recognition that legitimate recycling may occur in these situations,
EPA has made management of the hazardous secondary materials and the
presence of hazardous constituents in the product of the recycling
process to be factors that must be considered in the overall legitimacy
determination, but not factors that must always be met.
    Structure of legitimacy provision. Under the first paragraph of 40
CFR 260.43, hazardous secondary materials that are not legitimately
recycled are discarded materials and, therefore, are solid wastes. This
paragraph also states that anyone claiming an exclusion at Sec.
261.2(a)(2)(ii), Sec.  261.4(a)(23), Sec.  261.4(a)(24), or Sec.
261.4(a)(25) or using a non-waste determination at Sec.  260.30(d) or
(e) must be able to demonstrate that its recycling activity is
legitimate. The Agency has included the language ``In determining if
their recycling is legitimate, persons must address the requirements of
Sec.  260.43(b) and must consider the requirements of Sec.  260.43(c)''
to make it clear that the factors in paragraph (b) must be met, while
the factors in paragraph (c) must be considered and evaluated in
determining whether the recycling activity overall is legitimate.
    Although there is no specific recordkeeping requirement that goes
with the ability to demonstrate legitimacy, EPA would expect that in
the event of an inspection or an enforcement action by an implementing
agency, the recycler would be able to show how it made the overall
legitimacy determination per Sec.  261.2(f).\8\ In the event that the
process does not conform to one of the two factors under Sec.
260.43(c), the facility should be able to show that it considered that
factor and why the recycling activity overall remains legitimate. For
example, under existing exclusions from the definition of solid waste,
reuse of lead contaminated foundry sands may or may not be legitimate,
depending on the use. The use and reuse of foundry sands for mold
making in a facility's sand loop under normal industry practices has
been found to be legitimate because the sand is part of an industrial
process where there is little chance of the hazardous constituents
being released into the environment or causing damage to human health
and the environment when it is kept inside, because there is lead
throughout the foundry's process, and because there is a clear value to
reusing the sand.\9\ However, in the case of lead contaminated foundry
sand used as children's play sand, the same high levels of lead would
disqualify this use from being considered legitimate recycling.\10\ the
same result would be reached when applying Factor 4.
---------------------------------------------------------------------------

    \8\ Under the transfer-based exclusion being finalized in
today's rule, a reclaimer should also anticipate that a hazardous
secondary material generator may inquire as to whether the
reclamation process is legitimate (40 CFR 261.4(a)(24)(v)(B)(1)).
Reasonable effort inquiries will vary by generator and may include a
request for information or documentation of legitimacy.
    \9\ Letter. Elizabeth Cotsworth, Director Office of Solid Waste,
to Amy Blankenbiller, American Foundry Society, March 28, 2001.
http://yosemite.epa.gov/osw/rcra.nsf/
0c994248c239947e85256d090071175f/4C9A2EEE6E5F859B85256AC5004FC1C2/
$file/14534.pdf
    \10\ One of the profiles in the docket shows that from 1997-
1998, a horticultural nursery purchased approximately 375 tons of
foundry sand that contained lead above the regulatory limits and
that was then bagged and sold as play sand to approximately 40
different retailers. (U.S. EPA, An Assessment of Environmental
Problems Associated with Recycling of Hazardous Secondary Materials,
Appendix 2).
---------------------------------------------------------------------------

    Factor 1--Useful Contribution. ``Legitimate recycling must involve
a hazardous secondary material that provides a useful contribution to
the recycling process or to a product of the recycling process * * *
The hazardous secondary material provides a useful contribution if it
(i) contributes valuable ingredients to a product or intermediate; or
(ii) replaces a catalyst or carrier in the recycling process; or (iii)
is the source of a valuable constituent recovered in the recycling
process; or (iv) is recovered or regenerated by the recycling process;
or (v) is used as an effective substitute for a commercial product''
(40 CFR 260.43(b)(1)).
    This factor, one of the two core legitimacy factors, expresses the
principle that hazardous secondary materials should contribute value to
the recycling process. This factor is an

essential element to legitimate recycling because real recycling is not
occurring if the hazardous secondary materials being added or recovered
do not add anything to the process. This factor is intended to prevent
the practice of adding to or recovering hazardous secondary materials
from a manufacturing operation simply as a means of disposing of them,
or recovering only small amounts of a constituent, which EPA would
consider sham recycling.
    In response to comments received on this factor asking for more
clarification on what useful contribution means, the regulatory text
includes an explanation of how useful contribution might be achieved in
(i) through (v) of Sec.  260.43(b)(1). EPA stresses that the ways in
which hazardous secondary materials can add value and be useful in a
recycling process are (i) contributing valuable ingredients to a
product or intermediate; (ii) replacing a catalyst or carrier in the
recycling process; (iii) providing a valuable constituent to be
recovered; (iv) being regenerated; or (v) being used as an effective
substitute for a commercial product. The preamble to the October 2003
proposed rule gave full descriptions of these five situations (68 FR
61585), but the Agency has also included them in the regulatory text to
clarify this factor for the regulated community.
    The Agency also wants to restate for clarification that for
hazardous secondary materials to meet the useful contribution factor,
not every constituent or component of the hazardous secondary material
has to make a contribution to the recycling activity. For example, a
legitimate recycling operation involving precious metals might not
recover all of the components of the hazardous secondary material, but
would recover precious metals with sufficient value to consider the
recycling process legitimate. In addition, the recycling activity does
not have to involve the hazardous component of the hazardous secondary
materials if the value of the contribution of the non-hazardous
component justifies the recycling activity. One example of this factor
from an existing exemption is where hazardous secondary materials
containing large amounts of zinc, a non-hazardous component, are
recycled into zinc micronutrient fertilizers. In cases where the
hazardous component is not being used or recycled, the Agency stresses
that the recycler is responsible for the management of any hazardous
residuals of the recycling process.
    In a situation where more than one hazardous secondary material is
used in a single recycling process and the hazardous secondary
materials are mixed or blended as a part of the process, each hazardous
secondary material would need to satisfy the useful contribution
factor. This requirement prevents situations where a worthless
hazardous secondary material could be mixed with valuable and useful
hazardous secondary materials in an attempt to disguise and dispose of
it. In addition, a situation in which hazardous secondary materials
that can be useful to a process are added to that process in much
greater amounts than are needed to make the end-product or to otherwise
provide its useful contribution would also be sham recycling.
    Another way the usefulness of the hazardous secondary material's
contribution could be demonstrated is by looking at the efficiency of
the material's use in the recycling process--that is, how much of the
constituent in a hazardous secondary material is actually being used.
As an example, if there is a constituent in the hazardous secondary
material that could add value to the recycling process, but, due to
process design, most of it is not being recovered but is being disposed
of in the residuals, this would be a possible indicator of sham
recycling. However, there are certainly recycling scenarios where a low
recovery rate could still be legitimate. For example, under an existing
exclusion, if the concentration in a metal-bearing hazardous secondary
material is low (2%-4%) and a recycling process was able to recover a
large percentage of the target metal, this factor could be met and the
recycling may be legitimate (depending on the outcome of the analysis
of the other legitimacy factors).
    One way to use the efficiency of the recycling process to evaluate
legitimacy is to compare the process to typical industry recovery rates
from raw materials to determine if the recycling process is reasonably
efficient. This method should involve an examination of the overall
process, not just a single step of the process. For example, if one
step in the process recovers a small percentage of the constituent, but
the overall process recovers a much larger percentage, the Agency would
consider the overall efficiency of the recycling process in determining
whether hazardous secondary materials are providing a useful
contribution.
    There are various ways in which hazardous secondary materials can
be useful to a recycling process and various ways are laid out in this
discussion of how a facility might demonstrate conformity with this
factor. In addition, we provided a number of different ways a material
could contribute to the process in the regulatory text describing this
factor. Any one of these would be sufficient to demonstrate that the
hazardous secondary material provides a useful contribution. Overall,
the Agency considers this factor to be a critical element in
determining legitimacy and any recycling process that does not meet
this factor cannot be considered legitimate recycling.
    Factor 2--Valuable Product or Intermediate. ``The recycling process
must produce a valuable product or intermediate * * * The product or
intermediate is valuable if it is (i) sold to a third party or (ii)
used by the recycler or the generator as an effective substitute for a
commercial product or as an ingredient or intermediate in an industrial
process'' (40 CFR 260.43(b)(2)).
    This factor, one of the two core legitimacy factors, expresses the
principle that the product or intermediate of the recycling process
should be a material of value, either to a third party who buys it from
the recycler, or to the generator or recycler itself, who can use it as
a substitute for another material that it would otherwise have to buy
or obtain for its industrial process. This factor is also an essential
element of the concept of legitimate recycling because recycling cannot
be occurring if the product or intermediate of the recycling process is
not of use to anyone and, therefore, is not a real product. This factor
is intended to prevent the practice of running a hazardous secondary
material through an industrial process to make something just for the
purpose of avoiding the costs of hazardous waste management, rather
than for the purpose of using the product or intermediate of the
recycling activity. Such a practice would be sham recycling.
    Most commenters on the proposed rule for this factor stated that
this is a useful way of gauging whether recycling is actually taking
place, but requested that the Agency clarify the meaning of the term
valuable, as it is used in the regulatory text. EPA is repeating and
clarifying today that for the purpose of this factor, a recyclable
product may be considered ``valuable'' if it can be shown to have
either economic value or a more intrinsic value to the end user.
Evaluations of ``valuable'' for the purpose of this factor should be
done on a case-by-case basis, but one way to demonstrate that the
recycling process yields a valuable product would be the documented
sale of a product of the recycling process to a third party. Such
documentation could be in the form of

receipts or contracts and agreements that establish the terms of the
sale or transaction. This transaction could include money changing
hands or, in other circumstances, may involve trade or barter. A
recycler that has not yet arranged for the sale of its product to a
third party could establish value by demonstrating that it can replace
another product or intermediate that is available in the marketplace. A
product of the recycling process may be sold at a loss in some
circumstances, but the recycler would have to be prepared to show how
the product is clearly valuable to the purchaser.
    However, many recycling processes produce outputs that are not sold
to another party, but are instead used by the generator or recycler. A
product of the recycling process may be used as a feedstock in a
manufacturing process, but have no established monetary value in the
marketplace. Such recycled products or intermediates would be
considered to have intrinsic value, though demonstrating intrinsic
value may be less straightforward than demonstrating value for products
that are sold in the marketplace. Demonstrations of intrinsic value
could involve showing that the product of the recycling process or
intermediate replaces an alternative product that would otherwise have
to be purchased or could involve a showing that the product of the
recycling process or intermediate meets specific product specifications
or specific industry standards. Another approach could be to compare
the product's or intermediate's physical and chemical properties or
efficacy for certain uses with those of comparable products or
intermediates made from raw materials.
    Some recycling processes may consist of multiple steps that may
occur at separate facilities. In some cases, each processing step will
yield a valuable product or intermediate, such as when a metal-bearing
hazardous secondary material is processed to reclaim a precious metal
and is then put through another process to reclaim a different mineral.
When each step in the process yields a valuable product or intermediate
that is salable or usable in that form, the recycling activity would
conform to this factor.
    Like the other factors, this factor should be examined and
evaluated on a case-by-case basis looking at the specific facts of a
recycling activity. If, for instance, a recycling activity produces a
product or intermediate that is used by the recycler itself, but does
not serve any purpose and is just being used so that the product or
intermediate appears valuable, that would be an indicator of sham
recycling. An example of this would be a recycler that reclaims a
hazardous secondary material and then uses that material to make blocks
or building materials for which it has no market and then ``uses''
those building materials to make a warehouse in which it stores the
remainder of the building materials that it is unable to sell.
    Factor 3--Managed as a Valuable Commodity. ``The generator and the
recycler should manage the hazardous secondary material as a valuable
commodity. Where there is an analogous raw material, the hazardous
secondary material should be managed, at a minimum, in a manner
consistent with the management of the raw material. Where there is no
analogous raw material, the hazardous secondary material should be
contained. Hazardous secondary materials that are released to the
environment and are not recovered immediately are discarded'' (40 CFR
260.43(c)(1)).
    The first of the additional factors that must be considered
expresses the principle that hazardous secondary materials being
recycled should be managed in the same manner as other valuable
materials. This factor requires those making a legitimacy determination
to look at how the hazardous secondary material is managed before it
enters the recycling process. In EPA's view, a recycler will value
hazardous secondary materials that provide an important contribution to
its process or product and, therefore, will manage those hazardous
secondary materials in a manner consistent with how it manages a
valuable feedstock. If, on the other hand, the recycler does not manage
the hazardous secondary materials as it would a valuable feedstock,
that behavior may indicate that the hazardous secondary materials may
not be recycled, but rather released into the environment and
discarded.
    This factor may be particularly appropriate in the case where a
recycler has been paid by a generator to take its materials as a result
of the economic incentives in the hazardous secondary materials market.
By looking at the management of the hazardous secondary material before
it enters the recycler's process, the entity making the legitimacy
determination can tell that a material being managed like an analogous
raw material is, in fact, valued by the recycler. If the hazardous
secondary material is not being managed like a valuable raw material
because it is uncontrolled or is being released, that indicates that
the fee the recycler obtains for taking the hazardous secondary
material may be its only value to that recycler. If the fee received
were the only value to the recycler, it would mean that discard was
taking place.
    This factor addresses the management of hazardous secondary
materials in two distinct situations. The first situation is when a
hazardous secondary material is analogous to a raw material which it is
replacing in the process. In this case, the hazardous secondary
material should be managed prior to recycling similarly to the way the
analogous raw materials are managed in the course of normal
manufacturing. EPA expects that all parties handling hazardous
secondary materials destined for recycling--generators, transporters,
intermediate facilities and reclamation facilities--will handle them in
generally the same manner in which they would handle the valuable raw
materials they might otherwise be using in their process. ``Analogous
raw material,'' as defined elsewhere in this preamble, is a raw
material for which the hazardous secondary material substitutes and
which serves the same function and has similar physical and chemical
properties as the hazardous secondary material.
    The second situation the factor addresses is the case where there
is no analogous raw material that the hazardous secondary material is
replacing. This could be either because the process is designed around
a particular hazardous secondary material--that is, the hazardous
secondary material is not replacing anything--or it could be because of
physical or chemical differences between the hazardous secondary
material and the raw material that are too significant for them to be
considered ``analogous.''
    Hazardous secondary materials that have significantly different
physical or chemical properties when compared to the raw material would
not be considered analogous even if they serve the same function
because it may not be appropriate to manage them in the same way. In
this situation, the hazardous secondary material would have to be
contained for this factor to be met. A hazardous secondary material is
``contained'' if it is placed in a unit that controls the movement of
that material out of the unit. This requirement is consistent with the
idea that normal manufacturing processes are designed to use valuable
material inputs efficiently rather to than allow them to be released
into the environment.
    For example, if a manufacturer has an ingredient that is a dry raw
material managed in supersacks, the Agency would expect that a
hazardous secondary material that is a similar dry

material also would be managed in supersacks or in a manner that would
provide equivalent protection. If, on the other hand, the hazardous
secondary material was instead managed in an outdoor pile without
appropriate controls in place to address releases to the environment,
it may indicate that it was not being handled as a valuable commodity.
If, however, the manufacturer decided to replace the dry raw material
in its process with a liquid having the same constituents, it would not
be sufficient, nor would it make sense, for the liquid to be managed in
supersacks. Instead, the liquid would have to be ``contained'' (for
example in a tank or surface impoundment).
    An important part of this factor is the statement in the regulatory
text clarifying that hazardous secondary materials that are released to
the environment and not recovered immediately are discarded. Valuable
products should not be allowed to escape into the environment through
poor management and this factor clarifies that those hazardous
secondary materials that do escape (and are not immediately recovered)
are clearly discarded. Either a large release or ongoing releases of
smaller amounts could indicate that, in general, the hazardous
secondary material is not being managed as a valuable product, which
could potentially lead to the recycling process being found not to be
legitimate. Hazardous secondary materials that are immediately
recovered before they disperse into the environment--air, soil, or
water--and are reintroduced in the recycling process are not discarded.
This determination must be made on a case-by-case basis, however.
    EPA has determined that it is appropriate that this factor is one
of the two that must be considered rather than a factor that must be
met because there are situations in which this factor is not met, but
recycling appears to be legitimate. An example of this kind of
situation is described in the March 2007 supplemental proposal (72 FR
14199). In the example, a hazardous secondary material that is a
powder-like material is shipped in a woven super sack and stored in an
indoor containment area, whereas the analogous raw material is shipped
and stored in drums. A strict reading of this factor may determine that
the hazardous secondary material is not being managed in a manner
consistent with the raw material even if the differences in management
are not actually impacting the likelihood of a release. By designing
the legitimacy factors so that this one has to be considered, but not
necessarily met, the individual facts of situations like the one
described here can be evaluated on a case-by-case basis to determine if
they affect the legitimacy of the recycling activity.
    In summary, given the nature of the legitimacy factors and their
need to apply to all the practices covered by the exclusions in this
final rule, it is not appropriate or practicable for EPA to develop a
specific management standard. In the absence of such a management
standard, EPA is using this factor: materials must be managed as
analogous raw materials or, if there are no analogous raw materials,
the materials must be contained. EPA's intent with this factor is that
hazardous secondary materials are managed in the same manner as
materials that have been purchased or obtained at some cost, just as
raw materials are. Just as it is good business practice to ensure that
raw materials enter the manufacturing process rather than being spilled
or released, we would expect hazardous secondary materials to be
managed effectively and efficiently in order that their full value to
the manufacturing process would be realized.
    Factor 4--Comparison of Toxics in the Product. ``The product of the
recycling process does not (i) contain significant concentrations of
any hazardous constituents found in Appendix VIII of part 261 that are
not found in analogous products; or (ii) contain concentrations of any
hazardous constituents found in Appendix VIII of part 261 at levels
that are significantly elevated from those found in analogous products;
or (iii) exhibit a hazardous characteristic (as defined in part 261
subpart C) that analogous products do not exhibit'' (40 CFR
260.43(c)(2)).
    The second of the additional factors that must be considered
requires those making a legitimacy determination to look at the
concentrations of the hazardous constituents found in the product made
from hazardous secondary materials and compare them to the
concentrations of hazardous constituents in analogous products. Any of
the following three situations could be an indicator of sham recycling:
a product that contains significant levels of hazardous constituents
that are not found in the analogous products; a product with hazardous
constituents that were in the analogous products, but contains them at
significantly higher concentrations; or a product that exhibits a
hazardous characteristic that analogous products do not exhibit. Any of
these situations could indicate that sham recycling is occurring
because in lieu of proper hazardous waste disposal, the recycler could
have incorporated hazardous constituents into the final product when
they are not needed to make that product effective in its purpose. This
factor, therefore, is designed to determine when toxics that are
``along for the ride'' are discarded in a final product and, therefore,
the hazardous secondary material is not being legitimately recycled.
    To evaluate this factor, a recycler will ordinarily compare the
product of the recycling process to an analogous product made of raw
materials. For example, if a recycling process produced paint, the
levels of hazardous constituents in the paint will be compared with the
levels of the same constituents found in similar paint made from virgin
raw materials.
    A recycler is also allowed to perform this evaluation by comparing
the hazardous constituents in the hazardous secondary material
feedstock with those in an analogous raw material feedstock. If the
hazardous secondary material feedstock does not contain significantly
higher concentrations of hazardous constituents than the raw material
feedstock, then the end product of the recycling process would not
contain excess hazardous constituents ``along for the ride'' either.
EPA is clarifying here that this method of showing that the product
does not have ``toxics along for the ride'' is acceptable. There may be
cases in which it is easier to compare feedstocks than it is to compare
products because the recycler knows that the hazardous secondary
material is very similar in profile to the raw material. A comparison
of feedstocks may also be easier in cases where the recycler creates an
intermediate which is later processed again and may end up in two or
more products, when there is no analogous product, or when production
of the product of the recycling process has not yet begun.
    This factor identifies three ways to evaluate whether or not
unacceptable amounts of hazardous constituents are passed through to
the products of the recycling process. (As explained above, these
methods also could be used to compare the hazardous secondary material
feedstock to a raw material feedstock, if the recycler prefers.) The
first method specifies that when analogous products made from raw
materials do not contain hazardous constituents, the product of the
recycling process should not contain significant amounts of hazardous
constituents. For example, if paint made from reclaimed solvent
contains significant amounts of cadmium, but the same type of paint
made from virgin raw materials does not contain cadmium, it could
indicate that the cadmium serves

no useful purpose and is being passed though the recycling process and
discarded in the product.
    The second method addresses analogous products that do contain
hazardous constituents and asks whether the concentrations of those
hazardous constituents are significantly higher in the product of the
recycling process than in the product made from raw materials.
Concentrations of hazardous constituents in the product of the
recycling process that are significantly higher than in the product
made from virgin raw materials could again be an indicator of sham
recycling. For example, if a lead-bearing hazardous secondary material
was reclaimed and then that material was used as an ingredient in
making ceramic tiles and the amount of lead in the tiles was
significantly higher than the amount of lead found in similar tiles
made from virgin raw materials, the recycler should look more closely
at the factors to determine the overall legitimacy of the process.
    The third method under this factor is whether the product of the
recycling process exhibits a hazardous characteristic that analogous
products do not exhibit. Requiring an evaluation of hazardous
characteristics ensures that products of the recycling process do not
exhibit the characteristics of toxicity, ignitability, corrosivity, or
reactivity when the analogous products do not. The Agency believes that
most issues associated with ``toxics along for the ride'' will involve
the presence of toxic constituents, which are addressed under the first
two parts of the factor. That is, we believe that it is likely that
there are few instances where hazardous secondary materials are used in
the process and hazardous constituents are not present at significantly
higher levels, but the product made from the hazardous secondary
material nevertheless exhibits the hazardous characteristic of toxicity
when the analogous product does not. It is possible, though, that the
use of hazardous secondary materials as an ingredient could cause a
product to exhibit a hazardous characteristic, such as corrosivity,
that is not exhibited by analogous products.
    The Agency has determined that it is appropriate for this factor to
be considered in legitimacy determinations under the final exclusions
and in the non-waste determinations in this action, but thinks that
there may be situations in which the factor is not met but the
recycling would still be considered legitimate. An example of this kind
of situation that has been addressed by the Agency under the current
regulatory scheme would be in the use and reuse of foundry sands for
mold making in a facility's sand loop. Because of repeated exposure to
metals in a foundry's process, the sands used to make the molds may
have significantly higher concentrations of hazardous constituents than
virgin sand. However, because the sand is part of an industrial process
where there is little chance of the hazardous constituents being
released into the environment or causing damage to human health and the
environment when it is kept inside, because there is lead throughout
the foundry's process, and because there is a clear value to reusing
the sand, this would be an example of a situation where this factor is
not met, but it does not affect the legitimacy of the recycling
process.
    In fact, EPA has concluded as a general matter that foundries
engaged in the reuse of lead-containing foundry sands are recycling
those sands legitimately and these sands would not be regulated under
RCRA Subtitle C (under the circumstances described in EPA's March 2001
memorandum on this subject).\11\ Thus, while the used sands in the sand
loop arguably have toxics-along-for-the ride, EPA did not raise
questions about the legitimacy of the recycling, given the overall
nature of the operations. If the used foundry sand were being recycled
into a different product, such as a material used on the ground or in
children's play sand, the legitimacy determination would be very
different and significant levels of metals would likely render the
recycling illegitimate. The same conclusions would be reached applying
the factors codified in 260.43.
---------------------------------------------------------------------------

    \11\ Letter. Elizabeth Cotsworth, Director Office of Solid
Waste, to Amy Blankenbiller, American Foundry Society, March 28,
2001. http://yosemite.epa.gov/osw/rcra.nsf/
0c994248c239947e85256d090071175f/4C9A2EEE6E5F859B85256AC5004FC1C2/
$file/14534.pdf
---------------------------------------------------------------------------

    Another example of recycling that may be legitimate although this
factor has not been met could be when the material has concentrations
of toxics that could be considered ``significantly higher'' than the
analogous product, but meets industry specifications for the product
that include specific specifications for the hazardous constituent of
concern. Meeting accepted industry standards would be a strong
indication that this material is being legitimately recycled. A third
example could be in the mining and mineral processing industry. In many
mineral processing operations, the very nature of an operation results
in hazardous constituents concentrating in the product as it proceeds
through the various steps of the process. In many cases, there is not
an analogous product to compare the products of these processes so this
factor may not be relevant because of the nature of the operations. As
with the above example, if a facility considers a factor and decides
that it is not applicable to its process, the Agency suggests that the
facility evaluate the presence of hazardous constituents in its product
and be prepared to demonstrate both that it considered this factor and
the reasons it believes the factor is not relevant.
    As discussed in more detail in the comments section of this
preamble (section XVIII) and in the response to comments document in
the docket, commenters on this factor requested clarification
concerning what EPA meant by the terms used in this factor. In response
to some of these comments, EPA has made two clarifications in the
regulatory text by (1) specifying that the hazardous constituents
referred to in the regulation are those that are found in Appendix VIII
to 40 CFR part 261 and (2) clarifying that the hazardous
characteristics to which EPA is referring to are those in 40 CFR part
261 subpart C.
    The Agency also received much comment on the term ``significant''
and what the Agency intended by this term. EPA has decided to keep the
term in the final rule. The alternative to using ``significant'' or a
similarly flexible term to determine when there may be hazardous
constituents in the product made from recycled hazardous secondary
materials that are not in the analogous products made from raw
materials would be to set an absolute standard. In its discussion of
legitimacy in the October 2003 proposed rule, EPA discussed possible
``bright line'' or risk-based approaches as a way to set absolute lines
to define ``significant'' based on either a numerical limit or a risk
level (68 FR 61587-61588). EPA recognizes that the ``bright line'' or
the risk-based approach may provide greater clarity and predictability
to the regulated community, but that in both cases the Agency would
have to establish a line for what is acceptable and the line may either
be somewhat arbitrary or it may exclude recycling practices that, if
carefully considered, should be considered legitimate. Based on the
comments received on those approaches, we are convinced that they would
not be workable.
    On the other hand, a case-by-case analysis of a recycling process
can take into consideration the relevant principles and facts for that
activity,

leading to a determination of significance based on the facts of the
activity. Because this factor must apply to various different recycling
activities, we believe the case-by-case approach is most appropriate.
    EPA, therefore, is finalizing its proposed option of using the term
``significant'' in 40 CFR 260.43(c)(2)(i) and (ii). Evaluating the
significance of levels of hazardous constituents in products of the
recycling process may involve taking into consideration several
variables, such as the type of product, how it is used and by whom,
whether or not the elevated levels of hazardous constituents compromise
the efficacy of the product, the availability of the hazardous
constituents to the environment, and others. For example, if a
hazardous secondary material has been reclaimed and made into a product
that will be used by children, and that product contains hazardous
constituents that are not in analogous products, that product will
likely need to be closely scrutinized. On the other hand, low levels of
a hazardous constituent in a product from that same reclamation
operation that is used as an ingredient in an industrial process or for
another industrial application may not be significant and must be
evaluated in the context of the product's use.
    EPA provided several additional examples in implementing this
factor in the October 2003 proposed rule which will be repeated here.
If zinc galvanizing metal made from hazardous secondary materials that
were reclaimed contains 500 parts per million (ppm) of lead, while the
same zinc product made from raw materials typically contains 475 ppm,
this difference in concentration would likely not be considered
``significant'' in the evaluation of this factor. If, on the other
hand, the lead levels in the zinc product made from reclaimed hazardous
secondary materials were 1,000 ppm, it may indicate that the product
was being used to illegally dispose of lead and that the activity is
sham recycling, unless other factors would demonstrate otherwise.
    In another example, if a ``virgin'' solvent contains no detectable
amounts of barium, while spent solvent that has been reclaimed contains
a minimal amount of barium (e.g., 1 ppm), this difference might not be
considered significant. If, however, the barium in the reclaimed
solvent were at much higher levels (such as 50 ppm), it may indicate
discard of the barium and sham recycling.
    Unfortunately, because of the variety of possible recycling
scenarios under the exclusions and in the non-waste determinations
covered by this final rule, we cannot provide examples for how this
factor might work for all possible recycling situations. The Agency
stresses that the determination of legitimacy for this factor should
consider both the use and the users of the product in addition to the
concentration of the hazardous constituents or the presence of a
hazardous characteristic, as well as other relevant information. In
addition, in some cases, the implementing agency may accept a risk
argument from a recycler to show that the recycling activity meets this
factor. If the recycler can show that despite elevated concentrations
of hazardous constituents, such constituents pose little or no risk to
human health or the environment, the implementing agency may consider
that as evidence that the elevated concentrations are not significant.
How consideration of economics applies to legitimacy. Consideration of
economics has long been a part of the Agency's concept of legitimacy,
as is evident in the Lowrance Memo and earlier preamble text (50 FR
638, January 4, 1985 and 53 FR 522, January 8, 1988; see also American
Petroleum Institute v. EPA (``API II''), 216 F.3d 50, 57-58 (DC Cir.
2000)). This final rule does not codify specific regulatory language on
economics as part of the legitimacy provision, but EPA offers further
guidance and clarification on how economics may be considered in making
legitimacy determinations, which is similar to the preamble discussion
in the March 2007 supplemental proposal.
    Specifically, EPA believes that consideration of the economics of a
recycling activity can be used to inform and help determine whether the
recycling operation is legitimate. Positive economic factors would be a
strong indication of legitimate recycling, whereas negative economic
factors would be an indication that further evaluation of the recycling
operation may be warranted in assessing the legitimacy factors.
    Considering the economics of a recycling activity can also inform
whether the hazardous secondary material inputs provide a useful
contribution and whether the product of recycling is of value. Economic
information that may be useful could include (1) the amount paid or
revenue generated by the recycler for recycling hazardous secondary
materials; (2) the revenue generated from the sale of recycled
products; (3) the future cost of processing existing inventories of
hazardous secondary materials; and (4) other costs and revenues
associated with the recycling operation. The economics of the recycling
transaction may be more of an issue when hazardous secondary materials
are sent to a third-party recycler, but even when the hazardous
secondary materials are recycled under the control of the generator,
the generator must still show that the hazardous secondary materials
are, at a minimum, providing a useful contribution and producing a
valuable product.
Useful Economic Information
    (1) The amount paid or revenue generated by the recycler for
recycling hazardous secondary materials is one example of how economic
information can help support a legitimacy determination. We have three
primary illustrations to exemplify this. First, the basic economic
flows can suggest whether the recycling operation will process inputs,
including hazardous secondary materials, and produce products over a
reasonable period of time, recognizing that there will be lean and slow
times. A general accounting of the major costs, revenues, and economic
flows for a recycling operation over a reasonable period of time can
provide information for considering whether recycling is likely to
continue at a reasonable rate, compared to the rate at which inputs are
received, or whether it is likely that significant amounts of hazardous
secondary materials would be accumulated and then abandoned when the
facility closes. Any bona fide sources of revenues would be included in
this consideration, such as payments by generators to recyclers for
accepting hazardous secondary materials and subsidies supporting
recycling. However, in order to have some level of confidence that
beneficial products are or will be produced over a reasonable
timeframe, we believe that at least some portion of the revenues should
be from product sales (or savings due to avoided purchases of products
if the hazardous secondary materials are used directly by the
recycler). This is consistent with the factor requiring that the
hazardous secondary material must be recycled to make a valuable
product or intermediate.
    Two scenarios illustrate this first example: A recycling operation
that generates revenues from the sale of recycled products that greatly
exceed the costs of the operation is an indication of a process that
turns the hazardous secondary materials into useful products, and is
unlikely to over accumulate them. A very different example is an
operation that has, relative to its revenues, large inventories of
unsold product and large future liabilities in terms of stocks of

unprocessed hazardous secondary materials. This operation could
potentially fail the ``useful contribution'' and ``produces a valuable
product or intermediate'' legitimacy factors, and would draw closer
attention to determine whether it is engaged in treatment and/or
abandonment in the guise of recycling.
    Second, when the economics of a recycling operation that uses
hazardous secondary materials to produce and sell final products are
similar to a manufacturing operation using raw materials to produce and
sell final products, we believe that such an operation is likely to be
legitimate. For instance, if the recycler pays for hazardous secondary
materials as a manufacturer would pay for raw materials, the recycler
sells products from the recycling process as a manufacturer would sell
products from manufacturing, and the revenues generated equal or exceed
costs, then the hazardous secondary materials appear to be valuable
(i.e., the recycler is willing to pay for them) and appear to make a
useful contribution to a valuable recycled product.
    However, we also recognize that the economics of many legitimate
recycling operations that utilize hazardous secondary materials differ
from the economics of more traditional manufacturing operations. For
example, many recyclers are paid by generators to accept hazardous
secondary materials. Generators may be willing to pay recyclers because
generators can save money if the recycling is less expensive than
disposing of the hazardous secondary materials in landfills or
incinerators. Also, some recyclers receive subsidies that may be
designed to develop recycling infrastructure and markets or to achieve
other benefits of recycling. For instance, the recycling of electronic
materials can be legitimate even when the recycler is subsidized for
processing the material.
    Third, any analysis of the economics of a recycling operation
should recognize that a recycler may be able to charge generators and
still be a legitimate recycling operation. Because these hazardous
secondary materials are hazardous wastes if disposed of, typically the
generators' other alternative management option already carries a cost
that is based on the existing market for hazardous waste
transportation, treatment, and disposal. Hence, unless there is strong
competition in recycling markets or the hazardous secondary materials
are extremely valuable, a recycler may be able to charge generators
simply because alternative disposal options cost more.
    Recognizing that such a dynamic exists can assist those making
legitimacy determinations in evaluating recycling operations. For
example, if a recycler is charging generators fees (or receiving
subsidies from elsewhere) for taking hazardous secondary materials and
receives a far greater proportion of its revenue from acceptance of the
fees than from the sale of its products, both the useful contribution
and the valuable product factors may warrant further review, unless
other information would indicate that such recycling is legitimate.
Fees and subsidies may indicate that the economic situation allows the
recycler to charge high fees, regardless of the contribution provided
by the inputs, including hazardous secondary materials. In this
situation, recyclers may also have an increased economic incentive to
over-accumulate or overuse hazardous secondary materials or to manage
them less carefully than one might manage more valuable inputs.
Additionally, if there is little competition in the recycling market,
and/or if acceptance fees seem to be set largely to compete with the
relative costs of alternative disposal options rather than to reflect
the quality or usefulness of the input to the recycling operation, this
may also suggest a closer look at the useful contribution factor.
    (2) A comparison of revenue from sales of recycled products to
payments by generators is another example of how economic information
can help support an evaluation of ``valuable product.'' It is possible
that product sales revenues could be dwarfed by the acceptance of fees
because markets for particular products are highly competitive or
because high alternative disposal costs allow for high acceptance fees.
However, relatively low sales revenues could also require a review of
other factors, such as whether product sales prices are lower than
other comparable products, products are being stockpiled rather than
sold, or very little product is being produced relative to the amount
of inputs to the recycling operation. These indicators may suggest that
the product of the recycling process is not valuable and, thus, sham
recycling may be occurring.
    (3) A consideration of the future cost of processing or
alternatively managing existing inventories of hazardous secondary
material inputs is another example of how economic information can
inform a legitimacy determination. When hazardous secondary materials
make a significant useful contribution to the recycling process, a
recycler will have an economic incentive to process the input materials
relatively quickly and efficiently, rather than to maintain large
inventories. While recyclers often need to acquire sufficient amounts
of hazardous secondary materials to make it economically feasible to
recycle them, there should be little economic incentive to over-
accumulate such materials that make a useful contribution. Overly large
accumulations of input materials may indicate that the hazardous
secondary materials are not providing a useful contribution or that the
recycler is increasing its future costs of either processing or
disposing of the material, and may be faced with an unsound recycling
operation in the future. However, it is important to keep in mind that
possible explanations for this may exist. For example, the recycler may
have acquired a large stock of hazardous secondary materials because
the price was unusually low or perhaps the hazardous secondary
materials are generated episodically and the recycler has few
opportunities to acquire them.
    (4) An analysis of costs and revenues specific to on-site recycling
is an additional, albeit specific, example of economic information to
consider. When recycling is conducted under the control of the
generator, the recycler may not account formally for some of the costs
and savings of the operation. Still, when deciding whether to undertake
or continue the recycling operation or to utilize alternative outside
recycling or disposal options, the on-site recycler (under the control
of the generator) will evaluate the basic economic factors as a part of
doing business. One such factor could be an accounting of the costs of
virgin materials avoided by using hazardous secondary materials.
Similarly, sales of recycled products under the control of the
generator that are sold to an external market may support the valuable
product criterion.
3. Legitimacy Policy for Other Exclusions and Exemptions
    EPA is codifying a legitimacy provision in this final rule as part
of the final exclusions and non-waste determinations, but stresses that
EPA retains its long-standing policy that all recycling of hazardous
secondary materials must be legitimate. If a facility is engaged in
sham recycling, this, by definition, is not real recycling and that
material is being discarded. The legitimacy policy continues to apply
to all hazardous secondary materials that are excluded or exempted from
Subtitle C regulation because they are recycled and to recyclable
hazardous wastes that remain subject to the hazardous waste
regulations. This policy is well-

understood throughout the regulated community and among the state
implementing agencies.
    EPA believes that the four legitimacy factors being codified in 40
CFR 260.43 are substantively the same as the existing legitimacy
policy. These factors are a simplification and clarification of the
policy statements in the 1989 Lowrance Memo and in various Definition
of Solid Waste Federal Register notices.
    Nonetheless, to avoid confusion among the regulated community and
state and other implementing regulatory agencies about the status of
recycling under the existing exclusions, the Agency has decided not to
codify the legitimacy factors for existing exclusions and, thus, states
and other implementing agencies will continue to apply the existing
legitimacy policy to all recycling as they have in the past in order to
ensure that recycling is real and not a sham. The legitimacy provisions
of the final rule are codified only for the exclusions and non-waste
determinations being promulgated today. In developing the codified
legitimacy language, we did not intend to raise questions about the
status of legitimacy determinations that underlie existing exclusions
from the definition of solid waste, or about case-specific
determinations that have been made by EPA or the states. Current
exclusions and other prior solid waste determinations or variances,
including determinations made in letters of interpretation and
inspection reports, remain in effect.
    A number of commenters raised concerns with the application of the
codified legitimacy factors to these existing waste-specific and
industry-specific exclusions. In particular, as we noted in the October
2003 proposal, EPA has examined in depth a number of waste-specific and
industry-specific recycling activities and has promulgated specific
regulatory exclusions or provisions that address the legitimacy of
these practices in much more specific terms than the general factors
being finalized as part of the exclusions and non-waste determination
process today. One example is the regulation for zinc fertilizers made
from recycled hazardous secondary materials. In the zinc fertilizer
regulation, among the requirements established by EPA are specific
numerical limits on five heavy metal contaminants and dioxins in the
zinc fertilizer product exclusion at 40 CFR 261.4(a)(21). Other
examples are shredded circuit boards excluded under 40 CFR
261.4(a)(14), which must be free of mercury switches, mercury relays
and nickel-cadmium and lithium batteries, and comparable fuels excluded
under 40 CFR 261.4(a)(16), which must meet specific levels for
hazardous constituents. The conditions developed for the recycling
exclusions in Sec.  261.4(a) were found to be necessary under material-
specific rulemakings that determined when the particular hazardous
secondary material in question is not a solid waste. When EPA
originally made the decision that these materials are not solid waste,
the Agency took into account the relevant factors about the hazardous
secondary materials, including how the material was managed and what
toxic chemicals were present. By limiting the codified legitimacy
provision to the exclusions and non-waste determinations in today's
final rule, EPA is avoiding any implication that we are revisiting
these determinations.
    However, at the same time, these material-specific exclusions from
the definition of solid waste do not negate the basic requirement that
the hazardous secondary material must be ``legitimately'' recycled.
Recycling that is not legitimate is not recycling at all, but rather
``sham recycling''--discard in the guise of recycling.
    For example, under EPA's historic guidance, particularly questions
(1) and (3) in OSWER Directive 9441.1989(19), the ``Lowrance Memo,'' a
facility could not plausibly claim the zinc fertilizer product
exclusion at 40 CFR 261.4(a)(21) for a hazardous secondary material
that contained absolutely no or minimal levels of zinc, even if all the
conditions of the zinc fertilizer exclusion were met. The exclusion was
developed to encourage legitimate recycling of zinc-containing
hazardous secondary materials, not to allow any hazardous waste to be
discarded to purported fertilizer in the name of recycling when the
hazardous secondary material provided no recognizable benefit to the
product.
    Similarly, if a facility accepted zinc-containing hazardous waste,
claiming to make zinc fertilizer, but failed to produce a product that
was actually sold or was otherwise valuable, such a process would not
be legitimate recycling (under question (4) of the Lowrance Memo in the
historic legitimacy guidance), even if the management conditions or the
constituent levels in the zinc fertilizer exclusion were met. The
consequences of the latter example are illustrated in one of the damage
cases in the environmental problems study. A facility whose primary
business was mixing electric arc furnace dust (K061) with agricultural
lime for sale as a micronutrient lost its customers and could not sell
its product. However, the facility continued to accept EPA Hazardous
Waste K061, and, in approximately seven months, the facility had
accepted over 60,000 tons of this hazardous waste and stored it on the
ground in piles up to 30 feet high, with no prospect of it being used
to produce a product and, thus, legitimately recycled. While the
initial recycling of the K061 hazardous waste was legitimate, when the
facility failed to produce a product that was actually sold, the K061
could no longer be considered legitimately recycled.
    In summary, all hazardous secondary materials recycling and
hazardous waste recycling, whether such recycling remains under
hazardous waste regulations or is excluded from the definition of solid
waste, must be legitimate. This has been our long-standing policy and
it is well understood throughout the regulated community and the
implementing state regulatory agencies. In order to be clear that the
legitimacy provision codified at 40 CFR 260.43 under today's final rule
would not affect how the current legitimacy policy applies to recycling
under existing exclusions, the legitimacy provision at 40 CFR 260.43 is
explicitly designated as applying only to the exclusions and non-waste
determinations being finalized in today's rule.
    EPA also maintains that the legitimacy provision being finalized as
part of the exclusions and non-waste determinations is substantively
the same as existing policy because we developed the legitimacy factors
in 40 CFR 260.43 by closely examining the questions and sub-questions
in the Lowrance Memo and in the Federal Register preambles and
converting them into four more direct questions. The following
explanations show how each of the four factors is derived from the
Lowrance Memo and other existing policy statements.
Factor 1--The Hazardous Secondary Material Provides a Useful
Contribution
Relevant Lowrance Memo Questions
(1) Is the secondary material similar to an analogous raw material or
product?
    Is much more of the secondary material used as compared with the
analogous raw material/product it replaces? Is only a nominal amount of
it used?
    Is the secondary material as effective as the raw material or
product is replaces?

(3) What is the value of the secondary material?
    Is it listed in industry news letters, trade journals, etc.?
    Does the secondary material have economic value comparable to the
raw material that normally enters the process?
Discussion
    The factor addressing ``useful contribution'' has been distilled
from and clarifies concepts in the Agency's existing policy for
legitimate recycling. For example, the preamble to the January 4, 1985,
recycling regulations noted that if a hazardous secondary material is
``ineffective or only marginally effective for the claimed use, the
activity is not recycling but surrogate disposal.'' Similarly, the
January 8, 1988, proposed rule discussed ``how much energy or material
value each waste contributes to the recycling purpose.''
    In the 1989 Lowrance Memo, the issue of effectiveness was addressed
by the following questions: ``Is much more of the secondary material
used as compared with the analogous raw material/product it
replaces?''; ``Is only a nominal amount used?''; and ``Is the secondary
material as effective as the raw material or product it replaces?'' The
memo also addressed the value of the secondary material by asking, ``Is
[the secondary material] listed in industry news letters, trade
journals, etc.?'' and ``Does the secondary material have economic value
comparable to the raw material that normally enters the process?''
    Factor 1 takes these broad concepts of effectiveness and value and
turns them into the requirement that the hazardous secondary material
in the process must provide a ``useful contribution'' to the recycling
process, that is, it must actually be adding something to the process
into which they are being put. The factor provides more specifics than
the Memo or preamble by providing a list of ways that a hazardous
secondary material could provide that useful contribution to the
process. EPA requested comment on other ways in which a hazardous
secondary material might provide a useful contribution, but did not
receive any from commenters.
Factor 2--The Recycling Process Produces a Valuable Product or
Intermediate
Relevant Lowrance Memo Questions
(4) Is there a guaranteed market for the end product?
    Is there a contract in place to purchase the ``product'' ostensibly
produced from the hazardous secondary materials?
    If the type of recycling is reclamation, is the product used by the
reclaimer? The generator? Is there a batch tolling agreement? (Note
that since reclaimers are normally TSDFs, assuming they store before
reclaiming, reclamation facilities present fewer possibilities of
systemic abuse).
    Is the reclaimed product a recognized commodity?
    Are there industry-recognized quality specifications for the
product?
Discussion
    Factor 2 distills several of the questions posed by the 1989
legitimacy memo. The memo addressed the value of recycled products sold
to third parties by posing the questions, ``Is there a guaranteed
market for the end product?'' and ``Is there a contract in place to
purchase the ``product'' ostensibly produced from the hazardous
secondary materials?'' The memo addressed the value of recycled
products used by the recycler or the generator as process ingredients
by posing the questions, ``Is the product used by the (recycler)? The
generator? Is there a batch tolling agreement?'' The ``usefulness'' of
a recycled material was addressed by posing the questions, ``Is the
(recycled) product a recognized commodity?'' and ``Are there industry-
recognized quality specifications for the product?''
    The language of the factors in the legitimacy provision in the
final rule reflects these concepts in a concrete manner by, for
example, making it clear that the indicator of legitimacy is that a
recycling process results in a valuable product or intermediate and
that the product or intermediate is valuable if it is ``(i) sold to a
third party or (ii) used by the recycler or the generator as an
effective substitute for a commercial product or as an ingredient or
intermediate in an industrial process.''
    The Lowrance Memo posed additional questions aimed at
distinguishing recycling operations that involve direct use or reuse of
secondary materials from recycling operations that involve reclamation.
These concepts, however, are not particularly relevant to
distinguishing legitimate from sham recycling and are not generally
used by implementing agencies in legitimacy analyses, so we therefore
did not attempt to capture them in the codified regulatory text.
Factor 3--Managed as a Valuable Commodity
Relevant Lowrance Memo Questions
(5) Is the secondary material handled in a manner consistent with the
raw material/product it replaces?
    Is the secondary material stored in a similar manner as the
analogous raw material (i.e., to prevent loss?)
    Are adequate records regarding the recycling transactions kept?
    Do the companies involved have a history of mismanagement of
hazardous wastes?
Discussion
    Although worded somewhat differently, this factor is essentially
the same as the fifth question in the Lowrance Memo. Similarly, the
1985 preamble asked whether recyclable hazardous secondary materials
were ``handled in a manner consistent with their use as raw materials
or commercial product substitutes.''
    In one respect, however, Factor 3 is less restrictive than the
Lowrance Memo--the memo posed an additional question, ``Is the
secondary material stored on the land?'' This could be read as implying
that storage on the land is an indication of sham recycling. Of course,
this question is just one of the more than two dozen questions from the
Lowrance memo, that, when taken as a whole, help draw the distinction
between legitimate recycling and sham recycling. Also, the Agency is
aware of situations where storage of raw materials on the land is a
normal part of the manufacturing process. Thus, Factor 3 does not
identify land storage as a specific indicator of sham recycling.
Factor 4--The Product Does Not Contain Significant TARs
Relevant Lowrance Memo Questions
(1) Is the secondary material similar to an analogous raw material or
product?
    Does it contain Appendix VIII constituents not found in the
analogous raw material/product (or at higher levels)?
    Does it exhibit hazardous characteristics that the analogous raw
material/product would not?
    Does it contain levels of recoverable material similar to the
analogous raw material/product?
(6) Other Relevant Factors
    Are the toxic constituents actually necessary (or of sufficient
use) to the product or are they just ``along for the ride''?

Discussion
    The Lowrance Memo and the definition of solid waste preamble
statements from which it was developed have addressed the question of
``toxics along for the ride'' in a slightly different way than the
factor in the final rule. The Lowrance Memo, for example, allows for
examination of toxic constituents in the hazardous secondary material
destined for recycling and/or in the recycled product. As noted above,
Factor 4 is intended to primarily address the question of ``toxics
along for the ride'' in the products of recycling. We believe that the
presence of toxic constituents in recyclable hazardous secondary
materials is less relevant to assessing the legitimacy of recycling,
primarily because much if not most recycling (as well as manufacturing)
involves removing or destroying such harmful materials. As reflected in
the factor, the central question is whether or not (and in what amount)
hazardous constituents pass through the recycling process and become
incorporated into the products of recycling. While some may argue that
the approach of focusing on toxic constituents in recycled products may
be somewhat less restrictive than the policy it would replace, we
believe it is a better indicator of legitimate recycling. In cases
where a recycler would prefer to compare the virgin feedstock to the
hazardous secondary material going into the process, the rule makes it
clear that this would be an adequate stand-in for the comparison
described in the regulatory text.
Lowrance Memo Questions Not Covered in Factors
    A few of the questions from the Lowrance Memo are not covered by
the factors in the regulatory text for the legitimacy provision in
Sec.  260.43. The above discussions address why EPA believes this is
appropriate. In the case of the role economics can play in a legitimacy
determination, this preamble has discussed how it can inform an overall
legitimacy determination, but there is no particular factor on
economics.
Relevant Lowrance Memo Questions
(2) What degree of processing is required to produce a finished
product?
    Can the secondary material be fed directly into the process (i.e.,
direct use) or is reclamation (or pretreatment) required?
    How much value does final reclamation add?
    Is the secondary material stored on the land? (a sub-question of
(5) Is the secondary material handled in a manner consistent with the
raw material/ product it replaces?)
(6) Other Relevant Factors
    What are the economics of the recycling process? Does most of the
revenue come from charging generators for managing their wastes or from
the sale of the product?
    For the reasons outlined above, EPA believes that the legitimacy
factors in 260.43 are equivalent to the existing legitimacy policy that
applies to all recycling.

X. Non-Waste Determination Process

A. What Is the Purpose of This Provision?

    The purpose of the non-waste determination process is to provide
persons with an administrative procedure for receiving a formal
determination that their hazardous secondary materials are not
discarded and, therefore, are not solid wastes when recycled. This
process is available in addition to the solid waste exclusions in
today's rule. Once a non-waste determination has been granted, the
hazardous secondary material is not subject to the limitations and
conditions discussed elsewhere in today's rule (e.g., prohibition on
speculative accumulation, storage standard, or, for the transfer-based
exclusion, recordkeeping, reasonable efforts, financial assurance, and
export notice and consent); however, the regulatory authority may
specify that a hazardous secondary material meet certain conditions and
limitations as part of the non-waste determination.
    The non-waste determination process is voluntary. Facilities may
choose to continue to use the self-implementing portions of any
applicable waste exclusions and, for the vast majority of cases, where
the regulatory status of the hazardous secondary material is evident,
self-implementation will still be the most appropriate approach. In
addition, facilities may continue to contact EPA or the authorized
state to ask for informal assistance in making these types of non-waste
determinations. However, for cases where there is ambiguity about
whether a hazardous secondary material is a solid waste, today's formal
process can provide regulatory certainty for both the facility and the
implementing agency.
    EPA is finalizing two types of non-waste determinations: \12\ (1) A
determination for hazardous secondary materials reclaimed in a
continuous industrial process; and (2) a determination for hazardous
secondary materials indistinguishable in all relevant aspects from a
product or intermediate. The process for applying for a non-waste
determination is found at 40 CFR 260.34.
---------------------------------------------------------------------------

    \12\ In the March 2007 supplemental proposal, EPA also proposed
(but is not finalizing) a third type of non-waste determination for
hazardous secondary materials reclaimed under the control of the
generator via a tolling arrangement or similar contractual
arrangement. EPA, however, did not identify any comments that
described specific types of contractual arrangements that would meet
the proposed criteria for this non-waste determination. See section
XIX for more information.
---------------------------------------------------------------------------

    The Agency confirms today's process for non-waste determinations is
not intended to affect any existing exclusion under 40 CFR 261.4. The
process is also not intended to affect any variance already granted
under 40 CFR 260.30 or other EPA or authorized state determination. In
other words, generators or reclaimers operating under an existing
exclusion, variance, or other EPA, or authorized state, determination
do not need to apply for a formal non-waste determination under today's
rule. This process also does not affect the authority of EPA or an
authorized state to revisit past determinations according to
appropriate procedures, if they so choose.

B. Scope and Applicability

    Hazardous secondary materials presented for a non-waste
determination must be legitimately recycled and, therefore, must meet
the legitimacy factors under 40 CFR 260.43 of today's rule. For further
discussion of legitimacy and the factors to be considered, see section
IX of today's preamble.
    In addition, today's rule limits non-waste determinations to
reclamation activities and does not apply to recycling of ``inherently
waste-like'' materials (40 CFR 261.2(d)); recycling of materials that
are ``used in a manner constituting disposal,'' or ``used to produce
products that are applied to or placed on the land'' (40 CFR
261.2(c)(1)); or for ``burning of materials for energy recovery'' or
materials ``used to produce a fuel or otherwise contained in fuels''
(40 CFR 261.2(c)(2)). Today's rule does not affect how these recycling
practices are regulated.

C. Types of Non-Waste Determinations

1. Non-Waste Determination for Hazardous Secondary Materials Reclaimed
in a Continuous Industrial Process
    As discussed earlier in today's preamble, previous court decisions
have indicated that hazardous secondary

materials that are reclaimed in a continuous industrial process are not
discarded and, therefore, not a solid waste. EPA believes, in most
instances, hazardous secondary materials reclaimed in a continuous
process would be excluded under today's self-implementing exclusions.
However, production processes can vary widely from industry to industry
and it is possible that the regulatory status of certain materials may
be unclear under a self-implementing exclusion (including those
exclusions finalized today). Thus, to determine whether individual
hazardous secondary materials are reclaimed in a continuous industrial
process, and, therefore, not a solid waste, EPA has developed the non-
waste determination process to evaluate case-specific fact patterns.
    EPA is finalizing four criteria for making the non-waste
determination for hazardous secondary materials reclaimed in a
continuous industrial process. The first is the extent that the
management of the hazardous secondary material is part of the
continuous production process and is not waste treatment. At one end of
the spectrum, if the hazardous secondary material is handled in a
manner identical to virgin feedstock, then it would appear to be fully
integrated into the production process. At the other end of the
spectrum, hazardous secondary materials that are indisputably discarded
prior to being reclaimed are not a part of the continuous primary
production process, (``AMC II''), 907 F. 2d 1179 (DC Cir. 1990) (listed
wastes managed in units that are part of wastewater treatment units are
discarded materials (and solid wastes), especially where it is not
clear that the industry actually reuses the materials). For cases that
lie within the spectrum, persons applying for a non-waste determination
need to provide sufficient information about the production process to
demonstrate that the management of the hazardous secondary material is
an integral part of the production process and is not waste treatment.
It is important to note that this non-waste determination is not
necessarily limited to cases under the control of the generator. For
example, hazardous secondary materials that are hard piped from one
facility to another facility that is under separate control would
appear to be fully integrated into the production process and may
therefore be eligible for this non-waste determination, provided the
other criteria are met.
    The second criterion examined under this non-waste determination is
the capacity of the production process to use the hazardous secondary
material in a reasonable time frame and ensure that it will not be
abandoned. This criterion can be satisfied by a consideration of past
practices, market factors, the nature of the hazardous secondary
material, or any contractual arrangements. Abandonment of stockpiled
hazardous secondary materials is one way that discard can occur at
recycling operations and is one of the major causes of environmental
problems. As indicated in the recycling studies, 69 of the 208
incidents of environmental damage involve abandonment of the hazardous
secondary materials as the primary cause of damage. For today's self-
implementing exclusions for hazardous secondary materials, EPA is using
speculative accumulation (as defined in 40 CFR 261.1(c)(8)) as the
method for determining when a hazardous secondary material is discarded
by abandonment. For the non-waste determination, a person does not need
to demonstrate that the hazardous secondary material meets the
speculative accumulation limits per 40 CFR 261.1(c)(8), but he must
provide sufficient information about the hazardous secondary material
and the process to demonstrate that the hazardous secondary material
will in fact be reclaimed in a reasonable time frame and will not be
abandoned. EPA is not explicitly defining ``reasonable time frame''
because such time frames could vary according to the hazardous
secondary material and industry involved and, therefore, determining
this time frame should be made on a case-specific basis. However, a
person may still choose to use the speculative accumulation time frame
as a default.
    The third criterion for this non-waste determination is whether the
hazardous constituents in the hazardous secondary material are
reclaimed rather than released to the air, land, or water at
significantly higher concentrations from either a statistical or from a
health and environmental risk perspective than would otherwise be
released by the production process. To the extent that the hazardous
constituents are an extension of the original hazardous secondary
material, their release to the environment is an indicator of discard.
The Agency recognizes that normal production processes may also result
in a certain level of releases and, in evaluating this criteria, would
not deny a non-waste determination if the increase in releases is not
significantly different from either a statistical or risk perspective.
However, when unacceptably high levels of the hazardous constituents in
the hazardous secondary material are released to the environment rather
than reclaimed, then that material (or at least the portion of the
material that is of most concern) is not in fact being ``reclaimed in a
continuous industrial process.''
    The fourth and final criterion for this non-waste determination
includes any other relevant factors that demonstrate the hazardous
secondary material is not discarded. This catch-all criterion is
intended to allow the person to provide any case-specific information
deemed important and relevant in making the case that the hazardous
secondary material is not discarded and, therefore, not a solid waste.
2. Non-Waste Determination for Hazardous Secondary Materials
Indistinguishable in All Relevant Aspects From a Product or
Intermediate
    Although the courts have indicated that hazardous secondary
materials recycled within a continuous industrial process are not
discarded and, therefore, are not solid wastes, they have also said
that hazardous secondary materials destined for recycling in another
industry are not automatically discarded. However, there may be some
situations where the regulatory status of a certain material is unclear
under a self-implementing exclusion and thus may benefit from a non-
waste determination that evaluates case-specific fact patterns. EPA is
finalizing five criteria for making a non-waste determination for
hazardous secondary materials indistinguishable in all relevant aspects
from a product or intermediate.
    The first criterion for this non-waste determination is
consideration of likely markets for the hazardous secondary material
(e.g., based on the current positive value of the hazardous secondary
material, stability of demand, and any contractual arrangements). This
evaluation of market participation is a key element for determining
whether companies view these hazardous secondary materials like
products rather than negatively-valued wastes. EPA's market forces
study on how market incentives affect the management of hazardous
secondary materials indicates that both high value and stable markets
are strong incentives to refrain from over-accumulating hazardous
secondary materials, thus maximizing the likelihood that the hazardous
secondary materials will be reclaimed and not abandoned.
    The second criterion for this 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 Foods found useful in determining whether a material
is indistinguishable from a product. It is important to note that the
identity of a material can be comparable to a product without being
identical. However, to qualify for a non-waste determination, any
differences between the hazardous secondary material in question and
commercial products or intermediates should not be significant from
either a statistical or from a health and environmental risk
perspective.
    The third criterion for making this non-waste determination is the
capacity of the market to use the hazardous secondary material in a
reasonable time frame and ensure that it will not be abandoned.
Abandonment of stockpiled hazardous secondary materials is one way that
discard can occur at recycling operations and is one of the major
causes of environmental problems (a key finding from the recycling
studies discussed earlier). For today's self-implementing exclusions
for hazardous secondary materials, EPA is using speculative
accumulation (as defined in 40 CFR 261.1(c)(8)) as the method for
determining when a hazardous secondary material is discarded by
abandonment. For the non-waste determination, a person does not need to
demonstrate that the hazardous secondary material meets the speculative
accumulation limits per 40 CFR 261.1(c)(8), but he must provide
sufficient information about the hazardous secondary material and the
market demand for it to demonstrate that the hazardous secondary
material will in fact be reclaimed in a reasonable time frame and will
not be abandoned. EPA is not explicitly defining ``reasonable time
frame'' because such time frames could vary according to the hazardous
secondary material and industry involved, and therefore determining
this time frame should be made on a case-specific basis. However, a
person may still choose to use the speculative accumulation time frame
as a default.
    The fourth criterion for this non-waste determination is whether
the hazardous constituents in the hazardous secondary materials are
reclaimed rather than released to the air, land, or water at
significantly higher concentrations from either a statistical or from a
health and environmental risk perspective than would otherwise be
released by the production process. The Agency believes that to the
extent that the hazardous constituents are an extension of the original
hazardous secondary material, their release to the environment is a
possible indicator of discard. The Agency recognizes that normal
production processes also result in a certain level of releases and, in
evaluating this criteria, would not deny a non-waste determination if
the increase in releases is not significant from either a statistical
or a health and environmental risk perspective. However, when
unacceptably high levels of the hazardous constituents in the hazardous
secondary material are released to the environment rather than
reclaimed, then that material (or at least the portion of the hazardous
secondary material that is of most concern) is not being handled as a
commercial product or intermediate.
    As with the non-waste determination for hazardous secondary
materials reclaimed in a continuous industrial process, the fifth and
final criterion for this non-waste determination includes any other
relevant factors that demonstrate the hazardous secondary material is
not discarded. This catch-all criterion is intended to allow the person
to provide any case-specific information it deems important and
relevant in making the case that its hazardous secondary material is
not discarded.

D. Non-Waste Determination Process

    The process for the non-waste determination is the same as that for
the solid waste variances found in 40 CFR 260.30. In order to obtain a
non-waste determination, a facility that manages hazardous secondary
materials that would otherwise be regulated under 40 CFR part 261 as
either a solid waste or an excluded waste must apply to the
Administrator or the authorized state per the procedures described in
40 CFR 260.33, which EPA is amending today to apply to non-waste
determinations. The application must address the relevant criteria
discussed in detail above. The Administrator will evaluate the
submission and issue a draft notice tentatively granting or denying the
application. Notification of this tentative decision will be provided
by newspaper advertisement or radio broadcast in the locality where the
facility is located. The Administrator will accept comment on the
tentative decision for 30 days, and may also hold a public hearing. The
Administrator will issue a final decision after receipt of comments and
after the hearing (if held). If the application is denied, the facility
may still pursue a solid waste variance or exclusion (for example, one
of the solid waste variances under 40 CFR 260.30 or solid waste
exclusions under 40 CFR 261.4).
    After a formal non-waste determination has been granted, if a
change occurs that affects how a hazardous secondary material meets the
relevant criteria contained in 40 CFR 260.34, persons must re-apply to
the Administrator for a formal determination that the hazardous
secondary material continues to meet the relevant criteria and is not
discarded and not a solid waste.
    As discussed in more detail in section XX of today's preamble,
under section 3006 of RCRA, EPA would authorize states to administer
the non-waste determinations as part of their base RCRA program.
Because states are not required to implement federal requirements that
are less stringent or narrower in scope than the current requirements,
authorized states are not required to adopt the non-waste determination
process. Ordinarily this provision could not go into effect in an
authorized state until the state chooses to adopt it. However, because
the non-waste determination process is a formalization of
determinations that states may already perform, states that have not
formally adopted this non-waste determination process may participate
if the following conditions are met: (1) The state determines that the
hazardous secondary material meets the criteria in either paragraph (b)
or (c) of 40 CFR 260.34; (2) the state requests EPA to review its
determination; and (3) EPA approves the state determination. In
addition, of course, states may continue to make regulatory
determinations under their authorized state regulations, as they do
now.

E. Enforcement

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

to ensure the hazardous secondary material continues to meet the
criteria of the non-waste determination, including any conditions
specified therein by the regulatory authority. If a change occurs that
affects how a hazardous secondary material meets the relevant criteria
and (if applicable) any conditions as specified by the regulatory
authority and the applicant fails to re-apply to the Administrator for
a formal determination, the hazardous secondary material may be
determined to be a solid and hazardous waste and subject to the RCRA
Subtitle C hazardous waste requirements.

XI. Effect on Other Exclusions

    The final rule will not supersede any of the current exclusions or
other prior solid waste determinations or variances, including
determinations made in letters of interpretation and inspection
reports. If a hazardous secondary material has been determined not to
be a solid waste, for whatever reason, such a determination will remain
in effect, unless the regulatory agency decides to revisit the
regulatory determination under their current authority. In addition, if
a hazardous secondary material has been excluded from hazardous waste
regulations--for example, under the Bevill exclusion in 40 CFR
261.4(b)(7)--the regulatory status of that material will not be
affected by today's rule.
    In the October 2003 proposal, EPA proposed a number of specific
``conforming changes'' to existing exclusions (68 FR 61578-61580). The
purpose of these conforming changes was to simplify and clarify the
regulations. EPA did not intend to make any substantive changes as to
how currently excluded materials would need to be managed or regulated.
However, comments to the proposed changes were overwhelming in favor of
retaining the existing exclusions. These existing exclusions are
familiar to both the states and the regulated community, and making
wholesale adjustments, it appears, would have had unintended
consequences in many cases.
    Thus, in the March 2007 supplemental proposal, we proposed to
retain the existing exclusions exactly as written (72 FR 14205). In
addition, recycling of such hazardous secondary materials at new
facilities, or at existing facilities that are not currently operating
under the terms of an existing exclusion, would also be subject to the
existing applicable regulatory exclusions, rather than the proposed
exclusions.
    We did request comment, however, on the option of allowing a
regulated entity to choose which exclusion it is subject to in those
cases where more than one exclusion could apply and, if so, whether
that entity should be required to document the choice made. One state
supported allowing a regulated entity to choose if that entity
documents its choice and the few comments that were submitted by
industry on this matter, generally, preferred to have the option to
choose which exclusion they would be subject to. EPA has determined,
however, that the conditions that were developed for the existing
exclusions were found to be necessary under case-specific rulemakings
that determined when the hazardous secondary material in question is
not a solid waste. For example, broken cathode ray tubes must be
transported in closed containers (40 CFR 261.4(a)(22)) and shredded
circuit boards need to be free of mercury switches and relays (40 CFR
261.4(a)(14)).
    Therefore, the final rule requires that hazardous secondary
materials specifically subject to the existing exclusions must continue
to meet the existing conditions or requirements in order to be excluded
from the definition of solid waste. Moreover, industry and the states
are familiar with these requirements and EPA believes that changing
them would only lead to confusion in the regulated community. In
addition, the current exclusions would apply to facilities not
currently operating under terms of an existing exclusion. They would
also be subject to the conditions for that exclusion if they decide to
recycle the particular excluded wastes in the future.
    In the March 2007 supplemental proposal, we also requested comment
on whether any specific regulatory exclusion would need revision in
order to avoid confusion or contradictions. With a few exceptions,
public comments did not discuss this issue in depth. Only three states
commented on this issue. One supported the requirement that currently-
excluded facilities must stay under their specific exclusions and two
requested clarifications on how such a requirement would be
implemented. Industry, in a few cases, had specific comments on the
provisions already in place.
    One commenter asked that EPA clarify that wood preserving waste be
allowed to be reclaimed off-site under the new exclusion. This would be
an expansion of the existing exclusion, which is limited to on-site
reuse. Another comment was in regards to whether hazardous secondary
materials currently regulated under the closed-loop exclusion would be
eligible for the new exclusions that do not require closed-loop
operations. The third comment, from both reclaimers of spent lead-acid
batteries and spent lead-acid battery manufacturers requested that EPA
clarify that spent lead-acid battery recycling continue to be regulated
under 40 CFR 266.80 or as a universal waste at 40 CFR part 273. The
mining industry requested that EPA clarify that the proposed exclusions
would have ``no impact'' on 40 CFR 266.70 (precious metals exclusion)
and 40 CFR 266.100(d) and (g) (conditional exclusions from boiler and
industrial furnace (BIF) regulations for ``smelting, melting, and
refining furnaces'' and precious metals recovery furnaces).

A. Solid Waste Exclusions Found in 40 CFR 261.4(a)

    Under today's final rule, if a hazardous secondary material is
subject to material-specific management conditions under 40 CFR
261.4(a) when reclaimed, such a material is not eligible for the final
rule exclusions. For most of the exclusions in 40 CFR 261.4(a), this
provision will have no practical effect because the current exclusion
either (1) has no conditions, (2) has conditions that overlap with
those of the final rule exclusions (i.e., no speculative accumulation,
or land disposal),\13\ (3) does not involve reclamation, or (4)
involves hazardous secondary materials burned for energy recovery or
used in a manner constituting disposal. These include the exclusions in
40 CFR 261.4(a)(1)-(7), 40 CFR 261.4(a)(10)-(13), 40 CFR 261.4(a)(15)-
(16), 40 CFR 261.4(a)(18), and 40 CFR 261.4(a)(20)-(21).
---------------------------------------------------------------------------

    \13\ ``Disposal'' is defined in 40 CFR 260.10 as ``the
discharge, deposit, injection, dumping, spilling leaking or placing
of any solid waste or hazardous waste into or on any land or water
so that such solid waste or hazardous waste or any constituent
thereof may enter the environment or be emitted into the air or
discharged into any waters, including ground waters.'' Thus a
hazardous secondary material that is land disposed would presumably
not meet the ``contained'' standard.
---------------------------------------------------------------------------

    The exclusions in 40 CFR 261.4(a) that are for a specific material
and include conditions that are more specific than those included for
the exclusions being finalized today are those for (1) spent wood
preserving solutions (40 CFR 261.4(a)(9)), (2) shredded circuit boards
(40 CFR 261.4(a)(14)), (3) mineral processing spent materials (40 CFR
261.4(a)(17)), (4) spent caustic solutions from petroleum refining
liquid treating processes (40 CFR 261.4(a)(19)), and (5) cathode ray
tubes (40 CFR 261.4(a)(22)). For each of these cases, EPA has made a
material-specific determination of

when such a material is not discarded and therefore not a solid waste
and such a determination is more appropriately applied to these
materials than the general conditions of today's final rule. The
conditions of the material-specific exclusion essentially help define
when that material is legitimately recycled and not discarded.
    However, in the case of the spent wood preserving exclusion (40 CFR
261.4(a)(9)), EPA agrees with the comments that this exclusion is
limited to on-site recycling. Thus, if managed on-site, these materials
would need to comply with the existing conditions to be eligible for an
exclusion from the definition of solid waste. However, since the
current exclusion does not apply to hazardous secondary materials sent
off-site, and the substance of the exclusion (i.e., drip pad
requirements) applies to a management method not applicable to off-site
transfers, the new exclusion in today's rule would apply to hazardous
secondary materials that are sent off-site for reclamation. Thus, if
sent off-site for legitimate reclamation, these materials could be
eligible for today's exclusion if the restrictions and/or the
conditions are met.
    Finally, the closed-loop exclusion 40 CFR 261.4(a)(8) is not
specific to a material, but rather identifies a recycling process. EPA
agrees with comments stating that hazardous secondary materials
recycled via the closed-loop exclusion at 40 CFR 261.4(a)(8) could be
recycled under a different process and still be eligible for today's
exclusions. The closed-loop exclusion is based on the premise that
hazardous secondary materials reclaimed in a continuous process within
an industry are not discarded and, therefore, are not solid wastes
subject to EPA's RCRA jurisdiction (See AMC I.) In fact, closed loop
recycling is a subset of materials reclaimed in a continuous industrial
process, since materials may be reclaimed in a continuous process
outside of a closed loop system. EPA did not make a finding that any
particular hazardous secondary material must be reclaimed in a
continuous process. The Agency only determined that closed-loop
recycling, in general, should be excluded. Today's exclusions, however,
allow any hazardous secondary materials to be excluded if reclamation
meets the restrictions and/or conditions set forth in the rules. Thus,
a facility currently engaged in closed-loop recycling could change
their processes and still be excluded, as long as all applicable
restrictions and/or conditions are met.
    In addition to the solid waste exclusions currently in 40 CFR
261.4(a), EPA is planning to propose--in a separate rulemaking from
today's final rule--to amend its hazardous waste regulations to
conditionally exclude from the definition of solid waste spent
hydrotreating and hydrorefining catalysts generated in the petroleum
refining industry when these hazardous secondary materials are
reclaimed (see entry in the Introduction to the Fall 2007 Regulatory
Plan, 72 FR 69940, December 10, 2007). Spent hydrotreating and
hydrorefining catalysts generated in the petroleum refining industry
are routinely recycled by regenerating the catalyst so that it may be
used again as a catalyst. When regeneration is no longer possible,
these spent catalysts are either treated and disposed of as listed
hazardous wastes or sent to RCRA-permitted reclamation facilities,
where metals, such as vanadium, molybdenum, cobalt, and nickel are
reclaimed from the spent catalysts.
    EPA originally added spent hydrotreating and hydrorefining
catalysts (waste codes K171 and K172) to the list of RCRA hazardous
wastes found in 40 CFR 261.31 on the basis of toxicity (i.e., these
materials were shown to pose unacceptable risk to human health and the
environment when mismanaged) (63 FR 42110, August 6, 1998). In
addition, EPA based its decision to list these materials as hazardous
due to the fact that these spent catalysts can at times exhibit
pyrophoric or self-heating properties.
    It is largely because of these pyrophoric properties that EPA is
considering a separate proposal to conditionally exempt these catalysts
from hazardous waste regulation. This future proposal will allow the
agency to consider and seek comment on specific conditions to address
the pyrophoric properties of these hazardous secondary materials,
particularly during transportation and storage prior to reclamation, in
order for the Agency to determine that they are not being discarded. As
a result of this separate effort, these spent catalysts will not be
eligible for today's exclusions. Once EPA has proposed a conditional
exclusion specifically for these spent catalysts, and after
consideration of public comments, EPA will either finalize a
conditional exclusion specific to these spent catalysts or may decide
that the conditions being promulgated in today's final rule are fully
adequate for the management of these spent catalysts when recycled, and
therefore would remove the restriction preventing these spent catalysts
from being eligible for today's exclusions.

B. Spent Lead-Acid Battery Recycling and Precious Metals Reclamation

    EPA also agrees that spent lead-acid battery recycling should
continue to be regulated under 40 CFR 266.80 or 40 CFR part 273. This
is because these regulations are actually hazardous waste regulations
and are not solid waste exclusions. Continuing the regulation of spent
lead-acid battery (SLAB) recycling as hazardous waste is necessary due
to the unique nature of these batteries. Also, as noted by the
commenters, the current battery recycling regulations are working well.
More than 95% of SLABs are currently recycled and generators of SLABs
are exempt from Superfund liability under the Superfund Recycling
Equity Act (SREA), provided that they meet the requirements of the
exemption, including the requirement to take ``reasonable care'' to
determine that the accepting facility is in compliance with the
substantive environmental regulations.
    Because SREA was based on the current SLAB hazardous waste
regulations under RCRA, changing the regulation of SLABs could have
unintended consequences. For example, the current regulations prohibit
battery-breaking without a permit because such battery-breaking
operations have been high-risk activities. In addition, as noted in the
environmental problems study, 12% of our damage cases were from
battery-breaking operations. Moreover, the high value of the lead
plates and low entry cost for a battery-breaking facility provides a
strong market incentive for facilities to recycle without investing in
adequate management systems for the discarded battery acid and casings.
    In addition, because the RCRA-regulated ``generator'' of a SLAB is
often the garage or junkyard that removed the battery from the
automobile (rather than the original owner who discarded the battery),
the generator-controlled exclusion could be read to apply to these
operations. Therefore, the reasonable efforts and financial assurance
conditions that are a part of the transfer-based exclusion would not
apply, despite the fact that their activities would resemble waste
management rather than production. Because, in these cases, the SLABs
have effectively already been discarded by the original owners before
they enter the RCRA hazardous waste regulatory system, EPA will
continue to regulate SLABs as solid and hazardous waste under 40 CFR
266.80 or 40 CFR part 273.
    EPA also agrees with comments that the exclusions should have no
impact on 40 CFR 266.70 (precious metals

exclusion) and 40 CFR 266.100(d) and (g) (conditional exclusions from
the boiler and industrial furnace (BIF) regulations for ``smelting,
melting, and refining furnaces'' and precious metals recovery
furnaces). Because these exclusions are exclusions from certain
hazardous waste regulations, not solid waste exclusions, as a general
matter, EPA believes that facilities should have a choice of whether
they manage their materials as hazardous waste under these exclusions
or seek an exclusion from the definition of solid waste through today's
final rule.
    However, part of what 40 CFR 266.100(d) accomplishes is to define
when an operation involving burning is solely a metals recovery
operation rather than a burning for energy recovery or destruction
operation, neither of which is eligible for today's exclusions. This
distinction is an important one to make, and EPA did not intend to
revise how such material recovery operations were identified, nor did
EPA ask for comment on such a revision.
    Thus, for the purpose of defining the type of burning for metals
recovery to be allowed under these exclusions, EPA will reference the
requirements in 40 CFR part 266 subpart H that defines when a
``smelting, melting, and refining'' furnace is solely engaged in metals
recovery, but will not require the other conditions that are not
related to distinguishing legitimate materials recovery from burning.
Therefore, under today's final rule, hazardous secondary materials
burned for metals recovery would still be required to meet the minimum
metals and maximum toxic organic metals content specified in 40 CFR
part 266 (as part of the definition of this activity), and would
continue to be exempt from BIF permits, but they would not be subject
to hazardous waste manifests and storage permits, as long as the
conditions of the exclusions promulgated in today's rule are met.

C. Other Recycling Exclusions

    For other hazardous secondary materials currently eligible for
management under other exclusions or alternative regulatory structures
that do not include an exclusion from the definition of solid waste
(such as the universal waste regulations in 40 CFR part 273), the
facility would have the choice of either continuing to manage the
hazardous secondary material as a hazardous waste under the existing
regulations or under today's exclusions from the definition of solid
waste.
    In addition, it should be noted that, for the purposes of Sec.
261.2(a)(2)(ii) and Sec.  261.4(a)(2)(23), when a facility collects
hazardous secondary materials from other persons (for example, when
mercury-containing equipment is collected through a special collection
program), it is not the hazardous secondary material generator.
Therefore, a universal waste handler who collects hazardous secondary
materials from other persons would not be eligible for the generator-
controlled exclusion, even if it would be considered a ``generator''
for purposes of the Universal Waste regulations.

XII. Effect on Permitted and Interim Status Facilities

A. Permitted Facilities

    Facilities that currently have RCRA permits or interim status and
manage hazardous wastes that are excluded under today's final rule will
be affected in a number of ways, depending on the situation at the
facility. At some facilities, some of the hazardous waste management
units will be converted solely to manage excluded hazardous secondary
materials, and other units may continue to manage hazardous wastes. At
other facilities, all of the hazardous waste management units will be
converted to manage wastes excluded under today's final rule. In still
other cases, individual units may manage both excluded materials and
hazardous wastes. In all cases, the owner or operator of the facility
must comply with the applicable conditions and limitations of the
exclusion (including the containment of the hazardous secondary
material in units operating under the exclusion, recycling
legitimately, and the prohibition against speculative accumulation of
excluded hazardous secondary materials) to maintain the exclusion.
    Permitted facilities that continue to manage hazardous wastes in
addition to managing hazardous secondary materials excluded under this
final rule must continue to maintain their Part B permits. Individual
units may be converted solely to manage excluded hazardous secondary
materials; however, the permit requirements applicable to the newly
excluded units will remain in effect until they are removed from the
permit. Owners and operators that seek to remove permit conditions
applicable to units that are no longer hazardous waste management units
must submit a permit modification request to the implementing agency.
In the March 26, 2007, supplemental proposed rule, the Agency requested
comment on requiring owners and operators seeking to modify their
permits to remove units that are no longer regulated to follow the
procedures of 40 CFR 270.42(a) for Class 1 permit modifications, with
prior Agency approval. The Agency received few comments on this issue,
and is proceeding in this final rule with the proposed approach. Thus,
this final rule modifies 40 CFR 270.42 by adding an entry to Appendix 1
that classifies permit modifications to remove units that are no longer
regulated as a result of this rule as Class 1 with prior Agency
approval.
    As was discussed in the preamble of the March 26, 2007,
supplemental proposal, under the Class 1 with prior Agency approval
approach, the owner or operator must submit notification of the permit
modification to the implementing agency, along with documentation
demonstrating that the operations at the unit meet the conditions of
the exclusion and that the unit is used solely to manage excluded
hazardous secondary materials. In addition, the owner or operator must
comply with the requirements of 40 CFR 270.42(a)(ii) for public
notification. Under Sec.  270.42(a)(ii), the permit modification will
not become effective until the owner or operator receives written
approval by the implementing agency. The implementing agency will
approve the permit modification so long as the owner or operator has
complied with the procedural requirements of Sec.  270.42(a) and has
demonstrated that the operations meet the conditions of the exclusion,
and that the unit does not manage non-excluded hazardous wastes.
    One commenter disagreed with the Agency's approach, and believed
that the Class 2 permit modification procedures were necessary to
provide the public an opportunity to comment on the removal of the unit
from the permit. The Agency disagrees with this commenter. The
regulations that govern permit modification classify modifications to
the permit term, to allow for earlier permit termination, as Class 1
with prior Agency approval. The Agency believes that removing permit
conditions for units that are no longer regulated is, in effect,
allowing earlier permit termination at those units. Thus, the Agency
believes that Class 1 with prior Agency approval is the appropriate
designation for these permit modifications.
    In the preamble of the March 26, 2007, supplemental proposal, the
Agency discussed the issue of whether closure requirements at formerly
regulated units would be triggered when this rule becomes effective and
the hazardous secondary materials they are receiving is no longer
hazardous waste. This issue was also discussed in the October 2003
proposal, in which EPA

expressed the view that requiring closure of units in these situations
would serve little environmental purpose, since after closure the unit
would be immediately reopened and used to store the same (now excluded)
hazardous secondary material (68 FR 61580-61581).
    In today's final rule, a permitted unit that is converted solely to
manage excluded hazardous secondary materials will not be subject to
the 40 CFR part 264 closure requirements, since, typically, it will be
managing the same material, with the only difference being that the
material is now excluded from regulation as a hazardous waste. However,
we expect that any funds in the closure or post-closure financial
assurance mechanisms will be converted to provide financial assurance
under today's exclusion, assuming the facility is operating under the
transfer-based exclusion. In addition, as described in sections VII.D.
and VIII.D of this preamble, at the end of the operating life of these
units, all owners and operators (i.e., of units operating under either
exclusion promulgated in this final rule) must manage any hazardous
secondary materials that are not recycled, and remove or decontaminate
all hazardous residues and contaminated containment system components,
equipment structures, and soils.
    A permitted facility that converts to manage only hazardous
secondary materials excluded under this final rule, and is, therefore,
no longer a hazardous waste management facility, will no longer be
required to maintain a hazardous waste operating permit (although, as
discussed below, may still be subject to corrective action).\14\
However, permits issued to these facilities remain in effect until they
are terminated.
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    \14\ Again, the owner/operator of the facility must comply with
the applicable conditions and limitations of the exclusion
(including the containment of the hazardous secondary material in
the unit, legitimate recycling, and the prohibition against
speculative accumulation) to maintain the exclusion.
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    In the March 2007 supplemental proposal, the Agency also requested
comment on requiring owners and operators seeking to terminate their
operating permits (as opposed to just removing units from their permit)
by modifying the permit term to follow the procedures of 40 CFR
270.42(a) for Class 1 permit modifications, with prior Agency approval.
The Agency received few comments on this issue, and is proceeding in
this final rule with the proposed approach. Thus, this final rule
modifies Sec.  270.42 by adding an entry to Appendix 1 that classifies
permit modifications to terminate operating permits by modifying the
permit term, at facilities at which all units are excluded as a result
of this final rule, as Class 1 with prior Agency approval. Under this
approach, owners and operators seeking to terminate their operating
permits must submit a permit modification request to the overseeing
agency following the procedures of Sec.  270.42(a) for Class 1
modifications with prior Agency approval, as described above.\15\
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    \15\ The commenter discussed above who disagreed with the
Agency's approach for permit modifications to remove units that are
no longer regulated, also believed that Class 2 permit modification
procedures were necessary to provide the public an opportunity to
comment on the owner or operator's request to terminate a permit by
modifying the permit term. The Agency disagrees with this commenter.
As was discussed above, the regulations governing permit
modifications classify changes to the expiration date to allow
earlier permit termination as Class 1 with prior Agency approval.
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    To support a request for permit termination by modifying the permit
term, the owner or operator must demonstrate that the operations meet
the conditions of the exclusion, and that the facility does not manage
non-excluded hazardous wastes.
    In addition, as was explained in the October 28, 2003, proposal
(see 68 FR 61580) and again in the March 26, 2007, supplemental
proposal (72 FR 14206), the obligation of 40 CFR 264.101 to address
facility-wide corrective action at permitted facilities, is not
affected by this final rule, and remains in effect.\16\ Therefore, an
owner or operator of a facility that manages only hazardous secondary
materials excluded under this final rule, who seeks to terminate the
facility's permit by modifying the permit term, must demonstrate as
part of the permit modification request that the corrective action
obligations at the facility have been addressed or where corrective
action obligations remain, that continuation of the permit is not
necessary to assure that they will be addressed. The Agency's
corrective action authority at such facilities is not affected by this
rulemaking and the Agency thus retains its authority to address
corrective action at such facilities using all authorities applicable
prior to this rulemaking.
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    \16\ 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,''
(see 68 FR 8757) for a detailed discussion of corrective action
completion.
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    At some facilities, corrective action obligations will likely
continue to be addressed through the corrective action provisions of
the permit. In these cases, maintenance of the permit would ensure that
facility-wide corrective action will be addressed. Thus, in these
cases, the permit would not be terminated by modifying the permit term,
but would be modified to remove the provisions that applied to the now-
excluded hazardous secondary material. The facility's permit would,
thereafter, only address corrective action.
    In other cases, however, EPA or an authorized state may have
available an alternative federal or state enforcement mechanism or
other federal or state cleanup authority, through which it could choose
to address the facility's cleanup obligations, rather than continue to
pursue corrective action under a permit. In these cases, where the
alternate authority would ensure that facility-wide corrective action
will be addressed, maintenance of the permit would not be necessary.

B. Interim Status Facilities

    A facility that is operating under interim status will be affected
by this final rule in much the same way as is a permitted facility and
the issue of corrective action will be addressed in a similar manner.
At an interim status facility that converts to managing only hazardous
secondary materials that become excluded under this final rule, the
part 265 interim status standards that applied to the hazardous waste
management units at the facility, as well as the general facility
standards in part 265, will no longer apply. At the same time, the
Agency's authority to address corrective action at the facility is not
affected by this final rule, and the owner or operator retains
responsibility for unaddressed corrective action obligations at the
facility.

C. Releases From Excluded Units at Interim Status or Permitted
Facilities

    Commenters on the October 28, 2003, proposal stated that one of the
main purposes of the RCRA Subtitle C closure requirements is to
identify and remediate any releases originating from the units. In
response, the Agency noted in the March 26, 2007, supplemental proposal
that releases from these units are discarded solid wastes and,
therefore, potentially hazardous wastes, and agreed with the
commenter's concern that such releases should be addressed. The Agency
suggested in that preamble that the specific Subtitle C closure
requirements may not be the most appropriate means of addressing
cleanup of releases from these units, if any have occurred. Rather, the
Agency suggested that a better approach to address historical releases
from these

[[Continued on page 64717]]

]

[[pp. 64717-64766]] Revisions to the Definition of Solid Waste

[[Continued from page 64716]]

units, as well as any future releases, would be as part of corrective
action for all releases at the facility--an approach that the Agency
believed would achieve the same environmental results and would provide
the owner or operator the option of integrating the cleanup more
closely into the broader facility response.
    Some commenters on the March 26, 2007, supplemental proposal
objected to this approach of addressing releases from units that
previously managed hazardous wastes and, as a result of today's rule,
would subsequently only receive hazardous secondary materials excluded
from Subtitle C control. These commenters requested that EPA expressly
recognize that units storing or managing hazardous secondary materials
excluded as a result of this rule would no longer be regulated as solid
waste management units and are not subject to RCRA's corrective action
requirements. EPA disagrees with this approach, as we have discussed
previously in this section and as discussed below, and continues to
believe that the best approach to addressing releases from
conditionally excluded units is, generally, to address them as part of
corrective action for all releases at the facility.
    The Agency discussed the issue of its corrective action authority
to address non-SWMU-related releases at RCRA treatment, storage, or
disposal facilities in the May 1, 1996, Advance Notice of Proposed
rulemaking (see 61 FR 19442-3). There, the Agency stated, ``[g]iven the
legislative history of RCRA section 3004(u), which emphasizes that RCRA
facilities should be adequately cleaned up, in part, to prevent the
creation of new Superfund sites, EPA believes that corrective action
authorities can be used to address all unacceptable risks to human
health and the environment from RCRA facilities. In the permitting
context, remediation of non-SWMU related releases may be required under
the ``omnibus'' authority * * * In other contexts, orders under RCRA
sections 3008(h) or 7003 may require remedial action to address
releases regardless of whether a SWMU is present.''
    The Agency envisions three scenarios that might apply to units from
which releases have occurred. The first will arise in situations where
an owner or operator fails to comply with the applicable conditions and
limitations of the exclusion, and the unit consequently loses its
exemption. In these situations, the unit itself will once again become
a hazardous waste management unit, and the unit, as well as materials
in the unit, will become subject to all requirements that were
applicable prior to this final rule. Not only will corrective action
authority be available at such a unit, but the closure requirements of
40 CFR part 264 or 265 will once again apply at the unit as well, and
releases from that unit may be addressed through either the corrective
action or the closure process.
    The second scenario will arise in situations where releases occur
at an excluded unit but, based on the site-specific factors, the Agency
does not consider the release to be significant and, therefore, the
release does not cause the unit to lose its exclusion. Failure on the
part of the owner or operator to respond to such releases could be
considered an act of illegal disposal. The Agency generally would
address these situations by issuing an enforcement action under RCRA
section 3008(a), or other applicable authorities, to compel cleanup
actions and/or impose penalties. It should be noted that this approach
is consistent with the approach taken by the Agency in a July 2002
final rule, in which the Agency excluded hazardous secondary materials
used to make zinc fertilizers from the definition of solid waste (see
``Zinc Fertilizers Made from Recycled Hazardous Secondary Materials,''
67 FR 48400, July 24, 2002).
    The third scenario will arise in situations where releases from the
unit, of either the now excluded hazardous secondary material and/or
other hazardous or solid wastes previously managed in the unit, were
not addressed prior to the unit obtaining its exclusion. At permitted
and interim status facilities, the status of those releases is
unaffected by this rulemaking, and the Agency retains its authority to
address them under all authorities applicable to them prior to this
final rule, including sections 3004(u) and (v), and section 3008(h).

D. Financial Assurance Obtained for Closure at Newly-Excluded Units

    The requirements in 40 CFR parts 264 and 265 subpart H, which
applied at these units prior to their exclusion under this final rule,
provide for the release of financial assurance upon certification by
the facility owner or operator that closure has been completed in
accordance with the approved closure plan, and after the Agency has
verified that certification (see 40 CFR 264.143(i) and 265.143(h)).\17\
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    \17\ Similar provisions at 40 CFR 264.145(i) and 265.145(h)
provide for release of financial assurance for post-closure care.
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    Under the approach discussed in section VII.D. and VIII.D. of this
preamble, hazardous waste management units that convert to managing
only hazardous secondary materials that are excluded under this final
rule will no longer be subject to the 40 CFR part 264 or part 265
closure requirements. Further, while reclaimers who receive hazardous
secondary materials that have been excluded under the new 40 CFR
261.4(a)(24) are required to meet financial assurance requirements,\18\
persons who recycle hazardous secondary materials under the exclusions
for materials recycled under the control of the generator (Sec.
261.2(a)(2)(ii) and Sec.  261.4(a)(23)) are not required to meet the
financial assurance requirements.
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    \18\ See section VIII.C.4 of this preamble for a complete
discussion of financial assurance as a condition of the exclusion
for this group of facilities.
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    Under the requirements of 40 CFR parts 264 and 265 subpart G,
owners and operators of units now eligible for the exclusion of Sec.
261.2(a)(2)(ii) and Sec.  261.4(a)(23) would have been required to
remove and decontaminate all contaminated structures, equipment, and
soils (see Sec.  264.114 and Sec.  265.114). The financial assurance
provided under 40 CFR parts 264 and part 265 subpart H was designed to
assure that funds would be available for these activities. In the case
of generator controlled units, where financial assurance is no longer
required, previous releases from the unit, which would have been
addressed during closure and for which financial assurance was obtained
will, as a result of this rule, now be addressed through corrective
action authority. The question raised by the Agency in the March 26,
2007, supplemental proposal was whether funds obtained for closure
should, therefore, be directed to corrective action activities at the
unit.
    Commenters on the March 26, 2007, supplemental proposal generally
agreed that funds obtained for closure at units excluded under Sec.
261.2(a)(2)(ii) and Sec.  261.4(a)(23) (under the control of the
generator) should be directed to address releases from the unit. The
Agency agrees with these commenters, and encourages regulators to work
with owners and operators that seek to modify their permits to remove
conditions applicable to these units that will operate under the
exclusion of Sec.  261.2(a)(2)(ii) and Sec.  261.4(a)(23), to verify
that there are no unaddressed releases from the unit. In situations
where corrective action is necessary at the unit, the Agency encourages
regulators to work with owners and operators to assure that the
releases from the unit are addressed promptly.

XIII. Effect on CERCLA

    A primary purpose of today's final rule is to encourage the safe,
beneficial reclamation of hazardous secondary materials. In 1999,
Congress enacted the Superfund Recycling Equity Act (SREA), explicitly
defining those hazardous substance recycling activities that may be