Document ID: EPA-HQ-RCRA-2002-0031-0359
Agency: epa
Document Type: Supporting & Related Material
Title: 
Posted Date: 2007-03-26T04:00Z

SEQ CHAPTER \h \r 1 ENVIRONMENTAL PROTECTION AGENCY						

40 CFR Parts 260 and 261 					

[RCRA-2002-0031 - FRL -7577-7]

RIN 2050-AE98							

Revisions to the Definition of Solid Waste

AGENCY: Environmental Protection Agency.

ACTION: Supplemental Proposed Rule.							

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

DATES: Comments must be received on or before [Insert date] 60 days from
date of federal registerafter publication] in the Federal Register. 
Under the Paperwork Reduction Act, comments on the information
collection provisions must be received by OMB on or before [insert
date], thirty days after date of publication in the Federal Register.

ADDRESSES:  Submit your comments, identified by Docket ID No. EPA-HQ
-RCRA 2002-0031 by one of the following methods:

  HYPERLINK "http://www.regulations.gov"  www.regulations.gov :  Follow
the on-line instructions for submitting comments.

Email:  Comments may be sent by electronic mail (e-mail) to   HYPERLINK
"mailto:RCRA-docket@epa.gov"  RCRA-docket@epa.gov , Attention Docket ID
No. EPA-HQ-RCRA-2002-0031.  

Fax:  Fax comments to:  202-566-0270, Attention Docket ID No.
EPA-HQ-RCRA 2002-0031.  

Mail:  Send comments to:  OSWER Docket, EPA Docket Center, Mail Code
5305T, Environmental Protection Agency, 1200 Pennsylvania Avenue N.W.
Washington D.C. 20460, Attention Docket ID No. EPA-HQ-RCRA-2002-0031. 
In addition, please mail a copy of your comments on the information
collection provisions to the Office of Information and Regulatory
Affairs, Office of Management and Budget (OMB), Attn:  Desk Officer for
EPA, 725 17th St., Washington D.C. 20503.

Hand delivery:  Deliver comments to:  Environmental Protection Agency,
EPA Docket Center, Room B102, 1301 Constitution Avenue, N.W., Washington
D.C., Attention Docket ID No. EPA-HQ-RCRA-2002-0031.  Such deliveries
are only accepted during the docket’s normal hours of operation, and
special arrangements should be made for deliveries of boxed information.
 

Instructions:  Direct your comments to Docket ID Number EPA-
HQ-RCRA-2002- 0031.  EPA’s policy is that all comments received will
be included in the public docket without change and may be made
available online at   HYPERLINK "http://www.regulations.gov" 
www.regulations.gov , including any personal information provided,
unless the comment includes information claimed to be Confidential
Business Information (CBI) or other information whose disclosure is
restricted by statute. Do not submit information that you consider to be
CBI or otherwise protected through   HYPERLINK
"http://www.regulations.gov"  www.regulations.gov  or e-mail.  The  
HYPERLINK "http://www.regulations.gov"  www.regulations.gov  website is
an “anonymous access” system, which means EPA will not know your
identity or contact information unless you provide it in the body of
your comment.  If you send an e-mail comment directly to EPA without
going through   HYPERLINK "http://www.regulations.gov" 
www.regulations.gov  your e-mail address will be automatically captured
and included as part of the comment that is placed in the public docket
and made available on the Internet.  If you submit an electronic
comment, EPA recommends that you include your name and other contact
information in the body of your comment and with any disk or CD-ROM you
submit.  If EPA cannot read your comment due to technical difficulties
and cannot contact you for clarification, EPA may not be able to
consider your comment.  Electronic files should avoid the use of special
characters, any form of encryption, and be free of any defects or
viruses.  

Docket:  All documents in the docket are listed in the   HYPERLINK
"http://www.regulations.gov"  www.regulations.gov  index.  Although
listed in the index, some information is not publicly available, such as
CBI or other information whose disclosure is restricted by statute. 
Certain other material, such as copyrighted material, will be publicly
available only in hard copy.  Publicly available docket materials are
available either electronically in   HYPERLINK
"http://www.regulations.gov"  www.regulations.gov  or in hard copy at
the OSWER Docket, EPA/DC, EPA West, Room B102, 1301 Constitution Ave.,
N.W., 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.  Copies cost
$0.15 per page.      

The EPA Docket Center suffered damage due to flooding the last week of
June 2006.  The Docket Center is continuing to operate.  However, during
the cleanup, there will be temporary changes to Docket Center telephone
numbers, addresses, and hours of operation for people who wish to make
hand deliveries or visit the Public Reading Room to view documents. 
Consult EPA’s Federal Register notice at 71 FR 38147 (July 5, 2006) or
the EPA website at   HYPERLINK "http://www.epa.gov/epahome/dockets.htm" 
www.epa.gov/epahome/dockets.htm  for current information on docket
operations, locations, and phone numbers.  The Docket Center’s mailing
address for U.S. mail and the procedures for submitting comments to  
HYPERLINK "http://www.regulations.gov"  www.regulations.gov  are not
affected by the flooding and will remain the same.     

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. N.W., Washington
DC 20460, (703) 308-8800,  (  HYPERLINK mailto:(goode.marilyn@epa.gov)
goode.marilyn@epa.gov)  or Tracy Atagi, Office of Solid Waste, Hazardous
Waste Identification Division, MC 5304P, Environmental Protection
Agency, 1200 Pennsylvania Ave. N.W., Washington DC 20460, at (703)
308-8672 (  HYPERLINK mailto:(atagi.tracy@epa.gov) atagi.tracy@epa.gov)
.

SUPPLEMENTARY INFORMATION: 

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

B.  What to Consider When Preparing Comments for EPA.   

1.  Submitting CBI.  Do not submit this information to EPA through  
HYPERLINK "http://www.regulations.gov"  www.regulations.gov  or email. 
Clearly mark part of all information that you claim to be CBI.  For CBI
information in a disk or CD ROM that you mail to EPA, mark the outside
of the disk or CD ROM as CBI and then identify electronically within the
disk or CD ROM the specific information that is claimed as CBI.  In
addition to one complete version of the comment that includes
information claimed as CBI, a copy of the comment that does not contain
the information claimed as CBI must be submitted for inclusion in the
public docket.  Information so marked will not be disclosed, except in
accordance with procedures set forth in 40 CFR Part 2.  

2.  Tips for Preparing Your Comments.  When submitting comments,
remember to:

Identify the rulemaking by docket number and other identifying
information (subject heading, Federal Register date and page number).  

Follow directions.  The Agency may ask for commenters to respond to
specific questions or organize comments by referencing a Code of Federal
Regulations (CFR) part or sectionSection number.

Explain why you agree or disagree; suggest alternatives and substitute
language for your requested changes.

Describe any assumptions and provide any technical information and/or
data that you used.

If estimating burden or costs, explain methods used to arrive at the
estimate in sufficient detail to allow for it to be reproduced.

Provide specific examples to illustrate any concerns and suggest
alternatives. 

Make sure to submit comments by the comment period deadline identified
above.  

Preamble Outline  

I.	Statutory Authority

II.	What Is the Scope of This Supplemental Proposal?

III.	What Is the Intent of This Supplemental Proposal?  

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

V.	How Is Hazardous Waste Recycling Currently Regulated?  

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

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

VIII.	Recycling Studies

IX.	Exclusion for Hazardous Secondary Materials that Are Legitimately
Reclaimed Under the Control of the Generator.:  Proposed 40 CFR 260. 10,
261.2(a)(1), 261.2(a)(2), 261.2(c)(3), 261.4(a)(23).   

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

XI.	What Changes is EPA Proposing to the Legitimacy Criteria?Legitimacy:
 Proposed 40 CFR 261.2(g).  

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

XIII.	Effect of This Proposal on Other Programs.  

XIV.    Measurement of the Performance Outcomes of This Supplemental
Proposal.     

XV.	How Would These Proposed Regulatory Changes Be Administered and
Enforced in the States?  

XVI.	How Has EPA Fulfilled the Administrative Requirements for this
Rulemaking?

I.	Statutory Authority

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

II. What Is the Scope of This Supplemental Proposal?  

	

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

	The scope of the regulatory changes proposed today are as follows:  

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

This provision, with regulatory language proposed in 40 CFR
261.2(a)(2)(ii), would exclude certain hazardous secondary materials
(i.e., spent materials, listed sludges, and listed byproducts) that are
generated and legitimately reclaimed within the United States or its
territories. and are only handled in non-land-based units (e.g., tanks,
containers, containment buildings).  The exclusion would apply to
hazardous secondary material that is reclaimed under the control of the
generator, if the materials are not speculatively accumulated.  In
addition, EPA is proposing to include in 40 CFR 260.42 a requirement
that the generator would be required to submit a one-time notification
to EPA or the authorized state.  Furthermore, hazardous secondary
materials that are stored in land-based units (surface impoundments,
waste piles, injection wells, land treatment facilities, salt dome
formations, salt bed formations, or underground mines or caves) prior to
reclamation or that are reclaimed in the land-based units would have to
be contained in such units.  Hazardous secondary material would be
considered “under the control of the generator” under the following
circumstances:  

(1) it is generated and then reclaimed at the generating facility; or 

(2) it is generated and reclaimed by the same company, if the generator
certifies that it is under the same ownership as the reclaimer and that
the owner company has acknowledged responsibility for safe management of
the hazardous secondary materials; or 

(3) it is generated and reclaimed pursuant to a written agreement
between a tolling contractor and batch manufacturer, if the tolling
contractor retains ownership of, and responsibility for, the hazardous
secondary materials that are generated during the course of the
manufacture. 

	This proposed exclusion would not include recycling practices that
involve discard of materials.  These practices include recycling of
inherently waste-like materials (40 CFR 261.2(d)), recycling of
materials that are used in a manner constituting disposal or used to
produce products that are applied to or placed on the land (40 CFR
261.2(c)(1)), and burning of materials for energy recovery or used to
produce a fuel or otherwise contained in fuels (40 CFR 261.2(c)(2)). 
This proposed exclusion is further described in section IX of this
preamble.  We note that the Agency is considering expanding its
regulations for comparable fuels in a separate rulemaking.  

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

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

C.	Conditional Exclusion for Materials that are Transferred For the
Purpose of Reclamation

  	This conditional exclusion, with regulatory language proposed in 40
CFR 261.4(a)(24), (hereinafter referred to as the “transfer-based
exclusion”) would apply to hazardous secondary materials (i.e., spent
materials, listed sludges, and listed byproducts) that are generated and
subsequently transferred to a different person or company for the
purpose of reclamation.  As  long as the conditions to the exclusion are
satisfied, the hazardous secondary materials would not be subject to
Subtitle C regulation.  The conditions are intended to ensure that such
materials are handled as commodities rather than wastes.  They will also
help guarantee that protection of human health and the environment will
not be compromised in the absence of hazardous waste regulatory
requirements for these materials. It is important to note that when
hazardous secondary materials are generated and reclaimed within the
United States pursuant to a written agreement between a tolling
contractor and a batch manufacturer as defined in proposed 40 CFR
260.10, these materials would be subject to the requirements of proposed
40 CFR 261.2(a)(ii) or 261.4(a)(23) rather than the more extensive
requirements of  proposed 40 CFR 261.4(a)(24).  

	

	If any of the hazardous secondary materials under this
exclusionproposed 40 CFR 261.4(a)(24) are generated and then exported to
another country for reclamation, we are also proposing that the exporter
notify the receiving country of the export through EPA and obtain
consent from that country before shipment of the material. This
requirement is proposed to be codified in 40 CFR 261.4(a)(25). Like the
previously discussed exclusion for hazardous secondary materials
recycled under the control of the generator, this exclusion would not
cover recycling of inherently waste-like materials, recycling of
materials that are used in a manner constituting disposal, and burning
of materials for energy recovery.  The proposed exclusion is described
in more detail in section X of this preamble.  

CD.  Petition Process for Non-waste Determinations  

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

DE. Legitimacy

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

III. What Is the Intent of This Supplemental Proposal?

	

	Today’s supplemental proposal would revise and clarify the RCRA
definition of solid waste as it pertains to certain types of hazardous
secondary materials that would not be considered wastes subject to
regulation under RCRA Subtitle C.  This notice builds on our October 28,
2003 proposal (68 FR 61558) which was initiated partially in response to
decisions by the United States Court of Appeals for the D.C. Circuit,
which, taken together, have provided the Agency with additional
direction in this area.  

	

	This proposal represents an important restructuring of the RCRA
regulations that distinguish wastes from non-waste materials for RCRA
purposes, and that ensure environmental protections over hazardous
secondary materials recycling practices.  As such, it also is an
opportunity for the Agency to clarify in a regulatory context the
concept of “legitimate recycling,” which has been and is a key
component of RCRA’s regulatory program for recycling, but which to
date has been implemented without regulatory criteria.  Today’s
supplemental proposal thus includes specific regulatory provisions for
determining when hazardous secondary materials are recycled
legitimately.

	

	Today’s supplemental proposal is de-regulatory in nature because
certain recyclable materials that have heretofore been subject to the
hazardous waste regulations would no longer be regulated as hazardous
waste.  The criteriafactors to consider for legitimate recycling codify
existing principles, without increasing regulation.  This proposal is
not intended to bring new wastes into the RCRA regulatory system.

	

	By removing unnecessary hazardous waste regulatory controls over
certain recycling practices, and by providing more explicit criteria for
determining the legitimacy of recycling practices in general, EPA
expects that this proposal will encourage the safe, beneficial recycling
of hazardous secondary materials.  This regulatory initiative is thus
consistent with the Agency’s longstanding policy of encouraging the
recovery and reuse of valuable resources as an alternative to land
disposal, while at the same time maintaining protection of human health
and the environment.  It also is consistent with one of the primary
goals of the Congress in enacting the RCRA statute (as evidenced by its
name), and with the Agency’s vision of how the RCRA program could
evolve over the longer term to promote sustainability and more efficient
use of resources.  

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

	

	On October 28, 2003 (68 FR 61558), the Agency proposed to exclude from
the definition of solid waste any material generated and reclaimed in a
continuous process within the same industry, provided the reclamation
was legitimate. “Same industry” was defined as industries sharing
the same 4-digit North American Industry Classification System (NAICS)
code.  The basis for that exclusion was the holding in American Mining
Congress v. EPA (“AMC I”), 824 F.2d 1177 (D.C. Cir. 1987)) that
materials destined for beneficial reuse of recycling in a continuous
process by the generating industry are not discarded.  In order to be
eligible for the exclusion, the hazardous secondary material could not
be speculatively accumulated under 261.1(c)(8).  In addition, the
generator of such materials would be required to submit a one-time
notification to EPA or the authorized State with contact information,
the type of material that would be excluded, and the industry that
generated the material.  In the October 2003 proposal, the Agency also
proposed to codify in the RCRA regulations four criteria to be used in
determining whether recycling of hazardous secondary material was
legitimate.  We also solicited comment on a broader conditional
exclusion from RCRA regulation for essentially all hazardous secondary
materials that are legitimately recycled. For a discussion of public
comments received on our proposed exclusion, see section IX of this
preamble.   

	

	After evaluating comments received on the October 2003 proposal and
conducting an independent analysis, EPA decided to restructure its
approach.  Following the decision of the D.C. Circuit Court in
Association of Battery Recyclers v. EPA (“ABR”)( 208 F.3d 1047 (D.C.
Cir. 2000), EPA has decided to examine the principles behind the
court’s holdings on the definition of solid waste, rather than trying
to fit materials into specific fact patterns addressed by the court. 
EPA is therefore proposing (1) an exclusion for hazardous secondary
materials that are generated and then reclaimed under the control of the
generator;  (2) a conditional exclusion for hazardous secondary
materials that are generated and then transferred to another person for
the purpose of reclamation; and (3) a petition process for obtaining a
case-specific non-waste determination for certain hazardous secondary
materials that are recycled.  Today’s notice also proposes a
restructuring of the previously proposed legitimacy criteria and further
clarification and guidance on how the economics of the recycling
transaction should be considered in making legitimacy determinations.  A
detailed description of today’s proposed regulatory changes and the
reasons for not finalizing the October 2003 proposal are discussed in
sections IX, X, XI, and XII of this preamble.  

V. How Is Hazardous Waste Recycling Currently Regulated?

	

	The basic regulatory provisions for defining “solid wastes” and
“hazardous wastes” under RCRA are found in Part 261 of Title 40 of
the Code of Federal Regulations (CFR).  To be subject to RCRA’s
hazardous waste regulatory program, a material must first be a solid
waste that is also a hazardous waste.  A solid waste is a hazardous
waste if it is explicitly listed as such (in Subpart D of Part 261), or
if it exhibits one or more of the hazardous characteristics (as
specified in Subpart C of Part 261).  

	

	In general, hazardous wastes are subject to RCRA’s full “cradle to
grave” regulatory system from the time they are generated to the time
that they are ultimately disposed.  However, hazardous secondary
materials often can be recycled instead of being disposed, which can
change how those wastes are regulated. The “definition of solid
waste” regulations in Part 261 in effect separate recyclable hazardous
secondary materials into two broad categories – those that are
classified as solid wastes when recycled, and are therefore subject to
regulation under Subtitle C of RCRA if they are listed or characteristic
hazardous wastes, and those that are not considered solid wastes when
they are recycled, and thus are not regulated. It should be understood
that the term “hazardous secondary material” as it is used in
today’s rule and preamble therefore refers to both categories of
recyclable materials; that is, materials that are regulated as hazardous
wastes when recycled, and materials that are not considered wastes when
recycled.

	

	Hazardous secondary materials that are currently not regulated as
wastes when they are recycled include, for example, those which are used
or reused directly as effective substitutes for commercial products, and
those which can be used as ingredients in an industrial process,
provided the materials are not being reclaimed. See 40 CFR 261.2(e). In
essence, EPA considers these types of recycling practices to be more
akin to normal industrial production rather than waste management.

	

	In contrast, in some recycling practices, the hazardous secondary
material cannot be used as is and must be significantly processed before
it can be reused in a manner similar to products in commerce.  In these
cases, EPA has found that the material may be more “waste-like” and
the hazardous secondary materials therefore have been regulated as
hazardous wastes. One type of recycling that falls within this category
and that is especially relevant to this rule is reclamation of certain
types of hazardous secondary materials. Reclamation involves the
processing of hazardous secondary materials in some way in order so that
they can be used or reused. See 40 CFR 261.1(c)(4) and 40 CFR
261.2(c)(3). An example of reclamation is processing of a spent solvent
to restore its solvent properties before it is suitable for reuse as a
solvent. As explained elsewhere in today’s preamble, this supplemental
proposal would reexamine the regulatory status of these hazardous
secondary materials and de-regulate a specific subset of these materials
that are recycled by being reclaimed.

	

	In the existing Part 261 regulations, EPA identified other types of
recycling practices that are fully regulated because, we concluded, they
involve discard of materials. These practices include recycling of
“inherently waste-like” materials (40 CFR 261.2(d)), recycling of
materials that are “used in a manner constituting disposal,” or
“used to produce products that are applied to or placed on the
land,”(40 CFR 261.2(c)(1)) and “burning of materials for energy
recovery” or “used to produce a fuel or otherwise contained in
fuels” (40 CFR 261.2(c)(2)). Today’s supplemental proposal is not
intended to affect how these recycling practices are regulated.

	

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

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

A. Background

	RCRA gives EPA the authority to regulate the disposal of “solid
wastes” under its non-hazardous waste program. See, e.g., RCRA
sections 1008(a), 4001 and 4004(a).  RCRA also gives EPA authority to
regulate hazardous wastes. See, e.g., RCRA sections 3001-3004.
“Hazardous wastes” are the subset of solid wastes that present
threats to human health and the environment. See section 1004(5). EPA
also may address solid and hazardous wastes under its endangerment
authorities in section 7003. (Similar authorities are available for
citizen suits under section 7002.) Materials that are not solid wastes
are generally not subject to regulation under RCRA Subtitle C. Thus, the
definition of “solid waste” plays a key role in defining the scope
of EPA’s authorities under RCRA.

	The statute defines “solid waste” as “...any garbage, refuse,
sludge from a waste treatment plant, water supply treatment plant, or
air pollution control facility and other discarded material... resulting
from industrial, commercial, mining, and agricultural operations, and
from community activities...” (RCRA Section 1004 (27) (emphasis
added)). In its RCRA hazardous waste regulations, EPA has historically
defined certain hazardous secondary materials destined for recycling as
“waste,” while excluding others. 

	

	Since 1980, EPA has interpreted “solid waste” under its Subtitle C
regulations to encompass both materials that are destined for final,
permanent placement in disposal units, as well as some materials that
are destined for recycling.  45 FR 33090-95 (May 19, 1980); 50 FR 604 -
656 (Jan. 4, 1985) (see especially pages 616-618). EPA has offered three
arguments in support of this approach: 

	

The statute and the legislative history suggest that Congress expected
EPA to regulate as solid and hazardous wastes certain materials that are
destined for recycling (see 45 FR 33091, citing numerous sections of the
statute and U.S. Brewers’ Association v. EPA, 600 F. 2d 974 (D.C. Cir.
1979); 48 FR 14502-04 (April 3, 1983); and 50 FR 616-618).

Hazardous secondary materials stored or transported prior to recycling
have the potential to present the same types of threats to human health
and the environment as hazardous wastes stored or transported prior to
disposal. In fact, EPA found that recycling operations have accounted
for a number of significant damage incidents. For example, materials
destined for recycling were involved in one-third of the first 60
filings under RCRA’s imminent and substantial endangerment authority,
and 20 of the initial sites listed under CERCLA. (48 FR 14474, April 4,
1983.) Congress also cited some damage cases which can be interpreted to
involve recycling. (H.R. Rep. 94-1491, 94th Cong., 2d Sess., at 17, 18,
22).  More recent data (i.e., information on damages occurring after
1982) included in the rulemaking docket for today’s supplemental
proposal corroborate the fact that recycling operations can result in
significant damage incidents. (See Sectionsection IV.B.2 of today’s
preamble.)

Excluding all hazardous secondary materials destined for recycling would
allow materials to move in and out of the hazardous waste management
system depending on what any person handling the material intended to do
with it. This seems inconsistent with the mandate to track hazardous
wastes and control them from “cradle to grave.” 

	EPA has interpreted the statute to confer jurisdiction over at least
certain hazardous secondary materials destined for recycling. The Agency
has therefore developed in Part 261 of 40 CFR a definition of “solid
waste” for Subtitle C regulatory purposes. (Note:  This definition is
narrower than the definition of “solid waste” for RCRA endangerment
and information-gathering authorities. See 40 CFR 261.1(b) and
Connecticut Coastal Fishermen’s Association v. Remington Arms Co., 989
F.2d 1305, 1315 (2d Cir.1993), holding that EPA’s use of a narrower
and more specific definition of solid waste for Subtitle C purposes is a
reasonable interpretation of the statute. See also Military Toxics
Project v. EPA, 146 F.3d 948 (D.C. Cir. 1998).)

	

	Under its current Subtitle C regulations, EPA classifies as solid
wastes some – but not all – hazardous secondary materials that are
recycled by “reclamation.” The regulations define “spent
materials” as being “discarded” if they are destined for
reclamation. However, “commercial chemical products” are not defined
as “discarded” when reclaimed.  In addition, byproducts and sludges
are defined as “discarded” when reclaimed on a case-by-case basis.
That is, EPA considers these materials to be “discarded” when they
are specifically listed as a hazardous waste at 40 CFR 261 Subpart D. 
See Table 1 to 40 CFR 261.2.   EPA has also promulgated three exceptions
from the Subtitle C definition for materials destined for reclamation.
See 260.31(b) and (c); 40 CFR 261.4(a) (8). 

	

	Finally, EPA has always asserted that materials are not excluded from
its jurisdiction simply because someone claims that they will be
recycled. EPA has consistently considered hazardous secondary materials
destined for “sham recycling” to be discarded and, hence, to be
solid wastes for Subtitle C purposes.  See 45 FR 33093 (May 19, 1980),
50 FR 638-39 (Jan. 4, 1985).  The U.S. Court of Appeals for the D.C.
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 (D.C.Cir. 2000).

B. A Series of D.C. Circuit Court Decisions

	

	Trade associations representing mining and oil refining interests
challenged EPA’s 1985 regulatory definition of solid waste.  In 1987,
the D. C. 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 (D.C. Cir. 1987). Although the Court clearly
articulated this concept, it did not specify which portions of the rules
exceeded EPA’s authority. It more generally “granted the petition
for review.”

	

	The Court held that certain of the materials EPA was seeking to
regulate were not “discarded materials” under section 1004(27). 
After reviewing numerous statutory provisions and portions of the
legislative history, the Court held that Congress used the term
“discarded” in its ordinary sense, to mean “disposed of” or
“abandoned.” 824 F.2d at 1188-89. The Court further held that the
term “discarded materials” could not include materials ...destined
for beneficial reuse or recycling in a continuous process by the
generating industry itself (because they) are not yet part of the waste
disposal problem.” 824 F.2d at 1190. The Court held that Congress had
directly spoken to this issue, so that EPA’s use of a conflicting
definition was not entitled to deference under Chevron U.S.A., Inc. v.
NRDC, 467 U.S. 837 (1984). 824 F.2d at 1183, 1189-90, 1193. 

	

	At the same time, the Court did not hold that no recycled materials
could be discarded. The Court mentioned at least two examples of
recycled materials that EPA properly considered within its statutory
jurisdiction, noting that used oil can be considered a solid waste. 824
F.3d at 1187 (fn 14).  Also, the Court suggested that materials disposed
of and recycled as part of a waste management program are within EPA’s
jurisdiction. 824 F. 2d at 1179. Subsequent decisions by the D.C.
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
(D.C. Cir. 1990). The Court held that it is reasonable for EPA to
consider as discarded (and solid wastes) listed wastes managed in units
that are part of wastewater treatment units, especially where it is not
clear that the industry actually reuses the materials. (“AMC II”),
907 F. 2d 1179 (D.C. Cir. 1990). Also, the Court found that EPA
potentially had jurisdiction over oil-bearing wastewaters recycled at
petroleum refineries, although in the rule under review EPA failed to
provide a rational basis for asserting jurisdiction. American Petroleum
Institute v. EPA (“API II”), 216 F.3d 50, 57-58 (D.C. Cir. 2000).

	

	It also is worth noting that two other Circuits also have held that EPA
has authority over at least some materials destined for reclamation
rather than final discard. The U.S. Court of Appeals for the 11th
Circuit found that “[i]t is unnecessary to read into the term
‘discarded’ a congressional intent that the waste in question must
finally and forever be discarded.”  U.S. v. ILCO, 996 F.2d 1126 , 1132
(11th Cir. 1993) (finding that used lead batteries sent to a reclaimer
have been “discarded once” by the entity that sent the battery to
the reclaimer). The Fourth Circuit found that slag held on the ground
untouched for six months before sale for use as road bed could be a
solid waste. Owen Electric Steel Co. v. EPA, 37 F.3d 146, 150 (4th Cir.
1994). 

	

	Considering all of these decisions (except the API case decided in
2000), in 1998, EPA promulgated a rule in which EPA claimed Subtitle C
jurisdiction over hazardous secondary materials recycled by reclamation
within the mineral processing industry (the “LDR Phase IV rule”).
”) (63 FR 28556 (May 26, 1998)). In that rule, EPA promulgated a
conditional exclusion for all types of mineral processing hazardous
secondary materials destined for reclamation. EPA imposed a condition
prohibiting land-based storage prior to reclamation because it
considered hazardous  secondary materials from the mineral processing
industry that were stored on the land to be part of the waste disposal
problem.   (63 FR at 28581). The conditional exclusion decreased
regulation over spent materials stored prior to reclamation, but
increased regulation over by-products and sludges that exhibit a
hazardous characteristic, and that are stored prior to reclamation. EPA
noted that the statute does not authorize it to regulate “materials
that are destined for immediate reuse in another phase of the
industry’s ongoing production process.” EPA, however, took the
position that materials that are removed from a production process for
storage are not “immediately reused,” and therefore are
“discarded.”  ” (63 FR at 28580).  

	

	The mining industry challenged the rule, and the D.C. 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 (D.C. Cir. 2000).
The Court held that it had already resolved the issue presented here in
its opinion in AMC I, where it found that “...Congress unambiguously
expressed its intent that ‘solid waste’ (and therefore EPA’s
regulatory authority) be limited to materials that are ‘discarded’
by virtue of being disposed of, abandoned, or thrown away.” 208 F.2d
at 1051. It repeated that materials reused within an ongoing industrial
process are neither disposed of nor abandoned.  208 F.3d at 1051-52. It
explained that the intervening API I and AMC II decisions had not
narrowed the holding in AMC I. 208 F.3d at 1054-1056. 

	

	At the same time, the Court did not hold that storage before
reclamation automatically makes materials “discarded.” Rather, it
held that “... at least some of the secondary material EPA seeks to
regulate as solid waste (in the mineral processing rule) is destined for
reuse as part of a continuous industrial process and thus is not
abandoned or thrown away.” 208 F.3d at 1056. 

	In its most recent opinion dealing with the definition of solid waste,
Safe Food and Fertilizer v. EPA, 350 F.3d 1263 (D.C. Cir. 2003), the
Court upheld an EPA rule that excludes from the definition of solid
waste hazardous secondary materials used to make zinc fertilizers, and
the fertilizers themselves, so long as the recycled materials meet
certain handling, storage and reporting conditions and the resulting
fertilizers have concentration levels for lead, arsenic, mercury,
cadmium, chromium, and dioxins that fall below specified thresholds. 
Final Rule, “Zinc Fertilizers Made From Recycled Hazardous Secondary
Materials” (“Fertilizer Rule”), (67 FR 48393 (2002)).  EPA
determined that if these conditions are met, the recycled materials have
not been discarded.  The conditions apply to a number of recycled
materials not produced in the fertilizer production industry, including
certain zinc-bearing hazardous secondary materials such as brass foundry
dusts. 

	EPA’s reasoning was that market participants, consistent with the
EPA-required conditions in the rule, would treat the exempted materials
more like valuable products than like negatively-valued wastes and,
thus, would manage them in ways inconsistent with discard.  In addition,
the fertilizers derived from these recycled feedstocks are chemically
indistinguishable from analogous commercial products made from raw
materials.  350 F.3d at 1269.  The court upheld the rule based on
EPA’s explanation that market participants manage materials in ways
inconsistent with discard, and the fact that the levels of contaminants
in the recycled fertilizers were “identical” to the fertilizers made
with raw materials.  The court held that this interpretation of
“discard” was reasonable and consistent with the statutory purpose.
The court noted that the identity principle was defensible because the
differences in health and environmental risks between the two types of
fertilizers are so slight as to be substantively meaningless.  

	However, the Court specifically stated that it “need not consider
whether a material could be classified as a non-discarded exclusively on
the basis of the market-participation theory.”  350 F.3d at 1269.   
The court only determined that the combination of market participants’
treatment of the materials, EPA required management standards and the
“identity principle” are a reasonable set of tools to establish that
the recycled secondary materials and fertilizers are not discarded.  

 C. 2003 Proposed Revisions to the Definition of Solid Waste

	

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

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

	

	The concept of "discard" is the central organizing idea behind
today’s supplemental proposal, which reflects the fundamental logic of
the RCRA statute. As stated in RCRA Section 1004(27), "solid waste" is
defined as ". . . any garbage, refuse, sludge from a waste treatment
plant, or air pollution control facility and other discarded material .
. . resulting from industrial, commercial, mining and agricultural
activities. . ."  Therefore, in the context of this supplemental
proposal, a key issue is the circumstances under which a material that
is recycled by reclamation is or is not discarded.

	

	In the series of decisions discussed above relating to the RCRA
definition of solid waste, the Court of Appeals for the D.C. Circuit has
consistently cited a plain language definition of discard, as meaning
"disposing, abandoning or throwing away." EPA believes that this is a
workable and logical definition of the term, and the underlying logic of
today's proposed exclusions is consistent with this definition.

	

	The basic rationale that EPA is applying in this case differentiates
between recycled hazardous secondary materials over which the generator
maintains control and recycled hazardous secondary materials over which
the generator relinquishes control.  If the generator maintains control
over the recycled hazardous secondary material and it is legitimately
recycled under the standards established in this proposal and the
material is not speculatively accumulated within the meaning of EPA’s
regulations, the hazardous secondary material is not discarded.  This is
because the material is being treated as a valuable commodity rather
than as a waste.  By maintaining control over, and potential liability
for, the recycling process, the generator ensures that the materials are
not discarded.  See ABR 208 F.3d at 1051 (“Rather than throwing these
materials [destined for recycling] away, the producers saves them;
rather than abandoning them, the producer reuses them.”).  However,
when the hazardous secondary materials are managed in land-based units
(e.g., waste piles, surface impoundments, etc), the hazardous secondary
materials must be contained, or they may be considered discarded, even
if they remain under the control of the generator.  While placement on
the land would not in itself constitute discard, when hazardous
secondary materials are not being managed as a valuable product and, as
a result, a significant release occurs, such materials would be
considered discarded.  Further discussion of these concepts appears in
Sectionsection IX of this preamble.  

	

	In those cases, however, where generators of hazardous secondary
materials do not re-use or recycle the materials themselves, it often
may be a sound business decision to ship the material to be recycled to
a commercial facility or another manufacturer in order to avoid the
costs of disposing of the material. In such situations, the generator
has relinquished control of the hazardous secondary material and the
entity receiving such materials may not have the same incentives to
manage the hazardous secondary material as a useful product. 
Accordingly, the Agency believes that conditions are needed for the
Agency to determine that this material is not discarded.  However, if
the recycler legitimately recycles the hazardous secondary material, it
is not regulated as a solid waste, provided certain additional
conditions are met.  Further discussion of the Agency’s rationale for
this concept appears in Sectionsection X.A. of this preamble. 

	

	This is the general logic we have used in developing the exclusions in
today's supplemental proposal. The proposed exclusion for hazardous
secondary materials that are recycled under the control of the generator
is based on the notion that as long as the generator has control over
the recycling process, has chosen to legitimately reclaim it within the
United States or its territories, retains liability in the event that
the hazardous secondary materials (be they the materials that were
generated, residuals from a reclamation process, or both) are somehow
released into the environment, these materials are not discarded. In
addition, if the materials are managed in a land-based unit, the
generator must ensure that the materials are contained.  Of course, if
such hazardous secondary materials are released into the environment and
are not recovered in a timely manner, these materials have been
discarded and the generator is subject to all applicable federal and
state regulations, and applicable cleanup authorities.   The "broader"
exclusion for materials that are transferred by the generator to another
person or company for reclamation is based on the idea subsequent
activities are more likely to involve discard, given that the generator
has relinquished control of the hazardous secondary material, and
additional conditions are needed for the Agency to determine that these
materials are not discarded.   

VIII. Recycling Studies 

A. Purpose of Studies

	In response to the October, 2003, proposal, a number of commenters
criticized the Agency specifically for not having conducted a thorough
study of the potential 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 waswere attributed to
hazardous material recycling, including a number of sites listed on the
Superfund National Priorities List (NPL). 

	

	However, a number of other commenters expressed the view that the great
majority of these cases of recycling-related environmental problems
occurred before RCRA, CERCLA or other environmental programs were
established in the early 1980s. These commenters further argued that
these environmental programs—most notably, RCRA's hazardous waste
regulations, and the liability provisions of CERCLA—have created
strong incentives for proper management of recyclable materials and
recycling residuals. Several commenters further noted that because of
these developments, industrial recycling practices have changed
substantially since the early 1980s, and present day generators and
recyclers are much better environmental stewards than in the
pre-RCRA/CERCLA era. Thus, they argued, cases of “historical”
recycling-related environmental damage are not particularly relevant or
instructive with regard to modifying the current RCRA hazardous waste
regulations for hazardous material recycling. 

	

	In light of these comments and in deliberating on how to proceed with
this rulemaking effort, the Agency decided that additional information
on hazardous material recycling would benefit the regulatory
decision-making process, and would provide stakeholders with a clearer
picture of the hazardous material recycling industry in this country.
Accordingly, the Agency examined three basic issues that we believed
were of particular importance to informing this rulemaking effort:

How do responsible generators and recyclers of hazardous secondary
materials ensure that recycling is done in an environmentally safe
manner?

To what extent have hazardous secondary material recycling practices
resulted in environmental problems in recent years, and why?

Are there certain economic forces or incentives specific to hazardous
secondary material recycling that can explain why environmental problems
can sometimes originate from such recycling activities? 

	

Reports documenting these studies are in the administrative record for
this rulemaking, under the following titles:

"An Assessment of Current Good Practices for Recycling of Hazardous
Secondary Materials"

"An Assessment of Environmental Problems Associated With Recycling of
Hazardous Secondary Materials"

"Potential Effects of Market Forces on the Management of Hazardous
Recyclable Materials"

	

	The findings of these background studies have informed many of the
Agency's policy decisions in developing this regulatory proposal.
However, it should be understood that these three reports are not
definitive, peer-reviewed documents of a technical nature. We fully
acknowledge that in some respects they may not paint a complete picture,
or capture every detail of the subject matter that was examined. 
However, we believe that the information in the studies provides an
important perspective on current recycling practices, and that it
supports our policy direction in developing today’s supplemental
proposal.   EPA is planning to investigate the need for peer review of
these documents, and we solicitsolicits comment on the policy and
regulatory implications of the information in these studies.

B. Results 

1. Successful recycling practices

	One of the studies that EPA has completed is an examination of what
practices responsiblemany generators and recyclers currently use to
ensure that their hazardous secondary materials are recycled safely and
responsibly. One purpose of this study was to provide the Agency and the
rulemaking record with another angle from which to view the hazardous
secondary material recycling industry. In addition, the results of this
study suggest what kinds of regulatory controls might be appropriate for
these hazardous secondary materials to determine that they are handled
as commodities rather than wastes.  The practices have helped the Agency
develop elements of the supplemental proposal presented today. 

	The Agency has long heard from various representatives of industry and
other stakeholders that management of hazardous secondary materials has
changed and improved since the inception of the RCRA hazardous waste
regulations in the early 1980s and that these hazardous secondary
materials are being managed much more carefully than they were
historically. The successful recycling study examines which improved
practices are used by responsiblemany companies in the industry and the
reasons the practices are implemented. 

To complete this study, EPA spoke with representatives from multiple
organizations that regularly manage hazardous secondary materials, both
for recycling and for treatment followed by disposal, and examined
literature and publicly available information on the Internet focused on
the subject of recycling of hazardous secondary materials. The study
uses these sources to assemble an overall picture of the good practices
that are currently in use by a number of responsible companies. The full
study can be found in the docket for today’s supplemental proposal,
available at   HYPERLINK "http://www.regulations.gov" 
http://www.regulations.gov .  

The successful recycling study found two main drivers behind companies
adopting responsible recycling practices in the management of their
hazardous secondary materials. The first is concern of liability under
the Comprehensive Environmental Response, Compensation, and Liability
Act (CERCLA), also known as Superfund. Under CERCLA, a company can be
held liable as an arranger for disposal for contamination caused by its
materials sent for recycling at another facility’s site. Therefore, it
is in that company’s best interest to ensure that the facility to
which it sends its waste is not likely to become a Superfund site or to
fall under CERCLA in the future either because of financial failure or
because of bad materials management practices. The threat of Superfund
liability was cited by many of the sources for the responsible recycling
study as the main reason for the development of their audit programs in
this area. 

The other reason for adoption of responsible recycling practices cited
falls into a broad category of concerns about corporate responsibility
and public relations. Many companies now have very public environmental
policies and have implemented environmental management systems that are
part of their programs for corporate responsibility. Although the real
effects of these corporate policies are hard to gauge, EPA observed
during this study that audit programs that were developed in response to
CERCLA, now are maintained as part of a philosophy of corporate
responsibility, which is part of the image a corporation sells to its
customers. 

EPA found that responsible recycling practices used by generators and
recyclers to manage hazardous secondary materials fall into two general
categories. The first category includes the audit activities and
inquiries performed by a generator of a material to determine whether
the entity to which it is sending the hazardous secondary material is
equipped to responsibly manage those materials without the risk of
releases or other environmental damage. These recycling and waste audits
of other companies’ facilities form a backbone of many of the
transactions in the hazardous secondary materials market. The second
category of responsible recycling practices consists of the control
practices that ensure responsible management of any given shipment of
hazardous secondary material, such as the contracts under which the
transaction takes place and the tracking systems in place that can
inform a generator that its hazardous secondary material has been
properly managed. 

In this study, EPA found that certain generators of hazardous secondary
materials perform facility audits—a kind of environmental due
diligence—on the facilities to which they send their materials. These
audits can take many forms and can be of varying degrees of complexity,
depending on the secondary material or, in some cases, on the size and
sophistication of the generator. Although large companies are more
likely to perform in-depth facility audits, possibly because they more
frequently have environmental health and safety divisions coordinating
audits or because they may have greater amounts of hazardous secondary
materials they are sending off-site, some smaller companies are also
performing some kind of audit on the recycling facility receiving the
hazardous secondary material. 

The exact nature of each generator’s audit process will vary, but
there are some common elements. Often the audit has two parts: (1) a
remote screening audit during which the auditor examines the
recycler’s compliance history and financial records and the recycler
may fill out a questionnaire about its operations and facility and (2) a
visit to the recycler’s facility, which can take anywhere from several
hours to several days. Some common elements examined in both phases of
an audit include: (1) site history; (2) history of compliance with
environmental requirements and permits; (3) general appearance and
housekeeping at the facility; (4) description of process design and
capability; (5) residuals management; (6) financial soundness of the
recycler; and (7) possession of adequate pollution liability and general
insurance. 

	

In addition to generators auditing recycling facilities, another example
of a practice that EPA believes helps to ensure responsible management
is the design of hazardous secondary materials recycling contracts and
tracking systems to manage information about the location of a
particular container and to document its eventual recycling. 

	

Recycling contracts are normal business practice and minimize the
potential for recyclers to receive shipments of hazardous secondary
materials that they are not equipped to recycle. In these contracts, the
two parties can lay out specifications for the make-up of materials
being shipped to the recycler and describe the protocol for actions
taken if a material not meeting these specifications arrives at the
recycling facility. In some cases, the recycler can still handle the
material, but may charge the generator an additional fee for having to
alter the material to meet specifications. In other cases, the recycler
may not be able to accept the material at all. Through the contract
mechanism, both parties then agree on whether that hazardous secondary
material should be returned to the generator or sent to a different
recycler or waste disposal facility. 

EPA also found that knowing whether materials conform to the contract
specifications necessitated sampling of the hazardous secondary material
arriving at a recycler. Several recyclers told EPA that they sample each
rail car, truck, and drum arriving at their facilities before accepting
them. Legitimate recycling practices operate as a manufacturing process
might and there is tight control over the nature of the materials being
recycled. Recyclers who are seeking to make a salable product will make
sure that the inputs meet specifications. 

Due to time and resource limitations, EPA’s examination of successful
recycling practices was not exhaustive, as we were able to gather
information from a limited number of sources. We believe that the
practices and situations outlined in the study are representative of
industry practices performed by responsiblemany companies, but ask today
for comments on the results of the study and for relevant information
not represented therein. 

2.  Environmental problems associated with recycling of hazardous
secondary materials.

a. Scope and objectives of the study

	

	The general goal of this study was to identify and characterize
environmental problems that have been attributed to some type of
hazardous secondary material recycling activity, and that are relevant
for the purpose of this rulemaking effort.  The Agency believes that
discard is more likely to occur if environmental problems exist. 
Specifically, we sought to identify the following types of cases:

	

Cases where environmental damage clearly can be attributed to some type
of recycling activity. In conducting this study, we limited our search
to those environmental problems in which environmental damages were
clearly caused by some type of recycling-related activity. In this
context, “recycling-related activities” included—

accumulation or storage of hazardous secondary materials by the
generator, the recycler or an intermediary;

illegal disposal or abandonment of recyclable hazardous secondary
materials or recycling residuals;

transportation of recyclable hazardous secondary materials;

“sham” recycling operations (i.e., illegal disposal or treatment
disguised as recycling);

production and/or use of contaminated products from recycled hazardous
secondary materials, reclamation and/or production processes;

management of residuals from reclamation or production processes, or 

other activities associated with the management of recyclable hazardous
secondary materials, recycling residuals, or the products of recycling
processes.

The study identified a number of cleanup sites at which a recycling
process had operated, but where other sources of contamination made it
extremely difficult to determine with any certainty that the recycling
activity contributed to the environmental problems at the site. These
cases were not included in this study.

Relatively recent cases. Many of the environmental problems that were
examined in the course of this study occurred before RCRA, CERCLA or
other environmental programs were established in the early 1980s. The
Agency believes that, for the purpose of this rulemaking effort, these
“historical” recycling-related damage cases are much less relevant
and instructive than cases which have occurred within the current
regulatory and liability "landscape." This belief is based in large part
on the findings of our companion study of current good hazardous
secondary material recycling practices, which indicate that in today's
era (though there are exceptions), most generators and recyclers are
aware of their environmental responsibilities, and generally make
considerable efforts to ensure that materials are recycled and otherwise
managed responsibly. Therefore, all the cases included in the data for
this study occurred after 1982.

Cases involving recycling of regulated hazardous secondary materials
that are specifically excluded from RCRA regulation. The study was
intended to identify environmental problems associated with recycling of
regulated hazardous secondary materials, as well as those involving the
recycling of hazardous secondary materials that are not regulated
because they are subject to a specific regulatory exemption or exclusion
(see, for example, the exclusions in 40 CFR 261.4). The Agency was
interested in these types of problems because they may indicate the
extent to which environmental damages can occur even when recycling is
conducted under a stringent regulatory regime, and whether such
environmental problems may be more or less prevalent for materials that
are not regulated as hazardous wastes. The study was not designed to
identify cases involving recycling of non-hazardous materials such as
paper, glass, rubber, or plastics.

	

b. Methodology

	

	The initial task of this study was to identify as many
recycling-related environmental problems that were relevant to the scope
and purpose of the study as possible (the preceding section of this
preamble describes the types of cases that were considered relevant to
the study). Potential cases were identified from a variety of sources,
including:

Comments on the October 28, 2003, proposed rule

The Superfund National Priorities List 

National EPA data bases maintained for the CERCLA, RCRA, and enforcement
programs

Contacts with staff in state environmental agencies

Contacts with staff in EPA Regional Offices

State agency databases maintained for state Superfund programs and other
environmental programs

Internet searches

News media reports

		

	For those environmental problems found at recycling facilities or
resulting in the mismanagement of hazardous secondary materials to be
recycled that were relevant to the study, we gathered available
information to identify certain key facts relating to when the problem
occurred, the type of recycling practice involved, the types of
materials recycled, how and why the environmental damage occurred, and
other key data (these data are summarized in tabular form in Appendix 1
of the report entitled The Assessment of Environmental Problems
Associated With Recycling of Hazardous Secondary Materials). A written
description of each case was then prepared—these are in Appendix 2 of
the same report. 

	

	Many of the cases that were investigated, including many of the
Superfund sites, were well-documented, and we were able to assemble
relatively complete profiles for those cases. For many other cases,
however, much less complete information was available, while at some of
the sites, we were able to collect only very basic information. 

In addition, because of time and resource limitations, the search for
potentially relevant cases was not exhaustive. For example, we did not
systematically survey all state environmental agencies for relevant
cases, nor did we search paper files in EPA Regional Offices. Because of
this relatively limited scope, we believe that the cases we have
identified and described in this report in effect represent those that
were relatively easy to find, and that there are likely to be additional
cases that we did not identify.  However, we have no reason to think
that additional cases would substantially change the overall picture. 
Nevertheless, the Agency requests information on relevant cases of
environmental problems that we did not identify, as well as comments or
supplemental information on those that were characterized in the report.
If you provide data on additional cases of environmental problems from
recycling, Appendix 2 of the study is a good resource for the types of
information most useful to the Agency, particularly when the problem
occurred; the type of recycling practice involved; whether recycling
occurred at an on-site or off-site recycling facility; the types of
hazardous secondary materials being recycled; and how and why the
problem occurred. 

c. Summary of findings

	

	The study identified 208 cases in which environmental damages of some
kind occurred from some type of recycling activity and that fit the
scope of the study. Such damages included leaks, spills, dumps, or other
types of releases that were serious enough to require some type of
cleanup action. They also included instances where materials were
abandoned (e.g., in warehouses) and which required removal overseen by a
government agency and expenditure of public funds. However, the study
did not include situations in which environmental regulatory violations
occurred, but did not result in actual damage to the environment or
human health.

	

	With regard to the types of materials associated with the cases that
were documented in the study, most common were scrap metals, solvents,
used oil, non-ferrous metals, lead-acid batteries, and used drums sent
for cleaning and reconditioning. Less common were cases involving
mercury, precious metals, and hazardous foundry sands.

	

	The types of environmental damage that occurred varied widely; many
were relatively small incidents involving contaminated soils and/or
residuals, such as battery casings, while a number were much more
substantial and expensive, with large-scale soil and ground water
contamination, and remediation costs in the tens of millions of dollars.
A surprising number of cases (sixty-nine) involved materials that were
abandoned in one way or another.

	

	The study also tried to identify the cause of the environmental
problems for each case that was investigated. In large part, we were
able to identify, or at least infer, how the problems occurred, although
for eightfour percent of the cases examined, we were unable to determine
the primary cause of damage. However, in only a few cases were we able
to identify with any certainty why they occurred. For example, in
approximately one-third of the cases, we were able to conclude that
mismanagement of recycling residuals was at least partly the cause of
contamination problems. We were unable, however, to identify why the
residuals were managed improperly. 

	

	Mismanagement of the hazardous secondary materials prior to their
reclamation or reuse caused contamination at thirty-fiveforty percent of
sites, whereas mismanagement of recycling residuals was the primary
cause at thirty-threefour percent of the sites. Often, at the latter
category of sites, reclamation processes generated residuals in which
the toxic components of the recycled materials became concentrated, and
these wastes were then mismanaged. Examples of this include a number of
drum reconditioning facilities, where large numbers of used drums were
cleaned out to remove small amounts of remaining product such as
solvent, and these wastes were then improperly stored or disposed of.

	

	As already noted, sixty-nine of the cases examined in the study
involved abandonment of recyclable hazardous secondary materials as the
primary cause of damage. In most of these cases, business failure
appears to have been the main reason the hazardous secondary materials
were abandoned. SixSeven of the cases that were examined appear to have
been outright “sham” recyclers. In most of these cases, companies
advertised themselves to local generators as recyclers and accumulated
considerable quantities of waste materials, but did not actually recycle
them.  These sites were also then abandoned.

	

	Since a considerable number of commenters to the October 2003 proposal
supported the idea of a regulatory exclusion for on-site recycling
(i.e., at the generating facility), the study also distinguished between
environmental problems from recycling that occurred at off-site,
commercial recycling facilities, and those from recycling on-site.
TenThirteen (6%) of the 208 cases were determined to be from recycling
that occurred on-site. This relatively small proportion of cases may
signify that on-site recycling is inherently less likely to result in
environmental problems, for various reasons. However, it may also be
that recycling conducted at facilities generating hazardous secondary
materials occurs at fewer facilities than recycling by commercial
facilities or that these types of environmental problems are not as well
documented, or for other reasons are more difficult to identify, given
the scope and methodology of the study. The Agency solicits comment and
additional data on the issue of environmental problems from on-site
recycling that occurred since 1982 and where the problems are clearly
attributable to the recycling activity. We are particularly seeking
facts about any instances that are not captured in the study,
particularly answering the questions of when the recycling took place,
what type of recycling practices were involved, what the environmental
problem was, and what caused the problem.

	

	The study also addressed whether or not instances of environmental
damage occurred at hazardous waste recycling facilities with RCRA
permits (Note: RCRA does not require Part B permits for the recycling
processes themselves; typically, permits are issued to such facilities
when hazardous secondary materials are stored prior to recycling.)  RCRA
permitted hazardous waste management facilities are subject to
relatively stringent, facility-specific requirements, and in general are
given more oversight by regulatory agencies than facilities without
permits. For these reasons, these cases are of particular interest to
the Agency with regard to this rulemaking.

		

	Twenty-four of the cases identified were, at one time or another,
operating under RCRA hazardous waste permits. However, only nine clearly
appear to have been operating under RCRA permits at the time the damage
occurred. Two of these cases involved fires and/or explosions.

	The study also looked at some of the financial circumstances regarding
clean up of environmental problems. At thirteen of the twenty-four
hazardous waste permitted facilities, all or part of the funds used to
clean up environmental damages were contributed by the owner/operator of
the facility, either voluntarily or under some form of consent
agreement. In at least two of these cases, it appears that cleanup funds
became available by means of a RCRA-required financial assurance
mechanism, such as a surety bond. Thirteen of the facilities appear to
have been cited for serious permit violations, either before or as a
result of the damage incident. In four cases, the facility permits were
revoked because of compliance issues. Eleven of the twenty-four
facilities were found to be no longer in business, because of bankruptcy
or for other reasons.

	

	Of the 208 cases that were documented in the study, fifty-one were or
are listed on the CERCLA National Priorities List (NPL). Twenty-four
Fifty-five additional cases were addressed under CERCLA authorities, but
the sites were not listed on the NPL. State cleanup authorities were
used to address fifty-ninesixty-five of the cases, while
forty-fourthirty were addressed using RCRA corrective action
authorities. For thirty-one nineteen of the cases, we were unable to
identify what remedial program, if any, was used to clean up the sites. 
(In some cases, there was more than one type of cleanup action at a
site).  

	

	For eighty-nine of the cases, we were able to identify the costs, or at
least cost estimates, associated with addressing the environmental
problems caused by recycling activities. Thirty-seven of these cases
required less than one million dollars to clean up; forty-four cost
between one and ten million dollars; and eight cost more than ten
million dollars to remediate.

	

	It is possible that these cost data are incomplete and are not an
accurate representation of actual cleanup costs for the entire sample of
208 cases. For one thing, cost data were much easier to find for
CERCLA-lead cleanups than cleanups done under other programs.  Another
uncertainty with regard to these cost data is that in some cases, it was
not possible to distinguish between cleanup costs that were incurred
specifically to address recycling-related contamination, and costs for
other cleanup activities at the site. The Agency solicits additional
information from commenters regarding cleanup costs (actual or
estimated) incurred in remediating these recycling-related environmental
problems.    

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

EPA also has completed a study of how market forces can affect the
management of recyclable hazardous secondary materials. This study uses
economic theory to describe how various market incentives can influence
a firm’s decision making process when the recycling of hazardous
secondary material is involved.  Because the study is largely
theoretical, the results should be interpreted with caution, but it does
provide insights that can explain some of the possible fundamental
economic drivers of both the successful and unsuccessful recycling
practices, which in turn help us to design the exclusions that we are
proposing today

The October 2003 proposal was based in part on the premise that some
types of recycling are more akin to manufacturing than waste management
and therefore are not appropriate for regulation as waste management. 
[“In EPA’s view, a recycler will value secondary materials that
provide an important contribution to his process or product and will
manage them in a manner consistent with a valuable feedstock material
(i.e., will manage them to minimize their loss)”; 68 FR 61583]. 

However, as pointed out by some commenters to the proposed rule, the
economic forces shaping the behavior of firms that recycle hazardous
secondary materials can be different from those at play in manufacturing
processes using virgin materials.  For example, the inherent value of
hazardous secondary materials can be much lower than virgin materials
used in manufacturing, resulting in a different set of economic
incentives.  Additionally, different economic incentives between the
recycling of hazardous secondary materials and manufacturing may arise
due to differences in these two business models.  As opposed to
manufacturing, where the cost of raw materials or intermediates (or
inputs) is greater than zero and revenue is generated primarily from the
sale of the output, some models of hazardous materials recycling involve
generating revenue primarily from receipt of the hazardous secondary
materials.  Recyclers of hazardous secondary materials in this situation
may thus respond differently from traditional manufacturers to economic
forces and incentives.  

An increased understanding of these aspects of hazardous secondary
material recycling can help to craft a rule that takes advantage of the
positive economic forces, and compensates for the negative ones, in
order to produce an optimal amount of recycling.  An optimal amount of
recycling is one that maximizes the net benefits (private and social
benefits minus private and social costs).  One sub-optimal outcome of
not providing a proper balance could be too little recycling, resulting
in inefficiencies.  In this case, increasing the rate of recycling (for
example, via today’s proposed changes) would realize additional net
benefits.  However, sub-optimal outcomes can also result from too much
of an activity.  For hazardous secondary material recycling, this
situation occurs when firms accumulate more hazardous secondary material
than can be recycled in a reasonable timeframe, or operate their
recycling process in a way that imposes excessive costs on society (such
as excess pollution or mishandling of hazardous secondary material) and
that can result in the material being discarded.  

The market incentive study uses economic theory to provide information
on how certain characteristics can influence three different recycling
models to encourage or discourage an optimal outcome.  The three
recycling models examined are: (1) commercial recycling, where the
primary business of the firms is recycling hazardous secondary
materials, which are accepted for recycling from offsite industrial
sources (which usually pay a fee); (2) industrial intra-company
recycling, where firms generate hazardous secondary materials as
byproducts of their main production processes and recycle the hazardous
secondary materials for sale or for their own reuse in production; and
(3) industrial inter-company recycling, where firms whose primary
business is not recycling, but use or recycle hazardous secondary
materials obtained from other firms with the objective of reducing the
cost of their production inputs.

For each of these recycling models, the report looks at how they are
potentially affected by three market characteristics: (1) value of the
recycled product; (2) price stability of recycling output or inputs; and
(3) net worth of the firm.

For all three models of hazardous secondary material recycling, a
recycled product with a high value appears to contribute to an optimal
outcome for hazardous secondary material recycling.  For commercial and
industrial inter-company firms, the value of the product can serve as a
strong incentive for the firm to recycle the product with care and bring
it to the market.  Recycling by these firms would thus be driven
primarily by the potential revenues from the recycled product, and not
by other factors such as an acceptance fee.  For industrial
intra-company recyclers, the value of the recycled product would
contribute to optimal recycling behavior even if the firm is reusing the
product in its own production process instead of selling it to outside
firms. Conversely, for all three models of hazardous secondary material
recycling, a recycled product with a low value could be a potential
indicator of sub-optimal recycling outcomes.  For commercial firms in
particular, the acceptance fee is likely to be a much more prevalent
factor in the firm’s revenue structure when the recycled product has a
low value.  If the value of the recycled product is low, the firm may
have more of an incentive to focus on accepting hazardous secondary
material than properly recycling it and selling a low-value recycled
product. 

Price stability is another potential indicator of hazardous secondary
material recycling markets that produce optimal outcomes, particularly
for commercial recyclers.  When prices are stable, firms can more easily
adjust their production in response to the price signals they receive
from the market.  They are thus less subject to sudden upsets to their
revenue streams or costs which could force them to operate at a short or
long-term loss.  Unstable markets can contribute to sub-optimal
outcomes, due to an unexpected fall in revenues or rise in costs, such
that the firm is no longer able to cover the costs incurred to make the
product. This could encourage the stockpiling of hazardous secondary
material by the firm in order to continue collecting the acceptance fee.
 A commercial firm’s choice to shut down can also contribute to
sub-optimal recycling outcomes if this involves the abandonment of
hazardous secondary material that the firm was stockpiling on-site. 
Since industrial intra- and inter-company recyclers are also recycling
to produce a marketable product, they are subject to similar forces as
commercial firms.  They are less constrained in their responses to these
forces, however, since recycling is not their primary business
operation, and are able to switch from recycling to disposal, or from
using recycled materials to raw materials, if market conditions shift.

For all three recycling models, firms that have a higher net worth have
more to lose from liability issues and thus have a greater incentive to
invest in safe hazardous secondary material management and recycling
practices.  These firms would have more incentive to practice recycling
in an environmentally safe manner and also to insure against possible
liability risks that would jeopardize their investments.  Firms that
have a relatively low worth and do not have an established history in
the market could be potentially more likely to face incentives that
could cause them to engage in recycling practices that impose few
controls or cut corners in order to boost revenues. While we recognize
that it should not be assumed that all low-value firms would engage in
such practices, this can be viewed as one potential indicator of risky
behavior.

As mentioned earlier, using economic theory to interpret recycling
behavior should be done with extreme caution. An individual firm’s
decision-making process is based on many factors, and attempting to
extrapolate a firm’s likely behavior from a few factors, particularly
based on theoretical considerations, could lead to erroneous
conclusions.  However, when used in conjunction with other pieces of
information, the economic theory can be quite illuminating. For example,
because the industrial intra- and inter-company recyclers have more
flexibility (e.g., during price fluctuations, these companies can more
easily switch from recycling to disposal or from recycled inputs to
virgin inputs), they would be less likely to have environmental problems
from over-accumulated materials.  This outcome appears to be supported
by the results of the assessment of environmental problems study (see
Sectionsection VIII.B.2 of today’s supplemental proposal). 

On the other hand, certain specific types of commercial recycling, where
the product has low value, the prices are unstable, and/or the firm has
a low net worth, could indicate that it is more likely for environmental
problems to occur from over-accumulation of recycled materials, compared
to recycling by a well-capitalized firm that yields a product with high
value.  Again, this outcome appears to be the supported by the results
of the assessment of environmental problems study (see Sectionsection
VIII.B.2 of today’s supplemental proposal). 

However, as shown by the study of successful recycling practices,
generators who might otherwise bear a large liability from poorly
managed recycling at other companies have addressed this issue by
carefully examining the recyclers to which they send their hazardous
secondary materials to ensure the recyclers are technically and
financially capable of performing the recycling (see section VIII.B.1 of
today’s supplemental proposal). In addition, we have seen that
successful recyclers (both commercial and industrial) have often taken
advantage of mechanisms such as tolling contracts to help stabilize
price fluctuations, allowing recyclers to plan their operations better. 

For further discussion of this study, please see A Study of Potential
Effects of Market Forces on the Management of Hazardous Secondary
Materials in the docket for today’s supplemental proposal.

IX. Exclusion for Hazardous Secondary Materials that Are Legitimately
Reclaimed Under the Control of the Generator.:  Proposed 40 CFR 260.10,
261.2(a)(1), 261.2(a)(2), 261.2(c)(3), 261.4(a)(23).    

A. Purpose of the Exclusion

	

	In the October 2003 proposal, EPA proposed to exclude from the
definition of solid waste hazardous secondary materials generated and
reclaimed in a continuous industrial process within the same industry.
“Same industry” was defined as industries sharing the same 4-digit
North American Industry Classification System (NAICS) code. We also
co-proposed a second option, under which such materials would not be
eligible for the exclusion if the reclamation took place at a facility
that also recycled regulated hazardous wastes generated in a different
industry.   EPA chose the NAICS system as a way to define “same
industry” because the system is already widely used to classify
different industries.  We recognized that the system was developed for
statistical rather than regulatory purposes.  However, the NAICS scheme
employs a production-oriented concept, grouping together industries that
have similar or identical production processes.  In addition, the
regulated community is generally familiar with the NAICS system.  For
these reasons, the Agency proposed this system to define “same
industry”. 

	

EPA chose the four-digit NAICS level (rather than the three or
five-digit level) because that level appeared to be an appropriate
compromise between being too broad or too restrictive.  The Agency
evaluated the potential recycling opportunities available through
defining “same industry” at the three, four, and five digit levels. 
We performed the analysis for the chemical manufacturing sector, which
contains many RCRA hazardous waste generators and served as a surrogate
for other manufacturing sectors.  In general, we found that
classification at the three-digit level led to grouping facilities that
did not have similar production processes.  Classification at the five
digit level, on the other hand, led to grouping similar processes, but
greatly reduced opportunities for recycling.  		

In the same notice, EPA also solicited comment on several different
alternatives to the proposed exclusion.  The first alternative was
whether to exclude from the definition of solid waste those hazardous
secondary materials that are generated and reclaimed in a continuous
process on-site (as defined in 40 CFR 260.10), even if different
industries were involved. This option would also have required the same
notification and speculative accumulation provisions proposed for the
proposed option. This exclusion would be based on the premise that
materials recycled on-site in a continuous process are unlikely to be
discarded because they would be closely managed and monitored by a
single entity who is intimately familiar with both the generation and
reclamation of the material.  In addition, no off-site transport of the
hazardous secondary material (with its attendant risks) would occur, and
there would be few questions about potential liability in the event of
mismanagement or mishap.  An example of such recycling given in the
proposal was a facility that produces petrochemicals, as well as
pharmaceuticals.  Under the 4-digit NAICS-based proposal, such
reclamation would not have been excluded even if both establishments
were located at the same site and operated by the same company.  Another
example might be a situation where a generator contracts with a
different company to reclaim material at the generator’s facility,
possibly through a mobile treatment unit.  

The second alternative was an exclusion for certain situations within
the chemical manufacturing industry that might present unique recycling
situations.  Specifically, within the chemical manufacturing industry,
the first manufacturer  will contract out production of certain
chemicals to another manufacturer (referred to as batch or tolling
operations).  The second manufacturer may generate hazardous secondary
materials that could be returned to the larger chemical manufacturer for
reclamation.  In the proposal, we inquired whether some recycling could
be precluded as a result of uncertain application of the NAICS
classification approach due to frequently changing product slates, or
different products being produced from the same equipment at different
times. 

The third alternative would have provided a broader conditional
regulatory exclusion from RCRA regulation for essentially all hazardous
secondary materials that are legitimately recycled by reclamation.  The
purpose of this broader exclusion would be to encourage recycling and
lower costs, while still protecting human health and the environment.
The Agency suggested that additional requirements or conditions might be
appropriate to protect human health and the environment for this
exclusion, compared to the same-industry exclusion that we proposed. 
Examples of such additional conditions could include record-keeping and
reporting requirements, along with safeguards on storage or handling. 
Although the Agency solicited comment on additional conditions, the
discussion in the preamble of this approach was brief and may not have
provided sufficient information to commenters.  Like the other
exclusions discussed in the October 28, 2003 proposal, hazardous
secondary materials used in a manner constituting disposal, burned for
energy recovery, or materials that were inherently waste-like would not
be eligible. The Agency solicited comment on the increased recycling and
reuse that would result from broadening the rule in this way, as well as
comment on the potential effects to human health and the environment.  

	

	EPA received many comments on the NAICS “same industry” scheme from
various stakeholders.  Many commenters did not agree that NAICS was an
appropriate way to define “same industry,”; more importantly, most
commenters did not agree that excluding recycling within the same
industry was justified on legal or pragmatic grounds. These commenters
generally stated that EPA’s proposed exclusion did not accurately
reflect Congressional intent or court mandates concerning EPA’s
authority over legitimate recycling. They reiterated that EPA’s RCRA
authority extends only to materials that are truly discarded (i.e.,
disposed of, thrown away, or abandoned) and that have not yet become
part of the waste disposal problem.  Many of these commenters
interpreted the relevant court decisions to mean that any legitimately
reclaimed material (whether recycled within the same industry or between
industries) is not “discarded” and thus cannot be regulated as a
solid waste.  Some of these commenters cited the “Safe Foods”
decision (Safe Food and Fertilizer, et. al., v. EPA, 350 F.3d 1263, D.C.
Cir. 2003) as support for their contention that materials recycled in
different industries were not discarded. 

	Other commenters said that they would not benefit from the proposed
exclusion because so many recycling opportunities occur among different
industries.  These commenters included companies in the metals recycling
industry, mining and mineral processors, specialty batch chemical
manufacturers, some solvent recyclers, the paint and coatings industry,
spent pickle liquor generators, and small businesses. 

	

	Still other commenters argued that the Agency had read the court
decisions too broadly rather than too narrowly, but some of these
commenters also said that EPA had failed to present a reasoned analysis
of the indicia of discard.  One commenter stated that EPA did not
analyze potential environmental harm from the proposed rule.

	

	Many commenters, on the other hand, responded positively to the
Agency’s solicitation of comment about excluding on-site recycling
from the definition of solid waste.  These commenters agreed with
EPA’s suggestion that generators who recycle materials on-site (even
if the reclamation takes place in a different NAICS code) are likely to
be familiar with the material and more likely to maintain responsibility
for the materials.  Some commenters wanted any exclusion confined to
on-site recycling, but other commenters suggested that EPA expand any
on-site exclusion to include recycling (including off-site recycling)
conducted within the same company. These commenters believed that the
principal reasoning applied to on-site recycling would also apply to
same-company recycling – i.e., that the same entity would be familiar
with the material and would remain responsible for it.  

	

	Concerning our solicitation of comments on tolling arrangements, some
stakeholders commented that the specialty batch chemical industry, in
particular, might present unique situations regarding appropriate
exclusions, principally due to the varying nature of production and
hence of potential hazardous secondary materials available for
recycling.  Because of these circumstances, stakeholders believed that
exclusions targeted to the types of tolling arrangements common in this
industry would be easier to implement.  

	

	After evaluating the comments, the Agency has concluded that its
proposed approach to “same industry recycling” does not accurately
delineate EPA’s RCRA jurisdiction over hazardous secondary materials.
We agree with the many commenters who said that whether materials are
recycled within the same NAICS code is not an appropriate indication of
whether they are discarded.  NAICS designations are designed to be
consistent only with product lines, so that the effect of our October
2003 proposal would be that materials generated and reclaimed under the
control of the generator would not be excluded, even though the
generator has not abandoned the material and has every opportunity and
incentive to maintain oversight of, and responsibility for, the material
that is reclaimed (see ABR, 208 F.2d at 1051 (noting that discard has
not taken place where the producer saves and reuses secondary
materials)).  Under these circumstances, we believe that discard has
generally not occurred.  For example, of the 208 recycling cases that
caused environmental damage, only tenthirteen (approximately fivesix
percent) occurred as a result of on-site recycling. We also agree with
those commenters who said that most of this rationale would apply just
as reasonably to reclamation taking place within the same company.  In
the case of same-company recycling, both the generating facility and the
reclamation facility (if they are different) would be familiar with the
hazardous secondary materials and the parent company would be ultimately
liable for any mismanagement of the hazardous secondary materials. 
Under these circumstances, the incentive to avoid such mismanagement
would be so strong that mismanagement also would be very unlikely. 

	Concerning tolling arrangements, we also believe that the type of
tolling contract common in the specialty batch chemical industry does
not constitute discard as long as the recycling is legitimate and the
hazardous secondary material is not speculatively accumulated.  Under a
typical type of arrangement, one company (the tolling contractor)
contracts with a second (often smaller) company (the batch manufacturer)
to produce a specialty chemical (sometimes because of a temporary lack
of capacity, or because the batch manufacturer has specialized equipment
or expertise).  The batch manufacturer produces the chemical and the
production process generates a hazardous secondary material (such as a
solvent) which is routinely reclaimed at the tolling contractor’s
facility through an exempt closed-loop recycling process when it has the
capacity to manufacture the chemical in question at its own facility. 
However, if the batch manufacturer transports the hazardous  secondary
material back to the tolling contractor for reclamation, the tolling
contractor would be deemed under existing regulations to be reclaiming a
spent material, and a RCRA storage permit would generally be required. 
The typical contract in the specialty batch chemical industry contains
detailed specifications about the product to be manufactured, including
management of any hazardous secondary materials that are produced and
returned to the tolling contractor for reclamation. Under this scenario,
the hazardous secondary material continues to be managed as a valuable
product, so discard has not occurred. Moreover, if hazardous secondary
materials are generated and reclaimed pursuant to a written contract
between a tolling contractor and a batch manufacturer, and if the
contract specifies that the tolling contractor retains ownership of, and
responsibility for, the hazardous secondary materials, there is a strong
incentive to avoid any mismanagement or release.  

	In today’s supplemental notice, EPA has described three general
situations where we believe that discard has not taken place and where
the potential for environmental releases is therefore low. The three
situations involve circumstances under which hazardous secondary
materials are generated and reclaimed within the United States or its
territories.  They are either generated and reclaimed at the generating
facility, at a different facility, but within the same company, or
though a tolling arrangement.  Because the facility owner in these
situations still finds value in the hazardous secondary materials, has
retained control over them, and intends to use them, EPA is proposing to
exclude these materials from being a solid waste and thus from
regulation under Subtitle C of RCRA, if the recycling is legitimate (see
40 CFR 261.4(g)), and if the hazardous secondary materials are not
speculatively accumulated.  We are proposing slightly different
exclusions, depending on whether or not the excluded hazardous secondary
materials are stored in land-based units prior to reclamation or as part
of the reclamation process.    The scope and applicability of the
exclusions are described below.  

B. Scope and Applicability

1.  Hazardous Secondary Materials Managed Under the Control of the
Generator in  Non-Land-Based Units

	As stated above, the Agency generally believes that discard has not
occurred if hazardous secondary materials are legitimately recycled
under the control of the generator, provided they are not speculatively
accumulated, and provided they are reclaimed within the United States or
its territories.  We are therefore proposing an exclusion for these
hazardous secondary materials under §261.2(a)(2)(ii), except if such
materials are managed in a land-based unit prior to reclamation or as
part of the reclamation process.  See section B.2 below for discussion
of management in land-based units.  The definition of recycling that is
“under the control of the generator” is proposed in 40 CFR 260.10.  

The first part of the exclusion proposed today at 40 CFR
261.2(a)(2)(ii)(A) would apply to hazardous secondary materials
generated and reclaimed at the generating facility that are contained in
a non-land-based unit.  Examples of non-land-based units include, but
are not limited to, tanks, containers, and containment buildings.  

The definition of “hazardous secondary material generated and
reclaimed under the control of the generator” is proposed in 40 CFR
260.10 and consists of three parts.  The first part of the definition
would apply to hazardous secondary materials generated and reclaimed at
the generating facility.   This exclusion definition would include
situations where a generator contracts with a different company to
reclaim hazardous secondary materials at the generator’s facility,
either temporarily or permanently.  For purposes of this exclusion,
“generating facility” means all contiguous property owned by the
generator.  We are proposing to exclude hazardous secondary material
that is reclaimed “at the generating facility” rather than
“on-site” as defined in 40 CFR 260.10 (as we proposed in October
2003) because the later definition may encompass facilities not under
the control of the generator.  For example, an industrial park meets the
definition of “on-site,” even though facilities operating at an
industrial park may be completely separate and under separate ownership.
However, EPA solicits comment on whether facilities under separate
ownership, but located at the same site, should be included within this
proposed exclusion.  Additionally, EPA solicits comment on other
definitions which might be equally compatible with generator control as
the definition proposed in today’s notice.  

	

	The second part of the exclusion proposed today at 40 CFR
261.2(a)(2)(ii)(B) definition of hazardous secondary materials generated
and reclaimed under the control of the generator would apply to
hazardous secondary materials generated and reclaimed by the same
company (i.e., by the same “person” as defined in §260.10),
provided the materials are stored in non-land-based units.).  The
generator must certify that the hazardous secondary materials will be
sent to a company under the same ownership as the generator, and that
the owner corporation has acknowledged full responsibility for the safe
management of the hazardous secondary materials.  Because of existing
complexities in corporate ownership and liability, we are proposing to
require the generator to certify regarding ownership and responsibility
for the recyclable hazardous secondary materials.  EPA solicits comment
on any other certification language that might accomplish the same end,
and we also seek comment on other definitions of “same-company.”  

	

	The third part of the exclusion proposed today at 40 CFR
261.2(a)(2)(ii)(C) definition of hazardous secondary materials generated
and reclaimed under the control of the generator would apply to
hazardous secondary materials that are generated pursuant to a written
contract between a tolling contractor and batch manufacturer and
reclaimed by the tolling contractor, if the hazardous secondary
materials are stored in non-land-based units.  Under today’s proposal,
the tolling contractor must retain ownership of, and responsibility for,
the hazardous secondary materials that are generated during the course
of the manufacture.  For purposes of this exclusion, tolling contractor
means a person who arranges for the production of a product made from
raw materials through a written contract with the batch manufacturer.
Batch manufacturer means a person who produces a product made from raw
materials pursuant to a written contract with a tolling contractor.  As
stated above, this type of contract appears to be common within the
specialty batch chemical manufacturing industry.  

EPA notes that in order to be eligible for this exclusion, it is not a
requirement that the contractual arrangement in question refer
specifically to “tolling” or “batch manufacturing,” as long as
the person commissioning the manufacture of the product retains
ownership of, and responsibility for, the hazardous secondary materials
that are generated during the course of the manufacture.  The Agency
also solicits comment on other types of tolling arrangements or other
contractual arrangements under which discard is unlikely to happen and
which could appropriately be covered by an exclusion for
“generator-controlled” hazardous secondary material.  For example,
one company may enter into a contractual arrangement for a second
company to reclaim and reuse (or return for reuse) the first company’s
hazardous secondary material.  The first company could create a
contractual instrument that exhibits the same degree of control over how
the second company manages the hazardous secondary material as is found
in a tolling agreement.  EPA solicits comment on whether hazardous
secondary materials recycled under such contracts also should be
included within the scope of the exclusion.  

2.	Hazardous Secondary Materials Managed Under the Control of the
Generator in Land-Based Units

As stated above in section B.1 of this preamble, the exclusion proposed
today at 40 CFR 261.2(a)(2)(ii) would apply to materials generated and
reclaimed within the United States or its territories that are under the
control of the generator and that are stored in non-land-based units. 
However, some hazardous secondary materials that are generated and
reclaimed within the United States or its territories under the control
of the generator (i.e., at the generating facility, within the same
company, or through a tolling arrangement) are managed in units that are
land-based.  For these materials, we are proposing a slightly different
exclusion at 40 CFR 261.4(a)(23).  

The Agency is proposing to place this exclusion in 40 CFR 261.4(a)(23)
because while we recognize that raw materials and hazardous secondary
materials can be and are stored in land-based units (such as mineral
processing residues or pulping liquors), we also recognize that such
management clearly presents a greater potential for releases to the
environment than management in non-land-based units.   Therefore, we are
proposing an additional requirement which provides that if hazardous
secondary materials are managed in land-based units, such materials must
be contained in the units.  We are not proposing that the units meet any
particular design requirement or that the hazardous secondary materials
in the unit be managed in a particular way.  Rather, we are only
proposing that the hazardous secondary material in the unit be
“contained” and not released into the environment.  The definition
of land-based unit is proposed in §260.10, and is taken from section
3004(k) of RCRA (i.e., landfill, surface impoundment, waste pile,
injection well, land treatment facility, salt dome formation, salt bed
formation, or underground mine or cave).  Examples of surface
impoundments include ditches and sumps.

Whether the hazardous secondary material is “contained” in the
land-based unit will necessarily be determined on a case-by-case basis. 
Generally, however, recyclable material is “contained” if it is
placed in a unit that controls the movement of the hazardous secondary
material out of the unit.  Hazardous secondary material that remains
contained in a land-based unit that experiences a release would still
meet the terms of the exclusion in 261.4(a)(23), unless the hazardous
secondary material is not managed as a valuable product and as a result,
a significant release from the unit occurs.  In this situation, the
hazardous secondary material in the land-based unit would be considered
discarded.  In determining whether hazardous secondary materials in a
land-based unit are contained, a facility should consider the
circumstances under which the materials are stored.  For example,
materials that are stored in direct contact with the soil in a natural
or man-made impoundment may be more likely to leak.  However, the local
geological and meteorological conditions can greatly influence whether
such materials would be contained.  These local conditions, along with
specific measures that a facility employs, such as liners, leak
detection measures, inventory control and tracking, control of releases,
or monitoring and inspection during construction and operation of the
unit, may be used in determining whether the hazardous secondary
material is contained in the land-based unit.  

3.  Hazardous Secondary Materials Managed Under the Control of the
Generator:  General Provisions      

	Hazardous secondary materials released from any storage unit, whether
land-based or non-land based, are discarded and if such materials upon
discard would be either a listed hazardous waste or exhibit a hazardous
waste characteristic, the hazardous secondary materials would be part of
the waste disposal problem and would be subject to the hazardous waste
regulations, unless they are immediately cleaned up. 

We also note that hazardous secondary materials excluded from the
definition of solid waste generally become wastes when they are
speculatively accumulated, because at that point they are considered to
be discarded.  For this reason, all hazardous secondary materials
excluded under proposed 40 CFR 261.2(a)(2)(ii) or 261.4(a)(23) would be
subject to the speculative accumulation provisions of 40 CFR
261.1(c)(8).  In addition, as with other excluded recycling operations,
residuals from the recycling process are considered to be newly
generated solid wastes, which can also be hazardous wastes if they
exhibit a hazardous characteristic under Subpart C of Part 261 or if
they are specifically listed under Subpart D of Part 261.   

 

The Agency is soliciting comment on whether additional requirements
might be necessary to demonstrate absence of discard when hazardous
secondary materials are recycled under proposed 40 CFR 261.2(a)(2)(ii)
or 261.4(a)(23).  Our analysis has led us to conclude that discard has
not occurred and releases are highly unlikely when hazardous secondary
materials are generated and reclaimed under these circumstances, except
possibly when such materials are managed in land-based units. 
Nevertheless, we are requesting comment on other points of view.  An
example of such conditions would be recordkeeping requirements, such as
those proposed today in 40 CFR 261.4(a)(24)).  Another example would be
appropriate limitations on storage, such as performance-based standards
designed to address releases to the environment. The Agency solicits
comment on whether additional management requirements are appropriate
for hazardous secondary materials that are generated and reclaimed under
the control of the generator.  If commenters  believe such additional
requirements are appropriate, they should specify the technical
rationale for each requirement suggested, and why the requirement is
necessary if the hazardous secondary material remains under the control
of the generator.       

For all hazardous secondary materials that would be excluded under 40
CFR 261.2(a)(2)(ii) or 261.4(a)(23), we We are also proposing that
generators (and reclaimers, where the generator and reclaimer are
located at different facilities) of hazardous secondary materials
recycled under the control of the generator, whether managed in a
land-based or non-land based unit, would be required to submit a
one-time notice to the EPA Regional Administrator or, in an authorized
state, to the state Director. The notice would need to identify the
name, address, and EPA ID number (if it has one) of the generator or
reclaimer, the name and phone number of a contact person, the type of
hazardous secondary material that would be managed according to the
exclusion, and when the hazardous secondary materials would begin to be
managed in accordance with the exclusion.  A revised notice would be
required to be submitted in the event of a change to the name, address,
or EPA ID number of the generator or reclaimer or a change in the type
of hazardous secondary material being recycled.    

The intent of this proposed notification requirement is to provide basic
information to regulatory agencies about who will be managing hazardous
secondary materials under the exclusion, and the types of hazardous
secondary materials that would be recycled.  For hazardous secondary
materials that would be excluded under 40 CFR 261.2(a)(2)(ii), this
proposed notification requirement would be specified in 40 CFR 260.42
(i.e., separate from 40 CFR 261.2).  For hazardous secondary materials
that would be excluded under 40 CFR 261.4(a)(23), this proposed
notification requirement is included in the exclusion.   We note that in
both cases, the requirement to provide this notification would not be a
condition of the exclusion.  Thus, failure to comply with the
requirement would constitute a violation of RCRA, but would not affect
the excluded status of the waste. 

We believe our authority to request such information is inherent in our
authority to determine whether a material is discarded, and we consider
this to be the minimum information needed to enable credible evaluation
of the status of a hazardous secondary material under section 3007 of
RCRA.  EPA further believes that RCRA section 3007 allows it to gather
information with regard to any material when the Agency has reason to
believe that the material may be a solid waste and possibly a hazardous
waste within the meaning of RCRA section 1004(5).  Section 2002 also
gives EPA authority to issue regulations necessary to carry out the
purposes of  RCRA.  

We also note that after EPA promulgates regulations listing a material
as a hazardous waste or identifying it by its characteristics, section
3010 of RCRA requires generators of such materials to submit a
notification to EPA within 90 days.  Since the changes proposed today
could substantially affect this universe of facilities in the Subtitle C
system, we believe the notifications are appropriate and useful.  

EPA notes that the information discussed above can be difficult for
regulatory authorities to retrieve and use if it is not placed into a
data management system.  Similarly, using different notification
procedures and data management systems for different regulated materials
can be confusing and time-consuming for the regulated community.  For
these reasons, the Agency requests comment on whether the Subtitle C
Site Identification Form (EPA Form 8700-12) or the comparable state form
should be used to provide the information required in this supplemental
proposal.  This form is used to enter data into the RCRAInfo data
management system managed by the states and EPA.  To implement use of
this form for the notification requirements proposed today, we would
revise the form to include a section for materials covered by this
exclusion, with spaces for the appropriate data elements.  

  In addition, we are considering including additional information in
the notification in order to measure the impact of the proposed
rulemaking.  More data would assist EPA in targeting future resources
and activities to further increase recycling and to report to the public
the impacts of the proposed rulemaking.  The additional data elements
for which we are requesting comment are discussed in Sectionsection XIV
of today’s notice.  

 

We note that this exclusion applies only to hazardous secondary
materials generated and reclaimed within the United States or its
territories, because most of our information about recycling comes from
these geographical areas.  We do not have sufficient information about
most recycling activities outside of the United States to decide whether
discard is likely or unlikely. However, we are soliciting comment on
whether EPA should promulgate a conditional exclusion for exported
material otherwise meeting the criteria for this exclusion.

C.  Enforcement

	Under today’s proposal, hazardous secondary materials generated and
reclaimed within the United States under the control of the generator
would be excluded from RCRA Subtitle C regulation, but would be subject
to certain  restrictions, principally speculative accumulation.  Persons
that handle these hazardous secondary materials would be responsible for
maintaining the exclusion by ensuring that these restrictions are met. 
If the hazardous secondary materials were not managed pursuant to these
restrictions, they would not be excluded.  They would then be considered
solid and hazardous wastes if they were listed or they exhibited a
hazardous waste characteristic for Subtitle C purposes from the time
they were generated.  Persons operating under the exclusion would also
be required to notify EPA or the authorized state. 

Persons taking advantage of today’s proposed exclusion that fail to
meet the requirements may be subject to enforcement action and the
materials could be considered hazardous waste from the point of their
generation.  EPA could choose to bring an enforcement action under RCRA
section 3008(a) for all violations of the hazardous waste requirements
occurring from the time they are generated through the time they are
ultimately disposed or reclaimed.  The Agency believes that this
approach provides generators with an incentive to handle (or in the case
of tolling or other contractual arrangements, ensure that their
contractors handle) the hazardous secondary materials pursuant to the
requirements.  It also encourages each person to take appropriate steps
to ensure that such materials are safely handled and legitimately
recycled by others in the management chain. If there is a release of the
hazardous secondary materials into the environment, they are considered
discarded and subject to all applicable hazardous waste regulations.  

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

       EPA is today proposing an exclusion from the definition of solid
waste for hazardous secondary materials that are generated and
subsequently transferred to another company or person for the purpose of
reclamation, provided that certain conditions are met.  Recycling that
conforms to these conditions would not involve discard and therefore the
recyclable materials would not be regulated as solid waste.  Such
excluded hazardous secondary materials would also need to be recycled
legitimately, as determined according to the provisions of 40 CFR
261.2(g), which also are being proposed today, and could not be
speculatively accumulated, as defined in 40 CFR 261.1(c)(8). 

	The conditions that EPA is proposing today are based on our
understanding of how successful third-party recycling currently operates
(and, conversely, how unsuccessful recycling practices can result in
recyclable hazardous secondary materials being discarded), and are
supported by the information included in the recycling studies that are
described in section VIII of this preamble.  For example, the study of
current good recycling practices indicates that responsiblemany
generators examine the recycler's technical capabilities, business
viability, environmental track record, and other relevant questions
before sending hazardous secondary materials for recycling.  These
recycler audits, which can be thought of as a form of environmental "due
diligence," are in essence a precaution to minimize the prospect of
incurring CERCLA liability in the event that the recycling, or lack
thereof, results in discard of the material.  The fact that responsible
these companies are willing to incur the expense of auditing recyclers
as a business practice is of itself a marketplace affirmation that
sending hazardous secondary materials to other companies for recycling
involves some degree of risk.  Although these risks may be small when
the recycler is a well established, successful enterprise with a good
record of environmental stewardship, it also is apparent that not all
recyclers fit this profile, as evidenced in the study of environmental
problems associated with hazardous secondary material recycling.  Thus,
we believe that there is amplesufficient reason for the Agency to place
certain conditions on this proposed exclusion for the Agencygenerator to
determine that the material is not discarded, particularly since we
expect that this rulemaking, if implemented, could encourage some number
of companies that may be unfamiliar with recycling to enter the
hazardous secondary material recycling business.

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

	

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

B. Scope and Applicability

	The conditional exclusion for transferred materials would potentially
apply to materials that are currently regulated as hazardous wastes
because their recycling involves reclamation—specifically, spent
materials, and listed sludges and listed by-products.

This is the same universe of materials that would have potentially been
eligible for the exclusion proposed in October, 2003, except that that
proposed exclusion would have applied only to these types of hazardous
secondary materials that were recycled within the “same industry.” 
It would not be available for recycled materials that are regulated as
hazardous wastes for other reasons, such as "inherently waste-like
materials," materials that are “used in a manner constituting
disposal," or “materials burned for energy recovery.”

	

The exclusion proposed today also would not address materials that are
currently excluded from the definition of solid waste according to
other, existing provisions of 40 CFR Part 261.  For example, the wood
preserving exclusion in 40 CFR 261.4(a)(9) includes conditions for
managing materials on drip pads.  Today's proposed exclusion, if
finalized, would not supersede or otherwise affect this conditional
exclusion; such hazardous secondary materials would need to continue
being managed in accordance with that existing exclusion.  

	

Today's proposed exclusion specifies three restrictions, in addition to
conditions for both generators and the reclaimers to whom excluded
materials would be transferred.  One restriction is that materials that
are speculatively accumulated would not be eligible for the exclusion. 
Restrictions on speculative accumulation (see 40 CFR 261.1(c)(8)) have
been an important element of the RCRA recycling regulations since they
were promulgated on January 4, 1985.  According to this regulatory
provision, a hazardous secondary material is accumulated speculatively
if the person accumulating it cannot show that the material is
potentially recyclable; further, the person accumulating the hazardous
secondary material must show that during a calendar year (beginning
January 1) the amount of such material that is recycled, or transferred
to a different site for recycling, must equal at least 75% by weight or
volume of the amount of that material at the beginning of the period. 
This provision already applies to hazardous secondary materials that are
not otherwise considered to be wastes when recycled, such as materials
used as ingredients or commercial product substitutes, materials that
are recycled in a closed-loop production process, or unlisted sludges
and byproducts being reclaimed.  

	

A second restriction or pre-condition specified in the proposed
exclusion is that excluded hazardous secondary materials would need to
be transferred directly from the generator to the reclaimer, and not be
handled by anyone else other than a transporter.  Thus, brokers or other
middlemen would not be allowed to own or otherwise handle excluded
hazardous secondary materials.  This is because a key condition of this
exclusion would require the generator to make "reasonable efforts" 
Thus, a generator who wished to maintain the excluded status of his
hazardous secondary materials would not be able to ship those materials
to a "middleman," such as a broker.  This restriction is consistent with
a  premise underlying this proposed exclusion--that is, in order to
ensure that such excludedunregulated materials will not be safely and
legitimately recycled.  These reasonable efforts in effect require the
generator todiscarded, generators should have knowledgea reasonable
understanding of who will reclaim the hazardous secondary material,be
reclaiming the materials and how itthey will be managed and reclaimed,
and otherwise legitimately recycled.  However,a reasonable assurance
that the recycling practice is safe and legitimate (see the following
discussion of the proposed condition for "reasonable efforts").  A
generator who ships materials to a middleman such as a broker typically
does not know who will ultimately manage and reclaim them, or  how they
will be reclaimed.  Thus, we believe that this restriction helps ensure
that materials that become unregulated under the terms of this
conditional exclusion will not be discarded by the generator.  The
Agency requests comment on this aspect of the proposed exclusion.	

The Agency recognizes that, in some cases, recycling of an excluded
hazardous secondary material may involve more than one reclamation step.
 For example, a recyclable hazardous secondary material such as an
electroplating waste might have a relatively high moisture content, and
a somewhat variable chemical composition.  Such materials might thus
need to be dried and blended to a suitable, consistent specification
before they are amenable to a "final" reclamation process (e.g., metals
smelting).  In this example, the two different reclamation processes
might be conducted by different companies and/or at different
facilities.  The Agency sees no reason to discourage this kind of
recycling, and we are thus proposing that today's transfer-based
exclusion would be available for materials that are recycled by means of
one or more reclamation processes.  Note, however, that the condition
for generators to make "reasonable efforts" under the terms of this
exclusion would apply in the same way, regardless of how many
reclamation steps were involved with recycling of an excluded material. 
In other words, if the excluded hazardous secondary material were
reclaimed by more than one facility or company, the generator of such
material would need to make "reasonable efforts" to examine each
facility or company in order to ensure that the hazardous secondary
materials will be safely and legitimately recycled.  We believe that
this is a consistent application of the idea of requiring "reasonable
efforts" as a condition of this proposed exclusion; where recycling of a
hazardous secondary material involves more than one reclamation step at
more than one facility, generators should nevertheless be well informed
as to how the materials will be reclaimed, and by whom, throughout the
recycling process.   

	

The third specified pre-condition is that, for all hazardous secondary
materials that would be excluded under 40 CFR 261.4(a)(24), generators
and reclaimers that are currently subject to the hazardous waste
regulations would need to submit a one-time notice to EPA or the
authorized state.  The notice would need to identify the name, address,
and EPA ID number (if applicable) of the generator or reclaimer, the
name and phone number of a contact person, the type of hazardous
secondary material that would be managed according to the exclusion, and
when the hazardous secondary materials would begin to be managed in
accordance with the exclusion.  A revised notice would be required to be
submitted in the event of a change to the name, address, or EPA ID
number of the generator or reclaimer or a change in the type of material
recycled.    

The intent of this proposed notification requirement is to provide basic
information to regulatory agencies about who would be managing hazardous
secondary materials under the exclusion, and the types of materials that
would be recycled.  We believe our authority to request such information
is inherent in our authority to determine whether a material is
discarded, and we consider this to be the minimum information needed to
enable credible evaluation of the status of a material under section
3007 of RCRA.  We also note after EPA promulgates regulations listing a
material as a hazardous waste or identifying it by its characteristics,
section 3010 of RCRA requires generators of such materials to submit a
notification to EPA within 90 days.  Since the changes proposed today
could substantially affect this universe of facilities in the Subtitle C
system, we believe the notifications are appropriate and useful.  

	

The Agency requests comment on alternative notification requirements for
this exclusion.  One such alternative would be to require that more
detailed information be provided in the notice, such as identification
of the reclamation facility to which it will be shipped, how it will be
stored at the generator's facility, and/or a detailed characterization
of the hazardous secondary material and of the recycling process.    

	

Another option being considered with regard to notification would be a
requirement that it be signed by an authorized representative.  In
addition, we are considering the option of requiring persons using this
exclusion to submit periodic (e.g., annual) reports detailing their
recycling activities, to provide information on the types of volumes of
hazardous secondary materials recycled, to whom the materials were sent
for reclamation, the types of products that were produced from the
reclamation processes, or other relevant information.  We are also
considering (and soliciting comment on) the option of requiring the
information to be submitted in a particular format, or submitted
electronically, and whether, in lieu of sending it to the implementing
agency, it should be maintained at the facility.

EPA notes that the information discussed above can be difficult for
regulatory authorities to retrieve and use if it is not placed into a
data management system.  Similarly, using different notification
procedures and data management systems for different regulated materials
can be confusing and time-consuming for the regulated community.  For
these reasons, the Agency requests comment on whether the Subtitle C
Site Identification Form (EPA Form 8700-12) or the comparable state form
should be used to provide the information required in this supplemental
proposal.  This form is used to enter data into the RCRAInfo data
management system managed by the states and EPA.  To implement use of
this form for the notification requirements proposed today, we would
revise the form to include a section for materials covered by this
exclusion, with spaces for the appropriate data elements.

C. Conditions

	

Today's proposed conditional exclusion for transferred materials
specifies conditions for generators, as well as the reclaimers to whom
generators transfer their hazardous secondary materials.

1. Conditions for generators

	

In addition to the three pre-conditions described above, EPA is
proposing that generators who wish to avail themselves of the exclusion
for transferred materials must satisfy two basic conditions:  record
keeping, which includes export notification, and "reasonable efforts,"
which in effect would require the generator to make an assessment of the
reclaimer so as to ensure that the hazardous secondary materials he or
she generates will be recycled legitimately and would allow the Agency
to determine that the materials are not discarded.

	

Record Keeping.  In order to allow for adequate oversight of generators
who manage hazardous secondary materials in accordance with this
exclusion, we are proposing that such generators maintain for a period
of three years certain records that document shipments (i.e., transfers)
of excluded hazardous secondary materials to reclamation facilities. 
Specifically, the generator would need to maintain, for each shipment of
excluded material, documentation of when the shipment occurred, who the
transporter was, the name and address of the destination reclamation
facility, confirmation of the receipt of the hazardous secondary
material by the reclaimer, and the type and quantity of the hazardous
secondary material in the shipment.  We are not proposing to prescribe
any specific template for these records, or require that they be
maintained in a particular format (e.g., paper vs. electronic records). 

	

It is our understanding, supported by the information in the study of
current good recycling practices, that responsible generators who send
hazardous secondary materials to commercial recycling facilitiesare
concerned about potential environmental liability maintain these types
of records as a routine business matter.  Thus, we expect that this
record keeping condition will impose a minimal additional paperwork
burden for them.those facilities.  We also believe that this
recordkeeping condition will help to clarify what "appropriate
documentation" the generator would need to provide in the event of some
type of RCRA enforcement action (see 40 CFR 261.2(f)).  This proposed
condition is also very similar to the record-keeping condition that
currently applies to excluded hazardous secondary materials used to make
zinc fertilizer (see 40 CFR 261.4(a)(20)(ii)(D)).  We are also
requesting comment on whether to require the generator to maintain a
copy of a confirmation of the receipt of the hazardous secondary
material by the reclaimer.  Based on our conversations with commercial
recycling facilities, they routinely issue receipt confirmations or
“recycling certificates” as a way of helping the generator verify
that the hazardous secondary material reached its intended destination. 
The Agency solicits comment on this proposed condition for record
keeping.

The Agency also is proposing today a condition that would require
generators to maintain at the generating facility for no less than three
years of documentation showing the reasonable efforts made before
transferring the hazardous secondary materials to the reclamation
facility.  Such records would presumably include copies of audit
reports, and other relevant information that was used as the basis for
the generator’s determination that the reclamation facilities to which
the hazardous secondary materials were sent would legitimately recycle
the hazardous secondary material in a protective manner.  

	

In addition, we are proposing that for each reclamation facility to
which the generator transferred excluded hazardous secondary materials,
this documentation also include a certification signed and dated by an
authorized representative, including whether retention of the generator
company, which states the following:  

"I hereby certify in good faith and to the bestconfirmation of my
knowledge that, prior to arranging for transport of excluded hazardous
secondary materials to [insert name of reclamation facility], reasonable
efforts were made to ensure that the materials would be recycled
legitimately, and otherwise managed in receipt is a manner that is
protective of human health and the environment, and that such efforts
were based on current and accurate information."normal business
practice.

	

The reason for requiring these certifications is that we believe there
is some potential for abuse of this condition of requiring documentation
of reasonable efforts, and requiring such a certification is a
reasonable precaution against such abuses.  To illustrate, it is
possible that a generator could try to document his reasonable efforts
with an audit report that he knew to be well outdated or that otherwise
contained inaccurate information.  Such cases would not, in our view,
constitute a "reasonable effort."  The Agency requests comment on this
proposed condition.  	

We considered additional record keeping conditions for generators who
would operate under this proposed exclusion, but are not proposing them
today, primarily because we are committed to limiting such conditions to
those we believe are essential to allowing proper oversight of hazardous
secondary materials that are managed outside of the existing RCRA
hazardous waste regulatory system.  Examples of such additional
conditions would include more thorough characterization of the materials
that are transferred for reclamation, the types of units in which they
were accumulated at the generating facility, how they were transported
(e.g., by truck), whether or not the hazardous secondary materials were 
transported as a DOT hazardous material, the date the hazardous
secondary  materials were generated, the quantity of hazardous secondary
materials generated, and other similar conditions.  We request comment
on whether such additional record keeping conditions or others not
mentioned here are warranted for generators who would manage materials
under this proposed exclusion.

Similarly, under today’s supplemental proposal, exporters of hazardous
secondary materials that are excluded under 40 CFR 261.4(a)(24) would be
required to notify the receiving country through EPA and obtain consent
from that country before shipment of the hazardous secondary materials
could take place (see 40 CFR 261.4(a)(25)).  This requirement would
serve as a notification to the receiving country so that it can ensure
that the hazardous secondary materials are recycled rather than
disposed. As an additional benefit, the receiving country has the
opportunity to consent or not based on its analysis of whether the
recycling facility can properly recycle the hazardous secondary
materials and manage process residuals in an environmentally sound
manner within its borders. EPA believes that sections 2002, 3002, 3007,
and 3017 of RCRA provide authority to impose this condition because such
notice and consent help determine that the materials are not discarded. 

Under today’s supplemental proposal, hazardous secondary materials
that are exported from the United States and recycled at a reclamation
facility located in a foreign country are not solid wastes, provided
that the exporter complies with the requirements of 40 CFR
261.4(a)(24)(i)-(iv) and notifies EPA and obtains a subsequent written
consent forwarded by EPA from the receiving country.  The provisions
that we are proposing today in 40 CFR 261.4(a)(25) require exporters to
notify EPA of an intended export 60 days before the initial shipment is
intended to be shipped off-site.  The notification may cover export
activities extending over a 12 month or shorter period.  The
notification must include contact information about the exporter and the
recycler, including any alternate recycler.  The notification must
include a description of the manner in which the hazardous secondary
materials will be recycled. It must also include the frequency and rate
at which they will be exported, the period of time over which they will
be exported, the means of transport, the estimated total quantity of
hazardous secondary materials to be exported, and information about
transit countries through which such materials will pass. Notifications
must be sent to EPA’s Office of Enforcement and Compliance Assurance,
which will notify the receiving country and any transit countries. When
the receiving country consents in writing to the receipt of the
hazardous secondary materials, EPA will forward the written consent to
the exporter. The exporter may proceed with shipment only after it has
received a copy of the written consent from EPA.  If the receiving
country does not consent to receipt of the hazardous secondary materials
or withdraws a prior consent, EPA will notify the exporter in writing. 
EPA also will notify the exporter of any responses from transit
countries.  Exporters must keep copies of notifications and consents for
a period of three years following receipt of the consent.  These
procedures are similar to those required for exports of hazardous waste
under 40 CFR Subpart E, except for the use of the hazardous waste
manifest.  

Reasonable Efforts.  Today’s supplemental proposal would require
generators to make "reasonable efforts" to ensure that their materials
are safely and legitimately recycled, before shipping or otherwise
transferring them to a reclamation facility.  In effect, this would
require the generator to perform a type of "environmental review" due
diligence" of the reclaimer in advance of transferring the hazardous
secondary materials.   We believe that today's proposed condition for
reasonable efforts reflects, and would perhaps reinforce, the methods,
such as audits, that responsiblemany generators of hazardous secondary
materials now routinely use to maintain their commitment to sound
environmental stewardship, and to minimize their potential regulatory
and liability exposures.  

	

Auditing recyclers before shipping hazardous secondary materials to them
has become an appropriate practice among certain Some generators,
particularly those who generate relatively large volumes of hazardous
secondary materials, audit recyclers before shipping such materials.  to
them. EPA's study of good practices for recycling quotes one large
recycling and disposal vendor as stating that of its new customers,
sixty percent of the large customers and thirty to fifty percent of the
smaller customers now perform audits on them. Under current practices,
such audits can involve a site visit to the recycling facility, and an
examination of the company's finances, technical capability,
environmental compliance record, and housekeeping practices, and the
products (and the markets for them) that they will make from recycling
the hazardous secondary material..  (Note:  Audits that are currently
conducted may or may not cover all of these areas.)  According to those
interviewed as part of our recycling study, auditing a recycler
typically costs the generator from two to five thousand dollars, and in
some cases more, depending on how thorough the audit is, and whether it
is conducted by the generator's own personnel, or by an outside
consultant.  The study also identified at least one trade association
organization which conducts audits at several hundred recycling and
other waste handling facilities per year, and typically charges its
member companies less than $1000 for a recycling facility audit report. 
This organization audits overseas facilities, as well as domestic
recyclers, and re-audits facilities on a more or less ongoing basis. 
Membership in this and similar organizations, by spreading the  expense
of conducting audits among a number of companies, gives a generator a
means of reducing the cost of this type of “environmental "due
diligence" ” even further.  Such auditing "consortiums" also reduce
costs for the facilities that are audited, since fewer audits need to be
conducted by individual generators.  Note, however, that third-party
auditors do not generally draw any conclusions based on their audits or
provide a “certification” with respect to reclaimer operations, so
the generator would still be expected to decide if the reclaimer is
acceptable.

	

Today's proposed condition that addresses "reasonable efforts" is
intended to reflect and capture in a regulatory context how
responsiblemany generators currently inquire and make decisions about
whom they should do business with, and how they manage their potential
liability and regulatory non-compliance risks.  Such efforts would at a
minimum need to address the following questions:

(A) Is the recycler technically capable of reclaiming the hazardous
secondary material, and of managing them safely?

(B) Does the recycler’s compliance history and current practices
indicate a record of, and a continuing commitment to, sound
environmental stewardship?

(C) Is there is a reliable market for the products or intermediaries
that are made from recycling the hazardous secondary material?

(D) Will residuals generated from recycling the Currently, under 40 CFR
262, a generator must make a hazardous waste determination and thus,
already has an obligation to determine whether the waste is subject to
regulation.  EPA believes that to make a parallel determination that
hazardous secondary materials, if any, be managed are not solid wastes
because they are destined for reclamation and are not discarded, the
generator must make a reasonable effort to ensure that the reclaimer
intends to legitimately recycle the material pursuant to 40 CFR 261.2(g)
and not discard it, and that the reclaimer will manage the material in a
manner that is protective of human health and the environment?. 

		

The Agency acknowledges

EPA is also proposing that the four questions that would need to be
addressed by the generator as part of can use any credible evidence
available in making his reasonable efforts are by nature subjective. 
Under today’s supplemental proposal, the generator would be required
to maintain documentation of the reasonable efforts made and the ,
including information that was found in making their certification.  The
Agency’s intent is to ensure that the generator conducted appropriate
inquiry as to these questions, as well as other possible
informationgathered by the generator, provided by the reclaimer, and/or
provided by a third party, in deciding who should reclaim their
hazardous secondary materials.  For example, it is possible that a
generator could conductlieu of personally performing an audit, consider
these four questions (and thus, make reasonable efforts) and decide to
ship his excluded materials to a particular reclamation facility where,
due to circumstances beyond the control of the generator, they are
released and cause environmental problems at that facility.  In such
situations, and where the generator’s decision is based on an
objectively reasonable belief that the hazardous secondary materials
would be recycled legitimately and otherwise managed in a manner that is
protective of human health and the environment, the generator would not
have violated the terms of the exclusion.  

EPA solicits comment on whether the frequency of periodic updates of the
“reasonable efforts” should be identified in the regulations or
whether that question should be left to individual situations applying
an objectively reasonable belief standard.  Information on industry
standards for facility audits of off-site activities, including how
frequently they are conducted, would be especially helpful.audit.  (In
fact, in some cases, the generator may not be an expert in different
aspects of recycling, and reliable third-party information or judgment
would play an important part in the generator’s conclusion.)  For
example, the generator might hire an independent auditor to review the
operations of a recycler.  Also, the generator might rely on third-party
certifying bodies to provide a reasonable level of confidence that a
recycler would safely manage his materials.  Trade associations might
make available to their members information on specific facilities that
could be used to determine that the facility is safely and legitimately
recycling the hazardous secondary material.  Likewise, a parent
corporation might perform an environmental audit of a recycler, and the
audit could then be used by several of the company’s facilities. In
fact, EPA believes that many reputable third party auditors, and trade
associations that might make available to their members information on
specific facilities, already assemble the types of information that
would be needed for a generator to determine, based on credible
evidence, that the hazardous secondary material is being legitimately
recycled. EPA would encourage this type of pooling of information in
order to reduce the burden and take advantage of specialized technical
expertise.  

	This proposed provision requiring reasonable efforts by generators
would only apply to generators who send hazardous secondary materials to
recyclers that are not operating under RCRA Part B permits or interim
status standards.  RCRA permitted facilities and interim status
facilities are already subject to stringent design and operating
standards, must demonstrate financial assurance, are subject to
corrective action requirements in the event of environmental problems,
and are typically given more thorough oversight than facilities without
RCRA Part B permits.  Thus, the Agency believes that permitted and
interim status recycling facilities provide generators with
environmental assurances that would ensure the hazardous secondary
material materials sent to such a facility isare not discarded.  Not
requiring reasonable efforts for generators who ship hazardous secondary
materials to RCRA permitted or interim status recycling facilities would
likely be of particular benefit to relatively smaller volume generators
who may not have the time and moneyresources required to undertake
“reasonable efforts”.   .”

	

It should be noted that although RCRA permits provide relatively
stringent environmental protections, they are not an absolute guarantee
that environmental problems will always be prevented from occurring at
permitted facilities.  Evidence of this can be found in the results of
the study of environmental problems associated with hazardous secondary
material recycling.  That study found that nine of the 208 damage
incidents occurred at facilities operating under RCRA Part B permits. 
At least two of these cases were associated with accidents such as
fires, while others were caused by other factors such as bankruptcy or
permit violations.  In most of these cases, expenditure of public funds
to clean up the environmental problems was not required.  

		

	Other possible 

EPA requests comment on whether to require generators to maintain at the
generating facility documentation showing the reasonable efforts made
before transferring the hazardous secondary materials to the reclamation
facility.  Such records would presumably include copies of audit
reports, and/or other relevant information that was used as the basis
for the generator’s determination that the reclamation facilities to
which the hazardous secondary materials were sent would legitimately
recycle the hazardous secondary material in a protective manner. 
Requiring specific documentation would help EPA or the authorized state
to determine whether the generator did make reasonable efforts to ensure
that his hazardous secondary material was not discarded.     

	In addition, EPA requests comment on whether, as part of the
documentation, the generator should also be required to maintain at the
generating facility a certification statement, signed and dated by an
authorized representative of the generator company, that for each
reclamation facility to which the generator transferred excluded
hazardous secondary materials, that the generator made reasonable
efforts that the hazardous secondary material was legitimately recycled.
 Such certification statement could, for example, be worded as follows:

“I hereby certify in good faith and to the best of my knowledge that,
prior to arranging for transport of excluded hazardous secondary
materials to [insert name of reclamation facility], reasonable efforts
were made to ensure that the hazardous secondary materials would be
recycled legitimately, and otherwise managed in a manner that is
protective of human health and the environment, and that such efforts
were based on current and accurate information.” 

Today's proposed condition for reasonable efforts is in effect a general
standard; we are not proposing specific questions that generators would
need to assess in satisfying this condition of the exclusion.  However,
we acknowledge that specifying in more explicit terms the questions that
should be examined in making such reasonable efforts could provide more
certainty to generators, as well as overseeing agencies.  On the other
hand, more explicit provisions for defining reasonable efforts in this
context could also limit a generator's flexibility.   The Agency
requests comment on whether more specific provisions to define
reasonable efforts for the purpose of this exclusion should be specified
in the final rule.   

If EPA were to specify in more explicit terms how generators should
perform reasonable efforts with respect to this regulatory exclusion,
one approach could be to identify specific questions that generators
would need to address in satisfying this condition.  Such questions
would be focused on ensuring that the hazardous secondary material will
not be discarded.  The following are examples of possible questions that
EPA could specify in the final regulatory condition for determining
reasonable efforts, with an explanation of how each question could
potentially assist in determining that the hazardous secondary material
is not discarded.  EPA then outlines two options for how to determine
"reasonable efforts;" the first option would use the broader list of
questions (A through F) and the second option would use a subset of
questions (A and F) that some believe have a more bright-line nature. 
EPA requests comment on whether any or all of these questions should be
included in the regulation (including the advantages and disadvantages
of the various questions, as well as of the two options outlined below),
and if there are other questions that should be also be considered. 

(A)  Has the reclaimer notified the appropriate authorities pursuant to
§261.4(a)(24)(iii) and does he have financial assurance as required
under §261.4(a)(24)(v)(D)?

(B) Does the reclamation facility have the equipment and trained
personnel to safely recycle the hazardous secondary material?  

(C) Are there any unresolved significant violations of environmental
regulations at the reclamation facility, or any formal enforcement
actions taken against the facility in the previous three years for
violations of environmental regulations?  If yes, then the generator
must have credible evidence that the reclaimer will manage the materials
safely.

(D)  Does the material being recycled provide a useful component that
will be reused in the product of the recycling process or aid in the
recycling process itself? 

(E) Is the product (or intermediate) of recycling at the reclamation
facility a generally traded commodity meeting applicable specifications?
 If not, is there other available information, such as sales records or
long-term contracts, demonstrating that there is a reliable market for
the product (or intermediate)?  If not, then the generator must have
credible evidence that the recycling at the reclamation facility will
produce a valuable product or intermediate.

(F) Does the reclamation facility have the permits required (if any) to
manage the residuals (if any) generated from reclamation of the excluded
hazardous secondary material?  If not, does the reclaimer have a
contract with an appropriately permitted facility to dispose of the
residuals (if any) generated from the reclamation of the excluded
hazardous secondary material?   If not, then the generator must have
credible evidence that the residuals generated from the recycling of the
excluded secondary hazardous material will be managed in a manner that
is protective of human health and the environment.  

The first possible question (A) focuses on whether the recycler has met
two of the requirements he must fulfill before accepting excluded
hazardous secondary materials for reclamation:  notification of the
appropriate regulatory authority that he plans to reclaim excluded
hazardous secondary material (see Section X.B of today’s proposal),
and establishment of financial assurance to cover the costs of managing
any hazardous secondary materials that remain if the facility closes
(see Section X.C.2 of today’s proposal).  If a recycler were found to
have failed to meet these requirements then he will have also failed to
show a good faith effort towards demonstrating that he intends to
recycle the material and not discard it, and will manage the material in
a manner that is not protective of human health and the environment

The second possible question (B) focuses on the technical capability of
the recycler, the most basic of requirements for ensuring safe recycling
of hazardous secondary material.  If a reclamation facility were found
to not have adequate equipment or trained personnel, it raises serious
questions as to whether the facility would be engaged in safe recycling.
 

The third set of possible questions (C) focuses on the compliance
history of the recycler.  Although compliance data are an imperfect tool
for determining whether a recycler would safely manage the hazardous
secondary material, EPA believes that they are a reasonable starting
point.  Facility-specific enforcement data on unresolved alleged
significant violations and on formal enforcement actions (by both EPA
and states) and specific case information for the formal enforcement
actions are readily available on EPA’s public website at
http://www.epa.gov/echo/.  While the presence of a violation does not
automatically mean that the facility would not recycle the hazardous
secondary material safely, it would raise questions and would likely
require additional information from the facility.   If the generator
provides reasonable documentation that the enforcement data are
unrelated to the facility’s commitment to manage the hazardous
secondary material safely or that the violation has been corrected and
the facility is back in compliance, then that would satisfy this aspect
of the reasonable efforts determination.

The fourth possible question (D) focuses on the usefulness of the
secondary material to the recycling process. EPA’s study of the
potential effect of market forces on the recycling of hazardous
secondary materials shows that there is a particular incentive for
materials to be recycled when it can be done at a lower cost than
disposing of the material. In some cases, however, a hazardous secondary
material with little value can be put into a “recycling” process,
but not add anything of value either to the end product or to the
process itself.  In such cases, the hazardous secondary material is
effectively being discarded rather than recycled. A material being
legitimately recycled can contribute value to the process in two ways.
The recycled material can contain a constituent that is being reused and
which also appears in the final product. Alternatively, the material
being recycled can aid in the process itself, such as by replacing a raw
material that would otherwise be needed. For example, a hazardous
secondary material may act as an important catalyst or a carrier in a
process, but not end up in the final product. To ensure that its
hazardous secondary material is being properly recycled, a generator
would need to ensure that his material contributes to the process in one
of these ways.  

The fifth set of possible questions (E) focuses on the products of
recycling.  According to EPA’s study of the potential effect of market
forces on the management of recyclable hazardous secondary materials,
there is a relationship between the value of the product from recycling
and the likelihood of successful recycling.  Products with little or no
value can result in recyclable materials being over-accumulated and
mismanaged.  Mismanagement of recyclable materials was a major cause of
environmental damage in forty percent of the cases that EPA has studied.
 To provide assurance that the products created from the hazardous
secondary materials are in fact valuable, the generator would need to
determine if the products are general commodities that meet applicable
standards, or that there is a reliable market based on sales records or
long-term contracts. 

 For most recycled products, this determination would be straightforward
and the product specifications are well known.  Metals reclamation and
solvents, for example, results in the production of valuable products
that are readily traded on the open market.  Other products, however,
may be unique or recycled in a different manner and may require a closer
look to determine if they meet minimum standards.   For example, in one
of the damage cases, the reclamation facility used spent plastic blast
media to make certain construction materials, which are a generally
traded commodity with rigorous standards.  However, in this case, the
“recycling” process resulted in cinder blocks that would crumble on
contact, and concrete slabs that would not support the weight of a
person.  In some cases, there may be no formal standard for a product,
but a commonsense informal standard would still apply, particularly in
regards to toxic constituents.  For example, in another of the damage
cases, children’s play sand was made from foundry sands highly
contaminated with lead, which, in this situation would not meet such a
commonsense standard.  There are also other instances in the damage
cases of recyclers marketing their product as appropriate for “fill”
despite high levels of toxic constituents. In one case, a battery
recycler distributed material from old battery casings to a community to
be used as fill and driveway paving material, resulting in elevated
levels of lead at 96 of the 109 properties.  In order to determine
whether a reclamation facility is legitimately recycling, the generator
will need to check to make sure that the recycling results in a valuable
product or intermediate.

Although a typical audit of a recycling facility would include an
examination of the facility’s finances, EPA does not have information
on whether this financial evaluation would include an investigation as
to whether the recycling process results in a valuable product.   EPA
requests comment on how including such a question might affect the scope
of a typical audit.

The sixth set of possible questions (F) focuses on another major cause
of environmental problems from hazardous secondary material recycling:
the management of the residuals.  Roughly one-third of the damage cases
that EPA documented were caused by mismanagement of the residuals from
recycling.  Because the residuals from recycling can contain the
hazardous constituents that originated with the hazardous secondary
materials, it is important that the generator understands how those
residuals will be disposed.  These residuals may or may not be regulated
hazardous wastes, but in either case, the generator would need to
determine that they are managed in units that have the necessary permits
(either solid waste permits or hazardous waste permits) or otherwise
comply with applicable environmental standards (whether federal or
state), such that the material is being managed in a manner that is
protective of human health and the environment.

         In drafting these possible questions to establish reasonable
efforts, we have attempted to write them in as an objective a manner as
possible, but we recognize that answering these questions still requires
a certain amount of judgment.  We understand that generators might
prefer more definitive criteria.  Therefore, we ask for suggestions on
how the possible reasonable efforts questions (if they are included in
the regulation) could be more objective, yet provide the necessary
information, or any other information that should be required for making
a reasonable efforts determination.  

         In particular, as noted at the beginning of this discussion,
EPA requests comment on the alternative option of focusing “reasonable
efforts” only on questions A and F above.  This second of the two
options would limit the generator's reasonable efforts requirement to
determining whether the reclaimer has notified EPA or the authorized
state that he is engaged in recycling excluded hazardous secondary
material; whether the recycler complies with the financial requirements
of this part; and whether the reclaimer has obtained the appropriate
permits for managing residuals onsite or, alternatively, ships the
material offsite under a contract with an appropriately permitted
facility.   These requirements would assure the generator that the
reclaimer’s operations are known to the regulatory authority and
therefore can be inspected for compliance, that residuals would be
properly managed (thus addressing the second most common environmental
problem in the recycling case studies EPA has analyzed), and that
financial assurance would cover the cost of facility closure and other
potential environmental liabilities.   While this list would not be as
comprehensive, this option of focusing on a set of criteria that some
believe is of a more bright-line nature could make it easier for the
generator to determine whether the criteria have been met and thereby
make, in good faith, a certification that would demonstrate
“reasonable efforts.”   

 

         In addition, EPA requests comment on how difficult it would be
for a generator to address and certify in good faith the responses to
questions B through E.  In this regard, EPA requests comment on whether
generators already possess, or would be able to acquire through
reasonable efforts, the information and ability necessary to evaluate
the relevant aspects of the recycling industry, especially in situations
where the generator does not work in that industry or otherwise have a
reason to be familiar with it.  For example, under question (B), to what
extent do generators already posses, or would be able to acquire
readily, the information and ability needed to evaluate the adequacy of
“the equipment and trained personnel” in a different industry than
the one in which the generator operates?  Similarly, under question (E),
to what extent do generators already possess, or would be able to
acquire readily, the required knowledge of markets (in which they might
not participate) for purposes of determining whether something
constitutes a "valuable product or intermediate"?   

 

           EPA also requests comment on whether, if the final regulation
does include specific questions for the generator to consider when
making reasonable efforts, (1) should all generators be required to
answer those questions and document their responses to each of
them—that is, this documentation would be a condition of the
exclusion, or (2) should generators have the option of choosing to
answer and document their response to these sets of questions or not.
Under the latter approach, if a generator chooses to meet his burden of
an objectively reasonable belief that his materials would not be
discarded and would be managed in a manner that is protective of human
health and the environment by answering these sets of questions, then
the generator would have met his obligation under the regulations. 
Alternatively, the generator under the latter approach could meet his
burden of proof based on other considerations, but without any assurance
that a court, if the Agency were to undertake an enforcement action,
would not later decide that the information he relied on did not support
an objectively reasonable belief that his materials would not be
discarded or would be managed in a manner that is protective of human
health and the environment.  However, under both approaches, if a
generator meets the burden of proof that his decision to send his
materials to a reclaimer was based on an objectively reasonable belief
that the hazardous secondary materials would not be discarded and would
be managed in a manner that is protective of human health and the
environment, then the Agency would consider that the generator met his
obligation under the regulations.

	Note that codifying “reasonable efforts” standards that the
generator would certify have been met would have the effect of placing
on the generator the responsibility of assessing the recycler and
ensuring that the hazardous secondary materials would not be discarded. 
EPA is seeking comment on this aspect of the proposal.  Further, the
Agency seeks comment on whether any or all of the questions are
appropriate for the generator to answer in making reasonable efforts to
ensure that the reclaimer intends to legitimately recycle the material
and will not discard it pursuant to the criteria in 261.2(g), and that
the reclaimer will manage the material in a manner that is protective of
human health and the environment.

 

            Of course, regardless of the type of information/questions
EPA may include in the final rule, if any, the generator could choose to
seek additional information or ask additional questions, and as shown in
EPA’s study of good recycling practices, many generators already do
so.  EPA anticipates generators may seek additional information in
determining that their hazardous secondary materials will not be
discarded  due to concerns about CERCLA liability (which is unaffected
by today’s proposal, see Section XIII.D. of today’s proposal).

EPA also requests comment on the relationship between the reasonable
efforts questions and legitimacy (discussed in more detail in section XI
of today’s preamble).   Two of the questions identified above,
questions D and E, are related to the two factors that EPA is proposing
today to be the “core” considerations for determining whether a
recycling operation is legitimate, rather than sham recycling (i.e.,
whether the hazardous secondary material makes a useful contribution,
and whether the recycling process results in a valuable product).  EPA
believes that it is appropriate to include these concepts in
“reasonable efforts,” thus allowing the generator to make only one
determination before sending hazardous secondary material for recycling.
 In other words, if these reasonable efforts questions are codified in
the regulations, EPA is proposing that by satisfying reasonable efforts,
the generator would have also satisfied the obligation to determine his
hazardous secondary material would be legitimately recycled per proposed
40 CFR 261.2(g).  However, because EPA is also requesting comment on
recordkeeping and certification requirements related to reasonable
efforts, incorporating questions D and E could alter the implementation
of the legitimacy determination for materials excluded under this
provision.   EPA requests comment on whether to keep the legitimacy
determination an independent requirement for generators who would claim
today’s proposed exclusion and not directly link it to “reasonable
efforts.”

 

         Finally, EPA also solicits comment on whether the frequency of
periodic updates of the “reasonable efforts” should be identified in
the regulations, or whether that question should be left to individual
situations applying an objectively reasonable belief standard. 
Information on industry standards for facility audits of off-site
activities, including how frequently they are conducted, would be
especially helpful.   

Storage conditions.  The As with the proposed exclusion for hazardous
secondary materials reclaimed under the control of the generator, if the
generator  manages the hazardous secondary material in a land-based unit
under the transfer-based exclusion, the material must be contained.  For
further discussion of how to determine if a material in a land-based
unit is contained, see section IX of today’s preamble.  

However, the Agency is also considering several other conditions for
generators under this exclusion.  One option would be a condition
addressing storage of accumulated recyclable hazardous secondary
materials by the generator prior to shipping them to a reclamation
facility.  For example, we are proposing today a condition that
specifies a general performance standard for storage of excluded
hazardous secondary materials at reclamation facilities.  Arguably, the
same or a similar standard could be required for generators who take
advantage of the exclusion.  Without such a condition, generators would
have no restrictions at all as to how they could store excluded
materials, although they presumably would have an incentive to not
contaminate their property as a result of improperThe Agency requests
comment as to whether a storage.  If such materials were released into
the environment as the result of improper storage, they would be wastes
subject to remediation under CERCLA, RCRA or other authorities.  On the
other hand, some storage practices are considerably less expensive than
others, and some generators might store materials in such units (e.g.,
lagoons) that, while inexpensive, pose relatively high risk of release
into the environment.  The Agency requests comment as to whether a
storage condition  condition (beyond the requirement that material in
land-based units be contained) should be imposed on generators as part
of this exclusion, and if so, what type of condition(s) it should be. 

	

2. Conditions for Reclaimers

	

EPA is proposing that reclaimers of conditionally excluded materials
will have to satisfy four general conditions, which pertain to record
keeping, storage of recyclable hazardous secondary materials, management
of the residuals from reclamation processes, and financial assurance.

	

Record Keeping.  Today’s supplemental proposal would require
reclaimers who operate under this conditional exclusion for transferred
materials to maintain certain records, similar to the records we are
proposing to require for generators.  Specifically, such reclaimers
would need to maintain for at least three years records of each shipment
of materials received at the reclamation facility that were excluded
from regulation under the terms of this exclusion.  Such records would
need to document the name and address of the generator of the hazardous
secondary materials, the name of the transporter and the date such
materials were received, and the type and quantity of hazardous
secondary materials received.  The Agency believes that this information
is the minimum needed to enable effective oversight of recycling
activities that would no longer be subject to the existing hazardous
waste regulations.

	

In addition to these proposed record keeping provisions, the Agency is
considering additional records that would more thoroughly document
excluded recycling activities by reclaimers.  Examples of such
additional records would include more thorough characterization of the
hazardous secondary materials that are received for reclamation, the
types of units in which they were stored at the reclamation facility,
how they were transported (e.g., by truck), whether or not the hazardous
secondary material was transported as a DOT hazardous material, and
other similar conditions.  We request comment on whether such additional
record keeping conditions are warranted for reclaimers.  

	

Storage of Recyclable Hazardous Secondary Materials.  We are proposing
today a general performance standard for storage of excluded hazardous
secondary materials at reclamation facilities that operate under this
proposed exclusion.  Specifically, the hazardous secondary materials
must be managed in a manner that is at least as protective as that
employed for analogous raw materials.  An "analogous raw material" is a
raw material for which a hazardous secondary material is a substitute
and serves the same function and has similar physical and chemical
properties as the hazardous secondary material. A raw material that has
significantly different physical or chemical properties would not be
considered analogous even if it serves the same function.  For example,
a metal-bearing ore might serve the same function as a metal-bearing air
pollution control dust, but because the physical properties of the dust
would make it more susceptible to wind dispersal, the two would not be
considered analogous.  Similarly, a hazardous secondary material with
high levels of toxic volatile chemicals would not be considered
analogous to a raw material without these volatile chemicals.  Where
there is no analogous raw material, or if the hazardous secondary
material is managed in a land-based unit, the material must be
contained.  For example, in the case of the metal-bearing air pollution
control dust, dust suppression measures would likely be needed to
contain the hazardous secondary materials.  For the hazardous secondary
material with high levels of toxic volatile chemicals, a closed tank or
container would probably be needed to contain the volatile chemicals. 
For further discussion of how to determine if a material is contained,
see Sectionsection IX of today’s preamble.

	

Storage conditions for reclamation facilities that operate under today's
proposed exclusion would allow the Agency to determine that the
recyclable materials are not discarded.  The great majority of damages
documented in the study of recent recycling-related damage incidents
occurred at commercial reclamation facilities, and mismanagement of
hazardous secondary materials was found to be a cause of environmental
problems in 35% of the incidents.   Accordingly, EPA believes that this
proposed condition for storage, or some similar condition, is necessary
and appropriate for reclamation facilities that take advantage of this
exclusion, and will establish an expectation for the owner/operators of
such facilities; i.e., that they must manage hazardous secondary
materials in at least as protective a manner as they would an analogous
raw material, and in such a way that materials would not be released
into the environment.

	

The Agency considered a number of alternatives to this proposed storage
condition, including specifying a much more rigorous set of conditions
equivalent to current Subtitle C regulatory requirements for storage
(see, for example, the requirements for tanks and containers, which are
specified in subparts I and J of 40 CFR Part 264), or to a similar, but
less stringent set of storage conditions (e.g., requiring the hazardous
secondary material to be stored in an engineered unit).  However, we do
not believe that an elaborate set of conditions for storage are
necessary for the purpose of this exclusion.  For one thing, we are
proposing today that generators who wish to take advantage of this
exclusion must make "reasonable efforts" to evaluate the reclamation
facilities they ship materials to, to ensure that the hazardous
secondary materials will be legitimately and safely recycled.  In making
such reasonable efforts, we expect that generators will make an
assessment of the reclamation facilities' material storage practices and
equipment.  Thus, we believe generators will themselves evaluate the
storage and handling practices of hazardous secondary materials at the
reclamation facilities they do business with.   We request comment on
whether or not the condition should be written in more specific terms,
that is, in a way that would provide greater clarity with regard to how
storage units should be designed and operated.

	

Management of recycling residuals.  We are today proposing a condition
pertaining to management of residuals that are generated from
reclamation of hazardous secondary materials excluded from regulation
under this proposal.  The proposed condition specifies that "any
residuals that are generated from reclamation processes will be managed
in a manner that is protective of human health and the environment.  If
any residuals exhibit a hazardous characteristic according to subpart C
of 40 CFR part 261, or themselves are listed hazardous wastes, they are
hazardous wastes (if discarded) and must be managed according to the
applicable requirements of 40 CFR parts 260 through 272."

	

The purpose of this condition is primarily to clarify the regulatory
status of these waste materials, and to emphasize in explicit terms that
recycling residuals must be managed properly.  The study of recent
(i.e., post-CERCLA, post-RCRA) recycling-related environmental problems
revealed that mismanagement of residuals was the cause of such problems
in one third of the incidents that were documented.  Some common
examples of these mismanaged residuals were acids and casings from
processing of lead-acid batteries, solvents and other liquids generated
from cleaning drums at drum reconditioning facilities, and PCBs and
other oils generated from disassembled transformers.  In many of these
damage incidents, the residuals were simply disposed in on-site
landfills or piles, with little apparent regard for the environmental
consequences of such mismanagement, or possible CERCLA liabilities
associated with cleanup of these releases.

	

One issue that the Agency considered with respect to this proposed
condition was the regulatory status of wastes generated from the
reclamation of hazardous secondary materials that would be listed
hazardous wastes if they were not recycled.  One argument could be that
these residuals should be regulated as listed hazardous wastes, since
they were derived from materials that were physically and chemically
identical to listed hazardous wastes, and could contain hazardous
constituents that might pose significant threats to human health and the
environment if the residuals were mismanaged.  A different argument
would be that such a regulatory construct is unwarranted, since the
recycled hazardous secondary materials are not wastes, provided they
meet the conditions of the exclusion, and therefore the "derived from"
concept as articulated in §261.3(c)(2) should not be applied to these
wastes.  Further, such waste residuals from reclamation processes often
do not resemble the hazardous secondary materials that were reclaimed,
and thus, the argument goes, it should not be assumed that they would
always need to be managed as hazardous wastes.  

	

The Agency does not believe it is necessary to apply the
“derived-from” principle to the residuals generated from the
reclamation of excluded hazardous secondary materials.  If the residuals
exhibited a hazardous characteristic, or they themselves were a listed
hazardous waste, they would be considered hazardous wastes, and would
have to be managed accordingly.  If they did not exhibit a hazardous
characteristic, or were not themselves a listed hazardous waste, they
would need to be managed in accordance with applicable state or federal
requirements for non-hazardous wastes.  Thus, they would be subject to
the same regulatory system that applies to wastes that are not hazardous
wastes.  The Agency does not see a compelling reason to establish as
part of this rulemaking a different regulatory system based on the
“derived-from” principle for reclamation residuals.  We solicit
comment on this aspect of today’s supplemental proposal.

	

Financial Assurance.  EPA is proposing today the condition that
owner/operators of reclamation facilities that would operate under the
terms of this exclusion for transferred materials demonstrate financial
assurance, in accordance with the current requirements of Subpart H of
40 CFR Part 265.  Under Part 265 Subpart H, owners and operators must
demonstrate that resources will be available to pay for closure, and
post-closure care at their facilities.  They also must meet liability
coverage requirements for sudden and accidental occurrences at their
facilities.  The requirements found in Subpart H of 40 CFR 265 also
outline how owners and operators should determine cost estimates,
provide the acceptable mechanisms for demonstrating financial assurance,
and set the minimum amounts of liability coverage required.

We believe that requiring financial assurance for these reclamation
facilities is necessary for the Agency to determine that the materials
managed at these facilities are not discarded, and is supported by the
findings of the recycling studies we conducted as part of this
rulemaking effort.  

	

For example, the study of current good recycling practices indicated
that one of the main reasons that generators audit recyclers is to
evaluate their financial health and resources to respond to accidents or
other problems that could cause adverse environmental or human health
consequences.  This is primarily because of the joint-and-several
liability provisions of CERCLA, under which a generator can become a
"responsible party" obligated to help pay for remediation expenses if
(in this example) a recycler to whom he sent recyclable hazardous
secondary materials were to create contamination problems, but lacked
the resources to pay for their cleanup.  Because American manufacturers
have considerable experience with these types of CERCLA liability
issues, evaluating the financial health of the reclamation facility
before shipping recyclable materials to them has become a standard
business precaution for responsiblemany generators.  Today's proposed
condition for financial assurance thus can be seen as a regulatory
precaution against the same concern, ensuring that the reclamation
facility owner/operators who would operate under the terms of this
proposed exclusion are financially sound.

	

The need for some type of financial assurance for recyclers in this
context also is supported by the study of recycling-related
environmental problems.  The study indicates that business failure is a
primary causative factor associated with these damage incidents.  For
example, of the 208 damage incidents that were documented, at least 138
of the recyclers are no longer in business.  While there may not be a
clear cause-and-effect relationship in all of these cases, we believe
that this clearly suggests a correlation between the financial health of
recycling companies and the probability that their recycling activities
will result in some form of environmental damage.  In our view, this
further supports the need for some type of financial assurance condition
for this exclusion. 

	

As proposed, reclaimers of excluded hazardous secondary materials would
need to have financial assurance in accordance with the applicable
financial assurance requirements for hazardous waste treatment, storage
and disposal facilities.  These regulations for financial assurance were
not designed specifically to address the financial assurance
requirements of reclamation facilities that would be affected by
today’s supplemental proposal.  However, developing an entirely new
set of (cited above).   We believe that these financial assurance
requirements are appropriate for reclamation facilities that would be
managing excluded hazardous secondary materials, since such management
will typically involve some type of storage, and reclamation, which is
defined as "treatment" under the existing RCRA regulations.  If a
reclamation facility were to manage excluded materials in land-based
units (e.g., piles), it would be subject to the additional Subpart H
financial assurance requirements tailored specifically for these types
ofland disposal facilities would be a complex, resource intensive
undertaking, and was outside the scope of this rulemaking effort.  In
any case, the

The Agency currently has underway a review of the Subpart H financial
assurance regulations now in effect. We may, as part of that effort,
explore options for developing requirements more tailored to
reclamationhazardous waste treatment, storage and disposal facilities.

	

  The Agency does not intend to address general issues related to the
financial assurance mechanisms as a part of today’s rulemaking, since
these issues are being addressed in the broader review. However, in the
context of this rulemaking, the Agency is interested in receiving
comments regarding financial assurance for the as to whether or not the
existing Subpart H requirements need to be modified in some way
specifically for reclamation facility owner/operators that would be
affected by today's proposed exclusion, including.  EPA also solicits
comment on whether towe should adopt the financial assurance
requirements that were promulgated as part of the standardized permit
rule (see 70 FR 53419, September 8, 2005).  In particular, we are
interested in whether there are alternatives to the Subpart H
requirements that for the purpose of this rulemaking might be more
tailored to requiring financial assurance for reclaimers.), which are
EPA’s most recently issued RCRA financial assurance requirements.  

We are also interested in options that would involve tailoring the
costing requirements associated with Subpart H requirements for
today’s rulemaking.  For example, the Subpart H financial obligations
are tied in large part to the estimated future cost of closing the
hazardous waste facility. Closure costs can be difficult to estimate, or
subject to disagreement, and failure to close might not be the problem
at a given facility.  For example, closure cost estimates might not
address the kind of releases identified in the recycling study.  AThus,
a simpler alternative might be to set a standard, fixed amount of
financial assurance that would need to be demonstrated (e.g., $5 million
– an amount consistent with the costs identified in EPA’s recycling
study) and specify that the funds in the mechanism would.  For example,
EPA's study of environmental problems associated with hazardous material
recycling was able to identify actual or estimated cleanup costs
associated with 89 of the damage cases that were documented.  Of these
cases, 71 (80%) involved cleanup costs of  $5 million or less, while 81
cases (91%) cost $10 million or less.  It should be noted that there are
important uncertainties associated with these cost data, as explained in
our study report.  With these uncertainties in mind, these findings
might be used as the basis for identifying a specific, minimum amount of
financial assurance that reclamation facility owner/operators would need
to demonstrate.  Such funds would thus be available for any
environmental damage associated with the recycling.  Such an reclamation
operations at such facilities.  

This type of approach to establishing financial assurance requirements
for reclamation facilities would be less flexible than the current
regulations, but it would have the virtue of simplicity and
transparency. Similarly, the regulatory language of individual financial
assurance mechanisms might need to be modified slightly, to make it
clear that funds would be available for environmental damages beyond
closure.  The Agency solicits comment on such alternative approaches to
financial assurance requirements for reclamation facilities that would
operate under today’s proposed exclusion.   

	Finally, the Agency anticipates that, when and if today's proposed
exclusion for transferred materials is promulgated and becomes
effective, there are likely to be some generators of recyclable
hazardous wastes that will choose not to use the exclusion, and thus
will continue to manage their wastes under the current hazardous waste
regulatory system.  These generators may nevertheless wish to ship their
hazardous waste to a reclamation facility that is operating under this
exclusion.  In such situations, it is possible that questions could
arise as to the regulatory status of the hazardous waste materials that
are sent to such reclamation facilities.  Today's proposed exclusion
includes a provision (§261.4(a)(24)(vi)) that is intended to clarify
that the reclamation facilities may still claim the exclusion in these
types of situations.  The Agency requests comment on this provision.

Enforcement

Under today’s proposal, hazardous secondary materials transferred for
the purpose of reclamation would be excluded from RCRA subtitle C
regulation, but would be subject to certain conditions and restrictions.
 If a generator fails to meet any of the above-described conditions or
restrictions on the management of hazardous secondary materials that are
applicable to the generator, then the materials would be considered
discarded by the generator and would be subject to RCRA subtitle C
regulations from the point at which the material was used and could not
be reused without reclamation.  If a reclaimer were to fail to meet any
of the above-described pre-conditions or restrictions on the management
of hazardous secondary materials that are applicable to the reclaimer,
then the materials would be considered discarded by the reclaimer and
would be subject to RCRA subtitle C regulation from the point at which
the reclaimer failed to meet a condition or restriction, thereby
discarding the material.  

Please note that the failure of the reclaimer to meet conditions or
restrictions does not mean the material was considered waste when
handled by the generator, as long as the generator can adequately
demonstrate that he has met his obligations, including the obligation
under proposed 40 CFR 261.4(a)(24)(iv)(A) to make reasonable efforts to
ensure that the material will be recycled legitimately and otherwise
managed in a manner that is protective of human health and the
environment.  A generator who met his reasonable efforts obligations
could in good faith ship his excluded materials to a reclamation
facility where, due to circumstances beyond his control, they were
released and caused environmental problems at that facility.  In such
situations, and where the generator’s decision to ship to that
reclaimer is based on an objectively reasonable belief that the
hazardous secondary materials would be recycled legitimately and
otherwise managed in a manner consistent with this regulation, the
generator would not have violated the terms of the exclusion.   

XI.   SEQ CHAPTER \h \r 1 What Changes Is EPA Proposing to the
Legitimacy Criteria?:  Proposed 40 CFR 261.2(g)

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

Under the RCRA Subtitle C definition of solid waste, many existing
hazardous secondary materials are not solid wastes and thus, not subject
to RCRA’s “cradle to grave” management system if they are
recycled. The basic idea behind this construct is that recycling of such
materials often closely resembles normal industrial manufacturing,
rather than waste management. However, since there can be significant
economic incentive to manage hazardous secondary materials outside the
RCRA regulatory system, there is a clear potential for some handlers to
claim that they are recycling, when in fact they are conducting waste
treatment and/or disposal in the guise of recycling. To guard against
this, EPA has long articulated the need to distinguish between
“legitimate” (i.e., true) recycling and “sham” recycling,
beginning with the preamble to the 1985 regulations that established the
definition of solid waste (50 FR 638, January 4, 1985) and continuing
with the 2003 proposed codification of criteria for identifying
legitimate recycling.

On October 28, 2003 (68 FR 61581-61588), EPA extensively discussed our
position on the relevance of legitimate recycling to hazardous secondary
materials recycling in general and to the redefinition of solid waste
specifically. We proposed to codify in the RCRA hazardous waste
regulations four general criteria to be used in determining whether
recycling of hazardous secondary materials is legitimate. In today’s
action, we are proposing two changes to the proposed legitimacy criteria
and asking for public comment on those changes. The changes are 1) a
restructuring of the proposed criteria, called factors in this proposal,
to make two of them mandatory, while leaving the rest as factors to be
considered, and 2) additional guidance on how the economics of the
recycling activity should be considered in a legitimate recycling
determination.

 As we explained in the 2003 proposal, it is the Agency’s longstanding
policy that, for activities to qualify as recycling of hazardous
secondary materials, they must be legitimate. This principle applies to
both recycling of excluded hazardous secondary materials and recycling
of regulated hazardous secondary materials. The definition of legitimate
recycling is intended to apply to all recycling of hazardous secondary
materials, including:

Recyclable hazardous secondary materials that would be excluded from
Subtitle C regulation as wastes under today’s proposed exclusion from
the definition of solid waste.  

Hazardous secondary materials that, because they are recycled, are
excluded or exempted from Subtitle C regulation under other regulatory
provisions (e.g., see the exclusions in 40 CFR 261.2(e) and 261.4). 

Recyclable hazardous wastes that are regulated under Subtitle C prior to
recycling.  

Apart from the definition of solid waste implications, the concept of
legitimate recycling also is used to determine if a recycling unit is
exempt from RCRA Subtitle C permitting (except for certain air emission
standards) or a regulated waste treatment or disposal unit, subject to
full RCRA Subtitle C permitting. 

	

          The concept of legitimate recycling is designed to be used in
addition to and in concert with more specific criteria or requirements
when they have been established in the regulations for specific
recycling activities or recycled hazardous secondary materials. Affected
parties should look to those regulatory provisions, in addition to the
definition of legitimate recycling, to ensure compliance. For example,
for a zinc micronutrient fertilizer manufacturer who uses hazardous
secondary materials as a feedstock, the consideration of hazardous
constituents in the final product would involve an analysis of whether
the operation is legitimate recycling and an analysis of whether the
fertilizer meets the contaminant limits specified in 40 CFR 261.4(a)
(21).

	

          By ensuring that use of hazardous secondary materials in an
industrial process is legitimate recycling, the Agency seeks to ensure
that when a facility claims that it is recycling, the hazardous
secondary material is in fact being recycled and is contributing to a
valuable product and is not being treated or disposed of in the guise of
recycling. 

B. Definition of Legitimate Recycling in the 2003 Proposal

In the 2003 proposed rule (68 FR 61581-61588), EPA proposed codifying
specific regulatory provisions for determining when hazardous secondary
materials are recycled legitimately. Previously, the criteria considered
in evaluating legitimate recycling have been discussed extensively in
preambles to definition of solid waste rulemakings and, notably, in a
1989 memorandum that laid out a single list of criteria to be considered
in evaluating legitimacy (the “Lowrance Memo”; OSWER directive
9441.1989(19), dated April 26, 1989).

 	

The 2003 proposal consolidated the criteria in that memorandum into four
criteria. EPA was clear in its expectation that most, if not all,
legitimate recycling would conform with all four of the criteria, but
stated that the application of those criteria would require some
subjective evaluation of the criteria in each specific situation to
which they are being applied. In those cases where a legitimate
recycling operation does not meet all four criteria, the structure of
the definition of legitimacy was designed to be flexible enough to allow
those situations to be deemed legitimate. 

In general, the proposed regulatory language stated that legitimacy
determinations must be made by considering whether:

The hazardous secondary material to be recycled is managed as a valuable
commodity;

The hazardous secondary material provides a useful contribution to the
recycling process or to a product of the recycling process; 

The recycling process yields a valuable product or intermediate;

The product of the recycling process does not contain significant
amounts of hazardous  constituents that are not found in the analogous
products or exhibit a hazardous characteristic not exhibited by the
analogous product.  

The full proposed regulatory text can be found in the proposed rule (68
FR 61596). 

          It is the Agency’s opinion that the concept of legitimate
recycling proposed in the October 2003 proposal and in today’s
supplemental proposal is not substantively different than our
longstanding policy, as expressed in earlier preamble and guidance
statements. As part of proposing regulatory provisions on the legitimacy
of recycling, we are simply reorganizing, streamlining, and clarifying
the existing legitimacy principles. We believe that the regulatory
definition of legitimate recycling, when applied to specific recycling
scenarios, will result in determinations that are consistent with the
earlier policy. Therefore, we generally do not see the need for the
regulated community or overseeing agencies to revisit previous
determinations and expect any written determinations from these agencies
to, in effect, be grandfathered. For a more detailed analysis on how the
definition of legitimacy has evolved from earlier preamble and guidance
statements, see the October 28, 2003 proposal (68 FR 61581-61588), where
we provided a thorough explanation of how the proposed criteria related
to existing guidance. The Agency does not intend to reiterate that
analysis in today’s supplemental proposed rule, but will explain below
the changes we are proposing to make from the 2003 proposal.

The 2003 proposal did result in comments on the Agency’s proposal to
codify legitimacy and we are requesting further comment on this issue.
The Agency believes that there are many benefits to codifying the
legitimacy factors, as discussed in the 2003 proposal.  Many commenters,
particularly the state regulatory agencies, but some members of industry
as well, agreed with EPA’s rationale for codifying the legitimacy in
Part 261.  However, some commenters urged EPA to retain the existing
legitimacy guidance instead of codifying it in the regulations. These
commenters stated that the existing guidance provides a more flexible
way to assess whether an activity constitutes legitimate recycling and
raised several concerns with the codification of legitimacy. The
commenters expressed concern that codification could alter the
application of legitimacy. Although EPA intends to preserve current
interpretations of legitimacy, the commenters raised the concern that
putting legitimacy in the regulations could eliminate the flexibility in
the existing guidance for subjective evaluation and balancing of the
factors when making a determination. EPA is requesting comment on this
issue. 

     	In addition, the commenters raised the concern that codification
of legitimacy would place too much burden on the regulated entity to
make a showing that it is engaged in legitimate recycling. The Agency
believes that it has always been the responsibility of the regulated
entity to ensure, and if requested, to show that its recycling is
legitimate. EPA expects that regulated entities have evaluated and will
continue to evaluate their recycling operations using these factors and
will reach their conclusions about legitimacy without prior approval by
an overseeing agency. However, EPA is requesting comment on whether
codifying the factors in today’s proposal would place increased burden
on the regulated entity and, if so, what the reasons are for such
increased burden.  Finally, the concern has been expressed that
codification would fix into place a specific formulation of EPA’s
legitimacy factors, and therefore would limit future evolution of them.
Future changes to the factors could become more difficult if they have
been codified. The Agency believes there are many benefits to codifying
the legitimacy factors, as discussed in the 2003 proposal, but is
requesting comment on this issue.  

EPA is interested in comments about the benefits and drawbacks of
codifying legitimacy. In particular, EPA solicits comments on current
practices for assessing legitimacy, on any problems with current
practices that may be alleviated by codifying the factors, and on
alternative means of addressing any such problems.

C. Changes Proposed in Today’s Action

1. New structure of legitimacy factors

a. Design of the new structure	

	

For the reasons discussed below, EPA is proposing a new structure for
the definition of legitimate recycling. The proposed design of the
definition has two basic parts. The first part is considered the core of
legitimacy, which includes a requirement that the hazardous secondary
material being recycled provides a useful contribution to the recycling
process or to the product of the recycling process and a requirement
that the product of the recycling process is valuable. These two factors
are fundamental to the definition of legitimacy and, therefore, an
industrial process that does not conform to them would be considered
sham recycling (i.e., treatment or disposal in lieu of recycling). 

	

The second part of the proposed structure for legitimacy is a list of
two factors that must be considered, but not necessarily met, when a
recycler is making a legitimacy determination. EPA believes that these
factors are important in determining legitimacy, but has not proposed to
make them mandatory because the Agency believes that there may be some
situations in which a legitimate recycling process does not conform to
one of these factors. Therefore, EPA is proposing that the management of
the hazardous secondary material and the presence of hazardous
constituents in the product of the recycling activity be factors that
must be considered in the overall legitimacy determination, but not
mandatory requirements that must be met as part of a definition of
legitimacy.  The full proposed regulatory text for the legitimacy
portion of this supplemental proposal is found in 40 CFR 261.2(g). 

b. Why EPA is proposing this change

	

In the 2003 proposed rule, the regulatory text for legitimacy was made
up of paragraph (g) of proposed section 261.2, which stated that
hazardous secondary materials that are not legitimately recycled are
discarded and, therefore, solid wastes. Paragraphs (1) through (4) then
listed the four proposed legitimacy criteria after a statement that
legitimacy determinations must be made by considering them. Proposed
criteria 1 and 2 focused on the hazardous secondary material being
recycled and criteria 3 and 4 focused on the product of the recycling
process. 

	

In the 2003 proposed rule, the application of the four criteria to a
recycling process was proposed to require some evaluation and balancing.
That is, although the Agency expected that most legitimate recycling
practices would conform to all the pieces of legitimacy, it was aware
that there would be some cases in which legitimate recycling may not
conform to one or more of the criteria. As in the Lowrance Memo, the
structure of legitimacy allowed circumstances in which certain criteria
weighed more heavily than others in the final legitimacy determination.

	

Analysis of public comment on the 2003 proposal shows that there was
general agreement from industry, states, and other commenters that
recycling cannot be legitimate if the hazardous secondary material being
recycled does not provide a useful contribution to the process or to the
product and if the recycling process does not yield a product or
intermediate that is valuable to someone. Certain commenters requested
that EPA provide more information on how it defines the terms used in
the regulation and there was some disagreement with the specifics laid
out in the preamble. Some commenters, particularly several states, felt
that all four criteria should be mandatory requirements.  However,
almost all commenters agreed that proposed criteria 2 and 3 should be
met in order for recycling to be considered legitimate.  

	

EPA agrees with the importance of criteria 2 and 3 and, for this
proposal, has decided that these two concepts are, in fact, at the very
core of what it means to recycle legitimately. Therefore, today’s
proposed regulatory language states in 40 CFR 261.2(g)(2) that
“Legitimate recycling must involve a hazardous secondary material that
provides a useful contribution to the recycling process or to a product
of the recycling process and the recycling process must produce a
valuable product or intermediate.” This statement is followed by
paragraphs (i) and (ii) to give more details on how the Agency defines
these critical concepts. 

	

EPA has determined that the other criteria in the 2003 proposal,
criterion 1 and criterion 4, are still important concepts in making
legitimacy determinations, but should not be mandatory. Instead,
today’s proposed regulations state that a legitimacy determination
must consider these other two factors need to be considered in making a
determination as to the overall legitimacy, which are found in 40 CFR
261.2(g)(3) of the regulatory language.). In stating that the these
factors mustneed to be considered, EPA expects that anyone making a
legitimacy determination will look carefully at how their hazardous
secondary materials are managed as compared to analogous raw materials
and at the hazardous constituents in their products. 

However, these two factors would not be mandatory because EPA and
commenters were able to identify situations in which a recycling
scenario appears to be legitimate, but one of these factors was not met
in the way EPA described because that factor is not applicable or
relevant to the materials being recycled or to the particulars of the
recycling process.

To illustrate, in the case of proposed criterion 1,  For example, it is
possible that a solid, powdery hazardous secondary material could be
shipped to a recycling facility in flexible, woven "supersack"
containers, where the supersacks are then stored at the facility in a
well-designed, designated indoor containment area. and then legitimately
recycled.    If, however, an analogous raw material (i.e., with similar
physical and chemical characteristics) was typically received and stored
at the same facility in sealed steel drums, one could conclude that the
hazardous secondary material was not managed "in a manner consistent
with the analogous raw material."  In this case, therefore, ita strict
finding  could be concluded made that this factor was not met, even
though the differences in storage practices do not affect
protectiveness. In evaluating the legitimacy of a recycling process in
situations like this, we EPA does not believe that such a strict finding
that materials are not managed consistently should not necessarily be
the determining factor.  It is primarily to allow some flexibility for
these types of situations that weWe are proposing that this factor not
be mandatory in making legitimacy determinations in order to allow
flexibility for these types of situations.  

For similar reasons, the Agency is also proposing that the factor which
addresses "toxics along for the ride" be a consideration in making
legitimacy determinations, rather than a mandatory requirement.  One
illustration as to why some flexibility may be needed in assessing this
proposed factor could be a hypothetical situation in which a
pharmaceutical manufacturer uses a 

"virgin" solvent ("Solvent X") as a process ingredient, and generates a
spent solvent that is identical to the virgin solvent, except that it
has become contaminated with a relatively small amount of a different
solvent ("Solvent Y").  Solvents X and Y are assumed to have essentially
the same toxicity and solvent properties, and both chemicals would be
considered "hazardous constituents" under RCRA for waste identification
purposes.   In this example, the spent material (i.e., the mixture of
solvents "X" and "Y") is no longer useful to the generator in making
pharmaceuticals.  It would potentially be useful, however, to a
manufacturer of oil-based paints, as a substitute for virgin Solvent X. 
If the spent material was used in this manner by the paint manufacturer,
the resulting paint products could contain significant concentrations of
a hazardous constituent (i.e., "Solvent Y") not found in analogous
products made from virgin Solvent X.   Thus, this recycling practice
could be determined as not meeting today's proposed legitimacy factor
that addresses "toxics along for the ride."  

Given that the paint products made from spent (i.e., secondary)
materials would essentially have the same solvent properties and
potential environmental hazards as paint made from virgin solvents, it
might be reasonable to determine that the overall recycling practice was
legitimate.  Again, because of situations like this, we believe that
this factor is best expressed as a consideration in making legitimacy
determinations, rather than as a mandatory requirement.    

At the same time, it should be noted that “toxics along for the
ride” is an important consideration when the toxic constituents affect
either the performance of the product or cause adverse environmental or
health effects.  For example, elevated levels of lead in foundry sand
would not be a problem when the sand is re-used in the foundry molds,
but it has been a significant problem when the sand was sold as
children’s play sand.  In such a case, the high levels of lead would
disqualify this use from being considered legitimate recycling.

Under this proposed structure, if a facility making a legitimacy
determination decides that one of these two factors to be considered is,
in fact, not applicable to the recycling process, we recommend that the
facility document why the recycling process is legitimate, even though
it may not meet one or more of the factors to be considered. 

	

EPA believes that the new structure for the definition of legitimacy
will clarify what the Agency believes are the most important elements of
legitimacy and requests comment on this structure for making legitimacy
determinations related to hazardous secondary material recycling. 

2. Consideration of Economics in Legitimate Recycling

EPA also notes that the economics of the recycling activity may be
relevant to legitimate recycling determinations.  Consideration of
economics has long been a part of the Agency’s concept of legitimacy,
as evident in the Lowrance Memo and earlier preamble text (50 FR 638,
January 4, 1985 and 53 FR 522, January 8, 1988) [see also American
Petroleum Institute v. EPA (“API II”), 216 F.3d 50, 57-58 (D.C. Cir.
2000)].  In addition, in our October 2003 proposal, EPA proposed that
consideration of economics be part of the second legitimacy criterion
(i.e., whether the hazardous secondary material provides a useful
contribution).  In their comments to the October 2003 proposal, states
and some other stakeholders supported including a consideration of
economics when making legitimacy determinations, although they also
expressed a need for clarification of how economics should inform
legitimacy determinations.  Today’s proposal, unlike the October 2003
proposal, does not codify specific regulatory language on economics, but
offers further guidance and clarification on how economics may be
considered in making legitimacy determinations. The Agency believes that
we are clarifying how economics has traditionally been implemented via
the Lowrance Memo guidance, and therefore, does not believe the
consideration of economics as explained below impacts existing
legitimacy determinations.   

	Specifically, EPA believes that consideration of the economics of a
recycling activity can be used to inform and help determine whether the
recycling operation is legitimate.   Positive economic factors would be
a strong indication of legitimate recycling, whereas negative economic
factors would be an indication that a further look at the recycling
operation may be warranted in assessing its legitimacy.  While not
specifically addressed in the proposed regulations, consideration of
economics could be a factor in informing whether the hazardous secondary
material input provides a useful contribution and whether the product of
the recycling operation is of value.  

Consideration of the economics of a particular recycling operation can
greatly assist in making legitimacy determinations. Appropriate
information for this consideration could include an understanding of the
major costs, revenues, and economic flows for a recycling operation.
Information that may be useful could include (1) the amount paid or
revenue generated by the recycler for recycling hazardous secondary
materials; (2) the revenue generated from the sale of recycled products;
(3) the future cost of processing existing inventories of hazardous
secondary materials and (4) other costs and revenues associated with the
recycling operation. The economics of the recycling transaction may be
more of an issue when hazardous secondary materials are sent to a
third-party recycler, although where the hazardous secondary material
being recycled is under the control of the generator, the generator must
still be able to show that the hazardous secondary material is, at a
minimum, providing a useful contribution and producing a valuable
product.

The basic economic flows can suggest whether the recycling operation
will process inputs, including hazardous secondary materials, and
produce products over a reasonable period of time, recognizing that
there will be lean and slow times.   Thus, processing inputs that
produce legitimate products is a threshold for legitimate recycling.  A
general accounting of the major costs, revenues, and economic flows for
a recycling operation over a reasonable period of time  can provide
information to consider whether recycling is likely to continue at a
reasonable rate, compared to the rate at which inputs are received, or
whether it is likely that significant amounts of unrecycled material are
likely to be accumulated and then abandoned when the facility closes. 
Any bona fide sources of revenues would be included in this
consideration, such as payments by generators to recyclers for accepting
hazardous secondary materials and subsidies supporting recycling. 
However, in order to have some level of confidence that beneficial
products are or will be produced; we believe that at least some portion
of the revenues should be from product sales (or savings due to avoided
purchases of products if the hazardous secondary materials are used
directly by the recycler), consistent with the hazardous secondary
material being recycled to make a useful product.  

Two examples illustrate this concept.  A recycling operation that
generates revenues from sales of recycled products that greatly exceed
the costs of the operation is likely to quickly process the hazardous
secondary materials it receives into useful products. A very different
example is an operation that has, relative to its revenues, large
inventories of unsold product and large future liabilities in terms of
stocks of unprocessed hazardous secondary material.  This operation
would draw closer attention to determine whether it is engaged, in
essence, in treatment and/or abandonment in the guise of recycling.   

When the economics of a recycling operation is similar to that of
manufacturing using raw materials, the Agency believes that such an
operation is likely to be legitimate.  That is, the recycler pays for
hazardous secondary materials as a manufacturer would pay for raw
materials, the recycler sells products from the recycling process as a
manufacturer would sell products of manufacturing, and revenues equal or
exceed costs. In this scenario, hazardous secondary materials are
valuable (i.e., the recycler is willing to pay for them) and make a
useful contribution to a valuable recycled product (otherwise the
recycler would not be willing to pay for them).  In addition, the sale
of the products of recycling demonstrates their value. 

However, we also recognize that the economics of many legitimate
recycling operations that utilize hazardous secondary materials differs
from the economics of more traditional manufacturing operations.  An
understanding of the economics of these operations can be useful in
evaluating the legitimacy of a recycling operation.  For example, many
recyclers are paid by generators to accept hazardous secondary
materials.  Generators may be willing to pay recyclers because they can
save money if the recycling is less expensive than disposing of the
hazardous secondary materials in landfills or incinerators. Another
example is a scenario where recyclers receive subsidies which may be
designed to develop recycling infrastructure and markets, remove
problematic materials from disposal, or achieve other benefits of
recycling. For example, the recycling of electronic materials can be
legitimate even though the recycler is often subsidized for processing
the material.  Both of these examples involve situations that are
different from manufacturing using raw materials, but as long as they
are appropriately considered, an analysis of the economics of these
operations can assist in determining the legitimacy of the recycling.

Any analysis of the economics of a recycling operation should recognize
that a recycler may be able to charge generators and still be a
legitimate recycling operation properly excluded from regulation.  In
short, because these hazardous secondary materials are hazardous wastes
if disposed of, typically the generators’ other alternative management
option already carries a cost that is based on the existing market for
hazardous waste transportation and disposal.  Hence, unless there is
strong competition in recycling markets or the hazardous secondary
materials are extremely valuable, a recycler may be able to charge
generators simply because alternative disposal options cost more. While
the generator’s objective may be finding the least cost alternative
for getting rid of the hazardous secondary material, the recycling may
well be a legitimate recycling operation.

Recognizing that such a dynamic exists can assist those making
determinations in evaluating legitimacy of the recycling operation. For
example, if a recycler is charging generators fees (or receiving
subsidies from elsewhere) for taking hazardous secondary material and
receives a far greater proportion of its revenue from acceptance fees
than from the sale of its products, both the useful contribution and the
valuable product factors may warrant further review, unless other
information would indicate that such recycling is legitimate.  Fees and
subsidies could indicate that the economic situation allows the recycler
to charge high fees, regardless of the contribution provided by the
inputs, including hazardous secondary materials. In this situation,
recyclers may also have an increased economic incentive to
over-accumulate or overuse hazardous secondary materials, or to manage
them less carefully than one might manage more valuable inputs.
Additionally, if there is little competition in the recycling market,
and/or if acceptance fees seem to be set largely to compete with the
relative costs of alternative disposal options rather than to reflect
the quality or usefulness of the input to the recycling operation, this
may also suggest a closer look at “useful contribution.”

A relatively low proportion of revenues coming from sales of recycled
products compared to payments by generators may suggest the need for
more consideration of the “valuable product” criterion.  It is
possible that it is appropriate for product sales revenues to be dwarfed
by acceptance fee revenues because markets for the particular products
are highly competitive or because high alternative disposal costs allow
for high acceptance fees.  However, relatively low sales revenues could
also point to a review of product sales prices to see whether they are
lower than other comparable products, products are being stockpiled
rather than sold, or very little product is being produced relative to
the amount of inputs to the recycling operation. These could be possible
indicators that the recycled product may not be valuable and, thus, sham
recycling may be occurring. 

A consideration of the future cost of processing or alternatively
managing existing inventories of hazardous secondary material inputs
also can inform the legitimacy determination.  When hazardous secondary
materials make a significant useful contribution to the recycling
activity, a recycler will have an economic incentive to process input
materials relatively quickly or efficiently, rather than to maintain
large inventories. While recyclers often need to acquire a sufficient
amount of a hazardous secondary material to make it economically
feasible to recycle, there should be little economic incentive to
over-accumulate such materials that make a useful contribution. Overly
large accumulations of input materials may indicate that the input
materials are not providing a useful contribution or that the recycler
is increasing its future costs of either processing or disposing of the
material, and hence may be faced with an unsound recycling operation in
the future. Again, it is important to weigh this factor against other
considerations. For example, it is possible that the recycler has
acquired a large stock of hazardous secondary material because the price
was unusually low or perhaps the material is generated episodically and
the recycler has few opportunities to collect it.

When recycling is conducted under the control of the generator, the
recycler may not account formally for some of the costs and savings of
the operation.  Still, when deciding whether to undertake or continue
the recycling operation or to utilize alternative outside recycling or
disposal options, the recycler will evaluate basic economic factors as a
part of doing business.  Also, the recycler would be likely to account
for the costs of virgin materials avoided by using hazardous secondary
materials. Similarly, sales of recycled products under the control of
the generator that are sold to an external market may be used to
evaluate the valuable product criterion. Thus, the recycler should have
available the basic information necessary to consider the economics of
an on-site or internal recycling operation for purposes of making a
legitimacy determination.  We recognize, however, that an evaluation of
the economic structure of a recycling operation under the control of the
generator is likely to be less rigorous than that of a typical offsite
commercial recycling operation.

	We request comment on how the economics of the recycling activity
should be considered in making overall legitimate recycling
determinations consistent with prior legitimacy determinations under the
Lowrance Memo. We are specifically interested in whether economics
should simply be a consideration that informs legitimacy overall or
whether the economics of recycling should be a separate factor,
including regulatory language, to consider. In addition, we are
interested in hearing from both the regulated community and the States
about other ways in which consideration of economics can inform and
support determinations of legitimate recycling for both on-site and
offsite recycling.

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

A. What is the Intent of this Provision?

The intent of the non-waste determination petition process is to provide
petitioners with an administrative procedure for receiving a formal
determination that their recycled hazardous secondary material is not
discarded. This process would be available in addition to the solid
waste exclusions proposed today. Once a non-waste determination has been
granted, the hazardous secondary material would not be subject to the
restrictions and conditions that the exclusions discussed elsewhere in
today’s supplemental proposal would include (e.g., prohibition on
speculative accumulation, or, for the transfer-based exclusion,
recordkeeping, reasonable efforts, financial assurance, storage standard
and export notice and consent). 

The petition process would be voluntary.  Facilities may choose to
continue to self-implement any applicable waste exclusions and, for the
vast majority of cases, where the regulatory status of the material is
evident, self-implementation will still be the most appropriate
approach.  In addition, facilities may continue to contact EPA or the
authorized state asking for informal assistance in making these types of
waste determinations.  However, for cases where there is ambiguity about
whether a hazardous secondary material is a solid waste, thisthe formal
petition process will provide regulatory certainty for both the facility
and the implementing Agency.  

EPA anticipates that most generators who recycle their hazardous
secondary materials would use either the self-implementing exclusions
proposed today or existing exclusions.  We request comment on how
frequently the non-waste determination process is likely to be used and
how best to minimize the burden to the authorized states and to the
regulated community.  

The Agency is proposing three types of non-waste determinations:  (1)
for hazardous secondary materials recycled in a continuous industrial
process, (2) for hazardous secondary materials indistinguishable in all
relevant aspects from a product or intermediate, (3) for hazardous
secondary materials that is recycled under the control of the generator,
such as through contracts similar to the tolling arrangements proposed
in Sectionsection IX of today’s preamble.

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

As discussed earlier in today’s supplemental proposal, court decisions
have made it clear that hazardous secondary material that is recycled in
a continuous industrial process is not discarded and therefore, not a
solid waste. The October 2003 proposed rule attempted to parse the
language of some of those decisions in order to identify when material
destined for recycling is clearly not a solid waste.  As explained
earlier, we are not finalizing that approach.  Instead, the Agency has
decided to link the rulemaking more explicitly to the concept of
“discard” which underlie those decisions.  EPA believes that
today’s supplemental proposal excludes from the definition of solid
waste hazardous secondary materials recycled in a continuous industrial
process by virtue of the determination that such materials that are
legitimately recycled under the control of the generating facility and
not speculatively accumulated are not discarded and therefore not solid
waste.

However, production processes can vary widely from industry to industry.
  In the October 2003 proposal, we attempted to define “recycled in a
continuous industrial process” using the NAICS codes.  Based on the
comments we received, we determined that identifying which hazardous
secondary materials are recycled within a continuous industrial process
presents difficulties as courts have, at least implicitly, acknowledged.
 Even if EPA had more specific information on some hazardous secondary
materials, it still would be impossible to know if the Agency has
addressed every possibility. Thus to determine whether an individual
hazardous secondary material is recycled in a continuous industrial
process, and therefore not a solid waste, EPA may need to evaluate
case-specific fact patterns, which is best done through a case-by-case
procedure.  We are titling this procedure a “non-waste
determination” to acknowledge that this procedure constitutes an
administrative process for formally recognizing that a specific
hazardous secondary material is not a solid waste.

EPA is proposing four criteria for making this “non-waste
determination” that a specific hazardous secondary material is
reclaimed in a continuous industrial process.  The first is how
integrated the extent that the management of the hazardous secondary
material is intopart of the continuous production process.  At one end
of the spectrum, if the material is handled in a manner identical to
virgin feedstock, then it is fully integrated into the production
process. At the other end of the spectrum, materials indisputably
discarded prior to being reclaimed are not a part of the continuous
primary production process. (“AMC II”), 907 F. 2d 1179 (D.C. Cir.
1990) (listed wastes managed in units that are part of wastewater
treatment units are discarded materials (and solid wastes), especially
where it is not clear that the industry actually reuses the materials). 
For cases that lie within the spectrum, the petitioner would need to
provide sufficient information about the production process to
demonstrate that the management of the hazardous secondary material is
an integral part of the production process and is not waste treatment.

The second criterion for making this non-waste determination is the
capacity of the production process to use the hazardous secondary
material in a reasonable timeframe and ensure that it will not be
abandoned (for example, based on past practices, market factors, the
nature of the material, and any contractual arrangements).  Abandonment
of stockpiled recyclable hazardous secondary materials is one way that
discard can occur at recycling operations and is one of the major causes
of environmental problems.  As indicated in the recycling studies, 69 of
the 208 incidents of environmental damage involve abandonment of the
hazardous secondary material as the primary cause of damage.  For
today’s proposed exclusions for hazardous secondary materials recycled
under the control of the generating facility and hazardous secondary
materials transferred to another facility for recycling, EPA is
proposing speculative accumulation (as defined in 40 CFR 261.1(a)(8)) as
the method for determining when a material is unlikely to be recycled
and therefore may end up being discarded via abandonment.  For the
non-waste determination, the petitioner would not necessarily need to
demonstrate that the material would not be accumulated speculatively per
40 CFR 261.1(a)(8), but he must provide sufficient information about the
material and the process to demonstrate that the hazardous secondary
material will in fact be reclaimed in a reasonable timeframe and will
not be abandoned. EPA is not proposing an explicit definition of
“reasonable timeframe” because such a timeframe would vary according
to the material and industry involved, and therefore determining this
timeframe should be made on a case-specific basis.  However, an
applicant may still choose to use the speculative accumulation timeframe
as a default if it wishes.

The third criterion for this non-waste determination is whether the
hazardous constituents in the hazardous secondary material are recycled
rather than released to the air, land or water at significantly higher
concentrations from either a statistical or from a health and
environmental risk perspective than would otherwise be released by the
primary production process. To the extent that the hazardous
constituents are a continuation of the original hazardous secondary
material, their release to the environment is an indicator of discard.
The Agency recognizes that normal production processes also result in a
certain level of releases and, in evaluating this criteria, would not
deny a petition if the increase in releases is not significantly
different from either a statistical or risk perspective.  However, when
unacceptably high levels of the constituents that make the hazardous
secondary material of regulatory concern are released to the environment
rather than recycled, then that material (or at least the portion of the
material that is of most concern) is not in fact being “reused within
an ongoing industrial process.”

The fourth and final criterion for this non-waste determination includes
any other relevant factors that demonstrate the hazardous secondary
material is not discarded. This “catch-all” criterion is intended to
allow the applicant to provide any case-specific information it deems
important in making the case that its material is not discarded and
therefore not a solid waste.

EPA requests comment on these criteria, as well as any other criteria
that may be relevant for making this non-waste determination.

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

	

Although the courts have made clear that hazardous secondary materials
recycled within a continuous industrial process are not discarded and
therefore not solid waste, they have also said that hazardous secondary
materials destined for recycling in another industry are not
automatically discarded. In the Safe Foods case, the Court stated
“Nobody questions that virgin . . . feedstocks are products rather
than wastes. Once one accepts that premise, it seems eminently
reasonable to treat [recycled] materials that are indistinguishable in
the relevant respects as products as well.”  350 F.3d at 1269.  In
most cases, hazardous secondary materials that are indistinguishable
from products are unambiguously excluded from solid waste regulation
under 40 CFR 261.2(e). However, there may be some instances which would
benefit from a non-waste determination similar to that proposed today
for hazardous secondary materials reclaimed in a continuous industrial
process. EPA is proposing four criteria for making a non-waste
determination for hazardous secondary materials indistinguishable in all
relevant aspects from a product or intermediate.

	

The first criterion for this non-waste determination is consideration of
likely markets for the hazardous secondary material (for example, based
on the current positive value of the material, stability of demand, and
any contractual arrangements). This evaluation of market participation
is a key element for determining whether companies view and handle these
hazardous secondary materials like products rather than like
negatively-valued wastes. EPA’s report on how market incentives affect
the management of hazardous secondary materials indicates that both high
value and stable markets are strong incentives to refrain from
over-accumulating recyclable materials, thus maximizing the likelihood
that the hazardous secondary materials will be recycled and not
abandoned.  

	

The second criterion for this non-waste determination is the chemical
and physical identity of the hazardous secondary material and whether it
is comparable to commercial products or intermediates. This “identity
principle” is a second key factor that the Court in Safe Food found
useful in determining whether a material is indistinguishable from a
product. It is important to note that the identity of a material can be
“comparable” to a product without being identical.  However, to
qualify for a non-waste determination, any differences between the
hazardous secondary material in question and commercial products or
intermediates must be insignificant from either a statistical or from a
health and environmental risk perspective.

	

The third criterion for this non-waste determination is whether the
hazardous constituents in the hazardous secondary materials are recycled
rather than released to the air, land or water at significantly higher
concentrations from either a statistical or from a health and
environmental risk perspective than would otherwise be released by the
production process.  The Agency believes that to the extent that the
hazardous constituents are a continuation of the original hazardous
secondary material, their release to the environment is a possible
indicator of discard. The Agency recognizes that normal production
processes also result in a certain level of releases and, in evaluating
this criteria, would not deny a petition if the increase in releases is
not significant from either a statistical or a health and environmental
risk perspective.  However, when high concentrations of the constituents
that make the hazardous secondary material of regulatory concern are
released to the environment rather than reclaimed, then that material
(or at least the portion of the material that is of most concern) is not
being handled as a commercial product or intermediate.

As with the non-waste determination for hazardous secondary materials
reclaimed in a continuous industrial process, the fourth and final
criterion for this non-waste determination includes any other relevant
factors that demonstrate the material is not discarded. This
“catch-all” criterion is intended to allow the applicant to provide
any case-specific information it deems important in making the case that
its material is not discarded.

EPA requests comment on these criteria, as well as any other criteria
that may be relevant for making this non-waste determination.

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

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

However, the large variety of tollingcontractual arrangements may
preclude EPA from identifying all possible arrangements that clearly do
not involve discard. For this reason, the Agency also is proposing that
generators may seek a non-waste determination for tolling or other
contractual arrangements not covered by the proposed exclusion discussed
in Sectionsection IX of today’s preamble.   

The first criterion for this non-waste determination would be whether
the generator retains ownership and responsibility via a contract or
other mechanism for the hazardous secondary materials and the residuals
that result from their recycling.  Assumption of responsibility of both
the hazardous secondary materials and the residuals that would result
from their recycling is a key indication that the generator is not
abandoning the hazardous constituents that would have caused the
hazardous secondary materials to have been hazardous waste had they been
discarded.

The second criterion for this non-waste determination is whether the
hazardous constituents in the hazardous secondary materials are recycled
rather than released to the air, land or water at significantly higher
concentrations from either a statistical or from a health and
environmental risk perspective than would otherwise be released by the
production process.  The Agency believes that to the extent that the
hazardous constituents are a continuation of the original hazardous
secondary material, their release to the environment is a possible
indicator of discard. The Agency recognizes that normal production
processes also result in a certain level of releases and, in evaluating
this criteria, would not deny a petition if the increase in releases is
not significant from either a statistical or a health and environmental
risk perspective.  However, when high concentrations of the constituents
that make the hazardous secondary material of regulatory concern are
released to the environment rather than reclaimed, then that material
(or at least the portion of the material that is of most concern) is not
being recycled under the control of the generator.

As with the other types of non-waste determinations, the final criterion
for this non-waste determination includes any other relevant factors
that demonstrate the material is not discarded. This “catch-all”
criterion is intended to allow the applicant to provide any
case-specific information it deems important in making the case that its
material is not discarded.

EPA requests comment on these criteria, as well as any other criteria
that may be relevant for making this non-waste determination.

E. Scope and Eligibility

	

As with any solid waste determination that involves recycling, hazardous
secondary materials presented for a non-waste determination must be
legitimately recycled. In other words, the hazardous secondary material
must provide a useful contribution to the recycling process or to a
product of the recycling process, and the recycling process must produce
a valuable product or intermediate.  For further discussion of
legitimacy and the factors to be considered, see section XII of
today’s preamble.

In addition, non-waste determinations are limited to reclamation
activities and would not apply to recycling of “inherently
waste-like” materials (40 CFR 261.2(d)), recycling of materials that
are “used in a manner constituting disposal,” or “used to produce
products that are applied to or placed on the land,”(40 CFR
261.2(c)(1)) and “burning of materials for energy recovery” or
“used to produce a fuel or otherwise contained in fuels” (40 CFR
261.2(c)(2)). Today’s supplemental proposal is not intended to affect
how these recycling practices are regulated.  However, we  request
comment on whether such practices should be eligible for the
case-specific non-waste determinations.

F. Petition Process

	

The petition process for the non-waste determination would be the same
as that for the solid waste variances found in 40 CFR 260.31. In order
to obtain a non-waste determination, a facility that manages a hazardous
secondary material that would otherwise be regulated under 40 CFR 261 as
either a solid waste, or as a conditionally excluded waste, must apply
to the Administrator or the authorized state per the procedures
described in 40 CFR 260.33.  EPA proposes to amend section 260.33 to
apply to non-waste determinations also. The application must address the
relevant criteria (discussed in further detail above). The Administrator
would evaluate the petition and issue a draft notice tentatively
granting or denying the application.  Notification of this tentative
decision will be provided by newspaper advertisement or radio broadcast
in the locality where the facility is located.  The Administrator would
accept comment on the tentative decision for 30 days, and also may hold
a public hearing. The Administrator would issue a final decision after
receipt of comments and after the hearing (if any). If the application
is denied, the facility may still pursue a solid waste variance or
exclusion (for example, one of the solid waste variances under 40 CFR
260.31 or solid waste exclusions under 40 CFR 261.4).  EPA also may
choose to specify the Regional Administrator as the appropriate level of
review for this process.

As discussed in more detail in section XV of today’s supplemental
proposal, under section 3006 of RCRA, EPA would authorize states to
administer the non-waste determinations as part of their base RCRA
program.  Because states are not required to implement Federal
requirements that are less stringent or narrower in scope than current
requirements, authorized states are not required to adopt the non-waste
determination process, and ordinarily the proposed provision could not
go into effect in an authorized state until it does choose to adopt it. 
However, because the non-waste determination process is a formalization
of  determinations that states may already perform on an ad hoc basis,
EPA is proposing to allow states that have not yet formally adopted the
proposed regulation in 40 CFR 260.34 to participate in non-waste
determinations if the following conditions are met:  (1) the state
determines that the hazardous secondary material meets the criteria in
either paragraph (b), (c) or (d) of proposed section 40 CFR 260.34; (2)
the state requests EPA to review its determination; and (3) EPA approves
the State determination.  

G. Enforcement

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

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

XIII. Effect of This Proposal on Other Programs

A. Other Exclusions

	In the October 2003 proposal, EPA proposed a number of specific
“conforming changes” to existing exclusions (68 FR 61578-61580). 
The purpose of these conforming changes was to simplify and clarify the
regulations.  EPA did not intend to make any substantive changes as to
how currently excluded materials would need to be managed or regulated. 
However, comments to the proposed changes were overwhelming in favor of
retaining the existing exclusions.  These existing exclusions are
familiar to both the States and the regulated community, and making
wholesale adjustments appears to have had unintended consequences in
many cases.

	Thus in today’s supplemental proposal, EPA is proposing to retain the
existing exclusions (for example, the scrap metal exclusion in 40 CFR
261.4(a)(13)) exactly as written. However, we request comment on whether
any specific regulatory exclusion would need revision in order to avoid
confusion or contradictions.  EPA also is proposing that hazardous
secondary materials that are currently excluded with specific
requirements or conditions should be required to continue to meet those
requirements (e.g., the drip pad requirements for the wood preserving
exclusion in 40 CFR 261.4(a) (9)). In addition, recycling of such
materials at new facilities, or at existing facilities that are not
currently operating under the terms of an existing exclusion, would also
be subject to the existing applicable regulatory exclusion, rather than
today’s proposed exclusions.  

We request comment on the option of allowing a regulated entity to
choose which exclusion the person is subject to in those cases where
more than one exclusion could apply and, if so, whether that entity
should be required to document the choice made.

B. Permitted Facilities

	Facilities that currently have RCRA permits or interim status, and are
managing hazardous wastes that would become excluded under this rule,
could be affected by today’s supplemental proposal in a number of
ways.  Under one scenario, a facility that manages a variety of
hazardous waste materials, including some hazardous secondary materials
that would become excluded under this rule, would be affected only to
the extent that certain units or processes at the facility would no
longer be subject to hazardous waste regulations.  A somewhat different
scenario could involve a facility whose hazardous secondary materials
would all become excluded from regulation when this rule takes effect
(i.e., the facility is no longer a hazardous waste management facility).
 

	For permitted facilities that would be managing hazardous secondary
materials excluded under this rule in addition to regulated hazardous
wastes, changes to the facility’s permit would be necessary.   These
facilities would need to maintain their permits, but the units used
solely to manage hazardous secondary materials would no longer be
regulated solid waste management units subject to permit requirements. 
(Of course, to the extent that the exclusion were conditional, the
owner/operator of the facility would need to comply with the applicable
conditions to maintain the exclusion.)  In such cases, the facility
owner/operator could seek a permit modification from EPA or more
typically the authorized state agency to remove the formerly subject
unit(s) from the permit.  

	The Agency believes that owners and operators modifying their permits
to remove units managing only wastes excluded by this rule should comply
with the requirements of section 270.42(a) for Class 1 permit
modifications, with prior Agency approval.  Under this approach, owners
and operators would be required to submit notification of the permit
modification to the implementing agency, along with documentation
demonstrating that the operations at the unit meet the conditions of the
exclusion, and that the unit is used solely to manage excluded hazardous
secondary materials.  In addition, the owner or operator would be
required to comply with the requirements of section 270.42(a)(ii) for
public notification.  Under section 270.42(a)(2), the permit
modification would not become effective until the owner or operator
received written approval by the implementing agency.  The implementing
agency would approve the permit modification so long as the owner or
operator complied with the procedural requirements of section 270.42(a),
that the operations met the conditions of the exclusion, and adequately
demonstrated that the unit did not manage non-excluded hazardous wastes.
 EPA believes that Class I permit modifications with approval are
appropriate in this case even though the proposal would establish a
self-implementing exclusion, which does not require a regulatory
agency’s approval.  In this case, the unit in question has been
through a formal permit process, and the Agency believes it appropriate
that regulatory agency have the opportunity for a brief review before
the permit conditions it imposed are removed.  For example, the unit
might be intimately tied into other waste management operations at the
facility, or perhaps the regulatory agency imposed special provisions
under the omnibus provision, which it would want to consider.  EPA seeks
comment on this approach.	

	A permitted facility that would no longer be considered a hazardous
waste management facility under the exclusion (e.g., a facility managing
only hazardous secondary materials that become excluded under today’s
supplemental proposal) would no longer need a hazardous waste operating
permit nor need to comply with the existing hazardous waste regulations
governing permitted facilities.  (Again, to the extent that the
exclusion is conditional, the owner/operator of the facility would need
to comply with the applicable conditions to maintain the exclusion.) 
Owners or operators of such facilities could, therefore, apply to the
overseeing agency to terminate the permit by modifying the permit term. 
The Agency believes that owners or operators seeking to terminate the
facility’s permit by modifying the permit term should comply with the
requirements of section 270.42(a) for Class 1 modifications with prior
Agency approval, as described above.  To support a request for permit
termination by modifying the permit term, the owner or operator would
have to demonstrate that the operations meet the conditions of the
exclusion, and that the facility does not manage non-excluded hazardous
wastes.  Further, as discussed below, the owner or operator would have
to demonstrate that corrective action obligations at the facility have
been addressed, or, where corrective action obligations remain, that
continuation of the permit is not necessary to assure that they will be
addressed (e.g., where the facilities cleanup obligations will be
addressed under an alternative federal or state enforcement mechanism,
or other federal or state cleanup authority).  The Agency seeks comment
on this approach.

	As was explained in the October 2003 proposal (68 FR 61580), where a
permitted facility has not yet completed facility-wide corrective
action, but manages only hazardous secondary materials that would become
excluded under this proposed rule (see 40 CFR 264.101), the obligation
to address facility-wide corrective action would remain in effect. 
Therefore, in such cases, the permit would not typically be terminated,
but could be modified to remove the requirements that applied to the
now-excluded hazardous secondary material, and maintain the corrective
action provisions of the permit.  The facility’s permit, which would
thereafter address only corrective action, should be maintained until it
is no longer necessary to 

	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.  For example, in some
cases, as an alternative to a permitThus, 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 might choose to
address a facility’s cleanup obligations undermay have  available an
alternative federal or state enforcement mechanism, or other federal or
state cleanup authority, through which it could chose to address the
facility’s cleanup obligations, rather than continue to pursue
corrective action under a permit.  In these cases, where the alternate
authority would ensure that facility-wide corrective action will be
addressed, maintenance of the permit would not be necessary.   

	A facility that is operating under interim status would be affected by
promulgation of today’s supplemental proposal in much the same way as
would a permitted facility, and the issue of corrective action would be
addressed in a similar manner.  At an interim status facility managing
only hazardous secondary materials that become excluded under today’s
supplemental proposal, the Part 265 interim status standards that
applied to the hazardous waste management units at the facility, as well
as the general facility standards in Part 265, would no longer apply. 
At the same time, the owner or operator would retain responsibility for
unaddressed corrective action obligations at the solid waste management
units. 

	 Owners and operators of permitted and  interim status facilities with
corrective action obligations should refer to the Agency’s February
25, 2003 guidance entitled “Final Guidance on Completion of Corrective
Action Activities at RCRA Facilities,” (68 FR 8757) for a detailed
discussion of corrective action completion.  

 	

	In addition to the above described issues relating to permits and
corrective action, today’s supplemental proposal also may have
implications with regard to closure of hazardous waste storage units at
affected facilities. In cases where hazardous waste storage units would
only be managing excluded hazardous secondary material pursuant to
today’s supplemental proposal, the current regulations could be read
as triggering the closure requirements for those units, since
owners/operators of non-land based hazardous waste units (e.g., tanks,
containers, containment buildings) must begin closure within 90 days of
receiving a unit’s final volume of hazardous wastes.  See 40 CFR
264.113(a) and 265.113(a).  

	In the October, 2003 proposal (68 FR 61580-61581), EPA expressed the
view that requiring closure of units in these situations would serve
little environmental purpose, since after closure the unit would be
immediately reopened and used to store the same (now excluded) hazardous
secondary material.  In that notice, the Agency proposed that closure of
storage units would not be required when the wastes in such units were
excluded under the proposal.    

	In response to that proposal, several commenters stated that one of the
main purposes of the RCRA Subtitle C closure requirements is to identify
and remediate any releases originating from the units.  The Agency notes
that releases from these units are discarded and solid and hazardous
wastes, and agrees with commenter’s concern that such releases should
be addressed.  The Agency does not agree, however, that the specific
Subtitle C closure requirements are most appropriate to address cleanup
of releases from these units, if any have occurred.  Rather, the Agency
believes that a better approach would be to address potential releases
from these units as part of corrective action for all releases at the
facility.  This approach  would achieve the same environmental results,
and would provide the owner or operator the option of integrating the
cleanup more closely into the broader facility response.  

          When considering the issue of addressing releases from these
units, the question arises about what happens to the funds that provide
financial assurance for closure.  The requirements in Part 264 and 265
Subpart H, which apply at these units prior to the exclusion taking
effect, provide for release of financial assurance upon certification by
the owner or operator that closure has been completed in accordance with
the approved closure plan, and Agency verification of that certification
(see 264,143(i) and 265.143(h)).  Similar provisions at sections
264.145(i) and 265.145(h) provide for release of financial assurance for
post-closure care.  

	Under the approach to closure discussed above, owners and operators of
units that manage only wastes that would be excluded under this
supplemental proposal would not be subject to closure requirements and,
therefore, would not submit a certification of closure, and thus would
not trigger release of financial assurance.  As discussed in
Sectionsection X.C.2 of today’s preamble, reclaimers who receive
hazardous secondary materials that have been excluded under the proposed
40 CFR 261.4(a)(24) would still be required to meet Subpart H financial
assurance requirements as a condition of the exclusion.  In this case,
the financial assurance provided for closure would satisfy that
requirement (perhaps with some modification).  

However, persons who recycle materials under the proposed exclusions for
materials recycled under the control of the generator (40 CFR
261.2(a)(2)(ii) and 40 CFR 261.4(a)(23)) would not be required to meet
Subpart H financial assurance requirements as a condition of the
exclusion.   The Agency believes that those owners and operators should
be released from financial assurance requirements upon demonstrating
that no releases from the unit remain to be addressed.  In complex
facilities, that demonstration might be difficult, or it might be
inconsistent with broader corrective action strategy (for example, if
historical releases from the unit were mingled with other general
facility contamination).  Where such a situation exists, the Agency
believes that financial assurances obtained for closure and /or
post-closure should be redirected to address the corrective action needs
at the unit.  (In general, however, EPA believes that these situations
will be the exception rather than the rule, since the overwhelming
majority of units in question would have upgraded to current subtitle C
standards, e.g., secondary containment for tanks, etc.)  The Agency
requests comment on modifying the regulations to allow financial
assurances obtained for closure and/or post-closure to be redirected to
address the corrective action needs at units that manage only wastes
that would be excluded by this proposal.

C. Imports and Exports

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

D. Superfund

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

E.  National Partnership for Environmental Priorities

	If today’s proposed changes to the RCRA definition of solid waste are
promulgated, the Agency expects that affected companies will take
advantage of this new regulatory framework by exploring new
opportunities to recycle their hazardous secondary materials.  We
believe that these regulatory changes are consistent with EPA’s
efforts to encourage and promote sustainable methods and practices by
manufacturers and other businesses.  In this context,
“sustainability” is defined as economic development that meets the
needs of the present without compromising the ability of future
generations to meet their own needs.  

	The National Partnership for Environmental Priorities (NPEP) is a
voluntary program administered by EPA that fosters the establishment of
a new corporate/federal partnership in which both work collaboratively
towards voluntary reductions in the use of certain chemicals.  Recycling
is one means of achieving such reductions in chemical use.  The NPEP can
provide technical assistance and expertise to assist companies in
successfully achieving these goals, while at the same time saving money
or increasing production.  NPEP members’ successes are voluntarily
reported to EPA, and members are publicly recognized and rewarded for
their accomplishments.  For further information on the NPEP program,
visit the NPEP website at
Http://www.epa.gov/epaoswer/hazwaste/minimize/partnership.htm.  

XIV. Measurement of the Performance Outcomes of This Supplemental
Proposal

A.   Need for Performance Measurement

Since today's supplemental proposal, if finalized, would make important
changes to the Agency’s current RCRA regulatory framework for
industrial recycling of hazardous secondary materials, and is designed
to encourage industrial recycling of such materials, the Agency has a
strong interest in being able to measure the performance outcomes that
these regulatory changes may have on the regulated community. In
general, it is important for the Agency to be able to quantify, monitor,
and report to the public the actual performance outcomes of this
supplemental proposal. In general, performance measurement of federal
programs is expected of by Congress according to the 1993 Government
Performance and Results Act (  HYPERLINK
"http://www.whitehouse.gov/omb/mgmt-gpra" 
http://www.whitehouse.gov/omb/mgmt-gpra ) and the 2005 Government
Reorganization and Program Performance Improvement Act
(http://www.whitehouse.gov/omb/legislative/grppi_act_2005.pdf), as well
as by the 2002 President’s Management Agenda
(http://www.whitehouse.gov/omb/budget/fy2002/mgmt.pdf), and by the
Office of Management and Budget according to the annual Program
Assessment Rating Tool (  HYPERLINK "http://www.whitehouse.gov/omb/part"
 http://www.whitehouse.gov/omb/part ) initiated in 2003. In particular,
measurement of the performance outcomes for this supplemental proposal
will enable EPA to evaluate the actual effectiveness with regard to
encouraging industrial recycling, affecting future industrial recycling
trends, and targeting possible future regulatory and non-regulatory
initiatives directed at furthering safe and beneficial industrial
recycling practices. As discussed elsewhere in today's preamble, we
expect that the regulatory changes being proposed will have the effect
of reducing regulatory disincentives to industrial recycling, thereby
encouraging new recycling initiatives by the regulated community.

To measure performance outcomes, the Agency is interested in being able
to measure the numbers of existing and new industrial facilities that
actually take advantage of these regulatory changes, as well as the
quantities and types of hazardous secondary materials that are affected,
and the specific types of industries that are affected.  We also are
interested in measuring the extent to which industrial recycling that is
affected by today’s supplemental proposal occurs onsite or offsite,
and the extent to which small quantity and large quantity hazardous
waste generators (i.e., SQGs and LQGs) are able to take advantage of an
exclusion. Such information on the actual outcomes of these regulatory
changes could enable the Agency to measure, rather than estimate, the
actual cost savings benefits to industries affected by the regulatory
changes, as well as to measure environmental benefits (e.g., annual
quantities of specific materials conserved, avoided raw material inputs,
reduced pressure on landfill capacity, water and energy conserved).

B.  Approaches to Performance Measurement

1.	Expand Use of the Proposed Notification Requirements to Include
Outcome Data Elements.  Today’s supplemental proposal includes a
requirement that facilities (both generators and recyclers) taking
advantage of an exclusion provide regulatory authorities with certain
basic items of information through a one-time notification. However, the
notification proposed today would not provide EPA with other information
which might be helpful in measuring the performance outcomes of this
rule. For this reason, we are considering adding some or all of the
following data elements to the notifications: annual quantities (e.g.,
tons per year) and RCRA waste codes associated with each excluded
hazardous secondary material recycled, types of reclamation and
recycling processes involved (e.g., mechanical separation, distillation,
ion exchange, smelting), types of products produced from the reclamation
and recycling processes, associated NAICS industry codes and NAICS
materials codes, which specific exclusion the generator or recycler is
claiming, and whether the generator or recycler is or was a SQG or LQG.
We also are soliciting comment on whether to require a similar
notification from hazardous secondary materials generators and recyclers
who begin operations for the first time after the effective date of this
rule. Requiring such additional information could provide the Agency
with the means to measure the actual outcomes and success of these
regulatory revisions with regard to achieving their intended outcomes.
Finally, the Agency solicits comment on additional data elements in the
notification that might help EPA measure the performance outcomes of the
supplemental proposal  This information would allow EPA to track the
number of facilities and the types of hazardous secondary materials
affected by the proposed rulemaking, but would not allow us to estimate
the amount of material affected.  We request comment on whether
additional data elements could be added that would help inform EPA and
the public about the effect of the proposed exclusions without imposing
a significant additional burden on the regulated community.

2.	Use of Existing EPA Data Systems.  There are two existing data
systems which may be of limited utility to EPA for measuring the
performance outcomes of this supplemental proposal.  

(a) RCRA Biennial Report.  Under 40 CFR 262.41, large quantity hazardous
waste generators and hazardous waste treatment, storage, recycling and
disposal facilities (TSDRFs) are required to prepare and submit Biennial
Reports to RCRA-authorized states on the types and quantities of
hazardous wastes generated and managed during the reporting year
(http://www.epa.gov/epaoswer/hazwaste/data/biennialreport).  In the
past, the Agency has used data from the Biennial Report (BR) for
analytic purposes such as establishing baselines for estimating the
potential economic impacts on industries and facilities potentially
affected by RCRA rulemaking initiatives. While the BR has provided the
Agency with considerable valuable data regarding the types and
quantities of hazardous wastes that are generated, and where and how
they are treated, stored or disposed, this system has a number of
limitations, particularly with regard to: i) how small quantity
generators are not required to report to the BR and ii) how generation
and management of hazardous secondary materials that are not regulated
as hazardous wastes are not covered in the BR. Under today’s
supplemental proposal, these limitations may be exacerbated, since
current RCRA-regulated hazardous wastes subject to BR reporting will
become excluded as recycled hazardous secondary materials.  As a result,
in the future we expect the BR will provide less data relevant to
measuring hazardous secondary materials recycling trends, and thus will
be inadequate for measuring the future outcomes and success of this
supplemental proposal. Therefore, we request comment on modifying the
BRS to require or continue to require that such information be submitted
to EPA.  

b) Toxic Release Inventory.  Compared to the BR, the Toxic Release
Inventory (TRI) may provide greater utility for the purpose of measuring
future performance outcomes of today’s supplemental proposal, because
the TRI is not limited to hazardous waste and not limited to LQGs, but
includes annual reporting on industrial materials manufactured,
imported, processed, otherwise used, transferred offsite, treated or
disposed as waste, or recycled by certain industries. Consequently, by
its design and relatively broader scope, the TRI (Form R;
http://www.epa.gov/tri) contains limited information on RCRA hazardous
wastes (as well as more information about other types of industrial
materials such as secondary by-products) and it is probably more
on-point for the Agency to attempt to use for measuring future outcomes
of today’s supplemental proposal.  

In combination, both the BR and TRI data systems may provide a skeletal
but complementary framework for measuring future performance outcomes.

3. 	Surveys.  Another option, either as a stand-alone option or used in
combination with the BR/TRI option above, could be to conduct a mail or
phone survey of affected facilities. The main advantage of a survey
would be the ability to collect data on targeted performance measures
that would not be available through either the BR or TRI.  Moreover, a
survey mechanism could potentially serve a dual purpose as a form of
communications outreach to industrial facilities that are not recycling
or are unaware of today’s supplemental proposal, which would assist
EPA in better understanding why some generators are unable or unwilling
to recycle their hazardous secondary materials.  Such a survey could be
voluntary or mandatory, and could involve a statistically-valid sample
of industrial facilities, or could focus on particular industries or
affected materials. It could be conducted as a one-time effort or
periodically (e.g., once every four years) to capture recycling trends
over time.  To minimize burden, it could also be conducted
electronically over the internet. It should be noted, however, that with
some exceptions (e.g., surveys of fewer than 10 respondents), conducting
a survey of this nature would need OMB approval in accordance with the
provisions of the Paperwork Reduction Act. 

4.	Voluntary Partnerships with Affected Industries.  Measuring the
impact of today's supplemental proposal might also be done with the
voluntary assistance of stakeholder industry and trade associations,
many of which also may have a vested interest in assessing their
success, or lack thereof. We are aware that some trade associations may
maintain data on the recycling activities of their member companies;
such associations might be willing to share some of that existing
information with the Agency.  Another option could be to partner with
certain trade associations that may be willing on a voluntary basis to
gather relevant information from their members.   

			

5.	NPEP Voluntary Program.  As discussed in the preceding section of
this preamble, EPA’s National Partnership for Environmental Priorities
(NPEP) is a voluntary program that encourages companies and federal
facilities to reduce priority chemicals through waste minimization,
reuse, recycling, and reclamation, and to report achievements in
reductions. Companies that choose to change their materials management
practices from disposal to recycling as a result of today’s
supplemental proposal could be eligible for membership in NPEP.
Companies that join NPEP could identify voluntary goal(s) to initiate
new recycling or to increase current recycling at their facility of
priority chemicals. Upon completion of their goal(s), the partners can
submit a success story of their accomplishments. In turn, these partners
will receive EPA support and assistance for reducing priority chemicals
and award recognition for their success. Thus, information from NPEP
partners might also be of assistance to EPA in evaluating the impacts of
today's proposed rule.

C.	Request for Comment on Performance Measurement Approaches

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

XV. How Would These Proposed Regulatory Changes Be Administered and
Enforced in the States? 

A. Applicability of Rules in Authorized States

	Under section 3006 of RCRA, EPA may authorize qualified states to
administer the RCRA Subtitle C hazardous waste program within the state.
 Following authorization, EPA retains Subtitle C enforcement authority,
although authorized states have primary enforcement responsibility.  EPA
retains authority under sections 3007, 3008, 3013, 3017 and 7003.  The
standards and requirements for state authorization are found at 40 CFR
Part 271.

	Prior to enactment of the Hazardous and Solid Waste Amendments of 1984
(HSWA), a state with final RCRA authorization administered its hazardous
waste program entirely in lieu of EPA administering the federal program
in that state.  The federal requirements no longer applied in the
authorized state, and EPA could not issue permits for any facilities in
that state, since only the state was authorized to issue RCRA permits. 
When new, more stringent federal requirements were promulgated, the
state was obligated to enact equivalent authorities within specified
time frames.  However, the new federal requirements did not take effect
in an authorized state until the state adopted the federal requirements
as state law.

	

	In contrast, under RCRA section 3006(g) (42 U.S.C. 6926(g)), which was
added by HSWA, new requirements and prohibitions imposed under HSWA
authority take effect in authorized states at the same time that they
take effect in unauthorized states.  EPA is directed by the statute to
implement these requirements and prohibitions in authorized states,
including the issuance of permits, until the state is granted
authorization to do so. While states must still adopt HSWA related
provisions as state law to retain final authorization, EPA implements
the HSWA provisions in authorized states until the states do so.

	

	Authorized states are required to modify their programs only when EPA
enacts federal requirements that are more stringent or broader in scope
than existing federal requirements.  RCRA section 3009 allows the states
to impose standards more stringent than those in the federal program
(see also 40 CFR 271.1).  Therefore, authorized states may, but are not
required to, adopt federal regulations, both HSWA and non-HSWA, that are
considered less stringent than previous federal regulations.  

B. Effect on State Authorization

	

	Today's supplemental proposal is less stringent than the current
federal program.  Because states are not required to adopt less
stringent regulations, they do not have to adopt the exclusions being
proposed, although EPA encourages them to do so.  If a state's standards
for the hazardous secondary materials discussed here are less stringent
than those in today's supplemental proposal, the state will need to
amend its regulations to make them equivalent to today's standards and
pursue authorization. 

Today’s proposed rule would eliminate specific requirements that apply
to materials currently managed as hazardous waste, and is being
proposed, at least in part, in response to recent court decisions on the
definition of solid waste.  Specifically, in several decisions, courts
have held that EPA’s current definition of solid waste at 40 CFR
Section 261.2 is overly broad and would lead to the regulation of some
hazardous secondary materials that are not discarded and, therefore, are
not solid wastes.  In this rulemaking, the exclusion for materials
reclaimed under the control of the generator (proposed 40 CFR
261.2(a)(2)(ii)) identifies those hazardous secondary materials that are
not discarded and, therefore, are not solid wastes under RCRA.  EPA also
recognizes that there may be some hazardous secondary materials that are
not recycled under the control of the generator, but are not solid
wastes because they are reclaimed in a continuous industrial process. 
Because it was not possible to identify all of the continuous industrial
process recycling fact patterns, EPA has proposed a petition process for
non-waste determinations at proposed 40 CFR 260.30 (see Section VII
above).  

EPA believes that the proposed rule describes the appropriate scope of
the federal program under RCRA.   Thus, reclamation under the control of
the generator and recycling in a continuous process, as described
herein, are not activities associated with discarded materials and would
not be subject to RCRA.  In addition, today’s proposal also
conditionally excludes from the definition of solid waste reclaimed
materials that are not under the control of the generator and are not
recycled in a continuous industrial process.  EPA believes that these
exclusions will encourage recycling and that they are consistent with
RCRA’s statutory objective of conserving valuable material and energy
resources.

EPA would strongly encourage states to adopt the regulations being
proposed today.  When EPA authorizes a state to implement the RCRA
hazardous waste program, EPA determines whether the state program is
consistent with the federal program, and whether it is no less
stringent. This process, codified in 40 CFR 271, ensures national
consistency and minimum standards, while providing flexibility to states
in implementing rules.  In making this determination, EPA evaluates the
state requirements to ensure they are no less stringent than the federal
requirements.  Because today’s rule would eliminate specific
requirements for hazardous secondary materials that are currently
managed as hazardous waste, state programs would no longer need to
include those specific requirements in order to be consistent with
EPA’s regulations, when and if today’s rule is finalized.

However, under RCRA section 3009, a state may adopt standards that are
more stringent than the federal program.  Thus, a state is not required
to adopt today’s proposal, or a state may choose to adopt only part of
today’s proposal. Some states incorporate the federal regulations by
reference or have specific state statutory requirements that their state
program can be no more stringent than the federal regulations.  In those
cases, EPA anticipates that the exclusions in today’s proposal, when
and if finalized, would be adopted by these states, consistent with
state laws and state administrative procedures, unless they take
explicit action as specified by their respective state laws to decline
the proposed revisions. We note that if Statesstates choose not to adopt
the provisions of today’s proposal concerning exports, the provisions
of 40 CFR 262 Subparts E or H would apply to hazardous secondary
materials that are exported.  

C. Interstate Transport 

	

	Because some states may choose not to seek authorization for today's
supplemental proposal, there will probably be cases where the hazardous
secondary materials in question will be transported through states with
different regulations governing them.

	

	First, a hazardous secondary material which is subject to an exclusion
from the definition of solid waste regulations may be sent to a state,
or through a state, where it is subject to the hazardous waste
regulations.  In this scenario, for the portion of the trip through the
originating state, and any other states where the hazardous secondary
material is excluded, neither a hazardous waste transporter with an EPA
identification number per 40 CFR 263.11 nor a manifest would be
required.  However, for the portion of the trip through the receiving
state, and any other states that do not consider the hazardous secondary
material to be excluded, the transporter must have a manifest, and must
move the hazardous secondary material in compliance with 40 CFR Part
263. In order for the final transporter and the receiving facility to
fulfill the requirements concerning the manifest (40 CFR 263.20, 263.21,
263.22, 264.71, 264.72, 264.76 or 265.71, 265.72, and 265.76), the
initiating facility should complete a manifest and forward it to the
first transporter to travel in a state where the hazardous secondary
material is not excluded.  The receiving facility must then sign the
manifest and send a copy to the initiating facility.  

	

	Second, a hazardous secondary material generated in a state that does
not provide an exclusion for the hazardous secondary material may be
sent to a state where it is excluded.  In this scenario, the hazardous
secondary material must be moved by a hazardous waste transporter while
the hazardous secondary material is in the generator's state or any
other states where it is not excluded.  The initiating facility would
complete a manifest and give copies to the transporter as required under
40 CFR 262.23(a).  Transportation within the receiving state and any
other states that exclude the hazardous secondary material would not
require a manifest and need not be transported by a hazardous waste
transporter.  However, it is the initiating facility's responsibility to
ensure that the manifest is forwarded to the receiving facility by any
non-hazardous waste transporter and sent back to the initiating facility
by the receiving facility (see 40 CFR 262.23 and 262.42). 

One final point is that RCRA-regulated hazardous wastes, when
transported, require an EPA hazardous waste manifest, and are
incorporated by reference in Department of Transportation (DOT)
regulations in the DOT definition of hazardous material (49 CFR 171.8). 
Under today’s supplemental proposal, a hazardous secondary material
that is not a solid waste would no longer need an EPA manifest when
transported off-site for recycling, and therefore would not
automatically be considered a DOT hazardous material (hazmat).  However,
if the material contains a chemical or falls into a class of substances
that DOT has determined to pose an unacceptable hazard during
transportation, it would still be regulated as a DOT hazardous material
(a table at 49 CFR 172.101 lists materials considered "hazardous" by
DOT, according to 23 DOT hazard classes).  If it does not, then it would
not be so regulated by DOT.  EPA believes this is appropriate, since
when sent to recycling rather than disposal, these hazardous secondary
materials pose no greater risk than similar types of non-waste materials
already in transportation for commerce under non-hazmat DOT status.
Moreover, regardless of a hazardous secondary material’s EPA manifest
and DOT hazmat status, EPA believes that today’s supplemental proposal
is likely to result in a net reduction in annual transportation accident
risks during transport of affected materials, due to the expected net
reduction in annual miles transported, as a result of the companies
which would choose to switch from current offsite hazardous waste
management to recycling at either on-site or closer facilities to the
generating facility. 

XVI.  How Has EPA Fulfilled the Administrative Requirements for this
Rulemaking?

A. Executive Order 12866:  Regulatory Planning and Review

	

	Under section 3(f)(1) of Executive Order (EO) 12866 (58 FR 51735,
October 4, 1993), this action is an “economically significant
regulatory action” because the annual effect on the economy of this
proposed action is expected to be greater than $100 million, and the
proposed action contains novel policy issues.  Accordingly, EPA
submitted this action to the Office of Management and Budget (OMB) for
review under EO 12866 and any changes made in response to OMB
recommendations have been documented in the docket for this action.  

	In addition, EPA prepared an analysis of the potential national
economic costs and benefits associated with this proposed action.  The
analysis is contained in the our “Economics Background Document”:
Regulatory Impact Analysis (RIA) for EPA’s 2007 Supplemental Proposed
Revisions to the Industrial Recycling Exclusions of the RCRA Definition
of Solid Waste” (January 22, 2007, 284 pages) which is available for
public review and comment in the EPA Docket (http:
//www.regulations.gov) and is briefly summarized below.  If the
exclusions are promulgated as proposed today, (i.e., the two generator
controlled exclusions involving land- and non-land based units, plus the
offsite transfer exclusion, plus the case-by-case petition process) and
are adopted by all state governments, EPA expects this action to result
in a net effect of $107 million in average annual net cost savings to
about 4,600 facilities in 530 industries, and would is expected to
remove from RCRA regulation 0.65 million tons per year of hazardous
secondary materials currently managed as RCRA hazardous waste.  These
materials consist of 0.59 million tons (9091%) that are currently
recycled as RCRA hazardous waste, and 0.06 million tons (109%) of
hazardous waste that is currently disposed (i.e., landfilled, or
incinerated)), which EPA expects may switch from disposal to recycling. 
These impact estimates are EPA’s best estimates associated with impact
estimation uncertainty and ranges of $93 million to $205 million in
annual materials management cost savings, and 0.33 to 1.70 million tons
per year in affected hazardous secondary materials, respectively.  The 
as a result of this action, if promulgated.  With respect to each of the
proposed exclusions, the $107 million per year best estimate net cost
savings effect consists of four incrementaladditive components:  (a)
$6387 million per year for hazardous secondary materials generated and
reclaimed at the recycled under the control of the generating facility; 
(b) $24 million per year for in either land or non-land based units
(which includes the onsite, within same-company offsite recycling or ,
and tolling arrangement transfers;  (c) $1 million per year for
case-by-case non-waste determinationsexclusions), plus (db) $19 million
additional cost savings for conditional exclusion of other offsite
transfers., plus (c) $1 million per year cost savings for case-by-case
non-waste determinations.

These impact estimates are EPA’s best estimates within the economic
impact estimation uncertainty range of $93 million to $205 million in
annual materials management cost savings, and 0.33 to 1.70 million tons
per year in affected hazardous secondary materials, respectively, for
the net effect of the proposed regulatory exclusions.  The purpose of
these impact ranges is to reveal two major sources of uncertainty at the
launch of our RIA prior to the final draft of this proposal: (1) our RIA
assigned eight implementation conditions to the best estimate impact for
the proposed exclusions from a list of 18 possible conditions formulated
at the launch of the RIA.  In comparison, today’s notice proposes nine
conditions which differ by five conditions and standards (i.e.,
recycling legitimacy criteria, reasonable effort by generators, onsite
recordkeeping, land placement, and offsite shipment tracking); the
impact uncertainty range lower and upper bounds reflect inclusion of two
conditions and of 17 conditions, respectively; and (2) the main
underlying data in the RIA is the RCRA Biennial Report database about
RCRA hazardous waste activity, which includes numerical outliers; to
address these statistical outliers, the impact uncertainty ranges
reflect inclusion of 99% and 100% of the data, respectively, whereas our
best estimate includes 99.5% of the data (i.e., 0.5% of the largest
hazardous waste streams removed from the impact estimate).

In addition to these uncertainty factors which the RIA attempted to
address directly in the impact computations, there are five other
sources of impact uncertainty that our RIA describes as sensitivity
analyses and provides estimates of potential overall magnitude: (1)
based on extrapolating the adverse comments by some state governments on
exclusion options described in the October 2003 proposal, the economic
impacts could be 4% to 46% less than estimated in the RIA from state
non-adoption of this rule if promulgated; (2) the RIA is based on a
single year 2003 snapshot of RCRA hazardous waste data, but recent
(1997-2003) trend data show -17% to +38% fluctuation about mean in
annual waste tonnages recycled and disposed, and -54% to +54%
fluctuation in annual count of hazardous waste facilities; consequently,
future annual impacts could fluctuate rather widely relative to the
average annual impact estimates of our RIA based on 2003 data; (3) our
RIA is based on hazardous waste tonnages reported as managed in 2003
rather than reported as generated; however, recent trend (1997-2003)
data show -34% to +39% annual fluctuations between management and
generation quantities; (4) to a large degree macro economic conditions
determine the quantity of hazardous waste and secondary industrial
materials generated and managed in any given year; for example, although
our RIA is built upon a single year 2003 snapshot, one of the top-5
industries generating such materials is NAICS 3241 petroleum refining
which is expected to grow almost 6% annually through 2010, which could
increase future impacts; and (5) our RIA is founded on the “large
quantity generator” (LQG) and the “treatment, storage, disposal,
recycler facility” (TSDRF) data from the RCRA Biennial Report, and
therefore to some degree if not double-counted in the TSDRF data,
excludes from the impact estimates the RCRA regulatory class of “small
quantity generators” (SQGs), which may represent a 2% to 3% impact
underestimation.

Furthermore, our RIA estimate of potential new induced recycling as a
result of this proposal if promulgated, does not include an evaluation
of whether the U.S. or global markets for recycled industrial secondary
materials are large enough to absorb a potential increase in supply of
recycled materials.  Market conditions for recycled secondary materials
can vary considerably over time.  Demand for recycled solvents, for
example, is largely dependent on the petroleum market:  because virgin
solvents are made from petroleum products, high petroleum prices
encourage solvent recycling.  Similarly, high metals prices obviously
favor the recycling of metal-bearing secondary materials.  In addition,
there are four physical factors that suggest U.S. industries may be near
their current technical and economic limits for recycling RCRA hazardous
wastes: (1) the recent hazardous waste generation trend shows a 25%
decline between 1999 and 2003; (2) the recent hazardous waste recycling
trend shows a 73% increase in baseline recycling between 1999 and 2003
accounting in aggregate for metals recycling plus solvents recycling
plus other materials recycling (e.g., acid regeneration, non-solvent
liquid recycling); (3) recycling of RCRA hazardous wastes and secondary
industrial materials is technically difficult in some cases because of
numerous chemical co-contaminates in the materials; for example, based
on a national survey of large RCRA hazardous waste TSDRFs, 90% of
facilities reported between 10 and 60 hazardous chemical constituents in
wastes, with 287 constituents reported for a single wastestream, and a
total of 724 different chemical constituents reported in surveyed
wastes; this survey suggests that most LQGs must address a relatively
high number of hazardous chemical constituents in evaluating the
feasibility of their waste management options such as recycling; and (4)
some RCRA hazardous wastes have relatively low (e.g., less than 1%)
assay values for constituents with market value.  

EPA requests comment on the regulatory impact analysis, including both
the estimates of additional recycling and the cost savings that may
result from this proposed rule, and welcomes data from the public about
the possible impacts of the uncertainty factors.  For example, EPA is
seeking comments about whether the codification of the legitimacy
criteria, while not intended to impose any additional requirements as
compared to the current practice, may result in additional costs or
benefits that are not included in the RIA, and, if so, what those
additional costs or benefits would be.

	In addition to estimating the potential impact of this proposal,
EPA’s economic analysis also examined three other alternative
approaches for recycling exclusions:  on-site-only exclusion,
intra-industry offsite exclusion, and broad inter-industry transfer
exclusion with few conditions, as discussed in EPA’s October 2003
proposed rule.  See the “Economics Our best estimates of the potential
net cost savings for these three other approaches are $63 million, $72
million, and $129 million per year, associated with 0.35 million tons,
0.38 million tons, and 0.67 million tons per year secondary materials
potentially affected, respectively.  Accounting for estimation
uncertainty factors, net cost savings and potentially affected materials
for these three options could range between $45 million to $147 million
per year and 0.24 million to 0.91 million tons per year for the on-site
option, between $56 million to $156 million per year and 0.27 million to
0.98 million tons per year for the intra-industry option, and between
$114 million to $206 million per year and 0.46 million to 1.57 million
tons per year for the broad inter-industry transfer option.  In
comparison to these three options, and taking account of impact
uncertainty factors, the proposed approach is expected to result in
approximately the same range in annual cost savings as the highest
impact broad inter-industry transfer option of these three alternatives,
because it consists of four components: a broad transfer option with
certain conditions plus the two generator controlled options plus the
case-by-case petition option, but is expected to affect slightly more
waste quantities annually from addition of the case-by-case exclusion.

	In selecting the options for today's proposal, EPA considered both the
cost and benefits of the different options and the potential for each
option to result in materials being discarded and then resulting in
remediation or environmental damages.  The proposed combination option
of excluding materials recycled under the control of the generator,
hazardous secondary materials transferred for recycling with certain
conditions, and a case-by-case non-waste determination results in the
second highest estimated cost savings, number of entities affected and
amount of material expected to be induced to new recycling.  EPA chose
not to pursue the option with the highest estimated annual cost savings
($129 million versus $107 million per year for today's proposed
approach) because the lack of conditions for materials transferred to a
third-party recycler may result in material being discarded and increase
the likelihood of new cleanup sites that would need to be funded by
public funds.  See our “Economics Background Document,” which is in
the docket for today’s supplemental proposal, for a more detailed
discussion regarding the estimated impacts of the proposed approach, as
well as the impact uncertainties, and exclusion option alternatives that
were evaluated.  

B. Paperwork Reduction Act (ICR)

  SEQ CHAPTER \h \r 1 The information collection requirements in this
supplemental proposal have been submitted for approval to the Office of
Management and Budget (OMB) under the Paperwork Reduction Act, 44 U.S.C.
3501 et seq.  An Information Collection Request (ICR) document prepared
by EPA has been assigned EPA ICR number [to be assigned]1189.19 . 

The information requirements established for this action, and identified
in the ICR supporting today’s supplemental proposal, are largely
self-implementing, except for notice and consent requirements for
hazardous secondary materials exported for recycling.  This process will
ensure that (1) Regulated entities are held accountable to the
applicable requirements; (2) state inspectors can verify compliance when
needed; and (3) hazardous secondary materials exported for recycling are
actually handled as commodities abroad.  

EPA has carefully considered the burden that would be imposed upon the
regulated community by the regulations.  EPA is confident that those
activities required of respondents are necessary, and, to the extent
possible, has attempted to minimize the burden imposed.  EPA believes
that if the minimum requirements specified under the proposed
requirements are not met, neither the facilities nor EPA can ensure that
hazardous secondary materials sent for recycling are being managed in a
manner protective of human health and the environment.  

For the recordkeeping and reporting requirements applicable to hazardous
secondary materials sent for recycling, the aggregate annual burden to
respondents over the three-year period covered by this ICR is estimated
to be 11, 552 hours, with a cost to affected entities (i.e., industrial
facilities) of approximately $1,417,242.  However, this represents an
annual reduction in burden to respondents of approximately 52,050 hours,
or representing a cost reduction of $3,474,035 per year.  The estimated
annual operation and maintenance costs to affected entities are $739,469
per year, primarily for purchasing audit reports.  There are no startup
costs and no costs for purchases of services.  Administrative costs to
the Agency are estimated to be 1,257 hours per year, orrepresenting an
annual cost of $49,891.    

 

Burden means the total time, effort, or financial resources expended by
persons to generate, maintain, retain, or disclose or provide
information to or for a Federal agency.  This includes the time needed
to review instructions; develop, acquire, install, and utilize
technology and systems for the purposes of collecting, validating, and
verifying information, processing and maintaining information, and
disclosing and providing information; adjust existing systems to comply
with any previously applicable instructions and requirements; train
personnel to be 

able to respond to a collection of information; search data sources;
complete and review the collection of information; and transmit or
otherwise disclose the information. 

 

An Agency may not conduct or sponsor, and a person is not required to
respond to, a collection of information unless it displays a currently
valid OMB control number.  The OMB control numbers for EPA's regulations
are listed in 40 CFR Part 9.

 

To comment on the Agency's need for this information, the accuracy of
the provided burden estimates, and any suggested methods for minimizing
respondent burden, including the use of automated collection techniques,
EPA has established a public docket for this rule, which includes this
ICR, under Docket ID No. EPA-HQ-RCRA-2002-0031.  Submit any comments
related to the ICR for this proposed rule to EPA and OMB.  See the
“Addresses” section at the beginning of this notice for where to
submit comments to EPA.  Send comments to OMB at the Office of
Information and Regulatory Affairs, Office of Management and Budget,
Attn: Desk Officer for EPA, 725 17th Street, NW, Washington, DC  20503.

C.  Regulatory Flexibility Act 

  SEQ CHAPTER \h \r 1 The Regulatory Flexibility Act (RFA), as amended
by the Small Business 

Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C. 601 et.
seq., generally requires an agency to prepare a regulatory flexibility
analysis of any rule subject to notice and comment rulemaking
requirements under the Administrative Procedure Act or any other
statute, unless the agency certifies that the rule will not have a
significant economic impact on a substantial number of small entities. 
Small entities include small businesses, small organizations, and small
governmental jurisdictions. Because this action is designed to lower the
cost of waste management for industries subject to the supplemental
proposal, this proposal will not result in an adverse economic impact
effect on affected small entities.  Consequently, I hereby certify that
this supplemental proposal will not have a significant economic impact
on a substantial number of small entities.  In determining whether a
rule has a significant economic impact on a substantial number of small
entities, the impact of concern is any significant adverse economic
impact on small entities, since the primary purpose of the regulatory
flexibility analyses is to identify and address regulatory alternatives
which minimize any significant economic impact of the proposed rule on
small entities (5 U.S.C. Sections 603 and 604).  Thus, an agency may
certify that a rule will not have a significant economic impact on a
substantial number of small entities if the rule relieves regulatory
burden, or otherwise has a positive economic effect on small entities
subject to the rule.  For more information regarding the economic impact
of this supplemental proposal, please refer to the "Economics Background
Document" available from the EPA Docket (http://www.regulations.gov ).

 

EPA therefore concludes that today's supplemental proposal will relieve
regulatory burden for all size entities, including small entities.  The
Agency continues to be interested in the potential impacts of the
proposed rule on small entities and welcomes comments on issues related
to such 

impacts.

D. Unfunded Mandates Reform Act

  SEQ CHAPTER \h \r 1 Title II of the Unfunded Mandates Reform Act of
1995 (UMRA), Public Law 

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

Before EPA establishes any regulatory requirements that may
significantly or uniquely affect small governments, including tribal
governments, it must have developed under section 203 of the UMRA a
small government agency plan.  The plan must provide for notifying
potentially affected small governments, enabling officials to have
meaningful and timely input in the development of regulatory proposals,
and informing, educating, and advising small governments on compliance
with the regulatory requirements.

 

EPA has determined that this rule does not include a Federal mandate
that may result in expenditures of $100 million or more for State,
local, or tribal governments, in the aggregate, or the private sector in
any one year.  This is because this supplemental proposal imposes no
enforceable duty on any State, local, or tribal governments.  EPA also
has determined that this rule contains no regulatory requirements that
might significantly or uniquely affect small governments.  In addition,
as discussed above, the private sector is not expected to incur costs
exceeding $100 million. Therefore, today's supplemental proposal is not
subject to the requirements of sections 202 and 205 of UMRA.

E. Executive Order 13132:  Federalism

  SEQ CHAPTER \h \r 1 Executive Order 13132, entitled Federalism (64 FR
43255, August 10, 1999),  requires EPA to develop an accountable process
to ensure a meaningful and timely input by State and local officials in
the development of regulatory policies that have federalism
implications.  Policies that have federalism implications are defined in
the Executive Order to include regulations that have substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.

	

 	This supplemental proposal does not have federalism implications.  It
will not have substantial direct effects on the States, on the
relationship between the national government and the States, or on the
distribution of power and responsibilities among the various levels of
government, as specified in Executive Order 13132.  There are no State
and local government bodies that incur direct compliance costs by this
rulemaking.  State and local government implementation expenditures are
expected to be less than $500,000 in any one year.  Thus, the
requirements of Section 6 of the Executive Order do not apply to this
supplemental proposal.  In addition, because this rule is less stringent
than the current federal program, states are not required to adopt it.  

 	In the spirit of Executive Order 13132, and consistent with EPA policy
to promote communications between EPA and State and local governments,
EPA specifically solicits comment on this supplemental proposal from
State and local officials.

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

  SEQ CHAPTER \h \r 1 Executive Order 13175, entitled Consultation and
Coordination with Indian Tribal Governments (65 FR 67249, November 9,
2000), requires EPA to develop an accountable process to ensure a
meaningful and timely input by tribal officials in the development of
regulatory policies that have tribal implications.  This supplemental
proposal does not have tribal implications, as specified in Executive
Order 13175.  It does not significantly or uniquely affect the
communities of Indian tribal governments, nor would it impose
substantial direct compliance costs on them. Thus, Executive Order 13175
does not apply to this supplemental proposal.  .

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

  SEQ CHAPTER \h \r 1 The Executive Order 13045, entitled Protection of
Children from Environmental Health Risks and Safety Risks (62 FR 19885,
April 23, 1997) applies to any rule that EPA determines (1) is
economically significant as defined under Executive Order 12866, and (2)
the environmental health or safety risk addressed by the rule has a
disproportionate effect on children.  If the regulatory action meets
both criteria, the Agency must evaluate the environmental health or
safety effects of the planned rule on children; and explain why the
planned regulation is preferable to other potentially effective and
reasonably feasible alternatives considered by the Agency.  

	This supplemental proposal is not subject to the Executive Order
because the Agency does not have reason to believe the environmental
health or safety risks addressed by this proposed rule present a
disproportionate risk to children.

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

	This supplemental proposal is not a “significant energy action” as
defined in Executive Order 13211, “Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use” (66 Fed.
Reg. 28355, May 22, 2001) because it is not likely to have a significant
adverse effect on the supply, distribution, or use of energy.  This
supplemental proposal reduces regulatory burden and as explained in our
Economics Background Document,  may possibly induce fuel efficiency and
energy savings from voluntary shifting of some types of secondary
industrial materials, where cost-effective for firms to do so, from
current landfill and incineration disposal, to industrial recycling.  It
therefore should not adversely affect energy supply, distribution, or
use.

H. National Technology Transfer and Advancement Act of 1995 

  SEQ CHAPTER \h \r 1 Section 12(d) of the National Technology Transfer
and Advancement Act of 1995 (ANTTAA), Public Law No. 104 113, section
12(d) (15 U.S.C. 272 note) directs EPA to use voluntary consensus
standards in its regulatory activities, unless to do so would be
inconsistent with applicable law or otherwise impractical.  Voluntary
consensus standards are technical standards (e.g., materials
specifications, test methods, sampling procedures, and business
practices) that are developed or adopted by voluntary consensus
standards bodies.  The NTTAA directs EPA to provide Congress, through
OMB, explanations when the Agency decides not to use available and
applicable voluntary consensus standards.  Today's supplemental proposal
does not contain technical standards and therefore the NTTAA is not
applicable.  

I. 	Executive Order 12898:  Environmental Justice

  SEQ CHAPTER \h \r 1 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 concerns
voiced by many groups outside the Agency, EPA's Office of Solid Waste
and Emergency Response (OSWER) formed an Environmental Justice Task
Force to analyze the array of environmental justice issues specific to
waste programs and to develop an overall strategy to identify and
address these issues (OSWER Directive No. 9200.3-17).  

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

	 

List of Subjects

40 CFR Part 260

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

40 CFR Part 261

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

Dated:  ___________________________________

Stephen L. Johnson, Administrator

For the reasons stated in the preamble, title 40, Chapter I of the Code
of Federal Regulations is proposed to be amended as follows:

 

PART 260 – Hazardous Waste Management System:  General

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

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

.*   *   *   *   *    

Subpart B – Definitions

2.  Section 260.10 is amended by adding in alphabetical order the
definitions of “land-based unit” and “hazardous secondary
materials generated and reclaimed under the control of the generator”
to read as follows:

*   *   *   *   *   

Land-based unit means a landfill, surface impoundment, waste pile,
injection well, land treatment facility, salt dome formation, salt bed
formation, or underground mine or cave.  

*  *  *  *  *  

Hazardous secondary material generated and reclaimed under the control
of  the generator means:

(1) that such material is generated and reclaimed at the generating
facility (for purposes of this paragraph, generating facility means all
contiguous property owned by the generator); or 

(2) that such material is generated and reclaimed by the same
“person” as defined in §260.10, if the generator certifies the
following: “on behalf of [insert company name] I certify that the
indicated hazardous recyclable material will be sent to [insert company
name], that the two companies are under the same ownership, and that the
owner corporation [insert company name] has acknowledged full
responsibility for the safe management of the hazardous recyclable
material,” or 

(3) that such material is generated pursuant to a written contract
between a tolling contractor and a batch manufacturer and are reclaimed
by the tolling contractor, if  the tolling contractor retains ownership
of, and responsibility for, the recyclable material that is  generated
during the course of the production of the product.  For purposes of
this paragraph, tolling contractor means a person who arranges for the
production of a product made from raw materials through a written
contract with a batch manufacturer. Batch manufacturer means a person
who produces a product made from raw materials pursuant to a written
contract with a tolling contractor.   

Subpart C – [Amended]

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

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

* 	*	 *	 *	 *

 

(b) MaterialMaterials that isare reclaimed and then reused within the
original production process in which it wasthey were generated; 

*         *          *         *          * 

(d) MaterialMaterials that isare reclaimed in a continuous industrial
process;

(e) MaterialMaterials  that isare indistinguishable in all relevant
aspects from a product or intermediate;  and

(f) MaterialMaterials that isare reclaimed under the control of the
generator, including control through contracts, such as tolling
arrangements.

 

4.  Section 260.33 is amended by revising the section title, the
introductory paragraph and paragraph (a) 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
non-waste determination.  The application must address the relevant
criteria contained in §260.31, §260.32, or §260.34 as applicable.

* 	*	 *	 *	 *

5.   Section 260.34 is added to read as follows:

§ 260.34 Standards and criteria for non-waste determinations.

(a) An applicant may apply to the Administrator for a formal
determination that a material is clearly not discarded and therefore not
a solid waste.  The determinations will be based on the criteria
contained in paragraphs (b), (c), or (d) of this section as applicable. 
If an application is denied, the material might still be eligible for a
solid waste variance or exclusion (for example, one of the solid waste
variances under § 260.31 or solid waste exclusions under § 261.4).  
Determinations may also be granted by the State if the State is either
authorized for this provision or if the following conditions are met:

(1)	The State determines the material meets the criteria in paragraphs
(b), (c),  or (d) of this section;

(2)	The State requests that EPA review its determination; and 

(3)	EPA approves the State determination.

 

(b)  The Administrator may grant a non-waste determination for material
which is reclaimed in a continuous industrial process if the applicant
demonstrates that the material is an essential part of the production
process and is not discarded. The determination will be based on the
following criteria:

(1) How integratedThe extent that the management of the material is
intopart of the continuous primary production process and is not waste
treatment;

(2)  Whether the capacity of the production process would use the
material in a reasonable timeframe and ensure that the material will not
be abandoned (for example, based on past practices, market factors, the
nature of the material, and any contractual arrangements); 

(3) Whether the hazardous constituents in the secondary material are
reclaimed rather than discarded to the air, water or land at
significantly higher levels from either a statistical or from a health
and environmental risk perspective than would otherwise be released by
the primary production process; and 

(4) Other relevant factors that demonstrate the material is not
discarded.

(c)   The Administrator may grant a non-waste determination for material
which is  indistinguishable in all relevant aspects from a product or
intermediate if the applicant demonstrates that the material is
comparable to a product or intermediate and is not discarded.  The
determination will be based on the following criteria:

(1) Whether market participants treat the material as a product rather
than a waste (for example, based on the current positive value of the
material, stability of demand, and any contractual arrangements);	

(2)	Whether the chemical and physical identity of the material is
comparable to commercial products or intermediates; 	

(3)	Whether the hazardous constituents in the material are reclaimed
rather than discarded to the air, water or land at significantly higher
levels from either a statistical or from a health and environmental risk
perspective than would otherwise be released by the production process.

(4)	Other relevant factors that demonstrate the material is not
discarded.

 

(d)   The Administrator may grant a non-waste determination for material
which is  reclaimed under the control of the generator, including
control through contracts such as tolling arrangements, if the applicant
demonstrates that the generator retains control of the production and
the residuals, and that the material is not discarded.  The
determination will be based on the following criteria:

(1)  Whether the generator retains ownership and liability via a
contract or other mechanism for the material and the residuals resulting
from its recycling.

(2) Whether the hazardous constituents in the material are reclaimed
rather than discarded to the air, water or land at significantly higher
levels from either a statistical or from a health and environmental risk
perspective than would otherwise be released by a production process.

(3) Other relevant factors that demonstrate the material is not
discarded.

*  *  *  *  *  

5.   Section 260.42 is added to read as follows:

  

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

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

* * * * *

  SEQ CHAPTER \h \r 1 PART 261–IDENTIFICATION AND LISTING OF HAZARDOUS
WASTE

Subpart A – [Amended]

6.  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.

§261.2 Definition of solid waste.

*   *   *   *   *

6.  Section 261.2 is amended by revising paragraph (a)(1), revising
paragraph (c)(3), revising the heading for Column 3 of Table 1, and
adding new paragraphs (a)(2) and (g) to read as follows:  

(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 non-waste
determination under §§260.30 and 260.34.  

*  *  * 

(a)(2)(i) A discarded material  is any material which is:

(A) Abandoned, as explained in paragraph (b) of this section; or

(B) Recycled, as explained in paragraph (c) of this section; or

(C) Considered inherently waste-like, as explained in paragraph (d) of
this section; or

(D) A military munition identified as a solid waste in 40 CFR 266.202.

(a)(2)(ii)  A hazardous secondary material is not discarded if it is
generated and reclaimed within the United States or its territories,
provided that:  

(A)  the material is only handled in non-land-based units; and

(B), it is a hazardous secondary material generated and reclaimed under
the control of the generator as defined in §260.10; , and  

(C)  The materialit is not speculatively accumulated, as defined in
§261.1(c)(8); and).  (See also §260.42)

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

*   *   *   *  *  

(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) and 261.4(a)(25).  

 *  *  *  

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
§§261.4(a)(17), 261.4(a)(23) or 261.4(a)(24), and 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.

*     *     *        *    * 

 

(g) Legitimate Recycling  

(1) Hazardous secondary material that is not legitimately recycled is
discarded material and is a solid waste. Persons who recycle such
material, as well as persons claiming to be excluded from hazardous
waste regulation under §260.31, §260.34, §261.2 or §261.4 because
they are engaged in recycling, must be able to demonstrate that the
recycling is legitimate. Moreover, hazardous secondary material must be
legitimately recycled to qualify for special management standards under
§261.6 and 40 CFR Part 266. 

(2) Legitimate recycling must involve a hazardous secondary material
that provides a useful contribution to the recycling process or to a
product of the recycling process, and the recycling process must produce
a valuable product or intermediate. 

(i) The hazardous secondary material provides a useful contribution if
it:

(A) contributes valuable ingredients to a product or intermediate; or 

(B) replaces a catalyst or carrier in the recycling process; or 

(C) is the source of a valuable constituent recovered in the recycling
process; or

(D) is recovered or regenerated by the recycling process; or 

(E) is used as an effective substitute for a commercial product.

(ii) The product or intermediate is valuable if it is:

(A) sold to a third party; or 

(B) used by the recycler or the generator as an effective substitute for
a commercial product or as an ingredient or intermediate in an
industrial process.

(3) DeterminationsThe following factors need to be considered in making
a determination as to the overall legitimacy of a specific recycling
activity must also consider the following factors:.  If these factors
are not met, then this fact may be an indication that the material is
not legitimately recycled:  

(i) How the hazardous secondary material to be recycled is managed. The
generator and the recycler should manage such material as a valuable
commodity.  Where there is an analogous raw material, the hazardous
secondary material should be managed, at a minimum, in a manner
consistent with the management of the raw material.    Where there is no
analogous raw material, the hazardous secondary material mustshould be
contained.  Materials that are released to the environment and are not
recovered in a timely manner are discarded.  If the material is not
managed as a valuable commodity, that fact may be an indication that the
material is not legitimately recycled.

(ii) Whether the product of the recycling process: 

(A) contains significant concentrations of any Appendix VIII hazardous
constituents that are not found in analogous products; or 

(B) contains concentrations of any Appendix VIII hazardous constituents
at levels that are significantly elevated from those found in analogous
products; or 

(C) exhibits a hazardous characteristic (as defined in Part 261 subpart
C) that analogous products do not exhibit.  If a product contains any of
these concentrations or exhibits a hazardous characteristic, that fact
may be an indication that the material is not legitimately recycled.

8.  Section 261.4(a) is amended by adding new paragraphs (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 that is generated and reclaimed under
the control of the generator as defined in §260.10 is not a solid waste
if it meets the following conditionsprovided that:

(i) if it is managed in a land-based unit as defined in §260.10, the
material must be contained; and 

(ii)  it is a hazardous secondary material generated and reclaimed under
the materialcontrol of the generator as defined in §260.10; and

(iii) it is not speculatively accumulated, as defined in §261.1(c)(8);
and

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

(a)(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); and

(ii) The material is not handled by any person or facility other than
the generator, the transporter, or a reclaimer; and 

(iii) The generator and each reclaimer of hazardous secondary material
that has  previously been subject to regulation as hazardous wastes, but
which will be excluded from regulation under this paragraph, must send a
one-time notification to the Regional Administrator.  Such notices must
identify the name, address, and EPA ID number of the generator or
reclaimer (if applicable); the name and phone number of a contact
person; the type of material that will be managed according to the
exclusion, and when the materials will begin to be managed in accordance
with this conditional exclusion.  A revised notice must be sent to the
Regional Administrator in the event of a change to the name, address or
EPA ID number of the generator, or a change in the type of material
generated, and 

 

(iv) Generators of hazardous secondary materials that are eligible for
this exclusion must satisfy the following conditions:

 

(A)  Prior to arranging for transport of excluded material to a
reclamation facility that is not operating under a RCRA Part B permit or
interim status standards, the generator must make reasonable efforts to
ensure that the material will be recycled reclaimer intends to
legitimately (as determined according to the provisions of §261.2(g)),
recycle the material and otherwise managednot discard it pursuant to the
criteria in  261.2(g), and that the reclaimer will manage the material
in a manner that is protective of human health and the environment. 
Such In making these reasonable efforts must, at a minimum, address the
following questions for any reclaimer of the material:

(1) Is the reclaimer technically capable of reclaiming, the material,
and of managing it safely?

(2) Does the reclaimer’s compliance history and current practices
indicate a record of, and a continuing commitment to, sound
environmental stewardship?

(3) Is there is a reliable market for the products or intermediaries
that are made from recycling the material?

(4) Will residuals generated from recycling the material, if any, be
managed in a manner that is protective of human health and the
environment?

(B) The generator must maintain at the generating facility for no less
than three years records documenting the reasonable efforts made in
accordance with the condition specified in paragraph (A) of this
section.  For each reclamation facility to which may use any credible
evidence available, including information gathered by the generator has
transferred excluded material, such documentation must include a
certification signed and dated by a responsible corporate official of
the generator, which states:  "I hereby certify in good faith and to the
best of my knowledge that prior to arranging for transport of excluded
material to [insert name of reclamation facility], that reasonable
efforts were made to ensure that the 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.", provided by the reclaimer, and/or
provided by a third party.

(C)

(B)The generator must maintain at the generating facility for no less
than three years records of all off-site shipments of excluded material.
For each shipment,  these records must at a minimum contain the
following information:

(1) Name of the transporter and date of the shipment; 

(2) Name and address of the reclamation facility to which it was sent,
and documentation confirming the receipt of the shipment by the
reclamation facility; and

(3) The type and quantity of excluded material in the shipment. 

(C) If it is managed in a land-based unit as defined in §260.10, the
material must be contained.

(v) Reclaimers of hazardous secondary material excluded from regulation
under this exclusion must satisfy the following conditions:

(A)  The reclaimer must maintain at the reclamation facility for no less
than three years records of all shipments of excluded material that were
received at the facility. For each shipment, these records must at a
minimum contain the following information:

(1) Name of the transporter and date the shipment was received; 

(2) Name and address of the generating facility from which it was sent;
and	

(3) The type and quantity of excluded material in the shipment.

(B) The reclaimer must manage the hazardous secondary material in a
manner that is at least as protective as that employed for analogous raw
material or is otherwise contained.  An "analogous raw material" is a
raw material for which a hazardous secondary material is a substitute
and serves the same function and has similar physical and chemical
properties as the hazardous secondary material.   Where there is no
analogous raw material, or if the secondary hazardous material is
managed in a land-based unit as defined in defined in §260.10, the
material must be contained.

(C)  Any residuals that are generated from reclamation processes will be
managed in a manner that is protective of human health and the
environment.  If any residuals exhibit a hazardous characteristic
according to subpart C of 40 CFR Part 261, or if they themselves are
specifically listed in subpart D of 40 CFR Part 261, such residuals are
hazardous wastes and must be managed according to the applicable
requirements of 40 CFR parts 260 through 272.

(D) The reclaimer must comply with the financial requirements of 40 CFR
Part 264, 

Subpart H.

(vi)  A reclamation facility at which hazardous secondary materials are
managed in accordance with the provisions of this exclusion may also
accept and manage fully regulated hazardous wastes from generators who
do not use this exclusion.  Such materials are not solid wastes, and the
RCRA regulatory status of the reclamation facility will not be affected,
provided that the reclamation facility complies with the requirements
specified in §261.4(a)(24)(i),(ii),(iii) and (v).  

(a)(25)  Exports.  Hazardous secondary material that is exported from
the United States and recycled at a reclamation facility located in a
foreign country, provided that the exporter complies with the
requirements of §261.4(a)(24)(i)-(iv) of this chapter and also with the
following requirements:  

(i)  Notify EPA of an intended export before the hazardous secondary
material is   scheduled to leave the United States.  A complete
notification must be submitted at least sixty (60) days before the
initial shipment is intended to be shipped off-site.  This notification
may cover export activities extending over a twelve (12) month or lesser
period.  The notification must be in writing, signed by the exporter,
and include the following information:

(A)  Name, mailing address, telephone number and EPA ID number (if
applicable) of the exporter.    

(B) The estimated frequency or rate at which the materials is to be
exported and the period of time over which it is to be exported.

(C) The estimated total quantity of material specified in kilograms.  

(D) All points of entry to and departure from each foreign country
through which the material will pass.    

(E) A description of the means by which each shipment of the material
will be transported (e.g., mode of transportation vehicle (air, highway,
rail, water, etc.), type(s) of container (drums, boxes, tanks, etc.)). 

(F) The name and address of the reclaimer and any alternate reclaimer.  
 

(G) A description of the manner in which the material will be recycled
in the foreign country that will be receiving it.        

(H) The name of any transit country through which the material will be
sent and a description of the approximate length of time it will remain
in such country and the nature of its handling while there.   

(ii)  Notifications submitted by mail should be sent to the following
mailing address:  Office of Enforcement and Compliance Assurance, Office
of Federal Activities, International Compliance Assurance Division,
(Mail Code 2254A), Environmental Protection Agency, 1200 Pennsylvania
Ave., N.W., Washington, DC 20460.  Hand-delivered notifications should
be sent to:  Office of Enforcement and Compliance Assurance, Office of
Federal Activities, International Compliance Assurance Division, (Mail
Code 2254A), Environmental Protection Agency, Ariel Rios Bldg., Room
6144, 1200 Pennsylvania Ave., N.W., Washington, DC.  In both cases, the
following shall be prominently displayed on the front of the envelope: 
“Attention:  Notification of Intent to Export.” 

(iii)  Upon request by EPA, the exporter shall furnish to EPA any
additional information which a receiving country requests in order to
respond to a notification.  

(iv)  EPA will provide a complete notification to the receiving country
and any transit countries.  A notification is complete when EPA receives
a notification which EPA determines satisfies the requirements of
paragraph (a) (5) (i) of this section.  Where a claim of confidentiality
is asserted with respect to any notification information required by
paragraph (a)(5)(i) of this section, EPA may find the notification not
complete until any such claim is resolved in accordance with 40 CFR
260.2.  

 (v)  The export of hazardous secondary material under this paragraph is
prohibited unless the receiving country consents to the intended export.
When the receiving country consents in writing to the receipt of the
material, EPA will forward an Acknowledgment of Consent to the exporter.
 Where the receiving country objects to receipt of the material or
withdraws a prior consent, EPA will notify the exporter in writing.  EPA
will also notify the exporter of any responses from transit countries.  
 

(vi)  When the conditions specified on the original notification change,
the exporter must provide EPA with a written renotification of the
change, except for changes to the telephone number in paragraph
(a)(5)(i)(A) of this section and decreases in the quantity indicated
pursuant to paragraph (a)(5)(i)(C) of this section.  The shipment cannot
take place until consent of the receiving country to the changes has
been obtained (except for changes to information about points of entry
and departure and transit countries pursuant to paragraphs (a) (5) (i)
(D) and (a) (5) (i) (H) of this section) and the exporter receives from
EPA a copy of the Acknowledgment of Consent to Export reflecting the
receiving country’s consent to the changes.   

(vii)  A copy of the Acknowledgment of Consent to Export must accompany
the shipment.   The shipment must conform to the terms of the
Acknowledgment.    

(viii)  If a shipment cannot be delivered for any reason to the recycler
or the alternate recycler, the exporter must renotify EPA of a change in
the conditions of the original notification to allow shipment to a new
recycler in accordance with paragraph (a)(5)(vi) of this section and
obtain another Acknowledgment of Consent to Export.     

(ix) Exporters must keep copies of notifications and Acknowledgments of
Consent to Export for a period of three years following receipt of the
Acknowledgment.   

 In this context, the terms “recycling” and “reclamation” are
not necessarily synonymous.  “Recycling typically involves a series of
activities, including storage and other handling steps that culminate in
the production of a valuable end product of some kind.  Thus, if
materials need to be reclaimed in order to produce a valuable end
product, the reclamation activity can be thought of as one step in the
overall recycling process.  See proposed §261.4(g).  Further
explanation of the term “reclamation” can be found in the preamble
to the October 2003 proposal at 68 FR 61564.    

 EPA has proposed to limit this exclusion to hazardous secondary
materials reclaimed within the United States or its territories because
it does not have sufficient information related to recycling activities
outside of the United States or its territories to make the same general
finding that it has made for materials legitimately recycled under the
control of the generator.  However, as noted below, EPA requests comment
on whether the Agency should promulgate a conditional exclusion for
exported hazardous secondary material otherwise meeting the criteria for
this rule.   

 EPA has proposed to limit this exclusion to hazardous secondary
materials reclaimed within the United States or its territories because
it does not have sufficient information related to recycling activities
outside of the United States or its territories to make the same general
finding that it has made for materials legitimately recycled under the
control of the generator.  However, as noted below, EPA requests comment
on whether the Agency should promulgate a conditional exclusion for
exported hazardous secondary material otherwise meeting the criteria for
this rule.   

The Agency’s long-term “vision” of the future of the RCRA program
is discussed in the document “Beyond RCRA: Prospects for Waste and
Materials Management in the Year 2020,” which is available on the
Agency’s website http://www.epa.gov/epaoswer/osw/vision.htm  

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

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

 As an example, metal prices fluctuate and at times are below the cost
of processing.  However, recovery of metals is usually legitimate
recycling.  

 Where the hazardous secondary material being reclaimed is under the
control of the generator, the recycling operation is generally part of
an overall manufacturing operation, which would be part of the
evaluation.  

 In general, overaccumulation of hazardous secondary materials is
subject to the speculative accumulation provisions, as defined in 40 CFR
261.1(c) (8).

.”See, for example  the ABR decision, where the Court acknowledged
that the term, “discard,” could be “ambiguous as applied to some
situations, but not as applied to others,” and particularly cited the
difficulty in examining the details of the many processes in the mineral
processing industry.  208 F.3d at 1056.  While the court overturned
EPA’s regulations for casting too wide a net over continuous
industrial processes, it acknowledged that there are large number of
processes, some of which may be continuous and some of which may not. 
Determining what is a continuous process in the mineral processing
industry, according to the Court, would require examination of the
details of the processes and does not lend itself, well, to broad
abstraction.  Specifically, the court stated

Some mineral processing secondary materials covered under the Phase IV
Rule may not proceed directly to an ongoing recycling process and may be
analogous to the sludge in AMC II.   The parties have presented this
aspect of the case in broad abstraction, providing little detail about
the many processes throughout the industry that generate residual
material of the sort EPA is attempting to regulate under RCRA,  

208 F.3d at 1056  

	In the case of today’s supplemental proposal, which applies across
industries, there are far larger and more diverse processes.  While the
Agency believes it is proposing a reasonable set of principles, they
must still be applied to the details of the industrial processes in
question.  

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

*** DRAFT DELIBERATIVE—INTERNAL EPA—DO NOT DISTRIBUTE ***  Sept. 14,
 2006March 2, 2007

*** DRAFT DELIBERATIVE—INTERNAL EPA—DO NOT DISTRIBUTE *** Sept. 14,
2006

 March 2, 2007

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