

exhibits a hazardous characteristic that 

analogous products do not exhibit. Any 

of these situations could indicate that 

sham recycling is occurring because in 

lieu of proper hazardous waste disposal, 

the recycler could have incorporated 

hazardous constituents into the final 

product when they are not needed to 

make that product effective in its 

purpose. This factor, therefore, is 

designed to determine when toxics that 

are ‘‘along for the ride’’ are discarded in 

a final product and, therefore, the 

hazardous secondary material is not 

being legitimately recycled. 

To evaluate this factor, a recycler will 

ordinarily compare the product of the 

recycling process to an analogous 

product made of raw materials. For 

example, if a recycling process 

produced paint, the levels of hazardous 

constituents in the paint will be 

compared with the levels of the same 

constituents found in similar paint 

made from virgin raw materials. 

A recycler is also allowed to perform 

this evaluation by comparing the 

hazardous constituents in the hazardous 

secondary material feedstock with those 

in an analogous raw material feedstock. 

If the hazardous secondary material 

feedstock does not contain significantly 

higher concentrations of hazardous 

constituents than the raw material 

feedstock, then the end product of the 

recycling process would not contain 

excess hazardous constituents ‘‘along 

for the ride’’ either. EPA is clarifying 

here that this method of showing that 

the product does not have ‘‘toxics along 

for the ride’’ is acceptable. There may be 

cases in which it is easier to compare 

feedstocks than it is to compare 

products because the recycler knows 

that the hazardous secondary material is 

very similar in profile to the raw 

material. A comparison of feedstocks 

may also be easier in cases where the 

recycler creates an intermediate which 

is later processed again and may end up 

in two or more products, when there is 

no analogous product, or when 

production of the product of the 

recycling process has not yet begun. 

This factor identifies three ways to 

evaluate whether or not unacceptable 

amounts of hazardous constituents are 

passed through to the products of the 

recycling process. (As explained above, 

these methods also could be used to 

compare the hazardous secondary 

material feedstock to a raw material 

feedstock, if the recycler prefers.) The 

first method specifies that when 

analogous products made from raw 

materials do not contain hazardous 

constituents, the product of the 

recycling process should not contain 

significant amounts of hazardous 

constituents. For example, if paint made 

from reclaimed solvent contains 

significant amounts of cadmium, but the 

same type of paint made from virgin raw 

materials does not contain cadmium, it 

could indicate that the cadmium serves 


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11Letter. Elizabeth Cotsworth, Director Office of 

Solid Waste, to Amy Blankenbiller, American 

Foundry Society, March 28, 2001. http:// 

yosemite.epa.gov/osw/rcra.nsf/ 

0c994248c239947e85256d090071175f/ 

4C9A2EEE6E5F859B85256AC5004FC1C2/$file/ 

14534.pdf 

no useful purpose and is being passed 

though the recycling process and 

discarded in the product. 

The second method addresses 

analogous products that do contain 

hazardous constituents and asks 

whether the concentrations of those 

hazardous constituents are significantly 

higher in the product of the recycling 

process than in the product made from 

raw materials. Concentrations of 

hazardous constituents in the product of 

the recycling process that are 

significantly higher than in the product 

made from virgin raw materials could 

again be an indicator of sham recycling. 

For example, if a lead-bearing hazardous 

secondary material was reclaimed and 

then that material was used as an 

ingredient in making ceramic tiles and 

the amount of lead in the tiles was 

significantly higher than the amount of 

lead found in similar tiles made from 

virgin raw materials, the recycler should 

look more closely at the factors to 

determine the overall legitimacy of the 

process. 

The third method under this factor is 

whether the product of the recycling 

process exhibits a hazardous 

characteristic that analogous products 

do not exhibit. Requiring an evaluation 

of hazardous characteristics ensures that 

products of the recycling process do not 

exhibit the characteristics of toxicity, 

ignitability, corrosivity, or reactivity 

when the analogous products do not. 

The Agency believes that most issues 

associated with ‘‘toxics along for the 

ride’’ will involve the presence of toxic 

constituents, which are addressed under 

the first two parts of the factor. That is, 

we believe that it is likely that there are 

few instances where hazardous 

secondary materials are used in the 

process and hazardous constituents are 

not present at significantly higher 

levels, but the product made from the 

hazardous secondary material 

nevertheless exhibits the hazardous 

characteristic of toxicity when the 

analogous product does not. It is 

possible, though, that the use of 

hazardous secondary materials as an 

ingredient could cause a product to 

exhibit a hazardous characteristic, such 

as corrosivity, that is not exhibited by 

analogous products. 

The Agency has determined that it is 

appropriate for this factor to be 

considered in legitimacy determinations 

under the final exclusions and in the 

non-waste determinations in this action, 

but thinks that there may be situations 

in which the factor is not met but the 

recycling would still be considered 

legitimate. An example of this kind of 

situation that has been addressed by the 

Agency under the current regulatory 

scheme would be in the use and reuse 

of foundry sands for mold making in a 

facility’s sand loop. Because of repeated 

exposure to metals in a foundry’s 

process, the sands used to make the 

molds may have significantly higher 

concentrations of hazardous 

constituents than virgin sand. However, 

because the sand is part of an industrial 

process where there is little chance of 

the hazardous constituents being 

released into the environment or 

causing damage to human health and 

the environment when it is kept inside, 

because there is lead throughout the 

foundry’s process, and because there is 

a clear value to reusing the sand, this 

would be an example of a situation 

where this factor is not met, but it does 

not affect the legitimacy of the recycling 

process. 

In fact, EPA has concluded as a 

general matter that foundries engaged in 

the reuse of lead-containing foundry 

sands are recycling those sands 

legitimately and these sands would not 

be regulated under RCRA Subtitle C 

(under the circumstances described in 

EPA’s March 2001 memorandum on this 

subject).11 Thus, while the used sands 

in the sand loop arguably have toxicsalong-for-the ride, EPA did not raise 

questions about the legitimacy of the 

recycling, given the overall nature of the 

operations. If the used foundry sand 

were being recycled into a different 

product, such as a material used on the 

ground or in children’s play sand, the 

legitimacy determination would be very 

different and significant levels of metals 

would likely render the recycling 

illegitimate. The same conclusions 

would be reached applying the factors 

codified in 260.43. 

Another example of recycling that 

may be legitimate although this factor 

has not been met could be when the 

material has concentrations of toxics 

that could be considered ‘‘significantly 

higher’’ than the analogous product, but 

meets industry specifications for the 

product that include specific 

specifications for the hazardous 

constituent of concern. Meeting 

accepted industry standards would be a 

strong indication that this material is 

being legitimately recycled. A third 

example could be in the mining and 

mineral processing industry. In many 

mineral processing operations, the very 

nature of an operation results in 

hazardous constituents concentrating in 

the product as it proceeds through the 

various steps of the process. In many 

cases, there is not an analogous product 

to compare the products of these 

processes so this factor may not be 

relevant because of the nature of the 

operations. As with the above example, 

if a facility considers a factor and 

decides that it is not applicable to its 

process, the Agency suggests that the 

facility evaluate the presence of 

hazardous constituents in its product 

and be prepared to demonstrate both 

that it considered this factor and the 

reasons it believes the factor is not 

relevant. 

As discussed in more detail in the 

comments section of this preamble 

(section XVIII) and in the response to 

comments document in the docket, 

commenters on this factor requested 

clarification concerning what EPA 

meant by the terms used in this factor. 

In response to some of these comments, 

EPA has made two clarifications in the 

regulatory text by (1) specifying that the 

hazardous constituents referred to in the 

regulation are those that are found in 

Appendix VIII to 40 CFR part 261 and 

(2) clarifying that the hazardous 

characteristics to which EPA is referring 

to are those in 40 CFR part 261 subpart 

C. 

The Agency also received much 

comment on the term ‘‘significant’’ and 

what the Agency intended by this term. 

EPA has decided to keep the term in the 

final rule. The alternative to using 

‘‘significant’’ or a similarly flexible term 

to determine when there may be 

hazardous constituents in the product 

made from recycled hazardous 

secondary materials that are not in the 

analogous products made from raw 

materials would be to set an absolute 

standard. In its discussion of legitimacy 

in the October 2003 proposed rule, EPA 

discussed possible ‘‘bright line’’ or riskbased approaches as a way to set 

absolute lines to define ‘‘significant’’ 

based on either a numerical limit or a 

risk level (68 FR 61587–61588). EPA 

recognizes that the ‘‘bright line’’ or the 

risk-based approach may provide greater 

clarity and predictability to the 

regulated community, but that in both 

cases the Agency would have to 

establish a line for what is acceptable 

and the line may either be somewhat 

arbitrary or it may exclude recycling 

practices that, if carefully considered, 

should be considered legitimate. Based 

on the comments received on those 

approaches, we are convinced that they 

would not be workable. 

On the other hand, a case-by-case 

analysis of a recycling process can take 

into consideration the relevant 

principles and facts for that activity, 


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leading to a determination of 

significance based on the facts of the 

activity. Because this factor must apply 

to various different recycling activities, 

we believe the case-by-case approach is 

most appropriate. 

EPA, therefore, is finalizing its 

proposed option of using the term 

‘‘significant’’ in 40 CFR 260.43(c)(2)(i) 

and (ii). Evaluating the significance of 

levels of hazardous constituents in 

products of the recycling process may 

involve taking into consideration 

several variables, such as the type of 

product, how it is used and by whom, 

whether or not the elevated levels of 

hazardous constituents compromise the 

efficacy of the product, the availability 

of the hazardous constituents to the 

environment, and others. For example, 

if a hazardous secondary material has 

been reclaimed and made into a product 

that will be used by children, and that 

product contains hazardous constituents 

that are not in analogous products, that 

product will likely need to be closely 

scrutinized. On the other hand, low 

levels of a hazardous constituent in a 

product from that same reclamation 

operation that is used as an ingredient 

in an industrial process or for another 

industrial application may not be 

significant and must be evaluated in the 

context of the product’s use. 

EPA provided several additional 

examples in implementing this factor in 

the October 2003 proposed rule which 

will be repeated here. If zinc galvanizing 

metal made from hazardous secondary 

materials that were reclaimed contains 

500 parts per million (ppm) of lead, 

while the same zinc product made from 

raw materials typically contains 475 

ppm, this difference in concentration 

would likely not be considered 

‘‘significant’’ in the evaluation of this 

factor. If, on the other hand, the lead 

levels in the zinc product made from 

reclaimed hazardous secondary 

materials were 1,000 ppm, it may 

indicate that the product was being used 

to illegally dispose of lead and that the 

activity is sham recycling, unless other 

factors would demonstrate otherwise. 

In another example, if a ‘‘virgin’’ 

solvent contains no detectable amounts 

of barium, while spent solvent that has 

been reclaimed contains a minimal 

amount of barium (e.g., 1 ppm), this 

difference might not be considered 

significant. If, however, the barium in 

the reclaimed solvent were at much 

higher levels (such as 50 ppm), it may 

indicate discard of the barium and sham 

recycling. 

Unfortunately, because of the variety 

of possible recycling scenarios under 

the exclusions and in the non-waste 

determinations covered by this final 

rule, we cannot provide examples for 

how this factor might work for all 

possible recycling situations. The 

Agency stresses that the determination 

of legitimacy for this factor should 

consider both the use and the users of 

the product in addition to the 

concentration of the hazardous 

constituents or the presence of a 

hazardous characteristic, as well as 

other relevant information. In addition, 

in some cases, the implementing agency 

may accept a risk argument from a 

recycler to show that the recycling 

activity meets this factor. If the recycler 

can show that despite elevated 

concentrations of hazardous 

constituents, such constituents pose 

little or no risk to human health or the 

environment, the implementing agency 

may consider that as evidence that the 

elevated concentrations are not 

significant. How consideration of 

economics applies to legitimacy. 

Consideration of economics has long 

been a part of the Agency’s concept of 

legitimacy, as is 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)). This final rule does not codify 

specific regulatory language on 

economics as part of the legitimacy 

provision, but EPA offers further 

guidance and clarification on how 

economics may be considered in making 

legitimacy determinations, which is 

similar to the preamble discussion in 

the March 2007 supplemental proposal. 

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 further 

evaluation of the recycling operation 

may be warranted in assessing the 

legitimacy factors. 

Considering the economics of a 

recycling activity can also inform 

whether the hazardous secondary 

material inputs provide a useful 

contribution and whether the product of 

recycling is of value. Economic 

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, but even when 

the hazardous secondary materials are 

recycled under the control of the 

generator, the generator must still show 

that the hazardous secondary materials 

are, at a minimum, providing a useful 

contribution and producing a valuable 

product. 

Useful Economic Information 

(1) The amount paid or revenue 

generated by the recycler for recycling 

hazardous secondary materials is one 

example of how economic information 

can help support a legitimacy 

determination. We have three primary 

illustrations to exemplify this. First, 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. A general accounting of 

the major costs, revenues, and economic 

flows for a recycling operation over a 

reasonable period of time can provide 

information for considering 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 

hazardous secondary materials would 

be accumulated and then abandoned 

when the facility closes. 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 over a reasonable 

timeframe, 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). This is consistent with the 

factor requiring that the hazardous 

secondary material must be recycled to 

make a valuable product or 

intermediate. 

Two scenarios illustrate this first 

example: A recycling operation that 

generates revenues from the sale of 

recycled products that greatly exceed 

the costs of the operation is an 

indication of a process that turns the 

hazardous secondary materials into 

useful products, and is unlikely to over 

accumulate them. 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 


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unprocessed hazardous secondary 

materials. This operation could 

potentially fail the ‘‘useful 

contribution’’ and ‘‘produces a valuable 

product or intermediate’’ legitimacy 

factors, and would draw closer attention 

to determine whether it is engaged in 

treatment and/or abandonment in the 

guise of recycling. 

Second, when the economics of a 

recycling operation that uses hazardous 

secondary materials to produce and sell 

final products are similar to a 

manufacturing operation using raw 

materials to produce and sell final 

products, we believe that such an 

operation is likely to be legitimate. For 

instance, if 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 from 

manufacturing, and the revenues 

generated equal or exceed costs, then 

the hazardous secondary materials 

appear to be valuable (i.e., the recycler 

is willing to pay for them) and appear 

to make a useful contribution to a 

valuable recycled product. 

However, we also recognize that the 

economics of many legitimate recycling 

operations that utilize hazardous 

secondary materials differ from the 

economics of more traditional 

manufacturing operations. For example, 

many recyclers are paid by generators to 

accept hazardous secondary materials. 

Generators may be willing to pay 

recyclers because generators can save 

money if the recycling is less expensive 

than disposing of the hazardous 

secondary materials in landfills or 

incinerators. Also, some recyclers 

receive subsidies that may be designed 

to develop recycling infrastructure and 

markets or to achieve other benefits of 

recycling. For instance, the recycling of 

electronic materials can be legitimate 

even when the recycler is subsidized for 

processing the material. 

Third, 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. 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, treatment, 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. 

Recognizing that such a dynamic 

exists can assist those making 

legitimacy determinations in evaluating 

recycling operations. For example, if a 

recycler is charging generators fees (or 

receiving subsidies from elsewhere) for 

taking hazardous secondary materials 

and receives a far greater proportion of 

its revenue from acceptance of the 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 may 

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 the useful 

contribution factor. 

(2) A comparison of revenue from 

sales of recycled products to payments 

by generators is another example of how 

economic information can help support 

an evaluation of ‘‘valuable product.’’ It 

is possible that product sales revenues 

could be dwarfed by the acceptance of 

fees because markets for particular 

products are highly competitive or 

because high alternative disposal costs 

allow for high acceptance fees. 

However, relatively low sales revenues 

could also require a review of other 

factors, such as whether product sales 

prices 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 indicators may suggest that the 

product of the recycling process is not 

valuable and, thus, sham recycling may 

be occurring. 

(3) A consideration of the future cost 

of processing or alternatively managing 

existing inventories of hazardous 

secondary material inputs is another 

example of how economic information 

can inform a legitimacy determination. 

When hazardous secondary materials 

make a significant useful contribution to 

the recycling process, a recycler will 

have an economic incentive to process 

the input materials relatively quickly 

and efficiently, rather than to maintain 

large inventories. While recyclers often 

need to acquire sufficient amounts of 

hazardous secondary materials to make 

it economically feasible to recycle them, 

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 hazardous secondary 

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 may be faced with an unsound 

recycling operation in the future. 

However, it is important to keep in 

mind that possible explanations for this 

may exist. For example, the recycler 

may have acquired a large stock of 

hazardous secondary materials because 

the price was unusually low or perhaps 

the hazardous secondary materials are 

generated episodically and the recycler 

has few opportunities to acquire them. 

(4) An analysis of costs and revenues 

specific to on-site recycling is an 

additional, albeit specific, example of 

economic information to consider. 

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 on-site recycler (under the control of 

the generator) will evaluate the basic 

economic factors as a part of doing 

business. One such factor could be an 

accounting of 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 support the valuable 

product criterion. 

3. Legitimacy Policy for Other 

Exclusions and Exemptions 

EPA is codifying a legitimacy 

provision in this final rule as part of the 

final exclusions and non-waste 

determinations, but stresses that EPA 

retains its long-standing policy that all 

recycling of hazardous secondary 

materials must be legitimate. If a facility 

is engaged in sham recycling, this, by 

definition, is not real recycling and that 

material is being discarded. The 

legitimacy policy continues to apply to 

all hazardous secondary materials that 

are excluded or exempted from Subtitle 

C regulation because they are recycled 

and to recyclable hazardous wastes that 

remain subject to the hazardous waste 

regulations. This policy is wellVerDate Aug<31>2005 16:53 Oct 29, 2008 Jkt 217001 PO 00000 Frm 00041 Fmt 4701 Sfmt 4700 E:\FR\FM\30OCR2.SGM 30OCR2

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64708 Federal Register / Vol. 73, No. 211 / Thursday, October 30, 2008 / Rules and Regulations 

understood throughout the regulated 

community and among the state 

implementing agencies. 

EPA believes that the four legitimacy 

factors being codified in 40 CFR 260.43 

are substantively the same as the 

existing legitimacy policy. These factors 

are a simplification and clarification of 

the policy statements in the 1989 

Lowrance Memo and in various 

Definition of Solid Waste Federal 

Register notices. 

Nonetheless, to avoid confusion 

among the regulated community and 

state and other implementing regulatory 

agencies about the status of recycling 

under the existing exclusions, the 

Agency has decided not to codify the 

legitimacy factors for existing 

exclusions and, thus, states and other 

implementing agencies will continue to 

apply the existing legitimacy policy to 

all recycling as they have in the past in 

order to ensure that recycling is real and 

not a sham. The legitimacy provisions of 

the final rule are codified only for the 

exclusions and non-waste 

determinations being promulgated 

today. In developing the codified 

legitimacy language, we did not intend 

to raise questions about the status of 

legitimacy determinations that underlie 

existing exclusions from the definition 

of solid waste, or about case-specific 

determinations that have been made by 

EPA or the states. Current exclusions 

and other prior solid waste 

determinations or variances, including 

determinations made in letters of 

interpretation and inspection reports, 

remain in effect. 

A number of commenters raised 

concerns with the application of the 

codified legitimacy factors to these 

existing waste-specific and industryspecific exclusions. In particular, as we 

noted in the October 2003 proposal, 

EPA has examined in depth a number 

of waste-specific and industry-specific 

recycling activities and has promulgated 

specific regulatory exclusions or 

provisions that address the legitimacy of 

these practices in much more specific 

terms than the general factors being 

finalized as part of the exclusions and 

non-waste determination process today. 

One example is the regulation for zinc 

fertilizers made from recycled 

hazardous secondary materials. In the 

zinc fertilizer regulation, among the 

requirements established by EPA are 

specific numerical limits on five heavy 

metal contaminants and dioxins in the 

zinc fertilizer product exclusion at 40 

CFR 261.4(a)(21). Other examples are 

shredded circuit boards excluded under 

40 CFR 261.4(a)(14), which must be free 

of mercury switches, mercury relays and 

nickel-cadmium and lithium batteries, 

and comparable fuels excluded under 

40 CFR 261.4(a)(16), which must meet 

specific levels for hazardous 

constituents. The conditions developed 

for the recycling exclusions in § 261.4(a) 

were found to be necessary under 

material-specific rulemakings that 

determined when the particular 

hazardous secondary material in 

question is not a solid waste. When EPA 

originally made the decision that these 

materials are not solid waste, the 

Agency took into account the relevant 

factors about the hazardous secondary 

materials, including how the material 

was managed and what toxic chemicals 

were present. By limiting the codified 

legitimacy provision to the exclusions 

and non-waste determinations in 

today’s final rule, EPA is avoiding any 

implication that we are revisiting these 

determinations. 

However, at the same time, these 

material-specific exclusions from the 

definition of solid waste do not negate 

the basic requirement that the 

hazardous secondary material must be 

‘‘legitimately’’ recycled. Recycling that 

is not legitimate is not recycling at all, 

but rather ‘‘sham recycling’’—discard in 

the guise of recycling. 

For example, under EPA’s historic 

guidance, particularly questions (1) and 

(3) in OSWER Directive 9441.1989(19), 

the ‘‘Lowrance Memo,’’ a facility could 

not plausibly claim the zinc fertilizer 

product exclusion at 40 CFR 

261.4(a)(21) for a hazardous secondary 

material that contained absolutely no or 

minimal levels of zinc, even if all the 

conditions of the zinc fertilizer 

exclusion were met. The exclusion was 

developed to encourage legitimate 

recycling of zinc-containing hazardous 

secondary materials, not to allow any 

hazardous waste to be discarded to 

purported fertilizer in the name of 

recycling when the hazardous 

secondary material provided no 

recognizable benefit to the product. 

Similarly, if a facility accepted zinccontaining hazardous waste, claiming to 

make zinc fertilizer, but failed to 

produce a product that was actually 

sold or was otherwise valuable, such a 

process would not be legitimate 

recycling (under question (4) of the 

Lowrance Memo in the historic 

legitimacy guidance), even if the 

management conditions or the 

constituent levels in the zinc fertilizer 

exclusion were met. The consequences 

of the latter example are illustrated in 

one of the damage cases in the 

environmental problems study. A 

facility whose primary business was 

mixing electric arc furnace dust (K061) 

with agricultural lime for sale as a 

micronutrient lost its customers and 

could not sell its product. However, the 

facility continued to accept EPA 

Hazardous Waste K061, and, in 

approximately seven months, the 

facility had accepted over 60,000 tons of 

this hazardous waste and stored it on 

the ground in piles up to 30 feet high, 

with no prospect of it being used to 

produce a product and, thus, 

legitimately recycled. While the initial 

recycling of the K061 hazardous waste 

was legitimate, when the facility failed 

to produce a product that was actually 

sold, the K061 could no longer be 

considered legitimately recycled. 

In summary, all hazardous secondary 

materials recycling and hazardous waste 

recycling, whether such recycling 

remains under hazardous waste 

regulations or is excluded from the 

definition of solid waste, must be 

legitimate. This has been our longstanding policy and it is well 

understood throughout the regulated 

community and the implementing state 

regulatory agencies. In order to be clear 

that the legitimacy provision codified at 

40 CFR 260.43 under today’s final rule 

would not affect how the current 

legitimacy policy applies to recycling 

under existing exclusions, the 

legitimacy provision at 40 CFR 260.43 is 

explicitly designated as applying only to 

the exclusions and non-waste 

determinations being finalized in 

today’s rule. 

EPA also maintains that the 

legitimacy provision being finalized as 

part of the exclusions and non-waste 

determinations is substantively the 

same as existing policy because we 

developed the legitimacy factors in 40 

CFR 260.43 by closely examining the 

questions and sub-questions in the 

Lowrance Memo and in the Federal 

Register preambles and converting them 

into four more direct questions. The 

following explanations show how each 

of the four factors is derived from the 

Lowrance Memo and other existing 

policy statements. 

Factor 1—The Hazardous Secondary 

Material Provides a Useful Contribution 

Relevant Lowrance Memo Questions 

(1) Is the secondary material similar to 

an analogous raw material or product? 

Is much more of the secondary 

material used as compared with the 

analogous raw material/product it 

replaces? Is only a nominal amount of 

it used? 

Is the secondary material as effective 

as the raw material or product is 

replaces? 


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(3) What is the value of the secondary 

material? 

Is it listed in industry news letters, 

trade journals, etc.? 

Does the secondary material have 

economic value comparable to the raw 

material that normally enters the 

process? 

Discussion 

The factor addressing ‘‘useful 

contribution’’ has been distilled from 

and clarifies concepts in the Agency’s 

existing policy for legitimate recycling. 

For example, the preamble to the 

January 4, 1985, recycling regulations 

noted that if a hazardous secondary 

material is ‘‘ineffective or only 

marginally effective for the claimed use, 

the activity is not recycling but 

surrogate disposal.’’ Similarly, the 

January 8, 1988, proposed rule 

discussed ‘‘how much energy or 

material value each waste contributes to 

the recycling purpose.’’ 

In the 1989 Lowrance Memo, the 

issue of effectiveness was addressed by 

the following questions: ‘‘Is much more 

of the secondary material used as 

compared with the analogous raw 

material/product it replaces?’’; ‘‘Is only 

a nominal amount used?’’; and ‘‘Is the 

secondary material as effective as the 

raw material or product it replaces?’’ 

The memo also addressed the value of 

the secondary material by asking, ‘‘Is 

[the secondary material] listed in 

industry news letters, trade journals, 

etc.?’’ and ‘‘Does the secondary material 

have economic value comparable to the 

raw material that normally enters the 

process?’’ 

Factor 1 takes these broad concepts of 

effectiveness and value and turns them 

into the requirement that the hazardous 

secondary material in the process must 

provide a ‘‘useful contribution’’ to the 

recycling process, that is, it must 

actually be adding something to the 

process into which they are being put. 

The factor provides more specifics than 

the Memo or preamble by providing a 

list of ways that a hazardous secondary 

material could provide that useful 

contribution to the process. EPA 

requested comment on other ways in 

which a hazardous secondary material 

might provide a useful contribution, but 

did not receive any from commenters. 

Factor 2—The Recycling Process 

Produces a Valuable Product or 

Intermediate 

Relevant Lowrance Memo Questions 

(4) Is there a guaranteed market for the 

end product? 

Is there a contract in place to 

purchase the ‘‘product’’ ostensibly 

produced from the hazardous secondary 

materials? 

If the type of recycling is reclamation, 

is the product used by the reclaimer? 

The generator? Is there a batch tolling 

agreement? (Note that since reclaimers 

are normally TSDFs, assuming they 

store before reclaiming, reclamation 

facilities present fewer possibilities of 

systemic abuse). 

Is the reclaimed product a recognized 

commodity? 

Are there industry-recognized quality 

specifications for the product? 

Discussion 

Factor 2 distills several of the 

questions posed by the 1989 legitimacy 

memo. The memo addressed the value 

of recycled products sold to third 

parties by posing the questions, ‘‘Is 

there a guaranteed market for the end 

product?’’ and ‘‘Is there a contract in 

place to purchase the ‘‘product’’ 

ostensibly produced from the hazardous 

secondary materials?’’ The memo 

addressed the value of recycled 

products used by the recycler or the 

generator as process ingredients by 

posing the questions, ‘‘Is the product 

used by the (recycler)? The generator? Is 

there a batch tolling agreement?’’ The 

‘‘usefulness’’ of a recycled material was 

addressed by posing the questions, ‘‘Is 

the (recycled) product a recognized 

commodity?’’ and ‘‘Are there industryrecognized quality specifications for the 

product?’’ 

The language of the factors in the 

legitimacy provision in the final rule 

reflects these concepts in a concrete 

manner by, for example, making it clear 

that the indicator of legitimacy is that a 

recycling process results in a valuable 

product or intermediate and that the 

product or intermediate is valuable if it 

is ‘‘(i) sold to a third party or (ii) used 

by the recycler or the generator as an 

effective substitute for a commercial 

product or as an ingredient or 

intermediate in an industrial process.’’ 

The Lowrance Memo posed 

additional questions aimed at 

distinguishing recycling operations that 

involve direct use or reuse of secondary 

materials from recycling operations that 

involve reclamation. These concepts, 

however, are not particularly relevant to 

distinguishing legitimate from sham 

recycling and are not generally used by 

implementing agencies in legitimacy 

analyses, so we therefore did not 

attempt to capture them in the codified 

regulatory text. 

Factor 3—Managed as a Valuable 

Commodity 

Relevant Lowrance Memo Questions 

(5) Is the secondary material handled in 

a manner consistent with the raw 

material/product it replaces? 

Is the secondary material stored in a 

similar manner as the analogous raw 

material (i.e., to prevent loss?) 

Are adequate records regarding the 

recycling transactions kept? 

Do the companies involved have a 

history of mismanagement of hazardous 

wastes? 

Discussion 

Although worded somewhat 

differently, this factor is essentially the 

same as the fifth question in the 

Lowrance Memo. Similarly, the 1985 

preamble asked whether recyclable 

hazardous secondary materials were 

‘‘handled in a manner consistent with 

their use as raw materials or commercial 

product substitutes.’’ 

In one respect, however, Factor 3 is 

less restrictive than the Lowrance 

Memo—the memo posed an additional 

question, ‘‘Is the secondary material 

stored on the land?’’ This could be read 

as implying that storage on the land is 

an indication of sham recycling. Of 

course, this question is just one of the 

more than two dozen questions from the 

Lowrance memo, that, when taken as a 

whole, help draw the distinction 

between legitimate recycling and sham 

recycling. Also, the Agency is aware of 

situations where storage of raw 

materials on the land is a normal part 

of the manufacturing process. Thus, 

Factor 3 does not identify land storage 

as a specific indicator of sham recycling. 

Factor 4—The Product Does Not 

Contain Significant TARs 

Relevant Lowrance Memo Questions 

(1) Is the secondary material similar to 

an analogous raw material or product? 

Does it contain Appendix VIII 

constituents not found in the analogous 

raw material/product (or at higher 

levels)? 

Does it exhibit hazardous 

characteristics that the analogous raw 

material/product would not? 

Does it contain levels of recoverable 

material similar to the analogous raw 

material/product? 

(6) Other Relevant Factors 

Are the toxic constituents actually 

necessary (or of sufficient use) to the 

product or are they just ‘‘along for the 

ride’’? 


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12 In the March 2007 supplemental proposal, EPA 

also proposed (but is not finalizing) a third type of 

non-waste determination for hazardous secondary 

materials reclaimed under the control of the 

generator via a tolling arrangement or similar 

contractual arrangement. EPA, however, did not 

identify any comments that described specific types 

of contractual arrangements that would meet the 

proposed criteria for this non-waste determination. 

See section XIX for more information. 

Discussion 

The Lowrance Memo and the 

definition of solid waste preamble 

statements from which it was developed 

have addressed the question of ‘‘toxics 

along for the ride’’ in a slightly different 

way than the factor in the final rule. The 

Lowrance Memo, for example, allows 

for examination of toxic constituents in 

the hazardous secondary material 

destined for recycling and/or in the 

recycled product. As noted above, 

Factor 4 is intended to primarily 

address the question of ‘‘toxics along for 

the ride’’ in the products of recycling. 

We believe that the presence of toxic 

constituents in recyclable hazardous 

secondary materials is less relevant to 

assessing the legitimacy of recycling, 

primarily because much if not most 

recycling (as well as manufacturing) 

involves removing or destroying such 

harmful materials. As reflected in the 

factor, the central question is whether or 

not (and in what amount) hazardous 

constituents pass through the recycling 

process and become incorporated into 

the products of recycling. While some 

may argue that the approach of focusing 

on toxic constituents in recycled 

products may be somewhat less 

restrictive than the policy it would 

replace, we believe it is a better 

indicator of legitimate recycling. In 

cases where a recycler would prefer to 

compare the virgin feedstock to the 

hazardous secondary material going into 

the process, the rule makes it clear that 

this would be an adequate stand-in for 

the comparison described in the 

regulatory text. 

Lowrance Memo Questions Not Covered 

in Factors 

A few of the questions from the 

Lowrance Memo are not covered by the 

factors in the regulatory text for the 

legitimacy provision in § 260.43. The 

above discussions address why EPA 

believes this is appropriate. In the case 

of the role economics can play in a 

legitimacy determination, this preamble 

has discussed how it can inform an 

overall legitimacy determination, but 

there is no particular factor on 

economics. 

Relevant Lowrance Memo Questions 

(2) What degree of processing is 

required to produce a finished product? 

Can the secondary material be fed 

directly into the process (i.e., direct use) 

or is reclamation (or pretreatment) 

required? 

How much value does final 

reclamation add? 

Is the secondary material stored on 

the land? (a sub-question of (5) Is the 

secondary material handled in a manner 

consistent with the raw material/ 

product it replaces?) 

(6) Other Relevant Factors 

What are the economics of the 

recycling process? Does most of the 

revenue come from charging generators 

for managing their wastes or from the 

sale of the product? 

For the reasons outlined above, EPA 

believes that the legitimacy factors in 

260.43 are equivalent to the existing 

legitimacy policy that applies to all 

recycling. 

X. Non-Waste Determination Process 

A. What Is the Purpose of This 

Provision? 

The purpose of the non-waste 

determination process is to provide 

persons with an administrative 

procedure for receiving a formal 

determination that their hazardous 

secondary materials are not discarded 

and, therefore, are not solid wastes 

when recycled. This process is available 

in addition to the solid waste exclusions 

in today’s rule. Once a non-waste 

determination has been granted, the 

hazardous secondary material is not 

subject to the limitations and conditions 

discussed elsewhere in today’s rule 

(e.g., prohibition on speculative 

accumulation, storage standard, or, for 

the transfer-based exclusion, 

recordkeeping, reasonable efforts, 

financial assurance, and export notice 

and consent); however, the regulatory 

authority may specify that a hazardous 

secondary material meet certain 

conditions and limitations as part of the 

non-waste determination. 

The non-waste determination process 

is voluntary. Facilities may choose to 

continue to use the self-implementing 

portions of any applicable waste 

exclusions and, for the vast majority of 

cases, where the regulatory status of the 

hazardous secondary material is 

evident, self-implementation will still 

be the most appropriate approach. In 

addition, facilities may continue to 

contact EPA or the authorized state to 

ask for informal assistance in making 

these types of non-waste 

determinations. However, for cases 

where there is ambiguity about whether 

a hazardous secondary material is a 

solid waste, today’s formal process can 

provide regulatory certainty for both the 

facility and the implementing agency. 

EPA is finalizing two types of nonwaste determinations: 12 (1) A 

determination for hazardous secondary 

materials reclaimed in a continuous 

industrial process; and (2) a 

determination for hazardous secondary 

materials indistinguishable in all 

relevant aspects from a product or 

intermediate. The process for applying 

for a non-waste determination is found 

at 40 CFR 260.34. 

The Agency confirms today’s process 

for non-waste determinations is not 

intended to affect any existing exclusion 

under 40 CFR 261.4. The process is also 

not intended to affect any variance 

already granted under 40 CFR 260.30 or 

other EPA or authorized state 

determination. In other words, 

generators or reclaimers operating under 

an existing exclusion, variance, or other 

EPA, or authorized state, determination 

do not need to apply for a formal nonwaste determination under today’s rule. 

This process also does not affect the 

authority of EPA or an authorized state 

to revisit past determinations according 

to appropriate procedures, if they so 

choose. 

B. Scope and Applicability 

Hazardous secondary materials 

presented for a non-waste determination 

must be legitimately recycled and, 

therefore, must meet the legitimacy 

factors under 40 CFR 260.43 of today’s 

rule. For further discussion of 

legitimacy and the factors to be 

considered, see section IX of today’s 

preamble. 

In addition, today’s rule limits nonwaste determinations to reclamation 

activities and does 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)); or for ‘‘burning of materials 

for energy recovery’’ or materials ‘‘used 

to produce a fuel or otherwise contained 

in fuels’’ (40 CFR 261.2(c)(2)). Today’s 

rule does not affect how these recycling 

practices are regulated. 

C. Types of Non-Waste Determinations 

1. Non-Waste Determination for 

Hazardous Secondary Materials 

Reclaimed in a Continuous Industrial 

Process 

As discussed earlier in today’s 

preamble, previous court decisions have 

indicated that hazardous secondary 


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materials that are reclaimed in a 

continuous industrial process are not 

discarded and, therefore, not a solid 

waste. EPA believes, in most instances, 

hazardous secondary materials 

reclaimed in a continuous process 

would be excluded under today’s selfimplementing exclusions. However, 

production processes can vary widely 

from industry to industry and it is 

possible that the regulatory status of 

certain materials may be unclear under 

a self-implementing exclusion 

(including those exclusions finalized 

today). Thus, to determine whether 

individual hazardous secondary 

materials are reclaimed in a continuous 

industrial process, and, therefore, not a 

solid waste, EPA has developed the 

non-waste determination process to 

evaluate case-specific fact patterns. 

EPA is finalizing four criteria for 

making the non-waste determination for 

hazardous secondary materials 

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 and is not waste 

treatment. At one end of the spectrum, 

if the hazardous secondary material is 

handled in a manner identical to virgin 

feedstock, then it would appear to be 

fully integrated into the production 

process. At the other end of the 

spectrum, hazardous secondary 

materials that are 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, 

persons applying for a non-waste 

determination 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. It is important to note that 

this non-waste determination is not 

necessarily limited to cases under the 

control of the generator. For example, 

hazardous secondary materials that are 

hard piped from one facility to another 

facility that is under separate control 

would appear to be fully integrated into 

the production process and may 

therefore be eligible for this non-waste 

determination, provided the other 

criteria are met. 

The second criterion examined under 

this non-waste determination is the 

capacity of the production process to 

use the hazardous secondary material in 

a reasonable time frame and ensure that 

it will not be abandoned. This criterion 

can be satisfied by a consideration of 

past practices, market factors, the nature 

of the hazardous secondary material, or 

any contractual arrangements. 

Abandonment of stockpiled 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 materials as the 

primary cause of damage. For today’s 

self-implementing exclusions for 

hazardous secondary materials, EPA is 

using speculative accumulation (as 

defined in 40 CFR 261.1(c)(8)) as the 

method for determining when a 

hazardous secondary material is 

discarded by abandonment. For the nonwaste determination, a person does not 

need to demonstrate that the hazardous 

secondary material meets the 

speculative accumulation limits per 40 

CFR 261.1(c)(8), but he must provide 

sufficient information about the 

hazardous secondary material and the 

process to demonstrate that the 

hazardous secondary material will in 

fact be reclaimed in a reasonable time 

frame and will not be abandoned. EPA 

is not explicitly defining ‘‘reasonable 

time frame’’ because such time frames 

could vary according to the hazardous 

secondary material and industry 

involved and, therefore, determining 

this time frame should be made on a 

case-specific basis. However, a person 

may still choose to use the speculative 

accumulation time frame as a default. 

The third criterion for this non-waste 

determination is whether the hazardous 

constituents in the hazardous secondary 

material are reclaimed 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. To the extent that 

the hazardous constituents are an 

extension of the original hazardous 

secondary material, their release to the 

environment is an indicator of discard. 

The Agency recognizes that normal 

production processes may also result in 

a certain level of releases and, in 

evaluating this criteria, would not deny 

a non-waste determination if the 

increase in releases is not significantly 

different from either a statistical or risk 

perspective. However, when 

unacceptably high levels of the 

hazardous constituents in the hazardous 

secondary material 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 in fact being ‘‘reclaimed in a 

continuous 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 person to provide 

any case-specific information deemed 

important and relevant in making the 

case that the hazardous secondary 

material is not discarded and, therefore, 

not a solid waste. 

2. Non-Waste Determination for 

Hazardous Secondary Materials 

Indistinguishable in All Relevant 

Aspects From a Product or Intermediate 

Although the courts have indicated 

that hazardous secondary materials 

recycled within a continuous industrial 

process are not discarded and, therefore, 

are not solid wastes, they have also said 

that hazardous secondary materials 

destined for recycling in another 

industry are not automatically 

discarded. However, there may be some 

situations where the regulatory status of 

a certain material is unclear under a 

self-implementing exclusion and thus 

may benefit from a non-waste 

determination that evaluates casespecific fact patterns. EPA is finalizing 

five 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 (e.g., based on the current 

positive value of the hazardous 

secondary material, stability of demand, 

and any contractual arrangements). This 

evaluation of market participation is a 

key element for determining whether 

companies view these hazardous 

secondary materials like products rather 

than negatively-valued wastes. EPA’s 

market forces study 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 hazardous secondary 

materials, thus maximizing the 

likelihood that the hazardous secondary 

materials will be reclaimed and not 

abandoned. 

The second criterion for this nonwaste determination is the chemical and 

physical identity of the hazardous 

secondary material and whether it is 

comparable to commercial products or 


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intermediates. This ‘‘identity principle’’ 

is a second key factor that the Court in 

Safe Foods 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 nonwaste determination, any differences 

between the hazardous secondary 

material in question and commercial 

products or intermediates should not be 

significant from either a statistical or 

from a health and environmental risk 

perspective. 

The third criterion for making this 

non-waste determination is the capacity 

of the market to use the hazardous 

secondary material in a reasonable time 

frame and ensure that it will not be 

abandoned. Abandonment of stockpiled 

hazardous secondary materials is one 

way that discard can occur at recycling 

operations and is one of the major 

causes of environmental problems (a 

key finding from the recycling studies 

discussed earlier). For today’s selfimplementing exclusions for hazardous 

secondary materials, EPA is using 

speculative accumulation (as defined in 

40 CFR 261.1(c)(8)) as the method for 

determining when a hazardous 

secondary material is discarded by 

abandonment. For the non-waste 

determination, a person does not need 

to demonstrate that the hazardous 

secondary material meets the 

speculative accumulation limits per 40 

CFR 261.1(c)(8), but he must provide 

sufficient information about the 

hazardous secondary material and the 

market demand for it to demonstrate 

that the hazardous secondary material 

will in fact be reclaimed in a reasonable 

time frame and will not be abandoned. 

EPA is not explicitly defining 

‘‘reasonable time frame’’ because such 

time frames could vary according to the 

hazardous secondary material and 

industry involved, and therefore 

determining this time frame should be 

made on a case-specific basis. However, 

a person may still choose to use the 

speculative accumulation time frame as 

a default. 

The fourth criterion for this non-waste 

determination is whether the hazardous 

constituents in the hazardous secondary 

materials are reclaimed 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 an extension 

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 non-waste determination if the 

increase in releases is not significant 

from either a statistical or a health and 

environmental risk perspective. 

However, when unacceptably high 

levels of the hazardous constituents in 

the hazardous secondary material are 

released to the environment rather than 

reclaimed, then that material (or at least 

the portion of the hazardous secondary 

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 fifth 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 person 

to provide any case-specific information 

it deems important and relevant in 

making the case that its hazardous 

secondary material is not discarded. 

D. Non-Waste Determination Process 

The process for the non-waste 

determination is the same as that for the 

solid waste variances found in 40 CFR 

260.30. In order to obtain a non-waste 

determination, a facility that manages 

hazardous secondary materials that 

would otherwise be regulated under 40 

CFR part 261 as either a solid waste or 

an excluded waste must apply to the 

Administrator or the authorized state 

per the procedures described in 40 CFR 

260.33, which EPA is amending today to 

apply to non-waste determinations. The 

application must address the relevant 

criteria discussed in detail above. The 

Administrator will evaluate the 

submission 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 

will accept comment on the tentative 

decision for 30 days, and may also hold 

a public hearing. The Administrator will 

issue a final decision after receipt of 

comments and after the hearing (if 

held). 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 260.30 or solid waste exclusions 

under 40 CFR 261.4). 

After a formal non-waste 

determination has been granted, if a 

change occurs that affects how a 

hazardous secondary material meets the 

relevant criteria contained in 40 CFR 

260.34, persons must re-apply to the 

Administrator for a formal 

determination that the hazardous 

secondary material continues to meet 

the relevant criteria and is not discarded 

and not a solid waste. 

As discussed in more detail in section 

XX of today’s preamble, 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 the current 

requirements, authorized states are not 

required to adopt the non-waste 

determination process. Ordinarily this 

provision could not go into effect in an 

authorized state until the state chooses 

to adopt it. However, because the nonwaste determination process is a 

formalization of determinations that 

states may already perform, states that 

have not formally adopted this nonwaste determination process may 

participate if the following conditions 

are met: (1) The state determines that 

the hazardous secondary material meets 

the criteria in either paragraph (b) or (c) 

of 40 CFR 260.34; (2) the state requests 

EPA to review its determination; and (3) 

EPA approves the state determination. 

In addition, of course, states may 

continue to make regulatory 

determinations under their authorized 

state regulations, as they do now. 

E. Enforcement 

If a regulatory authority determines 

that a hazardous secondary material is 

not a solid waste through the non-waste 

determination process, the hazardous 

secondary material is not subject to the 

RCRA Subtitle C hazardous waste 

requirements. However, as part of this 

process, the applicant has an obligation 

to submit, to the best of his 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 the 

RCRA Subtitle C requirements and EPA 

or the authorized state could choose to 

bring an enforcement action under 

RCRA section 3008(a). Moreover, if the 

person submitting the non-waste 

determination is found to have 

knowingly submitted false information, 

then he also may be subject to criminal 

penalties under RCRA section 3008(d). 

Once a non-waste determination has 

been granted, the applicant is obligated 


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13 ‘‘Disposal’’ is defined in 40 CFR 260.10 as ‘‘the 

discharge, deposit, injection, dumping, spilling 

leaking or placing of any solid waste or hazardous 

waste into or on any land or water so that such solid 

waste or hazardous waste or any constituent thereof 

may enter the environment or be emitted into the 

air or discharged into any waters, including ground 

waters.’’ Thus a hazardous secondary material that 

is land disposed would presumably not meet the 

‘‘contained’’ standard. 

to ensure the hazardous secondary 

material continues to meet the criteria of 

the non-waste determination, including 

any conditions specified therein by the 

regulatory authority. If a change occurs 

that affects how a hazardous secondary 

material meets the relevant criteria and 

(if applicable) any conditions as 

specified by the regulatory authority 

and the applicant fails to re-apply to the 

Administrator for a formal 

determination, the hazardous secondary 

material may be determined to be a 

solid and hazardous waste and subject 

to the RCRA Subtitle C hazardous waste 

requirements. 

XI. Effect on Other Exclusions 

The final rule will not supersede any 

of the current exclusions or other prior 

solid waste determinations or variances, 

including determinations made in 

letters of interpretation and inspection 

reports. If a hazardous secondary 

material has been determined not to be 

a solid waste, for whatever reason, such 

a determination will remain in effect, 

unless the regulatory agency decides to 

revisit the regulatory determination 

under their current authority. In 

addition, if a hazardous secondary 

material has been excluded from 

hazardous waste regulations—for 

example, under the Bevill exclusion in 

40 CFR 261.4(b)(7)—the regulatory 

status of that material will not be 

affected by today’s rule. 

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, it 

appears, would have had unintended 

consequences in many cases. 

Thus, in the March 2007 

supplemental proposal, we proposed to 

retain the existing exclusions exactly as 

written (72 FR 14205). In addition, 

recycling of such hazardous secondary 

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 

exclusions, rather than the proposed 

exclusions. 

We did request comment, however, 

on the option of allowing a regulated 

entity to choose which exclusion it 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. 

One state supported allowing a 

regulated entity to choose if that entity 

documents its choice and the few 

comments that were submitted by 

industry on this matter, generally, 

preferred to have the option to choose 

which exclusion they would be subject 

to. EPA has determined, however, that 

the conditions that were developed for 

the existing exclusions were found to be 

necessary under case-specific 

rulemakings that determined when the 

hazardous secondary material in 

question is not a solid waste. For 

example, broken cathode ray tubes must 

be transported in closed containers (40 

CFR 261.4(a)(22)) and shredded circuit 

boards need to be free of mercury 

switches and relays (40 CFR 

261.4(a)(14)). 

Therefore, the final rule requires that 

hazardous secondary materials 

specifically subject to the existing 

exclusions must continue to meet the 

existing conditions or requirements in 

order to be excluded from the definition 

of solid waste. Moreover, industry and 

the states are familiar with these 

requirements and EPA believes that 

changing them would only lead to 

confusion in the regulated community. 

In addition, the current exclusions 

would apply to facilities not currently 

operating under terms of an existing 

exclusion. They would also be subject to 

the conditions for that exclusion if they 

decide to recycle the particular 

excluded wastes in the future. 

In the March 2007 supplemental 

proposal, we also requested comment 

on whether any specific regulatory 

exclusion would need revision in order 

to avoid confusion or contradictions. 

With a few exceptions, public 

comments did not discuss this issue in 

depth. Only three states commented on 

this issue. One supported the 

requirement that currently-excluded 

facilities must stay under their specific 

exclusions and two requested 

clarifications on how such a 

requirement would be implemented. 

Industry, in a few cases, had specific 

comments on the provisions already in 

place. 

One commenter asked that EPA 

clarify that wood preserving waste be 

allowed to be reclaimed off-site under 

the new exclusion. This would be an 

expansion of the existing exclusion, 

which is limited to on-site reuse. 

Another comment was in regards to 

whether hazardous secondary materials 

currently regulated under the closedloop exclusion would be eligible for the 

new exclusions that do not require 

closed-loop operations. The third 

comment, from both reclaimers of spent 

lead-acid batteries and spent lead-acid 

battery manufacturers requested that 

EPA clarify that spent lead-acid battery 

recycling continue to be regulated under 

40 CFR 266.80 or as a universal waste 

at 40 CFR part 273. The mining industry 

requested that EPA clarify that the 

proposed exclusions would have ‘‘no 

impact’’ on 40 CFR 266.70 (precious 

metals exclusion) and 40 CFR 

266.100(d) and (g) (conditional 

exclusions from boiler and industrial 

furnace (BIF) regulations for ‘‘smelting, 

melting, and refining furnaces’’ and 

precious metals recovery furnaces). 

A. Solid Waste Exclusions Found in 40 

CFR 261.4(a) 

Under today’s final rule, if a 

hazardous secondary material is subject 

to material-specific management 

conditions under 40 CFR 261.4(a) when 

reclaimed, such a material is not eligible 

for the final rule exclusions. For most of 

the exclusions in 40 CFR 261.4(a), this 

provision will have no practical effect 

because the current exclusion either (1) 

has no conditions, (2) has conditions 

that overlap with those of the final rule 

exclusions (i.e., no speculative 

accumulation, or land disposal),13 (3) 

does not involve reclamation, or (4) 

involves hazardous secondary materials 

burned for energy recovery or used in a 

manner constituting disposal. These 

include the exclusions in 40 CFR 

261.4(a)(1)–(7), 40 CFR 261.4(a)(10)– 

(13), 40 CFR 261.4(a)(15)–(16), 40 CFR 

261.4(a)(18), and 40 CFR 261.4(a)(20)– 

(21). 

The exclusions in 40 CFR 261.4(a) 

that are for a specific material and 

include conditions that are more 

specific than those included for the 

exclusions being finalized today are 

those for (1) spent wood preserving 

solutions (40 CFR 261.4(a)(9)), (2) 

shredded circuit boards (40 CFR 

261.4(a)(14)), (3) mineral processing 

spent materials (40 CFR 261.4(a)(17)), 

(4) spent caustic solutions from 

petroleum refining liquid treating 

processes (40 CFR 261.4(a)(19)), and (5) 

cathode ray tubes (40 CFR 261.4(a)(22)). 

For each of these cases, EPA has made 

a material-specific determination of 


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when such a material is not discarded 

and therefore not a solid waste and such 

a determination is more appropriately 

applied to these materials than the 

general conditions of today’s final rule. 

The conditions of the material-specific 

exclusion essentially help define when 

that material is legitimately recycled 

and not discarded. 

However, in the case of the spent 

wood preserving exclusion (40 CFR 

261.4(a)(9)), EPA agrees with the 

comments that this exclusion is limited 

to on-site recycling. Thus, if managed 

on-site, these materials would need to 

comply with the existing conditions to 

be eligible for an exclusion from the 

definition of solid waste. However, 

since the current exclusion does not 

apply to hazardous secondary materials 

sent off-site, and the substance of the 

exclusion (i.e., drip pad requirements) 

applies to a management method not 

applicable to off-site transfers, the new 

exclusion in today’s rule would apply to 

hazardous secondary materials that are 

sent off-site for reclamation. Thus, if 

sent off-site for legitimate reclamation, 

these materials could be eligible for 

today’s exclusion if the restrictions and/ 

or the conditions are met. 

Finally, the closed-loop exclusion 40 

CFR 261.4(a)(8) is not specific to a 

material, but rather identifies a 

recycling process. EPA agrees with 

comments stating that hazardous 

secondary materials recycled via the 

closed-loop exclusion at 40 CFR 

261.4(a)(8) could be recycled under a 

different process and still be eligible for 

today’s exclusions. The closed-loop 

exclusion is based on the premise that 

hazardous secondary materials 

reclaimed in a continuous process 

within an industry are not discarded 

and, therefore, are not solid wastes 

subject to EPA’s RCRA jurisdiction (See 

AMC I.) In fact, closed loop recycling is 

a subset of materials reclaimed in a 

continuous industrial process, since 

materials may be reclaimed in a 

continuous process outside of a closed 

loop system. EPA did not make a 

finding that any particular hazardous 

secondary material must be reclaimed in 

a continuous process. The Agency only 

determined that closed-loop recycling, 

in general, should be excluded. Today’s 

exclusions, however, allow any 

hazardous secondary materials to be 

excluded if reclamation meets the 

restrictions and/or conditions set forth 

in the rules. Thus, a facility currently 

engaged in closed-loop recycling could 

change their processes and still be 

excluded, as long as all applicable 

restrictions and/or conditions are met. 

In addition to the solid waste 

exclusions currently in 40 CFR 261.4(a), 

EPA is planning to propose—in a 

separate rulemaking from today’s final 

rule—to amend its hazardous waste 

regulations to conditionally exclude 

from the definition of solid waste spent 

hydrotreating and hydrorefining 

catalysts generated in the petroleum 

refining industry when these hazardous 

secondary materials are reclaimed (see 

entry in the Introduction to the Fall 

2007 Regulatory Plan, 72 FR 69940, 

December 10, 2007). Spent 

hydrotreating and hydrorefining 

catalysts generated in the petroleum 

refining industry are routinely recycled 

by regenerating the catalyst so that it 

may be used again as a catalyst. When 

regeneration is no longer possible, these 

spent catalysts are either treated and 

disposed of as listed hazardous wastes 

or sent to RCRA-permitted reclamation 

facilities, where metals, such as 

vanadium, molybdenum, cobalt, and 

nickel are reclaimed from the spent 

catalysts. 

EPA originally added spent 

hydrotreating and hydrorefining 

catalysts (waste codes K171 and K172) 

to the list of RCRA hazardous wastes 

found in 40 CFR 261.31 on the basis of 

toxicity (i.e., these materials were 

shown to pose unacceptable risk to 

human health and the environment 

when mismanaged) (63 FR 42110, 

August 6, 1998). In addition, EPA based 

its decision to list these materials as 

hazardous due to the fact that these 

spent catalysts can at times exhibit 

pyrophoric or self-heating properties. 

It is largely because of these 

pyrophoric properties that EPA is 

considering a separate proposal to 

conditionally exempt these catalysts 

from hazardous waste regulation. This 

future proposal will allow the agency to 

consider and seek comment on specific 

conditions to address the pyrophoric 

properties of these hazardous secondary 

materials, particularly during 

transportation and storage prior to 

reclamation, in order for the Agency to 

determine that they are not being 

discarded. As a result of this separate 

effort, these spent catalysts will not be 

eligible for today’s exclusions. Once 

EPA has proposed a conditional 

exclusion specifically for these spent 

catalysts, and after consideration of 

public comments, EPA will either 

finalize a conditional exclusion specific 

to these spent catalysts or may decide 

that the conditions being promulgated 

in today’s final rule are fully adequate 

for the management of these spent 

catalysts when recycled, and therefore 

would remove the restriction preventing 

these spent catalysts from being eligible 

for today’s exclusions. 

B. Spent Lead-Acid Battery Recycling 

and Precious Metals Reclamation 

EPA also agrees that spent lead-acid 

battery recycling should continue to be 

regulated under 40 CFR 266.80 or 40 

CFR part 273. This is because these 

regulations are actually hazardous waste 

regulations and are not solid waste 

exclusions. Continuing the regulation of 

spent lead-acid battery (SLAB) recycling 

as hazardous waste is necessary due to 

the unique nature of these batteries. 

Also, as noted by the commenters, the 

current battery recycling regulations are 

working well. More than 95% of SLABs 

are currently recycled and generators of 

SLABs are exempt from Superfund 

liability under the Superfund Recycling 

Equity Act (SREA), provided that they 

meet the requirements of the exemption, 

including the requirement to take 

‘‘reasonable care’’ to determine that the 

accepting facility is in compliance with 

the substantive environmental 

regulations. 

Because SREA was based on the 

current SLAB hazardous waste 

regulations under RCRA, changing the 

regulation of SLABs could have 

unintended consequences. For example, 

the current regulations prohibit batterybreaking without a permit because such 

battery-breaking operations have been 

high-risk activities. In addition, as noted 

in the environmental problems study, 

12% of our damage cases were from 

battery-breaking operations. Moreover, 

the high value of the lead plates and low 

entry cost for a battery-breaking facility 

provides a strong market incentive for 

facilities to recycle without investing in 

adequate management systems for the 

discarded battery acid and casings. 

In addition, because the RCRAregulated ‘‘generator’’ of a SLAB is often 

the garage or junkyard that removed the 

battery from the automobile (rather than 

the original owner who discarded the 

battery), the generator-controlled 

exclusion could be read to apply to 

these operations. Therefore, the 

reasonable efforts and financial 

assurance conditions that are a part of 

the transfer-based exclusion would not 

apply, despite the fact that their 

activities would resemble waste 

management rather than production. 

Because, in these cases, the SLABs have 

effectively already been discarded by 

the original owners before they enter the 

RCRA hazardous waste regulatory 

system, EPA will continue to regulate 

SLABs as solid and hazardous waste 

under 40 CFR 266.80 or 40 CFR part 

273. 

EPA also agrees with comments that 

the exclusions should have no impact 

on 40 CFR 266.70 (precious metals 


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exclusion) and 40 CFR 266.100(d) and 

(g) (conditional exclusions from the 

boiler and industrial furnace (BIF) 

regulations for ‘‘smelting, melting, and 

refining furnaces’’ and precious metals 

recovery furnaces). Because these 

exclusions are exclusions from certain 

hazardous waste regulations, not solid 

waste exclusions, as a general matter, 

EPA believes that facilities should have 

a choice of whether they manage their 

materials as hazardous waste under 

these exclusions or seek an exclusion 

from the definition of solid waste 

through today’s final rule. 

However, part of what 40 CFR 

266.100(d) accomplishes is to define 

when an operation involving burning is 

solely a metals recovery operation rather 

than a burning for energy recovery or 

destruction operation, neither of which 

is eligible for today’s exclusions. This 

distinction is an important one to make, 

and EPA did not intend to revise how 

such material recovery operations were 

identified, nor did EPA ask for comment 

on such a revision. 

Thus, for the purpose of defining the 

type of burning for metals recovery to be 

allowed under these exclusions, EPA 

will reference the requirements in 40 

CFR part 266 subpart H that defines 

when a ‘‘smelting, melting, and 

refining’’ furnace is solely engaged in 

metals recovery, but will not require the 

other conditions that are not related to 

distinguishing legitimate materials 

recovery from burning. Therefore, under 

today’s final rule, hazardous secondary 

materials burned for metals recovery 

would still be required to meet the 

minimum metals and maximum toxic 

organic metals content specified in 40 

CFR part 266 (as part of the definition 

of this activity), and would continue to 

be exempt from BIF permits, but they 

would not be subject to hazardous waste 

manifests and storage permits, as long as 

the conditions of the exclusions 

promulgated in today’s rule are met. 

C. Other Recycling Exclusions 

For other hazardous secondary 

materials currently eligible for 

management under other exclusions or 

alternative regulatory structures that do 

not include an exclusion from the 

definition of solid waste (such as the 

universal waste regulations in 40 CFR 

part 273), the facility would have the 

choice of either continuing to manage 

the hazardous secondary material as a 

hazardous waste under the existing 

regulations or under today’s exclusions 

from the definition of solid waste. 

In addition, it should be noted that, 

for the purposes of § 261.2(a)(2)(ii) and 

§ 261.4(a)(2)(23), when a facility collects 

hazardous secondary materials from 

other persons (for example, when 

mercury-containing equipment is 

collected through a special collection 

program), it is not the hazardous 

secondary material generator. Therefore, 

a universal waste handler who collects 

hazardous secondary materials from 

other persons would not be eligible for 

the generator-controlled exclusion, even 

if it would be considered a ‘‘generator’’ 

for purposes of the Universal Waste 

regulations. 

XII. Effect on Permitted and Interim 

Status Facilities 

A. Permitted Facilities 

Facilities that currently have RCRA 

permits or interim status and manage 

hazardous wastes that are excluded 

under today’s final rule will be affected 

in a number of ways, depending on the 

situation at the facility. At some 

facilities, some of the hazardous waste 

management units will be converted 

solely to manage excluded hazardous 

secondary materials, and other units 

may continue to manage hazardous 

wastes. At other facilities, all of the 

hazardous waste management units will 

be converted to manage wastes excluded 

under today’s final rule. In still other 

cases, individual units may manage 

both excluded materials and hazardous 

wastes. In all cases, the owner or 

operator of the facility must comply 

with the applicable conditions and 

limitations of the exclusion (including 

the containment of the hazardous 

secondary material in units operating 

under the exclusion, recycling 

legitimately, and the prohibition against 

speculative accumulation of excluded 

hazardous secondary materials) to 

maintain the exclusion. 

Permitted facilities that continue to 

manage hazardous wastes in addition to 

managing hazardous secondary 

materials excluded under this final rule 

must continue to maintain their Part B 

permits. Individual units may be 

converted solely to manage excluded 

hazardous secondary materials; 

however, the permit requirements 

applicable to the newly excluded units 

will remain in effect until they are 

removed from the permit. Owners and 

operators that seek to remove permit 

conditions applicable to units that are 

no longer hazardous waste management 

units must submit a permit modification 

request to the implementing agency. In 

the March 26, 2007, supplemental 

proposed rule, the Agency requested 

comment on requiring owners and 

operators seeking to modify their 

permits to remove units that are no 

longer regulated to follow the 

procedures of 40 CFR 270.42(a) for Class 

1 permit modifications, with prior 

Agency approval. The Agency received 

few comments on this issue, and is 

proceeding in this final rule with the 

proposed approach. Thus, this final rule 

modifies 40 CFR 270.42 by adding an 

entry to Appendix 1 that classifies 

permit modifications to remove units 

that are no longer regulated as a result 

of this rule as Class 1 with prior Agency 

approval. 

As was discussed in the preamble of 

the March 26, 2007, supplemental 

proposal, under the Class 1 with prior 

Agency approval approach, the owner 

or operator must 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 must 

comply with the requirements of 40 CFR 

270.42(a)(ii) for public notification. 

Under § 270.42(a)(ii), the permit 

modification will not become effective 

until the owner or operator receives 

written approval by the implementing 

agency. The implementing agency will 

approve the permit modification so long 

as the owner or operator has complied 

with the procedural requirements of 

§ 270.42(a) and has demonstrated that 

the operations meet the conditions of 

the exclusion, and that the unit does not 

manage non-excluded hazardous 

wastes. 

One commenter disagreed with the 

Agency’s approach, and believed that 

the Class 2 permit modification 

procedures were necessary to provide 

the public an opportunity to comment 

on the removal of the unit from the 

permit. The Agency disagrees with this 

commenter. The regulations that govern 

permit modification classify 

modifications to the permit term, to 

allow for earlier permit termination, as 

Class 1 with prior Agency approval. The 

Agency believes that removing permit 

conditions for units that are no longer 

regulated is, in effect, allowing earlier 

permit termination at those units. Thus, 

the Agency believes that Class 1 with 

prior Agency approval is the 

appropriate designation for these permit 

modifications. 

In the preamble of the March 26, 

2007, supplemental proposal, the 

Agency discussed the issue of whether 

closure requirements at formerly 

regulated units would be triggered when 

this rule becomes effective and the 

hazardous secondary materials they are 

receiving is no longer hazardous waste. 

This issue was also discussed in the 

October 2003 proposal, in which EPA 


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14Again, the owner/operator of the facility must 

comply with the applicable conditions and 

limitations of the exclusion (including the 

containment of the hazardous secondary material in 

the unit, legitimate recycling, and the prohibition 

against speculative accumulation) to maintain the 

exclusion. 

15The commenter discussed above who disagreed 

with the Agency’s approach for permit 

modifications to remove units that are no longer 

regulated, also believed that Class 2 permit 

modification procedures were necessary to provide 

the public an opportunity to comment on the owner 

or operator’s request to terminate a permit by 

modifying the permit term. The Agency disagrees 

with this commenter. As was discussed above, the 

regulations governing permit modifications classify 

changes to the expiration date to allow earlier 

permit termination as Class 1 with prior Agency 

approval. 

16Owners 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,’’ 

(see 68 FR 8757) for a detailed discussion of 

corrective action completion. 

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 (68 FR 

61580–61581). 

In today’s final rule, a permitted unit 

that is converted solely to manage 

excluded hazardous secondary materials 

will not be subject to the 40 CFR part 

264 closure requirements, since, 

typically, it will be managing the same 

material, with the only difference being 

that the material is now excluded from 

regulation as a hazardous waste. 

However, we expect that any funds in 

the closure or post-closure financial 

assurance mechanisms will be 

converted to provide financial assurance 

under today’s exclusion, assuming the 

facility is operating under the transferbased exclusion. In addition, as 

described in sections VII.D. and VIII.D 

of this preamble, at the end of the 

operating life of these units, all owners 

and operators (i.e., of units operating 

under either exclusion promulgated in 

this final rule) must manage any 

hazardous secondary materials that are 

not recycled, and remove or 

decontaminate all hazardous residues 

and contaminated containment system 

components, equipment structures, and 

soils. 

A permitted facility that converts to 

manage only hazardous secondary 

materials excluded under this final rule, 

and is, therefore, no longer a hazardous 

waste management facility, will no 

longer be required to maintain a 

hazardous waste operating permit 

(although, as discussed below, may still 

be subject to corrective action).14

However, permits issued to these 

facilities remain in effect until they are 

terminated. 

In the March 2007 supplemental 

proposal, the Agency also requested 

comment on requiring owners and 

operators seeking to terminate their 

operating permits (as opposed to just 

removing units from their permit) by 

modifying the permit term to follow the 

procedures of 40 CFR 270.42(a) for Class 

1 permit modifications, with prior 

Agency approval. The Agency received 

few comments on this issue, and is 

proceeding in this final rule with the 

proposed approach. Thus, this final rule 

modifies § 270.42 by adding an entry to 

Appendix 1 that classifies permit 

modifications to terminate operating 

permits by modifying the permit term, 

at facilities at which all units are 

excluded as a result of this final rule, as 

Class 1 with prior Agency approval. 

Under this approach, owners and 

operators seeking to terminate their 

operating permits must submit a permit 

modification request to the overseeing 

agency following the procedures of 

§ 270.42(a) for Class 1 modifications 

with prior Agency approval, as 

described above.15

To support a request for permit 

termination by modifying the permit 

term, the owner or operator must 

demonstrate that the operations meet 

the conditions of the exclusion, and that 

the facility does not manage nonexcluded hazardous wastes. 

In addition, as was explained in the 

October 28, 2003, proposal (see 68 FR 

61580) and again in the March 26, 2007, 

supplemental proposal (72 FR 14206), 

the obligation of 40 CFR 264.101 to 

address facility-wide corrective action at 

permitted facilities, is not affected by 

this final rule, and remains in effect.16

Therefore, an owner or operator of a 

facility that manages only hazardous 

secondary materials excluded under this 

final rule, who seeks to terminate the 

facility’s permit by modifying the 

permit term, must demonstrate as part 

of the permit modification request that 

the corrective action obligations at the 

facility have been addressed or where 

corrective action obligations remain, 

that continuation of the permit is not 

necessary to assure that they will be 

addressed. The Agency’s corrective 

action authority at such facilities is not 

affected by this rulemaking and the 

Agency thus retains its authority to 

address corrective action at such 

facilities using all authorities applicable 

prior to this rulemaking. 

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. 

B. Interim Status Facilities 

A facility that is operating under 

interim status will be affected by this 

final rule in much the same way as is 

a permitted facility and the issue of 

corrective action will be addressed in a 

similar manner. At an interim status 

facility that converts to managing only 

hazardous secondary materials that 

become excluded under this final rule, 

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, will no longer apply. At the same 

time, the Agency’s authority to address 

corrective action at the facility is not 

affected by this final rule, and the owner 

or operator retains responsibility for 

unaddressed corrective action 

obligations at the facility. 

C. Releases From Excluded Units at 

Interim Status or Permitted Facilities 

Commenters on the October 28, 2003, 

proposal 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. In response, the Agency noted 

in the March 26, 2007, supplemental 

proposal that releases from these units 

are discarded solid wastes and, 

therefore, potentially hazardous wastes, 

and agreed with the commenter’s 

concern that such releases should be 

addressed. The Agency suggested in that 

preamble that the specific Subtitle C 

closure requirements may not be the 

most appropriate means of addressing 

cleanup of releases from these units, if 

any have occurred. Rather, the Agency 

suggested that a better approach to 

address historical releases from these 


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17Similar provisions at 40 CFR 264.145(i) and 

265.145(h) provide for release of financial assurance 

for post-closure care. 

18See section VIII.C.4 of this preamble for a 

complete discussion of financial assurance as a 

condition of the exclusion for this group of 

facilities. 

units, as well as any future releases, 

would be as part of corrective action for 

all releases at the facility—an approach 

that the Agency believed would achieve 

the same environmental results and 

would provide the owner or operator 

the option of integrating the cleanup 

more closely into the broader facility 

response. 

Some commenters on the March 26, 

2007, supplemental proposal objected to 

this approach of addressing releases 

from units that previously managed 

hazardous wastes and, as a result of 

today’s rule, would subsequently only 

receive hazardous secondary materials 

excluded from Subtitle C control. These 

commenters requested that EPA 

expressly recognize that units storing or 

managing hazardous secondary 

materials excluded as a result of this 

rule would no longer be regulated as 

solid waste management units and are 

not subject to RCRA’s corrective action 

requirements. EPA disagrees with this 

approach, as we have discussed 

previously in this section and as 

discussed below, and continues to 

believe that the best approach to 

addressing releases from conditionally 

excluded units is, generally, to address 

them as part of corrective action for all 

releases at the facility. 

The Agency discussed the issue of its 

corrective action authority to address 

non-SWMU-related releases at RCRA 

treatment, storage, or disposal facilities 

in the May 1, 1996, Advance Notice of 

Proposed rulemaking (see 61 FR 19442– 

3). There, the Agency stated, ‘‘[g]iven 

the legislative history of RCRA section 

3004(u), which emphasizes that RCRA 

facilities should be adequately cleaned 

up, in part, to prevent the creation of 

new Superfund sites, EPA believes that 

corrective action authorities can be used 

to address all unacceptable risks to 

human health and the environment 

from RCRA facilities. In the permitting 

context, remediation of non-SWMU 

related releases may be required under 

the ‘‘omnibus’’ authority * * * In other 

contexts, orders under RCRA sections 

3008(h) or 7003 may require remedial 

action to address releases regardless of 

whether a SWMU is present.’’ 

The Agency envisions three scenarios 

that might apply to units from which 

releases have occurred. The first will 

arise in situations where an owner or 

operator fails to comply with the 

applicable conditions and limitations of 

the exclusion, and the unit 

consequently loses its exemption. In 

these situations, the unit itself will once 

again become a hazardous waste 

management unit, and the unit, as well 

as materials in the unit, will become 

subject to all requirements that were 

applicable prior to this final rule. Not 

only will corrective action authority be 

available at such a unit, but the closure 

requirements of 40 CFR part 264 or 265 

will once again apply at the unit as well, 

and releases from that unit may be 

addressed through either the corrective 

action or the closure process. 

The second scenario will arise in 

situations where releases occur at an 

excluded unit but, based on the sitespecific factors, the Agency does not 

consider the release to be significant 

and, therefore, the release does not 

cause the unit to lose its exclusion. 

Failure on the part of the owner or 

operator to respond to such releases 

could be considered an act of illegal 

disposal. The Agency generally would 

address these situations by issuing an 

enforcement action under RCRA section 

3008(a), or other applicable authorities, 

to compel cleanup actions and/or 

impose penalties. It should be noted 

that this approach is consistent with the 

approach taken by the Agency in a July 

2002 final rule, in which the Agency 

excluded hazardous secondary materials 

used to make zinc fertilizers from the 

definition of solid waste (see ‘‘Zinc 

Fertilizers Made from Recycled 

Hazardous Secondary Materials,’’ 67 FR 

48400, July 24, 2002). 

The third scenario will arise in 

situations where releases from the unit, 

of either the now excluded hazardous 

secondary material and/or other 

hazardous or solid wastes previously 

managed in the unit, were not addressed 

prior to the unit obtaining its exclusion. 

At permitted and interim status 

facilities, the status of those releases is 

unaffected by this rulemaking, and the 

Agency retains its authority to address 

them under all authorities applicable to 

them prior to this final rule, including 

sections 3004(u) and (v), and section 

3008(h). 

D. Financial Assurance Obtained for 

Closure at Newly-Excluded Units 

The requirements in 40 CFR parts 264 

and 265 subpart H, which applied at 

these units prior to their exclusion 

under this final rule, provide for the 

release of financial assurance upon 

certification by the facility owner or 

operator that closure has been 

completed in accordance with the 

approved closure plan, and after the 

Agency has verified that certification 

(see 40 CFR 264.143(i) and 

265.143(h)).17

Under the approach discussed in 

section VII.D. and VIII.D. of this 

preamble, hazardous waste management 

units that convert to managing only 

hazardous secondary materials that are 

excluded under this final rule will no 

longer be subject to the 40 CFR part 264 

or part 265 closure requirements. 

Further, while reclaimers who receive 

hazardous secondary materials that have 

been excluded under the new 40 CFR 

261.4(a)(24) are required to meet 

financial assurance requirements,18

persons who recycle hazardous 

secondary materials under the 

exclusions for materials recycled under 

the control of the generator 

(§ 261.2(a)(2)(ii) and § 261.4(a)(23)) are 

not required to meet the financial 

assurance requirements. 

Under the requirements of 40 CFR 

parts 264 and 265 subpart G, owners 

and operators of units now eligible for 

the exclusion of § 261.2(a)(2)(ii) and 

§ 261.4(a)(23) would have been required 

to remove and decontaminate all 

contaminated structures, equipment, 

and soils (see § 264.114 and § 265.114). 

The financial assurance provided under 

40 CFR parts 264 and part 265 subpart 

H was designed to assure that funds 

would be available for these activities. 

In the case of generator controlled units, 

where financial assurance is no longer 

required, previous releases from the 

unit, which would have been addressed 

during closure and for which financial 

assurance was obtained will, as a result 

of this rule, now be addressed through 

corrective action authority. The 

question raised by the Agency in the 

March 26, 2007, supplemental proposal 

was whether funds obtained for closure 

should, therefore, be directed to 

corrective action activities at the unit. 

Commenters on the March 26, 2007, 

supplemental proposal generally agreed 

that funds obtained for closure at units 

excluded under § 261.2(a)(2)(ii) and 

§ 261.4(a)(23) (under the control of the 

generator) should be directed to address 

releases from the unit. The Agency 

agrees with these commenters, and 

encourages regulators to work with 

owners and operators that seek to 

modify their permits to remove 

conditions applicable to these units that 

will operate under the exclusion of 

§ 261.2(a)(2)(ii) and § 261.4(a)(23), to 

verify that there are no unaddressed 

releases from the unit. In situations 

where corrective action is necessary at 

the unit, the Agency encourages 

regulators to work with owners and 

operators to assure that the releases 

from the unit are addressed promptly. 


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XIII. Effect on CERCLA 

A primary purpose of today’s final 

rule is to encourage the safe, beneficial 

reclamation of hazardous secondary 

materials. In 1999, Congress enacted the 

Superfund Recycling Equity Act 

(SREA), explicitly defining those 

hazardous substance recycling activities 

that may be exempted from liability 

under the Comprehensive 

Environmental Response, Compensation 

and Liability Act (CERCLA) (CERCLA 

section 127). Today’s final rule does not 

change the universe of recycling 

activities that could be exempted from 

CERCLA liability pursuant to CERCLA 

section 127. Today’s final rule only 

changes the definition of solid waste for 

purposes of the RCRA Subtitle C 

requirements. The final rule also does 

not limit or otherwise affect EPA’s 

ability to pursue potentially responsible 

persons under section 107 of CERCLA 

for releases or threatened releases of 

hazardous substances. 

XIV. Effect on Imports and Exports 

The exclusion for hazardous 

secondary materials generated and 

reclaimed under the control of the 

generator is limited to recycling 

performed in the United States or its 

territories. However, the exclusion for 

hazardous secondary materials exported 

for reclamation and the non-waste 

determinations included in today’s final 

rule do not place any geographic 

restrictions on movements of such 

hazardous secondary materials, 

provided they meet the conditions of 

the exclusion or, if stipulated, 

conditions of the non-waste 

determination. It is therefore possible 

that in some cases excluded hazardous 

secondary materials could be generated 

in the United States or its territories and 

subsequently exported for reclamation 

to a facility in a foreign country. It is 

also possible that hazardous secondary 

materials could be generated in a foreign 

country and imported for reclamation in 

the United States. Under today’s 

exclusion for hazardous secondary 

materials exported for reclamation, 

hazardous secondary materials are only 

excluded from the definition of solid 

waste in the U.S. and, thus, may be 

considered solid and hazardous wastes 

in the foreign country under that 

country’s laws and regulations. If this is 

the case, the U.S. facility that exports or 

imports hazardous secondary materials 

will also need to comply with any 

applicable laws and regulatory 

requirements of the foreign country. For 

further discussion, see section VIII.C.5. 

of today’s preamble regarding specific 

export and import conditions for 

hazardous secondary materials excluded 

under today’s rule. 

XV. General Comments on the Proposed 

Revisions to the Definition of Solid 

Waste 

EPA received hundreds of comments 

on the October 2003 proposal and the 

March 2007 supplemental proposal, 

most of which were quite detailed and 

raised multiple issues. Below is an 

overview of some of the major 

comments on general aspects of the 

proposals and a summary of EPA’s 

responses to those comments. For a 

complete discussion of all the 

comments and EPA’s responses to those 

comments, please see Revisions to the 

Definition of Solid Waste Final Rule 

Response to Comment Document found 

in the docket for today’s rulemaking. 

A. EPA’s Legal Authority To Determine 

Whether a Material Is a Solid Waste 

Comments: Legal Authority 

EPA received many comments from 

environmental groups and the waste 

treatment and recycling industry 

regarding EPA’s authority to define 

when recyclable hazardous secondary 

materials are solid wastes and how EPA 

used this authority in the proposed 

rulemaking. Some commenters argued 

that EPA has no authority under the 

RCRA statute to broadly exclude 

hazardous secondary materials from the 

definition of solid waste. These 

commenters asserted that Congress 

intended for hazardous secondary 

materials to be classified as solid wastes 

even when they are recycled. The 

commenters argued that the proposed 

exclusions are contrary to the plain 

statutory language of RCRA and that 

EPA may not lawfully exclude pollution 

control sludges and materials resulting 

from industrial, commercial, mining, 

and agricultural operations, according to 

accepted principles of statutory 

interpretation. Although the 

commenters acknowledged that EPA has 

promulgated such exclusions in the 

past, and that one such exclusion was 

recently upheld in court in Safe Food 

and Fertilizer v. EPA, they stated that 

they believed that the DC Circuit erred 

in Safe Food. The commenters argue 

that, in the fertilizer rule upheld in Safe 

Food, EPA considered impermissible 

factors (e.g., market participation, 

management practices, and chemical 

identity) in defining which materials are 

not discarded under RCRA, and that the 

Agency has done so again in the current 

rulemaking effort. 

EPA’s Response: Legal Authority 

EPA disagrees with comments that 

state that we have exceeded our 

authority by the exclusions being 

finalized today. While EPA clearly has 

the authority to regulate hazardous 

secondary materials that are reclaimed 

under Subtitle C of RCRA when discard 

is involved, the Agency also believes 

(and the courts have generally 

confirmed) that when hazardous 

secondary materials are reclaimed and 

such recycling operations do not 

involve discard, the hazardous 

secondary materials involved are not 

solid wastes under RCRA. EPA also has 

the authority to determine which types 

of recycling do not involve discard and, 

therefore, which types of hazardous 

secondary materials are not solid 

wastes. As EPA noted in the March 2007 

supplemental proposal, ‘‘[u]nder the 

RCRA Subtitle C definition of solid 

waste, many existing hazardous 

secondary materials are not solid wastes 

and, thus, not subject to RCRA’s ‘cradleto-grave’ management system if they are 

recycled. The basic idea behind this 

construct is that recycling of such 

materials often closely resembles 

normal industrial manufacturing, rather 

than waste management’’ (72 FR 14197). 

Existing exclusions, found in 40 CFR 

261.4(a), provide a long historical 

precedent for EPA’s authority to exclude 

reclaimed materials from the definition 

of solid waste. EPA refers these 

commenters to the discussion of case 

law, above, and asserts that this rule 

follows valid precedent in the DC 

Circuit, including the court’s opinion in 

Safe Food. 

B. Adequacy of Conditions and 

Restrictions Used To Determine 

Whether a Material Is a Solid Waste 

Comments: Adequacy of Conditions 

Other commenters did not dispute 

EPA’s authority to exclude hazardous 

secondary materials from the definition 

of solid waste, but instead argued that 

before EPA can lawfully claim that 

excluded materials are not discarded, 

the Agency would need to strengthen 

the conditions to protect human health 

and the environment. For example, one 

commenter believed that all legitimacy 

criteria should be mandatory, that 

performance standards, such as 

secondary containment are needed for 

materials stored in tanks and containers, 

and that EPA should require engineered 

liner systems and monitoring for 

materials stored in land-based units. 


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EPA’s Response: Adequacy of 

Conditions 

EPA disagrees that the restrictions we 

are requiring for the under the control 

of the generator exclusions or the 

conditions and restrictions we are 

requiring for the transfer-based 

exclusion are inadequate. Each of the 

restrictions and/or conditions is 

specifically linked to defining when the 

hazardous secondary materials are not 

discarded and to ensuring that the 

regulatory authority has the information 

needed to oversee the exclusion. 

Specifically, for hazardous secondary 

materials reclaimed under the control of 

the generator, the fact that the generator 

maintains control and liability for the 

hazardous secondary materials, either 

by managing them on-site, within the 

same company, or under a specific 

tolling contract, is itself an indication 

that the materials are not discarded. The 

prohibition on speculative 

accumulation (as defined in 261.1(c)(8)), 

addresses both the situation in which a 

large percentage of the hazardous 

secondary material is accumulated over 

the year without being recycled and the 

situation where there is no feasible 

means of recycling the hazardous 

secondary material, regardless of 

volume. Finally, the requirement that 

the hazardous secondary materials must 

be contained in the unit recognizes the 

reality that hazardous secondary 

materials that are released to the 

environment are discarded. 

For hazardous secondary materials 

transferred to another party for 

reclamation, the fact that the generator 

is required to make reasonable efforts to 

ensure that its hazardous secondary 

materials are properly and legitimately 

reclaimed demonstrates that the 

generator is not simply disposing of the 

material, but instead is taking 

responsibility that the hazardous 

secondary materials will be recycled. In 

addition, by maintaining a record of 

each shipment and a confirmation of 

receipt, the generator demonstrates that 

it continues to take responsibility for 

knowing the ultimate disposition of its 

hazardous secondary materials. 

Furthermore, by obtaining financial 

assurance, the reclamation facility 

demonstrates that it has also taken on 

the responsibility to ensure that the 

hazardous secondary materials will not 

be abandoned in the event that 

circumstances make it impossible for 

the facility to reclaim the hazardous 

secondary materials. For further 

discussion of how these and other 

restrictions and/or conditions of the 

exclusions are linked to defining when 

hazardous secondary materials are not 

discarded, see section V of this 

preamble, as well as sections VII–IX and 

sections XVI–XVIII. Support for the 

Agency’s determination regarding 

which materials are not discarded is 

also found throughout the rulemaking 

record in this proceeding. 

EPA also disagrees that specifying 

further engineering conditions, such as 

secondary containment, liners, and leak 

detection systems, is needed to 

determine which hazardous secondary 

materials are not being discarded. The 

restrictions EPA has established and the 

conditions that EPA is finalizing today 

address a variety of hazardous 

secondary materials and reclamation 

operations that are linked to defining 

the act of discard, rather than specifying 

a particular technology that may not be 

appropriate in some cases. 

Furthermore, hazardous secondary 

materials excluded under today’s rule 

may remain subject (or become subject) 

to requirements under other statutory 

programs. For example, hazardous 

secondary material generators, 

transporters, intermediate facilities and 

reclaimers may be subject to regulations 

developed under: 

• The Occupational Safety and Health 

Act of 1970, which requires hazard 

communication programs, labeling, 

material safety data sheets (MSDS) and 

employee information and training (29 

CFR part 1910). The Occupational 

Safety and Health Administration 

(OSHA) regulations also require 

emergency response planning and 

training under their Emergency 

Response Program to Hazardous 

Substance Releases (29 CFR 1910.120); 

• The Hazardous Materials 

Transportation Act of 1975 and the 

subsequent Hazardous Materials 

Transportation Uniform Safety Act of 

1990, which requires hazardous 

secondary materials meeting DOT’s 

defining criteria for hazard classes and 

divisions to comply with hazard 

identification, shipping papers, labeling 

and placarding, incident reporting and 

security plans (49 CFR part 107 and 

parts 171–180); 

• The Comprehensive Environmental 

Response, Compensation and Liability 

Act (CERCLA), Emergency Planning and 

Community Right-to-Know Act (EPCRA) 

and the Superfund Amendments and 

Reauthorization Act (SARA) of 1986 

which, combined, require notification of 

hazardous substance releases above a 

reportable quantity, emergency planning 

and, if applicable, MSDS and inventory 

reporting (40 CFR 302.6, 40 CFR parts 

355 and 370). Hazardous secondary 

material generators and reclaimers 

meeting defined criteria are also subject 

to toxic chemical release reporting (i.e., 

Toxics Release Inventory (TRI) under 

EPCRA (40 CFR part 372)). 

While not exhaustive, this list 

provides examples of regulatory 

programs designed to protect human 

health and the environment developed 

under other statutory authorities 

alongside of RCRA. For more 

information on these regulatory 

programs, please see ‘‘Memorandum: 

Requirements that other Regulatory 

Programs would place on Generators, 

Reclaimers and Transporters of 

Hazardous Secondary Materials’’ 

located in the docket for this 

rulemaking. 

C. EPA’s Authority To Regulate 

Recycling 

Comments: EPA’s Authority 

EPA also received comments from the 

hazardous waste generating industry 

disputing EPA’s authority to promulgate 

today’s rule. Unlike the environmental 

groups’ and waste treatment and 

recycling industry’s comments, which 

argued that EPA has no authority to 

deregulate hazardous secondary 

materials recycling, many of the 

generator industry comments asserted 

that EPA has no authority to regulate 

such recycling, even to prohibit 

speculative accumulation or require that 

the hazardous secondary materials be 

contained. 

While most such commenters 

applauded EPA’s decision in the March 

2007 supplemental proposal to 

explicitly link the proposed exclusions 

to the concept of defining when 

hazardous secondary materials are not 

discarded, many of these comments 

argued that EPA has over-reached its 

statutory authority by imposing 

restrictions or conditions that the 

commenters argued have no 

relationship to discard. 

Some commenters asserted that 

limiting the exclusions for hazardous 

secondary materials reclaimed under 

the control of the generator and 

imposing conditions on the exclusion 

for hazardous secondary materials 

transferred to a third party for 

reclamation, EPA has misread the intent 

of Congress. These comments cite 

previous court cases, noting the 

‘‘analysis of the statute reveals clear 

Congressional intent to extend EPA’s 

authority only to materials that are truly 

discarded, disposed of, thrown away, or 

abandoned’’ (AMC I, 824 F2d. at 1190). 

They go on to argue that materials being 

recycled do not fall into one of these 

enumerated activities. 

Specifically, many of the comments 

cite the ABR decision (which in turn 

cites earlier court decisions), where the 


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court noted that EPA’s authority is 

‘‘limited to materials that are ‘discarded’ 

by virtue of being disposed of, 

abandoned, or thrown away’’ and that 

‘‘[s]econdary materials destined for 

recycling are obviously not of that sort. 

Rather than throwing them away, the 

producer saves them, rather than 

abandoning them, the producer reuses 

them’’ (ABR 208 F.3d at 1051). ‘‘To say 

that when something is saved it is 

thrown away is an extraordinary 

distortion of the English language’’ (Id. 

at 1053). The commenters assert that, by 

limiting the exclusion to hazardous 

secondary materials intended for 

recycling that are ‘‘contained’’ in the 

unit, EPA is illegally imposing 

conditions on a material that has not 

been discarded. 

Other comments take issue with 

EPA’s decision to impose conditions for 

the transfer-based exclusion. These 

comments criticize EPA’s rationale that, 

in part, bases the conditions on the fact 

that ‘‘subsequent activities are more 

likely to involve discard, given that the 

generator has relinquished control of the 

hazardous secondary material’’ (72 FR 

14178). One commenter specifically 

challenged the proposed financial 

assurance requirement, claiming that 

the condition does not define the 

absence of discard and would 

effectively impose a waste management 

requirement upon a non-waste. 

EPA’s Response: EPA’s Authority 

EPA disagrees with the comments that 

Congress did not intend to give EPA the 

authority to regulate hazardous waste 

recycling. As EPA noted in both the 

October 2003 proposal and the March 

2007 supplemental proposal, the RCRA 

statute and the legislative history 

suggest that Congress expected EPA to 

regulate as solid and hazardous wastes 

certain materials that are destined for 

recycling (see 45 FR 33091, citing 

numerous sections of the statute and 

U.S. Brewers’ Association v. EPA, 600 F. 

2d 974 (DC Cir. 1979); 48 FR 14502–04, 

April 3, 1983; and 50 FR 616–618). 

Moreover, the case law discussed above 

clearly shows instances where EPA 

properly regulated the recycling of solid 

and hazardous wastes. 

EPA also disagrees that requiring the 

hazardous secondary materials to be 

‘‘contained’’ contradicts the court’s 

finding in ABR that EPA does not have 

the authority to define when hazardous 

secondary materials are not discarded. 

By limiting the exclusion to hazardous 

secondary materials that are contained, 

EPA is defining ‘‘discard’’ for this 

material. While it is true that the court 

has said that materials recycled in a 

continuous process by the generating 

industry are not solid wastes, 

commenters have failed to demonstrate 

how hazardous secondary materials that 

are not contained meet that description. 

By ‘‘contained,’’ EPA means not 

released to the environment. It is a selfevident fact that hazardous secondary 

materials released to the environment 

(e.g., causing soil and groundwater 

contamination) are not ‘‘destined for 

recycling’’ or ‘‘recycled in a continuous 

process’’; thus, they are part of the waste 

management problem. Moreover, as 

discussed above in section VII.C, to the 

extent that significant releases to the 

environment from a storage unit have 

occurred and remain unaddressed, it is 

reasonable to conclude that the material 

remaining in the unit is also actively 

being discarded. It is important to note 

that the hazardous secondary materials 

that remain in the unit are not solid 

wastes, unless the releases from the 

storage unit indicate that these materials 

are not being managed as valuable 

commodities and are, in fact, discarded. 

For examples of releases from a 

hazardous secondary materials storage 

unit that indicate that the hazardous 

secondary material in the unit is 

discarded and examples of releases that 

do not indicate discard, see section 

VII.C. of this preamble. 

EPA also disagrees with comments 

that, under the transfer-based exclusion, 

EPA cannot consider the fact that the 

generator has relinquished control of the 

hazardous secondary material (along 

with other factors that indicate discard) 

in determining what conditions are 

needed for this exclusion. EPA’s 

authority to regulate such transfers is 

clear: as the Court noted in Safe Food, 

‘‘materials destined for future recycling 

by another industry may be considered 

‘discarded’; the statutory definition does 

not preclude application of RCRA to 

such materials if they can reasonably be 

considered part of the waste disposal 

problem’’ (350 F.3d at 1268). 

EPA’s record for today’s rulemaking 

demonstrates that third-party recycling 

of hazardous secondary materials has 

been and continues to be part of the 

waste disposal problem, and, without 

the conditions being finalized today, 

these hazardous secondary materials 

would be solid wastes. Of the 208 

damage cases in EPA’s study of 

environmental problems associated with 

post-RCRA, post CERCLA hazardous 

secondary materials recycling, 94% 

appeared to take place at commercial 

off-site facilities. Moreover, EPA’s study 

of how market forces impact recycling 

demonstrates that these damages are 

consistent with our understanding of 

how the business model for commercial 

recycling can lead to sub-optimal 

results. As opposed to manufacturing, 

where the cost of inputs, either raw 

materials or intermediates, is greater 

than zero and revenue is from the sale 

of the output, recycling conducted by 

commercial hazardous secondary 

materials recyclers involves generating 

revenue from receipt of the hazardous 

secondary materials, as well as from the 

sale of the output. Recyclers of 

hazardous secondary materials in this 

situation can have a short-term 

incentive to accept more hazardous 

secondary materials than they can 

economically or safely recycle, resulting 

in the hazardous secondary materials 

eventually being discarded. 

The financial assurance condition for 

the transfer-based exclusion being 

finalized today is directly linked to this 

situation. By obtaining financial 

assurance, the owner or operator of the 

reclamation facility is making a direct 

demonstration that it will not abandon 

the hazardous secondary material. Of 

the 208 damage cases, 69 (or 33%) were 

primarily caused by abandonment of the 

hazardous secondary material by the 

recycler. None of 69 facilities whose 

damages were primarily caused by 

abandonment had financial assurance. 

Under the transfer-based exclusion, 

financial assurance is the means by 

which the recycler demonstrates an 

investment in the future of the recycled 

materials; even if the market changes in 

such a way that the recycler can no 

longer process the hazardous secondary 

materials, by obtaining financial 

assurance, it has made certain that the 

hazardous secondary materials will not 

be abandoned and therefore not 

discarded. EPA therefore disagrees with 

the comment that the financial 

assurance condition is not related to 

discard of the material. 

Moreover, financial assurance also 

addresses the correlation of the financial 

health of a reclamation facility with the 

absence of discard of hazardous 

secondary materials. According to the 

successful recycling study, an 

examination of a company’s finances is 

an important part of many of the 

environmental audits generators 

currently use to determine that their 

hazardous secondary materials will not 

be discarded. In addition, the 

environmental problems study showed 

that bankruptcies or other types of 

business failures were associated with 

138 (66%) of the damage cases, and the 

market forces study identified a low net 

worth of a firm as a strong indication of 

a sub-optimal outcome of recycling (i.e., 

over-accumulation of hazardous 

secondary materials, resulting in 

releases to the environment and 


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abandonment of hazardous secondary 

materials). 

In the March 2007 supplemental 

proposal, EPA proposed to require that 

reclamation facilities obtain financial 

assurance to ensure that the reclamation 

facility owner/operators who would 

operate under the terms of this 

exclusion are financially sound (72 FR 

14191), and many commenters 

supported this condition and EPA’s 

rationale. EPA continues to believe that 

the findings in the recycling studies 

indicate a correlation between financial 

health of a reclaimer and the likelihood 

he will not discard the hazardous 

secondary materials. 

D. Comments on Recycling Studies 

1. Environmental Problems Study 

EPA completed An Assessment of 

Environmental Problems Associated 

with Recycling of Hazardous Secondary 

Materials in order to identify and 

characterize environmental problems 

attributed to hazardous secondary 

materials recycling activities and to 

provide the stakeholders with a clearer 

picture of the recycling industry in the 

United States. 

The environmental problems study 

(or study) was conducted in response to 

public comments received on the 

October 2003 proposal and to guide 

EPA’s deliberations on how to proceed 

with the March 2007 supplemental 

proposal. In the public comments to the 

October 2003 proposal, a number of 

commenters expressed concern that 

deregulating hazardous secondary 

materials that are reclaimed in the 

manner described in that proposal could 

result in mismanagement of the 

hazardous secondary materials, and 

thus could create new cases of 

environmental damage requiring 

remedial action under federal or state 

authorities. Some of these commenters 

illustrated their concern by citing 

specific examples of environmental 

damage related to hazardous secondary 

materials recycling. A number of other 

commenters expressed the view that the 

great majority of the damage cases cited 

by commenters had occurred before 

RCRA, CERCLA, or other environmental 

regulatory programs were established in 

the early 1980s and, therefore, that the 

cases represent ‘‘historical’’ recyclingrelated environmental damage and are 

not particularly relevant or instructive 

for revising the RCRA Subtitle C 

definition of solid waste. These 

commenters further argued that the 

environmental programs—most notably 

RCRA’s hazardous waste regulations 

and the liability provisions of 

CERCLA—have created strong 

incentives for the proper management of 

recyclable hazardous secondary 

materials and recycling residuals. 

In response to the March 2007 

supplemental proposal and to the study, 

made public in the rulemaking docket 

in conjunction with that proposal, EPA 

received comments on the study from a 

variety of commenters. In general, the 

comments pertain to the scope and 

methodology of the study and how the 

study reflects on today’s exclusions and 

restrictions and/or conditions of the 

exclusions. 

Comments: Scope and Methodology 

With respect to the scope and 

methodology of the study, a few 

commenters agreed with excluding 

historical damage cases from the study 

and stated that recycling operations 

have in fact improved since RCRA was 

enacted. A few commenters provided 

several types of recycling-related 

environmental problems familiar to 

state agencies and a few commenters 

suggested the review of several 

additional damage cases. A few 

commenters argued that inclusion of 

their facility in the study, or the 

inclusion of their industry 

representatives’ facilities, was 

unfounded due to one or more of the 

following reasons: Hazardous secondary 

materials were exempt from RCRA 

when environmental problems 

occurred; environmental problems stem 

from historical or pre-RCRA activities; 

numerous facilities in the study shut 

down during the 1980s in response to 

the creation of regulatory disincentives; 

environmental problems were addressed 

pursuant to CERCLA; and problematic 

activities were clearly a result of noncompliance. Also, a commenter 

suggested that one damage case profiled 

in the study ‘‘is not a good example of 

a contaminated site caused by 

recycling.’’ In support of their comment, 

the commenter cited a Record of 

Decision (ROD) which stated that the 

site’s former foundry operations, which 

existed pre-RCRA, caused soil and 

groundwater contamination. 

One commenter suggested EPA 

overlooked potential sources of 

information for the study, including 

television commentary, media reports, 

books, and other reports (specifically 

one state report), and one commenter 

suggested that EPA ‘‘may have missed 

reviewing relevant files’’ by not 

analyzing state and regional paper files. 

Another commenter expressed concern 

that the study was not peer reviewed. 

EPA’s Response: Scope and 

Methodology 

EPA acknowledged in the preamble to 

the March 2007 supplemental proposal 

that we did not search every possible 

information source for damage cases for 

the environmental problems study. For 

example, we did not systematically 

survey all state environmental agencies 

for relevant cases, nor did we search 

paper files in EPA Regional offices. We 

did solicit damage cases from regional 

representatives and we solicited 

additional cases through the public 

comment process. We recognize that 

there are likely to be additional cases 

that we did not identify. However, we 

have no reason to believe that additional 

cases would substantially change the 

overall picture. In fact, information 

submitted to EPA does not indicate that 

EPA has failed to find a representative 

sample of environmental damage caused 

by recycling activities. 

EPA maintains that historical 

recycling-related damage cases are 

much less relevant and instructive than 

cases which have occurred within the 

current regulatory and liability 

landscape, and several commenters 

shared our belief. We value state 

commenters’ general discussion of 

environmental problems encountered at 

recycling operations and note that any 

facility taking advantage of today’s 

exclusion will need to comply with all 

applicable protective restrictions and 

conditions. 

We also appreciate the suggestion of 

additional damage cases to review for 

the study. Based on our analysis of these 

cases, we have added one new damage 

case site to the study and updated two 

existing damage case profiles with more 

information about environmental 

problems (see Addendum: An 

Assessment of Environmental Problems 

Associated With Recycling of Hazardous 

Secondary Materials). We also 

determined that three damage cases 

identified in the public comments 

already are included in the 2007 study 

and additional information was not 

revealed to supplement the profiles; 

determined that one damage case 

identified in the public comments was 

previously reviewed and the damage 

was deemed unrelated to recycling and 

that no additional information was 

provided to change this conclusion; and 

determined that two sites identified in 

the public comments had damage 

unrelated to recycling. We concluded 

that the new damage cases and the 

supplemental information added to 

existing cases are consistent with the 

damage cases previously cited in the 

study; therefore, the additional facts do 


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not substantially change our 

understanding of the hazardous 

secondary materials recycling damage 

cases. 

EPA maintains that the damage cases 

captured in the environmental problems 

study fall within the study’s scope and, 

as such, are relevant for guiding the 

development of today’s rulemaking. As 

we discussed in the study, we are 

interested in whether damage may be 

more or less prevalent for hazardous 

secondary materials that are explicitly 

exempted or excluded from RCRA 

regulatory controls and we are less 

interested in historical or pre-RCRA 

cases (defined in the study as before 

1982). We also indicated in the study 

that we are interested in ‘‘whether or 

not the recycler * * * went out of 

business’’ and which ‘‘government 

program is responsible for overseeing 

the cleanup of the site,’’ and clearly we 

are interested in acts of non-compliance 

that resulted in environmental damage. 

These points of interest, among others 

cited on pages 4–5 of the study, are 

informative for the purpose of this 

rulemaking and are within the scope of 

the study. Consequently, we disagree 

with industry and association 

commenters who argued that certain 

damage cases did not warrant inclusion 

in the Environmental Problems Study. 

We acknowledge that the particular 

damage case referenced by a commenter 

as ‘‘not a good example’’ for the study 

does in fact exhibit environmental 

damage which can be partially 

attributed to foundry operations pre1982. However, as indicated in the 

damage case profile in Appendix II of 

the study, the damage case was 

included in the study due to the 

following factors, which do not include 

damage associated with pre-1982 

operations: Abandonment of drums of 

spent catalyst, bankruptcy, and business 

closure. As a result, we maintain that 

this damage case is within the scope of 

the study. 

While we acknowledge that we did 

not review all possible sources of 

information for our study and generally 

relied on readily available material, we 

did in fact rely on media reports for 

information and we collaborated with 

regional representatives who are very 

knowledgeable about the damage cases 

and who assisted us in fact checking 

and suggesting damage cases. With 

respect to a commenter’s suggestion that 

we review the ‘‘Final Report of the 

Waste and Hazardous Materials 

Division, Fire & Explosions Task Force,’’ 

produced by Michigan DEQ, we regret 

that the state has not yet made the 

report publicly available. However, we 

note that the scope of the draft Michigan 

study was not limited to hazardous 

secondary materials recycling 

operations, and shows that accidents 

can and do occur in all types of 

manufacturing facilities. 

Despite the fact that we did not 

conduct an exhaustive review of all 

possible sources of damage case 

information, we believe that the 

restrictions and conditions of today’s 

exclusions are sufficient to ensure safe 

recycling activities. For facilities 

operating under the transfer-based 

exclusion, sudden accidental liability 

coverage for bodily injury and property 

damage to third parties is required for 

all units, and non-sudden accidental 

liability coverage is required for landbased units (see section VIII.C.4. for a 

more detailed discussion of liability 

coverage). We also note that facilities 

may be subject to other regulations that 

ensure facility safety, such as the OSHA 

requirements and state and local 

requirements (see ‘‘Memorandum: 

Requirements that other Regulatory 

Programs Would Place on Generators, 

Reclaimers and Transporters of 

Hazardous Secondary Materials’’ made 

available in the docket for today’s final 

rulemaking). While EPA has not done a 

definitive study of other regulatory 

requirements, we are reasonably 

comfortable with the fact that the 

available information indicates 

oversight by other regulatory agencies 

would significantly mitigate potential 

damage from the non-discarded 

materials. 

With respect to the comment 

regarding peer review, we believe that 

while the study was not peer reviewed, 

the scope and methodology are sound, 

as evidenced by the small number of 

comments received on this issue. 

Additionally, peer review was not 

warranted by EPA peer-review 

standards because the study is not a 

scientific and/or technical work 

product. Rather, the study is an analysis 

of existing and publicly available 

information compiled to provide a 

representative view of hazardous 

secondary materials recycling. 

Comments: Study’s Relation to Today’s 

Actions 

EPA received a number of comments 

alleging that the study does not support 

today’s exclusions. Several commenters 

strongly believe that the study reflected 

that recycling hazardous secondary 

materials is a high risk activity and thus 

should remain fully regulated. A few 

commenters wrote that the study does 

not support the transfer-based exclusion 

and these commenters collectively 

predicted that the exclusion will create 

future damage cases. To bolster their 

feedback, one commenter stressed that 

the majority of all damage cases cited in 

the study are located off-site from the 

facilities that generated the hazardous 

secondary materials. Commenters also 

used the study’s findings (namely 

damage type, damage cause, cost of 

cleanup) to support their opposition to 

the transfer-based exclusion. In 

particular, commenters stressed the 

financial impact to states and 

communities if additional 

environmental clean-ups were to result 

from facilities taking advantage of the 

exclusions. 

On the other hand, EPA also received 

responses from several commenters 

stating that the environmental problems 

study supports the proposed conditions 

of the transfer-based exclusion for 

reclaimers and generators. While several 

of these commenters opposed 

codification of the transfer-based 

exclusion, other commenters supported 

it as long as there were requirements to 

ensure protection of public health and 

the environment. For example, 

commenters responded that 

mismanagement of hazardous secondary 

materials, residuals, and recycled 

products or intermediates in the damage 

cases clearly represented a need to have 

requirements for protective management 

and storage, as well as a requirement for 

safe residuals management. 

Additionally, commenters believed in 

the importance of a financial assurance 

requirement to protect against the 

damage noted in the study related to 

bankruptcy and the abandonment of 

hazardous secondary materials and 

residuals. A commenter also responded 

that generators should assess whether 

the above protections exist at 

reclamation facilities in order to 

minimize their future liability. 

Additionally, in response to the study, 

EPA received one comment suggesting 

that each of the following safeguards be 

added to the exclusions: Tracking 

materials, restriction on land-based 

storage, and 90-day storage provisions 

in 40 CFR part 262 for all generators, 

including those who recycle on-site. 

EPA’s Response: Study’s Relation to 

Today’s Actions 

While EPA agrees that the study 

reflects the risk and problems involved 

with recycling hazardous secondary 

materials, we disagree with those 

commenters who stated that the study 

does not support today’s exclusions 

because of the perceived risk posed by 

the exclusions. Instead, we agree that 

the environmental problems highlighted 

in the study demonstrate the need to 

promulgate restrictions and conditions 

for the exclusions (e.g., requirements for 


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financial assurance, reasonable efforts, 

shipping documentation, hazardous 

secondary materials management, 

legitimate recycling, and speculative 

accumulation). EPA maintains that the 

restrictions and conditions finalized 

with today’s exclusions, and discussed 

more in depth in sections VII.C. and 

VIII.C., will address the problems 

identified in the study and will limit the 

exclusions to materials that EPA has 

determined are not discarded. We also 

agree with those commenters who 

suggest that generators should assess 

whether reclamation facilities 

adequately manage hazardous 

secondary materials in order to mitigate 

the risk of future environmental 

problems. Consequently, we are 

finalizing the reasonable efforts 

condition for the transfer-based 

exclusion. 

Comments: Restrictions on Mining and 

Mineral Processing 

A few commenters responded that the 

study does not support controls on landbased storage of hazardous secondary 

materials at mining and mineral 

processing facilities. They cited that 

only 1 of the 208 damage cases is 

associated with a primary mineral 

processing facility. Thus, the 

commenters argued that the small 

number of environmental problems 

stemming from recycling at mining and 

mineral processing facilities does not 

warrant the proposed regulatory 

oversight of the industry. 

EPA’s Response: Restrictions on Mining 

and Mineral Processing 

EPA acknowledges that the 

environmental problems study included 

one damage case from primary mineral 

processing and two damage cases from 

secondary mineral processing. We note 

that whether an industry has a single 

damage case represented in the study or 

numerous damage cases, all industries 

are treated equally within the final 

rulemaking for hazardous secondary 

materials generated, reclaimed, and 

managed in land-based units (40 CFR 

261.4(a)(23)). 

Moreover, further review of publicly 

available data revealed four additional 

damage case profiles from primary and 

secondary mineral processing facilities, 

which corroborates EPA’s view that the 

findings from the environmental 

problems study apply across industries, 

including the mining and mineral 

processing industries (see Addendum: 

An Assessment of Environmental 

Problems Associated with Recycling of 

Hazardous Secondary Materials to 

review new damage case profiles). Of 

the four additional damage cases, three 

are primary mineral processing facilities 

and one is a secondary mineral 

processing facility. Improper disposal of 

residuals and improper management of 

recyclables are the most frequently 

observed primary damage cause at such 

facilities. The primary environmental 

damage type resulting from the above 

activities are soil contamination, 

wildlife exposure, and groundwater and 

surface water contamination. 

We have concluded that the 

additional damage cases do not 

substantially change the overall picture 

of environmental problems caused by 

hazardous secondary materials recycling 

activities at facilities, including mining 

and mineral processing facilities. We 

also disagree with the commenters’ 

assertion that restrictions on land-based 

storage units are not supported by the 

environmental problems study. 

Cumulative damage causes from the 

study support the restrictions imposed 

by 40 CFR 261.4(a)(23) and the 

identification of additional mining and 

mineral processing damage cases 

corroborates EPA’s finding that no 

industry should be exempt from the 

restrictions and/or conditions due to the 

limited number of damage case profiles 

exhibited in the environmental 

problems study. 

2. Good Recycling Practices Study 

EPA completed An Assessment of 

Good Current Practices for Recycling of 

Hazardous Secondary Materials to 

provide a more complete picture of the 

hazardous secondary materials recycling 

industry in the United States. The study 

examines what practices responsible 

generators and recyclers currently use to 

ensure that their hazardous secondary 

materials are recycled responsibly. 

One purpose of the study was to 

provide the Agency with another angle 

from which to view the hazardous 

secondary materials recycling industry. 

EPA has long heard from representatives 

of that industry that management of 

hazardous secondary materials has 

changed and improved since RCRA was 

implemented in the early 1980s. In 

addition, by indicating what controls 

responsible recyclers are using, the 

study was intended to help EPA 

determine which kinds of regulatory 

requirements would be most 

appropriate and effective as conditions 

of the exclusions. 

Some of the comments on the 

successful recycling study supported 

the conclusions in the study. 

Particularly, these commenters stated 

that audits are typical, that they usually 

cover the subjects described in the 

study, and that RCRA and CERCLA 

liability are drivers of responsible 

recycling behavior. Several other 

commenters suggested that other 

incentives affecting the behavior of 

recyclers include economic concerns, 

the RCRA hazardous waste regulations, 

and environmental and safety 

regulations under other statutes. 

Comments: Scope of the Successful 

Recycling Study 

EPA received several critical 

comments in response to the study on 

responsible recycling behaviors. One 

comment that appeared more than once 

was that EPA’s study focused too much 

on large companies and that many of the 

practices a large company undertakes 

with a full environmental staff would 

not be possible for a smaller company 

and, therefore, that the practices are not 

widespread among smaller companies. 

EPA’s Response: Scope of the 

Successful Recycling Study 

EPA agrees with the focus on larger 

companies in the study and discusses it 

in the methodology section of the 

report’s introduction. Because many of 

the contacts for interviews for the report 

came out of the public comments on the 

October 2003 proposed rule, much of 

the information in the report came from 

companies large enough to have staff 

responsible for submitting public 

comments to federal proposed 

rulemakings. However, where possible 

and appropriate, the study does 

examine the options for small 

businesses, as well as what small 

businesses are doing that approximates 

the audit programs and other practices 

of larger companies. The Agency did 

find that many small companies are 

concerned with questions of liability in 

their hazardous secondary materials 

recycling and often either belong to 

auditing consortiums or already do 

smaller audits by mail and telephone if 

they cannot afford to set up visits to the 

recycling facilities to examine them in 

person. 

Comments: Purpose of the Successful 

Recycling Study 

Another comment made by several 

commenters expressed a concern that 

circular logic was in place in the March 

2007 supplemental proposal. The 

commenters stated that it was regulation 

under RCRA that led to the growth of 

the good practices being described and 

stated that EPA was using these 

practices as justification for taking away 

the very regulations that led to them. 

EPA’s Response: Purpose of the 

Successful Recycling Study 

The Agency believes that those 

making this comment misunderstood 


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the relationship between the successful 

recycling study and the March 2007 

supplemental proposal. The proposal 

did not state that this background 

material was a justification for why the 

Agency proposed the conditional 

exclusion for hazardous secondary 

materials not under the control of the 

generator. Rather, the Agency looked to 

the study to determine what the current 

responsible practices are and to use that 

information to inform decisions on what 

restrictions and/or conditions would be 

appropriate for the transfer-based 

exclusion. By promulgating restrictions 

and/or conditions that will lead to 

responsible management of hazardous 

secondary materials, the Agency intends 

to encourage hazardous secondary 

materials recycling, while protecting 

human health and the environment. 

3. Market Forces Study 

EPA received very few comments on 

Potential Effects of Market Forces on the 

Management of Hazardous Secondary 

Materials Intended for Recycling. The 

purpose of this study is to use economic 

theory to describe how various market 

incentives can influence a firm’s 

decision making process when the 

recycling of hazardous secondary 

materials is involved. Different 

economic incentives between the 

recycling of hazardous secondary 

materials and manufacturing can arise 

due to differences in these two business 

models. As opposed to manufacturing, 

where the cost of inputs of either raw 

materials or intermediates is greater 

than zero and revenue is generated 

primarily from the sale of the output, 

some models of hazardous secondary 

materials recycling involve generating 

revenue primarily from the receipt of 

the hazardous secondary materials. 

Recyclers of hazardous secondary 

materials in this situation may thus 

respond differently to economic forces 

and incentives from traditional 

manufacturers. 

Comments and EPA’s Response: Market 

Forces Study 

Most of the commenters agreed with 

the underlying premise of the study that 

market forces affect commercial 

recycling differently from how they 

affect manufacturing from virgin 

materials, thus creating a potential 

incentive for the over-accumulation of 

hazardous secondary materials in some 

circumstances. Thus, the study supports 

both the proposed conditions for the 

transfer-based exclusion and the ‘‘useful 

contribution’’ factor for the legitimacy 

criteria. EPA agrees with these 

comments. 

One commenter stated that as a result 

of the market forces study, EPA should 

also include a requirement that the 

generator evaluate the financial health 

of the recycler before shipping a 

hazardous secondary material to the 

recycler. While EPA agrees that 

evaluating the financial health of a 

company can be useful and informative, 

and encourages companies to do so, it 

is not an activity that lends itself to an 

objective standard that would be 

appropriate for regulation. Instead, EPA 

is requiring recyclers under the transferbased exclusion to have financial 

assurance in order to determine that 

negative economic factors will not result 

in the hazardous secondary materials 

being abandoned. 

One commenter disagreed with the 

study’s conclusion that intra- and intercompany recyclers have more flexibility 

in their waste management decisions 

than commercial recyclers do. The 

commenter noted that company politics 

and internal goals can make it difficult 

to switch from recycling to disposal, 

even if the market forces make it more 

economical, and that it may take two or 

more months to find a disposal 

contractor. 

While EPA generally agrees that there 

are more factors at work than those 

described in the study, we continue to 

believe that intra- and inter-company 

recycling have more flexibility in waste 

management decisions than a 

commercial recycler does. When a 

commercial recycler’s entire income is 

from accepting hazardous secondary 

materials for recycling and selling 

recycled products, there is no economic 

alternative for it to stop recycling and 

continue to stay in business unless it 

can afford the cost of a hazardous waste 

management permit and the cost of 

becoming a hazardous waste disposal 

facility. This finding is supported by the 

results of the damage cases, the 

overwhelming majority of which were at 

commercial recycling facilities. 

E. Use Constituting Disposal (UCD) and 

Burning for Energy (BFE) 

Comments: UCD and BFE 

EPA received extensive comments on 

both the October 2003 proposal and the 

March 2007 supplemental proposal 

requesting that the scope of the 

proposed rules be expanded to include 

hazardous secondary materials used in 

a manner constituting disposal and 

hazardous secondary materials burned 

for energy recovery. Commenters argued 

that these operations do not involve 

discard, and that they can have many 

environmental benefits, including 

resource conservation and reduction in 

greenhouse gas emissions. In particular, 

commenters argued that hazardous 

waste that is indistinguishable from a 

commercial fuel should be not a solid 

waste. Other commenters supported 

keeping the exclusion focused on 

reclamation and not including use 

constituting disposal and burning for 

energy recovery. Commenters noted that 

these types of activities, in some cases, 

are akin to discard, that precedents exist 

for regulation of these hazardous 

secondary materials, and that recycling 

and reclamation are higher on the waste 

management hierarchy and more likely 

to conserve resources than burning for 

energy recovery. 

EPA’s Response: BFE and UCD 

EPA continues to maintain that 

comments on UCD and BFE are outside 

the scope of the solid waste exclusions 

in today’s final rule, which are focused 

on reclamation. EPA agrees that 

hazardous secondary materials that are 

comparable to commercial fuels should 

not be solid wastes, and the Agency has 

already promulgated an exclusion for 

certain of these materials (40 CFR 

261.4(a)(16)). However, as stated earlier, 

such materials are outside the scope of 

today’s final exclusions and are best 

addressed under separate rulemaking 

efforts. 

XVI. Major Comments on the Exclusion 

for Hazardous Secondary Materials 

Legitimately Reclaimed Under the 

Control of the Generator 

A. Scope of the Exclusion 

1. Exclusion for Materials Recycled OnSite 

Comments: On-Site Exclusion 

In our March 2007 supplemental 

proposal, EPA proposed to exclude from 

the definition of solid waste hazardous 

secondary materials that are generated 

and legitimately reclaimed at the 

generating facility. EPA proposed to 

define ‘‘generating facility’’ in 40 CFR 

260.10 as ‘‘all contiguous property 

owned by the generator’’ (72 FR 14214). 

We noted that our proposed definition 

would include situations where a 

generator contracted with another 

company to reclaim hazardous 

secondary materials at the generator’s 

facility, either temporarily or 

permanently. The Agency solicited 

comment on whether facilities under 

separate ownership, but located at the 

same site (e.g., industrial parks), should 

be included within this proposed 

exclusion. We also solicited comment 

on other definitions which might be 

compatible with the concept of 

generator control. 


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Commenters who addressed this issue 

generally supported the proposed onsite exclusion. They agreed with EPA 

that hazardous secondary materials 

reclaimed by a generator at its facility 

are unlikely to be discarded because the 

materials will be managed and 

monitored by a single entity who is 

familiar with both the generation and 

recycling of the hazardous secondary 

materials. Several commenters also 

agreed with EPA that environmental 

risks were lessened if the hazardous 

secondary materials were not 

transported off-site, and that fewer 

liability questions would arise in the 

case of accidents or mismanagement. 

With respect to companies under 

separate ownership, but located at the 

same site, commenter reaction was more 

mixed. Some commenters said that this 

situation is not compatible with 

generator control. They argued that 

unrelated companies would not be as 

likely to have knowledge of each other’s 

operations and hazardous secondary 

materials, and that additional controls 

were necessary, such as financial 

assurance for the reclaimer and 

reasonable efforts on the part of the 

generator (conditions that EPA had 

proposed for the transfer-based 

exclusion). 

Other commenters supported an 

exclusion for facilities under separate 

ownership, but located at the same site, 

(i.e., co-located facilities). These 

commenters said that such an exclusion 

would encourage recycling. These 

commenters mentioned a variety of 

scenarios which they argued should be 

eligible for the exclusion. Some 

commenters described integrated 

chemical manufacturing operations with 

co-located facilities that are owned by 

different entities because of corporate 

mergers and acquisitions. Another 

commenter noted that at some steel 

plants, spent pickle liquor is reclaimed 

on-site by a company that is different 

from the company operating the steel 

plant. Other commenters noted that 

coke and tar plants at iron and steel 

facilities are sometimes owned by 

electric utilities. A few commenters 

argued that facilities at airports should 

be eligible for the exclusion, and other 

commenters mentioned various 

cooperative recycling ventures within 

the automotive industry. Some 

operations mentioned by commenters 

appeared to be prospective rather than 

actual. 

EPA’s Response: On-Site Exclusion 

After evaluating these comments, EPA 

has decided to finalize this provision as 

proposed and to limit the exclusion to 

hazardous secondary materials that are 

generated and legitimately reclaimed by 

the hazardous secondary material 

generator at that generator’s facility. We 

agree with the commenters that at least 

some of the situations they described 

are not necessarily incompatible with 

generator control. One of the 

situations—spent pickle liquor recycled 

on-site at a steel mill—is eligible for the 

generator-controlled exclusion if the 

generator has contracted with the 

company to reclaim the material at the 

generator’s facility. However, the 

Agency does not have sufficient legal or 

factual information about other 

situations mentioned by the 

commenters to determine if there is a 

single entity who remains in control of 

the hazardous secondary material 

throughout the reclamation process. 

For this reason, EPA believes that 

such situations may be more 

appropriately addressed under the 

exclusion for hazardous secondary 

materials transferred for reclamation (40 

CFR 261.4(a)(24)) or under the case-bycase non-waste determination 

procedures finalized today in § 260.30. 

For the sake of clarity and in response 

to comments, we are also adding a 

definition of ‘‘hazardous secondary 

material’’ and ‘‘hazardous secondary 

material generator’’ to § 260.10. 

‘‘Hazardous secondary material’’ means 

a secondary material that, when 

discarded, would be identified as 

hazardous waste under part 261 of 40 

CFR. ‘‘Hazardous secondary material 

generator’’ means any person whose act 

or process produces hazardous 

secondary material at the generating 

facility. A facility that collects 

hazardous secondary materials from 

other persons is not the hazardous 

secondary material generator. These 

definitions would apply to all of the 

exclusions promulgated today. We note 

that generators sometimes contract with 

a second company to collect hazardous 

secondary materials at the generating 

facility, after which the hazardous 

secondary materials are subsequently 

reclaimed at the facility of the second 

company. In that situation, the 

hazardous secondary materials would 

no longer be considered ‘‘under the 

control of the generator’’ because the 

materials are not reclaimed at the 

generating facility. The materials should 

instead be managed under the exclusion 

for materials transferred for reclamation. 

EPA agrees with certain comments 

that a facility that generates hazardous 

secondary materials may lease the 

property where it conducts operations, 

rather than own the property and that 

our proposed definition of ‘‘generating 

facility’’ would not cover such 

arrangements. EPA has therefore 

changed the definition of ‘‘generating 

facility’’ in 40 CFR 260.10 to read ‘‘all 

contiguous property owned, leased, or 

otherwise controlled by the hazardous 

secondary material generator.’’ We have 

also amended the existing definition of 

‘‘facility’’ in § 260.10 to include a 

reference to management of hazardous 

secondary materials. Therefore, any 

references to ‘‘facilities’’ or ‘‘units’’ of a 

facility in today’s rule also refers to 

facilities or units managing hazardous 

secondary materials excluded under this 

rule. 

2. Exclusion for Materials Recycled by 

the ‘‘Same Company’’ 

In its March 2007 supplemental 

proposal, EPA proposed to exclude from 

the definition of solid waste hazardous 

secondary materials that were generated 

and reclaimed by the same ‘‘person’’ as 

defined in 40 CFR 260.10, if the 

generator certified the following: ‘‘on 

behalf of [insert company name], I 

certify that the indicated hazardous 

recyclable material will be sent to 

[insert company name], that the two 

companies are under the same 

ownership, and that the owner 

corporation [insert company name] has 

acknowledged full responsibility for the 

safe management of the hazardous 

secondary material’’ (72 FR 14214). 

‘‘Person,’’ as defined in § 260.10, means 

an individual, trust, firm, joint stock 

company, Federal Agency, corporation 

(including a government corporation), 

partnership, association, State, 

municipality, commission, political 

subdivision of a State, or any interstate 

body. EPA proposed the certification 

requirement because of existing 

complexities in corporate ownership 

and liability. The certification would 

clarify the responsibilities of the 

generator and reclaimer and would help 

regulatory authorities determine 

whether a facility was eligible for this 

exclusion. The Agency solicited 

comment on any other certification 

language that might accomplish the 

same end, and on other definitions of 

‘‘same-company’’ (72 FR 14186). 

Comments: Same-Company Exclusion 

Many commenters supported this 

exclusion and stated that hazardous 

secondary materials sent from one 

company’s facility to another remained 

essentially under the control of the 

generating company. According to these 

commenters, if a generator sends 

materials to a reclaimer that is part of 

the same corporate structure, the 

generator is likely to be familiar with 

the recycling and materials management 

processes employed by the reclaimer. In 

addition, questions regarding liability 


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and responsibility for such hazardous 

secondary materials are likely to be 

clearer than is the case with facilities 

from unrelated companies. 

Other commenters stated that when 

hazardous secondary materials are 

generated and transported off-site for 

reclamation, additional controls were 

needed to avoid discard and protect 

human health and the environment 

even in the case of intra-company 

recycling. Some of these commenters 

preferred such reclamation to be 

regulated under the proposed 

conditional exclusion for hazardous 

secondary materials transferred for the 

purpose of reclamation. This measure 

would ensure that generators would 

have to perform reasonable efforts and 

that reclaimers would have to obtain 

financial assurance. Other commenters 

suggested additional notification and 

recordkeeping requirements for any 

hazardous secondary materials 

transported off-site. 

EPA’s Response: Same-Company 

Exclusion 

After evaluating these comments, the 

Agency has decided to retain ‘‘samecompany’’ recycling under the 

exclusion for hazardous secondary 

materials legitimately reclaimed under 

the control of the generator. We do not 

believe that facilities exchanging 

hazardous secondary materials within 

the same corporate structure should be 

subject to the requirements for our 

exclusion at § 261.4(a)(24), as long as 

appropriate control of the recycling 

process is maintained. In particular, it is 

unnecessary for the generator to perform 

reasonable efforts on the reclaimer, 

because the generator is likely to be 

knowledgeable about the reclaimer’s 

ability to recycle the hazardous 

secondary materials properly and 

legitimately. Similarly, if the generator 

and reclaimer are part of the same 

corporate structure and if common 

control is maintained over the policies 

of both facilities, there are strong 

incentives to ensure that the hazardous 

secondary materials are properly and 

legitimately reclaimed, thus making a 

financial assurance requirement for the 

reclaimer unnecessary. 

In response to commenters who 

suggested additional notification and 

recordkeeping requirements, we note 

that the Agency is revising our proposed 

requirements for notification and 

recordkeeping for all exclusions 

promulgated today. These revisions are 

discussed in sections VII.C. and VIII.C. 

of this preamble. 

Comments: Certification of Same 

Company 

Some commenters argued that no 

certification should be necessary when 

hazardous secondary materials are sent 

between the same or related companies 

because generator knowledge of the 

materials and the potential CERCLA 

liability should suffice to ensure safe 

and legitimate recycling. Other 

commenters supported a certification 

provision, but suggested alternative 

language that they stated would be more 

compatible with generator control. Still 

other commenters disagreed with our 

proposed requirement for certifying that 

the generator and reclaimer of 

hazardous secondary materials were 

under the same ownership and that the 

owner corporation must acknowledge 

responsibility for the safe management 

of the hazardous secondary materials. 

According to these commenters, 

under existing corporate law, parent 

companies do not (and sometimes 

cannot) assume legal liability for their 

subsidiaries. EPA’s proposed 

certification requirement regarding the 

owner company would therefore have 

little legal effect and could actually 

discourage same-company recycling. 

Some of these commenters suggested 

that either the generator or the reclaimer 

should acknowledge responsibility for 

properly managing the hazardous 

secondary material, not a third-party 

owner corporation. 

Other commenters said that the 

proposed requirement that the 

hazardous secondary materials be 

generated and reclaimed by the same 

‘‘person’’ under 40 CFR 260.10 was not 

appropriate because a corporation and 

its affiliates or subsidiaries are legally 

distinct and not the same ‘‘person.’’ 

Therefore, one commenter suggested 

that we refer to related ‘‘facilities’’ 

rather than ‘‘companies.’’ Some other 

commenters suggested that we focus on 

the concept of ‘‘control’’ rather than 

‘‘ownership.’’ 

EPA’s Response: Certification of Same 

Company 

After evaluating these comments, EPA 

does not agree with the commenters 

who argued that a certification 

requirement is not needed. We note that 

the purpose of the certification is not to 

directly ensure proper and legitimate 

recycling, but to clarify responsibility 

for the hazardous secondary materials 

and to demonstrate to regulatory 

officials that the hazardous secondary 

materials are not discarded and are 

within the terms of the generatorcontrolled exclusion. We are therefore 

retaining a certification requirement for 

this exclusion. 

However, the Agency has also 

decided that its proposed certification 

language should be revised to avoid 

confusion and to ensure more effective 

generator control. We have therefore 

revised our proposed regulatory 

definition for this exclusion to refer to 

‘‘facilities’’ rather than companies. 

Under the definition finalized today at 

40 CFR 260.10, the reclaiming facility 

must be ‘‘controlled’’ by the generating 

facility or by a person (under § 260.10) 

who controls both the generating facility 

and the reclaiming facility. ‘‘Control,’’ 

for purposes of this exclusion, means 

‘‘the power to direct the policies of the 

facility, whether by the ownership of 

stock, voting rights, or otherwise, except 

that contractors who operate facilities 

on behalf of a different person shall not 

be deemed to ‘‘control’’ such facilities’’ 

(see § 260.10). Our final certification 

language requires the generating facility 

to certify that it controls the reclaiming 

facility, or that the generating facility 

and the reclaiming facility are under 

common control. In addition, the 

generator must certify that either the 

generating facility or the reclaiming 

facility acknowledges full responsibility 

for the proper management of the 

hazardous secondary materials. To 

avoid confusion, we have also amended 

the definition of ‘‘facility’’ at 40 CFR 

260.10 to include facilities which 

manage hazardous secondary materials. 

Therefore, any reference to ‘‘facilities’’ 

in this rule also includes facilities 

which manage materials excluded under 

the regulations promulgated today. 

EPA believes that this revised 

language more appropriately reflects the 

concept of ‘‘generator control’’ that 

underlies the exclusions at 40 CFR 

261.2(a)(2)(ii) and 261.4(a)(23). 

Requiring that a generating facility 

control the reclaiming facility, or that 

both be under common control, ensures 

that there is an ongoing relationship 

between the generator and reclaimer 

and that the two facilities are more 

likely to be familiar with each others’ 

waste management practices, thereby 

minimizing the possibility of discard. If 

there is no such relationship, the two 

facilities should not be eligible for this 

exclusion and the use of the transferbased exclusion would be more 

appropriate. In addition, requiring the 

hazardous secondary material generator 

to certify that either the generating 

facility or the reclaiming facility 

acknowledges responsibility for the safe 

management of hazardous secondary 

materials ensures that the responsibility 

rests with the party most capable of 

assuming such responsibility. This 


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certification should be made by an 

official familiar with the corporate 

structure of both the generating and the 

reclaiming facilities and should be 

retained at the site of the generating 

facility. 

Comments and EPA’s Response: 

Application to Government Agencies 

and Universities 

Some commenters requested that EPA 

clarify whether two government 

agencies (such as the Department of 

Defense and the Department of Energy) 

would be considered the same ‘‘person’’ 

under 40 CFR 260.10 if hazardous 

secondary materials are generated by 

one agency and reclaimed by another. In 

response, we note that for purposes of 

RCRA, the federal government is not a 

single ‘‘person’’; rather, each agency or 

department would be considered a 

separate ‘‘person.’’ We also note that 

under today’s final rule, a federal 

agency that is a generating facility does 

not normally have the power to direct 

the policies of a different federal agency 

that is a reclaiming facility, nor is there 

a ‘‘person’’ under § 260.10 who directs 

the routine policies of both facilities. In 

certain situations, the two different 

federal agencies involved may wish to 

apply for a case-by-case non-waste 

determination under 40 CFR 260.30, as 

appropriate, or use the transfer-based 

exclusion. 

Other commenters requested that EPA 

clarify whether the same-company 

exclusion extends to hazardous 

secondary materials that are generated 

and reclaimed at different facilities, 

when both facilities are owned by the 

same government agency or university, 

but operated by a contractor. In some of 

these situations, the same contractor 

operates both the generating facility and 

the recycling facility, but, in other 

situations, the generating facility and 

the reclaiming facility are operated by 

different contractors. In those situations 

where the generating facility and the 

reclaiming facility are both owned by 

the same government agency or 

university, the two facilities would be 

under common control because the 

agency or university in question has the 

power to direct the policies of both the 

generating facility and the reclaiming 

facility. Under this scenario, both 

facilities would therefore be eligible for 

the same-company exclusion, even if 

operated by different contractors. 

However, if the generating facility and 

the reclaiming facility were each owned 

by a separate government agency or 

university, they would not be eligible 

for this exclusion even if both facilities 

were operated by the same contractor, 

because the element of common control 

would be lacking. We have revised the 

certification language of 40 CFR 260.10 

to reflect this approach. The parties 

involved may apply for a case-by-case 

non-waste determination under 40 CFR 

260.30, as appropriate, or use the 

transfer-based exclusion. 

3. Types of Tolling Arrangements 

Eligible 

In its March 2007 supplemental 

proposal, the Agency proposed to 

exclude from the definition of solid 

waste certain hazardous secondary 

materials that are generated pursuant to 

a written contract between a tolling 

contractor and a toll manufacturer. 

Through the contract, the tolling 

contractor would arrange for the 

manufacture by the toll manufacturer of 

a product made from unused materials 

specified by the tolling contractor. To be 

eligible for the exclusion, the tolling 

contractor would have to retain 

ownership of and responsibility for the 

hazardous secondary materials that 

were generated during the course of the 

production of the product. EPA solicited 

comment on other types of contractual 

arrangements under which discard is 

unlikely to happen and which could 

appropriately be covered by the 

exclusion for generator-controlled 

hazardous secondary materials. For 

example, one company could enter into 

a contractual arrangement for a second 

company to reclaim and reuse (or return 

for reuse) the first company’s hazardous 

secondary materials. The first company 

could create a contractual instrument 

that exhibits the same degree of control 

over how the second company manages 

the hazardous secondary materials as is 

found in a tolling arrangement (72 FR 

14186). 

Comments: Tolling Arrangements 

Some commenters stated that tolling 

arrangements are incompatible with 

‘‘generator control’’ and are best 

regulated under the proposed exclusion 

for materials that were transferred for 

legitimate reclamation. They argued that 

requirements such as reasonable efforts 

(by generators) and financial assurance 

(for reclaimers) were necessary to avoid 

discard in the case of off-site 

reclamation. Some of the commenters 

argued that the physical generator of the 

hazardous secondary material (in this 

case, the toll manufacturer) retains legal 

liability for the material. They stated 

that contracts which reallocated 

resources to address financial 

responsibility for mismanagement or 

mishap could contain loopholes that 

would allow tolling contractors to 

dispose of hazardous secondary 

materials or send them to a third party 

for reclamation. 

Other commenters, on the other hand, 

urged EPA to expand the tolling 

exclusion to other types of contractual 

arrangements. A few commenters said 

that the exclusion should be allowed for 

any contract between a generator and a 

reclaimer where the generator was 

willing to retain ownership of and/or 

responsibility for the hazardous 

secondary materials. Other commenters 

mentioned specific contractual 

situations in which they argued the 

hazardous secondary materials in 

question were clearly handled as a 

commodity and discard was therefore 

highly unlikely. One example given was 

a facility that reclaims metals from 

electric arc furnace dust and then sends 

the metals back to steel mills to be 

reused. Another example was a facility 

that takes spent copper etchant from 

manufacturers of printed wiring boards 

and uses the material to make new 

copper compounds. Still another 

example was a facility that collects used 

paint purge solvent from auto body 

paint operations, reclaims it, and sells 

regenerated solvent back to the auto 

body facility. 

EPA’s Response: Tolling Arrangements 

After considering these comments, the 

Agency has decided to retain the tolling 

exclusion, but not to broaden its scope. 

The exclusion will therefore be limited 

to situations where a tolling contractor 

contracts with a toll manufacturer to 

make a product from specified unused 

materials. We do not agree with those 

commenters who said that tolling 

contracts are not compatible with 

‘‘generator control.’’ The typical tolling 

contract contains detailed specifications 

about the product to be manufactured, 

including the management of any 

hazardous secondary materials that are 

generated and returned to the tolling 

contractor for reclamation. In addition, 

the tolling contractor will enter into a 

tolling contract with such requirements 

only if it has decided that the economic 

benefit from such recycling is justified. 

For these reasons, we do not believe that 

tolling arrangements should be subject 

to the conditions applicable to the 

transfer-based exclusion. 

On the other hand, the Agency also 

does not agree with those commenters 

who urged that we should allow the 

generator-controlled exclusion for any 

hazardous secondary materials 

generated under a contract between a 

generator and a reclaimer. We believe 

that the exclusion should be limited to 

the types of tolling arrangements 

specified in 40 CFR 260.10. When 

hazardous secondary materials are 


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transferred off-site for reclamation, there 

is, in general, less likelihood of 

generator control, and, hence, more 

likelihood of discard, in the absence of 

conditions that ensure the hazardous 

secondary materials will be handled as 

valuable products. In these situations, 

additional requirements are needed for 

the Agency to determine that no discard 

has occurred. Conversely, in the specific 

situations included in the generatorcontrolled exclusion (on-site, samecompany, and tolling reclamation), we 

believe that the generator is much more 

likely to be familiar with the reclaimer 

and to have powerful incentives to see 

that the hazardous secondary materials 

are reclaimed properly and legitimately. 

In these cases, the requirements that we 

have finalized today (notification, 

legitimate recycling, compliance with 

speculative accumulation limits, and 

containment) are sufficient for the 

Agency to determine that such 

hazardous secondary materials are not 

discarded. These requirements may not 

be sufficient in the case of unrelated 

generators and reclaimers who have a 

non-tolling type of contract. 

To clarify the requirements for tolling 

contracts under today’s rule, and to 

assist regulatory authorities in 

determining whether a facility is eligible 

for an exclusion under a tolling 

contract, EPA has also added a 

certification requirement to the 

definition of hazardous secondary 

material generated and reclaimed under 

the control of the generator in § 260.10 

of the final rule. This provision would 

require the tolling contractor to certify 

that it has a written contract with the 

toll manufacturer to manufacture a 

product or intermediate which is made 

from unused materials specified by the 

tolling contractor, and that the tolling 

contractor will reclaim the hazardous 

secondary materials generated during 

the course of this manufacture. The 

tolling contractor must also certify that 

it retains ownership of, and 

responsibility for, the hazardous 

secondary materials that are generated 

during the course of the manufacture, 

including any releases of hazardous 

secondary materials that occur during 

the manufacturing process. This 

certification should be made by an 

official familiar with the terms of the 

written contract and should be retained 

at the site of the tolling contractor. 

In response to those commenters who 

described specific types of contractual 

arrangements that should be eligible for 

the generator-controlled exclusion, we 

note that facilities operating under such 

arrangements may apply for a non-waste 

determination under § 260.30, as 

appropriate. In some cases, commenters 

did not include enough detail about the 

contracts to enable the Agency to draft 

appropriate regulatory language. In 

other cases, the arrangement suggested 

was industry-specific and the 

conditions or requirements suggested by 

the commenters were not appropriate 

for an exclusion covering many different 

types of facilities. We believe that such 

arrangements are best evaluated on a 

case-by-case basis by the regulatory 

authority, possibly under 40 CFR 

260.30, to determine their eligibility for 

exclusion. 

Comments: Terms Used in Tolling 

Exclusion 

One commenter suggested that we 

replace the term ‘‘batch manufacturer’’ 

with ‘‘toll manufacturer.’’ This 

commenter stated that ‘‘batch 

manufacturer’’ was too broad and 

generally referred to a facility which 

engages in a distinct, short production 

campaign, not necessarily tied to a twoparty contractual agreement. ‘‘Toll 

manufacturer,’’ this commenter stated, 

is a subset of batch manufacturers and 

generally refers to a party which 

undertakes manufacturing pursuant to a 

contract with a tolling contractor, such 

as the arrangement we proposed. This 

commenter also requested that EPA 

clarify that the ‘‘product’’ required to be 

produced under a tolling contract can 

include intermediates, as well as final 

products, and that materials used in toll 

manufacturing were sometimes 

specialty chemicals or intermediates 

that could not be described as ‘‘raw 

materials,’’ as would be required under 

our proposal. They suggested that we 

use the term ‘‘specified materials’’ 

instead. 

EPA’s Response: Terms Used in Tolling 

Exclusion 

The Agency agrees that the suggested 

term ‘‘toll manufacturer’’ is more 

accurate and has revised the definition 

in § 260.10 accordingly. EPA also agrees 

that a product produced under a tolling 

contract can be an intermediate or a 

final product and has revised the 

definition in § 260.10 to refer to 

‘‘production of a product or 

intermediate.’’ Finally, the Agency 

agrees that the term ‘‘raw materials’’ 

may not be accurate, but prefers to use 

the term ‘‘unused materials’’ instead of 

‘‘specified materials,’’ because we 

believe that term encompasses specialty 

chemicals and intermediates without 

also including spent or secondary 

materials, which are not included in our 

definition of toll manufacturing. 

B. Restrictions on Exclusions for 

Hazardous Secondary Materials 

Managed Under the Control of the 

Generator in Land-Based Units and 

Non-Land-Based Units 

In its March 2007 supplemental 

proposal, the Agency proposed in 40 

CFR 261.4(a)(23)(i) that hazardous 

secondary materials generated and 

legitimately reclaimed under the control 

of the generator must be contained if 

they were stored in land-based units (72 

FR 14216). EPA proposed to use the 

existing definition of land-based units 

and defined a land-based unit in 40 CFR 

260.10 as a landfill, surface 

impoundment, waste pile, injection 

well, land treatment facility, salt dome 

formation, salt bed formation, or 

underground mine or cave. EPA did not 

propose a containment limitation for 

such materials if they were stored in 

non-land-based units. 

EPA did not propose a regulatory 

definition of ‘‘contained,’’ nor did we 

propose specific performance or storage 

standards. We stated that whether 

hazardous secondary materials are 

contained would be decided on a caseby-case basis, and that such materials 

are generally contained if they are 

placed in a unit that controls the 

movement of the hazardous secondary 

materials out of the unit. We solicited 

comment on whether additional 

requirements might be necessary to 

demonstrate absence of discard when 

hazardous secondary materials were 

recycled under the control of the 

generator. In particular, we asked 

whether additional requirements for 

storage would be appropriate, such as 

performance-based standards designed 

to address releases to the environment. 

We also indicated that if commenters 

believed such requirements were 

appropriate, they should specify the 

technical rationale for each requirement 

suggested and why the requirement is 

necessary if the hazardous secondary 

material remains under the control of 

the generator. 

Comments and EPA’s Response: 

Definition of ‘‘Land-Based Unit’’ 

EPA received several comments 

expressing confusion over our proposed 

definition of ‘‘land-based unit.’’ We 

proposed land-based unit to mean ‘‘a 

landfill, surface impoundment, waste 

pile, injection well, land treatment 

facility, salt dome formation, salt bed 

formation, or underground mine or 

cave.’’ Commenters noted that including 

‘‘landfills’’ and ‘‘injection wells’’ was 

not necessary for the proposed 

exclusion, since these management 

units are clearly inappropriate for 


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hazardous secondary materials intended 

for recycling. Furthermore, commenters 

also noted that Subtitle C defines these 

terms waste-centrically (i.e., as a unit 

that handles ‘‘waste’’ in one way or 

another). This could create confusion 

because a hazardous secondary material 

would not, by definition, be ‘‘managed’’ 

(or ‘‘stored’’) in one of these ‘‘waste’’ 

units. EPA agrees with these comments, 

and in the final rule has defined ‘‘landbased unit’’ as an area where hazardous 

secondary materials are placed in or on 

the land before recycling. However, as 

discussed below, the Agency has 

clarified that land-based units that are 

production units are not included in the 

definition. 

Comments and EPA’s Response: Mineral 

Processing Industry 

Some commenters asserted that the 

Agency has no jurisdiction over landbased production units in the mineral 

processing industry. As previously 

stated, EPA agrees that the Agency does 

not regulate the production process. 

(See 63 FR 28580). Accordingly, EPA 

has clarified the definition of ‘‘landbased unit’’ to clarify that production 

units are not included in that definition. 

However, these commenters also 

asserted that EPA cannot legally require 

containment for these units. To the 

extent that these comments are intended 

to mean that EPA cannot regulate 

material that has been released into the 

environment, these comments are 

addressed in section XV.C. of this 

preamble, and also in the response to 

comments document in the record for 

this rulemaking. 

Comments: Standards for Units (Both 

Land-Based and Non-Land-Based) 

Other commenters, however, were 

opposed to allowing any land-based 

storage, at least without a RCRA Part B 

permit or strict requirements, such as 

secondary containment, leak detection 

measures, regular inspections, 

monitoring, or financial assurance. Most 

of these commenters did not appear to 

distinguish between land-based units 

under the generator-controlled 

exclusion and those under the exclusion 

for hazardous secondary materials 

transferred for reclamation; presumably, 

they wanted the same conditions for 

both. 

Regarding non-land-based units such 

as tanks, containers, or containment 

buildings, some commenters agreed 

with EPA’s approach, but other 

commenters preferred minimum storage 

standards for these units. Some 

commenters wanted Subtitle C 

standards to apply. Other commenters 

believed that the RCRA hazardous waste 

requirements were not necessary, but 

suggested other standards, such as 

requiring tanks to be in good condition, 

to be compatible with the stored 

material, to have secondary 

containment, or to be subject to routine 

inspections. 

EPA’s Response: Standards for Units 

(Land-Based and Non-Land-Based) 

After evaluating these comments, the 

Agency has decided not to add 

performance standards or other 

requirements for managing hazardous 

secondary materials excluded under any 

of the exclusions promulgated today 

(§§ 261.2(a)(2)(ii), 261.4(a)(23), or 

261.4(a)(24)). Such detailed measures 

are unnecessary for hazardous 

secondary materials that are handled as 

valuable products that are destined for 

recycling. Under today’s rule, regulatory 

authorities can determine whether such 

materials in a unit are contained by 

considering all such site-specific 

circumstances. For example, local 

conditions can greatly affect whether 

hazardous secondary materials managed 

in a surface impoundment are likely to 

leak and cause damage, and, therefore, 

whether the unit could be considered 

contained. Similarly, facilities may 

employ such measures as liners, leak 

detection measures, inventory control 

and tracking, control of releases, or 

monitoring and inspections. Any or all 

of these practices may be used to 

determine whether the hazardous 

secondary materials are contained in the 

unit. 

EPA also believes that detailed 

standards are not necessary to 

determine that valuable materials 

destined for recycling are not discarded 

when managed in non-land-based units. 

As with land-based units, the regulatory 

authorities can identify hazardous 

secondary materials that have been 

released from the unit and determine 

that the released material is discarded. 

To clarify this approach and to facilitate 

its implementation, however, EPA has 

revised its regulatory language to 

require that hazardous secondary 

materials that are generated and 

reclaimed under the control of the 

generator and managed in non-landbased units must also be contained 

(§ 261.4(a)(23)(i)). 

Comments and EPA’s Response: State 

Regulatory Program-Compliant Units 

A few commenters indicated that 

hazardous secondary materials managed 

in units complying with state regulatory 

programs to address releases should be 

considered contained. Because of the 

variety of such programs, and because 

the Agency has not conducted an indepth evaluation of such state 

requirements, we are not adding a 

definition of ‘‘contained’’ that would 

incorporate this suggested element. 

However, regulatory authorities may 

consider compliance with such 

requirements as one of the factors in 

determining whether the hazardous 

secondary materials are contained in the 

units. 

Comments: Releases 

In the March 2007 supplemental 

proposal, the Agency stated that 

hazardous secondary materials that 

remain contained in these units would 

still meet the terms of the exclusion 

even if a release occurred, unless the 

hazardous secondary materials are not 

managed as a valuable product, and, as 

a result, a significant release from the 

unit takes place. If such a significant 

release occurred, the hazardous 

secondary material remaining in the 

unit may be considered a solid and 

hazardous waste. Some commenters 

noted that a series of small releases from 

a unit could occur over time, causing 

cumulative environmental harm even 

though no single release was significant 

in terms of volume. These commenters 

said that such a series of releases should 

generally lead to the conclusion that the 

hazardous secondary material remaining 

in the unit was a waste. 

EPA’s Response: Releases 

EPA agrees with the comment 

concerning small releases from a unit 

over time. Thus, a ‘‘significant’’ release 

is not necessarily large in volume, but 

would include an unaddressed small 

release from a unit that, if allowed to 

continue over time, could cause 

significant damage. Any one release 

may not be significant in terms of 

volume. However, if the cause of such 

a release remains unaddressed over time 

and hazardous secondary materials are 

managed in such a way that the release 

is likely to continue, the hazardous 

secondary materials in the unit would 

not be contained. For example, a rusting 

tank or containers that are deteriorating 

may have a slow leak that, if 

unaddressed, could, over time, cause a 

significant environmental impact. 

Similarly, a surface impoundment with 

a slow, unaddressed leak to 

groundwater could, over time, result in 

significant damage. Another example 

would be a large pile of leadcontaminated finely ground material 

without any provisions to prevent wind 

dispersal of the particles. Such releases, 

if unaddressed over time and likely to 

continue, would mean that the 

hazardous secondary materials 

remaining in the unit were not being 


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managed as a valuable raw material, 

intermediate, or product and that the 

materials had been discarded. As a 

result, the hazardous secondary 

materials in the unit would be 

hazardous wastes and these units would 

be subject to the RCRA hazardous waste 

regulations. 

XVII. Major Comments on the 

Exclusion for Hazardous Secondary 

Materials Transferred for the Purpose 

of Legitimate Reclamation 

A. Status of Facilities Other Than the 

Generator or Reclaimer (‘‘Intermediate 

Facilities’’) 

Comments: Intermediate Facilities 

In its March 2007 supplemental 

proposal, EPA requested comment on its 

proposal that under the proposed 

exclusion for hazardous secondary 

materials transferred for reclamation, 

such materials would have to be 

transferred directly from the generator 

to the reclaimer and not be handled by 

anyone other than a transporter. 

EPA received many comments on this 

provision. Some commenters supported 

the provision as proposed because they 

were concerned that if hazardous 

secondary materials were transferred to 

a ‘‘middleman,’’ the generator would 

not have a reasonable understanding of 

who would reclaim the hazardous 

secondary materials and how they 

would be managed and reclaimed. If the 

generator was unable to ascertain 

whether the hazardous secondary 

materials in question could be properly 

and legitimately recycled, the materials 

should be considered discarded. 

Other commenters objected to this 

proposed limitation. They argued that 

many persons who generate smaller 

quantities of hazardous secondary 

materials need help in consolidating 

shipments to make reclamation 

economically feasible. Some of these 

commenters also argued that 

intermediate facilities provided valuable 

assistance to generators by helping them 

properly transport, package, and store 

material, and by helping them find 

responsible reclaimers. These 

commenters believed that EPA’s 

proposed limitation could discourage 

reclamation by persons who generate 

smaller quantities of such hazardous 

secondary materials. 

Most of the commenters who 

suggested that intermediate facilities be 

eligible for the exclusion also suggested 

conditions for these facilities. These 

conditions included requiring the 

generator to select the reclaimer, 

requiring the generator to perform 

reasonable efforts on the intermediate 

facility, as well as the reclaimer, and 

requirements for notification and 

recordkeeping. A few commenters 

argued that intermediate facilities 

should be required to have a RCRA Part 

B permit or interim status. 

EPA’s Response: Intermediate Facilities 

After evaluating these comments, the 

Agency has decided that intermediate 

facilities storing hazardous secondary 

materials should be eligible for the 

exclusion at 40 CFR 261.4(a)(24) under 

certain conditions. We believe that such 

facilities make it easier for generators 

that generate smaller quantities of 

hazardous secondary materials to send 

these materials for reclamation and that 

storage at such facilities under the 

conditions designed to address discard 

is completely consistent with handling 

the hazardous secondary materials as 

valuable commodities. To this end, we 

have added a new definition of 

‘‘intermediate facility’’ to 40 CFR 

260.10. We note that this rule does not 

address ‘‘brokers’’ because that term is 

commonly understood to mean a person 

who helps arrange for the transfer of 

hazardous waste or hazardous 

secondary material, but does not take 

possession of the material or manage it 

in any way. Brokers that never take 

possession of hazardous secondary 

materials would not have been affected 

under the supplemental proposal, nor 

are they affected by today’s rule. 

Under today’s rule, an intermediate 

facility is a facility that stores hazardous 

secondary materials for more than 10 

days, other than a generator or reclaimer 

of such materials. If an intermediate 

facility treats the hazardous secondary 

materials or commingles it with other 

hazardous secondary materials or with 

hazardous waste, it would not be 

eligible as an ‘‘intermediate facility’’ as 

defined in § 260.10 under today’s 

regulation. Under 40 CFR 260.42, 

intermediate facilities must submit the 

same notification required of generators 

and reclaimers of hazardous secondary 

materials transferred for reclamation. In 

addition, under § 261.4(a)(24)(v) of 

today’s rule, generators must also 

perform appropriate reasonable efforts 

on the intermediate facility, as well as 

the reclamation facility, and generators 

are responsible for the ultimate 

selection of the reclamation facility. 

These requirements will ensure that the 

intermediate facility is handling the 

hazardous secondary materials as a 

commodity. 

Today’s rule also requires 

intermediate facilities to comply with 

the applicable requirements for 

reclaimers of hazardous secondary 

materials under 40 CFR 261.4(a)(24)(vi), 

including recordkeeping, storage of 

excluded materials, financial assurance, 

and speculative accumulation. The 

Agency believes that these conditions 

are fully sufficient to ensure that 

hazardous secondary materials stored at 

intermediate facilities are handled as 

valuable products and not discarded. 

Therefore, we do not agree with those 

commenters who suggested that 

intermediate facilities should be 

required to operate under Part B permits 

or interim status. 

The Agency notes that in some cases, 

the intermediate facility performs the 

physical measures associated with 

generator reasonable efforts to ensure 

that the reclaimer will properly and 

legitimately recycle the hazardous 

secondary materials. These measures 

may include facility inspections and 

preparation of audits. In those cases, the 

generator must carefully review such 

measures to ensure that any information 

provided is credible. 

Under today’s rule (see 40 CFR 

261.4(a)(24)(ii)), if hazardous secondary 

materials are stored for 10 days or less 

at a transfer facility, the transit is not 

subject to the requirements applicable to 

intermediate facilities under the 

transfer-based exclusion. Instead, it 

must only be packaged in accordance 

with applicable DOT requirements. The 

Agency considers hazardous secondary 

materials stored by transfer facilities for 

short periods of time to be in transit, 

similar to hazardous waste stored by 

similar facilities for the same time 

period. They are therefore not 

discarded. We have revised the existing 

definition of ‘‘transfer facility’’ at 40 

CFR 260.10 to clarify that such facilities 

may store hazardous secondary 

materials, as well as hazardous waste. 

The generator need not perform 

reasonable efforts on such facilities, nor 

must such facilities comply with the 

requirements applicable to reclaimers of 

hazardous secondary materials under 40 

CFR 261.4(a)(24)(vi). In addition, 

hazardous secondary materials at 

transfer facilities may be repackaged 

from one container to another (e.g., the 

materials may be consolidated from 

smaller to larger containers) or 

transferred to different vehicles for 

shipment (see 45 FR 86966, December 

31, 1980). However, different hazardous 

secondary materials may not be mixed 

together. In addition, if there is a release 

of the hazardous secondary materials at 

the transfer facility that is not cleaned 

up immediately, such materials become 

solid waste, and, if they exhibit a 

hazardous characteristic or are 

specifically listed by EPA, a hazardous 

waste as well. Depending on the nature 

of the release, the hazardous secondary 

materials remaining in the unit could 


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also become a solid and hazardous 

waste subject to Subtitle C regulation 

(for a discussion of when such units are 

considered ‘‘contained,’’ see section XVI 

of this preamble). 

B. Reasonable Efforts Condition 

EPA received many comments on the 

condition proposed in the March 2007 

supplemental proposal that generators 

‘‘make reasonable efforts to ensure that 

the reclaimer intends to legitimately 

recycle the material and not discard it 

* * * and that the reclaimer will 

manage the material in a manner that is 

protective of human health and the 

environment.’’ This condition was 

proposed to be fulfilled by hazardous 

secondary material generators sending 

hazardous secondary materials to any 

reclamation facility not operating under 

a RCRA Part B permit or interim status 

standards, and the condition would 

have to be satisfied prior to transferring 

the hazardous secondary materials to 

the reclamation facility (72 FR 14190– 

14194). Below is a summary of six major 

issues raised in the comments and 

EPA’s responses. For more detailed 

comment responses, please see 

Revisions to the Definition of Solid 

Waste Response to Comments 

Document. 

Comments: An Objective Standard for 

Reasonable Efforts 

As proposed, the codified reasonable 

efforts provision for generators was a 

general standard, rather than a more 

specific standard with clearly stated 

requirements. EPA requested comment 

on establishing a more objective 

standard for making reasonable efforts, 

such as requiring generators to answer 

the questions discussed in the preamble. 

EPA acknowledged that creating an 

objective standard could provide 

generators and overseeing agencies with 

more regulatory certainty and requested 

comment on codifying the six questions 

outlined in the preamble. 

EPA received many comments in 

support of an objective standard for 

satisfying the reasonable efforts 

condition. Commenters suggested that a 

minimum standard was needed to 

determine whether a generator fulfilled 

the condition and as a way of 

determining what is ‘‘reasonable.’’ Many 

of these commenters also believed that 

a standard that generators must meet 

was necessary to delineate liability for 

hazardous secondary materials that are 

transferred from a generator to a 

reclamation facility. In contrast, several 

commenters suggested that formalizing 

a minimum standard which all 

generators must meet is inappropriate 

since recycling is inherently casespecific. 

On the issue of whether to codify a 

reasonable efforts standard, which 

several commenters addressed 

separately from the development of a 

standard, EPA received many comments 

both in support of and against 

codification. A large number of 

commenters addressed this issue by 

commenting on the six questions EPA 

discussed in the preamble. Those in 

favor of codification believed that 

establishing a minimum, objective 

standard was important in order to 

provide regulatory certainty for 

generators regarding what is 

‘‘reasonable’’ and for overseeing 

agencies needing to make consistent 

determinations that the condition is 

satisfied. Industry commenters 

responding in support of codification 

believed the six questions resemble 

existing audit questions, and would 

therefore be straightforward to answer 

and satisfy. Recyclers and waste 

management commenters believed that 

small quantity generators would benefit 

from having a clear standard and also 

that the standard would make 

additional clarifying guidance 

unnecessary in the future. Some 

commenters conditionally supported 

codification contingent upon severance 

of RCRA liability for generators that 

meet the minimum condition. These 

commenters supported EPA’s proposal 

to create what they termed as a ‘‘safe 

harbor’’ for generators that, having met 

the reasonable efforts condition, would 

be shielded from any future RCRA 

liability caused by environmental 

damage at a reclamation facility. 

On the other hand, several 

commenters (mostly from the generating 

industry) opposed codifying a standard. 

They believed a standard would be 

unnecessary since generators that 

already audit recyclers have existing 

criteria for making reasonable efforts. 

Some of these commenters also stressed 

a need to maintain flexibility in their 

activities and to avoid additional 

burdensome requirements. One state 

commenter requested that EPA allow 

generators to establish their own 

standard for reasonable efforts so that 

generators will weigh their own level of 

risk and ultimately be responsible for 

their decisions. This commenter also 

believed that one standard is 

impractical for both ‘‘a large industrial 

generator of a highly toxic hazardous 

secondary material’’ and ‘‘a small 

generator of a barely ignitable hazardous 

secondary material.’’ 

Of the commenters that responded to 

the March 2007 supplemental proposal 

to codify a standard for reasonable 

efforts, many also provided comments 

on the six questions in the preamble. In 

general, commenters were divided 

between supporting and opposing 

codification of all six questions, but 

responses were generally favorable 

when commenters discussed the value 

of individual questions within a 

reasonable efforts inquiry. One 

exception to this is with respect to 

proposed question (B) (‘‘Does the 

reclamation facility have the equipment 

and trained personnel to properly 

recycle the hazardous secondary 

material?’’), which several commenters 

believed to be difficult for a hazardous 

secondary material generator to answer 

with existing knowledge. A few 

commenters also noted that questions 

(D) and (E), the two proposed questions 

pertaining to legitimacy within the 

preamble discussion of reasonable 

efforts, did not represent the legitimacy 

‘‘factors to be considered’’ that were 

proposed in the March 2007 

supplemental proposal at 40 CFR 

261.2(g). These commenters suggested 

that a reasonable efforts inquiry should 

include all criteria and factors in the 

proposed legitimate recycling 

requirement. A few commenters also 

suggested including an additional 

question about the financial health of a 

reclaimer. 

EPA’s Response: An Objective Standard 

for Reasonable Efforts 

After evaluating these comments, EPA 

agrees that an objective minimum 

standard is appropriate and necessary 

for hazardous secondary material 

generators to determine that they have 

fulfilled the reasonable efforts 

condition. We believe that without such 

a standard, both generators and the 

regulatory agencies would experience 

difficulty in determining whether the 

condition is met. However, in defining 

the standard, it would in no way limit 

a generator’s ability to tailor and 

enhance its reasonable efforts inquiry to 

evaluate a particular industry or 

recycler. 

We also agree with the commenters 

who stated that the six questions from 

the preamble to the March 2007 

supplemental proposal, with two 

modifications noted below, serve as a 

minimum objective standard. Therefore, 

we are codifying them, with certain 

modifications. We strongly believe that 

any generator who takes advantage of 

today’s transfer-based exclusion must be 

able to answer all reasonable efforts 

questions affirmatively for each 

reclamation facility (and intermediate 

facility, if such hazardous secondary 

materials are sent to such a facility) in 

order to demonstrate that its hazardous 


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secondary materials will be properly 

and legitimately recycled and not 

discarded. In EPA’s view, a generator 

who is unable to satisfy the reasonable 

efforts condition has not demonstrated 

that its hazardous secondary materials 

are not discarded when recycled. The 

hazardous secondary materials would 

thus be ineligible for today’s transferbased exclusion. 

With respect to question (4) (‘‘Does 

the available information indicate that 

the reclamation facility and any 

intermediate facility that is used by the 

hazardous secondary material generator 

have the equipment and trained 

personnel to safely recycle the 

hazardous secondary material?’’), we 

believe that its inclusion within 

reasonable efforts is appropriate and 

necessary since the question informs a 

generator’s inquiry as to whether its 

hazardous secondary materials will be 

properly and legitimately recycled. If a 

reclamation facility were found to have 

inadequate equipment or untrained 

personnel, it would raise serious 

questions as to whether the facility 

would be engaged in proper recycling or 

discard. Without exploring this 

question, we believe that a generator 

cannot ascertain that a reclamation 

facility will properly and legitimately 

recycle its hazardous secondary 

materials. However, we also agree that, 

as drafted in the proposed rule, 

answering this question may require 

specialized knowledge and expertise. 

Accordingly, EPA is changing this 

question to allow the generator to rely 

on the reclamation facility to explain 

why its equipment and personnel are 

appropriate. Of course, the generator 

must have an objectively reasonable 

belief that the reclamation facility’s 

equipment and trained personnel are 

adequate for safe recycling. 

Accordingly, if the equipment and 

personnel described by the reclamation 

facility would be, to an objective 

reasonable person, clearly inadequate 

for safe recycling of the generator’s 

hazardous secondary material, then the 

generator would not have met this 

condition. However, EPA does not 

require nor expect the generator to have 

specialized knowledge or expertise of 

the recycling process. We also discuss 

in more detail how a generator can 

answer this question in section VIII.C.2. 

of this preamble. 

As noted previously, we are codifying 

the questions with two modifications. 

The first modification to the questions 

is language that accommodates the 

inclusion of intermediate facilities 

within the transfer-based exclusion. As 

discussed in section VIII.C. of this 

preamble, if a generator sends 

hazardous secondary materials to an 

intermediate facility where they are 

stored for longer than 10 days prior to 

being transferred to a reclamation 

facility, the generator will need to 

perform reasonable efforts for both the 

intermediate facility and reclamation 

facility. 

The second modification is to the 

questions pertaining to legitimate 

recycling activities. EPA acknowledges 

that one source of confusion for 

commenters regarding the relationship 

between the reasonable efforts condition 

and the legitimate recycling requirement 

may have been the two questions 

pertaining to legitimacy (proposed 

questions (D) and (E)) within the 

reasonable efforts preamble discussion 

and the proposed legitimacy 

requirement at 40 CFR 261.2(g). 

Questions (D) and (E) and the proposed 

regulatory language for legitimacy did 

not share the exact same wording, 

although both concepts were intended 

to be consistent. Furthermore, we 

understand the concern commenters 

raised that questions (D) and (E) did not 

represent the legitimacy ‘‘factors to be 

considered’’ that were proposed within 

40 CFR 261.2(g). As a result, we have 

restructured the reasonable efforts 

questions pertaining to legitimacy to 

read as a single question that ensures 

that a reclamation facility receiving 

hazardous secondary materials intends 

to legitimately recycle the hazardous 

secondary materials. Because of changes 

to the legitimacy provision in this final 

rule as compared to the March 2007 

supplemental proposal, this question 

now refers to the legitimacy requirement 

in § 260.43 of today’s final rule. 

Comments: Liability Related to 

Reasonable Efforts 

EPA proposed the reasonable efforts 

condition as a way for hazardous 

secondary material generators to 

demonstrate that they met their 

regulatory obligation to ensure that their 

hazardous secondary materials, when 

transferred to a reclamation facility, 

would not be discarded. Based on our 

assessment of good recycling practices 

and the comments received, we believe 

that the reasonable efforts condition 

reflects current industry best practices 

of auditing or assessing reclamation 

facilities prior to entering into business 

relations; this is done to minimize 

potential regulatory and liability 

exposures and to demonstrate a 

commitment to environmental 

stewardship. 

We received many comments related 

to liability and the reasonable efforts 

condition. Many commenters stated that 

making reasonable efforts to evaluate a 

reclaimer is a good method for limiting 

future liability and that many generators 

already employ some form of the 

practice. These commenters largely 

supported the provision. Other 

commenters expressed concern that the 

reasonable efforts condition is an 

unnecessary requirement since existing 

incentives, such as economic 

motivations and CERCLA liability, 

would cause a generator to perform 

evaluations of reclaimers without being 

mandated as a condition of the 

exclusion. 

Additionally, EPA received comments 

about whether satisfying the reasonable 

efforts condition would sever a 

generator’s regulatory liability if, after 

being sent to a reclamation facility, its 

hazardous secondary materials were 

discarded or involved in environmental 

damage. Several commenters (namely 

from industry) asked that EPA clarify 

that upon conducting a reasonable 

efforts evaluation of a reclamation 

facility, a generator would not be liable 

for a reclaimer’s subsequent 

environmental violations or if a 

reclaimer’s actions caused or 

contributed to some environmental 

harm or damage. Many of these 

commenters supported the codification 

of a reasonable efforts standard, 

provided that liability would be severed 

upon meeting the condition. 

Conversely, several commenters stated 

that generator liability should be 

maintained into the future regardless of 

satisfying the condition. In general, 

these commenters were concerned that 

hazardous secondary material 

generators could subvert RCRA liability 

by conducting incomplete and 

superficial evaluations of reclaimers, 

and that future environmental damage 

would result at reclamation facilities. A 

few of these commenters suggested that 

EPA clarify that a hazardous secondary 

material generator would be held liable 

for violating the condition of the 

exclusion into the future if it was shown 

that the generator did not conduct a 

thorough assessment of the reclaimer. 

EPA’s Response: Liability Related to 

Reasonable Efforts 

EPA disagrees that the reasonable 

efforts condition is unnecessary in light 

of economic forces or CERCLA liability, 

which may motivate some generators to 

evaluate recyclers. We proposed the 

reasonable efforts condition as a way for 

hazardous secondary material 

generators to demonstrate that they are 

not discarding the hazardous secondary 

materials when sending them to a third 

party for reclamation. The language of 

the condition is intended to capture 

within the regulatory text how 


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responsible generators currently inquire 

and make decisions about recycling of 

hazardous secondary materials and how 

generators manage potential liability 

and regulatory non-compliance risks. 

Several commenters suggested that not 

all generators currently audit or evaluate 

reclamation facilities despite having 

economic interests and existing liability 

concerns. Analysis of the environmental 

problems study also suggests that 

CERCLA liability alone is not enough to 

prevent damage and that increased 

generator inquiry of reclamation 

facilities may help avoid future cases of 

abandonment or discard, residuals 

mismanagement, sham recycling, and 

improper management of hazardous 

secondary materials and recycled 

products. 

By proposing the reasonable efforts 

condition, EPA intended to maintain 

RCRA liability for any hazardous 

secondary materials that are discarded. 

The condition clearly holds a generator 

accountable for determining that its 

hazardous secondary materials will not 

be discarded at a reclamation facility or 

any intermediate facility prior to 

transferring such materials to the 

facility. If a generator does not meet the 

condition, then the generator’s 

hazardous secondary materials would 

not be eligible for the transfer-based 

exclusion and would be considered by 

EPA to be hazardous waste subject to 

the RCRA Subtitle C controls from the 

point of generation. 

EPA did intend, however, that if the 

hazardous secondary materials 

generator had satisfied the reasonable 

efforts condition and discard 

subsequently occurred while hazardous 

secondary materials were under the 

control of the reclamation or 

intermediate facility, then the 

reclamation or intermediate facility, not 

the generator, would be liable under 

RCRA. EPA acknowledges that meeting 

this condition will not affect CERCLA 

liability. (See section XIII for more 

information on CERCLA liability.) We 

recognize commenters’ concern that in 

order to satisfy the reasonable efforts 

condition and be released from RCRA 

liability, hazardous secondary material 

generators could be tempted into 

making incomplete evaluations of 

reclamation and intermediate facilities. 

EPA believes that codifying an objective 

reasonable efforts standard that all 

generators must meet in order to satisfy 

the condition will alleviate this concern 

(see section VIII.C. of today’s 

rulemaking for more discussion). We 

also believe that specifying a standard 

that hazardous secondary material 

generators must satisfy will assist both 

regulatory agencies and the regulated 

community in determining whether the 

condition of the exclusion has been met 

or violated. 

Comments: Relationship Between the 

Reasonable Efforts Condition and the 

Legitimate Recycling Requirement 

EPA received a variety of comments 

on the relationship between the 

condition that hazardous secondary 

material generators must make a 

reasonable efforts inquiry of reclamation 

facilities and the requirement that 

hazardous secondary materials must be 

legitimately recycled. Several 

commenters stated that evaluating 

whether a reclaimer meets the 

legitimacy criteria should be part of a 

reasonable efforts inquiry to ensure that 

a generator’s hazardous secondary 

materials are legitimately recycled. One 

commenter stated that while a 

hazardous secondary material generator 

would need to ensure that a recycling 

activity being considered is legitimate in 

order to protect its own liability 

interests, a legitimacy determination 

should be entirely separate from the 

reasonable efforts condition. Another 

commenter also stressed that, as a 

matter of good practice, many 

responsible generators already ensure 

that they send hazardous secondary 

materials to facilities engaged in 

legitimate recycling; therefore, a 

legitimacy evaluation within reasonable 

efforts is unnecessary. Furthermore, 

several commenters (mostly from 

industry) stated that a reasonable efforts 

condition is redundant since the 

proposed legitimate recycling 

requirement in 40 CFR 261.2(g) ensures 

that hazardous secondary materials 

transferred off-site are safely recycled. 

EPA’s Response: Relationship Between 

the Reasonable Efforts Condition and 

the Legitimate Recycling Requirement 

EPA agrees with the commenters who 

stated that determining whether a 

recycling activity is legitimate is a 

sound practice and, based on comments 

we received, that many responsible 

generators already use existing 

legitimacy guidance as a way to manage 

their potential liability. The reasonable 

efforts condition is intended to assist 

generators in determining that their 

chosen reclamation facilities will 

properly and legitimately recycle the 

generators’ hazardous secondary 

materials. Consequently, EPA strongly 

believes that the reasonable efforts 

condition must contain a provision that 

explicitly refers generators to their 

obligation to ensure that their hazardous 

secondary materials are legitimately 

reclaimed. Including legitimacy as part 

of the reasonable efforts condition 

means that if the generator made 

reasonable efforts to ensure that its 

hazardous secondary materials are 

legitimately recycled in a way that 

satisfies this condition and, 

subsequently, the reclamation facility 

fails to recycle the materials 

legitimately, the reclamation facility, 

not the generator, becomes liable for 

violating RCRA (see section VIII.E. for 

more information). 

Comments: Periodic Updates to 

Reasonable Efforts 

EPA requested comment on a 

requirement for making periodic 

updates to reasonable efforts, but did 

not propose an explicit time period. 

Some commenters favored requiring a 

specific time limit for updating the 

reasonable efforts provision, while 

others (a slightly smaller number) 

favored a flexible time frame for 

updating reasonable efforts, to be 

determined by the hazardous secondary 

material generator. The commenters 

who supported a specific time frame for 

updating the reasonable efforts 

condition included states, several 

representatives of the recycling 

industry, one industry generator, and 

one environmental organization. Several 

of these commenters stated that the 

hazardous secondary material generator 

needed to evaluate changes over time to 

the recycling facility (e.g., compliance 

status, financial assurance, permit 

renewals, impact of changes in recycling 

markets) to ensure that their hazardous 

secondary materials continue to be 

recycled properly and legitimately. 

Commenters also suggested that 

generators re-evaluate recyclers 

whenever the generator becomes aware 

of new, ‘‘material’’ information about or 

changes to a reclamation facility. These 

commenters asked EPA to set a 

minimum schedule for updating 

reasonable efforts. The suggested 

schedules ranged from annually to every 

five years. 

Several industry generators and 

associations, as well as one waste 

management association, submitted 

comments in opposition to requiring 

specific periodic updates of the 

reasonable efforts provision. 

Commenters expressed concern that an 

arbitrary time frame would 

unnecessarily change generators’ 

current schedules for auditing or 

making inquiries of recycling facilities. 

Several commenters suggested that 

schedules for evaluating reclaimers 

should vary from facility to facility and 

by industry and that a generator should 

be allowed to decide when to update 

reasonable efforts given a facility’s 

history and the generator’s familiarity 


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with the facility. One commenting 

organization cited its use of an internal 

risk-based audit schedule to determine 

when to review a reclamation facility. 

The stated criteria for judging the level 

of risk included facilities with lower 

financial health and the addition of 

‘‘new processing capabilities and when 

ownership changes.’’ Another generator 

requested EPA to ‘‘suggest, and not 

require, the frequency of periodic 

updates.’’ 

EPA’s Response: Periodic Updates to 

Reasonable Efforts 

EPA agrees with the comments stating 

that requiring generators to conduct 

specific periodic updates of the 

reasonable efforts provision is critical 

for ensuring that reclamation facilities 

continue to properly and legitimately 

recycle the hazardous secondary 

materials into the future. We believe 

that if a hazardous secondary material 

generator evaluated a reclamation 

facility (or an intermediate facility if 

hazardous secondary material is sent to 

such a facility) only once before the 

initial transfer of hazardous secondary 

materials for recycling, it would not 

provide adequate assurance to 

regulators that hazardous secondary 

material generators have met the 

reasonable efforts condition to ensure 

discard will not occur 5, 10, or 20 years 

into the future. We understand that 

generators often evaluate recyclers or 

intermediate facilities on a recurring 

schedule determined by the generator’s 

particular interests, concerns, and 

experience. However, EPA believes that 

hazardous secondary material 

generators are also interested in having 

regulatory certainty regarding the time 

frame for which reasonable efforts must 

be conducted, rather than a completely 

discretionary ‘‘generator decides’’ 

approach, which will present many 

disagreements and challenges as to what 

a ‘‘reasonable’’ schedule is. We are also 

aware that many generators do not 

currently conduct reasonable efforts, let 

alone re-evaluate such facilities over 

time. For these reasons, we are requiring 

that hazardous secondary material 

generators update their reasonable 

efforts evaluation at least every three 

years, at a minimum. Based on public 

comments, this appears to represent 

general industry practice and to be 

within the average time frame for those 

generators who currently conduct 

environmental audits of facilities to 

which they send their hazardous 

secondary materials. 

By specifying a time frame for 

periodic updates, EPA in no way 

intends to limit a generator to 

conducting evaluations only every three 

years. In fact, we acknowledge that 

shorter time frames could be 

appropriate for certain industries. 

Additionally, we would expect that any 

hazardous secondary material generator 

who has concerns about a reclamation 

or intermediate facility, or who gains 

new knowledge of significant changes or 

extraordinary situations at such 

facilities, would conduct reasonable 

efforts regardless of the minimum 

required update schedule. 

Comments: Requiring Generators to 

Certify Reasonable Efforts 

EPA solicited comment on requiring 

hazardous secondary material 

generators to certify that they made 

reasonable efforts prior to arranging for 

transport of hazardous secondary 

materials to be recycled. As discussed in 

the preamble to the March 2007 

supplemental proposal, the certification 

statement would be a form of 

documentation necessary for each 

reclamation facility and would be 

signed and dated by an authorized 

representative of the generator 

company. We also provided certification 

language as an example. 

Several commenters including 

recyclers, all responding states but one, 

and a few industry generators and 

associations, commented in favor of 

requiring hazardous secondary material 

generators to certify that they had met 

the reasonable efforts condition. All 

commenters that responded regarding 

the example certification statement 

supported the language. A few 

commenters reiterated that generators 

must certify reasonable efforts for each 

reclamation facility and that 

certification should not be necessary for 

RCRA Part B permitted facilities. One 

commenter requested that the 

certification must be made ‘‘prior to 

implementing exempt operations.’’ 

Another commenter believed that a 

certification statement would improve 

the enforceability of the reasonable 

efforts condition. A generator that 

currently audits its waste facilities 

stated that ‘‘a letter signed and dated by 

the department manager is mailed to the 

audited facility stating the results of the 

audit,’’ and that the letter should act as 

a certification. Another commenter 

suggested that given the large number of 

facilities for which reasonable efforts are 

required, having a company 

representative, as opposed to an 

‘‘authorized representative,’’ sign and 

date a certification should be sufficient 

and would be less burdensome. One 

recycler requested that the generator 

certification and signature be built into 

the one-time notification that EPA is 

requiring for the exclusion. 

A smaller number of comments from 

generators opposed the certification 

requirement. A few generators found the 

certification statement to be overly 

burdensome and stated that it would 

stifle the use of third-party reclaimers. 

One generator, who currently audits 

reclamation facilities, stated it could not 

certify the accuracy of information 

prepared by third parties, nor could it 

certify responses by reclamation 

facilities to questions (B) through (E), 

which EPA discussed in the preamble. 

Another generator responded that 

without further clarification as to the 

minimum requirements for satisfying 

reasonable efforts, the generator could 

not certify that the condition was met. 

A commenter also suggested that 

requiring certification of reasonable 

efforts for reclamation facilities that 

recycle hazardous secondary materials 

was unnecessary if certification is not 

required for the storage, treatment, and 

disposal of hazardous waste. 

EPA’s Response: Requiring Generators 

To Certify Reasonable Efforts 

After evaluating the comments, EPA 

has concluded that certifying the 

reasonable efforts provision is a 

necessary and minimally burdensome 

requirement for ensuring that the 

reasonable efforts condition is met prior 

to transferring the hazardous secondary 

materials to a reclamation facility. We 

also strongly believe that requiring the 

signature of an authorized 

representative of the generator 

company, who can be any appointed 

company representative, is critical for 

ensuring accountability for satisfying 

the condition. In the event of an 

enforcement action, we believe that the 

certification will lend support to 

hazardous secondary material 

generators needing to prove that the 

reasonable efforts condition was met. 

Therefore, in today’s final rulemaking, 

we are finalizing a requirement that 

hazardous secondary material 

generators must certify that reasonable 

efforts were made for each reclamation 

and intermediate facility prior to 

transferring hazardous secondary 

materials to such facilities. 

With respect to those commenters 

who opposed certification and 

specifically argued that requiring such 

certification would stifle the use of 

third-party auditors, it is our 

understanding that third-party auditors 

do not generally draw any conclusions 

based on their audits, but simply report 

the results. In addition, the reasonable 

efforts condition requires that the 

hazardous secondary material generator 

decide whether a reclaimer is 

acceptable. Therefore, we disagree with 


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those commenters who stated that 

requiring a certification would 

constitute a significant new burden. 

Rather, EPA believes that requiring a 

hazardous secondary material generator 

to certify the reasonable efforts 

condition would provide them the 

flexibility to use audits or other 

information necessary in certifying that 

the condition of the exclusion was met. 

We find that the commenter example of 

an existing practice of sending a letter 

with audit results to an audited facility 

would need to include the certification 

language in 40 CFR 261.4(a)(24)(v)(C)(2) 

in order to meet the reasonable efforts 

condition. 

Comments: Documenting of Reasonable 

Efforts 

While EPA proposed that generators 

conduct reasonable efforts before 

sending hazardous secondary materials 

to the reclamation facility, we did not 

propose that documentation records 

must be kept of such demonstrations. 

However, EPA requested comment on 

whether to require hazardous secondary 

material generators to maintain 

documentation at the generating facility 

demonstrating that the reasonable 

efforts condition was satisfied prior to 

transferring the hazardous secondary 

materials to a reclamation facility. No 

form of documentation or format was 

specified, although EPA did cite audits 

as one type of documentation that could 

be relevant. Additionally, EPA 

requested comment on whether 

hazardous secondary material 

generators should be required to 

maintain certification statements that 

reasonable efforts were conducted for 

each reclamation facility to which the 

generator transferred the hazardous 

secondary materials to be reclaimed. 

A majority of commenters supported 

a requirement that generators maintain 

documentation of reasonable efforts. A 

few commenters asked that 

documentation be kept on-site, while a 

few commenters asked that the 

documentation could be kept at a 

headquarters or other off-site location. 

Other commenters specifically 

requested that EPA not specify a 

location for the documentation. 

Commenters in favor of this requirement 

stated that documentation would be 

necessary for showing the basis for the 

reasonable efforts determination, as well 

as for improving the enforceability of 

the condition. A few commenters 

suggested that documentation be 

maintained for three years and one 

industry commenter asked that EPA set 

a time requirement specifying how long 

such documentation must be kept. 

On the other hand, a few commenters 

were opposed to a documentation 

requirement. These commenters cited 

the confidential and proprietary nature 

of the audits and reports used by 

generators for making reasonable efforts 

and stated they did not believe they 

should share this information with 

regulators. A few commenters, 

including one state, also argued that a 

certification statement of having made 

reasonable efforts, signed by an 

authorized representative of the 

generator company, would provide 

adequate documentation that reasonable 

efforts were made. One state commenter 

also suggested that it would be difficult 

for states to enforce the requirement of 

documentation, presumably because 

EPA proposed that ‘‘any credible 

evidence available’’ could be used to 

demonstrate that the condition is met. 

EPA’s Response: Documenting 

Reasonable Efforts 

After evaluating the comments, EPA 

has concluded that it is important for 

hazardous secondary material 

generators to produce documentation to 

demonstrate that the reasonable efforts 

condition has been met prior to 

transferring hazardous secondary 

materials to a reclamation and/or 

intermediate facility. We do not believe 

it is necessary to mandate that, for 

example, audits are specifically required 

for documentation and we prefer to 

maintain some flexibility in terms of the 

format for documenting the condition 

based on commenter input and the 

knowledge that each reasonable efforts 

inquiry will be unique. This flexibility 

for documentation is also in response to 

commenter concern about the 

confidentiality of audits. We do not 

believe that this flexibility will in any 

way impact the ability of regulatory 

authorities to determine whether the 

condition is satisfied. We believe that 

the certification statement is critical for 

ensuring accountability for satisfying 

the condition and that the act of making 

reasonable efforts is in fact genuine. We 

believe this requirement helps 

generators support their position that 

hazardous secondary materials have not 

been discarded and helps regulators 

determine whether a generator has 

satisfied this condition. Since updates 

of reasonable efforts are required at a 

minimum of every three years, EPA 

believes that such generators should 

maintain documentation for a minimum 

of three years to show that the 

requirement to update reasonable efforts 

has been satisfied. 

We understand that audits and 

evaluations of reclamation facilities are 

not always kept on-site and may be 

maintained at a generator’s headquarters 

or at another off-site location. For this 

reason, EPA is requiring that 

documentation must be made available, 

upon request by a regulatory authority, 

within 72 hours, or within a longer 

period of time as specified by the 

regulatory authority. We understand 

that in the age of near-instantaneous 

communication, a hazardous secondary 

material generator that performed 

reasonable efforts prior to transferring 

hazardous secondary materials should 

be able to retrieve documentation with 

relative ease. We also note that time 

frames for producing documentation are 

generally determined by regulatory 

authorities on a case-by-case basis and 

time frames are clearly outlined by 

authorities within RCRA Section 3007 

information request letters. 

C. Financial Assurance Requirement 

In EPA’s March 2007 supplemental 

proposal, EPA proposed that 

reclamation facilities receiving and 

recycling hazardous secondary materials 

under the transfer-based exclusion be 

required to demonstrate financial 

assurance in accordance with the 

requirements of subpart H of 40 CFR 

part 265. As part of this proposal, EPA 

sought comment on whether the 

existing subpart H requirements should 

be modified in some way specifically for 

reclamation facilities affected by the 

proposed exclusion. EPA also requested 

comment on whether EPA should tailor 

the costing requirements associated 

with the subpart H financial assurance 

requirements. Because of these 

comments, EPA has made several 

revisions to the financial assurance 

condition, as explained below. 

Comments: Financial Assurance 

Many commenters supported EPA’s 

proposal that reclamation facilities 

receiving and recycling hazardous 

secondary materials under the transferbased approach be required to 

demonstrate financial assurance in 

accordance with the current 

requirements of subpart H of 40 CFR 

part 265 in order to demonstrate that the 

hazardous secondary materials are not 

being discarded. Commenters argued 

that without a codified financial 

assurance requirement, recyclers that 

mismanage hazardous secondary 

materials could simply close their doors 

(as has happened previously) and 

abandon their hazardous secondary 

materials, leaving an environmental 

problem for the public to address and 

imposing the financial burden of 

cleaning up recycling facilities on states 

and local authorities, which may not 

have the resources to do so. 


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Commenters also noted that EPA’s 

environmental problems study shows 

that the primary cause of damage 

incidents has been the business failure 

of recycling facilities. Without financial 

assurance, the commenters argue that 

states and taxpayers have been left with 

the bill for cleaning up these abandoned 

sites. Finally, these commenters stated 

that a recycling facility that does not 

meet the financial test, cannot obtain an 

insurance policy or other financial 

instrument, and does not have the 

resources to establish a trust fund or 

other mechanism, should not be 

handling hazardous secondary materials 

under the conditional exclusion. 

Other commenters supported EPA’s 

proposal on financial assurance, but 

also made suggestions for modifications. 

One commenter recommended that a 

financial assurance program be 

developed specifically for reclaimers. A 

few commenters recommended that 

reclamation facilities taking advantage 

of the exclusion maintain a closure plan 

that would be available for review, upon 

request, that substantiates and verifies 

the amount of financial assurance 

required. 

Still other commenters stated that 

reclamation facilities that receive 

hazardous secondary materials from offsite generators under the transfer-based 

approach should not be held to the same 

financial assurance standards as 

facilities with permits to manage 

hazardous waste. Instead, the financial 

assurance requirements for recycling 

facilities should reflect the relatively 

lower risks associated with the 

manufacturing/recycling activities. 

Commenters claimed that reclamation 

facilities are essentially processing raw 

materials for beneficial use as opposed 

to RCRA-permitted facilities that are 

treating, storing, and disposing 

hazardous waste. 

Finally, some commenters disagreed 

completely with EPA’s approach to 

financial assurance. Commenters stated 

that EPA lacks the authority to subject 

facilities to the requirements or 

conditions when using hazardous 

secondary materials in production 

operations in which these materials are 

never discarded. Commenters stated 

that proposed conditions for the 

exclusion do not define the absence of 

discard and would effectively impose a 

waste management requirement upon a 

non-waste. 

EPA’s Response: Financial Assurance 

EPA finds those comments that 

support the financial assurance 

condition persuasive and agrees with 

their conclusions. Requiring financial 

assurance for reclamation facilities (and 

intermediate facilities, which are 

included in the final rule) operating 

under the transfer-based exclusion is 

appropriate and reasonable for the 

Agency to determine that the hazardous 

secondary materials managed at these 

facilities are not discarded and is 

supported by the findings of the 

recycling studies conducted as part of 

this rulemaking effort. Financial 

assurance as a condition will ensure 

that the reclamation and intermediate 

facilities either have the financial 

wherewithal themselves, as 

demonstrated by qualifying for self 

insurance under the financial test, or 

that funds from a third party will be 

available to ensure that the hazardous 

secondary materials will not be 

abandoned. An owner or operator who 

must fully fund a trust to cover the 

retirement cost estimate will be careful 

not to discard the hazardous secondary 

materials so that he may recover the 

funds from the trust. Sureties, banks 

providing letters of credit and insurers 

will screen applicants to ensure that 

they are only providing assurance for 

good risks who are unlikely to abandon 

or discard such materials, thus 

demonstrating that the hazardous 

secondary material is not being 

discarded. As noted by the commenters, 

at least 138 of the 208 damage cases 

were firms that had gone out of business 

and abandoned the ‘‘hazardous 

secondary material,’’ a material that 

they presumably believed could be 

reclaimed. 

In addition, the market forces study 

indicates that recyclers of hazardous 

secondary materials can behave 

differently from traditional 

manufacturers due to differences in the 

economic forces and incentives 

involved in recycling. Unlike 

manufacturing, where the cost of raw 

materials or intermediates (or inputs) is 

greater than zero and revenue is 

generated primarily from the sale of the 

output, some models of hazardous 

secondary materials recycling involve 

generating revenue primarily from 

receipt of the hazardous secondary 

materials. This situation can lead to 

over-accumulation and abandonment of 

hazardous secondary materials, 

particularly in cases where the product 

of the recycling process has low value, 

the prices are unstable, and/or the firm 

has a low net worth. 

By requiring financial assurance, the 

public and federal, state and local 

governments can have confidence that 

the recycler’s business model takes 

these market factors into consideration 

and that it will therefore not abandon 

the hazardous secondary materials, even 

if unforeseen market changes occur. The 

successful recycling study indicated 

that one of the main reasons that 

generators audit recyclers is to evaluate 

their financial health and resources to 

respond to accidents or other problems 

that could cause adverse environmental 

or human health consequences. This is 

primarily because of the joint-andseveral liability provisions of CERCLA, 

under which a generator becomes a 

‘‘responsible party’’ obligated to pay (in 

part or in whole) for remediation 

expenses if (in this example) a recycler 

to whom he sent recyclable hazardous 

secondary materials were to create 

contamination problems, but lacked the 

resources to pay for the cleanup. 

Because American manufacturers 

have considerable experience with these 

types of CERCLA liability issues, 

evaluating the financial health of the 

reclamation facility before shipping 

recyclable hazardous secondary 

materials to them has become a standard 

business precaution for responsible 

generators. The condition for financial 

assurance thus can be seen as a way of 

addressing the same concern, thus 

ensuring that the reclamation and 

intermediate facility owner/operators 

who operate under the terms of this 

exclusion are financially sound and will 

not abandon or otherwise discard their 

hazardous secondary materials. 

Thus, EPA disagrees with the 

commenters who argued that recycling 

hazardous secondary materials is, as a 

general matter, the same as processing 

raw materials for beneficial use. Because 

of the nature of these materials (i.e., 

hazardous spent materials and listed byproducts and listed sludges), they are 

frequently more difficult to process than 

most raw materials, and the nature of 

the economics of the transfer of these 

materials can create an incentive for 

discard. Requiring financial assurance is 

essential for helping to define those 

situations where the hazardous 

secondary material is not being 

discarded. 

However, EPA agrees that some 

adjustments to the existing 40 CFR part 

265 financial assurance requirements 

would help better tailor them to 

hazardous secondary material 

reclamation and intermediate facilities. 

The current hazardous waste financial 

assurance regulations include 

provisions (such as post-closure) not 

appropriate to hazardous secondary 

material units, and the terminology is 

directed towards permitted TSDFs. EPA 

also agrees that the regulations need to 

be more explicit as to the 

documentation requirements for the 

financial assurance cost estimate. The 

financial assurance requirements in 40 

CFR part 265 subpart H in turn 


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reference and rely on certain 

requirements in the 40 CFR part 265 

subpart G closure regulations. Although 

the hazardous secondary material units 

are not required to undergo Subtitle C 

closure, some of the provisions of 40 

CFR part 265 subpart G are important to 

implementing 40 CFR part 265 subpart 

H and need to be clarified. As a 

convenience to the regulated 

community, EPA has placed the 

financial assurance requirements 

applicable to hazardous secondary 

materials in a stand-alone regulation 

(see 40 CFR part 261 subpart H). 

Substantively, these regulations 

generally mirror and include the same 

requirements as the 40 CFR part 265 

financial assurance regulations, but they 

have been condensed and reframed to 

refer to reclamation and intermediate 

facilities rather than TSDFs and to 

directly incorporate (rather than just 

referencing) those aspects of 40 CFR 

part 265, subpart G that are necessary 

for implementing the financial 

assurance condition. 

For further discussion of how the 

financial assurance condition operates 

and how the provisions map to the 

requirements in 40 CFR part 265, see 

section VIII.C of today’s preamble. 

D. Ability of Excluded Reclamation 

Facility To Accept Manifested 

Hazardous Waste 

In the March 2007 supplemental 

proposal, EPA proposed that reclaimers 

receiving hazardous secondary materials 

from generators that continue to manage 

such materials under the current 

hazardous waste regulatory system 

would still be able to claim the 

exclusion for those hazardous secondary 

materials. In essence, this would allow 

manifested hazardous waste to be sent 

to an unpermitted facility, as long as 

that facility met the conditions of the 

exclusion. 

Comments and EPA’s Response: 

Excluded Reclamation Facilities 

Accepting Manifested Waste 

Most of the commenters on this issue 

raised serious concerns about this 

provision, among other things arguing 

the fact that it would be unworkable. 

Commenters also raised concerns about 

the generator’s liability under such a 

situation, particularly if the reclaimer 

failed to inform the generator that its 

hazardous waste would be managed 

under the exclusion. Commenters also 

noted that the lack of a requirement for 

‘‘reasonable efforts’’ on the part of the 

generator is contrary to the basic 

premise of the exclusion, which is that 

generators will be responsible and 

ensure reclaimers properly manage and 

recycle the hazardous materials. 

After considering the comments 

received, EPA is not allowing reclaimers 

to manage manifested federal hazardous 

waste under the exclusion. Although 

this provision may have increased 

recycling opportunities, the fact that the 

hazardous secondary material generator 

manages the hazardous secondary 

materials as manifested hazardous 

wastes would have decoupled the 

exclusion from the underlying rationale 

that the materials are not discarded. 

E. Imports and Exports 

In the March 2007 supplemental 

proposal, the Agency proposed to 

exclude hazardous secondary materials 

that are exported from the United States 

for reclamation at a facility located in a 

foreign country, provided the hazardous 

secondary material generator complies 

with the generator requirements under 

the transfer-based exclusion (e.g., 

notification, reasonable efforts, etc.), as 

well as notice and consent regarding 

planned exports of such hazardous 

secondary materials. We also requested 

comment on whether the Agency should 

allow exports under the generatorcontrolled exclusion. 

Comments: Scope of Exports 

Overall, commenters expressed few 

concerns with the specifics of the 

proposed export regulations, although a 

few disagreed with allowing exports of 

hazardous secondary materials under 

the proposed rule altogether. These 

commenters believed that allowing 

exports of such hazardous secondary 

materials would run contrary to 

international agreements (such as 

agreements established by the 

Organization for Economic Cooperation 

and Development (OECD) and the Basel 

Convention regarding transport of 

hazardous waste) and may also increase 

the risk of environmental damage in 

other countries. At least two 

commenters suggested limiting exports 

to our bilateral partners only (i.e., 

Canada and Mexico). On the other hand, 

some industry commenters argued that 

many companies have worldwide 

operations and would therefore benefit 

from broader provisions allowing 

exports of hazardous secondary 

materials to be managed under the 

control of the generator because it 

would improve the companies’ ability to 

recycle hazardous secondary materials. 

EPA’s Response: Scope of Exports 

After considering these comments, the 

Agency is largely maintaining the export 

provisions as proposed, with some 

minor modifications described below. 

We believe that hazardous secondary 

materials exported for legitimate 

reclamation in accordance with today’s 

final rule are not discarded and, thus, 

not solid wastes and, therefore, we have 

no basis for prohibiting exports when a 

hazardous secondary material generator 

complies with the regulatory 

requirements. 

We also disagree with commenters 

who believe today’s rule runs contrary 

to international agreements controlling 

the movement of hazardous waste. We 

note the U.S. is an OECD Member and 

is, therefore, legally bound to comply 

with the OECD’s ‘‘Decision of the 

Council C(2001)107/FINAL, Concerning 

the Control of Transboundary 

Movements of Wastes Destined for 

Recovery Operations, as amended by 

C(2004)20,’’ which provides a 

framework for OECD Member countries 

to control transboundary movements of 

recoverable waste in an environmentally 

sound manner. The Amended 2001 

Decision recognizes that Member 

countries may develop their own 

regulations to determine whether or not 

materials are controlled as hazardous 

wastes. Under today’s rule, hazardous 

secondary materials meeting certain 

conditions and exported for reclamation 

are not solid wastes under U.S. 

regulation. The Agency notes, however, 

that once hazardous secondary materials 

reach the border of the receiving 

country, the hazardous secondary 

material is regulated in accordance with 

the receiving country’s laws and 

regulations. In other words, such 

hazardous secondary materials that are 

not solid and hazardous wastes under 

the U.S. hazardous waste regulations 

may be solid and hazardous wastes 

under the receiving country’s 

regulations and, therefore, facilities 

should be aware of the requirements 

that competent authorities of receiving 

countries may impose. 

Additionally, some commenters 

asserted that today’s rule was 

inconsistent with the Basel Convention, 

a separate multilateral international 

agreement governing the transboundary 

movements of hazardous wastes. The 

U.S., however, is not a party to the Basel 

Convention and thus is not held to the 

Convention’s agreements (although, 

because the Convention prohibits 

exports between a Basel party and a 

non-Basel party, the U.S. may not export 

hazardous waste to any Basel party, 

absent a bilateral or multilateral 

agreement with that party). Beyond this 

point, EPA, in any case, considers 

today’s rule to be consistent with Basel 

for the same reason that it is consistent 

with the OECD agreement described 

above. 


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19The Office of Enforcement and Compliance 

Assurance (OECA) is the office within EPA that 

implements the notice and consent process for 

exports. 

In response to comments on allowing 

exports under the generator-controlled 

exclusion, we note this exclusion is 

subject to few restrictions and is largely 

based on the assumption that hazardous 

secondary materials are unlikely to be 

discarded because they would be 

closely managed and monitored by a 

single entity. However, this same 

assumption does not pertain to exports 

of hazardous secondary materials 

because EPA would not be able to 

ensure the close management and 

monitoring by a single entity of 

hazardous secondary materials in a 

foreign country. Accordingly, we 

believe that hazardous secondary 

materials exported for reclamation is 

excluded only if the receiving country 

has consented and is provided an 

opportunity to determine and ensure 

that hazardous secondary materials 

exported to its reclamation facilities are 

not discarded. 

Additionally, we note that in today’s 

rule we have replaced the term 

‘‘exporter,’’ which was used in the 

March 2007 supplemental proposal, 

with the term ‘‘hazardous secondary 

material generator.’’ This is because, 

under the exclusion for hazardous 

secondary materials exported for 

reclamation (today’s 40 CFR 

261.4(a)(25)), the ‘‘exporter’’ is required 

to comply with the generator 

responsibilities listed under the 

transfer-based exclusion (such as 

reasonable efforts), as well as notice and 

consent and annual reports. By 

replacing the term ‘‘exporter’’ with 

‘‘hazardous secondary material 

generator,’’ we are clarifying that for 

hazardous secondary materials exported 

for reclamation, the hazardous 

secondary material generator is 

responsible for notice and consent and 

for submitting annual reports. We 

would also like to clarify that 

intermediate facilities can still be used 

for exports (as with the transfer-based 

exclusion), but the generator, not the 

intermediate facility, must comply with 

the notice and consent and annual 

report requirements. This is because the 

intermediate facility cannot perform the 

generator responsibilities under the 

transfer-based exclusions and, therefore, 

cannot perform the duties of the 

‘‘exporter’’ under this rule. We also note 

that this exclusion specifically 

references the condition in 

§ 261.4(a)(24)(iv) that recycling be 

legitimate as specified in § 260.43. 

Comments: Annual Reports 

In the proposed rule, we solicited 

comment on whether facilities 

managing hazardous secondary 

materials under the exclusions should 

be required to submit periodic (e.g., 

annual) reports detailing their recycling 

activities, such as information on the 

types or volumes of hazardous 

secondary materials reclaimed or other 

relevant information. 

With respect to exports, a few 

commenters suggested that we add to 40 

CFR 261.4(a)(25) a requirement that 

hazardous secondary material 

generators submit annual reports 

regarding the exports of their hazardous 

secondary materials. This requirement 

would be similar to the requirement 

currently in 40 CFR part 262 subpart E, 

in which primary exporters must submit 

annual reports regarding exports of 

hazardous waste. Conversely, a few 

commenters urged EPA to finalize the 

export requirements, as proposed with 

at least one commenter explicitly 

agreeing with EPA’s proposal not to 

require annual reports for hazardous 

secondary material generators. 

EPA’s Response: Annual Reports 

The Agency agrees with those 

commenters who supported a 

requirement for hazardous secondary 

material generators to submit to EPA 

annual reports regarding the exports of 

their hazardous secondary materials. We 

believe that such a requirement will 

help determine that hazardous 

secondary materials exported for 

reclamation are handled as commodities 

and not discarded. We have, therefore, 

added a provision to 40 CFR 

261.4(a)(25) requiring hazardous 

secondary material generators who 

export hazardous secondary materials to 

file a report with the Office of 

Enforcement and Compliance 

Assurance 19 that summarizes the types, 

quantities, frequency, and ultimate 

destination of all hazardous secondary 

materials exported for reclamation 

during the previous calendar year. Such 

reports would document the total 

amount of hazardous secondary 

materials exported during the calendar 

year, which is often not the same as the 

amount specified in an export notice. 

Such a report would also enable EPA to 

compare actual shipments in the annual 

report against proposed shipments in 

the export notice to ensure that the 

shipments occurred under the terms 

approved by the receiving country. 

Finally, such a report would enable EPA 

to provide summary information, if 

requested by a receiving country, that 

could assist the receiving country in 

determining what amount of hazardous 

secondary materials was received in that 

country for reclamation. 

Comments and EPA’s Response: Tacit 

Consent 

In the March 2007 supplemental 

proposal, we specified that the 

hazardous secondary material generator 

must receive consent (through EPA) in 

writing from the receiving country 

before the hazardous secondary 

materials could be exported. Some 

commenters pointed out that under the 

existing export regulations for 

hazardous wastes exported to OECD 

Member countries, the receiving country 

may use tacit consent to respond to the 

notification (40 CFR part 262 subpart 

H). Commenters expressed concern that 

this was a point of confusion, as fully 

regulated hazardous wastes are eligible 

for tacit consent, whereas excluded 

hazardous secondary materials would 

require consent in writing. To eliminate 

this confusion, EPA has added a 

provision to the regulations that allows 

tacit consent for hazardous secondary 

materials exported to OECD Member 

countries similar to that allowed for 

hazardous wastes under 40 CFR part 

262 subpart H. We note that Canada and 

Mexico, though OECD Member 

countries, typically require written 

consent for exports to their countries. 

For a detailed description of today’s 

exclusion for hazardous secondary 

materials exported for reclamation, see 

section VIII.C.5. of today’s preamble. 

F. Notification and Other Recordkeeping 

and Reporting Requirements 

EPA proposed a total of three 

recordkeeping and reporting 

requirements in the March 2007 

supplemental proposal: (1) A one-time 

notification to be submitted by 

hazardous secondary material 

generators and reclaimers (required for 

both the generator-controlled and the 

transfer-based exclusions); (2) for the 

transfer-based exclusion, a requirement 

for both the hazardous secondary 

material generator and reclaimer to 

maintain for three years records of all 

off-site shipments of excluded 

hazardous secondary materials (either 

sent by the generator or received by the 

reclaimer); and (3) notice and consent 

for hazardous secondary materials 

exported for reclamation in foreign 

countries. 

Comments: General Recordkeeping and 

Reporting Requirements 

Many commenters supported 

increasing the recordkeeping and 

reporting requirements in order to 

adequately monitor compliance with the 

exclusions and to measure increases in 


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safe hazardous waste recycling. 

Alternatively, some commenters urged 

EPA to finalize the requirements as 

proposed, cautioning that onerous 

reporting and recordkeeping 

requirements would discourage 

facilities from taking advantage of the 

exclusions. A few commenters 

questioned EPA’s authority for 

including recordkeeping and reporting 

requirements altogether; these 

commenters argued that, since 

hazardous secondary materials are not 

solid wastes and thus not subject to 

regulation, recordkeeping and reporting 

requirements should not apply. 

EPA’s Response: General Recordkeeping 

and Reporting Requirements 

EPA agrees with the majority of 

commenters and believes that additional 

recordkeeping and reporting 

requirements are necessary to enable 

effective and credible oversight. We 

therefore consider the recordkeeping 

and reporting requirements in today’s 

rule to be the minimum information 

necessary to determine that hazardous 

secondary materials are reclaimed and 

not discarded. Some of the 

recordkeeping requirements that we are 

finalizing today are discussed in detail 

within other relevant sections of today’s 

preamble (see section XVII.B. for our 

response to comments on 

documentation and certification of 

reasonable efforts and section VII.C. for 

a detailed description of financial 

assurance). This section focuses on our 

response to comments regarding the 

notification requirement and, for the 

transfer-based exclusion, the 

requirement that the generator maintain 

confirmations of receipt of hazardous 

secondary materials from the 

reclamation facility and intermediate 

facility. 

Comments: Notification as a Condition 

of the Exclusion 

In the March 2007 supplemental 

proposal, EPA noted that the one-time 

notification requirement under the 

authority of RCRA section 3007 would 

not be a condition of the exclusions, and 

that failure to notify, while constituting 

a violation of the notification 

regulations, would not affect the 

excluded status of the hazardous 

secondary materials. 

A number of commenters disagreed 

with this rationale and argued instead 

that the notification requirement should 

be made a condition of the exclusions. 

These commenters stated that, as 

proposed, the notification requirement 

would create an unintended incentive 

for hazardous secondary material 

generators and reclaimers not to notify, 

because those who chose not to notify 

would likely evade oversight for many 

years and, if caught, could simply 

regard the ‘‘paperwork violation,’’ and 

possible penalty for that violation, as a 

cost of doing business. These 

commenters maintained that the failure 

of a hazardous secondary material 

generator or reclaimer to provide 

notification is a strong indication that 

these entities are either unaware of or 

trying to circumvent the regulatory 

requirements, in both cases possibly 

increasing the likelihood for 

environmental damage. Therefore, these 

commenters argued that failure to notify 

should be regarded as more serious than 

a reporting violation and should, 

therefore, remove the excluded status of 

the hazardous secondary materials. 

Conversely, some commenters 

supported EPA’s proposed approach, 

agreeing that if an entity fails to notify, 

it does not necessarily indicate that the 

hazardous secondary materials were 

discarded and, therefore, should not 

automatically affect the excluded status 

of the materials. 

EPA’s Response: Notification as a 

Condition of the Exclusion 

At issue here is not the requirement 

to submit a notification, but rather the 

consequences an entity would face for 

failing to notify. Notification as a 

requirement under the authority of 

RCRA section 3007 of the exclusion 

means failure to notify would constitute 

a violation of the notification 

regulations. On the other hand, 

notification as a condition of the 

exclusion means failure to notify would 

potentially result in the loss of the 

exclusion for the hazardous secondary 

materials (i.e., the hazardous secondary 

materials would become solid and 

hazardous wastes and subject to full 

Subtitle C regulation). In context with 

this issue, EPA considered the intent of 

the notification, which is to provide 

basic information to regulatory agencies 

about who will be managing hazardous 

secondary materials under the 

exclusions. This basic information 

enables regulatory agencies to 

administer oversight and set 

enforcement priorities, but does not 

allow regulatory agencies to directly 

determine that hazardous secondary 

materials were discarded. In other 

words, a generator or reclaimer could 

fail to notify yet still be legitimately 

recycling their hazardous secondary 

materials according to the conditions of 

the exclusion. Therefore, EPA is 

retaining notification as a requirement 

under the authority of RCRA section 

3007, and, thus, notification is not a 

condition of today’s exclusions. 

Comments: Format of Notification 

In the March 2007 supplemental 

proposal, EPA requested comment on 

whether the notification should be 

submitted in a particular format and 

discussed the option of using the 

Subtitle C Site Identification Form (EPA 

Form 8700–12) to collect the 

information. By far, the majority of 

commenters were in favor of using the 

Site ID form, pointing out that EPA 

would effectively minimize burden by 

leveraging this form because it is 

already familiar to the regulated 

community. Of the very few 

commenters opposed to using the Site 

ID form, some argued that the form was 

not appropriate for collecting 

information on hazardous secondary 

materials because it is primarily used to 

collect information regarding hazardous 

wastes. However, other commenters 

thought the Site ID form was 

appropriate because it is currently used 

to collect information on other types of 

recycling activities not subject to full 

Subtitle C regulation, such as used oil 

and universal waste activities. Finally, 

some commenters supported use of the 

Site ID form because it would result in 

standardized and consistent data that 

users could electronically access 

through EPA’s databases. 

EPA’s Response: Format of Notification 

EPA agrees with the majority of 

commenters and is requiring hazardous 

secondary material generators, tolling 

contractors, toll manufacturers, 

reclaimers and intermediate facilities 

managing hazardous secondary 

materials to use the Site ID form (EPA 

Form 8700–12) when notifying in 

accordance with today’s rule. We 

believe that the Site ID form will 

provide standardized data, while 

minimizing the collection burden 

because many facilities notifying under 

today’s rule are already familiar with 

the form and will not need to invest 

resources in learning a new form and 

process. EPA also agrees with 

commenters who stated that the form is 

appropriate for today’s rule, since it 

already collects information on other 

types of recycling activities. However, 

EPA will modify the current Site ID 

form in order to accommodate the 

notification requirement for today’s 

rule. 

Comments: Types of Information in 

Notification 

In the March 2007 supplemental 

proposal, EPA proposed that generators 

and reclaimers of hazardous secondary 

materials include in the notification the 

name, address, and EPA ID number (if 


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applicable) of the generator or reclaimer; 

the name and number of a contact 

person; the type of hazardous secondary 

materials that would be managed 

according to the exclusion; and when 

the hazardous secondary materials 

would begin to be managed in 

accordance with the exclusion. Many 

commenters, particularly states, argued 

that this information was insufficient to 

monitor hazardous secondary material 

generators and reclaimers adequately 

and, instead, suggested additional types 

of information to include in the 

notification, such as quantity of the 

hazardous secondary materials managed 

under the exclusion, the name and EPA 

ID number of the reclaimer receiving the 

hazardous secondary materials and a 

description of the recycling process. 

These commenters argued that 

additional information was important to 

monitor compliance of the facilities 

with the exclusions and to measure 

increases in safe hazardous secondary 

materials recycling. 

On the other hand, some commenters 

urged EPA to retain the basic 

information in the notification as 

proposed. These commenters 

questioned how additional information 

would assist with defining discard and 

also noted that EPA, historically, has 

not required notification for the existing 

self-implementing exclusions from the 

definition of solid waste located in 40 

CFR 261.4. 

EPA’s Response: Types of Information 

in Notification 

After carefully considering these 

comments, we agree with those 

commenters who support requiring 

additional information in the 

notification in order to monitor 

compliance with the exclusions 

adequately. We believe today’s 

notification requirement reflects the 

minimum amount of information 

needed to identify which facilities will 

be managing hazardous secondary 

materials under today’s rule in order to 

enable regulatory agencies to administer 

oversight and ensure that hazardous 

secondary materials are reclaimed and 

not discarded. We, however, did not 

include suggested data elements that 

might be difficult or complex to collect, 

such as a description of the recycling 

process, and did not include 

information that is more appropriately 

documented and maintained at the 

facility. For example, some commenters 

suggested adding a requirement that 

generators indicate the identity of the 

reclaimer receiving their hazardous 

secondary materials for reclamation; 

however, under today’s transfer-based 

exclusion, this information is already 

documented as part of the requirement 

for hazardous secondary material 

generators to keep records of all off-site 

shipments. 

We consider the information we are 

requiring in the notification under 

today’s rule to reflect what responsible 

companies would routinely collect as 

part of their normal business operations. 

For example, responsible companies 

track quantities of valuable commodities 

that are managed on-site or shipped offsite and, thus, we believe reporting 

quantities of hazardous secondary 

materials managed in the notification 

will not present an undue burden. 

Furthermore, we note that EPA 

currently requires notification under 

certain of the 261.4 exclusions, such as 

for spent materials generated and 

recovered within the primary mineral 

processing industry (40 CFR 

261.4(a)(17)) and for hazardous 

secondary materials used to make zinc 

micronutrient fertilizers (40 CFR 

261.4(a)(20)) and, thus, we do not agree 

with those commenters who believe that 

the notification requirement is 

inconsistent with the existing solid 

waste exclusion requirements. 

For a detailed discussion on the 

notification requirement that EPA is 

finalizing today, see sections VII.C. and 

VIII.C. 

Comments: Periodic Reporting 

In the March 2007 supplemental 

proposal, EPA proposed that hazardous 

secondary material generators and 

reclaimers submit a one-time 

notification, but asked for comment on 

whether facilities using the exclusion 

should be required to submit periodic 

(e.g., annual) reports detailing their 

recycling activities. 

Several commenters supported 

requiring periodic reports (or periodic 

notification). These commenters argued 

that data collected in a one-time 

notification would become obsolete very 

quickly and would likely require 

substantial investment in order to ‘clean 

up’ the information before it could be 

used, a resource burden that would 

likely fall on the states. For example, 

over time, some facilities that originally 

submitted a one-time notification would 

cease managing hazardous secondary 

materials according to the exclusion. 

Some commenters argued that, by using 

a one-time notification approach, it 

would be a challenge to identify these 

facilities and, subsequently, a challenge 

to compile a list of facilities who are 

currently managing hazardous 

secondary materials according to the 

exclusions, thereby inhibiting the states’ 

ability to monitor compliance at these 

facilities. 

Furthermore, as one state commenter 

said, some generators managing 

hazardous secondary materials will go 

out of business and without a steady 

feed of updated information, states have 

no way of knowing which generating 

facilities have closed and, thus, are 

unable to ensure that their hazardous 

secondary materials were reclaimed and 

not discarded. This leaves states acutely 

vulnerable to costs incurred from 

potential environmental damage caused 

by abandonment of the hazardous 

secondary materials. 

Other commenters noted that periodic 

notifications would allow public 

agencies to compile credible 

information regarding hazardous 

secondary materials recycling that can 

be used to demonstrate success, target 

additional recycling opportunities, and 

improve the public’s understanding and 

acceptance of recycling practices. One 

commenter also supported a clear 

requirement to file periodically in order 

to reduce confusion regarding when to 

re-notify and also to ensure that the 

information was kept accurate and 

current. 

On the other hand, some commenters 

urged EPA to finalize the notification 

requirements as proposed and stressed 

that numerous recordkeeping and 

reporting requirements may inhibit 

facilities from taking advantage of the 

exclusions, thereby discouraging further 

increases in recycling. 

EPA’s Response: Periodic Reporting 

In considering these comments, EPA 

reflected on the intent of the notification 

requirement, which is to provide basic 

information to regulatory agencies about 

who is managing hazardous secondary 

materials under the exclusions in order 

to monitor compliance with the 

exclusions. As commenters noted, with 

a one-time notification approach, there 

is no assurance that the information 

collected in EPA’s databases over time 

will accurately reflect facilities that are 

managing hazardous secondary 

materials according to the exclusion. 

Therefore, the Agency can imagine 

instances where precious resources are 

required to be spent on ‘cleaning up’ the 

data before regulatory authorities can 

use it to identify facilities who are 

currently managing hazardous 

secondary materials under the 

exclusions. With a one-time 

notification, we can also foresee 

problems where regulatory agencies 

spend time and resources monitoring 

compliance at facilities that have since 

stopped managing hazardous secondary 

materials at some point in the past. This 

inefficient use of resources would serve 

to lower the effectiveness of regulators 


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20Estimates are from the Regulatory Impact 

Analysis for U.S. EPA’s 2008 Final Rule 

Amendments to the Industrial Recycling Exclusions 

from the Definition of Solid Waste. 

to monitor compliance overall and 

could potentially increase the risk of 

environmental damage from abuse of 

today’s exclusions. 

EPA further believes that 

responsibility for submitting and 

maintaining updated information lies 

with the hazardous secondary material 

generators, reclaimers, and intermediate 

facilities that use today’s exclusions. We 

understand arguments made by 

commenters that, as originally 

proposed, the one-time notification 

would in effect reverse this 

responsibility, placing an unreasonable 

burden on the states and EPA to ‘clean 

up’ the data every time a regulating 

agency sought to use the information. 

Instead, the incremental burden to 

facilities who must submit periodic 

notifications is minimal compared to 

the considerable public expense that 

states and EPA would likely incur over 

time in order to use the information 

submitted in a one-time notification. 

Once an initial notification is submitted, 

to re-notify, a facility need only review 

the previous notification and either 

make changes if necessary or confirm 

that the information remains accurate. 

EPA has chosen to use the Site ID form 

for this notification because it is 

standardized, electronically-accessible, 

and familiar to the regulated community 

and, therefore, will assist facilities by 

reducing the overall time and effort 

required to report the information. 

Currently, large quantity generators on 

average spend $364 a year on biennial 

reporting under full Subtitle C 

regulation, whereas under today’s rule, 

an initial notification is estimated to be 

only a third of that cost, with 

subsequent notifications likely costing 

even less.20 EPA has designed the 

notification requirement in today’s rule 

to strike an appropriate balance between 

providing essential information to 

regulators, while keeping additional 

burden at a minimum. 

We are convinced of the validity of 

the above arguments raised by 

commenters in support of periodic 

reporting and agree that the limitations 

of a one-time notification approach 

would undermine the purpose of the 

notification. Therefore, EPA is requiring 

hazardous secondary material 

generators, tolling contractors, toll 

manufacturers, reclaimers, and 

intermediate facilities managing 

hazardous secondary materials to notify 

the Regional Administrator prior to 

operating under the exclusions and by 

March 1 of each even-numbered year 

thereafter. We chose the two-year time 

frame to reflect both commenters’ 

suggestions (of those who supported 

periodic reporting, most suggested 

annual or biennial reporting) and to best 

fit with the biennial reporting process 

for hazardous wastes (pursuant to 40 

CFR 262.41, biennial reports are due by 

March 1 of each even-numbered year). 

Since many facilities are accustomed to 

the biennial reporting process and likely 

have structured their processes around 

the biennial report schedule, we chose 

the same calendar date for the 

notification requirement in order to 

allow facilities to leverage their existing 

processes and submit the notification at 

the same time their biennial report is 

due. 

Comments: Confirmation of Receipt 

In the March 2007 supplemental 

proposal, EPA requested comment on 

whether hazardous secondary material 

generators should be required to 

maintain confirmations of receipt of the 

hazardous secondary materials by the 

reclaimer. Many commenters expressed 

support for this requirement, citing that 

responsible commercial recyclers 

routinely issue receipt confirmations or 

‘‘recycling certificates’’ to assure the 

generator that its hazardous secondary 

materials reached the intended 

destination and were not discarded. Of 

those who supported the requirement, 

many argued that EPA should not 

specify a specific form of 

documentation so that facilities could 

leverage existing business practices 

already in place to track valuable 

commodities. A few commenters 

continued to urge EPA to be conscious 

of the imposition of additional 

recordkeeping and reporting 

requirements lest the Agency discourage 

recycling of hazardous secondary 

materials. 

EPA’s Response: Confirmation of 

Receipt 

We agree with commenters who 

support requiring confirmation of 

receipts and are, therefore, adding to 40 

CFR 261.4(a)(24) a requirement that 

generators maintain confirmation of 

receipts from reclaimers and 

intermediate facilities for all off-site 

shipments of excluded hazardous 

secondary materials for a period of three 

years. Under today’s rule, hazardous 

secondary materials may be transferred 

to intermediate facilities for storage or, 

where reclamation consists of multiple 

steps occurring at separate facilities, 

may be transferred to more than one 

reclaimer. This requirement would 

confirm that the hazardous secondary 

materials did in fact reach the reclaimer 

(or each reclaimer, if reclamation occurs 

at separate facilities) and any 

intermediate facility as originally 

intended and were not discarded. EPA 

also agrees with commenters that 

responsible companies would produce 

and maintain receipts as part of their 

normal business operations and, thus, 

the Agency believes this requirement 

will not pose an undue burden. The 

Agency is not specifying a certain form 

or format for this documentation, but 

instead provides examples of routine 

business records that would contain the 

appropriate information in section 

VIII.C.4. of today’s preamble and in 

today’s rule. 

XVIII. Major Comments on Legitimacy 

A. Codification of Legitimacy Factors 

EPA’s October 2003 proposal to 

codify the legitimacy criteria was in 

response to the comments that have 

been made over the years by both 

industry and states that the existing 

legitimacy guidance is useful, but 

somewhat hard for members of the 

regulated community to know about 

because it could only be found in 

preamble discussions and guidance. The 

March 2007 supplemental proposal 

made some adjustments to the October 

2003 proposal, including a change from 

the term ‘‘criteria’’ to ‘‘factors,’’ but left 

intact the general intention to codify 

those legitimacy factors for all recycling. 

As expected, the Agency received 

public comments from both state 

environmental agencies and from 

industry on our approach. 

Comments: Codification of Legitimacy. 

State commenters were unanimously 

in favor of codifying the legitimacy 

factors in the regulations. In response to 

the October 2003 proposal, twenty-three 

states expressed their support for 

codification. In comments to the March 

2007 supplemental proposal, two 

additional states supported codification 

of the proposed factors. All twelve states 

that commented on legitimacy in both 

proposals expressed their strong support 

for codification in both their 2003 and 

2007 comments. 

States have long advocated for 

establishing regulations that specifically 

address the legitimacy of recycling. In 

response to EPA’s proposals, many 

states commented that they are 

currently relying on the concept of 

legitimacy as laid out in definition of 

solid waste preambles and in the 1989 

‘‘Lowrance Memo’’ guidance because 

they are the best sources of information 

that can be used in evaluating a 

recycling operation. Codification is a 


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priority to the states because, as a 

regulation, the requirement for recycling 

to be legitimate would be better known 

and understood by the regulated 

community and it would be easier for 

states to monitor compliance. One 

commenter stated that it makes more 

sense to implement a regulation than a 

collection of statements found in 

guidance. 

Industry commenters, on the other 

hand, were split on the issue of 

codification. Including comments from 

both the October 2003 proposal and the 

March 2007 supplemental proposal, just 

over half of the industry commenters 

opposed codification of the legitimacy 

factors, although they tended to express 

support in their comments for the 

purpose and goals of the legitimacy 

factors and agree with the goal of 

identifying which processes are true 

recycling and which are sham recycling. 

Several industry commenters stated that 

the guidance is working well already 

and many of those opposed to 

codification expressed concern that if 

the legitimacy factors were codified, 

they would lose the flexibility in the 

guidance that allows the factors to apply 

to many varied industrial sectors and 

processes, automatically becoming more 

stringent. Another concern expressed by 

the commenters regarding codification 

of the legitimacy factors was that, in 

their view, the terms used in the 

regulatory text are too ambiguous and 

should be clarified before they can be 

part of a regulation. These commenters 

argue that codification of the factors 

without addressing these concerns 

would automatically be more stringent 

than having guidance, thereby 

inappropriately inhibiting legitimate 

recycling. 

About one-third of the forty-two 

industry commenters on the issue of 

whether or not to codify backed the 

codification of the legitimacy factors. 

Many of these commenters represented 

segments of the waste management 

industry, but a number of 

representatives of generating industries 

also made this comment. The industry 

commenters that supported codification 

stated that they did so because it would 

provide clarity, consistency, and 

predictability by making it more 

apparent which hazardous secondary 

materials and processes are covered by 

the recycling exclusions. One 

commenter noted the value in the 

legitimacy factors going through the 

notice and comment process since they 

are being used by the states in 

implementation of the regulations and 

another expressed an expectation that 

the codified requirements would lead to 

more uniformity in interpretation 

between implementing agencies. Several 

of these commenters also stated that 

they also valued the flexibility of the 

structure of the Lowrance memo and 

stressed the importance of the codified 

legitimacy factors retaining that 

flexibility. 

In addition, several more industry 

commenters stated that they saw the 

value in codifying the legitimacy factors 

and could support its codification under 

certain conditions. The suggested 

conditions included the codification of 

only the two proposed mandatory 

factors, codification of the factors in 

conjunction with finalizing what we 

called the ‘‘broader exclusion’’ option in 

the October 2003 proposal, and 

codification of legitimacy factors to be 

used only with the definition of solid 

waste exclusions that were included 

within the supplemental proposal in 

March 2007. 

EPA’s Response: Codification of 

Legitimacy. 

In today’s final rule, EPA is codifying 

the legitimacy factors as a requirement 

for today’s exclusions and for the nonwaste determinations, but not for all 

recycling. To avoid confusion among 

the regulated community, as well as the 

state and other implementing regulatory 

agencies about the status of recycling 

under the existing exclusions, EPA is 

not codifying the legitimacy factors as 

specifically applicable to existing 

exemptions in today’s final rule. In 

developing the codified legitimacy 

language, we did not intend to raise 

questions about the status of legitimacy 

determinations that underlie existing 

exclusions from the definition of solid 

waste, or about case-specific 

determinations that have been made by 

EPA or the states. Current exclusions 

and other prior solid waste 

determinations or variances, including 

determinations made in letters of 

interpretation and inspection reports, 

remain in effect. 

In codifying the legitimacy provisions 

for the exclusions and non-waste 

determinations in today’s final rule, 

EPA has taken into consideration all the 

comments it received in response to the 

October 2003 proposal and March 2007 

supplemental proposal on the structure 

of the legitimacy factors, as well as on 

the individual factors themselves and 

has made the appropriate changes to the 

factors to address those comments. 

In response to a general comment, 

EPA is aware of the comments that each 

of the terms in the legitimacy 

regulations should be more clearly 

defined and the suggestions for specific 

tests for each of the factors. We are, 

however, seeking a balance between 

having a set of specific tests and having 

the flexibility needed for a requirement 

that applies to the range of recycling 

practices in various industries in 

different industrial or commercial 

settings. 

Therefore, in response to comments, 

the discussion of legitimacy in today’s 

preamble describes more clearly what 

EPA means by the terms we use in the 

regulatory text for this element of the 

final rule. The Agency also is providing 

more examples of both legitimate and 

sham recycling than were included in 

the discussions of the individual factors 

in the preambles for the October 2003 

proposal and March 2007 supplemental 

proposal to illustrate the meaning of the 

legitimacy factors. The Agency also is 

stressing the importance of case-by-case 

determinations that are based on the 

facts of a specific situation. 

B. Effect on Current Determinations of 

Legitimate Recycling Activities 

In the March 2007 supplemental 

proposal, EPA stated its opinion that the 

concept of legitimate recycling 

originally proposed in October 2003 is 

not substantively different from our 

longstanding policy, as articulated in 

the 1989 Lowrance Memo and 

subsequent preambles. We stated that 

we were simply reorganizing, 

streamlining, and clarifying the existing 

legitimacy principles. Thus, we stated 

in the March 2007 supplemental 

proposal that we believe that the 

regulatory definition of legitimate 

recycling, when applied to specific 

recycling scenarios, would result in 

determinations that were consistent 

with EPA’s earlier policy. We went on 

to say that we did not believe the 

regulated community or implementing 

agencies would need to revisit previous 

legitimacy determinations. However, we 

did request examples of determinations 

which could be impacted by the 

codification. 

Comments: Relationships With Existing 

Determinations 

Commenters expressed concern that, 

in spite of EPA’s intentions, the 

codification could prompt 

implementing agencies to revisit past 

legitimacy determinations. In addition, 

comments on the October 2003 

proposed rule suggested that 

implementing agencies could interpret 

the proposed regulatory text as meaning 

that a recycling activity must satisfy all 

four of the factors to be considered 

legitimate. Several commenters on the 

March 2007 supplemental proposal 

stated that legitimacy should not apply 

to the existing recycling exclusions in 

the current regulations and others were 


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concerned that codification may lead 

implementing agencies to consider only 

the four factors and not consider other 

key information about the recycling 

activity. 

EPA’s Response: Relationships With 

Existing Determinations 

Regarding the existing exclusions in 

the regulations, EPA acknowledges that, 

in establishing a specific exclusion, we 

have already determined in the 

rulemaking record that the specific 

recycling practice is excluded from the 

definition of solid waste provided all 

the conditions of the rule are met. 

However, the Agency has always 

enforced its rules on the basis that any 

recycling must be legitimate (See U.S. v. 

Self, 2 F. 3d 1071, 1079 (10th Cir. 1993); 

U.S. v. Marine Shale Processors, 81 F. 

3d 1361, 1366 (5th Cir. 1996): Marine 

Shale Processors v. EPA, 81 F. 3d 1371, 

1381–83 (5th Cir. 1996)). This is meant 

to prevent a company from claiming to 

be operating under an existing exclusion 

and simply using that as a way to avoid 

full RCRA Subtitle C regulation. 

However, to avoid confusion among 

the regulated community and state and 

other implementing agencies about the 

status of recycling under existing 

exclusions, we have decided that the 

focus of this rule should be the specific 

changes it is making to the definition of 

solid waste in the form of the exclusions 

and non-waste determinations finalized 

today. Thus, the legitimacy factors 

codified in 40 CFR 260.43 only apply to 

the exclusions and non-waste 

determination process being finalized in 

this rule and we do not expect 

implementing agencies to revisit past 

legitimacy determinations based on this 

final rule preamble language. 

Also, it should be noted that the 

regulatory language does not preclude 

other considerations when looking at 

the codified factors for making 

legitimacy determinations. We 

recognize that additional information 

about the recycling activity could be 

helpful and could be used when 

assessing the four legitimacy factors and 

in making a determination about 

whether a specific recycling activity is 

legitimate. In fact, we encourage the 

regulated community and implementing 

agencies to use any and all information 

about the recycling process to come to 

an informed decision on the legitimacy 

of a hazardous secondary material 

recycling operation. However, given the 

public comment on the October 2003 

proposed rule and the March 2007 

supplemental proposal, no other factors 

have been identified and we believe that 

the four legitimacy factors codified in 

this rule include the relevant principles 

of legitimate recycling for the purposes 

of the exclusions and non-waste 

determinations being finalized today. 

C. Revised Structure for the Definition of 

Legitimate Recycling 

In the March 2007 supplemental 

proposal, we proposed a new structure 

for the definition of legitimate recycling. 

The first part consisted of those factors 

that must be met, which included a 

requirement that the hazardous 

secondary materials being recycled 

provide a useful contribution to the 

recycling process or to the product of 

the recycling process and a requirement 

that the product of the recycling process 

be valuable. EPA considers these two 

factors to be fundamental to legitimate 

recycling and if a recycling process does 

not meet them, it is sham recycling (i.e., 

treatment or disposal of a hazardous 

waste under the guise of recycling). 

The second part of the proposed 

structure included two additional 

factors that must be taken into account 

when a legitimacy determination is 

being made. We explained that while 

these two additional factors are 

important in determining whether a 

particular process is legitimate, there 

may be circumstances under which a 

legitimate recycling process might not 

conform to one or both of these factors. 

The two additional factors are whether 

the hazardous secondary materials are 

managed as a valuable commodity and 

whether the product of the recycling 

process contains significant 

concentrations of hazardous 

constituents. We note, however, that in 

cases where a recycling practice does 

not meet one or both of these factors, the 

hazardous secondary material generator 

and/or recycler should be able to 

demonstrate why the recycling is in fact 

still legitimate. 

Comments: Revised Structure 

The public comments on the 

individual factors in the March 2007 

supplemental proposal showed that, as 

in the comments to the October 2003 

proposal, there continues to be general 

agreement from industry and state 

commenters on two factors (useful 

contribution and valuable product/ 

intermediate). Commenters were 

virtually unanimous in their agreement 

that these two factors are crucial 

indicators of legitimacy and should be 

included in the concept of legitimacy. In 

other words, there was agreement that 

recycling cannot be legitimate if the 

material being recycled does not 

provide a useful contribution to the 

process or to the product and if the 

recycling process does not yield a 

product or intermediate that is valuable 

to someone. Certain commenters 

requested that EPA provide additional 

information on how it defines these 

terms and, while there was some 

disagreement with the specifics laid out 

in the preamble, there was little 

disagreement with the basic overarching 

concepts. 

Although there was support for the 

structure for legitimacy that was 

proposed in the March 2007 

supplemental proposal, most states, the 

environmental community, and the 

waste management industry argued that 

all four of the factors should be 

mandatory requirements-that is, they 

must all be met for the recycling activity 

to be considered legitimate recycling. 

Industry had a more mixed response to 

this issue with some supporting the 

proposed structure and others preferring 

that the factors be finalized as balancing 

factors. Others expressed their opinion 

that while they preferred nonmandatory criteria, the proposed 

approach was reasonable. Several 

commenters expressed their preference 

for keeping the legitimacy factors as 

guidance, but stated that if the Agency 

decided to codify the legitimacy factors, 

they preferred the structure as proposed 

in the March 2007 supplemental 

proposal. 

EPA’s Response: Revised Structure 

EPA agrees with the commenters on 

the importance of the two factors (useful 

contribution and valuable product/ 

intermediate) that were proposed to be 

mandatory in evaluating legitimate 

recycling and, for this final rule, we 

have decided that these two concepts 

are, in fact, at the very core of what it 

means to recycle legitimately. Therefore, 

the final regulatory language states in 40 

CFR 260.43(b) that ‘‘[l]egitimate 

recycling must involve a hazardous 

secondary material that provides a 

useful contribution to the recycling 

process or to a product of the recycling 

process, and the recycling process must 

produce a valuable product or 

intermediate.’’ This statement is 

followed by clauses (1) and (2) that give 

more details on how the Agency defines 

these concepts. 

EPA has determined that the other 

two factors are still important in making 

legitimacy determinations, but do not 

necessarily have to be met for the 

recycling activity to be considered 

legitimate. Instead, the regulations state 

that a person making a legitimacy 

determination must consider these two 

factors, which are found in § 260.43(c) 

of the final language. In stating that the 

factors must be considered, EPA expects 

that those making legitimacy 

determinations will evaluate how the 


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hazardous secondary materials in 

question are managed as compared to 

analogous raw materials and how levels 

of hazardous constituents in their 

products compare with the levels of 

hazardous constituents in analogous 

products. If the generator or recycler 

determines that one or both of these 

factors are not met, that person should 

be prepared to explain why their 

recycling activity is nevertheless still 

legitimate. As described in 

§ 260.43(c)(3) of the regulatory text, in 

evaluating the extent to which these 

factors are met and in determining 

whether a process that does not meet 

one or both of these factors is still 

legitimate, persons can consider the 

protectiveness of the storage methods, 

exposure from toxics in the product, the 

bioavailability of the toxics in the 

product, and other relevant 

considerations. We would note that the 

facility may be requested to demonstrate 

the legitimacy of their recycling process 

and explain why failure to meet one or 

both of these factors does not affect the 

legitimacy of the recycling process. 

Comments: Mandatory Factors 

As part of the October 2003 proposal, 

the Agency solicited comment on 

whether the factors should continue to 

be used in the same way as the previous 

guidance had been used, as factors to be 

balanced or considered in making an 

overall determination, or whether the 

factors should be structured differently 

in the final rule, such as in the form of 

mandatory requirements that must all be 

met. Based on the comments received 

on that proposed rulemaking, we 

proposed a new structure in the March 

2007 supplemental proposal with two 

mandatory factors and two factors that 

must be taken into account, but not 

necessarily met in every situation (72 

FR 14198). 

Many state implementing agencies 

argued that all the factors should be 

written as mandatory requirements that 

must be met. Most industry commenters 

(but not all) did not. The main argument 

in favor of making the factors mandatory 

requirements is that commenters argued 

that this approach would result in 

legitimacy determinations that are more 

objective and more enforceable. The 

main arguments against making all the 

factors mandatory requirements is that 

the overall determination is made on a 

case-by-case basis, which is often 

facility-specific, and not all legitimate 

recycling can fit into such a rigid 

system. 

EPA’s Response: Mandatory Factors 

The Agency can see both state and 

industry viewpoints and, in the end, as 

described above, has decided upon a 

course of action that results in a 

compromise between the two 

approaches. In section IX of this 

preamble, we explain in detail the final 

design of the legitimacy factors, which 

includes two factors that must be met 

(useful contribution and valuable 

product/intermediate) and two factors 

that must be taken into account in 

making an overall legitimacy 

determination. We believe this approach 

and the attendant regulatory language is 

clearer than the existing guidance, yet 

retains enough flexibility to account for 

the variety of legitimate hazardous 

secondary materials recycling practices 

that exist today. 

D. Comments on the Specific Factors 

In developing the legitimacy factors, 

the Agency sought a balance between 

having a set of specific tests and having 

the flexibility that is necessary to allow 

the four legitimacy factors to apply to 

hazardous secondary material recycling 

practices in the many industrial or 

commercial settings to which the factors 

would be applied. As a result, each of 

the legitimacy factors included a term or 

terms that drew public comments 

arguing that the factors were not clearly 

enough defined. The underlined terms 

in the following excerpts from the 

regulatory text demonstrate what these 

terms are: 

• Factor 1: ‘‘Legitimate recycling 

must involve a hazardous secondary 

material that provides a useful 

contribution to the recycling process or 

to a product of the recycling process.’’ 

• Factor 2: ‘‘The recycling process 

must produce a valuable product or 

intermediate.’’ 

• Factor 3: ‘‘The generator and 

recycler should manage the material as 

a valuable commodity * * * Where 

there is no analogous raw material, the 

hazardous secondary material should be 

contained.’’ 

• Factor 4: ‘‘The product of the 

recycling process does not contain 

significant concentrations of hazardous 

constituents [or] contain concentrations 

* * * at levels that are significantly 

elevated from those found in analogous 

products.’’ 

The October 2003 proposal gave some 

narrative descriptions of these terms to 

explain what they mean in the context 

of legitimate recycling, but that proposal 

did not provide any concrete tests for 

how those specific terms are to be used 

when judging whether a process and/or 

hazardous secondary material meets 

these factors. 

Comments: Defining Legitimacy Terms 

For each of the four factors, the 

Agency received public comments that 

focused specifically on the meaning of 

and the difficulties in implementing 

these factors when the terms are not 

accompanied by a test for the hazardous 

secondary material generators and 

recyclers to use when making 

determinations of legitimacy. For the 

first factor, the Agency received several 

comments on the definition of ‘‘useful 

contribution’’ from the October 2003 

proposal. For the second factor, over 

twenty commenters submitted 

comments on the definition of 

‘‘valuable’’ in response to the October 

2003 proposal. In addition, the Agency 

received several comments on the 

definition of ‘‘valuable’’ and on the 

definition of ‘‘contained’’ related to the 

third factor and over twenty comments 

on the definition of ‘‘significant’’ in the 

fourth factor. We also received some 

additional comments on the March 2007 

supplemental proposal relating to the 

same definitional terms in each factor. 

The comments on these terms will be 

described in more depth in the 

discussion below for each of the 

applicable factors, but, in general, the 

comments showed a wide range of 

opinions: Some commenters found the 

discussion in the preamble to define the 

terms was adequate and appropriate, 

other commenters objected to the terms 

as not being clearly defined, while still 

other commenters found the terms to be 

too subjective to be a useful tool. We 

also received comments that suggested 

alternative ways to define the terms to 

be clearer or to better meet the Agency’s 

objectives. 

EPA’s Response: Defining Legitimacy 

Terms 

The Agency has incorporated the 

ideas generated by the comment process 

into the final rule, as appropriate. The 

final language and decisions regarding 

the legitimacy factors are laid out below 

in this section and in section IX of this 

preamble, where the final legitimacy 

language is discussed more fully. 

However, after considering the 

comments, we have decided that we 

would not develop specific definitions 

or precise tests that hazardous 

secondary material generators and 

recyclers must use when making 

legitimacy determinations. Instead, the 

Agency has bolstered our preamble 

discussion on the meaning of these 

terms and has included more examples 

than we had in the preambles to the 

October 2003 proposal and the March 

2007 supplemental proposal. 


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EPA’s decision not to include specific 

bright-line tests for the final legitimacy 

factors reflects the fact that legitimacy 

determinations do not lend themselves 

to the application of absolute 

distinctions, especially given the 

breadth of recycling practices and 

recycled hazardous secondary materials 

that exist in industry. The main 

argument we received for developing 

specific tests was that, without specific 

tests, those making legitimacy 

determinations may be uncertain about 

whether their regulatory agency would 

agree with that interpretation of the 

recycling scenario. This may lead to 

reduced recycling rates if companies 

choose not to take advantage of the 

exclusions for recycling rather than risk 

interpreting their activities differently 

than the regulator does. 

Although we understand the concerns 

behind this argument, we are addressing 

them by including more discussion and 

explanations of the final factors in the 

preamble to the final rule. The 

complexities of defining ‘‘valuable 

commodity/product,’’ ‘‘useful 

contribution,’’ ‘‘contained,’’ and 

‘‘significant’’ so that they can be 

determined through a bright-line test 

and are still appropriate for all 

industries, all recycling processes, and 

all recycled hazardous secondary 

materials are too great for the Agency to 

be able to design a simple and 

straightforward system of tests to be 

used in making such determinations. 

The complex regulatory system of tests 

for different types of industries or 

different processes that would be 

necessary would not be efficient or 

accessible to most generators, especially 

small businesses. 

In addition, we believe that legitimacy 

determinations are best made on a caseby-case basis, which has always been 

the case, with the facts of a specific 

situation in hand. In a case-by-case 

determination, a series of specific tests 

may not be as useful and as accurate in 

determining legitimacy as careful 

consideration of the hazardous 

secondary material, the recycling 

process, and the specifics of the 

situation would be. If a person has any 

questions as to the legitimacy of a 

particular recycling activity, he can 

always approach the appropriate 

regulatory agency for assistance in 

making a legitimacy determination. 

Comments: Factor 1—The Hazardous 

Secondary Material Provides a Useful 

Contribution 

Factor 1 expresses the fundamental 

principle that hazardous secondary 

materials must actually be useful (i.e., 

contribute positively) to the recycling 

process and is intended to prevent the 

practice of incorporating hazardous 

secondary materials within 

manufacturing operations simply as a 

means of disposing of them. The Agency 

firmly believes that this concept is 

crucial to the definition of legitimacy 

and is finalizing it as part of the core 

definition. This factor, along with the 

second factor described below, must be 

met for any recycling activity to be 

considered legitimate recycling. The 

regulatory text for this factor is found in 

40 CFR 260.43(b)(1). 

In general, we received much support 

for and agreement with the underlying 

principle of this factor—that the 

hazardous secondary materials must 

provide some useful contribution to 

either the recycling process or the 

recycled product. Commenters asked for 

clarification on a number of issues 

related to this factor, specifically in 

regard to the October 2003 proposal and 

how the economics of recycling is 

connected to this factor and how the 

economics of recycling should be 

evaluated. In the March 2007 

supplemental proposal, we described 

how the economics of recycling relates 

not only to the useful contribution 

factor but, in fact, to all of the factors of 

legitimacy and explained our thinking 

about how evaluating the economics of 

recycling transactions should be 

undertaken. 

EPA’s Response: Factor 1—The 

Hazardous Secondary Material Provides 

a Useful Contribution 

The Agency is today finalizing this 

factor as part of the core definition of 

legitimate recycling and as a factor that 

must be met for the recycling to be 

considered legitimate under § 260.43. 

We also revised the October 2003 

proposal discussion regarding the 

consideration of economics related to 

this criterion, and we expanded its 

consideration beyond just the useful 

contribution criterion. Today, we are 

offering further guidance, similar to the 

March 2007 supplemental proposal, 

which explains how economics may be 

considered in making legitimacy 

determinations and how it may apply to 

the mandatory factors and the factors 

that must be taken into account. 

Comments and EPA’s Response: Factor 

1—Contribution to the Process 

EPA also received comments on our 

statements in the October 2003 proposal 

that indicated that not every component 

of a hazardous secondary material does 

or must contribute to the recycling 

process or product of the recycling 

process in order for there to be an 

overall contribution. In particular, one 

state agency favored allowing the nonhazardous component of hazardous 

secondary materials to provide the 

useful contribution and one industry 

commenter agreed that not all of the 

hazardous secondary material would 

have to contribute for this factor to be 

met. Another state agency asked us to 

clarify that the statement ‘‘not every 

component of a hazardous secondary 

material would necessarily have to 

contribute to the product or the process 

to meet this criterion’’ was applicable 

only in the context of this factor. 

It has been the Agency’s longstanding 

policy that in a legitimacy 

determination not every constituent or 

component in a hazardous secondary 

material would have to contribute to a 

product of the recycling process or 

intermediate or to the recycling process 

in order for there to be an overall 

contribution and this applies to the 

provision in § 260.43 as well. For 

example, the use of hazardous 

secondary materials in zinc fertilizer is 

considered legitimate recycling when 

the zinc, a non-hazardous constituent, is 

the main contribution to the fertilizer. 

Another example is the use of CRT glass 

used in copper smelters as a fluxing 

agent. In this case, the glass provides a 

useful contribution by facilitating the 

manufacturing process. Thus, we agree 

with those commenters who raised 

questions about this issue and are 

restating our position here. 

Comments and EPA’s Response: Factor 

1—Efficiency of the Process 

Another issue that was discussed in 

the October 2003 proposal arising in the 

context of useful contribution was the 

efficiency of a recycling process in 

recovering or regenerating the useful 

component of the hazardous secondary 

material. One example we used was the 

recovery of copper from a hazardous 

secondary material. We stated that 

where the process was reasonably 

efficient and recovered all but a small 

percentage of the copper, it looked like 

legitimate recycling. However, where a 

small percentage of copper in the 

hazardous secondary material is 

recovered, sham recycling may be 

indicated. However, we did not discuss 

recovery rates in the middle range (e.g., 

50% of copper recovered from a 

particular recycling process) and some 

commenters asked for clarification, 

including how the factor applies to 

hazardous secondary materials that are 

contributing to the recycling process 

either as a carrier or a catalyst. 

The Agency is clarifying in today’s 

preamble and regulatory text that the 

useful contribution of a hazardous 

secondary material to the recycling 


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process or product can be demonstrated 

in a number of ways. We provided a 

number of different ways such a 

material could contribute to the process 

in the preamble to the October 2003 

proposed rule (68 FR 61584–61585) and 

did not mean to imply that the 

hazardous secondary material would 

have to meet all of the examples to 

provide a useful contribution. For 

example, hazardous secondary materials 

could provide a useful contribution to a 

process by serving as a carrier or 

catalyst and the process efficiency 

would not factor into the demonstration 

of this factor in this example. 

In general, the regulated community 

should look to typical industry recovery 

rates to determine if the recycling 

recovery rates are reasonably efficient in 

terms of making a useful contribution to 

the recycling process or product. In 

addition, it should be noted that EPA 

would generally look at the quantity or 

the rate of recovery of the overall 

process, not the recovery rate of a single 

step in the process, when analyzing this 

factor for legitimacy. For example, if one 

step in the process recovers a small 

percentage of the constituent, but the 

overall process recovers a much larger 

percentage, the Agency would consider 

the overall efficiency of the recycling 

process in determining whether 

hazardous secondary materials are 

providing a useful contribution. This 

assumes that there is enough of the 

target constituent present in the 

hazardous secondary materials to 

contribute meaningfully to the recycling 

activity. 

Comments and EPA’s Response: Factor 

1—Residuals 

In the discussion of useful 

contribution in the October 2003 

proposal, in the context of process 

efficiency, we stated that a ‘‘pattern of 

mismanagement of the residues’’ may be 

an indicator of sham recycling (68 FR 

61584). We received several comments 

asking us to explain the connection 

between useful contribution of the 

hazardous secondary materials and 

management of residues. Several 

commenters questioned this statement 

and disagreed that how a facility 

managed its residues had any bearing on 

whether the hazardous secondary 

materials going into a recycling process 

were being legitimately recycled. 

We agree with the commenters who 

suggested that the management of 

residuals from the recycling process is 

not an indicator of whether the 

hazardous secondary materials provide 

a useful contribution and thus is not a 

factor in determining whether legitimate 

recycling is occurring. For these 

reasons, we are making it clear that the 

management of recycling residuals is 

not a consideration in making 

legitimacy determinations. Instead, as 

part of today’s final rule, we are 

requiring that any residuals that are 

generated from the recycling process be 

managed in a manner that is protective 

of human health and the environment. 

Specifically, there is a requirement for 

hazardous secondary material 

generators to make reasonable efforts to 

ensure that the hazardous secondary 

materials are legitimately recycled and, 

among other things, that the reclaimer 

manages the hazardous secondary 

materials in a manner that is protective 

of human health and the environment, 

including how any recycling residuals 

are managed. Finally, we note that the 

generation of residuals that are solid 

wastes are subject to the waste 

characterization and identification 

requirements in 40 CFR Part 261 as a 

newly generated waste. 

Comments: Factor 2—The Recycling 

Process Yields a Valuable Product/ 

Intermediate 

This factor is intended to capture the 

fundamental concept that legitimate 

recycling must produce something of 

value. For the purposes of evaluating 

this factor, a product of the recycling 

process or intermediate would be 

considered valuable if it can be shown 

to have either economic value or value 

that is more intrinsic (i.e., it is useful to 

the end user, even though it may not be 

salable as a product or commodity in 

the open marketplace). The regulatory 

text for this factor can be found in 40 

CFR 260.43(b)(2). 

In general, most commenters agreed 

with the concept that the recycling 

process must produce something of 

value. Many commenters also stressed 

the importance of keeping the concept 

of ‘‘intrinsic’’ value—that is, a product 

does not have to be sold to have value. 

Instead, it can be used as an effective 

substitute for a commercial product or 

as a useful ingredient in an industrial 

process. However, other commenters 

disagreed, contending that intrinsic 

value is too subjective to use to 

determine compliance. One commenter 

also thought this factor was redundant 

with the factor that hazardous 

secondary materials must provide a 

useful contribution and should be 

deleted. 

Another common concern in the 

comments was how to evaluate whether 

the product or intermediate is valuable. 

Some commenters stressed the 

importance of evaluating this factor over 

time, given that markets and prices 

fluctuate, and others argued that it must 

be done on a case-by-case basis. 

EPA’s Response: Factor 2—The 

Recycling Process Yields a Valuable 

Product 

In general, the Agency agrees with the 

commenters who stated that a product’s 

value can be either monetary or 

intrinsic. Clearly, not all valuable 

products are sold. For example, many 

legitimate recycling situations exist 

where the intermediate or product of the 

recycling process has value and is used 

on-site, sent off-site to another facility 

owned by the same company, or even 

traded between companies. There are a 

number of already established networks 

where hazardous secondary materials 

are exchanged among and across 

industries. This rule does not interfere 

with those ongoing exchanges where 

such materials are being legitimately 

recycled. One example of such a 

program is the U.S. Business Council for 

Sustainable Development’s by-product 

synergy program which has conducted a 

number of regional pilots in which 

diverse industries are brought together 

to facilitate feedstock and by-product 

exchanges. No money is exchanged in 

these types of programs. 

We are also clarifying in the 

regulatory text that the product of the 

recycling process can be either a 

commercial product or intermediate, as 

long as it has value to the end user. In 

addition, we are further clarifying that 

the regulated community does not need 

to evaluate each step in the recycling 

process to determine if the final 

products or intermediates are valuable. 

Rather, an individual recycler or 

generator would look at its final product 

or intermediate and must be able to 

demonstrate why it has value. 

We understand the concerns of some 

commenters that intrinsic value is 

harder to demonstrate than the value of 

a product of the recycling process that 

is sold in the open marketplace. While 

this demonstration is not as 

straightforward, there are a number of 

ways the end user can demonstrate the 

intrinsic value of the recycled 

intermediate or product. Some examples 

include showing that the product of the 

recycling process replaces an alternative 

product or material that would 

otherwise have to be purchased or by 

demonstrating that a product of the 

recycling process or intermediate meets 

specific product specifications or 

established industry standards. Another 

approach to demonstrating the value of 

a product of the recycling process or 

intermediate would be to compare its 

characteristics (e.g., its physical/ 

chemical properties or its usefulness for 


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certain applications) with comparable 

products or intermediates made from 

raw materials. 

Finally, we disagree with the 

commenter who stated that this factor is 

equivalent to the hazardous secondary 

material making a useful contribution to 

a product or intermediate. It is certainly 

possible for a recycling process to result 

in the production of a valuable product 

or intermediate without the hazardous 

secondary materials added to the 

process making any contribution 

whatsoever. For example, this would be 

the case when hazardous secondary 

materials are added to the process and 

all of the hazardous secondary 

materials, including the hazardous 

constituents, end up in the residuals, 

which are discarded, and the materials 

added to the process provide no benefit 

whatsoever. This is the essence of sham 

recycling. A vast majority of the 

commenters saw the need for both 

factors and after exploring the concept 

of legitimate recycling further, we were 

unable to find any examples of 

legitimate recycling that did not meet 

both of the core factors (i.e., the 

hazardous secondary material provides 

a useful contribution and the recycling 

process produces a product of value), 

nor did any commenters provide us 

with such examples. Thus, we are 

retaining both concepts as factors that 

must be met in order for a process to be 

considered legitimate recycling. 

Comments: Factor 3—How the 

Hazardous Secondary Material To Be 

Recycled Is Managed 

This factor on the management of 

hazardous secondary materials was 

designed to illustrate that hazardous 

secondary materials that are bound for 

recycling should be managed to prevent 

releases into the environment in the 

same way that valuable commodities 

would reasonably be expected to be 

managed. Hazardous secondary 

materials that are recycled are valuable 

production inputs. As such, we believe 

that such materials should be managed 

in a way that retains their value and 

prevents significant losses to the 

environment. Hazardous secondary 

materials that are mismanaged to the 

extent that they are released into the 

environment are not recycled. 

This factor is one of the two 

legitimacy factors that EPA believes 

needs to be considered. However, in 

some cases, it may not be clear that the 

factor is met or it may not be met, yet 

the recycling activity can still be 

legitimate. The regulatory text for the 

factor can be found in 40 CFR 

260.43(c)(1) and it states that the 

handler should manage the hazardous 

secondary material ‘‘as a valuable 

commodity.’’ If an analogous raw 

material exists, the hazardous secondary 

material should be managed, ‘‘at a 

minimum, in a manner consistent with 

the management of the raw material.’’ If 

there is no analogous raw material, the 

proposal states that the hazardous 

secondary material should be 

‘‘contained.’’ 

The response from commenters on 

this factor was mixed in response to 

both the October 2003 proposal and the 

March 2007 supplemental proposal. 

Many states and environmental 

organizations commented that the factor 

should be mandatory and some argued 

that it should include a strict test. Many 

commenters from the generating 

industry and the waste management 

industry stated that they support this 

factor and believe that it is a fair and 

reasonable indicator of legitimacy. Some 

industry commenters thought that this 

factor should be mandatory, whereas 

others commented that the factor should 

neither be codified nor mandatory. At 

least one commenter stated that the 

factor was not necessary because of 

other existing disincentives for 

mismanagement. Representatives from 

extractive industries were most strongly 

opposed to this factor, stating that EPA 

cannot include legitimacy requirements 

on secondary materials that are going to 

be recycled because they are not in 

EPA’s jurisdiction. 

EPA’s Response: Factor 3—How the 

Hazardous Secondary Material To Be 

Recycled Is Managed 

Today, we are finalizing this factor as 

one of the two factors that must be 

considered during a legitimacy 

determination, but not necessarily met. 

We modified the language of this factor 

since the October 2003 proposal and are 

finalizing it basically as proposed in the 

March 2007 supplemental proposal. 

EPA has decided that it is most 

appropriate to finalize this factor as one 

of the factors that must be considered 

rather than as a mandatory factor. 

Although we believe that this factor is 

an important part of a legitimacy 

determination because hazardous 

secondary materials that are not being 

managed carefully may be materials that 

the recycler does not value for its 

process, the factor is not part of what 

the Agency considers the core of 

legitimacy. In addition, as discussed in 

section IX of this preamble, EPA and 

commenters were able to identify 

situations in which this factor is not 

met, but the recycling appears to be 

legitimate because the hazardous 

secondary materials are still being 

managed in a responsible manner. EPA 

does not want to restrict legitimate 

recycling and, therefore, in these cases, 

the facility could make a determination 

of legitimacy without meeting this 

factor, but should be prepared to 

explain why its recycling is legitimate. 

EPA also believes that this factor can 

be critical when considering whether 

hazardous secondary materials are 

legitimately recycled and EPA disagrees 

with commenters who argued that 

evaluating ‘‘materials management’’ is 

outside the scope of RCRA because 

hazardous secondary materials are not 

solid wastes due to being excluded. EPA 

believes that the commenters’ argument 

is circular. The hazardous secondary 

materials are excluded only if the 

recycling is legitimate. How materials 

are managed is part of determining 

legitimate recycling. EPA has the 

authority to define legitimate recycling 

and, therefore, has the authority to 

require this evaluation. 

Comments: Definition of Terms in 

Factor 3 

Commenters stated that compliance 

with this factor is dependent on the 

regulated community and regulators 

understanding what EPA means by it. In 

the October 2003 proposal, we proposed 

that the factor read, ‘‘[w]here there is no 

analogous raw material, the secondary 

material should be managed to 

minimize the potential for releases to 

the environment.’’ Many commenters 

stated that the term ‘‘minimize’’ in this 

context was particularly unclear. State 

commenters argued that the term 

‘‘minimize’’ did not provide enough 

guidance or could be interpreted to 

allow unclear amounts of hazardous 

secondary materials to be released, 

leaving room for potential 

mismanagement of that material, 

whereas some industry commenters 

asked if this standard meant they would 

have to meet or exceed controls required 

for regulated hazardous wastes in their 

recycling operations. Several 

commenters also asked about the term 

‘‘valuable commodity’’ and how 

‘‘valuable’’ is defined. 

EPA’s Response: Definition of Terms in 

Factor 3 

EPA agrees that terms for this factor 

should be more clear to facilitate 

compliance. Although we have not 

developed a specific test or codified 

definitions to explain this factor, we 

have adjusted some of the language in 

the factor to address this concern and 

are providing further explanation of 

what we intend by this factor in today’s 

preamble so that it is better understood 

and can be consistently applied. 


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In the March 2007 supplemental 

proposal, we modified the language for 

this factor to state instead that ‘‘[w]here 

there is no analogous raw material, the 

hazardous secondary material should be 

contained.’’ This change addressed the 

ambiguity of the word ‘‘minimize,’’ as 

well as state comments that the storage 

requirements in this factor needed to be 

better defined. The Agency believes that 

facilities that value hazardous 

secondary materials as part of their 

manufacturing process will contain 

those materials to prevent their release. 

The term ‘‘contained’’ is also being used 

elsewhere in the exclusions being 

finalized. EPA is defining this term in 

the same way throughout: A recyclable 

material is ‘‘contained’’ if it is placed in 

a unit that controls the movement of 

that material out of the unit into the 

environment. We also believe that the 

standard for contained is more clear for 

states and industry than the standard to 

minimize potential releases to the 

environment was in the October 2003 

proposal. 

We also want to clarify the use of 

several other terms on which we 

received comments. These terms are 

discussed briefly here and in more 

depth in section IX of this preamble, 

where the legitimacy factors are fully 

described. ‘‘Analogous raw material,’’ 

also defined elsewhere in the 

exclusions, is a raw material for which 

a hazardous secondary material is a 

substitute and which serves the same 

function and has similar physical and 

chemical properties as the hazardous 

secondary material. Materials generally 

would not be considered analogous if 

their chemical makeup were very 

different from one another—particularly 

if the hazardous secondary materials 

contain hazardous constituents that 

necessitate management processes that 

the raw material does not—or if their 

physical properties are different. 

Regarding the term ‘‘valuable 

commodity,’’ EPA believes that 

hazardous secondary materials should 

be managed in the same or similar 

manner as raw materials that have been 

purchased or obtained at some cost. The 

legitimacy criteria are designed to 

determine whether a process is like 

manufacturing rather than like waste 

management. We believe that the 

standard for management of the 

hazardous secondary materials is 

reasonable for helping assess whether 

disposal in the guise of normal 

manufacturing is occurring. 

Comments: Factor 4—Comparisons of 

Toxics in the Product 

This factor was designed to prevent 

hazardous constituents from being 

‘‘discarded’’ by being incorporated into 

a product made from hazardous 

secondary materials. The factor 

identifies this situation as being 

hazardous constituents that are in a 

product made from hazardous 

secondary materials when they are not 

in analogous products, or when 

hazardous constituents are at 

significantly higher levels in products 

made from hazardous secondary 

materials than in analogous products 

that contain such hazardous 

constituents, or when the product 

exhibits one or more of the hazardous 

characteristics and the analogous 

product does not. An analogous product 

can either be the final product of 

manufacturing or, in some cases, an 

intermediate in a process. These 

hazardous constituents are often called 

‘‘toxics along for the ride’’ (TARs) and, 

if present, could be an indicator of 

discard. 

This factor is the second of the two 

legitimacy factors that EPA believes 

needs to be considered but, in some 

cases, does not need to be met for the 

recycling activity to be considered 

legitimate. We modified the language of 

this factor since the October 2003 

proposal and are finalizing the factor 

basically as proposed in the March 2007 

supplemental proposal. The regulatory 

text for the factor can be found in 40 

CFR 260.43(c)(2) and it states that the 

person making the determination 

should look at the product of the 

recycling process and compare it to 

analogous products that are made 

without hazardous secondary materials. 

The person making the determination 

should examine the concentrations of 

hazardous constituents to learn whether 

the product of the recycling process 

contains significant concentrations of 

hazardous constituents when the 

analogous product contains none, 

whether it contains significantly 

elevated levels of hazardous 

constituents when compared to the 

analogous product that contain such 

hazardous constituents, or whether it 

exhibits a hazardous characteristic 

when the analogous product does not. 

The Agency received many comments 

on the fourth factor in response to both 

the October 2003 proposal and the 

March 2007 supplemental proposal. The 

comments the Agency received on 

Factor 4 were very mixed, ranging from 

commenters who argued that this factor 

should be one of the factors that must 

be met to those who stated that the 

factor is irrelevant and should not be 

considered as part of a legitimacy 

determination. 

EPA’s Response: Factor 4—Comparisons 

of Toxics in the Product 

Today, we are finalizing this factor as 

one of the two factors that must be 

considered during a legitimacy 

determination, but not necessarily met. 

EPA maintains that this factor is an 

important way of determining whether 

a recycling process is, in fact, true 

recycling rather than a ‘‘sham.’’ 

If hazardous secondary materials with 

a toxic constituent or toxic constituents 

in amounts or concentrations greater 

than analogous raw materials are simply 

being run through a manufacturing 

process, it is an indication that those 

hazardous secondary materials may be 

being discarded in the guise of 

recycling. Toxics that are illegally 

disposed of in this manner can become 

exposure risks and could harm human 

health and the environment. EPA has 

jurisdiction over materials being 

discarded and, therefore, is requiring 

that this factor be considered in 

legitimacy determinations. The factor is 

not one of the mandatory factors 

because the Agency has identified 

situations where higher levels of toxic 

constituents may not be relevant or 

applicable and, thus, would not be an 

indicator of ‘‘sham’’ recycling if this 

factor is not met, as discussed in section 

IX of this preamble. In these cases, the 

facility could make a determination of 

legitimacy without meeting this factor, 

but should be prepared to explain why 

its recycling is legitimate. 

Comments: Factor 4—the Term 

‘‘Significant’’ and Alternative 

Approaches 

Many of these comments sought 

further guidance on the meaning of the 

term ‘‘significant’’ in the proposed 

regulatory text, stating that the 

definition in the proposal was unclear 

or subjective, which may lead to a wide 

range of possible interpretations of the 

term. Commenters also expressed 

concern that a definition that is too 

vague may discourage recycling. In a 

related topic, commenters also 

responded to EPA’s request for 

comments on two alternate approaches 

in the October 2003 proposal: (1) An 

approach that would establish a ‘‘bright 

line’’ for complying with the factor by 

specifically defining the terms 

‘‘significant amounts’’ and 

‘‘significantly elevated’’ in the 

regulatory text and (2) an approach that 

would require the use of risk assessment 

tools to determine if a product with 

elevated levels of a hazardous 

constituent due to use of hazardous 

secondary materials in its manufacture 

process posed a greater risk to human 


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health or the environment than the 

analogous product made from raw 

materials. 

On the whole, commenters were not 

enthusiastic about the two alternative 

approaches that EPA suggested. Most 

commenters stated that a specific test of 

either nature would not be appropriate 

because of the wide variety of recycling 

situations to which it would have to 

apply. 

EPA’s Response: Factor 4—the Term 

‘‘Significant’’ and Alternative 

Approaches 

The Agency believes that designing a 

specific test, such as those described in 

the preamble to the October 2003 

proposal, that is applicable to the many 

different recycling scenarios possible in 

the exclusions and non-waste 

determinations would be difficult, if not 

impossible. Thus, we agree with those 

commenters who argued against 

adopting such a specific test. Therefore, 

the Agency has more clearly described 

in this preamble to the final rule what 

it means by ‘‘significant’’ so that 

members of the regulated community 

can be confident in their evaluations of 

whether their products made from 

hazardous secondary materials contain 

‘‘toxics along for the ride.’’ Therefore, 

members of the regulated community 

will neither be discouraged from 

recycling nor be forced to seek an 

opinion from a regulatory agency in 

every case. Details on implementation of 

this factor are in section IX of today’s 

preamble. 

Comments: Factor 4—Comparing the 

Products Instead of Hazardous 

Secondary Materials 

Most commenters responded 

positively to a change the Agency made 

in its October 2003 proposal to compare 

the product of the recycling process to 

the analogous product made from raw 

materials rather than comparing the 

hazardous secondary materials to the 

analogous raw materials. EPA discussed 

this shift in its October 2003 proposal at 

68 FR 61586–61587. 

However, several commenters argued 

that the change is an attempt by the 

Agency to regulate products or stated 

that certain unique elements of their 

production processes made it so that 

this factor should not apply to their 

industry or their particular process. In 

addition, some commenters were 

concerned that under this factor, in 

some cases, the generator would have to 

know what was being done with its 

hazardous secondary material several 

steps downstream in the recycling 

process when it was incorporated into a 

final product. 

EPA’s Response: Factor 4—Comparing 

the Products Instead of Hazardous 

Secondary Materials 

The Agency believes that for an entity 

to ensure that hazardous secondary 

materials are being legitimately recycled 

and not discarded, it needs to know 

what happens to the hazardous 

secondary materials once they leave the 

generator’s control. However, in 

response to these comments, we are 

clarifying in today’s preamble that the 

final legitimacy factor allows the entity 

conducting the legitimacy 

determination to make the comparison 

on ‘‘toxics’’ either between the final 

products or between the hazardous 

secondary material and the analogous 

raw material it replaces. If the 

comparison of materials going into the 

process shows no significant difference 

in levels of toxics, the product of the 

recycling process will not significantly 

differ from analogous products in those 

levels either. In cases where the 

generator finds it too complex to 

compare the product from its recycling 

process to the analogous product made 

from the virgin raw material, it can, 

instead, compare the chemistry of the 

materials going into the process to 

evaluate this factor. 

Comments and EPA’s Response: 

Relevance of Factor 4 to a Particular 

Process 

Regarding the implementation of this 

factor, several commenters raised the 

concern that many products that are 

made from hazardous secondary 

materials do not have analogous 

products made from raw materials 

because they are always or have always 

been made from a combination of 

primary and in-process materials and 

that these are cases where this factor is 

not relevant to that particular recycling 

process. The commenters stated that 

this is especially true in the mineral 

extraction industries, but also may be 

the case in other industries as well. 

The Agency is aware that there are 

situations where there may not be 

analogous products made from raw 

materials. In that case, the facility can 

opt to compare the toxic constituents in 

the hazardous secondary material it is 

using against those in an analogous raw 

material instead. We also note that 

while this factor needs to be considered, 

it is not mandatory because EPA 

recognizes that in some situations, it 

will not be relevant to a particular 

industrial process. In the case where the 

facility considers this factor and decides 

that it is not applicable to its process, 

the Agency suggests that the facility 

evaluate the presence of hazardous 

constituents in its product and 

document both that it considered this 

factor and the reasons it believes the 

factor is not relevant. 

E. Consideration of Economics in 

Legitimacy 

Comments: Economics Considerations 

EPA received several comments in 

response to the preamble discussion 

about how to consider economics in the 

context of making legitimacy 

determinations in the March 2007 

supplemental proposal. EPA did not 

propose that economic consideration be 

codified within the regulatory definition 

of legitimate recycling and instead 

offered guidance on how economic 

consideration is relevant to determining 

the legitimacy of a recycling operation. 

EPA received only positive comments 

on the preamble discussion about 

consideration of economics in 

legitimacy. Specifically, EPA agrees 

with commenters who supported our 

position on the following: The 

economics of recycling are relevant to 

making legitimacy determinations, the 

economics of recycling are in fact 

different from traditional 

manufacturing, a recycling activity can 

be legitimate if a recycler charges a fee 

to accept hazardous secondary 

materials, economic considerations 

need to take into account the 

fluctuations in market prices of raw 

materials, and negative economic factors 

can contribute to environmental 

problems, such as speculative 

accumulation, abandonment, and sham 

recycling. 

However, EPA received many 

comments from both industry and 

recycling associations that opposed the 

October 2003 proposal to codify the 

economics consideration as a separate 

‘‘factor to be considered.’’ These 

commenters generally argued that 

consideration of economics was 

inherent within the four legitimacy 

factors (e.g., both of the mandatory 

factors, as well as the two factors which 

must be considered) and, therefore, a 

separate factor was not warranted. On 

the other hand, a few commenters 

(primarily states) requested that EPA 

codify a separate economics factor to be 

considered and they supported the 

inclusion of an enforceable factor for 

legitimacy determinations. 

EPA’s Response: Economics 

Considerations 

EPA agrees with those commenters 

who argued that economic 

considerations are inherent within the 

legitimacy factors. We believe that one 

specific factor cannot encompass all 


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economic scenarios for the entire 

universe of hazardous secondary 

materials recycling. Furthermore, we do 

not believe that a separate enforceable 

factor in the regulations strengthens the 

definition of legitimate recycling, but 

we do believe that articulating how 

economic considerations can influence 

the legitimacy factors adds real value to 

the legitimacy determinations made by 

state regulators and the regulated 

community. 

Based on the comments we received, 

the Agency is not codifying specific 

regulatory language on economic 

considerations. Instead, today’s 

preamble offers guidance and 

clarification on how economics may be 

considered in making legitimacy 

determinations, similar to the preamble 

discussion in the March 2007 

supplemental proposal. For more 

detailed information on economic 

considerations, please refer to ‘‘How 

consideration of economics applies to 

legitimacy’’ in section IX of today’s 

rulemaking. 

Comments and EPA’s Response: 

Specific Test for Economics 

EPA received some comments on the 

need for a specific test for consideration 

of economics. Commenters that 

supported a specific test believed it 

could include an accounting of 

economic flows over a period of time to 

determine longevity; an annual 

regulatory review of markets and a 

facility’s economics; a ‘‘rebuttable 

presumption that the recycling is 

legitimate where the recycler pays for 

the secondary materials,’’ similar to 

manufacturing operations; and a 

requirement that payment for recycled 

products and intermediates be more 

than nominal if considered to be a sign 

of positive economics. One comment 

was also submitted which expressly 

opposed a specific test, citing that 

markets fluctuate too much to analyze 

the flows of revenues. 

EPA believes that none of the 

examples suggested by the commenters 

are applicable to a broad universe of 

recycling activities. We also 

acknowledge that fluctuations in 

markets for hazardous secondary 

materials and recycled products, and 

subsequent impacts in revenue flows, 

create another challenging aspect of 

developing a test for the consideration 

of economics. Therefore, we believe that 

it is not possible to craft an economic 

test for legitimacy that can 

accommodate all legitimate recycling 

activities. As stated in section IX of 

today’s rulemaking, we believe that this 

preamble discussion provides sufficient 

guidance on how to consider economics 

in legitimacy determinations. 

F. Documentation of Legitimacy 

Comments and EPA’s Response: 

Documentation of Legitimacy 

Several of the public comments stated 

that it is important that the hazardous 

secondary material generator or recycler 

of a recycled material maintain 

documentation that substantiates how 

the recycling activity complies with the 

legitimacy requirements. The comments 

stated that these records would show 

how the recycling activity meets the 

factors or, if a factor is not applicable, 

the records would document why it is 

not necessary for it to meet that factor. 

In this way, the hazardous secondary 

material generator or recycler could 

show that it considered all the factors. 

Other commenters objected to any 

recordkeeping requirements 

documenting that a recycling activity is 

legitimate. 

After considering the comments, the 

Agency has determined that for the 

purpose of the legitimacy factors in the 

final rule, 40 CFR 261.2(f) applies. 

Section 261.2(f) states that, in the 

context of an enforcement action to 

implement Subtitle C of RCRA, a person 

claiming that a material is not a solid 

waste or is conditionally exempt from 

regulation is responsible for showing 

that they meet the terms of the 

exclusion and must provide appropriate 

documentation to show why they are 

eligible. For the legitimacy requirements 

finalized today, this provision would 

require that persons claiming that their 

recycling activity is legitimate would 

have the burden to provide 

documentation showing how the 

hazardous secondary materials provide 

a useful contribution to the recycling 

process and how the product of the 

recycling activity—whether it is a 

consumer product or a process 

intermediate—is valuable. In addition, 

the documentation would have to show 

that the hazardous secondary material 

generator or recycler considered the 

other two factors and determined for 

each of them that either the activity 

meets the factor or that the factor does 

not apply to this recycling activity and 

why it is not relevant or appropriate to 

consider. 

In addition, as part of today’s transferbased exclusion, the hazardous 

secondary material generator has to 

undertake reasonable efforts to ensure 

its hazardous secondary materials will 

be legitimately recycled pursuant to 

§ 260.43. As part of the reasonable 

efforts requirements, generators must 

document their reasonable efforts per 

§ 261.4(a)(24)(v)(C). 

XIX. Major Comments on the NonWaste Determination Process 

In the March 2007 supplemental 

proposal, EPA proposed a non-waste 

determination process that would 

provide persons with an administrative 

process for receiving a formal 

determination that their hazardous 

secondary materials are not discarded 

and, therefore, not solid waste. The 

process would be voluntary and 

available in addition to the two selfimplementing exclusions. EPA 

proposed three types of non-waste 

determinations: (1) For hazardous 

secondary materials reclaimed in a 

continuous industrial process; (2) for 

hazardous secondary materials 

indistinguishable in all relevant aspects 

from a product or intermediate; and (3) 

for hazardous secondary materials 

reclaimed under the control of the 

generator, such as through contracts 

similar to tolling arrangements. For each 

type of non-waste determination, EPA 

proposed a set of criteria which the 

hazardous secondary materials would 

have to meet in order to receive a formal 

non-waste determination from the 

regulatory authority. For a detailed 

description of the non-waste 

determination process that EPA is 

finalizing today, see section X of today’s 

preamble. 

Comments: Finalizing the Non-Waste 

Determination Process 

Overall, many commenters supported 

the non-waste determination process 

because it provides persons with 

regulatory certainty and offers a flexible 

alternative to the self-implementing 

exclusions included in today’s rule. On 

the other hand, some commenters 

argued that the non-waste determination 

process would be resource-intensive, 

placing a significant burden on the 

states that would have to perform a 

case-by-case review of each application. 

One commenter said that, historically, 

many hazardous waste facilities have 

sought formal approval of their 

recycling practices from regulators and 

that EPA may be underestimating the 

number of applications that states 

would receive from the regulated 

community. Additionally, one state 

commenter mentioned that the nonwaste determination process would 

increase regulatory inconsistency 

between states and at least two state 

commenters saw no reason to establish 

a formal non-waste determination 

process since they viewed the current 

variance procedure under 40 CFR 

260.33 and their own state 


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determination processes as an effective 

means to the same end. Finally, a few 

commenters did not support the nonwaste determination process because of 

its lack of explicit conditions, such as 

those conditions required for the two 

self-implementing exclusions in today’s 

rule. 

EPA’s Response: Finalizing the NonWaste Determination Process 

EPA agrees with the majority of 

commenters who support the non-waste 

determination process as an alternative 

way for hazardous secondary material 

generators to seek regulatory certainty in 

circumstances involving reclamation of 

hazardous secondary materials which 

do not clearly fit under today’s selfimplementing exclusions. EPA, 

however, does not agree with 

commenters who believe the non-waste 

determination would cause significant 

burden to states. Instead, we anticipate 

that the vast majority of persons will 

choose to use the self-implementing 

exclusions because this would be less 

resource intensive for the facility. In 

fact, the Agency does not envision any 

person submitting such an application if 

they are considered ‘‘under the control 

of the generator’’ because there are 

relatively few restrictions for this 

exclusion, and, indeed, it would 

probably require less effort than seeking 

a non-waste determination. Thus, the 

Agency only expects a limited number 

of persons to submit applications where 

the regulatory status is unclear under 

today’s exclusions and a formal nonwaste determination may be 

appropriate. EPA further believes that, 

by modeling the non-waste 

determination process after the current 

variance procedures, it has kept the 

additional burden to the states at a 

minimum because states can leverage 

their existing processes. 

EPA believes that requiring explicit 

conditions, such as those required for 

today’s self-implementing exclusions, is 

not warranted for hazardous secondary 

materials receiving non-waste 

determinations because persons are, 

instead, required to make specific 

demonstrations as to how the hazardous 

secondary materials meet the eligibility 

criteria. Furthermore, regulatory 

authorities, if they so choose, may 

stipulate conditions within the nonwaste determination as appropriate and 

relevant on a case-by-case basis. One 

purpose of the non-waste determination 

is to provide a measure of flexibility not 

provided by the self-implementing solid 

waste exclusions and specifying the 

conditions to be imposed would defeat 

this purpose. 

With respect to the comment 

regarding inconsistency among state 

non-waste determinations, EPA notes 

that, by allowing states to become 

authorized to conduct their own RCRA 

hazardous waste programs, the RCRA 

statute provides states flexibility to 

regulate hazardous waste more 

stringently than required under the 

federal regulations. Additionally, states 

sometimes take different interpretations 

of the same or similar regulations. This 

situation ultimately leads to variations 

between state regulations and 

interpretations, which EPA views as 

inherent to the RCRA structure and, 

thus, not a quality unique to the nonwaste determination process. 

We also want to clarify that, although 

today’s non-waste determination 

process is similar to the current variance 

procedures, non-waste determinations 

are technically not variances in which 

EPA regulations otherwise classify 

materials as solid wastes and facilities 

may apply for an exception. Instead, the 

new procedure would apply to cases in 

which hazardous secondary materials 

are not discarded, but which do not fit 

within the self-implementing 

exclusions, or for which the restrictions 

and conditions of the exclusions are not 

applicable. 

A. Eligibility for Non-Waste 

Determination Process 

Comments: Scope of Non-Waste 

Determinations 

In the March 2007 supplemental 

proposal, EPA indicated that non-waste 

determinations would be limited to 

reclamation activities and would not 

apply to recycling of ‘‘inherently wastelike’’ materials, as defined at 40 CFR 

261.2(d), recycling of materials that are 

‘‘used in a manner constituting 

disposal,’’ or ‘‘used to produce products 

that are placed on the land,’’ (40 CFR 

261.2(c)(1)), or ‘‘burning materials for 

energy recovery’’ or ‘‘used to produce a 

fuel or otherwise contained in fuels’’ (40 

CFR 261.2(c)(2)). 

EPA received a number of comments 

urging the Agency to broaden the nonwaste determinations to include all 

recycling scenarios in which hazardous 

secondary materials are not discarded. 

Some commenters supported expanding 

the scope to allow recycling for 

‘‘burning for energy recovery’’ and ‘‘use 

constituting disposal.’’ These 

commenters argued that EPA could 

achieve further increases in recycling if 

the Agency broadened the scope of the 

hazardous secondary materials eligible 

to apply for a non-waste determination. 

On the other hand, some commenters 

agreed with EPA’s proposed scope and 

supported limiting eligibility to only 

hazardous secondary materials being 

reclaimed. Alternatively, a few 

commenters supported limiting 

eligibility only to those circumstances 

where the recycling of hazardous 

secondary materials would not meet 

either a condition of the selfimplementing exclusions or one of the 

legitimacy criteria, but still would not 

be considered discard. These 

commenters also argued that narrowing 

the eligibility would effectively limit the 

number of applications submitted and 

thus reduce the overall burden on the 

states. 

EPA’s Response: Scope of Non-Waste 

Determinations 

EPA agrees with those commenters 

who supported limiting non-waste 

determinations to reclamation activities. 

With respect to ‘‘burning for energy 

recovery’’ and ‘‘use constituting 

disposal,’’ EPA confirms that these 

types of recycling are ineligible for 

today’s non-waste determination 

process. EPA believes that these types of 

recycling activities would best be left to 

other rulemaking proceedings. 

Furthermore, we disagree with those 

commenters who suggest further 

limiting the eligibility to only those 

cases where reclamation of the 

hazardous secondary materials would 

specifically violate a condition of 

today’s self-implementing exclusions. 

We believe that by modeling the nonwaste determination procedure after the 

existing variance procedure, we have 

ensured that any additional burden to 

the states will be kept at a minimum 

and thus further limits on eligibility are 

not necessary. 

Comments: Whether the Hazardous 

Constituents in the Hazardous 

Secondary Materials Are Reclaimed 

Rather Than Released to the Air, Water, 

or Land 

Overall, we received only a few 

comments that discussed the specific 

criteria that EPA proposed for the nonwaste determinations. For the criterion 

regarding whether the hazardous 

constituents in the hazardous secondary 

materials are reclaimed rather than 

released to the air, water, or land at 

significantly higher concentrations, 

some commenters argued that this 

criterion was inappropriate for 

determining discard because these types 

of releases are inevitable when 

reclaiming hazardous secondary 

materials. At least two commenters 

suggested that EPA should establish a 

‘‘bright line’’ to clearly define 

‘‘significantly higher concentrations’’ in 

order to provide persons with greater 


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regulatory certainty. Other commenters 

expressed concern that this criterion (as 

well as the other criteria within 40 CFR 

260.34) would be construed to apply to 

other types of recycling, including those 

eligible for today’s self-implementing 

exclusions. 

EPA’s Response: Whether the 

Hazardous Constituents in the 

Hazardous Secondary Materials Are 

Reclaimed Rather Than Released to the 

Air, Water, or Land 

EPA disagrees with commenters who 

believe this criterion is not relevant for 

determining if hazardous secondary 

materials are being discarded. By 

indicating that such releases must not 

be at ‘‘significantly higher 

concentrations’’ than would otherwise 

be released during the production 

process, we believe we have set a 

reasonable and meaningful bar that 

applicants must meet in order to 

demonstrate that their hazardous 

secondary materials are reclaimed and 

not discarded. Hazardous secondary 

materials that fail to meet this criterion 

may exhibit an indication that they are 

discarded and that such handling may 

present a greater risk of adverse impacts 

to human health and the environment. 

Regarding those commenters who 

support a ‘‘bright line’’ in order to 

define ‘‘significantly higher 

concentrations,’’ EPA believes that, 

given the wide variety of production 

processes and recycling practices, 

establishing a ‘‘one size fits all’’ 

objective standard is not practical and 

would invite inefficiency. 

EPA also confirms that this criterion, 

and the other criteria in 40 CFR 260.34, 

are specific to the relevant non-waste 

determinations, and thus are not 

required for the self-implementing 

exclusions or those exclusions found in 

40 CFR 261.4, unless they are 

specifically included under state 

regulations as a criteria to consider. 

Comments and EPA’s Response: 

Whether the Capacity of the Production 

Process Would Allow for Use of the 

Hazardous Secondary Material in a 

Reasonable Time Frame 

For the criterion regarding whether 

the capacity of the production process 

would allow for use of the hazardous 

secondary material in a reasonable time 

frame (proposed explicitly for the nonwaste determination for hazardous 

secondary materials reclaimed in a 

continuous industrial process), some 

commenters regarded this criterion as 

consistent with judicial direction and, 

thus, supported adding this criterion to 

the other non-waste determinations. 

Since EPA would consider hazardous 

secondary materials that were eternally 

‘‘stored’’ for future recycling to be akin 

to discard, EPA agrees with these 

commenters that all non-waste 

determinations should take into account 

whether the hazardous secondary 

materials will be reclaimed within a 

‘‘reasonable time frame.’’ Therefore, in 

this final rule, EPA has added this 

criterion (with appropriate 

modifications to the language) to the 

non-waste determination for hazardous 

secondary materials indistinguishable in 

all relevant aspects from a product or 

intermediate. As with the non-waste 

determination for hazardous secondary 

materials reclaimed in a continuous 

industrial process, a person does not 

need to demonstrate that the hazardous 

secondary material meets the 

speculative accumulation limits per 40 

CFR 261.1(c)(8), but he must provide 

sufficient information about the 

hazardous secondary material and the 

process to demonstrate that the material 

will in fact be reclaimed in a reasonable 

time frame and will not be abandoned. 

However, a person may still choose to 

use the speculative accumulation time 

frame as a default if he so chooses. 

Comments: Non-Waste Determination 

for Hazardous Secondary Materials 

Reclaimed Under the Control of the 

Generator 

A few commenters disagreed with the 

non-waste determination for hazardous 

secondary materials reclaimed under 

the control of the generator via a tolling 

arrangement or similar contractual 

arrangement. These commenters 

believed that the generator would be 

unable to maintain control over its 

hazardous secondary materials and 

residuals once at the reclamation facility 

and, thus, could not reliably meet the 

criteria for this non-waste 

determination. One state foresaw major 

enforcement problems with situations 

involving a commercial facility that 

handles hazardous secondary materials 

from multiple customers in a single 

process and then mismanages the 

residuals from that unit. As the 

residuals would be linked back to 

multiple generators, the liability for the 

mismanaged residuals would be 

difficult to detangle. On the other hand, 

some commenters felt that all tolling 

arrangements, including those eligible 

for the self-implementing exclusion, 

would best be evaluated through the 

non-waste determination process. These 

commenters argued that the regulatory 

authority should be required to review 

all tolling arrangements and their 

respective liability provisions in order 

to ensure that the hazardous secondary 

materials will not be discarded. 

EPA’s Response: Non-Waste 

Determination for Hazardous Secondary 

Materials Reclaimed Under the Control 

of the Generator 

We did not intend for such 

circumstances where a hazardous 

secondary material generator was 

unable to maintain control and 

responsibility over his hazardous 

secondary materials to be eligible for a 

non-waste determination for hazardous 

secondary materials reclaimed under 

the control of the generator. Where an 

applicant’s hazardous secondary 

materials are intermingled with 

materials from other hazardous 

secondary material generators in a way 

that renders the applicant unable to 

maintain control and liability over his 

specific materials, the applicant would 

have been effectively precluded from 

obtaining this formal non-waste 

determination since he would 

ultimately fail the first criterion. 

EPA, however, has decided not to 

finalize the non-waste determination for 

materials reclaimed under the control of 

the generator because EPA could not 

identify any comments which described 

in detail other specific situations 

involving tolling or contractual 

arrangements that would not already be 

covered under today’s selfimplementing generator-controlled 

exclusion. We, therefore, remain unclear 

as to what other arrangements exist 

where the generator would retain 

control over its hazardous secondary 

materials to ensure they are reclaimed 

and not discarded. Without this clear 

picture, EPA believes we cannot finalize 

this non-waste determination and thus 

we are not including it in today’s final 

rule. 

B. Process for Non-Waste 

Determinations 

In the March 2007 supplemental 

proposal, EPA proposed that the nonwaste determination process would be 

the same as that for the solid waste 

variances found in 40 CFR 260.33. In 

order to obtain a non-waste 

determination, a facility must apply to 

the Administrator or the authorized 

state. The Administrator or authorized 

state evaluates the application and 

issues a draft notice and opportunity for 

comment in the locality where the 

facility is located. The Administrator or 

authorized state would then issue a final 

decision based on the evaluation of the 

comments received. 

Comments and EPA’s Response: 

Requirement To Renew Applications 

A few commenters argued that nonwaste determinations should be 


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renewed, either periodically or in the 

event of certain changes to the recycling 

process, so that regulators can ensure 

that the hazardous secondary materials 

continue to be reclaimed and not 

discarded. 

EPA agrees with those commenters 

who believe that certain changes in the 

recycling process should logically 

trigger a re-review of the circumstances. 

Therefore, in the event of a change that 

affects how hazardous secondary 

materials meet one or more of the 

criteria upon which a non-waste 

determination has been based, EPA is 

requiring persons to re-apply to the 

Administrator or the authorized state for 

a formal determination that the 

hazardous secondary material continues 

to meet the relevant criteria and is not 

discarded and, therefore, not a solid 

waste. 

Comments and EPA’s Response: 

Timelines for Regulators 

Some commenters expressed concerns 

about the length of time an applicant 

would need to wait before receiving a 

formal determination from their 

regulatory authority, explaining that 

particularly lengthy delays would 

adversely affect business operations. 

Although we understand this concern, 

requiring non-waste determinations to 

be made within a specific time frame 

would be difficult, as each case varies 

in complexity with some requiring more 

time to review than others. Furthermore, 

EPA would be challenged to prescribe 

one time frame that would 

accommodate numerous state regulatory 

agencies that vary in staffing and 

workloads. Therefore, we are not 

requiring regulators to issue 

determinations within a certain period 

of time. 

Comments and EPA’s Response: Public 

Comment Process 

At least two commenters suggested 

updating the format for public notice. 

For example, instead of requiring notice 

through a ‘‘newspaper advertisement or 

radio broadcast’’ (as EPA proposed), 

public notice should be allowed to 

include electronic formats, such as 

posting on a Web site or distribution 

through e-mail, in order to reduce costs. 

Other commenters supported requiring 

public notice for a broader audience, not 

necessarily limited to the ‘‘locality 

where the recycler is located.’’ These 

commenters argued that non-waste 

determinations may have national 

implications and would be more 

appropriately published in the Federal 

Register or made available through the 

EPA Docket Center. 

In response to these comments, EPA 

notes the non-waste determination 

process was purposely structured to 

follow the same procedures as outlined 

for solid waste variances in 40 CFR 

260.33 in order to leverage the existing 

structure and keep additional burden on 

the states to a minimum. EPA, 

furthermore, believes that any changes 

to the type of format required for public 

notice would be more appropriately 

handled as part of a separate, wholesale 

effort to update all public notice 

requirements in the federal hazardous 

waste regulations. Therefore, for today’s 

rule, EPA is retaining the same public 

notice provisions as proposed and 

required in 40 CFR 260.33. 

XX. How Will These Regulatory 

Changes Be Administered and Enforced 

in the States? 

A. Applicability of Rules in Authorized 

States 

Under section 3006 of RCRA, EPA 

may authorize qualified states to 

administer the RCRA Subtitle C 

hazardous waste program within the 

state. Following authorization, EPA 

retains Subtitle C enforcement 

authority, although authorized states 

have primary enforcement 

responsibility. EPA retains authority 

under sections 3007, 3008, 3013, 3017 

and 7003. The standards and 

requirements for state authorization are 

found at 40 CFR part 271. 

Prior to enactment of the Hazardous 

and Solid Waste Amendments of 1984 

(HSWA), a state with final RCRA 

authorization administered its 

hazardous waste program entirely in 

lieu of EPA administering the federal 

program in that state. The federal 

requirements no longer applied in the 

authorized state and EPA could not 

issue permits for any facilities in that 

state, since only the state was 

authorized to issue RCRA permits. 

When new, more stringent federal 

requirements were promulgated, the 

state was obligated to enact equivalent 

authorities within specified time frames. 

However, the new federal requirements 

did not take effect in an authorized state 

until the state adopted the federal 

requirements as state law. 

In contrast, under RCRA section 

3006(g) (42 U.S.C. 6926(g)), which was 

added by HSWA, new requirements and 

prohibitions imposed under HSWA 

authority take effect in authorized states 

at the same time that they take effect in 

unauthorized states. EPA is directed by 

the statute to implement these 

requirements and prohibitions in 

authorized states, including the 

issuance of permits, until the state is 

granted authorization to do so. While 

states must still adopt HSWA related 

provisions as state law to retain final 

authorization, EPA implements the 

HSWA provisions in authorized states 

until the states do so. 

Authorized states are required to 

modify their programs only when EPA 

enacts federal requirements that are 

more stringent or broader in scope than 

existing federal requirements. RCRA 

section 3009 allows the states to impose 

standards more stringent than those in 

the federal program (see 40 CFR 271.1). 

Therefore, authorized states may, but 

are not required to, adopt federal 

regulations, both HSWA and nonHSWA, that are considered less 

stringent than previous federal 

regulations. 

B. Effect on State Authorization 

Today’s rule eliminates specific 

requirements that apply to hazardous 

secondary materials currently managed 

as hazardous waste. EPA believes that 

today’s final rule describes the 

appropriate scope of the federal program 

under RCRA. These exclusions will 

encourage recycling and are consistent 

with RCRA’s statutory objective of 

conserving valuable material and energy 

resources. 

EPA strongly encourages states to 

adopt the regulations being finalized 

today. When EPA authorizes a state to 

implement the RCRA hazardous waste 

program, EPA determines whether the 

state program is consistent with the 

federal program and whether it is no 

less stringent. This process, codified in 

40 CFR part 271, ensures national 

consistency and minimum standards, 

while providing flexibility to the states 

in implementing the rules. In making 

this determination, EPA evaluates the 

state requirements to ensure they are no 

less stringent than the federal 

requirements. Because today’s rule 

eliminates specific requirements for 

hazardous secondary materials that are 

currently managed as hazardous waste, 

state programs would no longer need to 

include those specific requirements in 

order to be consistent with EPA’s 

regulations. 

However, if a state were, through 

implementation of state waiver 

authorities or other state laws, to allow 

compliance with the provisions of 

today’s rule in advance of adoption or 

authorization, EPA would not generally 

consider such implementation a 

concern for purposes of enforcement or 

state authorization. Of course, the state 

could not implement the requirements 

in a way that was less stringent than the 

federal requirements in today’s rule. 


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In the case of the case-by-case nonwaste determinations found in 40 CFR 

260.34, a non-waste determination may 

be granted by the state if the state is 

either authorized for this provision or if 

the following conditions are met: (1) 

The state determines the hazardous 

secondary material meets the applicable 

criteria for the non-waste determination; 

(2) the state requests that EPA review its 

determination; and (3) EPA approves 

the state determination. 

It should be noted that, under RCRA 

section 3009, a state may adopt 

standards that are more stringent than 

the federal program. Thus, a state is not 

required to adopt today’s final rule or a 

state may choose to adopt only parts of 

today’s final rule. Some states 

incorporate the federal regulations by 

reference or have specific state statutory 

requirements that their state program 

can be no more stringent than the 

federal regulations. In those cases, EPA 

anticipates that the exclusions in 

today’s final rule will be adopted by 

these states, consistent with state laws 

and state administrative procedures, 

unless they take explicit action as 

specified by their respective state laws 

to decline the revisions. We note that if 

states choose not to adopt the provisions 

of today’s final rule concerning exports, 

then any hazardous secondary materials 

that are exported would be subject to 

the hazardous waste export 

requirements in 40 CFR part 262 

subparts E or H, or analogous export 

requirements that are part of a state’s 

RCRA authorized program. EPA also 

notes that, as described in this 

preamble, we believe that the legitimacy 

provision finalized in § 260.43 is 

substantially the same as and no more 

stringent than the existing regulatory 

scheme in which all recycling must be 

legitimate. If a state agency were to 

adopt the four legitimacy factors in 

§ 260.43 for all recycling, EPA would 

consider their regulations to be 

equivalent to the federal requirements. 

XXI. Administrative Requirements for 

This Rulemaking? 

A. Executive Order 12866: Regulatory 

Planning and Review 

Under section 3(f)(1) of Executive 

Order (EO) 12866 (58 FR 51735, October 

4, 1993), this action is a ‘‘significant 

regulatory action’’ because today’s 

action contains novel policy issues (EO 

12866 Section 3(f)(4)) and because its 

potential impact on the economy will be 

greater than the $100 million or more 

annual effect, meeting the 

‘‘economically significant’’ threshold of 

EO 12866 Section 3(f)(1). Because this 

rule meets two of the EO 12866 

‘‘significant’’ criteria, EPA submitted 

this action to the Office of Management 

and Budget (OMB) for review under EO 

12866 and any changes made in 

response to OMB’s recommendations 

have been documented in the docket for 

this action. EPA also prepared an 

analysis of the potential economic costs 

and benefits associated with this 

proposed action. The analysis is 

contained in our ‘‘Regulatory Impact 

Analysis’’ (RIA) which is available from 

the docket (http://www.regulations.gov) 

and is briefly summarized below. 

Assuming full adoption of this final 

rule by all RCRA-authorized states, 

EPA’s best estimate (i.e., ‘‘expected 

value’’) of the future average annual net 

benefits of this final rule to the national 

economy is $95 million per year, 

affecting about 5,600 facilities in 280 

industries in 21 economic sectors. 

However, the sensitivity analysis 

section of our RIA for this final rule 

identifies 11 numerical uncertainty 

factors behind our calculation of this 

best estimate. Future variation in one or 

more of these factors may result in 

future annual net benefits ranging 

between $19 million to $333 million in 

any given future year. Therefore, EPA is 

classifying this final rule as 

‘‘economically significant’’ because the 

$333 million per year upper-bound of 

our net benefits uncertainty range 

exceeds the $100 million ‘‘annual 

effect’’ threshold established by section 

3(f)(1) of the 1993 Executive Order 

12866.’’ 

This action is expected to remove 

from RCRA regulation 1.5 million tons 

per year of hazardous secondary 

materials currently managed as RCRA 

hazardous waste. These affected 

hazardous secondary materials consist 

of about 98% that are currently 

reclaimed as RCRA hazardous waste, 

and about 2% of hazardous waste that 

is currently disposed of (e.g., landfilled, 

incinerated, or deepwell injected), 

which EPA expects may switch from 

disposal to reclamation as a result of 

this action. This $95 million annual net 

cost savings estimate is 11% less than 

the $107 million annual net cost savings 

estimated in our 2007 RIA in support of 

the March 2007 supplemental proposal 

for this action. This difference is largely 

explained by enhancements made to the 

methodology of the RIA based on public 

comments received from 30 

organizations on our 2003 and 2007 

RIA’s in support of this action, as well 

as by updates of key data underlying the 

RIA. 

These impact estimates are EPA’s best 

estimates within the economic impact 

estimation uncertainty range of $19 

million to $333 million in annual 

materials management cost savings for 

the net effect of the exclusions. These 

impact ranges reflect the overall 

uncertainty range of ¥80% to +249% 

across eleven different uncertainty 

factors addressed as a sensitivity 

analysis in our RIA. The specific 

uncertainty factors evaluated are (1) 

state government adoption, (2) future 

fluctuations in affected hazardous 

secondary materials generation 

tonnages, (3) within-year discrepancies 

between hazardous secondary materials 

generation and corresponding 

management tonnages, (4) future 

industrial production levels, (5) 

omission of SQG facility counts in our 

impact estimates by artifact that we 

based the impacts on LQG and TSDRF 

data from the RCRA Biennial Report 

database, (6) Biennial Report database 

quality assurance considerations, (7) 

physical and chemical quality of the 

hazardous secondary materials affected, 

(8) impact estimation methodology level 

of effort, (9) changes in future market 

price of commodities recovered from 

recycled material, (10) the possibility of 

same-company facilities sharing offsite 

captive recycling facility, and (11) the 

possibility of baseline disposal 

switchover to onsite recycling. 

Concerning the uncertainty of state 

government adoption, included as one 

component of potential industry cost 

savings is the transfer effect of an 

expected $5 million reduction in future 

annual state government hazardous 

waste fee revenues if all state 

governments adopt today’s rule. 

With respect to each of the regulatory 

exclusions in today’s action, the $95 

million per year net cost savings effect 

consists of approximately (a) $7 million 

per year for hazardous secondary 

materials reclaimed under the control of 

the generator in either land or non-land 

based units (which includes on-site, 

same-company, and tolling exclusions), 

plus (b) $87 million per year cost 

savings for exclusion of other offsite 

transfers, plus (c) $1 million per year in 

cost savings for case-by-case non-waste 

determinations. 

Embedded in this overall impact 

estimate is $4.7 million per year in 

potential commodity market value of 

three categories of 15 constituents in 

affected materials we expect may begin 

to be recovered from hazardous 

secondary materials that would 

otherwise continue to be disposed of as 

hazardous wastes in the absence of 

today’s action: (1) Commodity metals 

(chromium, copper, lead, molybdenum 

disulfide, nickel, zinc), (2) commodity 

solvents (acetone, alkyl benzenes, C9– 

C10 alkyl benzenes, methanol, methyl 

ethyl ketone, toluene, xylene), and (3) 


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other commodity materials (acids, 

carbon). However, the RIA estimate of 

potential new induced recycling does 

not include an evaluation of whether 

the U.S. or global recycling markets are 

large enough to sustain this potential 

future increase in supply of recovered 

materials. Market conditions for 

recycled hazardous secondary materials 

can vary considerably over time. 

Demand for recycled solvents, for 

example, is largely dependent on the 

petroleum market because virgin 

solvents are made from petroleum 

products, and high petroleum prices 

encourage solvent recycling. Similarly, 

high metals prices obviously favor the 

recycling of metal-bearing hazardous 

secondary materials. 

The RIA, available from the docket 

(http://www.regulations.gov), provides 

many more details and descriptions 

about these assorted components of 

expected economic impacts, including 

potential distributional effects on other 

industries not directly subject to today’s 

action. 

B. Paperwork Reduction Act 

(Information Collection Request) 

The information collection 

requirements in this rule have been 

submitted for approval to OMB under 

the Paperwork Reduction Act, 44 U.S.C. 

3501 et seq. The information collection 

requirements are not enforceable until 

OMB approves them. The information 

collection request has been updated 

since the March 2007 supplemental 

proposal to reflect the final rule 

requirements and to respond to public 

comments. 

The information requirements 

established for this action are voluntary 

to the extent that the exclusions being 

finalized today are voluntary and 

represent an overall reduction in burden 

as compared with the alternative 

information requirements associated 

with managing the hazardous secondary 

materials as hazardous waste. The 

information requirements help ensure 

that (1) entities operating under the 

regulatory exclusions contained in 

today’s action are held accountable to 

the applicable requirements; (2) state 

inspectors can verify compliance with 

the restrictions and conditions of the 

exclusions when needed; and (3) 

hazardous secondary materials exported 

for recycling are actually handled as 

commodities abroad. 

For the recordkeeping and reporting 

requirements applicable to hazardous 

secondary materials sent for 

reclamation, the aggregate annual 

burden to respondents over the threeyear period covered by this ICR is 

estimated to be 11,552 hours, with a 

cost to affected entities (i.e., industrial 

facilities) of $1,417,242. However, this 

represents an annual reduction in 

burden to respondents of 52,050 hours, 

representing a cost reduction of 

$3,474,035 per year. The estimated 

annual operation and maintenance costs 

to affected entities are $739,469 per 

year, primarily for purchasing audit or 

other similar type reports. There are no 

startup costs and no costs for purchases 

of services. Administrative costs to the 

Agency are estimated to be 1,257 hours 

per year, representing an annual cost of 

$49,891. Burden is defined at 5 CFR 

1320.3(b). 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

unless it displays a currently valid OMB 

control number. The OMB control 

numbers for EPA’s regulations in 40 

CFR are listed in 40 CFR part 9. When 

this ICR is approved by OMB, the 

Agency will publish a technical 

amendment to 40 CFR part 9 in the 

Federal Register to display the OMB 

control number for the approved 

information collection requirements 

contained in this final rule. 

C. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA), 

as amended by the Small Business 

Regulatory Enforcement Fairness Act of 

1996 (SBREFA), 5 U.S.C. 601 et seq., 

generally requires an agency to prepare 

a regulatory flexibility analysis of any 

rule subject to notice and comment 

rulemaking requirements under the 

Administrative Procedure Act or any 

other statute, unless the agency certifies 

that the rule will not have a significant 

economic impact on a substantial 

number of small entities. Small entities 

include small businesses, small 

organizations, and small governmental 

jurisdictions. 

For purposes of assessing the impacts 

of today’s rule on small entities, small 

entity is defined as: (1) A small business 

as defined by the Small Business 

Administration’s (SBA) regulations at 13 

CFR 121.201; (2) a small governmental 

jurisdiction that is a government of a 

city, county, town, school district or 

special district with a population of less 

than 50,000; and (3) a small 

organization that is any not-for-profit 

enterprise which is independently 

owned and operated and is not 

dominant in its field. For more 

information regarding the expected 

economic impact of this action, please 

refer to our ‘‘Regulatory Impact 

Analysis’’ available from the docket for 

this final rule. 

After considering the economic 

impacts of this final rule on small 

entities, I certify that this action will not 

have a significant economic impact on 

a substantial number of small entities. 

In determining whether a rule has a 

significant economic impact on a 

substantial number of small entities, the 

impact of concern is any significant 

adverse economic impact on small 

entities, since the primary purpose of 

the regulatory flexibility analyses is to 

identify and address regulatory 

alternatives ‘‘which minimize any 

significant economic impact of the rule 

on small entities.’’ 5 U.S.C. 603 and 604. 

Thus, an agency may certify that a rule 

will not have a significant economic 

impact on a substantial number of small 

entities if the rule relieves regulatory 

burden, or otherwise has a positive 

economic effect on all of the small 

entities subject to the rule. Because 

today’s action is designed to lower the 

cost of industrial hazardous secondary 

materials management for entities 

subject to today’s requirements, this 

final rule will not result in an adverse 

economic impact effect on affected 

small entities. EPA therefore concludes 

that today’s action will relieve 

regulatory burden for all size entities, 

including small entities. 

D. Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act of 1995 (UMRA), Public 

Law 104–4, establishes requirements for 

Federal agencies to assess the effects of 

their regulatory actions on state, local, 

and tribal governments and the private 

sector. Under section 202 of the UMRA, 

EPA generally must prepare a written 

statement, including a cost-benefit 

analysis, for proposed and final rules 

with ‘‘Federal mandates’’ that may 

result in expenditures to state, local, 

and tribal governments, in the aggregate, 

or to the private sector, of $100 million 

or more in any one year. Before 

promulgating an EPA rule for which a 

written statement is needed, section 205 

of the UMRA generally requires EPA to 

identify and consider a reasonable 

number of regulatory alternatives and 

adopt the least costly, most costeffective or least burdensome alternative 

that achieves the objectives of the rule. 

The provisions of section 205 do not 

apply when they are inconsistent with 

applicable law. Moreover, section 205 

allows EPA to adopt an alternative other 

than the least costly, most cost-effective 

or least burdensome alternative if the 

Administrator publishes with the final 

rule an explanation why that alternative 

was not adopted. Before EPA establishes 

any regulatory requirements that may 

significantly or uniquely affect small 

governments, including tribal 

governments, it must have developed 


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under section 203 of the UMRA a small 

government agency plan. The plan must 

provide for notifying potentially 

affected small governments, enabling 

officials of affected small governments 

to have meaningful and timely input in 

the development of EPA regulatory 

proposals with significant Federal 

intergovernmental mandates, and 

informing, educating, and advising 

small governments on compliance with 

the regulatory requirements. 

EPA has determined that this rule 

does not include a Federal mandate that 

may result in expenditures of $100 

million or more for state, local, or tribal 

governments, in the aggregate, or the 

private sector in any one year. This is 

because this rule imposes no 

enforceable duty on any state, local, or 

tribal governments. Although one public 

commenter noted that many states 

choose to incorporate EPA’s regulations 

by reference, EPA does not require them 

to do so. EPA also has determined that 

this rule contains no regulatory 

requirements that might significantly or 

uniquely affect small governments. In 

addition, as discussed above, the private 

sector is not expected to incur costs 

exceeding $100 million. Therefore, 

today’s rule is not subject to the 

requirements of sections 202 and 205 of 

UMRA. 

E. Executive Order 13132: Federalism 

Executive Order 13132, entitled 

Federalism (64 FR 43255, August 10, 

1999), requires EPA to develop an 

accountable process to ensure 

meaningful and timely input by state 

and local officials in the development of 

regulatory policies that have federalism 

implications. Policies that have 

federalism implications are defined in 

the Executive Order to include 

regulations that have substantial direct 

effects on the states, on the relationship 

between the national government and 

the states, or on the distribution of 

power and responsibilities among the 

various levels of government. 

This final rule does not have 

federalism implications. It will not have 

substantial direct effects on the states, 

on the relationship between the national 

government and the states, or on the 

distribution of power and 

responsibilities among the various 

levels of government, as specified in 

Executive Order 13132. There are no 

state and local government bodies that 

incur direct compliance costs by this 

rulemaking. State and local government 

implementation expenditures are 

expected to be less than $500,000 in any 

one year. Thus, the requirements of 

Section 6 of the Executive Order do not 

apply to this final rule. Although one 

public commenter noted that many 

states choose to incorporate EPA’s 

regulations by reference, EPA does not 

require them to do so. 

F. Executive Order 13175: Consultation 

and Coordination With Indian Tribal 

Governments 

Executive Order 13175, entitled 

Consultation and Coordination with 

Indian Tribal Governments (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 final rule does not 

have tribal implications, as specified in 

Executive Order 13175. It does not 

significantly or uniquely affect the 

communities of Indian tribal 

governments, nor would it impose 

substantial direct compliance costs on 

them. Thus, Executive Order 13175 does 

not apply to this final rule. 

G. Executive Order 13045: Protection of 

Children From Environmental Health 

Risks and Safety Risks 

This action is not subject to EO 13045 

(62 FR 19885, April 23, 1997) because 

the Agency does not believe the 

environmental health risks or safety 

risks addressed by this action present a 

disproportionate risk to children. An 

assessment of countervailing risk and a 

discussion of how today’s rule 

addresses those risks can be found in 

Chapter 11 of the Regulatory Impact 

Analysis, found in the docket for today’s 

rulemaking. 

H. Executive Order 13211: Actions That 

Significantly Affect Energy Supply, 

Distribution, or Use 

This final rule is not a ‘‘significant 

energy action’’ as defined in Executive 

Order 13211, ‘‘Actions Concerning 

Regulations That Significantly Affect 

Energy Supply, Distribution, or Use’’ (66 

FR 28355, May 22, 2001) because it is 

not likely to have a significant adverse 

effect on the supply, distribution, or use 

of energy. This final rule reduces 

regulatory burden and as explained in 

our Regulatory Impact Analysis, may 

possibly induce fuel efficiency and 

energy savings from the voluntary 

shifting of some types of hazardous 

secondary materials, where it is costeffective for firms to do so, from current 

landfill and incineration to reclamation. 

It therefore should not adversely affect 

energy supply, distribution, or use. 

I. National Technology Transfer and 

Advancement Act of 1995 

Section 12(d) of the National 

Technology Transfer and Advancement 

Act of 1995 (‘‘NTTAA’’), Public Law No. 

104–113, 12(d) (15 U.S.C. 272 note) 

directs EPA to use voluntary consensus 

standards in its regulatory activities 

unless to do so would be inconsistent 

with applicable law or otherwise 

impractical. Voluntary consensus 

standards are technical standards (e.g., 

materials specifications, test methods, 

sampling procedures, and business 

practices) that are developed or adopted 

by voluntary consensus standards 

bodies. NTTAA directs EPA to provide 

Congress, through OMB, explanations of 

when the Agency decides not to use 

available and applicable voluntary 

consensus standards. 

This action does not involve technical 

standards. Therefore, EPA did not 

consider the use of any voluntary 

consensus standards. 

J. Executive Order 12898: 

Environmental Justice 

Executive Order 12898, Federal 

Actions to Address Environmental 

Justice in Minority Populations and 

Low-Income Population (February 11, 

1994), is designed to address the 

environmental and human health 

conditions of minority and low-income 

populations. EPA is committed to 

addressing environmental justice 

concerns and has assumed a leadership 

role in environmental justice initiatives 

to enhance environmental quality for all 

citizens of the United States. The 

Agency’s goals are to ensure that no 

segment of the population, regardless of 

race, color, national origin, income, or 

net worth bears disproportionately high 

and adverse human health and 

environmental impacts as a result of 

EPA’s policies, programs, and activities. 

Our goal is to ensure that all citizens 

live in clean and sustainable 

communities. In response to Executive 

Order 12898, and to the concerns voiced 

by many groups outside the Agency, 

EPA’s Office of Solid Waste and 

Emergency Response (OSWER) formed 

an Environmental Justice Task Force to 

analyze the array of environmental 

justice issues specific to waste programs 

and to develop an overall strategy to 

identify and address these issues 

(OSWER Directive No. 9200.3–17). 

This final rule would streamline the 

requirements for certain hazardous 

secondary materials sent for 

reclamation. Facilities that would be 

affected by today’s final rule include 

those generating hazardous secondary 

materials, as well as facilities which 

reclaim such materials. Disposal and 

treatment facilities would not be 

affected by this final rule. While 

commenters assert that minorities now 

comprise a majority in neighborhoods 


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with commercial hazardous waste 

facilities, and much larger (over twothirds) majorities can be found in 

neighborhoods with clustered facilities, 

EPA does not believe that such 

neighborhoods will be adversely 

impacted by today’s rule. As explained 

in Chapter 11 of the Regulatory Impact 

Analysis found in the docket to today’s 

rule, EPA has performed an assessment 

of potential countervailing risks and has 

determined that the conditions address 

those risks and no net impact is 

expected. Thus, overall, no 

disproportionate impacts to minorities 

or low income communities are 

expected. 

K. Congressional Review Act 

The Congressional Review Act, 5 

U.S.C. 801 et seq., as added by Subtitle 

E of the Small Business Regulatory 

Enforcement Fairness Act of 1996 

(SBREFA), generally provides that 

before a rule may take effect, the agency 

promulgating the rule must submit a 

report containing the rule and other 

required information to the U.S. Senate, 

the U.S. House of Representatives, and 

to the Comptroller General of the United 

States, prior to publication of the rule in 

the Federal Register. Furthermore, a 

‘‘major rule’’ cannot take effect until 60 

days after it is published in the Federal 

Register. Today’s action is expected to 

be a ‘‘major rule’’ as defined by 5 U.S.C. 

804(2) according to the first of its three 

‘‘major rule’’ definitions: ‘‘The term 

‘‘major rule’’ means any rule that the 

Administrator of the Office of 

Information and Regulatory Affairs of 

OMB finds has resulted in or is likely 

to result in—(A) an annual effect on the 

economy of $100,000,000 or more; (B) a 

major increase in costs or prices for 

consumers, individual industries, 

Federal, state, or local government 

agencies, or geographic regions; or (C) 

significant adverse effects on 

competition, employment, investment, 

productivity, innovation, or on the 

ability of United States-based 

enterprises to compete with foreignbased enterprises in domestic and 

export markets.’’ EPA has submitted a 

copy of this rule to each House of the 

Congress and to the Comptroller 

General, and this rule will be effective 

December 29, 2008. 

List of Subjects 

40 CFR Part 260 

Environmental protection, 

Administrative practice and procedure, 

Confidential business information, 

Hazardous waste, Reporting and 

recordkeeping requirements. 

40 CFR Part 261 

Environmental protection, Hazardous 

waste, Recycling, Reporting and 

recordkeeping requirements. 

40 CFR Part 270 

Administrative practice and 

procedure, Hazardous waste, Reporting 

and recordkeeping requirements, Permit 

application requirements, Permit 

modification procedures, Waste 

treatment and disposal. 

Dated: October 7, 2008. 

Stephen L. Johnson, 

Administrator. 

■ For the reasons stated in the preamble, 

title 40, chapter I of the Code of Federal 

Regulations is amended to read as 

follows: 

PART 260—HAZARDOUS WASTE 

MANAGEMENT SYSTEM: GENERAL 

■ 1. The authority citation for part 260 

continues to read as follows: 

Authority: 42 U.S.C. 6905, 6912(a), 6921– 

6927, 6930, 6935, 6937, 6938, 6939 and 6974. 

Subpart B—Definitions 

■ 2. Section 260.10 is amended by 

revising the definitions of ‘‘Facility’’ 

and ‘‘Transfer facility’’ and by adding in 

alphabetical order the definitions of 

‘‘Hazardous secondary material,’’ 

‘‘Hazardous secondary material 

generated and reclaimed under the 

control of the generator’’ and 

‘‘Hazardous secondary material 

generator,’’ ‘‘Intermediate facility,’’ and 

‘‘Land-based unit’’ to read as follows: 

§ 260.10 Definitions. 

* * * * * 

Facility means: 

(1) All contiguous land, and 

structures, other appurtenances, and 

improvements on the land, used for 

treating, storing, or disposing of 

hazardous waste, or for managing 

hazardous secondary materials prior to 

reclamation. A facility may consist of 

several treatment, storage, or disposal 

operational units (e.g., one or more 

landfills, surface impoundments, or 

combinations of them). 

(2) For the purpose of implementing 

corrective action under 40 CFR 264.101 

or 267.101, all contiguous property 

under the control of the owner or 

operator seeking a permit under Subtitle 

C of RCRA. This definition also applies 

to facilities implementing corrective 

action under RCRA Section 3008(h). 

(3) Notwithstanding paragraph (2) of 

this definition, a remediation waste 

management site is not a facility that is 

subject to 40 CFR 264.101, but is subject 

to corrective action requirements if the 

site is located within such a facility. 

* * * * * 

Hazardous secondary material means 

a secondary material (e.g., spent 

material, by-product, or sludge) that, 

when discarded, would be identified as 

hazardous waste under part 261 of this 

chapter. 

Hazardous secondary material 

generated and reclaimed under the 

control of the generator means: 

(1) That such material is generated 

and reclaimed at the generating facility 

(for purposes of this defintion, 

generating facility means all contiguous 

property owned, leased, or otherwise 

controlled by the hazardous secondary 

material generator); or 

(2) That such material is generated 

and reclaimed at different facilities, if 

the reclaiming facility is controlled by 

the generator or if both the generating 

facility and the reclaiming facility are 

controlled by a person as defined in 

§ 260.10, and if the generator provides 

one of the following certifications: ‘‘on 

behalf of [insert generator facility name], 

I certify that this facility will send the 

indicated hazardous secondary material 

to [insert reclaimer facility name], 

which is controlled by [insert generator 

facility name] and that [insert the name 

of either facility] has acknowledged full 

responsibility for the safe management 

of the hazardous secondary material,’’ or 

‘‘on behalf of [insert generator facility 

name] I certify that this facility will 

send the indicated hazardous secondary 

material to [insert reclaimer facility 

name], that both facilities are under 

common control, and that [insert name 

of either facility] has acknowledged full 

responsibility for the safe management 

of the hazardous secondary material.’’ 

For purposes of this paragraph, 

‘‘control’’ means the power to direct the 

policies of the facility, whether by the 

ownership of stock, voting rights, or 

otherwise, except that contractors who 

operate facilities on behalf of a different 

person as defined in § 260.10 shall not 

be deemed to ‘‘control’’ such facilities, 

or 

(3) That such material is generated 

pursuant to a written contract between 

a tolling contractor and a toll 

manufacturer and is reclaimed by the 

tolling contractor, if the tolling 

contractor certifies the following: ‘‘On 

behalf of [insert tolling contractor 

name], I certify that [insert tolling 

contractor name], has a written contract 

with [insert toll manufacturer name] to 

manufacture [insert name of product or 

intermediate] which is made from 

specified unused materials, and that 

[insert tolling contractor name] will 


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reclaim the hazardous secondary 

materials generated during this 

manufacture. On behalf of [insert tolling 

contractor name], I also certify that 

[insert tolling contractor name] retains 

ownership of, and responsibility for, the 

hazardous secondary materials that are 

generated during the course of the 

manufacture, including any releases of 

hazardous secondary materials that 

occur during the manufacturing process. 

For purposes of this paragraph, tolling 

contractor means a person who arranges 

for the production of a product or 

intermediate made from specified 

unused materials through a written 

contract with a toll manufacturer. Toll 

manufacturer means a person who 

produces a product or intermediate 

made from specified unused materials 

pursuant to a written contract with a 

tolling contractor. 

Hazardous secondary material 

generator means any person whose act 

or process produces hazardous 

secondary materials at the generating 

facility. For purposes of this paragraph, 

‘‘generating facility’’ means all 

contiguous property owned, leased, or 

otherwise controlled by the hazardous 

secondary material generator. For the 

purposes of § 261.2(a)(2)(ii) and 

§ 261.4(a)(23), a facility that collects 

hazardous secondary materials from 

other persons is not the hazardous 

secondary material generator. 

* * * * * 

Intermediate facility means any 

facility that stores hazardous secondary 

materials for more than 10 days, other 

than a hazardous secondary material 

generator or reclaimer of such material. 

* * * * * 

Land-based unit means an area where 

hazardous secondary materials are 

placed in or on the land before 

recycling. This definition does not 

include land-based production units. 

* * * * * 

Transfer facility means any 

transportation-related facility, including 

loading docks, parking areas, storage 

areas and other similar areas where 

shipments of hazardous waste or 

hazardous secondary materials are held 

during the normal course of 

transportation. 

* * * * * 

■ 3. Section 260.30 is amended by 

revising the section heading, the 

introductory text, paragraph (b), and 

adding paragraphs (d) and (e) to read as 

follows: 

§ 260.30 Non-waste determinations and 

variances from classification as a solid 

waste. 

In accordance with the standards and 

criteria in § 260.31 and § 260.34 and the 

procedures in § 260.33, the 

Administrator may determine on a caseby-case basis that the following recycled 

materials are not solid wastes: 

* * * * * 

(b) Materials that are reclaimed and 

then reused within the original 

production process in which they were 

generated; 

* * * * * 

(d) Hazardous secondary materials 

that are reclaimed in a continuous 

industrial process; and 

(e) Hazardous secondary materials 

that are indistinguishable in all relevant 

aspects from a product or intermediate. 

* * * * * 

■ 4. Section 260.33 is amended by 

revising the section heading, the 

introductory text, paragraph (a) and 

adding paragraph (c) to read as follows: 

§ 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 nonwaste determination. The application 

must address the relevant criteria 

contained in § 260.31, § 260.32, or 

§ 260.34, as applicable. 

* * * * * 

(c) For non-waste determinations, in 

the event of a change in circumstances 

that affect how a hazardous secondary 

material meets the relevant criteria 

contained in § 260.34 upon which a 

non-waste determination has been 

based, the applicant must re-apply to 

the Administrator for a formal 

determination that the hazardous 

secondary material continues to meet 

the relevant criteria and therefore is not 

a solid waste. 

■ 5. Section 260.34 is added to Subpart 

C to read as follows: 

§ 260.34 Standards and criteria for nonwaste determinations. 

(a) An applicant may apply to the 

Administrator for a formal 

determination that a hazardous 

secondary material is not discarded and 

therefore not a solid waste. The 

determinations will be based on the 

criteria contained in paragraphs (b) or 

(c) of this section, as applicable. If an 

application is denied, the hazardous 

secondary material might still be 

eligible for a solid waste variance or 

exclusion (for example, one of the solid 

waste variances under § 260.31). 

Determinations may also be granted by 

the State if the State is either authorized 

for this provision or if the following 

conditions are met: 

(1) The State determines the 

hazardous secondary material meets the 

criteria in paragraphs (b) or (c) of this 

section, as applicable; 

(2) The State requests that EPA review 

its determination; and 

(3) EPA approves the State 

determination. 

(b) The Administrator may grant a 

non-waste determination for hazardous 

secondary material which is reclaimed 

in a continuous industrial process if the 

applicant demonstrates that the 

hazardous secondary material is a part 

of the production process and is not 

discarded. The determination will be 

based on whether the hazardous 

secondary material is legitimately 

recycled as specified in § 260.43 and on 

the following criteria: 

(1) The extent that the management of 

the hazardous secondary material is part 

of the continuous primary production 

process and is not waste treatment; 

(2) Whether the capacity of the 

production process would use the 

hazardous secondary material in a 

reasonable time frame and ensure that 

the hazardous secondary material will 

not be abandoned (for example, based 

on past practices, market factors, the 

nature of the hazardous secondary 

material, or any contractual 

arrangements); 

(3) Whether the hazardous 

constituents in the hazardous secondary 

material are reclaimed rather than 

released to the air, water or land at 

significantly higher levels from either a 

statistical or from a health and 

environmental risk perspective than 

would otherwise be released by the 

production process; and 

(4) Other relevant factors that 

demonstrate the hazardous secondary 

material is not discarded. 

(c) The Administrator may grant a 

non-waste determination for hazardous 

secondary material which is 

indistinguishable in all relevant aspects 

from a product or intermediate if the 

applicant demonstrates that the 

hazardous secondary material is 

comparable to a product or intermediate 

and is not discarded. The determination 

will be based on whether the hazardous 

secondary material is legitimately 


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recycled as specified in § 260.43 and on 

the following criteria: 

(1) Whether market participants treat 

the hazardous secondary material as a 

product or intermediate rather than a 

waste (for example, based on the current 

positive value of the hazardous 

secondary material, stability of demand, 

or any contractual arrangements); 

(2) Whether the chemical and 

physical identity of the hazardous 

secondary material is comparable to 

commercial products or intermediates; 

(3) Whether the capacity of the market 

would use the hazardous secondary 

material in a reasonable time frame and 

ensure that the hazardous secondary 

material will not be abandoned (for 

example, based on past practices, 

market factors, the nature of the 

hazardous secondary material, or any 

contractual arrangements); 

(4) Whether the hazardous 

constituents in the hazardous secondary 

material are reclaimed rather than 

released to the air, water or land at 

significantly higher levels from either a 

statistical or from a health and 

environmental risk perspective than 

would otherwise be released by the 

production process; and 

(5) Other relevant factors that 

demonstrate the hazardous secondary 

material is not discarded. 

■ 6. Section 260.42 is added to Subpart 

C to read as follows: 

§ 260.42 Notification requirement for 

hazardous secondary materials. 

(a) Hazardous secondary material 

generators, tolling contractors, toll 

manufacturers, reclaimers, and 

intermediate facilities managing 

hazardous secondary materials which 

are excluded from regulation under 

§ 261.2(a)(2)(ii), § 261.4(a)(23), (24), or 

(25) must send a notification prior to 

operating under the exclusion(s) and by 

March 1 of each even numbered year 

thereafter to the Regional Administrator 

using EPA Form 8700–12 that includes 

the following information: 

(1) The name, address, and EPA ID 

number (if applicable) of the facility; 

(2) The name and telephone number 

of a contact person; 

(3) The NAICS code of the facility; 

(4) The exclusion under which the 

hazardous secondary materials will be 

managed (e.g., § 261.2(a)(2)(ii), 

§ 261.4(a)(23), (24), and/or (25)); 

(5) For reclaimers and intermediate 

facilities managing hazardous secondary 

materials in accordance with 

§ 261.4(a)(24) or (25), whether the 

reclaimer or intermediate facility has 

financial assurance (not applicable for 

persons managing hazardous secondary 

materials generated and reclaimed 

under the control of the generator); 

(6) When the facility expects to begin 

managing the hazardous secondary 

materials in accordance with the 

exclusion; 

(7) A list of hazardous secondary 

materials that will be managed 

according to the exclusion (reported as 

the EPA hazardous waste numbers that 

would apply if the hazardous secondary 

materials were managed as hazardous 

wastes); 

(8) For each hazardous secondary 

material, whether the hazardous 

secondary material, or any portion 

thereof, will be managed in a land-based 

unit; 

(9) The quantity of each hazardous 

secondary material to be managed 

annually; and 

(10) The certification (included in 

EPA Form 8700–12) signed and dated 

by an authorized representative of the 

facility. 

(b) If a hazardous secondary material 

generator, tolling contractor, toll 

manufacturer, reclaimer or intermediate 

facility has submitted a notification, but 

then subsequently stops managing 

hazardous secondary materials in 

accordance with the exclusion(s), the 

facility must notify the Regional 

Administrator within thirty (30) days 

using EPA Form 8700–12. For purposes 

of this section, a facility has stopped 

managing hazardous secondary 

materials if the facility no longer 

generates, manages and/or reclaims 

hazardous secondary materials under 

the exclusion(s) and does not expect to 

manage any amount of hazardous 

secondary materials for at least one year. 

■ 7. Section 260.43 is added to Subpart 

C to read as follows: 

§ 260.43 Legitimate recycling of hazardous 

secondary materials regulated under 

§ 260.34, § 261.2(a)(2)(ii), and § 261.4(a)(23), 

(24), or (25). 

(a) Persons regulated under § 260.34 

or claiming to be excluded from 

hazardous waste regulation under 

§ 261.2(a)(2)(ii), § 261.4(a)(23), (24), or 

(25) because they are engaged in 

reclamation must be able to demonstrate 

that the recycling is legitimate. 

Hazardous secondary material that is 

not legitimately recycled is discarded 

material and is a solid waste. In 

determining if their recycling is 

legitimate, persons must address the 

requirements of § 260.43(b) and must 

consider the requirements of § 260.43(c) 

below. 

(b) Legitimate recycling must involve 

a hazardous secondary material that 

provides a useful contribution to the 

recycling process or to a product or 

intermediate of the recycling process, 

and the recycling process must produce 

a valuable product or intermediate. 

(1) The hazardous secondary material 

provides a useful contribution if it 

(i) Contributes valuable ingredients to 

a product or intermediate; or 

(ii) Replaces a catalyst or carrier in the 

recycling process; or 

(iii) Is the source of a valuable 

constituent recovered in the recycling 

process; or 

(iv) Is recovered or regenerated by the 

recycling process; or 

(v) Is used as an effective substitute 

for a commercial product. 

(2) The product or intermediate is 

valuable if it is 

(i) Sold to a third party; or 

(ii) Used by the recycler or the 

generator as an effective substitute for a 

commercial product or as an ingredient 

or intermediate in an industrial process. 

(c) The following factors must be 

considered in making a determination 

as to the overall legitimacy of a specific 

recycling activity. 

(1) The generator and the recycler 

should manage the hazardous secondary 

material as a valuable commodity. 

Where there is an analogous raw 

material, the hazardous secondary 

material should be managed, at a 

minimum, in a manner consistent with 

the management of the raw material. 

Where there is no analogous raw 

material, the hazardous secondary 

material should be contained. 

Hazardous secondary materials that are 

released to the environment and are not 

recovered immediately are discarded. 

(2) The product of the recycling 

process does not 

(i) Contain significant concentrations 

of any hazardous constituents found in 

Appendix VIII of part 261 that are not 

found in analogous products; or 

(ii) Contain concentrations of any 

hazardous constituents found in 

Appendix VIII of part 261 at levels that 

are significantly elevated from those 

found in analogous products; or 

(iii) Exhibit a hazardous characteristic 

(as defined in part 261 subpart C) that 

analogous products do not exhibit. 

(3) In making a determination that a 

hazardous secondary material is 

legitimately recycled, persons must 

evaluate all factors and consider 

legitimacy as a whole. If, after careful 

evaluation of these other considerations, 

one or both of the factors are not met, 

then this fact may be an indication that 

the material is not legitimately recycled. 

However, the factors in this paragraph 

do not have to be met for the recycling 

to be considered legitimate. In 

evaluating the extent to which these 

factors are met and in determining 


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whether a process that does not meet 

one or both of these factors is still 

legitimate, persons can consider the 

protectiveness of the storage methods, 

exposure from toxics in the product, the 

bioavailability of the toxics in the 

product, and other relevant 

considerations. 

PART 261—IDENTIFICATION AND 

LISTING OF HAZARDOUS WASTE 

■ 8. The authority citation for part 261 

continues to read as follows: 

Authority: 42 U.S.C. 6905, 6912(a), 6921, 

6922, 6924(y), and 6938. 

Subpart A—[Amended] 

■ 9. Section 261.1 is amended by 

revising paragraph (c)(4) to read as 

follows: 

§ 261.1 Purpose and scope. 

* * * * * 

(c) * * * 

(4) A material is ‘‘reclaimed’’ if it is 

processed to recover a usable product, 

or if it is regenerated. Examples are 

recovery of lead values from spent 

batteries and regeneration of spent 

solvents. In addition, for purposes of 

§§ 261.2(a)(2)(ii), 261.4(a)(23), and 

261.4(a)(24) smelting, melting and 

refining furnaces are considered to be 

solely engaged in metals reclamation if 

the metal recovery from the hazardous 

secondary materials meets the same 

requirements as those specified for 

metals recovery from hazardous waste 

found in § 266.100(d)(1)–(3) of this 

chapter, and if the residuals meet the 

requirements specified in § 266.112 of 

this chapter. 

* * * * * 

■ 10. Section 261.2 is amended by 

revising paragraph (a)(1), (a)(2), (c)(3) 

and Table 1 in paragraph (c)(4) to read 

as follows: 

§ 261.2 Definition of solid waste. 

* * * * * 

(a)(1) A solid waste is any discarded 

material that is not excluded under 

§ 261.4(a) or that is not excluded by a 

variance granted under §§ 260.30 and 

260.31 or that is not excluded by a nonwaste determination under §§ 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 § 266.202. 

(ii) A hazardous secondary material is 

not discarded if it is generated and 

reclaimed under the control of the 

generator as defined in § 260.10, it is not 

speculatively accumulated as defined in 

§ 261.1(c)(8), it is handled only in nonland-based units and is contained in 

such units, it is generated and reclaimed 

within the United States and its 

territories, it is not otherwise subject to 

material-specific management 

conditions under § 261.4(a) when 

reclaimed, it is not a spent lead acid 

battery (see § 266.80 and § 273.2), it 

does not meet the listing description for 

K171 or K172 in § 261.32, and the 

reclamation of the material is legitimate, 

as specified under § 260.43. (See also 

the notification requirements of 

§ 260.42). (For hazardous secondary 

materials managed in land-based units, 

see § 261.4(a)(23)). 

* * * * * 

(c) * * * 

(3) Reclaimed. Materials noted with a 

‘‘—’’ in column 3 of Table 1 are not 

solid wastes when reclaimed. Materials 

noted with an ‘‘*’’ in column 3 of Table 

1 are solid wastes when reclaimed 

unless they meet the requirements of 

§§ 261.2(a)(2)(ii), or 261.4(a)(17), or 

261.4(a)(23), or 261.4(a)(24) or 

261.4(a)(25). 

(4) * * * 

TABLE 1 

Use constituting 

disposal 

(§ 261.2(c)(1)) 

Energy recovery/ 

fuel 

(§ 261.2(c)(2)) 

Reclamation 

(261.2(c)(3)), 

except as 

provided in 

§§ 261.2(a)(2)(ii), 

261.4(a)(17), 

261.4(a)(23), 

261.4(a)(24), or 

261.4(a)(25) 

Speculative 

accumulation 

(§ 261.2(c)(4)) 

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. 

* * * * * 

■ 11. Section 261.4 is amended by 

adding new paragraphs (a)(23), (24), and 

(25) to read as follows: 

§ 261.4 Exclusions. 

(a) * * * 

(23) Hazardous secondary material 

generated and reclaimed within the 

United States or its territories and 

managed in land-based units as defined 

in § 260.10 of this chapter is not a solid 

waste provided that: 

(i) The material is contained; 

(ii) The material is a hazardous 

secondary material generated and 

reclaimed under the control of the 

generator, as defined in § 260.10; 

(iii) The material is not speculatively 

accumulated, as defined in § 261.1(c)(8); 

(iv) The material is not otherwise 

subject to material-specific management 

conditions under paragraph (a) of this 

section when reclaimed, it is not a spent 

lead acid battery (see § 266.80 and 

§ 273.2 of this chapter), and it does not 

meet the listing description for K171 or 

K172 in § 261.32; 


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(v) The reclamation of the material is 

legitimate, as specified under § 260.43 

of this chapter; and 

(vi) In addition, persons claiming the 

exclusion under this paragraph (a)(23) 

must provide notification as required by 

§ 260.42 of this chapter. (For hazardous 

secondary material managed in a nonland-based unit, see § 261.2(a)(2)(ii)). 

(24) Hazardous secondary material 

that is generated and then transferred to 

another person for the purpose of 

reclamation is not a solid waste, 

provided that: 

(i) The material is not speculatively 

accumulated, as defined in § 261.1(c)(8); 

(ii) The material is not handled by any 

person or facility other than the 

hazardous secondary material generator, 

the transporter, an intermediate facility 

or a reclaimer, and, while in transport, 

is not stored for more than 10 days at 

a transfer facility, as defined in § 260.10 

of this chapter, and is packaged 

according to applicable Department of 

Transportation regulations at 49 CFR 

Parts 173, 178, and 179 while in 

transport; 

(iii) The material is not otherwise 

subject to material-specific management 

conditions under paragraph (a) of this 

section when reclaimed, it is not a spent 

lead-acid battery (see § 266.80 and 

§ 273.2 of this chapter), and it does not 

meet the listing description for K171 or 

K172 in § 261.32; 

(iv) The reclamation of the material is 

legitimate, as specified under § 260.43 

of this chapter; 

(v) The hazardous secondary material 

generator satisfies all of the following 

conditions: 

(A) The material must be contained. 

(B) Prior to arranging for transport of 

hazardous secondary materials to a 

reclamation facility (or facilities) where 

the management of the hazardous 

secondary materials is not addressed 

under a RCRA Part B permit or interim 

status standards, the hazardous 

secondary material generator must make 

reasonable efforts to ensure that each 

reclaimer intends to properly and 

legitimately reclaim the hazardous 

secondary material and not discard it, 

and that each reclaimer will manage the 

hazardous secondary material in a 

manner that is protective of human 

health and the environment. If the 

hazardous secondary material will be 

passing through an intermediate facility 

where the management of the hazardous 

secondary materials is not addressed 

under a RCRA Part B permit or interim 

status standards, the hazardous 

secondary material generator must make 

contractual arrangements with the 

intermediate facility to ensure that the 

hazardous secondary material is sent to 

the reclamation facility identified by the 

hazardous secondary material generator, 

and the hazardous secondary material 

generator must perform reasonable 

efforts to ensure that the intermediate 

facility will manage the hazardous 

secondary material in a manner that is 

protective of human health and the 

environment. Reasonable efforts must be 

repeated at a minimum of every three 

years for the hazardous secondary 

material generator to claim the 

exclusion and to send the hazardous 

secondary materials to each reclaimer 

and any intermediate facility. In making 

these reasonable efforts, the generator 

may use any credible evidence 

available, including information 

gathered by the hazardous secondary 

material generator, provided by the 

reclaimer or intermediate facility, and/ 

or provided by a third party. The 

hazardous secondary material generator 

must affirmatively answer all of the 

following questions for each 

reclamation facility and any 

intermediate facility: 

(1) Does the available information 

indicate that the reclamation process is 

legitimate pursuant to § 260.43 of this 

chapter? In answering this question, the 

hazardous secondary material generator 

can rely on their existing knowledge of 

the physical and chemical properties of 

the hazardous secondary material, as 

well as information from other sources 

(e.g., the reclamation facility, audit 

reports, etc.) about the reclamation 

process. (By responding to this question, 

the hazardous secondary material 

generator has also satisfied its 

requirement in § 260.43(a) of this 

chapter to be able to demonstrate that 

the recycling is legitimate). 

(2) Does the publicly available 

information indicate that the 

reclamation facility and any 

intermediate facility that is used by the 

hazardous secondary material generator 

notified the appropriate authorities of 

hazardous secondary materials 

reclamation activities pursuant to 

§ 260.42 of this chapter and have they 

notified the appropriate authorities that 

the financial assurance condition is 

satisfied per paragraph (a)(24)(vi)(F) of 

this section? In answering these 

questions, the hazardous secondary 

material generator can rely on the 

available information documenting the 

reclamation facility’s and any 

intermediate facility’s compliance with 

the notification requirements per 

§ 260.42 of this chapter, including the 

requirement in § 260.42(a)(5) to notify 

EPA whether the reclaimer or 

intermediate facility has financial 

assurance. 

(3) Does publicly available 

information indicate that the 

reclamation facility or any intermediate 

facility that is used by the hazardous 

secondary material generator has not 

had any formal enforcement actions 

taken against the facility in the previous 

three years for violations of the RCRA 

hazardous waste regulations and has not 

been classified as a significant noncomplier with RCRA Subtitle C? In 

answering this question, the hazardous 

secondary material generator can rely on 

the publicly available information from 

EPA or the state. If the reclamation 

facility or any intermediate facility that 

is used by the hazardous secondary 

material generator has had a formal 

enforcement action taken against the 

facility in the previous three years for 

violations of the RCRA hazardous waste 

regulations and has been classified as a 

significant non-complier with RCRA 

Subtitle C, does the hazardous 

secondary material generator have 

credible evidence that the facilities will 

manage the hazardous secondary 

materials properly? In answering this 

question, the hazardous secondary 

material generator can obtain additional 

information from EPA, the state, or the 

facility itself that the facility has 

addressed the violations, taken remedial 

steps to address the violations and 

prevent future violations, or that the 

violations are not relevant to the proper 

management of the hazardous secondary 

materials. 

(4) Does the available information 

indicate that the reclamation facility 

and any intermediate facility that is 

used by the hazardous secondary 

material generator have the equipment 

and trained personnel to safely recycle 

the hazardous secondary material? In 

answering this question, the generator 

may rely on a description by the 

reclamation facility or by an 

independent third party of the 

equipment and trained personnel to be 

used to recycle the generator’s 

hazardous secondary material. 

(5) If residuals are generated from the 

reclamation of the excluded hazardous 

secondary materials, does the 

reclamation facility have the permits 

required (if any) to manage the 

residuals? If not, does the reclamation 

facility have a contract with an 

appropriately permitted facility to 

dispose of the residuals? If not, does the 

hazardous secondary material generator 

have credible evidence that the 

residuals will be managed in a manner 

that is protective of human health and 

the environment? In answering these 

questions, the hazardous secondary 

material generator can rely on publicly 

available information from EPA or the 


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state, or information provided by the 

facility itself. 

(C) The hazardous secondary material 

generator must maintain for a minimum 

of three years documentation and 

certification that reasonable efforts were 

made for each reclamation facility and, 

if applicable, intermediate facility 

where the management of the hazardous 

secondary materials is not addressed 

under a RCRA Part B permit or interim 

status standards prior to transferring 

hazardous secondary material. 

Documentation and certification must 

be made available upon request by a 

regulatory authority within 72 hours, or 

within a longer period of time as 

specified by the regulatory authority. 

The certification statement must: 

(1) Include the printed name and 

official title of an authorized 

representative of the hazardous 

secondary material generator company, 

the authorized representative’s 

signature, and the date signed; 

(2) Incorporate the following 

language: ‘‘I hereby certify in good faith 

and to the best of my knowledge that, 

prior to arranging for transport of 

excluded hazardous secondary materials 

to [insert name(s) of reclamation facility 

and any intermediate facility], 

reasonable efforts were made in 

accordance with § 261.4(a)(24)(v)(B) to 

ensure that the hazardous secondary 

materials would be recycled 

legitimately, and otherwise managed in 

a manner that is protective of human 

health and the environment, and that 

such efforts were based on current and 

accurate information.’’ 

(D) The hazardous secondary material 

generator must maintain at the 

generating facility for no less than three 

(3) years records of all off-site shipments 

of hazardous secondary materials. For 

each shipment, these records must, at a 

minimum, contain the following 

information: 

(1) Name of the transporter and date 

of the shipment; 

(2) Name and address of each 

reclaimer and, if applicable, the name 

and address of each intermediate facility 

to which the hazardous secondary 

material was sent; 

(3) The type and quantity of 

hazardous secondary material in the 

shipment. 

(E) The hazardous secondary material 

generator must maintain at the 

generating facility for no less than three 

(3) years confirmations of receipt from 

each reclaimer and, if applicable, each 

intermediate facility for all off-site 

shipments of hazardous secondary 

materials. Confirmations of receipt must 

include the name and address of the 

reclaimer (or intermediate facility), the 

type and quantity of the hazardous 

secondary materials received and the 

date which the hazardous secondary 

materials were received. This 

requirement may be satisfied by routine 

business records (e.g., financial records, 

bills of lading, copies of DOT shipping 

papers, or electronic confirmations of 

receipt); and 

(vi) Reclaimers of hazardous 

secondary material excluded from 

regulation under this exclusion and 

intermediate facilities as defined in 

§ 260.10 of this chapter satisfy all of the 

following conditions: 

(A) The reclaimer and intermediate 

facility must maintain at its facility for 

no less than three (3) years records of all 

shipments of hazardous secondary 

material that were received at the 

facility and, if applicable, for all 

shipments of hazardous secondary 

materials that were received and 

subsequently sent off-site from the 

facility for further reclamation. For each 

shipment, these records must at a 

minimum contain the following 

information: 

(1) Name of the transporter and date 

of the shipment; 

(2) Name and address of the 

hazardous secondary material generator 

and, if applicable, the name and address 

of the reclaimer or intermediate facility 

which the hazardous secondary 

materials were received from; 

(3) The type and quantity of 

hazardous secondary material in the 

shipment; and 

(4) For hazardous secondary materials 

that, after being received by the 

reclaimer or intermediate facility, were 

subsequently transferred off-site for 

further reclamation, the name and 

address of the (subsequent) reclaimer 

and, if applicable, the name and address 

of each intermediate facility to which 

the hazardous secondary material was 

sent. 

(B) The intermediate facility must 

send the hazardous secondary material 

to the reclaimer(s) designated by the 

hazardous secondary materials 

generator. 

(C) The reclaimer and intermediate 

facility must send to the hazardous 

secondary material generator 

confirmations of receipt for all off-site 

shipments of hazardous secondary 

materials. Confirmations of receipt must 

include the name and address of the 

reclaimer (or intermediate facility), the 

type and quantity of the hazardous 

secondary materials received and the 

date which the hazardous secondary 

materials were received. This 

requirement may be satisfied by routine 

business records (e.g., financial records, 

bills of lading, copies of DOT shipping 

papers, or electronic confirmations of 

receipt). 

(D) The reclaimer and intermediate 

facility must manage the hazardous 

secondary material in a manner that is 

at least as protective as that employed 

for analogous raw material and must be 

contained. An ‘‘analogous raw material’’ 

is a raw material for which a hazardous 

secondary material is a substitute and 

serves the same function and has similar 

physical and chemical properties as the 

hazardous secondary material. 

(E) Any residuals that are generated 

from reclamation processes will be 

managed in a manner that is protective 

of human health and the environment. 

If any residuals exhibit a hazardous 

characteristic according to subpart C of 

40 CFR part 261, or if they themselves 

are specifically listed in subpart D of 40 

CFR part 261, such residuals are 

hazardous wastes and must be managed 

in accordance with the applicable 

requirements of 40 CFR parts 260 

through 272. 

(F) The reclaimer and intermediate 

facility has financial assurance as 

required under subpart H of 40 CFR part 

261. 

(vii) In addition, all persons claiming 

the exclusion under this paragraph 

(a)(24) of this section must provide 

notification as required under § 260.42 

of this chapter. 

(25) Hazardous secondary material 

that is exported from the United States 

and reclaimed at a reclamation facility 

located in a foreign country is not a 

solid waste, provided that the hazardous 

secondary material generator complies 

with the applicable requirements of 

paragraph (a)(24)(i)–(v) of this section 

(excepting paragraph (a)(v)(B)(2) of this 

section for foreign reclaimers and 

foreign intermediate facilities), and that 

the hazardous secondary material 

generator also complies with the 

following requirements: 

(i) Notify EPA of an intended export 

before the hazardous secondary material 

is scheduled to leave the United States. 

A complete notification must be 

submitted at least sixty (60) days before 

the initial shipment is intended to be 

shipped off-site. This notification may 

cover export activities extending over a 

twelve (12) month or lesser period. The 

notification must be in writing, signed 

by the hazardous secondary material 

generator, and include the following 

information: 

(A) Name, mailing address, telephone 

number and EPA ID number (if 

applicable) of the hazardous secondary 

material generator; 

(B) A description of the hazardous 

secondary material and the EPA 

hazardous waste number that would 


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apply if the hazardous secondary 

material was managed as hazardous 

waste and the U.S. DOT proper shipping 

name, hazard class and ID number (UN/ 

NA) for each hazardous secondary 

material as identified in 49 CFR parts 

171 through 177; 

(C) The estimated frequency or rate at 

which the hazardous secondary material 

is to be exported and the period of time 

over which the hazardous secondary 

material is to be exported; 

(D) The estimated total quantity of 

hazardous secondary material; 

(E) All points of entry to and 

departure from each foreign country 

through which the hazardous secondary 

material will pass; 

(F) A description of the means by 

which each shipment of the hazardous 

secondary material will be transported 

(e.g., mode of transportation vehicle (air, 

highway, rail, water, etc.), type(s) of 

container (drums, boxes, tanks, etc.)); 

(G) A description of the manner in 

which the hazardous secondary material 

will be reclaimed in the receiving 

country; 

(H) The name and address of the 

reclaimer, any intermediate facility and 

any alternate reclaimer and intermediate 

facilities; and 

(I) The name of any transit countries 

through which the hazardous secondary 

material will be sent and a description 

of the approximate length of time it will 

remain in such countries and the nature 

of its handling while there (for purposes 

of this section, the terms 

‘‘Acknowledgement of Consent’’, 

‘‘receiving country’’ and ‘‘transit 

country’’ are used as defined in 40 CFR 

262.51 with the exception that the terms 

in this section refer to hazardous 

secondary materials, rather than 

hazardous waste): 

(ii) Notifications submitted by mail 

should be sent to the following mailing 

address: Office of Enforcement and 

Compliance Assurance, Office of 

Federal Activities, International 

Compliance Assurance Division, (Mail 

Code 2254A), Environmental Protection 

Agency, 1200 Pennsylvania Ave., NW., 

Washington, DC 20460. Hand-delivered 

notifications should be delivered to: 

Office of Enforcement and Compliance 

Assurance, Office of Federal Activities, 

International Compliance Assurance 

Division, Environmental Protection 

Agency, Ariel Rios Bldg., Room 6144, 

12th St. and Pennsylvania Ave., NW., 

Washington, DC 20004. In both cases, 

the following shall be prominently 

displayed on the front of the envelope: 

‘‘Attention: Notification of Intent to 

Export.’’ 

(iii) Except for changes to the 

telephone number in paragraph 

(a)(25)(i)(A) of this section and 

decreases in the quantity of hazardous 

secondary material indicated pursuant 

to paragraph (a)(25)(i)(D) of this section, 

when the conditions specified on the 

original notification change (including 

any exceedance of the estimate of the 

quantity of hazardous secondary 

material specified in the original 

notification), the hazardous secondary 

material generator must provide EPA 

with a written renotification of the 

change. The shipment cannot take place 

until consent of the receiving country to 

the changes (except for changes to 

paragraph (a)(25)(i)(I) of this section and 

in the ports of entry to and departure 

from transit countries pursuant to 

paragraphs (a)(25)(i)(E) of this section) 

has been obtained and the hazardous 

secondary material generator receives 

from EPA an Acknowledgment of 

Consent reflecting the receiving 

country’s consent to the changes. 

(iv) Upon request by EPA, the 

hazardous secondary material generator 

shall furnish to EPA any additional 

information which a receiving country 

requests in order to respond to a 

notification. 

(v) EPA will provide a complete 

notification to the receiving country and 

any transit countries. A notification is 

complete when EPA receives a 

notification which EPA determines 

satisfies the requirements of paragraph 

(a)(25)(i) of this section. Where a claim 

of confidentiality is asserted with 

respect to any notification information 

required by paragraph (a)(25)(i) of this 

section, EPA may find the notification 

not complete until any such claim is 

resolved in accordance with 40 CFR 

260.2. 

(vi) The export of hazardous 

secondary material under this paragraph 

(a)(25) is prohibited unless the receiving 

country consents to the intended export. 

When the receiving country consents in 

writing to the receipt of the hazardous 

secondary material, EPA will send an 

Acknowledgment of Consent to the 

hazardous secondary material generator. 

Where the receiving country objects to 

receipt of the hazardous secondary 

material or withdraws a prior consent, 

EPA will notify the hazardous 

secondary material generator in writing. 

EPA will also notify the hazardous 

secondary material generator of any 

responses from transit countries. 

(vii) For exports to OECD Member 

countries, the receiving country may 

respond to the notification using tacit 

consent. If no objection has been lodged 

by any receiving country or transit 

countries to a notification provided 

pursuant to paragraph (a)(25)(i) of this 

section within thirty (30) days after the 

date of issuance of the 

acknowledgement of receipt of 

notification by the competent authority 

of the receiving country, the 

transboundary movement may 

commence. In such cases, EPA will send 

an Acknowledgment of Consent to 

inform the hazardous secondary 

material generator that the receiving 

country and any relevant transit 

countries have not objected to the 

shipment, and are thus presumed to 

have consented tacitly. Tacit consent 

expires one (1) calendar year after the 

close of the thirty (30) day period; 

renotification and renewal of all 

consents is required for exports after 

that date. 

(viii) A copy of the Acknowledgment 

of Consent must accompany the 

shipment. The shipment must conform 

to the terms of the Acknowledgment of 

Consent. 

(ix) If a shipment cannot be delivered 

for any reason to the reclaimer, 

intermediate facility or the alternate 

reclaimer or alternate intermediate 

facility, the hazardous secondary 

material generator must re-notify EPA of 

a change in the conditions of the 

original notification to allow shipment 

to a new reclaimer in accordance with 

paragraph (iii) of this section and obtain 

another Acknowledgment of Consent. 

(x) Hazardous secondary material 

generators must keep a copy of each 

notification of intent to export and each 

Acknowledgment of Consent for a 

period of three years following receipt 

of the Acknowledgment of Consent. 

(xi) Hazardous secondary material 

generators must file with the 

Administrator no later than March 1 of 

each year, a report summarizing the 

types, quantities, frequency and 

ultimate destination of all hazardous 

secondary materials exported during the 

previous calendar year. Annual reports 

submitted by mail should be sent to the 

following address: Office of 

Enforcement and Compliance 

Assurance, Office of Federal Activities, 

International Compliance Assurance 

Division (Mail Code 2254A), 

Environmental Protection Agency, 1200 

Pennsylvania Ave., NW., Washington, 

DC 20460. Hand-delivered reports 

should be delivered to: Office of 

Enforcement and Compliance 

Assurance, Office of Federal Activities, 

International Compliance Assurance 

Division, Environmental Protection 

Agency, Ariel Rios Bldg., Room 6144, 

12th St. and Pennsylvania Ave., NW., 

Washington, DC 20004. Such reports 

must include the following information: 

(A) Name, mailing and site address, 

and EPA ID number (if applicable) of 


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the hazardous secondary material 

generator; 

(B) The calendar year covered by the 

report; 

(C) The name and site address of each 

reclaimer and intermediate facility; 

(D) By reclaimer and intermediate 

facility, for each hazardous secondary 

material exported, a description of the 

hazardous secondary material and the 

EPA hazardous waste number that 

would apply if the hazardous secondary 

material was managed as hazardous 

waste, DOT hazard class, the name and 

U.S. EPA ID number (where applicable) 

for each transporter used, the total 

amount of hazardous secondary material 

shipped and the number of shipments 

pursuant to each notification; 

(E) A certification signed by the 

hazardous secondary material generator 

which states: ‘‘I certify under penalty of 

law that I have personally examined and 

am familiar with the information 

submitted in this and all attached 

documents, and that based on my 

inquiry of those individuals 

immediately responsible for obtaining 

the information, I believe that the 

submitted information is true, accurate, 

and complete. I am aware that there are 

significant penalties for submitting false 

information including the possibility of 

fine and imprisonment.’’ 

(xii) All persons claiming an 

exclusion under this paragraph (a)(25) 

must provide notification as required by 

§ 260.42 of this chapter. 

* * * * * 

Subparts F–G [Reserved] 

■ 12. In part 261, Subpart F and Subpart 

G are added and reserved. 

■ 13. Part 261 is amended by adding 

new Subpart H to read as follows: 

Subpart H—Financial Requirements for 

Management of Excluded Hazardous 

Secondary Materials 

Sec. 

261.140 Applicability. 

261.141 Definitions of terms as used in this 

subpart. 

261.142 Cost estimate. 

261.143 Financial assurance condition. 

261.144–261.146 [reserved]. 

261.147 Liability requirements. 

261.148 Incapacity of owners or operators, 

guarantors, or financial institutions. 

261.149 Use of State-required mechanisms. 

261.150 State assumption of responsibility. 

261.151 Wording of the instruments. 

Subpart H—Financial Requirements for 

Management of Excluded Hazardous 

Secondary Materials 

§ 261.140 Applicability. 

(a) The requirements of this subpart 

apply to owners or operators of 

reclamation and intermediate facilities 

managing hazardous secondary 

materials excluded under 40 CFR 

§ 261.4(a)(24), except as provided 

otherwise in this section. 

(b) States and the Federal government 

are exempt from the financial assurance 

requirements of this subpart. 

§ 261.141 Definitions of terms as used in 

this subpart. 

The terms defined in § 265.141(d), (f), 

(g), and (h) of this chapter have the same 

meaning in this subpart as they do in 

§ 265.141 of this chapter. 

§ 261.142 Cost estimate. 

(a) The owner or operator must have 

a detailed written estimate, in current 

dollars, of the cost of disposing of any 

hazardous secondary material as listed 

or characteristic hazardous waste, and 

the potential cost of closing the facility 

as a treatment, storage, and disposal 

facility. 

(1) The estimate must equal the cost 

of conducting the activities described in 

paragraph (a) of this section at the point 

when the extent and manner of the 

facility’s operation would make these 

activities the most expensive; and 

(2) The cost estimate must be based 

on the costs to the owner or operator of 

hiring a third party to conduct these 

activities. A third party is a party who 

is neither a parent nor a subsidiary of 

the owner or operator. (See definition of 

parent corporation in § 265.141(d) of 

this chapter.) The owner or operator 

may use costs for on-site disposal in 

accordance with applicable 

requirements if he can demonstrate that 

on-site disposal capacity will exist at all 

times over the life of the facility. 

(3) The cost estimate may not 

incorporate any salvage value that may 

be realized with the sale of hazardous 

secondary materials, or hazardous or 

non-hazardous wastes if applicable 

under § 265.5113(d) of this chapter, 

facility structures or equipment, land, or 

other assets associated with the facility. 

(4) The owner or operator may not 

incorporate a zero cost for hazardous 

secondary materials, or hazardous or 

non-hazardous wastes if applicable 

under § 265.5113(d) of this chapter that 

might have economic value. 

(b) During the active life of the 

facility, the owner or operator must 

adjust the cost estimate for inflation 

within 60 days prior to the anniversary 

date of the establishment of the 

financial instrument(s) used to comply 

with § 261.143. For owners and 

operators using the financial test or 

corporate guarantee, the cost estimate 

must be updated for inflation within 30 

days after the close of the firm’s fiscal 

year and before submission of updated 

information to the Regional 

Administrator as specified in 

§ 261.143(e)(3). The adjustment may be 

made by recalculating the cost estimate 

in current dollars, or by using an 

inflation factor derived from the most 

recent Implicit Price Deflator for Gross 

National Product published by the U.S. 

Department of Commerce in its Survey 

of Current Business, as specified in 

paragraphs (b)(1) and (2) of this section. 

The inflation factor is the result of 

dividing the latest published annual 

Deflator by the Deflator for the previous 

year. 

(1) The first adjustment is made by 

multiplying the cost estimate by the 

inflation factor. The result is the 

adjusted cost estimate. 

(2) Subsequent adjustments are made 

by multiplying the latest adjusted cost 

estimate by the latest inflation factor. 

(c) During the active life of the 

facility, the owner or operator must 

revise the cost estimate no later than 30 

days after a change in a facility’s 

operating plan or design that would 

increase the costs of conducting the 

activities described in paragraph (a) or 

no later than 60 days after an 

unexpected event which increases the 

cost of conducting the activities 

described in paragraph (a) of this 

section. The revised cost estimate must 

be adjusted for inflation as specified in 

paragraph (b) of this section. 

(d) The owner or operator must keep 

the following at the facility during the 

operating life of the facility: The latest 

cost estimate prepared in accordance 

with paragraphs (a) and (c) and, when 

this estimate has been adjusted in 

accordance with paragraph (b), the latest 

adjusted cost estimate. 

§ 261.143 Financial assurance condition. 

Per § 261.4(a)(24)(vi)(F) of this 

chapter, an owner or operator of a 

reclamation or intermediate facility 

must have financial assurance as a 

condition of the exclusion as required 

under § 261.4(a)(24) of this chapter. He 

must choose from the options as 

specified in paragraphs (a) through (e) of 

this section. 

(a) Trust fund. (1) An owner or 

operator may satisfy the requirements of 

this section by establishing a trust fund 

which conforms to the requirements of 

this paragraph and submitting an 

originally signed duplicate of the trust 

agreement to the Regional 

Administrator. The trustee must be an 

entity which has the authority to act as 

a trustee and whose trust operations are 

regulated and examined by a Federal or 

State agency. 


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(2) The wording of the trust agreement 

must be identical to the wording 

specified in § 261.151(a)(1), and the 

trust agreement must be accompanied 

by a formal certification of 

acknowledgment (for example, see 

§ 261.151(a)(2)). Schedule A of the trust 

agreement must be updated within 60 

days after a change in the amount of the 

current cost estimate covered by the 

agreement. 

(3) The trust fund must be funded for 

the full amount of the current cost 

estimate before it may be relied upon to 

satisfy the requirements of this section. 

(4) Whenever the current cost 

estimate changes, the owner or operator 

must compare the new estimate with the 

trustee’s most recent annual valuation of 

the trust fund. If the value of the fund 

is less than the amount of the new 

estimate, the owner or operator, within 

60 days after the change in the cost 

estimate, must either deposit an amount 

into the fund so that its value after this 

deposit at least equals the amount of the 

current cost estimate, or obtain other 

financial assurance as specified in this 

section to cover the difference. 

(5) If the value of the trust fund is 

greater than the total amount of the 

current cost estimate, the owner or 

operator may submit a written request to 

the Regional Administrator for release of 

the amount in excess of the current cost 

estimate. 

(6) If an owner or operator substitutes 

other financial assurance as specified in 

this section for all or part of the trust 

fund, he may submit a written request 

to the Regional Administrator for release 

of the amount in excess of the current 

cost estimate covered by the trust fund. 

(7) Within 60 days after receiving a 

request from the owner or operator for 

release of funds as specified in 

paragraph (a) (5) or (6) of this section, 

the Regional Administrator will instruct 

the trustee to release to the owner or 

operator such funds as the Regional 

Administrator specifies in writing. If the 

owner or operator begins final closure 

under subpart G of 40 CFR part 264 or 

265, an owner or operator may request 

reimbursements for partial or final 

closure expenditures by submitting 

itemized bills to the Regional 

Administrator. The owner or operator 

may request reimbursements for partial 

closure only if sufficient funds are 

remaining in the trust fund to cover the 

maximum costs of closing the facility 

over its remaining operating life. No 

later than 60 days after receiving bills 

for partial or final closure activities, the 

Regional Administrator will instruct the 

trustee to make reimbursements in those 

amounts as the Regional Administrator 

specifies in writing, if the Regional 

Administrator determines that the 

partial or final closure expenditures are 

in accordance with the approved 

closure plan, or otherwise justified. If 

the Regional Administrator has reason 

to believe that the maximum cost of 

closure over the remaining life of the 

facility will be significantly greater than 

the value of the trust fund, he may 

withhold reimbursements of such 

amounts as he deems prudent until he 

determines, in accordance with 

§ 265.143(i) that the owner or operator 

is no longer required to maintain 

financial assurance for final closure of 

the facility. If the Regional 

Administrator does not instruct the 

trustee to make such reimbursements, 

he will provide to the owner or operator 

a detailed written statement of reasons. 

(8) The Regional Administrator will 

agree to termination of the trust when: 

(i) An owner or operator substitutes 

alternate financial assurance as 

specified in this section; or 

(ii) The Regional Administrator 

releases the owner or operator from the 

requirements of this section in 

accordance with paragraph (i) of this 

section. 

(b) Surety bond guaranteeing payment 

into a trust fund. (1) An owner or 

operator may satisfy the requirements of 

this section by obtaining a surety bond 

which conforms to the requirements of 

this paragraph and submitting the bond 

to the Regional Administrator. The 

surety company issuing the bond must, 

at a minimum, be among those listed as 

acceptable sureties on Federal bonds in 

Circular 570 of the U.S. Department of 

the Treasury. 

(2) The wording of the surety bond 

must be identical to the wording 

specified in § 261.151(b). 

(3) The owner or operator who uses a 

surety bond to satisfy the requirements 

of this section must also establish a 

standby trust fund. Under the terms of 

the bond, all payments made thereunder 

will be deposited by the surety directly 

into the standby trust fund in 

accordance with instructions from the 

Regional Administrator. This standby 

trust fund must meet the requirements 

specified in paragraph (a) of this 

section, except that: 

(i) An originally signed duplicate of 

the trust agreement must be submitted 

to the Regional Administrator with the 

surety bond; and 

(ii) Until the standby trust fund is 

funded pursuant to the requirements of 

this section, the following are not 

required by these regulations: 

(A) Payments into the trust fund as 

specified in paragraph (a) of this 

section; 

(B) Updating of Schedule A of the 

trust agreement (see § 261.151(a)) to 

show current cost estimates; 

(C) Annual valuations as required by 

the trust agreement; and 

(D) Notices of nonpayment as 

required by the trust agreement. 

(4) The bond must guarantee that the 

owner or operator will: 

(i) Fund the standby trust fund in an 

amount equal to the penal sum of the 

bond before loss of the exclusion under 

§ 261.4(a)(24) of this chapter or 

(ii) Fund the standby trust fund in an 

amount equal to the penal sum within 

15 days after an administrative order to 

begin closure issued by the Regional 

Administrator becomes final, or within 

15 days after an order to begin closure 

is issued by a U.S. district court or other 

court of competent jurisdiction; or 

(iii) Provide alternate financial 

assurance as specified in this section, 

and obtain the Regional Administrator’s 

written approval of the assurance 

provided, within 90 days after receipt 

by both the owner or operator and the 

Regional Administrator of a notice of 

cancellation of the bond from the surety. 

(5) Under the terms of the bond, the 

surety will become liable on the bond 

obligation when the owner or operator 

fails to perform as guaranteed by the 

bond. 

(6) The penal sum of the bond must 

be in an amount at least equal to the 

current cost estimate, except as 

provided in paragraph (f) of this section. 

(7) Whenever the current cost 

estimate increases to an amount greater 

than the penal sum, the owner or 

operator, within 60 days after the 

increase, must either cause the penal 

sum to be increased to an amount at 

least equal to the current cost estimate 

and submit evidence of such increase to 

the Regional Administrator, or obtain 

other financial assurance as specified in 

this section to cover the increase. 

Whenever the current cost estimate 

decreases, the penal sum may be 

reduced to the amount of the current 

cost estimate following written approval 

by the Regional Administrator. 

(8) Under the terms of the bond, the 

surety may cancel the bond by sending 

notice of cancellation by certified mail 

to the owner or operator and to the 

Regional Administrator. Cancellation 

may not occur, however, during the 120 

days beginning on the date of receipt of 

the notice of cancellation by both the 

owner or operator and the Regional 

Administrator, as evidenced by the 

return receipts. 

(9) The owner or operator may cancel 

the bond if the Regional Administrator 

has given prior written consent based on 

his receipt of evidence of alternate 


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financial assurance as specified in this 

section. 

(c) Letter of credit. (1) An owner or 

operator may satisfy the requirements of 

this section by obtaining an irrevocable 

standby letter of credit which conforms 

to the requirements of this paragraph 

and submitting the letter to the Regional 

Administrator. The issuing institution 

must be an entity which has the 

authority to issue letters of credit and 

whose letter-of-credit operations are 

regulated and examined by a Federal or 

State agency. 

(2) The wording of the letter of credit 

must be identical to the wording 

specified in § 261.151(c). 

(3) An owner or operator who uses a 

letter of credit to satisfy the 

requirements of this section must also 

establish a standby trust fund. Under 

the terms of the letter of credit, all 

amounts paid pursuant to a draft by the 

Regional Administrator will be 

deposited by the issuing institution 

directly into the standby trust fund in 

accordance with instructions from the 

Regional Administrator. This standby 

trust fund must meet the requirements 

of the trust fund specified in paragraph 

(a) of this section, except that: 

(i) An originally signed duplicate of 

the trust agreement must be submitted 

to the Regional Administrator with the 

letter of credit; and 

(ii) Unless the standby trust fund is 

funded pursuant to the requirements of 

this section, the following are not 

required by these regulations: 

(A) Payments into the trust fund as 

specified in paragraph (a) of this 

section; 

(B) Updating of Schedule A of the 

trust agreement (see § 261.151(a)) to 

show current cost estimates; 

(C) Annual valuations as required by 

the trust agreement; and 

(D) Notices of nonpayment as 

required by the trust agreement. 

(4) The letter of credit must be 

accompanied by a letter from the owner 

or operator referring to the letter of 

credit by number, issuing institution, 

and date, and providing the following 

information: The EPA Identification 

Number (if any issued), name, and 

address of the facility, and the amount 

of funds assured for the facility by the 

letter of credit. 

(5) The letter of credit must be 

irrevocable and issued for a period of at 

least 1 year. The letter of credit must 

provide that the expiration date will be 

automatically extended for a period of at 

least 1 year unless, at least 120 days 

before the current expiration date, the 

issuing institution notifies both the 

owner or operator and the Regional 

Administrator by certified mail of a 

decision not to extend the expiration 

date. Under the terms of the letter of 

credit, the 120 days will begin on the 

date when both the owner or operator 

and the Regional Administrator have 

received the notice, as evidenced by the 

return receipts. 

(6) The letter of credit must be issued 

in an amount at least equal to the 

current cost estimate, except as 

provided in paragraph (f) of this section. 

(7) Whenever the current cost 

estimate increases to an amount greater 

than the amount of the credit, the owner 

or operator, within 60 days after the 

increase, must either cause the amount 

of the credit to be increased so that it 

at least equals the current cost estimate 

and submit evidence of such increase to 

the Regional Administrator, or obtain 

other financial assurance as specified in 

this section to cover the increase. 

Whenever the current cost estimate 

decreases, the amount of the credit may 

be reduced to the amount of the current 

cost estimate following written approval 

by the Regional Administrator. 

(8) Following a determination by the 

Regional Administrator that the 

hazardous secondary materials do not 

meet the conditions of the exclusion 

under § 261.4(a)(24), the Regional 

Administrator may draw on the letter of 

credit. 

(9) If the owner or operator does not 

establish alternate financial assurance as 

specified in this section and obtain 

written approval of such alternate 

assurance from the Regional 

Administrator within 90 days after 

receipt by both the owner or operator 

and the Regional Administrator of a 

notice from the issuing institution that 

it has decided not to extend the letter of 

credit beyond the current expiration 

date, the Regional Administrator will 

draw on the letter of credit. The 

Regional Administrator may delay the 

drawing if the issuing institution grants 

an extension of the term of the credit. 

During the last 30 days of any such 

extension the Regional Administrator 

will draw on the letter of credit if the 

owner or operator has failed to provide 

alternate financial assurance as 

specified in this section and obtain 

written approval of such assurance from 

the Regional Administrator. 

(10) The Regional Administrator will 

return the letter of credit to the issuing 

institution for termination when: 

(i) An owner or operator substitutes 

alternate financial assurance as 

specified in this section; or 

(ii) The Regional Administrator 

releases the owner or operator from the 

requirements of this section in 

accordance with paragraph (i) of this 

section. 

(d) Insurance. (1) An owner or 

operator may satisfy the requirements of 

this section by obtaining insurance 

which conforms to the requirements of 

this paragraph and submitting a 

certificate of such insurance to the 

Regional Administrator At a minimum, 

the insurer must be licensed to transact 

the business of insurance, or eligible to 

provide insurance as an excess or 

surplus lines insurer, in one or more 

States. 

(2) The wording of the certificate of 

insurance must be identical to the 

wording specified in § 261.151(d). 

(3) The insurance policy must be 

issued for a face amount at least equal 

to the current cost estimate, except as 

provided in paragraph (f) of this section. 

The term ‘‘face amount’’ means the total 

amount the insurer is obligated to pay 

under the policy. Actual payments by 

the insurer will not change the face 

amount, although the insurer’s future 

liability will be lowered by the amount 

of the payments. 

(4) The insurance policy must 

guarantee that funds will be available 

whenever needed to pay the cost of 

removal of all hazardous secondary 

materials from the unit, to pay the cost 

of decontamination of the unit, to pay 

the costs of the performance of activities 

required under subpart G of 40 CFR 

parts 264 or 265, as applicable, for the 

facilities covered by this policy. The 

policy must also guarantee that once 

funds are needed, the insurer will be 

responsible for paying out funds, up to 

an amount equal to the face amount of 

the policy, upon the direction of the 

Regional Administrator, to such party or 

parties as the Regional Administrator 

specifies. 

(5) After beginning partial or final 

closure under 40 CFR parts 264 or 265, 

as applicable, an owner or operator or 

any other authorized person may 

request reimbursements for closure 

expenditures by submitting itemized 

bills to the Regional Administrator. The 

owner or operator may request 

reimbursements only if the remaining 

value of the policy is sufficient to cover 

the maximum costs of closing the 

facility over its remaining operating life. 

Within 60 days after receiving bills for 

closure activities, the Regional 

Administrator will instruct the insurer 

to make reimbursements in such 

amounts as the Regional Administrator 

specifies in writing if the Regional 

Administrator determines that the 

expenditures are in accordance with the 

approved plan or otherwise justified. If 

the Regional Administrator has reason 

to believe that the maximum cost over 

the remaining life of the facility will be 

significantly greater than the face 


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amount of the policy, he may withhold 

reimbursement of such amounts as he 

deems prudent until he determines, in 

accordance with paragraph (h) of this 

section, that the owner or operator is no 

longer required to maintain financial 

assurance for the particular facility. If 

the Regional Administrator does not 

instruct the insurer to make such 

reimbursements, he will provide to the 

owner or operator a detailed written 

statement of reasons. 

(6) The owner or operator must 

maintain the policy in full force and 

effect until the Regional Administrator 

consents to termination of the policy by 

the owner or operator as specified in 

paragraph (i)(10) of this section. Failure 

to pay the premium, without 

substitution of alternate financial 

assurance as specified in this section, 

will constitute a significant violation of 

these regulations warranting such 

remedy as the Regional Administrator 

deems necessary. Such violation will be 

deemed to begin upon receipt by the 

Regional Administrator of a notice of 

future cancellation, termination, or 

failure to renew due to nonpayment of 

the premium, rather than upon the date 

of expiration. 

(7) Each policy must contain a 

provision allowing assignment of the 

policy to a successor owner or operator. 

Such assignment may be conditional 

upon consent of the insurer, provided 

such consent is not unreasonably 

refused. 

(8) The policy must provide that the 

insurer may not cancel, terminate, or 

fail to renew the policy except for 

failure to pay the premium. The 

automatic renewal of the policy must, at 

a minimum, provide the insured with 

the option of renewal at the face amount 

of the expiring policy. If there is a 

failure to pay the premium, the insurer 

may elect to cancel, terminate, or fail to 

renew the policy by sending notice by 

certified mail to the owner or operator 

and the Regional Administrator. 

Cancellation, termination, or failure to 

renew may not occur, however, during 

the 120 days beginning with the date of 

receipt of the notice by both the 

Regional Administrator and the owner 

or operator, as evidenced by the return 

receipts. Cancellation, termination, or 

failure to renew may not occur and the 

policy will remain in full force and 

effect in the event that on or before the 

date of expiration: 

(i) The Regional Administrator deems 

the facility abandoned; or 

(ii) Conditional exclusion or interim 

status is lost, terminated, or revoked; or 

(iii) Closure is ordered by the 

Regional Administrator or a U.S. district 

court or other court of competent 

jurisdiction; or 

(iv) The owner or operator is named 

as debtor in a voluntary or involuntary 

proceeding under Title 11 (Bankruptcy), 

U.S. Code; or 

(v) The premium due is paid. 

(9) Whenever the current cost 

estimate increases to an amount greater 

than the face amount of the policy, the 

owner or operator, within 60 days after 

the increase, must either cause the face 

amount to be increased to an amount at 

least equal to the current cost estimate 

and submit evidence of such increase to 

the Regional Administrator, or obtain 

other financial assurance as specified in 

this section to cover the increase. 

Whenever the current cost estimate 

decreases, the face amount may be 

reduced to the amount of the current 

cost estimate following written approval 

by the Regional Administrator. 

(10) The Regional Administrator will 

give written consent to the owner or 

operator that he may terminate the 

insurance policy when: 

(i) An owner or operator substitutes 

alternate financial assurance as 

specified in this section; or 

(ii) The Regional Administrator 

releases the owner or operator from the 

requirements of this section in 

accordance with paragraph (i) of this 

section. 

(e) Financial test and corporate 

guarantee. (1) An owner or operator 

may satisfy the requirements of this 

section by demonstrating that he passes 

a financial test as specified in this 

paragraph. To pass this test the owner 

or operator must meet the criteria of 

either paragraph (e)(1) (i) or (ii) of this 

section: 

(i) The owner or operator must have: 

(A) Two of the following three ratios: 

A ratio of total liabilities to net worth 

less than 2.0; a ratio of the sum of net 

income plus depreciation, depletion, 

and amortization to total liabilities 

greater than 0.1; and a ratio of current 

assets to current liabilities greater than 

1.5; and 

(B) Net working capital and tangible 

net worth each at least six times the sum 

of the current cost estimates and the 

current plugging and abandonment cost 

estimates; and 

(C) Tangible net worth of at least $10 

million; and 

(D) Assets located in the United States 

amounting to at least 90 percent of total 

assets or at least six times the sum of the 

current cost estimates and the current 

plugging and abandonment cost 

estimates. 

(ii) The owner or operator must have: 

(A) A current rating for his most 

recent bond issuance of AAA, AA, A, or 

BBB as issued by Standard and Poor’s 

or Aaa, Aa, A, or Baa as issued by 

Moody’s; and 

(B) Tangible net worth at least six 

times the sum of the current cost 

estimates and the current plugging and 

abandonment cost estimates; and 

(C) Tangible net worth of at least $10 

million; and 

(D) Assets located in the United States 

amounting to at least 90 percent of total 

assets or at least six times the sum of the 

current cost estimates and the current 

plugging and abandonment cost 

estimates. 

(2) The phrase ‘‘current cost 

estimates’’ as used in paragraph (e)(1) of 

this section refers to the cost estimates 

required to be shown in paragraphs 1– 

4 of the letter from the owner’s or 

operator’s chief financial officer 

(§ 261.151(e)). The phrase ‘‘current 

plugging and abandonment cost 

estimates’’ as used in paragraph (e)(1) of 

this section refers to the cost estimates 

required to be shown in paragraphs 1– 

4 of the letter from the owner’s or 

operator’s chief financial officer 

(§ 144.70(f) of this chapter). 

(3) To demonstrate that he meets this 

test, the owner or operator must submit 

the following items to the Regional 

Administrator: 

(i) A letter signed by the owner’s or 

operator’s chief financial officer and 

worded as specified in § 261.151(e); and 

(ii) A copy of the independent 

certified public accountant’s report on 

examination of the owner’s or operator’s 

financial statements for the latest 

completed fiscal year; and 

(iii) If the chief financial officer’s 

letter providing evidence of financial 

assurance includes financial data 

showing that the owner or operator 

satisfies paragraph (e)(1)(i) of this 

section that are different from the data 

in the audited financial statements 

referred to in paragraph (e)(3)(ii)of this 

section or any other audited financial 

statement or data filed with the SEC, 

then a special report from the owner’s 

or operator’s independent certified 

public accountant to the owner or 

operator is required. The special report 

shall be based upon an agreed upon 

procedures engagement in accordance 

with professional auditing standards 

and shall describe the procedures 

performed in comparing the data in the 

chief financial officer’s letter derived 

from the independently audited, yearend financial statements for the latest 

fiscal year with the amounts in such 

financial statements, the findings of the 

comparison, and the reasons for any 

differences. 

(4) The owner or operator may obtain 

an extension of the time allowed for 


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submission of the documents specified 

in paragraph (e)(3) of this section if the 

fiscal year of the owner or operator ends 

during the 90 days prior to the effective 

date of these regulations and if the yearend financial statements for that fiscal 

year will be audited by an independent 

certified public accountant. The 

extension will end no later than 90 days 

after the end of the owner’s or operator’s 

fiscal year. To obtain the extension, the 

owner’s or operator’s chief financial 

officer must send, by the effective date 

of these regulations, a letter to the 

Regional Administrator of each Region 

in which the owner’s or operator’s 

facilities to be covered by the financial 

test are located. This letter from the 

chief financial officer must: 

(i) Request the extension; 

(ii) Certify that he has grounds to 

believe that the owner or operator meets 

the criteria of the financial test; 

(iii) Specify for each facility to be 

covered by the test the EPA 

Identification Number (if any issued), 

name, address, and current cost 

estimates to be covered by the test; 

(iv) Specify the date ending the 

owner’s or operator’s last complete 

fiscal year before the effective date of 

these regulations in this subpart; 

(v) Specify the date, no later than 90 

days after the end of such fiscal year, 

when he will submit the documents 

specified in paragraph (e)(3) of this 

section; and 

(vi) Certify that the year-end financial 

statements of the owner or operator for 

such fiscal year will be audited by an 

independent certified public 

accountant. 

(5) After the initial submission of 

items specified in paragraph (e)(3) of 

this section, the owner or operator must 

send updated information to the 

Regional Administrator within 90 days 

after the close of each succeeding fiscal 

year. This information must consist of 

all three items specified in paragraph 

(e)(3) of this section. 

(6) If the owner or operator no longer 

meets the requirements of paragraph 

(e)(1) of this section, he must send 

notice to the Regional Administrator of 

intent to establish alternate financial 

assurance as specified in this section. 

The notice must be sent by certified 

mail within 90 days after the end of the 

fiscal year for which the year-end 

financial data show that the owner or 

operator no longer meets the 

requirements. The owner or operator 

must provide the alternate financial 

assurance within 120 days after the end 

of such fiscal year. 

(7) The Regional Administrator may, 

based on a reasonable belief that the 

owner or operator may no longer meet 

the requirements of paragraph (e)(1) of 

this section, require reports of financial 

condition at any time from the owner or 

operator in addition to those specified 

in paragraph (e)(3) of this section. If the 

Regional Administrator finds, on the 

basis of such reports or other 

information, that the owner or operator 

no longer meets the requirements of 

paragraph (e)(1) of this section, the 

owner or operator must provide 

alternate financial assurance as 

specified in this section within 30 days 

after notification of such a finding. 

(8) The Regional Administrator may 

disallow use of this test on the basis of 

qualifications in the opinion expressed 

by the independent certified public 

accountant in his report on examination 

of the owner’s or operator’s financial 

statements (see paragraph (e)(3)(ii) of 

this section). An adverse opinion or a 

disclaimer of opinion will be cause for 

disallowance. The Regional 

Administrator will evaluate other 

qualifications on an individual basis. 

The owner or operator must provide 

alternate financial assurance as 

specified in this section within 30 days 

after notification of the disallowance. 

(9) The owner or operator is no longer 

required to submit the items specified in 

paragraph (e)(3) of this section when: 

(i) An owner or operator substitutes 

alternate financial assurance as 

specified in this section; or 

(ii) The Regional Administrator 

releases the owner or operator from the 

requirements of this section in 

accordance with paragraph (i) of this 

section. 

(10) An owner or operator may meet 

the requirements of this section by 

obtaining a written guarantee. The 

guarantor must be the direct or highertier parent corporation of the owner or 

operator, a firm whose parent 

corporation is also the parent 

corporation of the owner or operator, or 

a firm with a ‘‘substantial business 

relationship’’ with the owner or 

operator. The guarantor must meet the 

requirements for owners or operators in 

paragraphs (e)(1) through (8) of this 

section and must comply with the terms 

of the guarantee. The wording of the 

guarantee must be identical to the 

wording specified in § 261.151(g)(1). A 

certified copy of the guarantee must 

accompany the items sent to the 

Regional Administrator as specified in 

paragraph (e)(3) of this section. One of 

these items must be the letter from the 

guarantor’s chief financial officer. If the 

guarantor’s parent corporation is also 

the parent corporation of the owner or 

operator, the letter must describe the 

value received in consideration of the 

guarantee. If the guarantor is a firm with 

a ‘‘substantial business relationship’’ 

with the owner or operator, this letter 

must describe this ‘‘substantial business 

relationship’’ and the value received in 

consideration of the guarantee. The 

terms of the guarantee must provide 

that: 

(i) Following a determination by the 

Regional Administrator that the 

hazardous secondary materials at the 

owner or operator’s facility covered by 

this guarantee do not meet the 

conditions of the exclusion under 

§ 261.4(a)(24) of this chapter, the 

guarantor will dispose of any hazardous 

secondary material as hazardous waste 

and close the facility in accordance with 

closure requirements found in parts 264 

or 265 of this chapter, as applicable, or 

establish a trust fund as specified in 

paragraph (a) of this section in the name 

of the owner or operator in the amount 

of the current cost estimate. 

(ii) The corporate guarantee will 

remain in force unless the guarantor 

sends notice of cancellation by certified 

mail to the owner or operator and to the 

Regional Administrator. Cancellation 

may not occur, however, during the 120 

days beginning on the date of receipt of 

the notice of cancellation by both the 

owner or operator and the Regional 

Administrator, as evidenced by the 

return receipts. 

(iii) If the owner or operator fails to 

provide alternate financial assurance as 

specified in this section and obtain the 

written approval of such alternate 

assurance from the Regional 

Administrator within 90 days after 

receipt by both the owner or operator 

and the Regional Administrator of a 

notice of cancellation of the corporate 

guarantee from the guarantor, the 

guarantor will provide such alternate 

financial assurance in the name of the 

owner or operator. 

(f) Use of multiple financial 

mechanisms. An owner or operator may 

satisfy the requirements of this section 

by establishing more than one financial 

mechanism per facility. These 

mechanisms are limited to trust funds, 

surety bonds, letters of credit, and 

insurance. The mechanisms must be as 

specified in paragraphs (a) through (d) 

of this section, respectively, of this 

section, except that it is the combination 

of mechanisms, rather than the single 

mechanism, which must provide 

financial assurance for an amount at 

least equal to the current cost estimate. 

If an owner or operator uses a trust fund 

in combination with a surety bond or a 

letter of credit, he may use the trust 

fund as the standby trust fund for the 

other mechanisms. A single standby 

trust fund may be established for two or 

more mechanisms. The Regional 


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Administrator may use any or all of the 

mechanisms to provide for the facility. 

(g) Use of a financial mechanism for 

multiple facilities. An owner or operator 

may use a financial assurance 

mechanism specified in this section to 

meet the requirements of this section for 

more than one facility. Evidence of 

financial assurance submitted to the 

Regional Administrator must include a 

list showing, for each facility, the EPA 

Identification Number (if any issued), 

name, address, and the amount of funds 

assured by the mechanism. If the 

facilities covered by the mechanism are 

in more than one Region, identical 

evidence of financial assurance must be 

submitted to and maintained with the 

Regional Administrators of all such 

Regions. The amount of funds available 

through the mechanism must be no less 

than the sum of funds that would be 

available if a separate mechanism had 

been established and maintained for 

each facility. In directing funds 

available through the mechanism for 

any of the facilities covered by the 

mechanism, the Regional Administrator 

may direct only the amount of funds 

designated for that facility, unless the 

owner or operator agrees to the use of 

additional funds available under the 

mechanism. 

(h) Removal and Decontamination 

Plan for Release (1) An owner or 

operator of a reclamation facility or an 

intermediate facility who wishes to be 

released from his financial assurance 

obligations under § 261.4(a)(24)(vi)(F) of 

this chapter must submit a plan for 

removing all hazardous secondary 

material residues to the Regional 

Administrator at least 180 days prior to 

the date on which he expects to cease 

to operate under the exclusion. 

(2) The plan must include, at least: 

(A) For each hazardous secondary 

materials storage unit subject to 

financial assurance requirements under 

§ 261.4(a)(24)(vi)(F), a description of 

how all excluded hazardous secondary 

materials will be recycled or sent for 

recycling, and how all residues, 

contaminated containment systems 

(liners, etc), contaminated soils, 

subsoils, structures, and equipment will 

be removed or decontaminated as 

necessary to protect human health and 

the environment, and 

(B) A detailed description of the steps 

necessary to remove or decontaminate 

all hazardous secondary material 

residues and contaminated containment 

system components, equipment, 

structures, and soils including, but not 

limited to, procedures for cleaning 

equipment and removing contaminated 

soils, methods for sampling and testing 

surrounding soils, and criteria for 

determining the extent of 

decontamination necessary to protect 

human health and the environment; and 

(C) A detailed description of any other 

activities necessary to protect human 

health and the environment during this 

timeframe, including, but not limited to, 

leachate collection, run-on and run-off 

control, etc; and 

(D) A schedule for conducting the 

activities described which, at a 

minimum, includes the total time 

required to remove all excluded 

hazardous secondary materials for 

recycling and decontaminate all units 

subject to financial assurance under 

§ 261.4(a)(24)(vi)(F) and the time 

required for intervening activities which 

will allow tracking of the progress of 

decontamination. 

(3) The Regional Administrator will 

provide the owner or operator and the 

public, through a newspaper notice, the 

opportunity to submit written 

comments on the plan and request 

modifications to the plan no later than 

30 days from the date of the notice. He 

will also, in response to a request or at 

his discretion, hold a public hearing 

whenever such a hearing might clarify 

one or more issues concerning the plan. 

The Regional Administrator will give 

public notice of the hearing at least 30 

days before it occurs. (Public notice of 

the hearing may be given at the same 

time as notice of the opportunity for the 

public to submit written comments, and 

the two notices may be combined.) The 

Regional Administrator will approve, 

modify, or disapprove the plan within 

90 days of its receipt. If the Regional 

Administrator does not approve the 

plan, he shall provide the owner or 

operator with a detailed written 

statement of reasons for the refusal and 

the owner or operator must modify the 

plan or submit a new plan for approval 

within 30 days after receiving such 

written statement. The Regional 

Administrator will approve or modify 

this plan in writing within 60 days. If 

the Regional Administrator modifies the 

plan, this modified plan becomes the 

approved plan. The Regional 

Administrator must assure that the 

approved plan is consistent with 

paragraph (h) of this section. A copy of 

the modified plan with a detailed 

statement of reasons for the 

modifications must be mailed to the 

owner or operator. 

(4) Within 60 days of completion of 

the activities described for each 

hazardous secondary materials 

management unit, the owner or operator 

must submit to the Regional 

Administrator, by registered mail, a 

certification that all hazardous 

secondary materials have been removed 

from the unit and the unit has been 

decontaminated in accordance with the 

specifications in the approved plan. The 

certification must be signed by the 

owner or operator and by a qualified 

Professional Engineer. Documentation 

supporting the Professional Engineer’s 

certification must be furnished to the 

Regional Administrator, upon request, 

until he releases the owner or operator 

from the financial assurance 

requirements for § 261.4(a)(24)(vi)(F). 

(i) Release of the owner or operator 

from the requirements of this section. 

Within 60 days after receiving 

certifications from the owner or operator 

and a qualified Professional Engineer 

that all hazardous secondary materials 

have been removed from the facility or 

a unit at the facility and the facility or 

a unit has been decontaminated in 

accordance with the approved plan per 

paragraph (h), the Regional 

Administrator will notify the owner or 

operator in writing that he is no longer 

required under § 261.4(a)(24)(vi)(F) to 

maintain financial assurance for that 

facility or a unit at the facility, unless 

the Regional Administrator has reason 

to believe that all hazardous secondary 

materials have not been removed from 

the facility or unit at a facility or that 

the facility or unit has not been 

decontaminated in accordance with the 

approved plan. The Regional 

Administrator shall provide the owner 

or operator a detailed written statement 

of any such reason to believe that all 

hazardous secondary materials have not 

been removed from the unit or that the 

unit has not been decontaminated in 

accordance with the approved plan. 

§§ 261.144–261.146 [Reserved] 

§ 261.147 Liability requirements. 

(a) Coverage for sudden accidental 

occurrences. An owner or operator of a 

hazardous secondary material 

reclamation facility or an intermediate 

facility subject to financial assurance 

requirements under § 261.4(a)(24)(vi)(F) 

of this chapter, or a group of such 

facilities, must demonstrate financial 

responsibility for bodily injury and 

property damage to third parties caused 

by sudden accidental occurrences 

arising from operations of the facility or 

group of facilities. The owner or 

operator must have and maintain 

liability coverage for sudden accidental 

occurrences in the amount of at least $1 

million per occurrence with an annual 

aggregate of at least $2 million, 

exclusive of legal defense costs. This 

liability coverage may be demonstrated 

as specified in paragraphs (a) (1), (2), 

(3), (4), (5), or (6) of this section: 


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(1) An owner or operator may 

demonstrate the required liability 

coverage by having liability insurance as 

specified in this paragraph. 

(i) Each insurance policy must be 

amended by attachment of the 

Hazardous Secondary Material Facility 

Liability Endorsement, or evidenced by 

a Certificate of Liability Insurance. The 

wording of the endorsement must be 

identical to the wording specified in 

§ 261.151(h). The wording of the 

certificate of insurance must be 

identical to the wording specified in 

§ 261.151(i). The owner or operator 

must submit a signed duplicate original 

of the endorsement or the certificate of 

insurance to the Regional 

Administrator, or Regional 

Administrators if the facilities are 

located in more than one Region. If 

requested by a Regional Administrator, 

the owner or operator must provide a 

signed duplicate original of the 

insurance policy. 

(ii) Each insurance policy must be 

issued by an insurer which, at a 

minimum, is licensed to transact the 

business of insurance, or eligible to 

provide insurance as an excess or 

surplus lines insurer, in one or more 

States. 

(2) An owner or operator may meet 

the requirements of this section by 

passing a financial test or using the 

guarantee for liability coverage as 

specified in paragraphs (f) and (g) of this 

section. 

(3) An owner or operator may meet 

the requirements of this section by 

obtaining a letter of credit for liability 

coverage as specified in paragraph (h) of 

this section. 

(4) An owner or operator may meet 

the requirements of this section by 

obtaining a surety bond for liability 

coverage as specified in paragraph (i) of 

this section. 

(5) An owner or operator may meet 

the requirements of this section by 

obtaining a trust fund for liability 

coverage as specified in paragraph (j) of 

this section. 

(6) An owner or operator may 

demonstrate the required liability 

coverage through the use of 

combinations of insurance, financial 

test, guarantee, letter of credit, surety 

bond, and trust fund, except that the 

owner or operator may not combine a 

financial test covering part of the 

liability coverage requirement with a 

guarantee unless the financial statement 

of the owner or operator is not 

consolidated with the financial 

statement of the guarantor. The amounts 

of coverage demonstrated must total at 

least the minimum amounts required by 

this section. If the owner or operator 

demonstrates the required coverage 

through the use of a combination of 

financial assurances under this 

paragraph, the owner or operator shall 

specify at least one such assurance as 

‘‘primary’’ coverage and shall specify 

other assurance as ‘‘excess’’ coverage. 

(7) An owner or operator shall notify 

the Regional Administrator in writing 

within 30 days whenever: 

(i) A claim results in a reduction in 

the amount of financial assurance for 

liability coverage provided by a 

financial instrument authorized in 

paragraphs (a)(1) through (a)(6) of this 

section; or 

(ii) A Certification of Valid Claim for 

bodily injury or property damages 

caused by a sudden or non-sudden 

accidental occurrence arising from the 

operation of a hazardous secondary 

material reclamation facility or 

intermediate facility is entered between 

the owner or operator and third-party 

claimant for liability coverage under 

paragraphs (a)(1) through (a)(6) of this 

section; or 

(iii) A final court order establishing a 

judgment for bodily injury or property 

damage caused by a sudden or nonsudden accidental occurrence arising 

from the operation of a hazardous 

secondary material reclamation facility 

or intermediate facility is issued against 

the owner or operator or an instrument 

that is providing financial assurance for 

liability coverage under paragraphs 

(a)(1) through (a)(6) of this section. 

(b) Coverage for nonsudden accidental 

occurrences. An owner or operator of a 

hazardous secondary material 

reclamation facility or intermediate 

facility with land-based units, as 

defined in § 260.10 of this chapter, 

which are used to manage hazardous 

secondary materials excluded under 

§ 261.4(a)(24) of this chapter or a group 

of such facilities, must demonstrate 

financial responsibility for bodily injury 

and property damage to third parties 

caused by nonsudden accidental 

occurrences arising from operations of 

the facility or group of facilities. The 

owner or operator must have and 

maintain liability coverage for 

nonsudden accidental occurrences in 

the amount of at least $3 million per 

occurrence with an annual aggregate of 

at least $6 million, exclusive of legal 

defense costs. An owner or operator 

who must meet the requirements of this 

section may combine the required peroccurrence coverage levels for sudden 

and nonsudden accidental occurrences 

into a single per-occurrence level, and 

combine the required annual aggregate 

coverage levels for sudden and 

nonsudden accidental occurrences into 

a single annual aggregate level. Owners 

or operators who combine coverage 

levels for sudden and nonsudden 

accidental occurrences must maintain 

liability coverage in the amount of at 

least $4 million per occurrence and $8 

million annual aggregate. This liability 

coverage may be demonstrated as 

specified in paragraph (b)(1), (2), (3), (4), 

(5), or (6) of this section: 

(1) An owner or operator may 

demonstrate the required liability 

coverage by having liability insurance as 

specified in this paragraph. 

(i) Each insurance policy must be 

amended by attachment of the 

Hazardous Secondary Material Facility 

Liability Endorsement or evidenced by 

a Certificate of Liability Insurance. The 

wording of the endorsement must be 

identical to the wording specified in 

§ 261.151(h). The wording of the 

certificate of insurance must be 

identical to the wording specified in 

§ 261.151(i). The owner or operator 

must submit a signed duplicate original 

of the endorsement or the certificate of 

insurance to the Regional 

Administrator, or Regional 

Administrators if the facilities are 

located in more than one Region. If 

requested by a Regional Administrator, 

the owner or operator must provide a 

signed duplicate original of the 

insurance policy. 

(ii) Each insurance policy must be 

issued by an insurer which, at a 

minimum, is licensed to transact the 

business of insurance, or eligible to 

provide insurance as an excess or 

surplus lines insurer, in one or more 

States. 

(2) An owner or operator may meet 

the requirements of this section by 

passing a financial test or using the 

guarantee for liability coverage as 

specified in paragraphs (f) and (g) of this 

section. 

(3) An owner or operator may meet 

the requirements of this section by 

obtaining a letter of credit for liability 

coverage as specified in paragraph (h) of 

this section. 

(4) An owner or operator may meet 

the requirements of this section by 

obtaining a surety bond for liability 

coverage as specified in paragraph (i) of 

this section. 

(5) An owner or operator may meet 

the requirements of this section by 

obtaining a trust fund for liability 

coverage as specified in paragraph (j) of 

this section. 

(6) An owner or operator may 

demonstrate the required liability 

coverage through the use of 

combinations of insurance, financial 

test, guarantee, letter of credit, surety 

bond, and trust fund, except that the 

owner or operator may not combine a 


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Federal Register / Vol. 73, No. 211 / Thursday, October 30, 2008 / Rules and Regulations 64771 

financial test covering part of the 

liability coverage requirement with a 

guarantee unless the financial statement 

of the owner or operator is not 

consolidated with the financial 

statement of the guarantor. The amounts 

of coverage demonstrated must total at 

least the minimum amounts required by 

this section. If the owner or operator 

demonstrates the required coverage 

through the use of a combination of 

financial assurances under this 

paragraph, the owner or operator shall 

specify at least one such assurance as 

‘‘primary’’ coverage and shall specify 

other assurance as ‘‘excess’’ coverage. 

(7) An owner or operator shall notify 

the Regional Administrator in writing 

within 30 days whenever: 

(i) A claim results in a reduction in 

the amount of financial assurance for 

liability coverage provided by a 

financial instrument authorized in 

paragraphs (b)(1) through (b)(6) of this 

section; or 

(ii) A Certification of Valid Claim for 

bodily injury or property damages 

caused by a sudden or non-sudden 

accidental occurrence arising from the 

operation of a hazardous secondary 

material treatment and/or storage 

facility is entered between the owner or 

operator and third-party claimant for 

liability coverage under paragraphs 

(b)(1) through (b)(6) of this section; or 

(iii) A final court order establishing a 

judgment for bodily injury or property 

damage caused by a sudden or nonsudden accidental occurrence arising 

from the operation of a hazardous 

secondary material treatment and/or 

storage facility is issued against the 

owner or operator or an instrument that 

is providing financial assurance for 

liability coverage under paragraphs 

(b)(1) through (b)(6) of this section. 

(c) Request for variance. If an owner 

or operator can demonstrate to the 

satisfaction of the Regional 

Administrator that the levels of 

financial responsibility required by 

paragraph (a) or (b) of this section are 

not consistent with the degree and 

duration of risk associated with 

treatment and/or storage at the facility 

or group of facilities, the owner or 

operator may obtain a variance from the 

Regional Administrator. The request for 

a variance must be submitted in writing 

to the Regional Administrator. If 

granted, the variance will take the form 

of an adjusted level of required liability 

coverage, such level to be based on the 

Regional Administrator’s assessment of 

the degree and duration of risk 

associated with the ownership or 

operation of the facility or group of 

facilities. The Regional Administrator 

may require an owner or operator who 

requests a variance to provide such 

technical and engineering information 

as is deemed necessary by the Regional 

Administrator to determine a level of 

financial responsibility other than that 

required by paragraph (a) or (b) of this 

section. 

(d) Adjustments by the Regional 

Administrator. If the Regional 

Administrator determines that the levels 

of financial responsibility required by 

paragraph (a) or (b) of this section are 

not consistent with the degree and 

duration of risk associated with 

treatment and/or storage at the facility 

or group of facilities, the Regional 

Administrator may adjust the level of 

financial responsibility required under 

paragraph (a) or (b) of this section as 

may be necessary to protect human 

health and the environment. This 

adjusted level will be based on the 

Regional Administrator’s assessment of 

the degree and duration of risk 

associated with the ownership or 

operation of the facility or group of 

facilities. In addition, if the Regional 

Administrator determines that there is a 

significant risk to human health and the 

environment from nonsudden 

accidental occurrences resulting from 

the operations of a facility that is not a 

surface impoundment, pile, or land 

treatment facility, he may require that 

an owner or operator of the facility 

comply with paragraph (b) of this 

section. An owner or operator must 

furnish to the Regional Administrator, 

within a reasonable time, any 

information which the Regional 

Administrator requests to determine 

whether cause exists for such 

adjustments of level or type of coverage. 

(e) Period of coverage. Within 60 days 

after receiving certifications from the 

owner or operator and a qualified 

Professional Engineer that all hazardous 

secondary materials have been removed 

from the facility or a unit at the facility 

and the facility or a unit has been 

decontaminated in accordance with the 

approved plan per § 261.143(h), the 

Regional Administrator will notify the 

owner or operator in writing that he is 

no longer required under 

§ 261.4(a)(24)(vi)(F) to maintain liability 

coverage for that facility or a unit at the 

facility, unless the Regional 

Administrator has reason to believe that 

that all hazardous secondary materials 

have not been removed from the facility 

or unit at a facility or that the facility 

or unit has not been decontaminated in 

accordance with the approved plan. 

(f) Financial test for liability coverage. 

(1) An owner or operator may satisfy the 

requirements of this section by 

demonstrating that he passes a financial 

test as specified in this paragraph. To 

pass this test the owner or operator must 

meet the criteria of paragraph (f)(1) (i) or 

(ii) of this section: 

(i) The owner or operator must have: 

(A) Net working capital and tangible 

net worth each at least six times the 

amount of liability coverage to be 

demonstrated by this test; and 

(B) Tangible net worth of at least $10 

million; and 

(C) Assets in the United States 

amounting to either: 

(1) At least 90 percent of his total 

assets; or 

(2) at least six times the amount of 

liability coverage to be demonstrated by 

this test. 

(ii) The owner or operator must have: 

(A) A current rating for his most 

recent bond issuance of AAA, AA, A, or 

BBB as issued by Standard and Poor’s, 

or Aaa, Aa, A, or Baa as issued by 

Moody’s; and 

(B) Tangible net worth of at least $10 

million; and 

(C) Tangible net worth at least six 

times the amount of liability coverage to 

be demonstrated by this test; and 

(D) Assets in the United States 

amounting to either: 

(1) At least 90 percent of his total 

assets; or 

(2) at least six times the amount of 

liability coverage to be demonstrated by 

this test. 

(2) The phrase ‘‘amount of liability 

coverage’’ as used in paragraph (f)(1) of 

this section refers to the annual 

aggregate amounts for which coverage is 

required under paragraphs (a) and (b) of 

this section and the annual aggregate 

amounts for which coverage is required 

under paragraphs (a) and (b) of 40 CFR 

264.147 and 265.147. 

(3) To demonstrate that he meets this 

test, the owner or operator must submit 

the following three items to the Regional 

Administrator: 

(i) A letter signed by the owner’s or 

operator’s chief financial officer and 

worded as specified in § 261.151(f). If an 

owner or operator is using the financial 

test to demonstrate both assurance as 

specified by § 261.143(e), and liability 

coverage, he must submit the letter 

specified in § 261.151(f) to cover both 

forms of financial responsibility; a 

separate letter as specified in 

§ 261.151(e) is not required. 

(ii) A copy of the independent 

certified public accountant’s report on 

examination of the owner’s or operator’s 

financial statements for the latest 

completed fiscal year. 

(iii) If the chief financial officer’s 

letter providing evidence of financial 

assurance includes financial data 

showing that the owner or operator 

satisfies paragraph (f)(1)(i) of this 


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section that are different from the data 

in the audited financial statements 

referred to in paragraph (f)(3)(ii) of this 

section or any other audited financial 

statement or data filed with the SEC, 

then a special report from the owner’s 

or operator’s independent certified 

public accountant to the owner or 

operator is required. The special report 

shall be based upon an agreed upon 

procedures engagement in accordance 

with professional auditing standards 

and shall describe the procedures 

performed in comparing the data in the 

chief financial officer’s letter derived 

from the independently audited, yearend financial statements for the latest 

fiscal year with the amounts in such 

financial statements, the findings of the 

comparison, and the reasons for any 

difference. 

(4) The owner or operator may obtain 

a one-time extension of the time 

allowed for submission of the 

documents specified in paragraph (f)(3) 

of this section if the fiscal year of the 

owner or operator ends during the 90 

days prior to the effective date of these 

regulations and if the year-end financial 

statements for that fiscal year will be 

audited by an independent certified 

public accountant. The extension will 

end no later than 90 days after the end 

of the owner’s or operator’s fiscal year. 

To obtain the extension, the owner’s or 

operator’s chief financial officer must 

send, by the effective date of these 

regulations, a letter to the Regional 

Administrator of each Region in which 

the owner’s or operator’s facilities to be 

covered by the financial test are located. 

This letter from the chief financial 

officer must: 

(i) Request the extension; 

(ii) Certify that he has grounds to 

believe that the owner or operator meets 

the criteria of the financial test; 

(iii) Specify for each facility to be 

covered by the test the EPA 

Identification Number, name, address, 

the amount of liability coverage and, 

when applicable, current closure and 

post-closure cost estimates to be covered 

by the test; 

(iv) Specify the date ending the 

owner’s or operator’s last complete 

fiscal year before the effective date of 

these regulations; 

(v) Specify the date, no later than 90 

days after the end of such fiscal year, 

when he will submit the documents 

specified in paragraph (f)(3) of this 

section; and 

(vi) Certify that the year-end financial 

statements of the owner or operator for 

such fiscal year will be audited by an 

independent certified public 

accountant. 

(5) After the initial submission of 

items specified in paragraph (f)(3) of 

this section, the owner or operator must 

send updated information to the 

Regional Administrator within 90 days 

after the close of each succeeding fiscal 

year. This information must consist of 

all three items specified in paragraph 

(f)(3) of this section. 

(6) If the owner or operator no longer 

meets the requirements of paragraph 

(f)(1) of this section, he must obtain 

insurance, a letter of credit, a surety 

bond, a trust fund, or a guarantee for the 

entire amount of required liability 

coverage as specified in this section. 

Evidence of liability coverage must be 

submitted to the Regional Administrator 

within 90 days after the end of the fiscal 

year for which the year-end financial 

data show that the owner or operator no 

longer meets the test requirements. 

(7) The Regional Administrator may 

disallow use of this test on the basis of 

qualifications in the opinion expressed 

by the independent certified public 

accountant in his report on examination 

of the owner’s or operator’s financial 

statements (see paragraph (f)(3)(ii) of 

this section). An adverse opinion or a 

disclaimer of opinion will be cause for 

disallowance. The Regional 

Administrator will evaluate other 

qualifications on an individual basis. 

The owner or operator must provide 

evidence of insurance for the entire 

amount of required liability coverage as 

specified in this section within 30 days 

after notification of disallowance. 

(g) Guarantee for liability coverage. (1) 

Subject to paragraph (g)(2) of this 

section, an owner or operator may meet 

the requirements of this section by 

obtaining a written guarantee, 

hereinafter referred to as ‘‘guarantee.’’ 

The guarantor must be the direct or 

higher-tier parent corporation of the 

owner or operator, a firm whose parent 

corporation is also the parent 

corporation of the owner or operator, or 

a firm with a ‘‘substantial business 

relationship’’ with the owner or 

operator. The guarantor must meet the 

requirements for owners or operators in 

paragraphs (f)(1) through (f)(6) of this 

section. The wording of the guarantee 

must be identical to the wording 

specified in § 261.151(g)(2). A certified 

copy of the guarantee must accompany 

the items sent to the Regional 

Administrator as specified in paragraph 

(f)(3) of this section. One of these items 

must be the letter from the guarantor’s 

chief financial officer. If the guarantor’s 

parent corporation is also the parent 

corporation of the owner or operator, 

this letter must describe the value 

received in consideration of the 

guarantee. If the guarantor is a firm with 

a ‘‘substantial business relationship’’ 

with the owner or operator, this letter 

must describe this ‘‘substantial business 

relationship’’ and the value received in 

consideration of the guarantee. 

(i) If the owner or operator fails to 

satisfy a judgment based on a 

determination of liability for bodily 

injury or property damage to third 

parties caused by sudden or nonsudden 

accidental occurrences (or both as the 

case may be), arising from the operation 

of facilities covered by this corporate 

guarantee, or fails to pay an amount 

agreed to in settlement of claims arising 

from or alleged to arise from such injury 

or damage, the guarantor will do so up 

to the limits of coverage. 

(ii) [Reserved] 

(2)(i) In the case of corporations 

incorporated in the United States, a 

guarantee may be used to satisfy the 

requirements of this section only if the 

Attorneys General or Insurance 

Commissioners of: 

(A) The State in which the guarantor 

is incorporated; and 

(B) Each State in which a facility 

covered by the guarantee is located have 

submitted a written statement to EPA 

that a guarantee executed as described 

in this section and § 264.151(g)(2) is a 

legally valid and enforceable obligation 

in that State. 

(ii) In the case of corporations 

incorporated outside the United States, 

a guarantee may be used to satisfy the 

requirements of this section only if: 

(A) The non-U.S. corporation has 

identified a registered agent for service 

of process in each State in which a 

facility covered by the guarantee is 

located and in the State in which it has 

its principal place of business; and if 

(B) The Attorney General or Insurance 

Commissioner of each State in which a 

facility covered by the guarantee is 

located and the State in which the 

guarantor corporation has its principal 

place of business, has submitted a 

written statement to EPA that a 

guarantee executed as described in this 

section and § 261.151(h)(2) is a legally 

valid and enforceable obligation in that 

State. 

(h) Letter of credit for liability 

coverage. (1) An owner or operator may 

satisfy the requirements of this section 

by obtaining an irrevocable standby 

letter of credit that conforms to the 

requirements of this paragraph and 

submitting a copy of the letter of credit 

to the Regional Administrator. 

(2) The financial institution issuing 

the letter of credit must be an entity that 

has the authority to issue letters of 

credit and whose letter of credit 

operations are regulated and examined 

by a Federal or State agency. 


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(3) The wording of the letter of credit 

must be identical to the wording 

specified in § 261.151(j). 

(4) An owner or operator who uses a 

letter of credit to satisfy the 

requirements of this section may also 

establish a standby trust fund. Under 

the terms of such a letter of credit, all 

amounts paid pursuant to a draft by the 

trustee of the standby trust will be 

deposited by the issuing institution into 

the standby trust in accordance with 

instructions from the trustee. The 

trustee of the standby trust fund must be 

an entity which has the authority to act 

as a trustee and whose trust operations 

are regulated and examined by a Federal 

or State agency. 

(5) The wording of the standby trust 

fund must be identical to the wording 

specified in § 261.151(m). 

(i) Surety bond for liability coverage. 

(1) An owner or operator may satisfy the 

requirements of this section by 

obtaining a surety bond that conforms to 

the requirements of this paragraph and 

submitting a copy of the bond to the 

Regional Administrator. 

(2) The surety company issuing the 

bond must be among those listed as 

acceptable sureties on Federal bonds in 

the most recent Circular 570 of the U.S. 

Department of the Treasury. 

(3) The wording of the surety bond 

must be identical to the wording 

specified in § 261.151(k) of this chapter. 

(4) A surety bond may be used to 

satisfy the requirements of this section 

only if the Attorneys General or 

Insurance Commissioners of: 

(i) The State in which the surety is 

incorporated; and 

(ii) Each State in which a facility 

covered by the surety bond is located 

have submitted a written statement to 

EPA that a surety bond executed as 

described in this section and 

§ 261.151(k) is a legally valid and 

enforceable obligation in that State. 

(j) Trust fund for liability coverage. (1) 

An owner or operator may satisfy the 

requirements of this section by 

establishing a trust fund that conforms 

to the requirements of this paragraph 

and submitting an originally signed 

duplicate of the trust agreement to the 

Regional Administrator. 

(2) The trustee must be an entity 

which has the authority to act as a 

trustee and whose trust operations are 

regulated and examined by a Federal or 

State agency. 

(3) The trust fund for liability 

coverage must be funded for the full 

amount of the liability coverage to be 

provided by the trust fund before it may 

be relied upon to satisfy the 

requirements of this section. If at any 

time after the trust fund is created the 

amount of funds in the trust fund is 

reduced below the full amount of the 

liability coverage to be provided, the 

owner or operator, by the anniversary 

date of the establishment of the Fund, 

must either add sufficient funds to the 

trust fund to cause its value to equal the 

full amount of liability coverage to be 

provided, or obtain other financial 

assurance as specified in this section to 

cover the difference. For purposes of 

this paragraph, ‘‘the full amount of the 

liability coverage to be provided’’ means 

the amount of coverage for sudden and/ 

or nonsudden occurrences required to 

be provided by the owner or operator by 

this section, less the amount of financial 

assurance for liability coverage that is 

being provided by other financial 

assurance mechanisms being used to 

demonstrate financial assurance by the 

owner or operator. 

(4) The wording of the trust fund must 

be identical to the wording specified in 

§ 261.151(l). 

§ 261.148 Incapacity of owners or 

operators, guarantors, or financial 

institutions. 

(a) An owner or operator must notify 

the Regional Administrator by certified 

mail of the commencement of a 

voluntary or involuntary proceeding 

under Title 11 (Bankruptcy), U.S. Code, 

naming the owner or operator as debtor, 

within 10 days after commencement of 

the proceeding. A guarantor of a 

corporate guarantee as specified in 

§ 261.143(e) must make such a 

notification if he is named as debtor, as 

required under the terms of the 

corporate guarantee. 

(b) An owner or operator who fulfills 

the requirements of § 261.143 or 

§ 261.147 by obtaining a trust fund, 

surety bond, letter of credit, or 

insurance policy will be deemed to be 

without the required financial assurance 

or liability coverage in the event of 

bankruptcy of the trustee or issuing 

institution, or a suspension or 

revocation of the authority of the trustee 

institution to act as trustee or of the 

institution issuing the surety bond, 

letter of credit, or insurance policy to 

issue such instruments. The owner or 

operator must establish other financial 

assurance or liability coverage within 60 

days after such an event. 

§ 261.149 Use of State-required 

mechanisms. 

(a) For a reclamation or intermediate 

facility located in a State where EPA is 

administering the requirements of this 

subpart but where the State has 

regulations that include requirements 

for financial assurance of closure or 

liability coverage, an owner or operator 

may use State-required financial 

mechanisms to meet the requirements of 

§ 261.143 or § 261.147 if the Regional 

Administrator determines that the State 

mechanisms are at least equivalent to 

the financial mechanisms specified in 

this subpart. The Regional 

Administrator will evaluate the 

equivalency of the mechanisms 

principally in terms of certainty of the 

availability of: Funds for the required 

closure activities or liability coverage; 

and the amount of funds that will be 

made available. The Regional 

Administrator may also consider other 

factors as he deems appropriate. The 

owner or operator must submit to the 

Regional Administrator evidence of the 

establishment of the mechanism 

together with a letter requesting that the 

State-required mechanism be 

considered acceptable for meeting the 

requirements of this subpart. The 

submission must include the following 

information: The facility’s EPA 

Identification Number (if available), 

name, and address, and the amount of 

funds for closure or liability coverage 

assured by the mechanism. The 

Regional Administrator will notify the 

owner or operator of his determination 

regarding the mechanism’s acceptability 

in lieu of financial mechanisms 

specified in this subpart. The Regional 

Administrator may require the owner or 

operator to submit additional 

information as is deemed necessary to 

make this determination. Pending this 

determination, the owner or operator 

will be deemed to be in compliance 

with the requirements of § 261.143 or 

§ 261.147, as applicable. 

(b) If a State-required mechanism is 

found acceptable as specified in 

paragraph (a) of this section except for 

the amount of funds available, the 

owner or operator may satisfy the 

requirements of this subpart by 

increasing the funds available through 

the State-required mechanism or using 

additional financial mechanisms as 

specified in this subpart. The amount of 

funds available through the State and 

Federal mechanisms must at least equal 

the amount required by this subpart. 

§ 261.150 State assumption of 

responsibility. 

(a) If a State either assumes legal 

responsibility for an owner’s or 

operator’s compliance with the closure 

or liability requirements of this part or 

assures that funds will be available from 

State sources to cover those 

requirements, the owner or operator will 

be in compliance with the requirements 

of § 261.143 or § 261.147 if the Regional 

Administrator determines that the 

State’s assumption of responsibility is at 


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least equivalent to the financial 

mechanisms specified in this subpart. 

The Regional Administrator will 

evaluate the equivalency of State 

guarantees principally in terms of: 

Certainty of the availability of funds for 

the required closure activities or 

liability coverage; and the amount of 

funds that will be made available. The 

Regional Administrator may also 

consider other factors as he deems 

appropriate. The owner or operator 

must submit to the Regional 

Administrator a letter from the State 

describing the nature of the State’s 

assumption of responsibility together 

with a letter from the owner or operator 

requesting that the State’s assumption of 

responsibility be considered acceptable 

for meeting the requirements of this 

subpart. The letter from the State must 

include, or have attached to it, the 

following information: The facility’s 

EPA Identification Number (if 

available), name, and address, and the 

amount of funds for closure or liability 

coverage that are guaranteed by the 

State. The Regional Administrator will 

notify the owner or operator of his 

determination regarding the 

acceptability of the State’s guarantee in 

lieu of financial mechanisms specified 

in this subpart. The Regional 

Administrator may require the owner or 

operator to submit additional 

information as is deemed necessary to 

make this determination. Pending this 

determination, the owner or operator 

will be deemed to be in compliance 

with the requirements of § 265.143 or 

§ 265.147, as applicable. 

(b) If a State’s assumption of 

responsibility is found acceptable as 

specified in paragraph (a) of this section 

except for the amount of funds 

available, the owner or operator may 

satisfy the requirements of this subpart 

by use of both the State’s assurance and 

additional financial mechanisms as 

specified in this subpart. The amount of 

funds available through the State and 

Federal mechanisms must at least equal 

the amount required by this subpart. 

§ 261.151 Wording of the instruments. 

(a)(1) A trust agreement for a trust 

fund, as specified in § 261.143(a) must 

be worded as follows, except that 

instructions in brackets are to be 

replaced with the relevant information 

and the brackets deleted: 

Trust Agreement 

Trust Agreement, the ‘‘Agreement,’’ 

entered into as of [date] by and between 

[name of the owner or operator], a [name of 

State] [insert ‘‘corporation,’’ ‘‘partnership,’’ 

‘‘association,’’ or ‘‘proprietorship’’], the 

‘‘Grantor,’’ and [name of corporate trustee], 

[insert ‘‘incorporated in the State of llll 

----’’ or ‘‘a national bank’’], the ‘‘Trustee.’’ 

Whereas, the United States Environmental 

Protection Agency, ‘‘EPA,’’ an agency of the 

United States Government, has established 

certain regulations applicable to the Grantor, 

requiring that an owner or operator of a 

facility regulated under parts 264, or 265, or 

satisfying the conditions of the exclusion 

under § 261.4(a)(24) shall provide assurance 

that funds will be available if needed for care 

of the facility under 40 CFR parts 264 or 265, 

subparts G, as applicable , 

Whereas, the Grantor has elected to 

establish a trust to provide all or part of such 

financial assurance for the facilities 

identified herein, 

Whereas, the Grantor, acting through its 

duly authorized officers, has selected the 

Trustee to be the trustee under this 

agreement, and the Trustee is willing to act 

as trustee, 

Now, Therefore, the Grantor and the 

Trustee agree as follows: 

Section 1. Definitions. As used in this 

Agreement: 

(a) The term ‘‘Grantor’’ means the owner or 

operator who enters into this Agreement and 

any successors or assigns of the Grantor. 

(b) The term ‘‘Trustee’’ means the Trustee 

who enters into this Agreement and any 

successor Trustee. 

Section 2. Identification of Facilities and 

Cost Estimates. This Agreement pertains to 

the facilities and cost estimates identified on 

attached Schedule A [on Schedule A, for 

each facility list the EPA Identification 

Number (if available), name, address, and the 

current cost estimates, or portions thereof, for 

which financial assurance is demonstrated by 

this Agreement]. 

Section 3. Establishment of Fund. The 

Grantor and the Trustee hereby establish a 

trust fund, the ‘‘Fund,’’ for the benefit of EPA 

in the event that the hazardous secondary 

materials of the grantor no longer meet the 

conditions of the exclusion under 

§ 261.4(a)(24). The Grantor and the Trustee 

intend that no third party have access to the 

Fund except as herein provided. The Fund is 

established initially as consisting of the 

property, which is acceptable to the Trustee, 

described in Schedule B attached hereto. 

Such property and any other property 

subsequently transferred to the Trustee is 

referred to as the Fund, together with all 

earnings and profits thereon, less any 

payments or distributions made by the 

Trustee pursuant to this Agreement. The 

Fund shall be held by the Trustee, IN 

TRUST, as hereinafter provided. The Trustee 

shall not be responsible nor shall it 

undertake any responsibility for the amount 

or adequacy of, nor any duty to collect from 

the Grantor, any payments necessary to 

discharge any liabilities of the Grantor 

established by EPA. 

Section 4. Payments from the Fund. The 

Trustee shall make payments from the Fund 

as the EPA Regional Administrator shall 

direct, in writing, to provide for the payment 

of the costs of the performance of activities 

required under subpart G of 40 CFR parts 264 

or 265 for the facilities covered by this 

Agreement. The Trustee shall reimburse the 

Grantor or other persons as specified by the 

EPA Regional Administrator from the Fund 

for expenditures for such activities in such 

amounts as the beneficiary shall direct in 

writing. In addition, the Trustee shall refund 

to the Grantor such amounts as the EPA 

Regional Administrator specifies in writing. 

Upon refund, such funds shall no longer 

constitute part of the Fund as defined herein. 

Section 5. Payments Comprising the Fund. 

Payments made to the Trustee for the Fund 

shall consist of cash or securities acceptable 

to the Trustee. 

Section 6. Trustee Management. The 

Trustee shall invest and reinvest the 

principal and income of the Fund and keep 

the Fund invested as a single fund, without 

distinction between principal and income, in 

accordance with general investment policies 

and guidelines which the Grantor may 

communicate in writing to the Trustee from 

time to time, subject, however, to the 

provisions of this section. In investing, 

reinvesting, exchanging, selling, and 

managing the Fund, the Trustee shall 

discharge his duties with respect to the trust 

fund solely in the interest of the beneficiary 

and with the care, skill, prudence, and 

diligence under the circumstances then 

prevailing which persons of prudence, acting 

in a like capacity and familiar with such 

matters, would use in the conduct of an 

enterprise of a like character and with like 

aims; except that: 

(i) Securities or other obligations of the 

Grantor, or any other owner or operator of the 

facilities, or any of their affiliates as defined 

in the Investment Company Act of 1940, as 

amended, 15 U.S.C. 80a–2.(a), shall not be 

acquired or held, unless they are securities or 

other obligations of the Federal or a State 

government; 

(ii) The Trustee is authorized to invest the 

Fund in time or demand deposits of the 

Trustee, to the extent insured by an agency 

of the Federal or State government; and 

(iii) The Trustee is authorized to hold cash 

awaiting investment or distribution 

uninvested for a reasonable time and without 

liability for the payment of interest thereon. 

Section 7. Commingling and Investment. 

The Trustee is expressly authorized in its 

discretion: 

(a) To transfer from time to time any or all 

of the assets of the Fund to any common, 

commingled, or collective trust fund created 

by the Trustee in which the Fund is eligible 

to participate, subject to all of the provisions 

thereof, to be commingled with the assets of 

other trusts participating therein; and 

(b) To purchase shares in any investment 

company registered under the Investment 

Company Act of 1940, 15 U.S.C. 80a–1 et 

seq., including one which may be created, 

managed, underwritten, or to which 

investment advice is rendered or the shares 

of which are sold by the Trustee. The Trustee 

may vote such shares in its discretion. 

Section 8. Express Powers of Trustee. 

Without in any way limiting the powers and 

discretions conferred upon the Trustee by the 

other provisions of this Agreement or by law, 

the Trustee is expressly authorized and 

empowered: 

(a) To sell, exchange, convey, transfer, or 

otherwise dispose of any property held by it, 

by public or private sale. No person dealing 


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with the Trustee shall be bound to see to the 

application of the purchase money or to 

inquire into the validity or expediency of any 

such sale or other disposition; 

(b) To make, execute, acknowledge, and 

deliver any and all documents of transfer and 

conveyance and any and all other 

instruments that may be necessary or 

appropriate to carry out the powers herein 

granted; 

(c) To register any securities held in the 

Fund in its own name or in the name of a 

nominee and to hold any security in bearer 

form or in book entry, or to combine 

certificates representing such securities with 

certificates of the same issue held by the 

Trustee in other fiduciary capacities, or to 

deposit or arrange for the deposit of such 

securities in a qualified central depositary 

even though, when so deposited, such 

securities may be merged and held in bulk 

in the name of the nominee of such 

depositary with other securities deposited 

therein by another person, or to deposit or 

arrange for the deposit of any securities 

issued by the United States Government, or 

any agency or instrumentality thereof, with a 

Federal Reserve bank, but the books and 

records of the Trustee shall at all times show 

that all such securities are part of the Fund; 

(d) To deposit any cash in the Fund in 

interest-bearing accounts maintained or 

savings certificates issued by the Trustee, in 

its separate corporate capacity, or in any 

other banking institution affiliated with the 

Trustee, to the extent insured by an agency 

of the Federal or State government; and 

(e) To compromise or otherwise adjust all 

claims in favor of or against the Fund. 

Section 9. Taxes and Expenses. All taxes of 

any kind that may be assessed or levied 

against or in respect of the Fund and all 

brokerage commissions incurred by the Fund 

shall be paid from the Fund. All other 

expenses incurred by the Trustee in 

connection with the administration of this 

Trust, including fees for legal services 

rendered to the Trustee, the compensation of 

the Trustee to the extent not paid directly by 

the Grantor, and all other proper charges and 

disbursements of the Trustee shall be paid 

from the Fund. 

Section 10. Annual Valuation. The Trustee 

shall annually, at least 30 days prior to the 

anniversary date of establishment of the 

Fund, furnish to the Grantor and to the 

appropriate EPA Regional Administrator a 

statement confirming the value of the Trust. 

Any securities in the Fund shall be valued 

at market value as of no more than 60 days 

prior to the anniversary date of establishment 

of the Fund. The failure of the Grantor to 

object in writing to the Trustee within 90 

days after the statement has been furnished 

to the Grantor and the EPA Regional 

Administrator shall constitute a conclusively 

binding assent by the Grantor, barring the 

Grantor from asserting any claim or liability 

against the Trustee with respect to matters 

disclosed in the statement. 

Section 11. Advice of Counsel. The Trustee 

may from time to time consult with counsel, 

who may be counsel to the Grantor, with 

respect to any question arising as to the 

construction of this Agreement or any action 

to be taken hereunder. The Trustee shall be 

fully protected, to the extent permitted by 

law, in acting upon the advice of counsel. 

Section 12. Trustee Compensation. The 

Trustee shall be entitled to reasonable 

compensation for its services as agreed upon 

in writing from time to time with the Grantor. 

Section 13. Successor Trustee. The Trustee 

may resign or the Grantor may replace the 

Trustee, but such resignation or replacement 

shall not be effective until the Grantor has 

appointed a successor trustee and this 

successor accepts the appointment. The 

successor trustee shall have the same powers 

and duties as those conferred upon the 

Trustee hereunder. Upon the successor 

trustee’s acceptance of the appointment, the 

Trustee shall assign, transfer, and pay over to 

the successor trustee the funds and 

properties then constituting the Fund. If for 

any reason the Grantor cannot or does not act 

in the event of the resignation of the Trustee, 

the Trustee may apply to a court of 

competent jurisdiction for the appointment 

of a successor trustee or for instructions. The 

successor trustee shall specify the date on 

which it assumes administration of the trust 

in a writing sent to the Grantor, the EPA 

Regional Administrator, and the present 

Trustee by certified mail 10 days before such 

change becomes effective. Any expenses 

incurred by the Trustee as a result of any of 

the acts contemplated by this Section shall be 

paid as provided in Section 9. 

Section 14. Instructions to the Trustee. All 

orders, requests, and instructions by the 

Grantor to the Trustee shall be in writing, 

signed by such persons as are designated in 

the attached Exhibit A or such other 

designees as the Grantor may designate by 

amendment to Exhibit A. The Trustee shall 

be fully protected in acting without inquiry 

in accordance with the Grantor’s orders, 

requests, and instructions. All orders, 

requests, and instructions by the EPA 

Regional Administrator to the Trustee shall 

be in writing, signed by the EPA Regional 

Administrators of the Regions in which the 

facilities are located, or their designees, and 

the Trustee shall act and shall be fully 

protected in acting in accordance with such 

orders, requests, and instructions. The 

Trustee shall have the right to assume, in the 

absence of written notice to the contrary, that 

no event constituting a change or a 

termination of the authority of any person to 

act on behalf of the Grantor or EPA 

hereunder has occurred. The Trustee shall 

have no duty to act in the absence of such 

orders, requests, and instructions from the 

Grantor and/or EPA, except as provided for 

herein. 

Section 15. Amendment of Agreement. 

This Agreement may be amended by an 

instrument in writing executed by the 

Grantor, the Trustee, and the appropriate 

EPA Regional Administrator, or by the 

Trustee and the appropriate EPA Regional 

Administrator if the Grantor ceases to exist. 

Section 16. Irrevocability and Termination. 

Subject to the right of the parties to amend 

this Agreement as provided in Section 16, 

this Trust shall be irrevocable and shall 

continue until terminated at the written 

agreement of the Grantor, the Trustee, and 

the EPA Regional Administrator, or by the 

Trustee and the EPA Regional Administrator, 

if the Grantor ceases to exist. Upon 

termination of the Trust, all remaining trust 

property, less final trust administration 

expenses, shall be delivered to the Grantor. 

Section 17. Immunity and Indemnification. 

The Trustee shall not incur personal liability 

of any nature in connection with any act or 

omission, made in good faith, in the 

administration of this Trust, or in carrying 

out any directions by the Grantor or the EPA 

Regional Administrator issued in accordance 

with this Agreement. The Trustee shall be 

indemnified and saved harmless by the 

Grantor or from the Trust Fund, or both, from 

and against any personal liability to which 

the Trustee may be subjected by reason of 

any act or conduct in its official capacity, 

including all expenses reasonably incurred in 

its defense in the event the Grantor fails to 

provide such defense. 

Section 18. Choice of Law. This Agreement 

shall be administered, construed, and 

enforced according to the laws of the State 

of [insert name of State]. 

Section 19. Interpretation. As used in this 

Agreement, words in the singular include the 

plural and words in the plural include the 

singular. The descriptive headings for each 

Section of this Agreement shall not affect the 

interpretation or the legal efficacy of this 

Agreement. 

In Witness Whereof the parties have 

caused this Agreement to be executed by 

their respective officers duly authorized and 

their corporate seals to be hereunto affixed 

and attested as of the date first above written: 

The parties below certify that the wording of 

this Agreement is identical to the wording 

specified in 40 CFR 261.151(a)(1) as such 

regulations were constituted on the date first 

above written. 

[Signature of Grantor] 

[Title] 

Attest: 

[Title] 

[Seal] 

[Signature of Trustee] 

Attest: 

[Title] 

[Seal] 

(2) The following is an example of the 

certification of acknowledgment which must 

accompany the trust agreement for a trust 

fund as specified in § 261.143(a) of this 

chapter. State requirements may differ on the 

proper content of this acknowledgment. 

State of lllllllllllllllll

County of llllllllllllllll

On this [date], before me personally came 

[owner or operator] to me known, who, being 

by me duly sworn, did depose and say that 

she/he resides at [address], that she/he is 

[title] of [corporation], the corporation 

described in and which executed the above 

instrument; that she/he knows the seal of 

said corporation; that the seal affixed to such 

instrument is such corporate seal; that it was 

so affixed by order of the Board of Directors 

of said corporation, and that she/he signed 

her/his name thereto by like order. 

[Signature of Notary Public] 

(b) A surety bond guaranteeing payment 

into a trust fund, as specified in § 261.143(b) 

of this chapter, must be worded as follows, 

except that instructions in brackets are to be 

replaced with the relevant information and 

the brackets deleted: 


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Financial Guarantee Bond 

Date bond executed: 

Effective date: 

Principal: [legal name and business address 

of owner or operator] 

Type of Organization: [insert ‘‘individual,’’ 

‘‘joint venture,’’ ‘‘partnership,’’ or 

‘‘corporation’’] 

State of incorporation: llllllllll

Surety(ies): [name(s) and business 

address(es)] 

EPA Identification Number, name, address 

and amount(s) for each facility guaranteed by 

this bond: llllllllllllllll

Total penal sum of bond: $ llllllll

Surety’s bond number: llllllllll

Know All Persons By These Presents, That 

we, the Principal and Surety(ies) are firmly 

bound to the U.S. EPA in the event that the 

hazardous secondary materials at the 

reclamation or intermediate facility listed 

below no longer meet the conditions of the 

exclusion under 40 CFR 261.4(a)(24), in the 

above penal sum for the payment of which 

we bind ourselves, our heirs, executors, 

administrators, successors, and assigns 

jointly and severally; provided that, where 

the Surety(ies) are corporations acting as cosureties, we, the Sureties, bind ourselves in 

such sum ‘‘jointly and severally’’ only for the 

purpose of allowing a joint action or actions 

against any or all of us, and for all other 

purposes each Surety binds itself, jointly and 

severally with the Principal, for the payment 

of such sum only as is set forth opposite the 

name of such Surety, but if no limit of 

liability is indicated, the limit of liability 

shall be the full amount of the penal sum. 

Whereas said Principal is required, under 

the Resource Conservation and Recovery Act 

as amended (RCRA), to have a permit or 

interim status in order to own or operate each 

facility identified above, or to meet 

conditions under 40 CFR sections 

261.4(a)(24), and 

Whereas said Principal is required to 

provide financial assurance as a condition of 

permit or interim status or as a condition of 

an exclusion under 40 CFR sections 

261.4(a)(24) and 

Whereas said Principal shall establish a 

standby trust fund as is required when a 

surety bond is used to provide such financial 

assurance; 

Now, Therefore, the conditions of the 

obligation are such that if the Principal shall 

faithfully, before the beginning of final 

closure of each facility identified above, fund 

the standby trust fund in the amount(s) 

identified above for the facility, 

Or, if the Principal shall satisfy all the 

conditions established for exclusion of 

hazardous secondary materials from coverage 

as solid waste under 40 CFR sections 

261.4(a)(24), 

Or, if the Principal shall fund the standby 

trust fund in such amount(s) within 15 days 

after a final order to begin closure is issued 

by an EPA Regional Administrator or a U.S. 

district court or other court of competent 

jurisdiction, 

Or, if the Principal shall provide alternate 

financial assurance, as specified in subpart H 

of 40 CFR part 261, as applicable, and obtain 

the EPA Regional Administrator’s written 

approval of such assurance, within 90 days 

after the date notice of cancellation is 

received by both the Principal and the EPA 

Regional Administrator(s) from the 

Surety(ies), then this obligation shall be null 

and void; otherwise it is to remain in full 

force and effect. 

The Surety(ies) shall become liable on this 

bond obligation only when the Principal has 

failed to fulfill the conditions described 

above. Upon notification by an EPA Regional 

Administrator that the Principal has failed to 

perform as guaranteed by this bond, the 

Surety(ies) shall place funds in the amount 

guaranteed for the facility(ies) into the 

standby trust fund as directed by the EPA 

Regional Administrator. 

The liability of the Surety(ies) shall not be 

discharged by any payment or succession of 

payments hereunder, unless and until such 

payment or payments shall amount in the 

aggregate to the penal sum of the bond, but 

in no event shall the obligation of the 

Surety(ies) hereunder exceed the amount of 

said penal sum. 

The Surety(ies) may cancel the bond by 

sending notice of cancellation by certified 

mail to the Principal and to the EPA Regional 

Administrator(s) for the Region(s) in which 

the facility(ies) is (are) located, provided, 

however, that cancellation shall not occur 

during the 120 days beginning on the date of 

receipt of the notice of cancellation by both 

the Principal and the EPA Regional 

Administrator(s), as evidenced by the return 

receipts. 

The Principal may terminate this bond by 

sending written notice to the Surety(ies), 

provided, however, that no such notice shall 

become effective until the Surety(ies) 

receive(s) written authorization for 

termination of the bond by the EPA Regional 

Administrator(s) of the EPA Region(s) in 

which the bonded facility(ies) is (are) 

located. 

[The following paragraph is an optional 

rider that may be included but is not 

required.] 

Principal and Surety(ies) hereby agree to 

adjust the penal sum of the bond yearly so 

that it guarantees a new amount, provided 

that the penal sum does not increase by more 

than 20 percent in any one year, and no 

decrease in the penal sum takes place 

without the written permission of the EPA 

Regional Administrator(s). 

In Witness Whereof, the Principal and 

Surety(ies) have executed this Financial 

Guarantee Bond and have affixed their seals 

on the date set forth above. 

The persons whose signatures appear 

below hereby certify that they are authorized 

to execute this surety bond on behalf of the 

Principal and Surety(ies) and that the 

wording of this surety bond is identical to the 

wording specified in 40 CFR 261.151(b) as 

such regulations were constituted on the date 

this bond was executed. 

Principal 

[Signature(s)] 

lllllllllllllllllllll

[Name(s)] 

lllllllllllllllllllll

[Title(s)] 

lllllllllllllllllllll

[Corporate seal] lllllllllllll

Corporate Surety(ies) 

[Name and address] 

State of incorporation: llllllllll

Liability limit: 

$ llllllllllllllllllll

[Signature(s)] 

[Name(s) and title(s)] 

[Corporate seal] 

[For every co-surety, provide signature(s), 

corporate seal, and other information in the 

same manner as for Surety above.] 

Bond premium: $ llllllllllll

(c) A letter of credit, as specified in 

§ 261.143(c) of this chapter, must be worded 

as follows, except that instructions in 

brackets are to be replaced with the relevant 

information and the brackets deleted: 

Irrevocable Standby Letter of Credit 

Regional Administrator(s) 

Region(s) llllllllllllllll

U.S. Environmental Protection Agency 

Dear Sir or Madam: We hereby establish 

our Irrevocable Standby Letter of Credit 

No.llll in your favor, in the event that 

the hazardous secondary materials at the 

covered reclamation or intermediary 

facility(ies) no longer meet the conditions of 

the exclusion under 40 CFR 261.4(a)(24), at 

the request and for the account of [owner’s 

or operator’s name and address] up to the 

aggregate amount of [in words] U.S. dollars 

$llll, available upon presentation of 

(1) your sight draft, bearing reference to 

this letter of credit No.ll, and 

(2) your signed statement reading as 

follows: ‘‘I certify that the amount of the draft 

is payable pursuant to regulations issued 

under authority of the Resource Conservation 

and Recovery Act of 1976 as amended.’’ 

This letter of credit is effective as of [date] 

and shall expire on [date at least 1 year later], 

but such expiration date shall be 

automatically extended for a period of [at 

least 1 year] on [date] and on each successive 

expiration date, unless, at least 120 days 

before the current expiration date, we notify 

both you and [owner’s or operator’s name] by 

certified mail that we have decided not to 

extend this letter of credit beyond the current 

expiration date. In the event you are so 

notified, any unused portion of the credit 

shall be available upon presentation of your 

sight draft for 120 days after the date of 

receipt by both you and [owner’s or 

operator’s name], as shown on the signed 

return receipts. 

Whenever this letter of credit is drawn on 

under and in compliance with the terms of 

this credit, we shall duly honor such draft 

upon presentation to us, and we shall deposit 

the amount of the draft directly into the 

standby trust fund of [owner’s or operator’s 

name] in accordance with your instructions. 

We certify that the wording of this letter of 

credit is identical to the wording specified in 

40 CFR 261.151(c) as such regulations were 

constituted on the date shown immediately 

below. 

[Signature(s) and title(s) of official(s) of 

issuing institution] [Date] 

This credit is subject to [insert ‘‘the most 

recent edition of the Uniform Customs and 

Practice for Documentary Credits, published 


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and copyrighted by the International 

Chamber of Commerce,’’ or ‘‘the Uniform 

Commercial Code’’]. 

(d) A certificate of insurance, as specified 

in § 261.143(e) of this chapter, must be 

worded as follows, except that instructions in 

brackets are to be replaced with the relevant 

information and the brackets deleted: 

Certificate of Insurance 

Name and Address of Insurer (herein called 

the ‘‘Insurer’’): 

lllllllllllllllllllll

Name and Address of Insured (herein called 

the ‘‘Insured’’): 

lllllllllllllllllllll

Facilities Covered: [List for each facility: 

The EPA Identification Number (if any 

issued), name, address, and the amount of 

insurance for all facilities covered, which 

must total the face amount shown below. 

Face Amount: 

lllllllllllllllllllll

Policy Number: lllllllllllll

Effective Date: 

lllllllllllllllllllll

The Insurer hereby certifies that it has 

issued to the Insured the policy of insurance 

identified above to provide financial 

assurance so that in accordance with 

applicable regulations all hazardous 

secondary materials can be removed from the 

facility or any unit at the facility and the 

facility or any unit at the facility can be 

decontaminated at the facilities identified 

above. The Insurer further warrants that such 

policy conforms in all respects with the 

requirements of 40 CFR 261.143(d) as 

applicable and as such regulations were 

constituted on the date shown immediately 

below. It is agreed that any provision of the 

policy inconsistent with such regulations is 

hereby amended to eliminate such 

inconsistency. 

Whenever requested by the EPA Regional 

Administrator(s) of the U.S. Environmental 

Protection Agency, the Insurer agrees to 

furnish to the EPA Regional Administrator(s) 

a duplicate original of the policy listed 

above, including all endorsements thereon. 

I hereby certify that the wording of this 

certificate is identical to the wording 

specified in 40 CFR 261.151(d) such 

regulations were constituted on the date 

shown immediately below. 

[Authorized signature for Insurer] 

[Name of person signing] 

[Title of person signing] 

Signature of witness or notary: llllll

[Date] 

(e) A letter from the chief financial officer, 

as specified in § 261.143(e) of this chapter, 

must be worded as follows, except that 

instructions in brackets are to be replaced 

with the relevant information and the 

brackets deleted: 

Letter From Chief Financial Officer 

[Address to Regional Administrator of 

every Region in which facilities for which 

financial responsibility is to be demonstrated 

through the financial test are located]. 

I am the chief financial officer of [name 

and address of firm]. This letter is in support 

of this firm’s use of the financial test to 

demonstrate financial assurance, as specified 

in subpart H of 40 CFR part 261. 

[Fill out the following nine paragraphs 

regarding facilities and associated cost 

estimates. If your firm has no facilities that 

belong in a particular paragraph, write 

‘‘None’’ in the space indicated. For each 

facility, include its EPA Identification 

Number (if any issued), name, address, and 

current cost estimates.] 

1. This firm is the owner or operator of the 

following facilities for which financial 

assurance is demonstrated through the 

financial test specified in subpart H of 40 

CFR 261. The current cost estimates covered 

by the test are shown for each facility: 

llll. 

2. This firm guarantees, through the 

guarantee specified in subpart H of 40 CFR 

part 261, the following facilities owned or 

operated by the guaranteed party. The 

current cost estimates so guaranteed are 

shown for each facility: llll. The firm 

identified above is [insert one or more: (1) 

The direct or higher-tier parent corporation 

of the owner or operator; (2) owned by the 

same parent corporation as the parent 

corporation of the owner or operator, and 

receiving the following value in 

consideration of this guaranteellll, or 

(3) engaged in the following substantial 

business relationship with the owner or 

operator llll, and receiving the 

following value in consideration of this 

guaranteellll]. [Attach a written 

description of the business relationship or a 

copy of the contract establishing such 

relationship to this letter]. 

3. In States where EPA is not administering 

the financial requirements of subpart H of 40 

CFR part 261, this firm, as owner or operator 

or guarantor, is demonstrating financial 

assurance for the following facilities through 

the use of a test equivalent or substantially 

equivalent to the financial test specified in 

subpart H of 40 CFR part 261. The current 

cost estimates covered by such a test are 

shown for each facility:llll. 

4. This firm is the owner or operator of the 

following hazardous secondary materials 

management facilities for which financial 

assurance is not demonstrated either to EPA 

or a State through the financial test or any 

other financial assurance mechanism 

specified in subpart H of 40 CFR part 261 or 

equivalent or substantially equivalent State 

mechanisms. The current cost estimates not 

covered by such financial assurance are 

shown for each facility:llll. 

5. This firm is the owner or operator of the 

following UIC facilities for which financial 

assurance for plugging and abandonment is 

required under part 144. The current closure 

cost estimates as required by 40 CFR 144.62 

are shown for each facility:llll. 

6. This firm is the owner or operator of the 

following facilities for which financial 

assurance for closure or post-closure care is 

demonstrated through the financial test 

specified in subpart H of 40 CFR parts 264 

and 265. The current closure and/or postclosure cost estimates covered by the test are 

shown for each facility: llll . 

7. This firm guarantees, through the 

guarantee specified in subpart H of 40 CFR 

parts 264 and 265, the closure or post-closure 

care of the following facilities owned or 

operated by the guaranteed party. The 

current cost estimates for the closure or postclosure care so guaranteed are shown for 

each facility: llll. The firm identified 

above is [insert one or more: (1) The direct 

or higher-tier parent corporation of the owner 

or operator; (2) owned by the same parent 

corporation as the parent corporation of the 

owner or operator, and receiving the 

following value in consideration of this 

guarantee lll; or (3) engaged in the 

following substantial business relationship 

with the owner or operator ll, and 

receiving the following value in 

consideration of this guarantee ll]. [Attach 

a written description of the business 

relationship or a copy of the contract 

establishing such relationship to this letter]. 

8. In States where EPA is not administering 

the financial requirements of subpart H of 40 

CFR part 264 or 265, this firm, as owner or 

operator or guarantor, is demonstrating 

financial assurance for the closure or postclosure care of the following facilities 

through the use of a test equivalent or 

substantially equivalent to the financial test 

specified in subpart H of 40 CFR parts 264 

and 265. The current closure and/or postclosure cost estimates covered by such a test 

are shown for each facility: ll. 

9. This firm is the owner or operator of the 

following hazardous waste management 

facilities for which financial assurance for 

closure or, if a disposal facility, post-closure 

care, is not demonstrated either to EPA or a 

State through the financial test or any other 

financial assurance mechanism specified in 

subpart H of 40 CFR parts 264 and 265 or 

equivalent or substantially equivalent State 

mechanisms. The current closure and/or 

post-closure cost estimates not covered by 

such financial assurance are shown for each 

facility: ll. 

This firm [insert ‘‘is required’’ or ‘‘is not 

required’’] to file a Form 10K with the 

Securities and Exchange Commission (SEC) 

for the latest fiscal year. 

The fiscal year of this firm ends on [month, 

day]. The figures for the following items 

marked with an asterisk are derived from this 

firm’s independently audited, year-end 

financial statements for the latest completed 

fiscal year, ended [date]. 

[Fill in Alternative I if the criteria of 

paragraph (e)(1)(i) of § 261.143 of this chapter 

are used. Fill in Alternative II if the criteria 

of paragraph (e)(1)(ii) of § 261.143(e) of this 

chapter are used.] 

Alternative I 

1. Sum of current cost estimates [total of 

all cost estimates shown in the nine 

paragraphs above] $ll 

*2. Total liabilities [if any portion of the 

cost estimates is included in total liabilities, 

you may deduct the amount of that portion 

from this line and add that amount to lines 

3 and 4] $ll 

*3. Tangible net worth $llll 

*4. Net worth $llll- 

*5. Current assets $llll 

*6. Current liabilities $llll 


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7. Net working capital [line 5 minus line 

6] $llll 

*8. The sum of net income plus 

depreciation, depletion, and amortization 

$llll- 

*9. Total assets in U.S. (required only if 

less than 90% of firm’s assets are located in 

the U.S.) $llll10. Is line 3 at least $10 million? (Yes/No) 

llll 

11. Is line 3 at least 6 times line 1? (Yes/ 

No) llll12. Is line 7 at least 6 times line 1? (Yes/ 

No) llll- 

*13. Are at least 90% of firm’s assets 

located in the U.S.? If not, complete line 14 

(Yes/No) llll 

14. Is line 9 at least 6 times line 1? (Yes/ 

No) llll15. Is line 2 divided by line 4 less than 2.0? 

(Yes/No) llll16. Is line 8 divided by line 2 greater than 

0.1? (Yes/No) llll17. Is line 5 divided by line 6 greater than 

1.5? (Yes/No) llllAlternative II 

1. Sum of current cost estimates [total of 

all cost estimates shown in the eight 

paragraphs above] $llll2. Current bond rating of most recent 

issuance of this firm and name of rating 

service llll3. Date of issuance of bond llll4. Date of maturity of bond llll- 

*5. Tangible net worth [if any portion of 

the cost estimates is included in ‘‘total 

liabilities’’ on your firm’s financial 

statements, you may add the amount of that 

portion to this line] $llll- 

*6. Total assets in U.S. (required only if 

less than 90% of firm’s assets are located in 

the U.S.) $llll7. Is line 5 at least $10 million? (Yes/No) 

llll 

8. Is line 5 at least 6 times line 1? (Yes/ 

No) llll 

*9. Are at least 90% of firm’s assets located 

in the U.S.? If not, complete line 10 (Yes/No) 

____ 

10. Is line 6 at least 6 times line 1? (Yes/ 

No) llllI hereby certify that the wording of this 

letter is identical to the wording specified in 

40 CFR 261.151(e) as such regulations were 

constituted on the date shown immediately 

below. 

[Signature] lllllllllllllll

[Name] lllllllllllllllll

[Title] lllllllllllllllll

[Date] 

lllllllllllllllllllll

(f) A letter from the chief financial officer, 

as specified in Sec. 261.147(f) of this chapter, 

must be worded as follows, except that 

instructions in brackets are to be replaced 

with the relevant information and the 

brackets deleted. 

Letter From Chief Financial Officer 

[Address to Regional Administrator of 

every Region in which facilities for which 

financial responsibility is to be demonstrated 

through the financial test are located]. 

I am the chief financial officer of [firm’s 

name and address]. This letter is in support 

of the use of the financial test to demonstrate 

financial responsibility for liability coverage 

under § 261.147[insert ‘‘and costs assured 

§ 261.143(e)’’ if applicable] as specified in 

subpart H of 40 CFR part 261. 

[Fill out the following paragraphs 

regarding facilities and liability coverage. If 

there are no facilities that belong in a 

particular paragraph, write ‘‘None’’ in the 

space indicated. For each facility, include its 

EPA Identification Number (if any issued), 

name, and address]. 

The firm identified above is the owner or 

operator of the following facilities for which 

liability coverage for [insert ‘‘sudden’’ or 

‘‘nonsudden’’ or ‘‘both sudden and 

nonsudden’’] accidental occurrences is being 

demonstrated through the financial test 

specified in subpart H of 40 CFR part 

261:llll 

The firm identified above guarantees, 

through the guarantee specified in subpart H 

of 40 CFR part 261, liability coverage for 

[insert ‘‘sudden’’ or ‘‘nonsudden’’ or ‘‘both 

sudden and nonsudden’’] accidental 

occurrences at the following facilities owned 

or operated by the following: llll-. The 

firm identified above is [insert one or more: 

(1) The direct or higher-tier parent 

corporation of the owner or operator; (2) 

owned by the same parent corporation as the 

parent corporation of the owner or operator, 

and receiving the following value in 

consideration of this guarantee -llll; or 

(3) engaged in the following substantial 

business relationship with the owner or 

operator llll-, and receiving the 

following value in consideration of this 

guarantee llll-]. [Attach a written 

description of the business relationship or a 

copy of the contract establishing such 

relationship to this letter.] 

The firm identified above is the owner or 

operator of the following facilities for which 

liability coverage for [insert ‘‘sudden’’ or 

‘‘nonsudden’’ or ‘‘both sudden and 

nonsudden’’] accidental occurrences is being 

demonstrated through the financial test 

specified in subpart H of 40 CFR parts 264 

and 265:llll 

The firm identified above guarantees, 

through the guarantee specified in subpart H 

of 40 CFR parts 264 and 265, liability 

coverage for [insert ‘‘sudden’’ or 

‘‘nonsudden’’ or ‘‘both sudden and 

nonsudden’’] accidental occurrences at the 

following facilities owned or operated by the 

following: ll. The firm identified above is 

[insert one or more: (1) The direct or highertier parent corporation of the owner or 

operator; (2) owned by the same parent 

corporation as the parent corporation of the 

owner or operator, and receiving the 

following value in consideration of this 

guarantee ll; or (3) engaged in the 

following substantial business relationship 

with the owner or operator ll, and 

receiving the following value in 

consideration of this guarantee ll]. [Attach 

a written description of the business 

relationship or a copy of the contract 

establishing such relationship to this letter.] 

[If you are using the financial test to 

demonstrate coverage of both liability and 

costs assured under § 261.143(e) or closure or 

post-closure care costs under 40 CFR 

264.143, 264.145, 265.143 or 265.145, fill in 

the following nine paragraphs regarding 

facilities and associated cost estimates. If 

there are no facilities that belong in a 

particular paragraph, write ‘‘None’’ in the 

space indicated. For each facility, include its 

EPA identification number (if any issued), 

name, address, and current cost estimates.] 

1. This firm is the owner or operator of the 

following facilities for which financial 

assurance is demonstrated through the 

financial test specified in subpart H of 40 

CFR 261. The current cost estimates covered 

by the test are shown for each 

facility:llll. 

2. This firm guarantees, through the 

guarantee specified in subpart H of 40 CFR 

part 261, the following facilities owned or 

operated by the guaranteed party. The 

current cost estimates so guaranteed are 

shown for each facility:llll. The firm 

identified above is [insert one or more: (1) 

The direct or higher-tier parent corporation 

of the owner or operator; (2) owned by the 

same parent corporation as the parent 

corporation of the owner or operator, and 

receiving the following value in 

consideration of this guaranteellll, or 

(3) engaged in the following substantial 

business relationship with the owner or 

operator llll, and receiving the 

following value in consideration of this 

guaranteellll]. [Attach a written 

description of the business relationship or a 

copy of the contract establishing such 

relationship to this letter]. 

3. In States where EPA is not administering 

the financial requirements of subpart H of 40 

CFR part 261, this firm, as owner or operator 

or guarantor, is demonstrating financial 

assurance for the following facilities through 

the use of a test equivalent or substantially 

equivalent to the financial test specified in 

subpart H of 40 CFR part 261. The current 

cost estimates covered by such a test are 

shown for each facility:llll. 

4. This firm is the owner or operator of the 

following hazardous secondary materials 

management facilities for which financial 

assurance is not demonstrated either to EPA 

or a State through the financial test or any 

other financial assurance mechanism 

specified in subpart H of 40 CFR part 261 or 

equivalent or substantially equivalent State 

mechanisms. The current cost estimates not 

covered by such financial assurance are 

shown for each facility:llll. 

5. This firm is the owner or operator of the 

following UIC facilities for which financial 

assurance for plugging and abandonment is 

required under part 144. The current closure 

cost estimates as required by 40 CFR 144.62 

are shown for each facility:llll. 

6. This firm is the owner or operator of the 

following facilities for which financial 

assurance for closure or post-closure care is 

demonstrated through the financial test 

specified in subpart H of 40 CFR parts 264 

and 265. The current closure and/or postclosure cost estimates covered by the test are 

shown for each facility: llll. 

7. This firm guarantees, through the 

guarantee specified in subpart H of 40 CFR 

parts 264 and 265, the closure or post-closure 

care of the following facilities owned or 

operated by the guaranteed party. The 


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current cost estimates for the closure or postclosure care so guaranteed are shown for 

each facility: llll. The firm identified 

above is [insert one or more: (1) The direct 

or higher-tier parent corporation of the owner 

or operator; (2) owned by the same parent 

corporation as the parent corporation of the 

owner or operator, and receiving the 

following value in consideration of this 

guarantee llll; or (3) engaged in the 

following substantial business relationship 

with the owner or operator llll, and 

receiving the following value in 

consideration of this guarantee llll]. 

[Attach a written description of the 

business relationship or a copy of the 

contract establishing such relationship to this 

letter]. 

8. In States where EPA is not administering 

the financial requirements of subpart H of 40 

CFR part 264 or 265, this firm, as owner or 

operator or guarantor, is demonstrating 

financial assurance for the closure or postclosure care of the following facilities 

through the use of a test equivalent or 

substantially equivalent to the financial test 

specified in subpart H of 40 CFR parts 264 

and 265. The current closure and/or postclosure cost estimates covered by such a test 

are shown for each facility: llll. 

9. This firm is the owner or operator of the 

following hazardous waste management 

facilities for which financial assurance for 

closure or, if a disposal facility, post-closure 

care, is not demonstrated either to EPA or a 

State through the financial test or any other 

financial assurance mechanism specified in 

subpart H of 40 CFR parts 264 and 265 or 

equivalent or substantially equivalent State 

mechanisms. The current closure and/or 

post-closure cost estimates not covered by 

such financial assurance are shown for each 

facility: llll. 

This firm [insert ‘‘is required’’ or ‘‘is not 

required’’] to file a Form 10K with the 

Securities and Exchange Commission (SEC) 

for the latest fiscal year. 

The fiscal year of this firm ends on [month, 

day]. The figures for the following items 

marked with an asterisk are derived from this 

firm’s independently audited, year-end 

financial statements for the latest completed 

fiscal year, ended [date]. 

Part A. Liability Coverage for Accidental 

Occurrences 

[Fill in Alternative I if the criteria of 

paragraph (f)(1)(i) of Sec. 261.147 are used. 

Fill in Alternative II if the criteria of 

paragraph (f)(1)(ii) of Sec. 261.147 are used.] 

Alternative I 

1. Amount of annual aggregate liability 

coverage to be demonstrated $llll-. 

*2. Current assets $llll-. 

*3. Current liabilities $llll-. 

4. Net working capital (line 2 minus line 

3) $llll-. 

*5. Tangible net worth $llll-. 

*6. If less than 90% of assets are located 

in the U.S., give total U.S. assets $lllll 

. 

7. Is line 5 at least $10 million? (Yes/No) 

llll-. 

8. Is line 4 at least 6 times line 1? (Yes/ 

No) llll-. 

9. Is line 5 at least 6 times line 1? (Yes/ 

No) llll-. 

*10. Are at least 90% of assets located in 

the U.S.? (Yes/No) llll. If not, complete 

line 11. 

11. Is line 6 at least 6 times line 1? (Yes/ 

No) llll. 

Alternative II 

1. Amount of annual aggregate liability 

coverage to be demonstrated $llll-. 

2. Current bond rating of most recent 

issuance and name of rating service lllll 

llll-. 

3. Date of issuance of bond 

llllllll—. 

4. Date of maturity of bond 

llllllll—. 

*5. Tangible net worth $llll-. 

*6. Total assets in U.S. (required only if 

less than 90% of assets are located in the 

U.S.) $llll-. 

7. Is line 5 at least $10 million? (Yes/No) 

llll-. 

8. Is line 5 at least 6 times line 1? lllll 

. 

9. Are at least 90% of assets located in the 

U.S.? If not, complete line 10. (Yes/No) ——. 

10. Is line 6 at least 6 times line 1? 

llll-. 

[Fill in part B if you are using the financial 

test to demonstrate assurance of both liability 

coverage and costs assured under 

§ 261.143(e) or closure or post-closure care 

costs under 40 CFR 264.143, 264.145, 

265.143 or 265.145.] 

Part B. Facility Care and Liability Coverage 

[Fill in Alternative I if the criteria of 

paragraphs (e)(1)(i) of Sec. 261.143 and 

(f)(1)(i) of Sec. 261.147 are used. Fill in 

Alternative II if the criteria of paragraphs 

(e)(1)(ii) of Sec. 261.143 and (f)(1)(ii) of Sec. 

261.147 are used.] 

Alternative I 

1. Sum of current cost estimates (total of 

all cost estimates listed above) $llll2. Amount of annual aggregate liability 

coverage to be demonstrated $llll3. Sum of lines 1 and 2 $llll 

*4. Total liabilities (if any portion of your 

cost estimates is included in your total 

liabilities, you may deduct that portion from 

this line and add that amount to lines 5 and 

6) $llll- 

*5. Tangible net worth $llll 

*6. Net worth $llll- 

*7. Current assets $llll 

*8. Current liabilities $llll 

9. Net working capital (line 7 minus line 

8) $llll 

*10. The sum of net income plus 

depreciation, depletion, and amortization 

$llll- 

*11. Total assets in U.S. (required only if 

less than 90% of assets are located in the 

U.S.) $llll 

12. Is line 5 at least $10 million? (Yes/No) 

13. Is line 5 at least 6 times line 3? (Yes/ 

No) 

14. Is line 9 at least 6 times line 3? (Yes/ 

No) 

*15. Are at least 90% of assets located in 

the U.S.? (Yes/No) If not, complete line 16. 

16. Is line 11 at least 6 times line 3? (Yes/ 

No) 

17. Is line 4 divided by line 6 less than 2.0? 

(Yes/No) 

18. Is line 10 divided by line 4 greater than 

0.1? (Yes/No) 

19. Is line 7 divided by line 8 greater than 

1.5? (Yes/No) 

Alternative II 

1. Sum of current cost estimates (total of 

all cost estimates listed above) $____- 

2. Amount of annual aggregate liability 

coverage to be demonstrated $____- 

3. Sum of lines 1 and 2 $____ 

4. Current bond rating of most recent 

issuance and name of rating service ______- 

5. Date of issuance of bond ______— 

6. Date of maturity of bond ______— 

*7. Tangible net worth (if any portion of 

the cost estimates is included in ‘‘total 

liabilities’’ on your financial statements you 

may add that portion to this line) $____- 

*8. Total assets in the U.S. (required only 

if less than 90% of assets are located in the 

U.S.) $____- 

9. Is line 7 at least $10 million? (Yes/No) 

10. Is line 7 at least 6 times line 3? (Yes/ 

No) 

*11. Are at least 90% of assets located in 

the U.S.? (Yes/No) If not complete line 12. 

12. Is line 8 at least 6 times line 3? (Yes/ 

No) 

I hereby certify that the wording of this 

letter is identical to the wording specified in 

40 CFR 261.151(f) as such regulations were 

constituted on the date shown immediately 

below. 

[Signature] lllllllllllllll

[Name] lllllllllllllllll

[Title] lllllllllllllllll

[Date] llllllllllllllllll

(g)(1) A corporate guarantee, as specified in 

§ 261.143(e) of this chapter, must be worded 

as follows, except that instructions in 

brackets are to be replaced with the relevant 

information and the brackets deleted: 

Corporate Guarantee for Facility Care 

Guarantee made this [date] by [name of 

guaranteeing entity], a business corporation 

organized under the laws of the State of 

[insert name of State], herein referred to as 

guarantor. This guarantee is made on behalf 

of the [owner or operator] of [business 

address], which is [one of the following: ‘‘our 

subsidiary’’; ‘‘a subsidiary of [name and 

address of common parent corporation], of 

which guarantor is a subsidiary’’; or ‘‘an 

entity with which guarantor has a substantial 

business relationship, as defined in 40 CFR 

264.141(h) and 265.141(h)’’ to the United 

States Environmental Protection Agency 

(EPA). 

Recitals 

1. Guarantor meets or exceeds the financial 

test criteria and agrees to comply with the 

reporting requirements for guarantors as 

specified in 40 CFR 261.143(e). 

2. [Owner or operator] owns or operates the 

following facility(ies) covered by this 

guarantee: [List for each facility: EPA 

Identification Number (if any issued), name, 

and address. 

3. ‘‘Closure plans’’ as used below refer to 

the plans maintained as required by subpart 

H of 40 CFR part 261 for the care of facilities 

as identified above. 


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4. For value received from [owner or 

operator], guarantor guarantees that in the 

event of a determination by the Regional 

Administrator that the hazardous secondary 

materials at the owner or operator’s facility 

covered by this guarantee do not meet the 

conditions of the exclusion under 

§ 261.4(a)(24), the guarantor will dispose of 

any hazardous secondary material as 

hazardous waste, and close the facility in 

accordance with closure requirements found 

in parts 264 or 265 of this chapter, as 

applicable, or establish a trust fund as 

specified in § 261.143(a) in the name of the 

owner or operator in the amount of the 

current cost estimate. 

5. Guarantor agrees that if, at the end of 

any fiscal year before termination of this 

guarantee, the guarantor fails to meet the 

financial test criteria, guarantor shall send 

within 90 days, by certified mail, notice to 

the EPA Regional Administrator(s) for the 

Region(s) in which the facility(ies) is(are) 

located and to [owner or operator] that he 

intends to provide alternate financial 

assurance as specified in subpart H of 40 CFR 

part 261, as applicable, in the name of [owner 

or operator]. Within 120 days after the end 

of such fiscal year, the guarantor shall 

establish such financial assurance unless 

[owner or operator] has done so. 

6. The guarantor agrees to notify the EPA 

Regional Administrator by certified mail, of 

a voluntary or involuntary proceeding under 

Title 11 (Bankruptcy), U.S. Code, naming 

guarantor as debtor, within 10 days after 

commencement of the proceeding. 

7. Guarantor agrees that within 30 days 

after being notified by an EPA Regional 

Administrator of a determination that 

guarantor no longer meets the financial test 

criteria or that he is disallowed from 

continuing as a guarantor, he shall establish 

alternate financial assurance as specified in 

of 40 CFR parts 264, 265, or subpart H of 40 

CFR part 261, as applicable, in the name of 

[owner or operator] unless [owner or 

operator] has done so. 

8. Guarantor agrees to remain bound under 

this guarantee notwithstanding any or all of 

the following: amendment or modification of 

the closure plan, the extension or reduction 

of the time of performance, or any other 

modification or alteration of an obligation of 

the owner or operator pursuant to 40 CFR 

parts 264, 265, or Subpart H of 40 CFR part 

261. 

9. Guarantor agrees to remain bound under 

this guarantee for as long as [owner or 

operator] must comply with the applicable 

financial assurance requirements of 40 CFR 

parts 264 and 265 or the financial assurance 

condition of 40 CFR 261.4(a)(24)(vi)(F) for 

the above-listed facilities, except as provided 

in paragraph 10 of this agreement. 

10. [Insert the following language if the 

guarantor is (a) a direct or higher-tier 

corporate parent, or (b) a firm whose parent 

corporation is also the parent corporation of 

the owner or operator]: 

Guarantor may terminate this guarantee by 

sending notice by certified mail to the EPA 

Regional Administrator(s) for the Region(s) in 

which the facility(ies) is(are) located and to 

[owner or operator], provided that this 

guarantee may not be terminated unless and 

until [the owner or operator] obtains, and the 

EPA Regional Administrator(s) approve(s), 

alternate coverage complying with 40 CFR 

261.143. 

[Insert the following language if the 

guarantor is a firm qualifying as a guarantor 

due to its ‘‘substantial business relationship’’ 

with the owner or operator] 

Guarantor may terminate this guarantee 

120 days following the receipt of notification, 

through certified mail, by the EPA Regional 

Administrator(s) for the Region(s) in which 

the facility(ies) is(are) located and by [the 

owner or operator]. 

11. Guarantor agrees that if [owner or 

operator] fails to provide alternate financial 

assurance as specified in 40 CFR parts 264, 

265, or subpart H of 40 CFR 261, as 

applicable, and obtain written approval of 

such assurance from the EPA Regional 

Administrator(s) within 90 days after a notice 

of cancellation by the guarantor is received 

by an EPA Regional Administrator from 

guarantor, guarantor shall provide such 

alternate financial assurance in the name of 

[owner or operator]. 

12. Guarantor expressly waives notice of 

acceptance of this guarantee by the EPA or 

by [owner or operator]. Guarantor also 

expressly waives notice of amendments or 

modifications of the closure plan and of 

amendments or modifications of the 

applicable requirements of 40 CFR parts 264, 

265, or subpart H of 40 CFR 261. 

I hereby certify that the wording of this 

guarantee is identical to the wording 

specified in 40 CFR 261.151(g)(1) as such 

regulations were constituted on the date first 

above written. 

Effective date: llllllllllllll

[Name of guarantor] lllllllllll

[Authorized signature for guarantor] llll

[Name of person signing] lllllllll

[Title of person signing] lllllllll

Signature of witness or notary: llllll

(2) A guarantee, as specified in Sec. 

261.147(g) of this chapter, must be worded as 

follows, except that instructions in brackets 

are to be replaced with the relevant 

information and the brackets deleted: 

Guarantee for Liability Coverage 

Guarantee made this [date] by [name of 

guaranteeing entity], a business corporation 

organized under the laws of [if incorporated 

within the United States insert ‘‘the State of 

____-’’ and insert name of State; if 

incorporated outside the United States insert 

the name of the country in which 

incorporated, the principal place of business 

within the United States, and the name and 

address of the registered agent in the State of 

the principal place of business], herein 

referred to as guarantor. This guarantee is 

made on behalf of [owner or operator] of 

[business address], which is one of the 

following: ‘‘our subsidiary;’’ ‘‘a subsidiary of 

[name and address of common parent 

corporation], of which guarantor is a 

subsidiary;’’ or ‘‘an entity with which 

guarantor has a substantial business 

relationship, as defined in 40 CFR [either 

264.141(h) or 265.141(h)]’’, to any and all 

third parties who have sustained or may 

sustain bodily injury or property damage 

caused by [sudden and/or nonsudden] 

accidental occurrences arising from operation 

of the facility(ies) covered by this guarantee. 

Recitals 

1. Guarantor meets or exceeds the financial 

test criteria and agrees to comply with the 

reporting requirements for guarantors as 

specified in 40 CFR 261.147(g). 

2. [Owner or operator] owns or operates the 

following facility(ies) covered by this 

guarantee: [List for each facility: EPA 

identification number (if any issued), name, 

and address; and if guarantor is incorporated 

outside the United States list the name and 

address of the guarantor’s registered agent in 

each State.] This corporate guarantee satisfies 

RCRA third-party liability requirements for 

[insert ‘‘sudden’’ or ‘‘nonsudden’’ or ‘‘both 

sudden and nonsudden’’] accidental 

occurrences in above-named owner or 

operator facilities for coverage in the amount 

of [insert dollar amount] for each occurrence 

and [insert dollar amount] annual aggregate. 

3. For value received from [owner or 

operator], guarantor guarantees to any and all 

third parties who have sustained or may 

sustain bodily injury or property damage 

caused by [sudden and/or nonsudden] 

accidental occurrences arising from 

operations of the facility(ies) covered by this 

guarantee that in the event that [owner or 

operator] fails to satisfy a judgment or award 

based on a determination of liability for 

bodily injury or property damage to third 

parties caused by [sudden and/or 

nonsudden] accidental occurrences, arising 

from the operation of the above-named 

facilities, or fails to pay an amount agreed to 

in settlement of a claim arising from or 

alleged to arise from such injury or damage, 

the guarantor will satisfy such judgment(s), 

award(s) or settlement agreement(s) up to the 

limits of coverage identified above. 

4. Such obligation does not apply to any 

of the following: 

(a) Bodily injury or property damage for 

which [insert owner or operator] is obligated 

to pay damages by reason of the assumption 

of liability in a contract or agreement. This 

exclusion does not apply to liability for 

damages that [insert owner or operator] 

would be obligated to pay in the absence of 

the contract or agreement. 

(b) Any obligation of [insert owner or 

operator] under a workers’ compensation, 

disability benefits, or unemployment 

compensation law or any similar law. 

(c) Bodily injury to: 

(1) An employee of [insert owner or 

operator] arising from, and in the course of, 

employment by [insert owner or operator]; or 

(2) The spouse, child, parent, brother, or 

sister of that employee as a consequence of, 

or arising from, and in the course of 

employment by [insert owner or operator]. 

This exclusion applies: 

(A) Whether [insert owner or operator] may 

be liable as an employer or in any other 

capacity; and 

(B) To any obligation to share damages 

with or repay another person who must pay 

damages because of the injury to persons 

identified in paragraphs (1) and (2). 

(d) Bodily injury or property damage 

arising out of the ownership, maintenance, 

use, or entrustment to others of any aircraft, 

motor vehicle or watercraft. 


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(e) Property damage to: 

(1) Any property owned, rented, or 

occupied by [insert owner or operator]; 

(2) Premises that are sold, given away or 

abandoned by [insert owner or operator] if 

the property damage arises out of any part of 

those premises; 

(3) Property loaned to [insert owner or 

operator]; 

(4) Personal property in the care, custody 

or control of [insert owner or operator]; 

(5) That particular part of real property on 

which [insert owner or operator] or any 

contractors or subcontractors working 

directly or indirectly on behalf of [insert 

owner or operator] are performing operations, 

if the property damage arises out of these 

operations. 

5. Guarantor agrees that if, at the end of 

any fiscal year before termination of this 

guarantee, the guarantor fails to meet the 

financial test criteria, guarantor shall send 

within 90 days, by certified mail, notice to 

the EPA Regional Administrator[s] for the 

Region[s] in which the facility[ies] is[are] 

located and to [owner or operator] that he 

intends to provide alternate liability coverage 

as specified in 40 CFR 261.147, as applicable, 

in the name of [owner or operator]. Within 

120 days after the end of such fiscal year, the 

guarantor shall establish such liability 

coverage unless [owner or operator] has done 

so. 

6. The guarantor agrees to notify the EPA 

Regional Administrator by certified mail of a 

voluntary or involuntary proceeding under 

title 11 (Bankruptcy), U.S. Code, naming 

guarantor as debtor, within 10 days after 

commencement of the proceeding. Guarantor 

agrees that within 30 days after being notified 

by an EPA Regional Administrator of a 

determination that guarantor no longer meets 

the financial test criteria or that he is 

disallowed from continuing as a guarantor, 

he shall establish alternate liability coverage 

as specified in 40 CFR 261.147 in the name 

of [owner or operator], unless [owner or 

operator] has done so. 

7. Guarantor reserves the right to modify 

this agreement to take into account 

amendment or modification of the liability 

requirements set by 40 CFR 261.147, 

provided that such modification shall 

become effective only if a Regional 

Administrator does not disapprove the 

modification within 30 days of receipt of 

notification of the modification. 

8. Guarantor agrees to remain bound under 

this guarantee for so long as [owner or 

operator] must comply with the applicable 

requirements of 40 CFR 261.147 for the 

above-listed facility(ies), except as provided 

in paragraph 10 of this agreement. 

9. [Insert the following language if the 

guarantor is (a) a direct or higher-tier 

corporate parent, or (b) a firm whose parent 

corporation is also the parent corporation of 

the owner or operator]: 

10. Guarantor may terminate this guarantee 

by sending notice by certified mail to the 

EPA Regional Administrator(s) for the 

Region(s) in which the facility(ies) is(are) 

located and to [owner or operator], provided 

that this guarantee may not be terminated 

unless and until [the owner or operator] 

obtains, and the EPA Regional 

Administrator(s) approve(s), alternate 

liability coverage complying with 40 CFR 

261.147. 

[Insert the following language if the 

guarantor is a firm qualifying as a guarantor 

due to its ‘‘substantial business relationship’’ 

with the owner or operator]: 

Guarantor may terminate this guarantee 

120 days following receipt of notification, 

through certified mail, by the EPA Regional 

Administrator(s) for the Region(s) in which 

the facility(ies) is(are) located and by [the 

owner or operator]. 

11. Guarantor hereby expressly waives 

notice of acceptance of this guarantee by any 

party. 

12. Guarantor agrees that this guarantee is 

in addition to and does not affect any other 

responsibility or liability of the guarantor 

with respect to the covered facilities. 

13. The Guarantor shall satisfy a thirdparty liability claim only on receipt of one of 

the following documents: 

(a) Certification from the Principal and the 

third-party claimant(s) that the liability claim 

should be paid. The certification must be 

worded as follows, except that instructions in 

brackets are to be replaced with the relevant 

information and the brackets deleted: 

Certification of Valid Claim 

The undersigned, as parties [insert 

Principal] and [insert name and address of 

third-party claimant(s)], hereby certify that 

the claim of bodily injury and/or property 

damage caused by a [sudden or nonsudden] 

accidental occurrence arising from operating 

[Principal’s] facility should be paid in the 

amount of $ . 

[Signatures] lllllllllllllll

Principal llllllllllllllll

(Notary) Date llllllllllllll

[Signatures] lllllllllllllll

Claimant(s) lllllllllllllll

(Notary) Date llllllllllllll

(b) A valid final court order establishing a 

judgment against the Principal for bodily 

injury or property damage caused by sudden 

or nonsudden accidental occurrences arising 

from the operation of the Principal’s facility 

or group of facilities. 

14. In the event of combination of this 

guarantee with another mechanism to meet 

liability requirements, this guarantee will be 

considered [insert ‘‘primary’’ or ‘‘excess’’] 

coverage. 

I hereby certify that the wording of the 

guarantee is identical to the wording 

specified in 40 CFR 261.151(g)(2) as such 

regulations were constituted on the date 

shown immediately below. 

Effective date: llllllllllllll

[Name of guarantor] lllllllllll

[Authorized signature for guarantor] llll

[Name of person signing] lllllllll

[Title of person signing] lllllllll

Signature of witness or notary: llllll

(h) A hazardous waste facility liability 

endorsement as required § 261.147 must be 

worded as follows, except that instructions in 

brackets are to be replaced with the relevant 

information and the brackets deleted: 

Hazardous Secondary Material Reclamation/ 

Intermediate Facility Liability Endorsement 

1. This endorsement certifies that the 

policy to which the endorsement is attached 

provides liability insurance covering bodily 

injury and property damage in connection 

with the insured’s obligation to demonstrate 

financial responsibility under 40 CFR 

261.147. The coverage applies at [list EPA 

Identification Number (if any issued), name, 

and address for each facility] for [insert 

‘‘sudden accidental occurrences,’’ 

‘‘nonsudden accidental occurrences,’’ or 

‘‘sudden and nonsudden accidental 

occurrences’’; if coverage is for multiple 

facilities and the coverage is different for 

different facilities, indicate which facilities 

are insured for sudden accidental 

occurrences, which are insured for 

nonsudden accidental occurrences, and 

which are insured for both]. The limits of 

liability are [insert the dollar amount of the 

‘‘each occurrence’’ and ‘‘annual aggregate’’ 

limits of the Insurer’s liability], exclusive of 

legal defense costs. 

2. The insurance afforded with respect to 

such occurrences is subject to all of the terms 

and conditions of the policy; provided, 

however, that any provisions of the policy 

inconsistent with subsections (a) through (e) 

of this Paragraph 2 are hereby amended to 

conform with subsections (a) through (e): 

(a) Bankruptcy or insolvency of the insured 

shall not relieve the Insurer of its obligations 

under the policy to which this endorsement 

is attached. 

(b) The Insurer is liable for the payment of 

amounts within any deductible applicable to 

the policy, with a right of reimbursement by 

the insured for any such payment made by 

the Insurer. This provision does not apply 

with respect to that amount of any deductible 

for which coverage is demonstrated as 

specified in 40 CFR 261.147(f). 

(c) Whenever requested by a Regional 

Administrator of the U.S. Environmental 

Protection Agency (EPA), the Insurer agrees 

to furnish to the Regional Administrator a 

signed duplicate original of the policy and all 

endorsements. 

(d) Cancellation of this endorsement, 

whether by the Insurer, the insured, a parent 

corporation providing insurance coverage for 

its subsidiary, or by a firm having an 

insurable interest in and obtaining liability 

insurance on behalf of the owner or operator 

of the facility, will be effective only upon 

written notice and only after the expiration 

of 60 days after a copy of such written notice 

is received by the Regional Administrator(s) 

of the EPA Region(s) in which the facility(ies) 

is(are) located. 

(e) Any other termination of this 

endorsement will be effective only upon 

written notice and only after the expiration 

of thirty (30) days after a copy of such written 

notice is received by the Regional 

Administrator(s) of the EPA Region(s) in 

which the facility(ies) is (are) located. 

Attached to and forming part of policy No. 

—— issued by [name of Insurer], herein 

called the Insurer, of [address of Insurer] to 

[name of insured] of [address] this 

llllllll day of llllllll, 

19ll. The effective date of said policy is 

llllllll day of llllllll, 

19ll. 

I hereby certify that the wording of this 

endorsement is identical to the wording 

specified in 40 CFR 261.151(h) as such 


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64782 Federal Register / Vol. 73, No. 211 / Thursday, October 30, 2008 / Rules and Regulations 

regulation was constituted on the date first 

above written, and that the Insurer is 

licensed to transact the business of 

insurance, or eligible to provide insurance as 

an excess or surplus lines insurer, in one or 

more States. 

[Signature of Authorized Representative of 

Insurer] 

[Type name] 

[Title], Authorized Representative of [name 

of Insurer] 

[Address of Representative] 

(i) A certificate of liability insurance as 

required in § 261.147 must be worded as 

follows, except that the instructions in 

brackets are to be replaced with the relevant 

information and the brackets deleted: 

Hazardous Secondary Material Reclamation/ 

Intermediate Facility Certificate of Liability 

Insurance 

1. [Name of Insurer], (the ‘‘Insurer’’), of 

[address of Insurer] hereby certifies that it 

has issued liability insurance covering bodily 

injury and property damage to [name of 

insured], (the ‘‘insured’’), of [address of 

insured] in connection with the insured’s 

obligation to demonstrate financial 

responsibility under 40 CFR parts 264, 265, 

and the financial assurance condition of 40 

CFR 261.4(a)(24)(vi)(F). The coverage applies 

at [list EPA Identification Number (if any 

issued), name, and address for each facility] 

for [insert ‘‘sudden accidental occurrences,’’ 

‘‘nonsudden accidental occurrences,’’ or 

‘‘sudden and nonsudden accidental 

occurrences’’; if coverage is for multiple 

facilities and the coverage is different for 

different facilities, indicate which facilities 

are insured for sudden accidental 

occurrences, which are insured for 

nonsudden accidental occurrences, and 

which are insured for both]. The limits of 

liability are [insert the dollar amount of the 

‘‘each occurrence’’ and ‘‘annual aggregate’’ 

limits of the Insurer’s liability], exclusive of 

legal defense costs. The coverage is provided 

under policy number, issued on [date]. The 

effective date of said policy is [date]. 

2. The Insurer further certifies the 

following with respect to the insurance 

described in Paragraph 1: 

(a) Bankruptcy or insolvency of the insured 

shall not relieve the Insurer of its obligations 

under the policy. 

(b) The Insurer is liable for the payment of 

amounts within any deductible applicable to 

the policy, with a right of reimbursement by 

the insured for any such payment made by 

the Insurer. This provision does not apply 

with respect to that amount of any deductible 

for which coverage is demonstrated as 

specified in 40 CFR 261.147. 

(c) Whenever requested by a Regional 

Administrator of the U.S. Environmental 

Protection Agency (EPA), the Insurer agrees 

to furnish to the Regional Administrator a 

signed duplicate original of the policy and all 

endorsements. 

(d) Cancellation of the insurance, whether 

by the insurer, the insured, a parent 

corporation providing insurance coverage for 

its subsidiary, or by a firm having an 

insurable interest in and obtaining liability 

insurance on behalf of the owner or operator 

of the hazardous waste management facility, 

will be effective only upon written notice 

and only after the expiration of 60 days after 

a copy of such written notice is received by 

the Regional Administrator(s) of the EPA 

Region(s) in which the facility(ies) is(are) 

located. 

(e) Any other termination of the insurance 

will be effective only upon written notice 

and only after the expiration of thirty (30) 

days after a copy of such written notice is 

received by the Regional Administrator(s) of 

the EPA Region(s) in which the facility(ies) 

is (are) located. 

I hereby certify that the wording of this 

instrument is identical to the wording 

specified in 40 CFR 261.151(i) as such 

regulation was constituted on the date first 

above written, and that the Insurer is 

licensed to transact the business of 

insurance, or eligible to provide insurance 

as an excess or surplus lines insurer, in one 

or more States. 

[Signature of authorized representative of 

Insurer] 

[Type name] 

[Title], Authorized Representative of [name 

of Insurer] 

[Address of Representative] 

(j) A letter of credit, as specified in 

§ 261.147(h) of this chapter, must be worded 

as follows, except that instructions in 

brackets are to be replaced with the relevant 

information and the brackets deleted: 

Irrevocable Standby Letter of Credit 

Name and Address of Issuing Institution ll

Regional Administrator(s) llllllll

Region(s) llllllllllllllll

U.S. Environmental Protection Agency ll

Dear Sir or Madam: We hereby establish 

our Irrevocable Standby Letter of Credit No. 

llll----- in the favor of [’’any and all 

third-party liability claimants’’ or insert 

name of trustee of the standby trust fund], at 

the request and for the account of [owner or 

operator’s name and address] for third-party 

liability awards or settlements up to [in 

words] U.S. 

dollars $llll----- per occurrence and the 

annual aggregate amount of [in words] U.S. 

dollars $_—, for sudden accidental 

occurrences and/or for third-party liability 

awards or settlements up to the amount of [in 

words] U.S. dollars $llll----- per 

occurrence, and the annual aggregate amount 

of [in words] U.S. dollars $llll-----, for 

nonsudden accidental occurrences available 

upon presentation of a sight draft bearing 

reference to this letter of credit No. lllll 

----, and [insert the following language if the 

letter of credit is being used without a 

standby trust fund: (1) a signed certificate 

reading as follows: 

Certificate of Valid Claim 

The undersigned, as parties [insert 

principal] and [insert name and address of 

third party claimant(s)], hereby certify that 

the claim of bodily injury and/or property 

damage caused by a [sudden or nonsudden] 

accidental occurrence arising from operations 

of [principal’s] facility should be paid in the 

amount of $[ ]. We hereby certify that the 

claim does not apply to any of the following: 

(a) Bodily injury or property damage for 

which [insert principal] is obligated to pay 

damages by reason of the assumption of 

liability in a contract or agreement. This 

exclusion does not apply to liability for 

damages that [insert principal] would be 

obligated to pay in the absence of the 

contract or agreement. 

(b) Any obligation of [insert principal] 

under a workers’ compensation, disability 

benefits, or unemployment compensation 

law or any similar law. 

(c) Bodily injury to: 

(1) An employee of [insert principal] 

arising from, and in the course of, 

employment by [insert principal]; or 

(2) The spouse, child, parent, brother or 

sister of that employee as a consequence of, 

or arising from, and in the course of 

employment by [insert principal]. 

This exclusion applies: 

(A) Whether [insert principal] may be 

liable as an employer or in any other 

capacity; and 

(B) To any obligation to share damages 

with or repay another person who must pay 

damages because of the injury to persons 

identified in paragraphs (1) and (2). 

(d) Bodily injury or property damage 

arising out of the ownership, maintenance, 

use, or entrustment to others of any aircraft, 

motor vehicle or watercraft. 

(e) Property damage to: 

(1) Any property owned, rented, or 

occupied by [insert principal]; 

(2) Premises that are sold, given away or 

abandoned by [insert principal] if the 

property damage arises out of any part of 

those premises; 

(3) Property loaned to [insert principal]; 

(4) Personal property in the care, custody 

or control of [insert principal]; 

(5) That particular part of real property on 

which [insert principal] or any contractors or 

subcontractors working directly or indirectly 

on behalf of [insert principal] are performing 

operations, if the property damage arises out 

of these operations. 

[Signatures] lllllllllllllll

Grantor lllllllllllllllll

[Signatures] lllllllllllllll

Claimant(s) lllllllllllllll

or (2) a valid final court order establishing a 

judgment against the Grantor for bodily 

injury or property damage caused by sudden 

or nonsudden accidental occurrences arising 

from the operation of the Grantor’s facility or 

group of facilities.] 

This letter of credit is effective as of [date] 

and shall expire on [date at least one year 

later], but such expiration date shall be 

automatically extended for a period of [at 

least one year] on [date and on each 

successive expiration date, unless, at least 

120 days before the current expiration date, 

we notify you, the USEPA Regional 

Administrator for Region [Region], and 

[owner’s or operator’s name] by certified mail 

that we have decided not to extend this letter 

of credit beyond the current expiration date. 

Whenever this letter of credit is drawn on 

under and in compliance with the terms of 

this credit, we shall duly honor such draft 

upon presentation to us. 

[Insert the following language if a standby 

trust fund is not being used: ‘‘In the event 

that this letter of credit is used in 

combination with another mechanism for 


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liability coverage, this letter of credit shall be 

considered [insert ‘‘primary’’ or ‘‘excess’’ 

coverage].’’ 

We certify that the wording of this letter of 

credit is identical to the wording specified in 

40 CFR 261.151(j) as such regulations were 

constituted on the date shown immediately 

below. [Signature(s) and title(s) of official(s) 

of issuing institution] [Date]. 

This credit is subject to [insert ‘‘the most 

recent edition of the Uniform Customs and 

Practice for Documentary Credits, published 

and copyrighted by the International 

Chamber of Commerce,’’ or ‘‘the Uniform 

Commercial Code’’]. 

(k) A surety bond, as specified in Sec. 

261.147(i) of this chapter, must be worded as 

follows: except that instructions in brackets 

are to be replaced with the relevant 

information and the brackets deleted: 

Payment Bond 

Surety Bond No. [Insert number] 

Parties [Insert name and address of owner 

or operator], Principal, incorporated in 

[Insert State of incorporation] of [Insert city 

and State of principal place of business] and 

[Insert name and address of surety 

company(ies)], Surety Company(ies), of 

[Insert surety(ies) place of business]. 

EPA Identification Number (if any issued), 

name, and address for each facility 

guaranteed by this bond: ll 

lllllllllllllllllllll

lllllllllllllllllllll

Nonsudden 

Sudden accidental 

accidental 

occurrences 

occurrences 

lllllllllllllllllllll

lllllllllllllllllllll

Penal Sum Per Occurrence ............................................................................................................. [insert amount] ......... [insert amount] 

Annual Aggregate ............................................................................................................................ [insert amount] ......... [insert amount] 

lllllllllllllllllllll

lllllllllllllllllllll

Purpose: This is an agreement between the 

Surety(ies) and the Principal under which 

the Surety(ies), its(their) successors and 

assignees, agree to be responsible for the 

payment of claims against the Principal for 

bodily injury and/or property damage to 

third parties caused by [‘‘sudden’’ and/or 

‘‘nonsudden’’] accidental occurrences arising 

from operations of the facility or group of 

facilities in the sums prescribed herein; 

subject to the governing provisions and the 

following conditions. 

Governing Provisions: 

(1) Section 3004 of the Resource 

Conservation and Recovery Act of 1976, as 

amended. 

(2) Rules and regulations of the U.S. 

Environmental Protection Agency (EPA), 

particularly 40 CFR parts 264, 265, and 

Subpart H of 40 CFR part 261 (if applicable). 

(3) Rules and regulations of the governing 

State agency (if applicable) [insert citation]. 

Conditions: 

(1) The Principal is subject to the 

applicable governing provisions that require 

the Principal to have and maintain liability 

coverage for bodily injury and property 

damage to third parties caused by [‘‘sudden’’ 

and/or ‘‘nonsudden’’] accidental occurrences 

arising from operations of the facility or 

group of facilities. Such obligation does not 

apply to any of the following: 

(a) Bodily injury or property damage for 

which [insert Principal] is obligated to pay 

damages by reason of the assumption of 

liability in a contract or agreement. This 

exclusion does not apply to liability for 

damages that [insert Principal] would be 

obligated to pay in the absence of the 

contract or agreement. 

(b) Any obligation of [insert Principal] 

under a workers’ compensation, disability 

benefits, or unemployment compensation 

law or similar law. 

(c) Bodily injury to: 

(1) An employee of [insert Principal] 

arising from, and in the course of, 

employment by [insert principal]; or 

(2) The spouse, child, parent, brother or 

sister of that employee as a consequence of, 

or arising from, and in the course of 

employment by [insert Principal]. This 

exclusion applies: 

(A) Whether [insert Principal] may be 

liable as an employer or in any other 

capacity; and 

(B) To any obligation to share damages 

with or repay another person who must pay 

damages because of the injury to persons 

identified in paragraphs (1) and (2). 

(d) Bodily injury or property damage 

arising out of the ownership, maintenance, 

use, or entrustment to others of any aircraft, 

motor vehicle or watercraft. 

(e) Property damage to: 

(1) Any property owned, rented, or 

occupied by [insert Principal]; 

(2) Premises that are sold, given away or 

abandoned by [insert Principal] if the 

property damage arises out of any part of 

those premises; 

(3) Property loaned to [insert Principal]; 

(4) Personal property in the care, custody 

or control of [insert Principal]; 

(5) That particular part of real property on 

which [insert Principal] or any contractors or 

subcontractors working directly or indirectly 

on behalf of [insert Principal] are performing 

operations, if the property damage arises out 

of these operations. 

(2) This bond assures that the Principal 

will satisfy valid third party liability claims, 

as described in condition 1. 

(3) If the Principal fails to satisfy a valid 

third party liability claim, as described 

above, the Surety(ies) becomes liable on this 

bond obligation. 

(4) The Surety(ies) shall satisfy a third 

party liability claim only upon the receipt of 

one of the following documents: 

(a) Certification from the Principal and the 

third party claimant(s) that the liability claim 

should be paid. The certification must be 

worded as follows, except that instructions in 

brackets are to be replaced with the relevant 

information and the brackets deleted: 

Certification of Valid Claim 

The undersigned, as parties [insert name of 

Principal] and [insert name and address of 

third party claimant(s)], hereby certify that 

the claim of bodily injury and/or property 

damage caused by a [sudden or nonsudden] 

accidental occurrence arising from operating 

[Principal’s] facility should be paid in the 

amount of $[ ]. 

[Signature] 

Principal 

[Notary] Date 

[Signature(s)] 

Claimant(s) 

[Notary] Date 

or (b) A valid final court order establishing 

a judgment against the Principal for bodily 

injury or property damage caused by sudden 

or nonsudden accidental occurrences arising 

from the operation of the Principal’s facility 

or group of facilities. 

(5) In the event of combination of this bond 

with another mechanism for liability 

coverage, this bond will be considered [insert 

‘‘primary’’ or ‘‘excess’’] coverage. 

(6) The liability of the Surety(ies) shall not 

be discharged by any payment or succession 

of payments hereunder, unless and until 

such payment or payments shall amount in 

the aggregate to the penal sum of the bond. 

In no event shall the obligation of the 

Surety(ies) hereunder exceed the amount of 

said annual aggregate penal sum, provided 

that the Surety(ies) furnish(es) notice to the 

Regional Administrator forthwith of all 

claims filed and payments made by the 

Surety(ies) under this bond. 

(7) The Surety(ies) may cancel the bond by 

sending notice of cancellation by certified 

mail to the Principal and the USEPA 

Regional Administrator for Region [Region ], 

provided, however, that cancellation shall 

not occur during the 120 days beginning on 

the date of receipt of the notice of 

cancellation by the Principal and the 

Regional Administrator, as evidenced by the 

return receipt. 

(8) The Principal may terminate this bond 

by sending written notice to the Surety(ies) 

and to the EPA Regional Administrator(s) of 

the EPA Region(s) in which the bonded 

facility(ies) is (are) located. 

(9) The Surety(ies) hereby waive(s) 

notification of amendments to applicable 

laws, statutes, rules and regulations and 

agree(s) that no such amendment shall in any 

way alleviate its (their) obligation on this 

bond. 

(10) This bond is effective from [insert 

date] (12:01 a.m., standard time, at the 

address of the Principal as stated herein) and 

shall continue in force until terminated as 

described above. 

In Witness Whereof, the Principal and 

Surety(ies) have executed this Bond and have 

affixed their seals on the date set forth above. 

The persons whose signatures appear 

below hereby certify that they are authorized 


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to execute this surety bond on behalf of the 

Principal and Surety(ies) and that the 

wording of this surety bond is identical to the 

wording specified in 40 CFR 261.151(k), as 

such regulations were constituted on the date 

this bond was executed. 

PRINCIPAL 

[Signature(s)] 

[Name(s)] 

[Title(s)] 

[Corporate Seal] 

CORPORATE SURETY[IES] 

[Name and address] 

State of incorporation: llllllllll

Liability Limit: $ llllllllllll

[Signature(s)] 

[Name(s) and title(s)] 

[Corporate seal] 

[For every co-surety, provide signature(s), 

corporate seal, and other information in the 

same manner as for Surety above.] 

Bond premium: $ llllllllllll

(l)(1) A trust agreement, as specified in 

§ 261.147(j) of this chapter, must be worded 

as follows, except that instructions in 

brackets are to be replaced with the relevant 

information and the brackets deleted: 

Trust Agreement 

Trust Agreement, the ‘‘Agreement,’’ 

entered into as of [date] by and between 

[name of the owner or operator] a [name of 

State] [insert ‘‘corporation,’’ ‘‘partnership,’’ 

‘‘association,’’ or ‘‘proprietorship’’], the 

‘‘Grantor,’’ and [name of corporate trustee], 

[insert, ‘‘incorporated in the State of 

llll’’ or ‘‘a national bank’’], the 

‘‘trustee.’’ 

Whereas, the United States Environmental 

Protection Agency, ‘‘EPA,’’ an agency of the 

United States Government, has established 

certain regulations applicable to the Grantor, 

requiring that an owner or operator must 

demonstrate financial responsibility for 

bodily injury and property damage to third 

parties caused by sudden accidental and/or 

nonsudden accidental occurrences arising 

from operations of the facility or group of 

facilities. 

Whereas, the Grantor has elected to 

establish a trust to assure all or part of such 

financial responsibility for the facilities 

identified herein. 

Whereas, the Grantor, acting through its 

duly authorized officers, has selected the 

Trustee to be the trustee under this 

agreement, and the Trustee is willing to act 

as trustee. 

Now, therefore, the Grantor and the 

Trustee agree as follows: 

Section 1. Definitions. As used in this 

Agreement: 

(a) The term ‘‘Grantor’’ means the owner or 

operator who enters into this Agreement and 

any successors or assigns of the Grantor. 

(b) The term ‘‘Trustee’’ means the Trustee 

who enters into this Agreement and any 

successor Trustee. 

Section 2. Identification of Facilities. This 

agreement pertains to the facilities identified 

on attached schedule A [on schedule A, for 

each facility list the EPA Identification 

Number (if any issued), name, and address of 

the facility(ies) and the amount of liability 

coverage, or portions thereof, if more than 

one instrument affords combined coverage as 

demonstrated by this Agreement]. 

Section 3. Establishment of Fund. The 

Grantor and the Trustee hereby establish a 

trust fund, hereinafter the ‘‘Fund,’’ for the 

benefit of any and all third parties injured or 

damaged by [sudden and/or nonsudden] 

accidental occurrences arising from operation 

of the facility(ies) covered by this guarantee, 

in the amounts of llll-[up to $1 million] 

per occurrence and [up to $2 million] annual 

aggregate for sudden accidental occurrences 

and llll [up to $3 million] per 

occurrence and llll-[up to $6 million] 

annual aggregate for nonsudden occurrences, 

except that the Fund is not established for 

the benefit of third parties for the following: 

(a) Bodily injury or property damage for 

which [insert Grantor] is obligated to pay 

damages by reason of the assumption of 

liability in a contract or agreement. This 

exclusion does not apply to liability for 

damages that [insert Grantor] would be 

obligated to pay in the absence of the 

contract or agreement. 

(b) Any obligation of [insert Grantor] under 

a workers’ compensation, disability benefits, 

or unemployment compensation law or any 

similar law. 

(c) Bodily injury to: 

(1) An employee of [insert Grantor] arising 

from, and in the course of, employment by 

[insert Grantor]; or 

(2) The spouse, child, parent, brother or 

sister of that employee as a consequence of, 

or arising from, and in the course of 

employment by [insert Grantor]. This 

exclusion applies: 

(A) Whether [insert Grantor] may be liable 

as an employer or in any other capacity; and 

(B) To any obligation to share damages 

with or repay another person who must pay 

damages because of the injury to persons 

identified in paragraphs (1) and (2). 

(d) Bodily injury or property damage 

arising out of the ownership, maintenance, 

use, or entrustment to others of any aircraft, 

motor vehicle or watercraft. 

(e) Property damage to: 

(1) Any property owned, rented, or 

occupied by [insert Grantor]; 

(2) Premises that are sold, given away or 

abandoned by [insert Grantor] if the property 

damage arises out of any part of those 

premises; 

(3) Property loaned to [insert Grantor]; 

(4) Personal property in the care, custody 

or control of [insert Grantor]; 

(5) That particular part of real property on 

which [insert Grantor] or any contractors or 

subcontractors working directly or indirectly 

on behalf of [insert Grantor] are performing 

operations, if the property damage arises out 

of these operations. 

In the event of combination with another 

mechanism for liability coverage, the Fund 

shall be considered [insert ‘‘primary’’ or 

‘‘excess’’] coverage. 

The Fund is established initially as 

consisting of the property, which is 

acceptable to the Trustee, described in 

Schedule B attached hereto. Such property 

and any other property subsequently 

transferred to the Trustee is referred to as the 

Fund, together with all earnings and profits 

thereon, less any payments or distributions 

made by the Trustee pursuant to this 

Agreement. The Fund shall be held by the 

Trustee, IN TRUST, as hereinafter provided. 

The Trustee shall not be responsible nor shall 

it undertake any responsibility for the 

amount or adequacy of, nor any duty to 

collect from the Grantor, any payments 

necessary to discharge any liabilities of the 

Grantor established by EPA. 

Section 4. Payment for Bodily Injury or 

Property Damage. The Trustee shall satisfy a 

third party liability claim by making 

payments from the Fund only upon receipt 

of one of the following documents; 

(a) Certification from the Grantor and the 

third party claimant(s) that the liability claim 

should be paid. The certification must be 

worded as follows, except that instructions in 

brackets are to be replaced with the relevant 

information and the brackets deleted: 

Certification of Valid Claim 

The undersigned, as parties [insert Grantor] 

and [insert name and address of third party 

claimant(s)], hereby certify that the claim of 

bodily injury and/or property damage caused 

by a [sudden or nonsudden] accidental 

occurrence arising from operating [Grantor’s] 

facility or group of facilities should be paid 

in the amount of $[ ]. 

[Signatures] 

Grantor 

[Signatures] 

Claimant(s) 

(b) A valid final court order establishing a 

judgment against the Grantor for bodily 

injury or property damage caused by sudden 

or nonsudden accidental occurrences arising 

from the operation of the Grantor’s facility or 

group of facilities. 

Section 5. Payments Comprising the Fund. 

Payments made to the Trustee for the Fund 

shall consist of cash or securities acceptable 

to the Trustee. 

Section 6. Trustee Management. The 

Trustee shall invest and reinvest the 

principal and income, in accordance with 

general investment policies and guidelines 

which the Grantor may communicate in 

writing to the Trustee from time to time, 

subject, however, to the provisions of this 

section. In investing, reinvesting, exchanging, 

selling, and managing the Fund, the Trustee 

shall discharge his duties with respect to the 

trust fund solely in the interest of the 

beneficiary and with the care, skill, 

prudence, and diligence under the 

circumstance then prevailing which persons 

of prudence, acting in a like capacity and 

familiar with such matters, would use in the 

conduct of an enterprise of a like character 

and with like aims; except that: 

(i) Securities or other obligations of the 

Grantor, or any other owner or operator of the 

facilities, or any of their affiliates as defined 

in the Investment Company Act of 1940, as 

amended, 15 U.S.C. 80a–2.(a), shall not be 

acquired or held unless they are securities or 

other obligations of the Federal or a State 

government; 

(ii) The Trustee is authorized to invest the 

Fund in time or demand deposits of the 

Trustee, to the extent insured by an agency 

of the Federal or State government; and 


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(iii) The Trustee is authorized to hold cash 

awaiting investment or distribution 

uninvested for a reasonable time and without 

liability for the payment of interest thereon. 

Section 7. Commingling and Investment. The 

Trustee is expressly authorized in its 

discretion: 

(a) To transfer from time to time any or all 

of the assets of the Fund to any common 

commingled, or collective trust fund created 

by the Trustee in which the fund is eligible 

to participate, subject to all of the provisions 

thereof, to be commingled with the assets of 

other trusts participating therein; and 

(b) To purchase shares in any investment 

company registered under the Investment 

Company Act of 1940, 15 U.S.C. 81a–1 et 

seq., including one which may be created, 

managed, underwritten, or to which 

investment advice is rendered or the shares 

of which are sold by the Trustee. The Trustee 

may vote such shares in its discretion. 

Section 8. Express Powers of Trustee. 

Without in any way limiting the powers and 

discretions conferred upon the Trustee by the 

other provisions of this Agreement or by law, 

the Trustee is expressly authorized and 

empowered: 

(a) To sell, exchange, convey, transfer, or 

otherwise dispose of any property held by it, 

by public or private sale. No person dealing 

with the Trustee shall be bound to see to the 

application of the purchase money or to 

inquire into the validity or expediency of any 

such sale or other disposition; 

(b) To make, execute, acknowledge, and 

deliver any and all documents of transfer and 

conveyance and any and all other 

instruments that may be necessary or 

appropriate to carry out the powers herein 

granted; 

(c) To register any securities held in the 

Fund in its own name or in the name of a 

nominee and to hold any security in bearer 

form or in book entry, or to combine 

certificates representing such securities with 

certificates of the same issue held by the 

Trustee in other fiduciary capacities, or to 

deposit or arrange for the deposit of such 

securities in a qualified central depository 

even though, when so deposited, such 

securities may be merged and held in bulk 

in the name of the nominee of such 

depository with other securities deposited 

therein by another person, or to deposit or 

arrange for the deposit of any securities 

issued by the United States Government, or 

any agency or instrumentality thereof, with a 

Federal Reserve bank, but the books and 

records of the Trustee shall at all times show 

that all such securities are part of the Fund; 

(d) To deposit any cash in the Fund in 

interest-bearing accounts maintained or 

savings certificates issued by the Trustee, in 

its separate corporate capacity, or in any 

other banking institution affiliated with the 

Trustee, to the extent insured by an agency 

of the Federal or State government; and 

(e) To compromise or otherwise adjust all 

claims in favor of or against the Fund. 

Section 9. Taxes and Expenses. All taxes of 

any kind that may be assessed or levied 

against or in respect of the Fund and all 

brokerage commissions incurred by the Fund 

shall be paid from the Fund. All other 

expenses incurred by the Trustee in 

connection with the administration of this 

Trust, including fees for legal services 

rendered to the Trustee, the compensation of 

the Trustee to the extent not paid directly by 

the Grantor, and all other proper charges and 

disbursements of the Trustee shall be paid 

from the Fund. 

Section 10. Annual Valuations. The 

Trustee shall annually, at least 30 days prior 

to the anniversary date of establishment of 

the Fund, furnish to the Grantor and to the 

appropriate EPA Regional Administrator a 

statement confirming the value of the Trust. 

Any securities in the Fund shall be valued 

at market value as of no more than 60 days 

prior to the anniversary date of establishment 

of the Fund. The failure of the Grantor to 

object in writing to the Trustee within 90 

days after the statement has been furnished 

to the Grantor and the EPA Regional 

Administrator shall constitute a conclusively 

binding assent by the Grantor barring the 

Grantor from asserting any claim or liability 

against the Trustee with respect to matters 

disclosed in the statement. 

Section 11. Advice of Counsel. The Trustee 

may from time to time consult with counsel, 

who may be counsel to the Grantor with 

respect to any question arising as to the 

construction of this Agreement or any action 

to be taken hereunder. The Trustee shall be 

fully protected, to the extent permitted by 

law, in acting upon the advice of counsel. 

Section 12. Trustee Compensation. The 

Trustee shall be entitled to reasonable 

compensation for its services as agreed upon 

in writing from time to time with the Grantor. 

Section 13. Successor Trustee. The Trustee 

may resign or the Grantor may replace the 

Trustee, but such resignation or replacement 

shall not be effective until the Grantor has 

appointed a successor trustee and this 

successor accepts the appointment. The 

successor trustee shall have the same powers 

and duties as those conferred upon the 

Trustee hereunder. Upon the successor 

trustee’s acceptance of the appointment, the 

Trustee shall assign, transfer, and pay over to 

the successor trustee the funds and 

properties then constituting the Fund. If for 

any reason the Grantor cannot or does not act 

in the event of the resignation of the Trustee, 

the Trustee may apply to a court of 

competent jurisdiction for the appointment 

of a successor trustee or for instructions. The 

successor trustee shall specify the date on 

which it assumes administration of the trust 

in a writing sent to the Grantor, the EPA 

Regional Administrator, and the present 

Trustee by certified mail 10 days before such 

change becomes effective. Any expenses 

incurred by the Trustee as a result of any of 

the acts contemplated by this section shall be 

paid as provided in Section 9. 

Section 14. Instructions to the Trustee. All 

orders, requests, and instructions by the 

Grantor to the Trustee shall be in writing, 

signed by such persons as are designated in 

the attached Exhibit A or such other 

designees as the Grantor may designate by 

amendments to Exhibit A. The Trustee shall 

be fully protected in acting without inquiry 

in accordance with the Grantor’s orders, 

requests, and instructions. All orders, 

requests, and instructions by the EPA 

Regional Administrator to the Trustee shall 

be in writing, signed by the EPA Regional 

Administrators of the Regions in which the 

facilities are located, or their designees, and 

the Trustee shall act and shall be fully 

protected in acting in accordance with such 

orders, requests, and instructions. The 

Trustee shall have the right to assume, in the 

absence of written notice to the contrary, that 

no event constituting a change or a 

termination of the authority of any person to 

act on behalf of the Grantor or EPA 

hereunder has occurred. The Trustee shall 

have no duty to act in the absence of such 

orders, requests, and instructions from the 

Grantor and/or EPA, except as provided for 

herein. 

Section 15. Notice of Nonpayment. If a 

payment for bodily injury or property 

damage is made under Section 4 of this trust, 

the Trustee shall notify the Grantor of such 

payment and the amount(s) thereof within 

five (5) working days. The Grantor shall, on 

or before the anniversary date of the 

establishment of the Fund following such 

notice, either make payments to the Trustee 

in amounts sufficient to cause the trust to 

return to its value immediately prior to the 

payment of claims under Section 4, or shall 

provide written proof to the Trustee that 

other financial assurance for liability 

coverage has been obtained equaling the 

amount necessary to return the trust to its 

value prior to the payment of claims. If the 

Grantor does not either make payments to the 

Trustee or provide the Trustee with such 

proof, the Trustee shall within 10 working 

days after the anniversary date of the 

establishment of the Fund provide a written 

notice of nonpayment to the EPA Regional 

Administrator. 

Section 16. Amendment of Agreement. 

This Agreement may be amended by an 

instrument in writing executed by the 

Grantor, the Trustee, and the appropriate 

EPA Regional Administrator, or by the 

Trustee and the appropriate EPA Regional 

Administrator if the Grantor ceases to exist. 

Section 17. Irrevocability and Termination. 

Subject to the right of the parties to amend 

this Agreement as provided in Section 16, 

this Trust shall be irrevocable and shall 

continue until terminated at the written 

agreement of the Grantor, the Trustee, and 

the EPA Regional Administrator, or by the 

Trustee and the EPA Regional Administrator, 

if the Grantor ceases to exist. Upon 

termination of the Trust, all remaining trust 

property, less final trust administration 

expenses, shall be delivered to the Grantor. 

The Regional Administrator will agree to 

termination of the Trust when the owner or 

operator substitutes alternate financial 

assurance as specified in this section. 

Section 18. Immunity and Indemnification. 

The Trustee shall not incur personal liability 

of any nature in connection with any act or 

omission, made in good faith, in the 

administration of this Trust, or in carrying 

out any directions by the Grantor or the EPA 

Regional Administrator issued in accordance 

with this Agreement. The Trustee shall be 

indemnified and saved harmless by the 

Grantor or from the Trust Fund, or both, from 

and against any personal liability to which 

the Trustee may be subjected by reason of 

any act or conduct in its official capacity, 


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64786 Federal Register / Vol. 73, No. 211 / Thursday, October 30, 2008 / Rules and Regulations 

including all expenses reasonably incurred in 

its defense in the event the Grantor fails to 

provide such defense. 

Section 19. Choice of Law. This Agreement 

shall be administered, construed, and 

enforced according to the laws of the State 

of [enter name of State]. 

Section 20. Interpretation. As used in this 

Agreement, words in the singular include the 

plural and words in the plural include the 

singular. The descriptive headings for each 

section of this Agreement shall not affect the 

interpretation or the legal efficacy of this 

Agreement. 

In Witness Whereof the parties have 

caused this Agreement to be executed by 

their respective officers duly authorized and 

their corporate seals to be hereunto affixed 

and attested as of the date first above written. 

The parties below certify that the wording of 

this Agreement is identical to the wording 

specified in 40 CFR 261.151(l) as such 

regulations were constituted on the date first 

above written. 

[Signature of Grantor] 

[Title] 

Attest: 

[Title] 

[Seal] 

[Signature of Trustee] 

Attest: 

[Title] 

[Seal] 

(2) The following is an example of the 

certification of acknowledgement which 

must accompany the trust agreement for a 

trust fund as specified in Sec. 261.147(j) of 

this chapter. State requirements may differ 

on the proper 

State of lllllllllllllllll

County of llllllllllllllll

On this [date], before me personally came 

[owner or operator] to me known, who, being 

by me duly sworn, did depose and say that 

she/he resides at [address], that she/he is 

[title] of [corporation], the corporation 

described in and which executed the above 

instrument; that she/he knows the seal of 

said corporation; that the seal affixed to such 

instrument is such corporate seal; that it was 

so affixed by order of the Board of Directors 

of said corporation, and that she/he signed 

her/ his name thereto by like order. 

[Signature of Notary Public] 

(m)(1) A standby trust agreement, as 

specified in § 261.147(h) of this chapter, must 

be worded as follows, except that 

instructions in brackets are to be replaced 

with the relevant information and the 

brackets deleted: 

Standby Trust Agreement 

Trust Agreement, the ‘‘Agreement,’’ 

entered into as of [date] by and between 

[name of the owner or operator] a [name of 

a State] [insert ‘‘corporation,’’ ‘‘partnership,’’ 

‘‘association,’’ or ‘‘proprietorship’’], the 

‘‘Grantor,’’ and [name of corporate trustee], 

[insert, ‘‘incorporated in the State of 

________’’ or ‘‘a national bank’’], the 

‘‘trustee.’’ 

Whereas the United States Environmental 

Protection Agency, ‘‘EPA,’’ an agency of the 

United States Government, has established 

certain regulations applicable to the Grantor, 

requiring that an owner or operator must 

demonstrate financial responsibility for 

bodily injury and property damage to third 

parties caused by sudden accidental and/or 

nonsudden accidental occurrences arising 

from operations of the facility or group of 

facilities. 

Whereas, the Grantor has elected to 

establish a standby trust into which the 

proceeds from a letter of credit may be 

deposited to assure all or part of such 

financial responsibility for the facilities 

identified herein. 

Whereas, the Grantor, acting through its 

duly authorized officers, has selected the 

Trustee to be the trustee under this 

agreement, and the Trustee is willing to act 

as trustee. 

Now, therefore, the Grantor and the 

Trustee agree as follows: 

Section 1. Definitions. As used in this 

Agreement: 

(a) The term Grantor means the owner or 

operator who enters into this Agreement and 

any successors or assigns of the Grantor. 

(b) The term Trustee means the Trustee 

who enters into this Agreement and any 

successor Trustee. 

Section 2. Identification of Facilities. This 

Agreement pertains to the facilities identified 

on attached schedule A [on schedule A, for 

each facility list the EPA Identification 

Number (if any issued), name, and address of 

the facility(ies) and the amount of liability 

coverage, or portions thereof, if more than 

one instrument affords combined coverage as 

demonstrated by this Agreement]. 

Section 3. Establishment of Fund. The 

Grantor and the Trustee hereby establish a 

standby trust fund, hereafter the ‘‘Fund,’’ for 

the benefit of any and all third parties injured 

or damaged by [sudden and/or nonsudden] 

accidental occurrences arising from operation 

of the facility(ies) covered by this guarantee, 

in the amounts of llll-[up to $1 million] 

per occurrence and llll-[up to $2 

million] annual aggregate for sudden 

accidental occurrences and llll-[up to 

$3 million] per occurrence and llll-[up 

to $6 million] annual aggregate for 

nonsudden occurrences, except that the Fund 

is not established for the benefit of third 

parties for the following: 

(a) Bodily injury or property damage for 

which [insert Grantor] is obligated to pay 

damages by reason of the assumption of 

liability in a contract or agreement. This 

exclusion does not apply to liability for 

damages that [insert Grantor] would be 

obligated to pay in the absence of the 

contract or agreement. 

(b) Any obligation of [insert Grantor] under 

a workers’ compensation, disability benefits, 

or unemployment compensation law or any 

similar law. 

(c) Bodily injury to: 

(1) An employee of [insert Grantor] arising 

from, and in the course of, employment by 

[insert Grantor]; or 

(2) The spouse, child, parent, brother or 

sister of that employee as a consequence of, 

or arising from, and in the course of 

employment by [insert Grantor]. 

This exclusion applies: 

(A) Whether [insert Grantor] may be liable 

as an employer or in any other capacity; and 

(B) To any obligation to share damages 

with or repay another person who must pay 

damages because of the injury to persons 

identified in paragraphs (1) and (2). 

(d) Bodily injury or property damage 

arising out of the ownership, maintenance, 

use, or entrustment to others of any aircraft, 

motor vehicle or watercraft. 

(e) Property damage to: 

(1) Any property owned, rented, or 

occupied by [insert Grantor]; 

(2) Premises that are sold, given away or 

abandoned by [insert Grantor] if the property 

damage arises out of any part of those 

premises; 

(3) Property loaned by [insert Grantor]; 

(4) Personal property in the care, custody 

or control of [insert Grantor]; 

(5) That particular part of real property on 

which [insert Grantor] or any contractors or 

subcontractors working directly or indirectly 

on behalf of [insert Grantor] are performing 

operations, if the property damage arises out 

of these operations. 

In the event of combination with another 

mechanism for liability coverage, the Fund 

shall be considered [insert ‘‘primary’’ or 

‘‘excess’’] coverage. 

The Fund is established initially as 

consisting of the proceeds of the letter of 

credit deposited into the Fund. Such 

proceeds and any other property 

subsequently transferred to the Trustee is 

referred to as the Fund, together with all 

earnings and profits thereon, less any 

payments or distributions made by the 

Trustee pursuant to this Agreement. The 

Fund shall be held by the Trustee, IN 

TRUST, as hereinafter provided. The Trustee 

shall not be responsible nor shall it 

undertake any responsibility for the amount 

or adequacy of, nor any duty to collect from 

the Grantor, any payments necessary to 

discharge any liabilities of the Grantor 

established by EPA. 

Section 4. Payment for Bodily Injury or 

Property Damage. The Trustee shall satisfy a 

third party liability claim by drawing on the 

letter of credit described in Schedule B and 

by making payments from the Fund only 

upon receipt of one of the following 

documents: 

(a) Certification from the Grantor and the 

third party claimant(s) that the liability claim 

should be paid. The certification must be 

worded as follows, except that instructions in 

brackets are to be replaced with the relevant 

information and the brackets deleted: 

Certification of Valid Claim 

The undersigned, as parties [insert Grantor] 

and [insert name and address of third party 

claimant(s)], hereby certify that the claim of 

bodily injury and/or property damage caused 

by a [sudden or nonsudden] accidental 

occurrence arising from operating [Grantor’s] 

facility should be paid in the amount of 

$[ ] 

[Signature] lllllllllllllll

Grantor lllllllllllllllll

[Signatures] lllllllllllllll

Claimant(s) lllllllllllllll


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(b) A valid final court order establishing a 

judgment against the Grantor for bodily 

injury or property damage caused by sudden 

or nonsudden accidental occurrences arising 

from the operation of the Grantor’s facility or 

group of facilities. 

Section 5. Payments Comprising the Fund. 

Payments made to the Trustee for the Fund 

shall consist of the proceeds from the letter 

of credit drawn upon by the Trustee in 

accordance with the requirements of 40 CFR 

261.151(k) and Section 4 of this Agreement. 

Section 6. Trustee Management. The 

Trustee shall invest and reinvest the 

principal and income, in accordance with 

general investment policies and guidelines 

which the Grantor may communicate in 

writing to the Trustee from time to time, 

subject, however, to the provisions of this 

Section. In investing, reinvesting, 

exchanging, selling, and managing the Fund, 

the Trustee shall discharge his duties with 

respect to the trust fund solely in the interest 

of the beneficiary and with the care, skill, 

prudence, and diligence under the 

circumstances then prevailing which persons 

of prudence, acting in a like capacity and 

familiar with such matters, would use in the 

conduct of an enterprise of a like character 

and with like aims; except that: 

(i) Securities or other obligations of the 

Grantor, or any other owner or operator of the 

facilities, or any of their affiliates as defined 

in the Investment Company Act of 1940, as 

amended, 15 U.S.C. 80a–2(a), shall not be 

acquired or held, unless they are securities or 

other obligations of the Federal or a State 

government; 

(ii) The Trustee is authorized to invest the 

Fund in time or demand deposits of the 

Trustee, to the extent insured by an agency 

of the Federal or a State government; and 

(iii) The Trustee is authorized to hold cash 

awaiting investment or distribution 

uninvested for a reasonable time and without 

liability for the payment of interest thereon. 

Section 7. Commingling and Investment. 

The Trustee is expressly authorized in its 

discretion: 

(a) To transfer from time to time any or all 

of the assets of the Fund to any common, 

commingled, or collective trust fund created 

by the Trustee in which the Fund is eligible 

to participate, subject to all of the provisions 

thereof, to be commingled with the assets of 

other trusts participating therein; and 

(b) To purchase shares in any investment 

company registered under the Investment 

Company Act of 1940, 15 U.S.C. 80a–1 et 

seq., including one which may be created, 

managed, underwritten, or to which 

investment advice is rendered or the shares 

of which are sold by the Trustee. The Trustee 

may vote such shares in its discretion. 

Section 8. Express Powers of Trustee. 

Without in any way limiting the powers and 

discretions conferred upon the Trustee by the 

other provisions of this Agreement or by law, 

the Trustee is expressly authorized and 

empowered: 

(a) To sell, exchange, convey, transfer, or 

otherwise dispose of any property held by it, 

by public or private sale. No person dealing 

with the Trustee shall be bound to see to the 

application of the purchase money or to 

inquire into the validity or expediency of any 

such sale or other disposition; 

(b) To make, execute, acknowledge, and 

deliver any and all documents of transfer and 

conveyance and any and all other 

instruments that may be necessary or 

appropriate to carry out the powers herein 

granted; 

(c) To register any securities held in the 

Fund in its own name or in the name of a 

nominee and to hold any security in bearer 

form or in book entry, or to combine 

certificates representing such securities with 

certificates of the same issue held by the 

Trustee in other fiduciary capacities, or to 

deposit or arrange for the deposit of such 

securities in a qualified central depositary 

even though, when so deposited, such 

securities may be merged and held in bulk 

in the name of the nominee of such 

depositary with other securities deposited 

therein by another person, or to deposit or 

arrange for the deposit of any securities 

issued by the United States Government, or 

any agency or instrumentality thereof, with a 

Federal Reserve Bank, but the books and 

records of the Trustee shall at all times show 

that all such securities are part of the Fund; 

(d) To deposit any cash in the Fund in 

interest-bearing accounts maintained or 

savings certificates issued by the Trustee, in 

its separate corporate capacity, or in any 

other banking institution affiliated with the 

Trustee, to the extent insured by an agency 

of the Federal or State government; and 

(e) To compromise or otherwise adjust all 

claims in favor of or against the Fund. 

Section 9. Taxes and Expenses. All taxes of 

any kind that may be assessed or levied 

against or in respect of the Fund and all 

brokerage commissions incurred by the Fund 

shall be paid from the Fund. All other 

expenses incurred by the Trustee in 

connection with the administration of this 

Trust, including fees for legal services 

rendered to the Trustee, the compensation of 

the Trustee to the extent not paid directly by 

the Grantor, and all other proper charges and 

disbursements to the Trustee shall be paid 

from the Fund. 

Section 10. Advice of Counsel. The Trustee 

may from time to time consult with counsel, 

who may be counsel to the Grantor, with 

respect to any question arising as to the 

construction of this Agreement or any action 

to be taken hereunder. The Trustee shall be 

fully protected, to the extent permitted by 

law, in acting upon the advice of counsel. 

Section 11. Trustee Compensation. The 

Trustee shall be entitled to reasonable 

compensation for its services as agreed upon 

in writing from time to time with the Grantor. 

Section 12. Successor Trustee. The Trustee 

may resign or the Grantor may replace the 

Trustee, but such resignation or replacement 

shall not be effective until the Grantor has 

appointed a successor trustee and this 

successor accepts the appointment. The 

successor trustee shall have the same powers 

and duties as those conferred upon the 

Trustee hereunder. Upon the successor 

trustee’s acceptance of the appointment, the 

Trustee shall assign, transfer, and pay over to 

the successor trustee the funds and 

properties then constituting the Fund. If for 

any reason the Grantor cannot or does not act 

in the event of the resignation of the Trustee, 

the Trustee may apply to a court of 

competent jurisdiction for the appointment 

of a successor trustee or for instructions. The 

successor trustee shall specify the date on 

which it assumes administration of the trust 

in a writing sent to the Grantor, the EPA 

Regional Administrator and the present 

Trustee by certified mail 10 days before such 

change becomes effective. Any expenses 

incurred by the Trustee as a result of any of 

the acts contemplated by this Section shall be 

paid as provided in Section 9. 

Section 13. Instructions to the Trustee. All 

orders, requests, certifications of valid 

claims, and instructions to the Trustee shall 

be in writing, signed by such persons as are 

designated in the attached Exhibit A or such 

other designees as the Grantor may designate 

by amendments to Exhibit A. The Trustee 

shall be fully protected in acting without 

inquiry in accordance with the Grantor’s 

orders, requests, and instructions. The 

Trustee shall have the right to assume, in the 

absence of written notice to the contrary, that 

no event constituting a change or a 

termination of the authority of any person to 

act on behalf of the Grantor or the EPA 

Regional Administrator hereunder has 

occurred. The Trustee shall have no duty to 

act in the absence of such orders, requests, 

and instructions from the Grantor and/or 

EPA, except as provided for herein. 

Section 14. Amendment of Agreement. 

This Agreement may be amended by an 

instrument in writing executed by the 

Grantor, the Trustee, and the EPA Regional 

Administrator, or by the Trustee and the EPA 

Regional Administrator if the Grantor ceases 

to exist. 

Section 15. Irrevocability and Termination. 

Subject to the right of the parties to amend 

this Agreement as provided in Section 14, 

this Trust shall be irrevocable and shall 

continue until terminated at the written 

agreement of the Grantor, the Trustee, and 

the EPA Regional Administrator, or by the 

Trustee and the EPA Regional Administrator, 

if the Grantor ceases to exist. Upon 

termination of the Trust, all remaining trust 

property, less final trust administration 

expenses, shall be paid to the Grantor. 

The Regional Administrator will agree to 

termination of the Trust when the owner or 

operator substitutes alternative financial 

assurance as specified in this section. 

Section 16. Immunity and indemnification. 

The Trustee shall not incur personal liability 

of any nature in connection with any act or 

omission, made in good faith, in the 

administration of this Trust, or in carrying 

out any directions by the Grantor and the 

EPA Regional Administrator issued in 

accordance with this Agreement. The Trustee 

shall be indemnified and saved harmless by 

the Grantor or from the Trust Fund, or both, 

from and against any personal liability to 

which the Trustee may be subjected by 

reason of any act or conduct in its official 

capacity, including all expenses reasonably 

incurred in its defense in the event the 

Grantor fails to provide such defense. 

Section 17. Choice of Law. This Agreement 

shall be administered, construed, and 

enforced according to the laws of the State 

of [enter name of State]. 

Section 18. Interpretation. As used in this 

Agreement, words in the singular include the 


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plural and words in the plural include the 

singular. The descriptive headings for each 

Section of this Agreement shall not affect the 

interpretation of the legal efficacy of this 

Agreement. 

In Witness Whereof the parties have 

caused this Agreement to be executed by 

their respective officers duly authorized and 

their corporate seals to be hereunto affixed 

and attested as of the date first above written. 

The parties below certify that the wording of 

this Agreement is identical to the wording 

specified in 40 CFR 261.151(m) as such 

regulations were constituted on the date first 

above written. 

[Signature of Grantor] 

[Title] 

Attest: 

[Title] 

[Seal] 

[Signature of Trustee] 

Attest: 

[Title] 

[Seal] 

(2) The following is an example of the 

certification of acknowledgement which 

must accompany the trust agreement for a 

standby trust fund as specified in section 

261.147(h) of this chapter. State requirements 

may differ on the proper content of this 

acknowledgement. 

State of lllllllllllllllll

County of llllllllllllllll

On this [date], before me personally came 

[owner or operator] to me known, who, being 

by me duly sworn, did depose and say that 

she/he resides at [address], that she/he is 

[title] of [corporation], the corporation 

described in and which executed the above 

instrument; that she/he knows the seal of 

said corporation; that the seal affixed to such 

instrument is such corporate seal; that it was 

so affixed by order of the Board of Directors 

of said corporation, and that she/he signed 

her/ his name thereto by like order. 

[Signature of Notary Public] 

PART 270—EPA ADMINISTERED 

PERMIT PROGRAMS: THE 

HAZARDOUS WASTE PERMIT 

PROGRAM 

■ 13. The authority citation for part 270 

continues to read as follows: 

Authority: 42 U.S.C. 6905, 6912, 6924, 

6925, 6927, 6939 and 6974. 

Subpart D—Changes to Permits 

■ 14. In § 270.42, Appendix I is 

amended to add a new A. 9 and A. 10 

to read as follows: 

§ 270.42 Permit modification at the request 

of the permittee. 

* * * * * 

Appendix I to § 270.42—Classification 

of permit modification 

Modifications Class 

A. General Permit Provisions. 

* * * * * * * 

9. Changes to remove permit conditions applicable to a unit excluded under the provisions of § 261.4. .......................................... 1 1 

10. Changes in the expiration date of a permit issued to a facility at which all units are excluded under the provisions of § 261.4. 1 1 

* * * * * * * 

1 Class 1 modifications requiring prior Agency approval. 

[FR Doc. E8–24399 Filed 10–29–08; 8:45 am] 

BILLING CODE 6560–50–P 


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