that are owned by different entities because of corporate mergers and
acquisitions. Another commenter noted that at some steel plants, spent
pickle liquor is reclaimed on-site by a company that is different from
the company operating the steel plant. Other commenters noted that coke
and tar plants at iron and steel facilities are sometimes owned by
electric utilities. A few commenters argued that facilities at airports
should be eligible for the exclusion, and other commenters mentioned
various cooperative recycling ventures within the automotive industry.
Some operations mentioned by commenters appeared to be prospective
rather than actual.

EPA’s response: on-site exclusion

After evaluating these comments, EPA has decided to finalize this
provision as proposed and to limit the exclusion to hazardous secondary
materials that are generated and legitimately reclaimed by the hazardous
secondary material generator at that generator’s facility. We agree
with commenters that at least some of the situations they described are
not necessarily incompatible with generator control. One of the
situations—spent pickle liquor recycled on-site at a steel mill—is
eligible for the generator-controlled exclusion if the generator has
contracted with the company to reclaim the material at the generator’s
facility. However, the Agency does not have sufficient legal or factual
information about other situations mentioned by the commenters to
determine if there is a single entity who remains in control of the
hazardous secondary material throughout the reclamation process.

For this reason, EPA believes that such situations are more
appropriately addressed under the exclusion for hazardous secondary
materials transferred for reclamation (40 CFR 261.4(a)(24)) or under the
case-by-case non-waste determination procedures finalized today in
§260.30.

For the sake of clarity and in response to comments, we are also adding
a definition of “hazardous secondary material” and “hazardous
secondary material generator” to §260.10. “Hazardous secondary
material” means a secondary material that, when discarded, would be
identified as hazardous waste under part 261 of 40 CFR. “Hazardous
secondary material generator” means any person whose act or process
produces hazardous secondary material at the generating facility. A
facility that collects hazardous secondary materials that has been
discarded by other persons is not the hazardous secondary material
generator. These definitions would apply to all of the exclusions
promulgated today. We note that generators sometimes contract with a
second company to collect hazardous secondary materials at the
generating facility, after which the hazardous secondary materials are
subsequently reclaimed at the facility of the second company. In that
situation, the hazardous secondary materials would no longer be
considered “under the control of the generator” because the
materials are not reclaimed at the generating facility. The materials
should instead be managed under the exclusion for materials transferred
for reclamation.

EPA agrees with certain comments that a facility that generates
hazardous secondary materials may lease the property where it conducts
operations, rather than own the property and that our proposed
definition of “generating facility” would not cover such
arrangements. EPA has therefore changed the definition of “generating
facility” in 40 CFR 260.10 to read “all contiguous property owned,
leased, or otherwise controlled by the hazardous secondary material
generator.” We have also amended the existing definition of
“facility” in §260.10 to include a reference to management of
hazardous secondary materials. Therefore, any references to
“facilities” or “units” of a facility in today’s rule also
refers to facilities or units managing hazardous secondary materials
excluded under this rule.

2. Exclusion for Materials Recycled by the “Same Company”

In its March 2007 supplemental proposal, EPA proposed to exclude from
the definition of solid waste hazardous secondary materials that were
generated and reclaimed by the same “person” as defined in 40 CFR
260.10, if the generator certified the following: “on behalf of
[insert company name], I certify that the indicated hazardous recyclable
material will be sent to [insert company name], that the two companies
are under the same ownership, and that the owner corporation [insert
company name] has acknowledged full responsibility for the safe
management of the hazardous secondary material” (72 FR 14214).
“Person,” as defined in §260.10, means an individual, trust, firm,
joint stock company, Federal Agency, corporation (including a government
corporation), partnership, association, State, municipality, commission,
political subdivision of a State, or any interstate body. EPA proposed
the certification requirement because of existing complexities in
corporate ownership and liability. The certification would clarify the
responsibilities of the generator and reclaimer and would help
regulatory authorities determine whether a facility was eligible for
this exclusion. The Agency solicited comment on any other certification
language that might accomplish the same end, and on other definitions of
“same-company” (72 FR 14186).

Comments: same-company exclusion

Many commenters supported this exclusion and stated that hazardous
secondary materials sent from one company’s facility to another
remained essentially under the control of the generating company.
According to these commenters, if a generator sends materials to a
reclaimer that is part of the same corporate structure, the generator is
likely to be familiar with the recycling and materials management
processes employed by the reclaimer. In addition, questions regarding
liability and responsibility for such hazardous secondary materials are
likely to be clearer than is the case with facilities from unrelated
companies.

Other commenters stated that when hazardous secondary materials are
generated and transported off-site for reclamation, additional controls
were needed to avoid discard and protect human health and the
environment even in the case of intra-company recycling. Some of these
commenters preferred such reclamation to be regulated under the proposed
conditional exclusion for hazardous secondary materials transferred for
the purpose of reclamation. This measure would ensure that generators
would have to perform reasonable efforts and that reclaimers would have
to obtain financial assurance. Other commenters suggested additional
notification and recordkeeping requirements for any hazardous secondary
materials transported off-site.

EPA’s response: same-company exclusion

After evaluating these comments, the Agency has decided to retain
“same-company” recycling under the exclusion for hazardous secondary
materials legitimately reclaimed under the control of the generator. We
do not believe that facilities exchanging hazardous secondary materials
within the same corporate structure should be subject to the
requirements for our exclusion at §261.4(a)(24), as long as appropriate
control of the recycling process is maintained. In particular, it is
unnecessary for the generator to perform reasonable efforts on the
reclaimer, because the generator is likely to be knowledgeable about the
reclaimer’s ability to recycle the hazardous secondary materials
properly and legitimately. Similarly, if the generator and reclaimer are
part of the same corporate structure and if common control is maintained
over the policies of both facilities, there are strong incentives to
ensure that the hazardous secondary materials are properly and
legitimately reclaimed, thus making a financial assurance requirement
for the reclaimer unnecessary.

In response to commenters who suggested additional notification and
recordkeeping requirements, we note that the Agency is revising our
proposed requirements for notification and recordkeeping for all
exclusions promulgated today. These revisions are discussed in sections
VII.C. and VIII.C. of this preamble.

Comments: certification of same company

Some commenters argued that no certification should be necessary when
hazardous secondary materials are sent between the same or related
companies because generator knowledge of the materials and the potential
CERCLA liability should suffice to ensure safe and legitimate recycling.
Other commenters supported a certification provision, but suggested
alternative language that they stated would be more compatible with
generator control. Still other commenters disagreed with our proposed
requirement for certifying that the generator and reclaimer of hazardous
secondary materials were under the same ownership and that the owner
corporation must acknowledge responsibility for the safe management of
the hazardous secondary materials.

According to these commenters, under existing corporate law, parent
companies do not (and sometimes cannot) assume legal liability for their
subsidiaries. EPA’s proposed certification requirement regarding the
owner company would therefore have little legal effect and could
actually discourage same-company recycling. Some of these commenters
suggested that either the generator or the reclaimer should acknowledge
responsibility for properly managing the hazardous secondary material,
not a third-party owner corporation.

Other commenters said that the proposed requirement that the hazardous
secondary materials be generated and reclaimed by the same “person”
under 40 CFR 260.10 was not appropriate because a corporation and its
affiliates or subsidiaries are legally distinct and not the same
“person.” Therefore, one commenter suggested that we refer to
related “facilities” rather than “companies.” Some other
commenters suggested that we focus on the concept of “control”
rather than “ownership.”

EPA’s response: certification of same company

After evaluating these comments, EPA does not agree with the commenters
who argued that a certification requirement is not needed. We note that
the purpose of the certification is not to directly ensure proper and
legitimate recycling, but to clarify responsibility for the hazardous
secondary materials and to demonstrate to regulatory officials that the
hazardous secondary materials are not discarded and are within the terms
of the generator-controlled exclusion. We are therefore retaining a
certification requirement for this exclusion.

	However, the Agency has also decided that its proposed certification
language should be revised to avoid confusion and to ensure more
effective generator control. We have therefore revised our proposed
regulatory definition for this exclusion to refer to “facilities”
rather than companies. Under the definition finalized today at 40 CFR
260.10, the reclaiming facility must be “controlled” by the
generating facility or by a person (under §260.10) who controls both
the generating facility and the reclaiming facility. “Control,” for
purposes of this exclusion, means “the power to direct the policies of
the facility, whether by the ownership of stock, voting rights, or
otherwise, except that contractors who operate facilities on behalf of a
different person shall not be deemed to “control” such facilities
(see §260.10). Our final certification language requires the generating
facility to certify that it controls the reclaiming facility, or that
the generating facility and the reclaiming facility are under common
control. In addition, the generator must certify that either the
generating facility or the reclaiming facility acknowledges full
responsibility for the proper management of the hazardous secondary
materials. To avoid confusion, we have also amended the definition of
“facility” at 40 CFR 260.10 to include facilities which manage
hazardous secondary materials. Therefore, any reference to
“facilities” in this rule also includes facilities which manage
materials excluded under the regulations promulgated today.

	EPA believes that this revised language more appropriately reflects the
concept of “generator control” that underlies the exclusions at 40
CFR 261.2(a)(ii) and 261.4(a)(23). Requiring that a generating facility
control the reclaiming facility, or that both be under common control,
ensures that there is an ongoing relationship between the generator and
reclaimer and that the two facilities are more likely to be familiar
with each others’ waste management practices, thereby minimizing the
possibility of discard. If there is no such relationship, the two
facilities should not be eligible for this exclusion and the use of the
transfer-based exclusion would be more appropriate. In addition,
requiring the hazardous secondary material generator to certify that
either the generating facility or the reclaiming facility acknowledges
responsibility for the safe management of hazardous secondary materials
ensures that the responsibility rests with the party most capable of
assuming such responsibility.

Comments and EPA’s response: application to government agencies and
universities

Some commenters requested that EPA clarify whether two government
agencies (such as the Department of Defense and the Department of
Energy) would be considered the same “person” under 40 CFR 260.10 if
hazardous secondary materials are generated by one agency and reclaimed
by another. In response, we note that for purposes of RCRA, the federal
government is not a single “person”; rather, each agency or
department would be considered a separate “person.” We also note
that under today’s final rule, a federal agency that is a generating
facility does not normally have the power to direct the policies of
another federal agency that is a reclaiming facility, nor is there a
“person” under §260.10 who directs the routine policies of both
facilities. In certain situations, the parties involved may wish to
apply for a case-by-case non-waste determination under 40 CFR 260.30, as
appropriate, or use the transfer-based exclusion.

	Other commenters requested that EPA clarify whether the same-company
exclusion extends to hazardous secondary materials that are generated
and reclaimed at different facilities, when both facilities are owned by
the same government agency or university, but operated by a contractor.
In some of these situations, the same contractor operates both the
generating facility and the recycling facility, but, in other
situations, the generating facility and the reclaiming facility are
operated by different contractors. In those situations where the
generating facility and the reclaiming facility are both owned by the
same government agency or university, the two facilities would be under
common control because the agency or university in question has the
power to direct the policies of both the generating facility and the
reclaiming facility. Under this scenario, both facilities would
therefore be eligible for the same-company exclusion, even if operated
by different contractors. However, if the generating facility and the
reclaiming facility were each owned by a separate government agency or
university, they would not be eligible for this exclusion even if both
facilities were operated by the same contractor, because the element of
common control would be lacking. We have revised the certification
language of 40 CFR 260.10 to reflect this approach. The parties involved
may apply for a case-by-case non-waste determination under 40 CFR
260.30, as appropriate, or use the transfer-based exclusion.

3. Types of Tolling Arrangements Eligible

In its March 2007 supplemental proposal, the Agency proposed to exclude
from the definition of solid waste certain hazardous secondary materials
that are generated pursuant to a written contract between a tolling
contractor and a toll manufacturer. Through the contract, the tolling
contractor would arrange for the manufacture by the toll manufacturer of
a product made from virgin materials specified by the tolling
contractor. To be eligible for the exclusion, the tolling contractor
would have to retain ownership of and responsibility for the hazardous
secondary materials that were generated during the course of the
production of the product. EPA solicited comment on other types of
contractual arrangements under which discard is unlikely to happen and
which could appropriately be covered by the exclusion for
generator-controlled hazardous secondary materials. For example, one
company could enter into a contractual arrangement for a second company
to reclaim and reuse (or return for reuse) the first company’s
hazardous secondary materials. The first company could create a
contractual instrument that exhibits the same degree of control over how
the second company manages the hazardous secondary materials as is found
in a tolling arrangement (72 FR 14186).

Comments: tolling arrangements

Some commenters stated that tolling arrangements are incompatible with
“generator control” and are best regulated under the proposed
exclusion for materials that were transferred for legitimate
reclamation. They argued that requirements such as reasonable efforts
(by generators) and financial assurance (for reclaimers) were necessary
to avoid discard in the case of off-site reclamation. Some of the
commenters argued that the physical generator of the hazardous secondary
material (in this case, the toll manufacturer) retains legal liability
for the material. They stated that contracts which reallocated resources
to address financial responsibility for mismanagement or mishap could
contain loopholes that would allow tolling contractors to dispose of
hazardous secondary materials or send them to a third party for
reclamation.

Other commenters, on the other hand, urged EPA to expand the tolling
exclusion to other types of contractual arrangements. A few commenters
said that the exclusion should be allowed for any contract between a
generator and a reclaimer where the generator was willing to retain
ownership of and/or responsibility for the hazardous secondary
materials. Other commenters mentioned specific contractual situations in
which they argued the hazardous secondary materials in question were
clearly handled as a commodity and discard was therefore highly
unlikely. One example given was a facility that reclaims metals from
electric arc furnace dust and then sends the metals back to steel mills
to be reused. Another example was a facility that takes spent copper
etchant from manufacturers of printed wiring boards and uses the
material to make new copper compounds. Still another example was a
facility that collects used paint purge solvent from auto body paint
operations, reclaims it, and sells regenerated solvent back to the auto
body facility.

EPA’s response: tolling arrangements

After considering these comments, the Agency has decided to retain the
tolling exclusion, but not to broaden its scope. The exclusion will
therefore be limited to situations where a tolling contractor contracts
with a toll manufacturer to make a product from specified virgin
materials. We do not agree with those commenters who said that tolling
contracts are not compatible with “generator control.” The typical
tolling contract contains detailed specifications about the product to
be manufactured, including the management of any hazardous secondary
materials that are generated and returned to the tolling contractor for
reclamation. In addition, the tolling contractor will enter into a
tolling contract with such requirements only if it has decided that the
economic benefit from such recycling is justified. For these reasons, we
do not believe that tolling arrangements should be subject to the
conditions applicable to the transfer-based exclusion.

On the other hand, the Agency also does not agree with those commenters
who urged that we should allow the generator-controlled exclusion for
any hazardous secondary materials generated under a contract between a
generator and a reclaimer. We believe that the exclusion should be
limited to the types of tolling arrangements specified in 40 CFR 260.10.
When hazardous secondary materials are transferred off-site for
reclamation, there is, in general, less likelihood of generator control,
and, hence, more likelihood of discard, in the absence of conditions
that ensure the hazardous secondary materials will be handled as
valuable products. In these situations, additional requirements are
needed for the Agency to determine that no discard has occurred.
Conversely, in the specific situations included in the
generator-controlled exclusion (on-site, same-company, and tolling
reclamation), we believe that the generator is much more likely to be
familiar with the reclaimer and to have powerful incentives to see that
the hazardous secondary materials are reclaimed properly and
legitimately. In these cases, the requirements that we have finalized
today (notification, compliance with speculative accumulation limits,
and containment) are sufficient for the Agency to determine that such
hazardous secondary materials are not discarded. These requirements may
not be sufficient in the case of unrelated generators and reclaimers who
have a non-tolling type of contract.

To clarify the requirements for tolling contracts under today’s rule,
and to assist regulatory authorities in determining whether a facility
is eligible for an exclusion under a tolling contract, EPA has also
added a certification requirement to the definition of hazardous
secondary material generated and reclaimed under the control of the
generator in §260.10 of the final rule. This provision would require
the tolling contractor to certify that it has a written contract with
the toll manufacturer to manufacture a product or intermediate which is
made from virgin materials specified by the tolling contractor, and that
the tolling contractor will reclaim the hazardous secondary materials
generated during the course of this manufacture. The tolling contractor
must also certify that it retains ownership of, and responsibility for,
the hazardous secondary materials that are generated during the course
of the manufacture, including any releases of hazardous secondary
materials that occur during the manufacturing process.

In response to those commenters who described specific types of
contractual arrangements that should be eligible for the
generator-controlled exclusion, we note that facilities operating under
such arrangements may apply for a non-waste determination under
§260.30, as appropriate. In some cases, commenters did not include
enough detail about the contracts to enable the Agency to draft
appropriate regulatory language. In other cases, the arrangement
suggested was industry-specific and the conditions or requirements
suggested by the commenters were not appropriate for an exclusion
covering many different types of facilities. We believe that such
arrangements are best evaluated on a case-by-case basis by the
regulatory authority, possibly under 40 CFR 260.30, to determine their
eligibility for exclusion.

Comments: terms used in tolling exclusion

	One commenter suggested that we replace the term “batch
manufacturer” with “toll manufacturer.” This commenter stated that
“batch manufacturer” was too broad and generally referred to a
facility which engages in a distinct, short production campaign, not
necessarily tied to a two-party contractual agreement. “Toll
manufacturer,” this commenter stated, is a subset of batch
manufacturers and generally refers to a party which undertakes
manufacturing pursuant to a contract with a tolling contractor, such as
the arrangement we proposed. This commenter also requested that EPA
clarify that the “product” required to be produced under a tolling
contract can include intermediates, as well as final products, and that
materials used in toll manufacturing were sometimes specialty chemicals
or intermediates that could not be described as “raw materials,” as
would be required under our proposal. They suggested that we use the
term “specified materials” instead.

EPA’s response: terms used in tolling exclusion

The Agency agrees that the suggested term “toll manufacturer” is
more accurate and has revised the definition in §260.10 accordingly.
EPA also agrees that a product produced under a tolling contract can be
an intermediate or a final product and has revised the definition in
§260.10 to refer to “production of a product or intermediate.”
Finally, the Agency agrees that the term “raw materials” may not be
accurate, but prefers to use the term “virgin materials” instead of
“specified materials,” because we believe that term encompasses
specialty chemicals and intermediates without also including spent or
secondary materials, which are not included in our definition of toll
manufacturing.

B. Restrictions on Exclusions for Hazardous Secondary Materials Managed
Under the Control of the Generator in Land-Based Units and
Non-Land-Based Units

In its March 2007 supplemental proposal, the Agency proposed in 40 CFR
261.4(a)(23)(i) that hazardous secondary materials generated and
legitimately reclaimed under the control of the generator must be
contained if they were stored in land-based units (72 FR14216). EPA
proposed to use the existing definition of land based units and defined
a land-based unit in 40 CFR 260.10 as a landfill, surface impoundment,
waste pile, injection well, land treatment facility, salt dome
formation, salt bed formation, or underground mine or cave. EPA did not
propose a containment limitation for such materials if they were stored
in non-land-based units.

EPA did not propose a regulatory definition of “contained,” nor did
we propose specific performance or storage standards. We stated that
whether hazardous secondary materials are contained would be decided on
a case-by-case basis, and that such materials are generally contained if
they are placed in a unit that controls the movement of the hazardous
secondary materials out of the unit. We solicited comment on whether
additional requirements might be necessary to demonstrate absence of
discard when hazardous secondary materials were recycled under the
control of the generator. In particular, we asked whether additional
requirements for storage would be appropriate, such as performance-based
standards designed to address releases to the environment. We also
indicated that if commenters believed such requirements were
appropriate, they should specify the technical rationale for each
requirement suggested and why the requirement is necessary if the
hazardous secondary material remains under the control of the generator.

Comments and EPA’s response: definition of “land-based unit”

EPA received several comments expressing confusion over our proposed
definition of “land-based unit.” We proposed land-based unit to mean
“a landfill, surface impoundment, waste pile, injection well, land
treatment facility, salt dome formation, salt bed formation, or
underground mine or cave.” Commenters noted that including
“landfills” and “injection wells” was not necessary for the
proposed exclusion, since these management units are clearly
inappropriate for hazardous secondary materials intended for recycling.
Furthermore, commenters also noted that Subtitle C defines these terms
waste-centrically (i.e., as a unit that handles "waste" in one way or
another). This could create confusion because a hazardous secondary
material would not, by definition, be "managed" (or "stored") in one of
these “waste” units. EPA agrees with these comments, and in the
final rule has defined “land-based unit” as an area where hazardous
secondary materials are placed in or on the land before recycling.

Comments and EPA’s response: mineral processing industry

Some commenters asserted that the Agency has no jurisdiction over
land-based production units in the mineral processing industry.
Therefore, according to these commenters, EPA cannot legally require
containment for these units. These comments are addressed in section
XV.C. of this preamble, and also in the response to comments document in
the record for this rulemaking.

Comments: standards for units (both land-based and non-land-based)

Other commenters, however, were opposed to allowing any land-based
storage, at least without a RCRA Part B permit or strict requirements,
such as secondary containment, leak detection measures, regular
inspections, monitoring, or financial assurance. Most of these
commenters did not appear to distinguish between land-based units under
the generator-controlled exclusion and those under the exclusion for
hazardous secondary materials transferred for reclamation; presumably,
they wanted the same conditions for both.

Regarding non-land-based units such as tanks, containers, or containment
buildings, some commenters agreed with EPA’s approach, but other
commenters preferred minimum storage standards for these units. Some
commenters wanted Subtitle C standards to apply. Other commenters
believed that the RCRA hazardous waste requirements were not necessary,
but suggested other standards, such as requiring tanks to be in good
condition, to be compatible with the stored material, to have secondary
containment, or to be subject to routine inspections.

EPA’s response: standards for units (land-based and non-land-based)

After evaluating these comments, the Agency has decided not to add
performance standards or other requirements for managing hazardous
secondary materials excluded under any of the exclusions promulgated
today (§§261.2(a)(ii), 261.4(a)(23), or 261.4(a)(24)). Such detailed
measures are unnecessary for hazardous secondary materials that are
handled as valuable products that are destined for recycling. Under
today’s rule, regulatory authorities can determine whether such
materials in a unit are contained by considering all such site-specific
circumstances. For example, local conditions can greatly affect whether
hazardous secondary materials managed in a surface impoundment are
likely to leak and cause damage, and, therefore, whether the unit could
be considered contained. Similarly, facilities may employ such measures
as liners, leak detection measures, inventory control and tracking,
control of releases, or monitoring and inspections. Any or all of these
practices may be used to determine whether the hazardous secondary
materials are contained in the unit.

EPA also believes that detailed standards are not necessary to determine
that valuable materials destined for recycling are not discarded when
managed in non-land-based units. As with land-based units, the
regulatory authorities can identify hazardous secondary materials that
have been released from the unit and determine that the released
material is discarded. To clarify this approach and to facilitate its
implementation, however, EPA has revised its regulatory language to
require that hazardous secondary materials that are generated and
reclaimed under the control of the generator and managed in
non-land-based units must also be contained (§261.4(a)(23)(i)).

Comments and EPA’s response: state regulatory program-compliant units

A few commenters indicated that hazardous secondary materials managed in
units complying with state regulatory programs to address releases
should be considered contained. Because of the variety of such programs,
and because the Agency has not conducted an in-depth evaluation of such
state requirements, we are not adding a definition of “contained”
that would incorporate this suggested element. However, regulatory
authorities may consider compliance with such requirements as one of the
factors in determining whether the hazardous secondary materials are
contained in the units.

Comments: releases

In the March 2007 supplemental proposal, the Agency stated that
hazardous secondary materials that remain contained in these units would
still meet the terms of the exclusion even if a release occurred, unless
the hazardous secondary materials are not managed as a valuable product,
and, as a result, a significant release from the unit takes place. If
such a significant release occurred, the hazardous secondary material
remaining in the unit may be considered a solid and hazardous waste.
Some commenters noted that a series of small releases from a unit could
occur over time, causing cumulative environmental harm even though no
single release was significant in terms of volume. These commenters said
that such a series of releases should generally lead to the conclusion
that the hazardous secondary material remaining in the unit was a waste.

EPA’s response: releases

EPA agrees with the comment concerning small releases from a unit over
time. Thus, a “significant” release is not necessarily large in
volume, but would include an unaddressed small release from a unit that,
if allowed to continue over time, would cause significant damage. Any
one release may not be significant in terms of volume. However, if the
cause of such a release remains unaddressed and hazardous secondary
materials are managed in such a way that the release is likely to
continue, the hazardous secondary materials in the unit would not be
contained. For example, a rusting tank or containers that are
deteriorating may have a slow leak that, if unaddressed, would cause a
significant environmental impact. Similarly, a surface impoundment with
a slow, unaddressed leak to groundwater could result in significant
damage. Another example would be a large pile of lead-contaminated
finely ground material without any provisions to prevent wind dispersal
of the particles. Such releases, if unaddressed, would mean that the
hazardous secondary materials remaining in the unit were not being
managed as a valuable raw material, intermediate, or product and that
the materials had been discarded. As a result, the hazardous secondary
materials in the unit would be hazardous wastes and these units would be
subject to the RCRA hazardous waste regulations.

XVII. Major Comments on the Exclusion for Hazardous Secondary Materials
Transferred for Legitimate Reclamation

A. Status of Facilities Other than the Generator or Reclaimer
(“Intermediate Facilities”)

Comments: intermediate facilities

In its March 2007 supplemental proposal, EPA requested comment on its
proposal that under the proposed exclusion for hazardous secondary
materials transferred for reclamation, such materials would have to be
transferred directly from the generator to the reclaimer and not be
handled by anyone other than a transporter.

EPA received many comments on this provision. Some commenters supported
the provision as proposed because they were concerned that if hazardous
secondary materials were transferred to a “middleman,” the generator
would not have a reasonable understanding of who would reclaim the
hazardous secondary materials and how they would be managed and
reclaimed. If the generator was unable to ascertain whether the
hazardous secondary materials in question could be properly and
legitimately recycled, the materials should be considered discarded.

Other commenters objected to this proposed limitation. They argued that
many persons who generate smaller quantities of hazardous secondary
materials need help in consolidating shipments to make reclamation
economically feasible. Some of these commenters also argued that
intermediate facilities provided valuable assistance to generators by
helping them properly transport, package, and store material, and by
helping them find responsible reclaimers. These commenters believed that
EPA’s proposed limitation could discourage reclamation by persons who
generate smaller quantities of such hazardous secondary materials.

Most of the commenters who suggested that intermediate facilities be
eligible for the exclusion also suggested conditions for these
facilities. These conditions included requiring the generator to select
the reclaimer, requiring the generator to perform reasonable efforts on
the intermediate facility, as well as the reclaimer, and requirements
for notification and recordkeeping. A few commenters argued that
intermediate facilities should be required to have a RCRA Part B permit
or interim status.

EPA’s response: intermediate facilities

After evaluating these comments, the Agency has decided that
intermediate facilities storing hazardous secondary materials should be
eligible for the exclusion at 40 CFR 261.4(a)(24) under certain
conditions. We believe that such facilities make it easier for
generators that generate smaller quantities of hazardous secondary
materials to send these materials for reclamation and that storage at
such facilities under conditions designed to address discard is
completely consistent with handling the hazardous secondary materials as
valuable commodities. To this end, we have added a new definition of
“intermediate facility” to 40 CFR 260.10. We note that this rule
does not address “brokers” because that term is commonly understood
to mean a person who helps arrange for the transfer of hazardous waste
or hazardous secondary material, but does not take possession of the
material or manage it in any way. Brokers that never take possession of
hazardous secondary materials would not have been affected under the
supplemental proposal, nor are they affected by today’s rule.

Under today’s rule, an intermediate facility is a facility that stores
hazardous secondary materials for more than 10 days, other than a
generator or reclaimer of such materials. If an intermediate facility
treats the hazardous secondary materials or commingles it with other
hazardous secondary materials or with hazardous waste, it would not be
eligible as an “intermediate facility” as defined in §260.10 under
today’s regulation. Under 40 CFR 260.42, intermediate facilities must
submit the same notification required of generators and reclaimers of
hazardous secondary materials transferred for reclamation. In addition,
under §261.4(a)(24)(iv) of today’s rule, generators must also perform
appropriate reasonable efforts on the intermediate facility, as well as
the reclamation facility, and generators are responsible for the
ultimate selection of the reclamation facility. These requirements will
ensure that the intermediate facility is handling the hazardous
secondary materials as a commodity.

Today’s rule also requires intermediate facilities to comply with the
applicable requirements for reclaimers of hazardous secondary materials
under 40 CFR 261.4(a)(24)(v), including recordkeeping, storage of
excluded materials, financial assurance, and speculative accumulation.
The Agency believes that these conditions are fully sufficient to ensure
that hazardous secondary materials stored at intermediate facilities are
handled as valuable products and not discarded. Therefore, we do not
agree with those commenters who suggested that intermediate facilities
should be required to operate under Part B permits or interim status.

The Agency notes that in some cases, the intermediate facility performs
the physical measures associated with generator reasonable efforts to
ensure that the reclaimer will properly and legitimately recycle the
hazardous secondary materials. These measures may include facility
inspections and preparation of audits. In those cases, the generator
must carefully review such measures to ensure that any information
provided is credible.

 Under today’s rule (see 40 CFR 261.4(a)(24)(ii)), if hazardous
secondary materials are stored for 10 days or less at a transfer
facility, the transit is not subject to the requirements applicable to
intermediate facilities under the transfer-based exclusion. Instead, it
must only be packaged in accordance with applicable DOT requirements.
The Agency considers hazardous secondary materials stored by transfer
facilities for short periods of time to be in transit, similar to
hazardous waste stored by similar facilities for the same time period.
They are therefore not discarded. We have revised the existing
definition of “transfer facility” at 40 CFR 260.10 to clarify that
such facilities may store hazardous secondary materials as well as
hazardous waste. The generator need not perform reasonable efforts on
such facilities, nor must such facilities comply with the requirements
applicable to reclaimers of hazardous secondary materials under 40 CFR
261.4(a)(24)(v). In addition, hazardous secondary materials at transfer
facilities may be repackaged from one container to another (e.g., the
materials may be consolidated from smaller to larger containers) or
transferred to different vehicles for shipment (see 45 FR 86966,
December 31, 1980). However, different hazardous secondary materials may
not be mixed together. In addition, if there is a release of the
hazardous secondary materials at the transfer facility that is not
cleaned up immediately, such materials become solid waste, and, if they
exhibit a hazardous characteristic or are specifically listed by EPA, a
hazardous waste as well. Depending on the nature of the release, the
hazardous secondary materials remaining in the unit could also become a
solid and hazardous waste subject to Subtitle C regulation (for a
discussion of when such units are considered “contained,” see
section XVI of this preamble).

B. Reasonable Efforts Condition

EPA received many comments on the condition proposed in the March 2007
supplemental proposal that generators “make reasonable efforts to
ensure that the reclaimer intends to legitimately recycle the material
and not discard it… and that the reclaimer will manage the material in
a manner that is protective of human health and the environment.” This
condition was proposed to be fulfilled by hazardous secondary material
generators sending hazardous secondary materials to any reclamation
facility not operating under a RCRA Part B permit or interim status
standards, and the condition would have to be satisfied prior to
transferring the hazardous secondary materials to the reclamation
facility (72 FR 14190–14194). Below is a summary of six major issues
raised in the comments and EPA's responses. For more detailed comment
responses, please see Revisions to the Definition of Solid Waste
Response to Comments Document.

Comments: an objective standard for reasonable efforts

As proposed, the codified reasonable efforts provision for generators
was a general standard, rather than a more specific standard with
clearly stated requirements. EPA requested comment on establishing a
more objective standard for making reasonable efforts, such as requiring
generators to answer the questions discussed in the preamble. EPA
acknowledged that creating an objective standard could provide
generators and overseeing agencies with more regulatory certainty and
requested comment on codifying the six questions outlined in the
preamble.

EPA received many comments in support of an objective standard for
satisfying the reasonable efforts condition. Commenters suggested that a
minimum standard was needed to determine whether a generator fulfilled
the condition and as a way of determining what is “reasonable.” Many
of these commenters also believed that a standard that generators must
meet was necessary to delineate liability for hazardous secondary
materials that are transferred from a generator to a reclamation
facility. In contrast, several commenters suggested that formalizing a
minimum standard which all generators must meet is inappropriate since
recycling is inherently case-specific.

On the issue of whether to codify a reasonable efforts standard, which
several commenters addressed separately from the development of a
standard, EPA received many comments both in support of and against
codification. A large number of commenters addressed this issue by
commenting on the six questions EPA discussed within the preamble. Those
in favor of codification believed that establishing a minimum, objective
standard was important in order to provide regulatory certainty for
generators regarding what is “reasonable” and for overseeing
agencies needing to make consistent determinations that the condition is
satisfied. Industry commenters responding in support of codification
believed the six questions resemble existing audit questions, and would
therefore be straightforward to answer and satisfy. Recyclers and waste
management commenters believed that small quantity generators would
benefit from having a clear standard and also that the standard would
make additional clarifying guidance unnecessary in the future. Some
commenters conditionally supported codification contingent upon
severance of RCRA liability for generators that meet the minimum
condition. These commenters supported EPA’s proposal to create what
they termed as a “safe harbor” for generators that, having met the
reasonable efforts condition, would be shielded from any future RCRA
liability caused by environmental damage at a reclamation facility.

On the other hand, several commenters (mostly from the generating
industry) opposed codifying a standard. They believed a standard would
be unnecessary since generators that already audit recyclers have
existing criteria for making reasonable efforts. Some of these
commenters also stressed a need to maintain flexibility in their
activities and to avoid additional burdensome requirements. One state
commenter requested that EPA allow generators to establish their own
standard for reasonable efforts so that generators will weigh their own
level of risk and ultimately be responsible for their decisions. This
commenter also believed that one standard is impractical for both “a
large industrial generator of a highly toxic hazardous secondary
material” and “a small generator of a barely ignitable hazardous
secondary material.”

Of the commenters that responded to the March 2007 supplemental proposal
to codify a standard for reasonable efforts, many also provided comments
on the six questions in the preamble. In general, commenters were
divided between supporting and opposing codification of all six
questions, but responses were generally favorable when commenters
discussed the value of individual questions within a reasonable efforts
inquiry. One exception to this is with respect to proposed question B
(“Does the reclamation facility have the equipment and trained
personnel to properly recycle the hazardous secondary material?”),
which several commenters believed to be difficult for a hazardous
secondary material generator to answer with existing knowledge. A few
commenters also noted that questions D and E, the two proposed questions
pertaining to legitimacy within the preamble discussion of reasonable
efforts, did not represent the legitimacy “factors to be considered”
that were proposed at 40 CFR 261.2(g). These commenters suggested that a
reasonable efforts inquiry should include all criteria and factors in
the proposed legitimate recycling requirement. A few commenters also
suggested including an additional question about the financial health of
a reclaimer.

EPA’s response: an objective standard for reasonable efforts

After evaluating these comments, EPA agrees that an objective minimum
standard is appropriate and necessary for hazardous secondary material
generators to determine that they have fulfilled the reasonable efforts
condition. We believe that without such a standard, both generators and
the regulatory agencies would experience difficulty in determining
whether the condition is met. However, in defining the standard, it
would in no way limit a generator’s ability to tailor and enhance its
reasonable efforts inquiry to evaluate a particular industry or
recycler.

We also agree with the commenters who stated that the six questions from
the preamble to the March 2007 supplemental proposal, with two
modifications noted below, serve as a minimum objective standard.
Therefore, we are codifying them, with certain modifications. We
strongly believe that any generator who takes advantage of today’s
transfer-based exclusion must be able to answer all reasonable efforts
questions affirmatively for each reclamation facility (and intermediate
facility, if such hazardous secondary materials are sent to such a
facility) in order to demonstrate that its hazardous secondary materials
will be properly and legitimately recycled and not discarded. In EPA’s
view, a generator who is unable to satisfy the reasonable efforts
condition has not demonstrated that its hazardous secondary materials
are not discarded when recycled. The hazardous secondary materials would
thus be ineligible for today’s transfer-based exclusion.

With respect to question B (“Does the reclamation facility have the
equipment and trained personnel to properly recycle the hazardous
secondary material?”), we believe that its inclusion within reasonable
efforts is appropriate and necessary since the question informs a
generator’s inquiry as to whether its hazardous secondary materials
will be properly and legitimately recycled. If a reclamation facility
were found to have inadequate equipment or untrained personnel, it would
raise serious questions as to whether the facility would be engaged in
proper recycling or discard. Without exploring this question, we believe
that a generator cannot ascertain that a reclamation facility will
properly and legitimately recycle its hazardous secondary materials. We
also discuss in more detail how a generator can answer this question in
section VIII.C.2. of this preamble.

As noted previously, we are codifying the questions with two
modifications. The first modification to the questions is language that
accommodates the inclusion of intermediate facilities within the
transfer-based exclusion. As discussed in section VIII.C. of this
preamble, if a generator sends hazardous secondary materials to an
intermediate facility where they are stored for longer than 10 days
prior to being transferred to a reclamation facility, the generator will
need to perform reasonable efforts for both the intermediate facility
and reclamation facility.

The second modification is to the questions pertaining to legitimate
recycling activities. EPA acknowledges that one source of confusion for
commenters regarding the relationship between the reasonable efforts
condition and the legitimate recycling requirement may have been the two
questions pertaining to legitimacy (questions D and E) within the
reasonable efforts preamble discussion and the proposed legitimacy
requirement at 40 CFR 261.2(g). Questions D and E and the proposed
regulatory language for legitimacy did not share the exact same wording,
although both concepts were intended to be consistent. Furthermore, we
understand the concern commenters raised that questions D and E did not
represent the legitimacy “factors to be considered” that were
proposed within 40 CFR 261.2(g). As a result, we have restructured the
reasonable efforts questions pertaining to legitimacy to read as a
single question that ensures that a reclamation facility receiving
hazardous secondary materials intends to legitimately recycle the
hazardous secondary materials pursuant to 40 CFR 261.2(g).

Comments: liability related to reasonable efforts

EPA proposed the reasonable efforts condition as a way for hazardous
secondary material generators to demonstrate that they met their
regulatory obligation to ensure that their hazardous secondary
materials, when transferred to a reclamation facility, would not be
discarded. Based on our assessment of good recycling practices and
comments received, we believe that the reasonable efforts condition
reflects current industry best practices of auditing or assessing
reclamation facilities prior to entering into business relations; this
is done to minimize potential regulatory and liability exposures and to
demonstrate a commitment to environmental stewardship.

We received many comments related to liability and the reasonable
efforts condition. Many commenters stated that making reasonable efforts
to evaluate a reclaimer is a good method for limiting future liability
and that many generators already employ some form of the practice. These
commenters largely supported the provision. Other commenters expressed
concern that the reasonable efforts condition is an unnecessary
requirement since existing mechanisms, such as economic motivations and
CERCLA liability, would cause a generator to perform evaluations of
reclaimers without being mandated as a condition of the exclusion.

Additionally, EPA received comments about whether satisfying the
reasonable efforts condition would sever a generator’s regulatory
liability if, after being sent to a reclamation facility, its hazardous
secondary materials were discarded or involved in environmental damage.
Several commenters (namely from industry) asked that EPA clarify that
upon conducting a reasonable efforts evaluation of a reclamation
facility, a generator would not be liable for a reclaimer’s subsequent
environmental violations or if a reclaimer’s actions caused or
contributed to some environmental harm or damage. Many of these
commenters supported the codification of a reasonable efforts standard,
provided that liability would be severed upon meeting the condition.
Conversely, several commenters stated that generator liability should be
maintained into the future regardless of satisfying the condition. In
general, these commenters were concerned that hazardous secondary
material generators could subvert RCRA liability by conducting
incomplete and superficial evaluations of reclaimers, and that future
environmental damage would result at reclamation facilities. A few of
these commenters suggested that EPA clarify that a hazardous secondary
material generator would be held liable for violating the condition of
the exclusion into the future if it was shown that the generator did not
conduct a thorough assessment of the reclaimer.

EPA’s response: liability related to reasonable efforts

EPA disagrees that the reasonable efforts condition is unnecessary in
light of economic forces or CERCLA liability, which may also motivate
some generators to evaluate recyclers. We proposed the reasonable
efforts condition as a way for hazardous secondary material generators
to demonstrate that they are not discarding the hazardous secondary
materials when sending them to a third party for reclamation. The
language of the condition is intended to capture within the regulatory
text how many responsible generators currently inquire and make
decisions about recycling of hazardous secondary materials and how
generators manage potential liability and regulatory non-compliance
risks. Several commenters suggested that not all generators currently
audit or evaluate reclamation facilities despite having economic
interests and existing liability concerns. Analysis of the study of
environmental damage also suggests that CERCLA liability alone is not
enough to prevent damage and that increased generator inquiry of
reclamation facilities may help avoid future cases of abandonment or
discard, residuals mismanagement, sham recycling, and improper
management of hazardous secondary materials and recycled products.

By proposing the reasonable efforts condition, EPA intended to maintain
RCRA liability for any hazardous secondary materials that are discarded.
The condition clearly holds a generator accountable for determining that
its hazardous secondary materials will not be discarded at a reclamation
facility or any intermediate facility prior to transferring such
materials to the facility. If a generator does not meet the condition,
then the generator’s hazardous secondary materials would not be
eligible for the transfer-based exclusion and would be considered by EPA
to be hazardous waste subject to RCRA Subtitle C controls from the point
of generation.

EPA did intend, however, that if the hazardous secondary materials
generator had satisfied the reasonable efforts condition and discard
subsequently occurred while hazardous secondary materials were under the
control of the reclamation or intermediate facility, then the
reclamation or intermediate facility, not the generator, would be liable
under RCRA. EPA acknowledges that meeting this condition will not affect
CERCLA liability. (See section XIII for more information on CERCLA
liability.)

We recognize commenters’ concern that in order to satisfy the
reasonable efforts condition and be released from RCRA liability,
hazardous secondary material generators could be tempted into making
incomplete evaluations of reclamation and intermediate facilities. EPA
believes that codifying an objective reasonable efforts standard that
all generators must meet in order to satisfy the condition will
alleviate this concern. (see section VIII.C. of today’s rulemaking for
more discussion) We also believe that specifying a standard that
hazardous secondary material generators must satisfy will assist both
regulatory agencies and the regulated community in determining whether
the condition of the exclusion has been met or violated.

Comments: relationship between the reasonable efforts condition and the
legitimate recycling requirement

EPA received a variety of comments on the relationship between the
condition that hazardous secondary material generators must make a
reasonable efforts inquiry of reclamation facilities and the requirement
that hazardous secondary materials must be legitimately recycled.
Several commenters stated that evaluating whether a reclaimer meets the
legitimacy criteria should be part of a reasonable efforts inquiry to
ensure that a generator’s hazardous secondary materials are
legitimately recycled. One commenter stated that while a hazardous
secondary material generator would need to ensure that a recycling
activity being considered is legitimate in order to protect its own
liability interests, a legitimacy determination should be entirely
separate from the reasonable efforts condition. Another commenter also
stressed that, as a matter of good practice, many responsible generators
already ensure that they send hazardous secondary materials to
facilities engaged in legitimate recycling; therefore, a legitimacy
evaluation within reasonable efforts is unnecessary. Furthermore,
several commenters (mostly from industry) stated that a reasonable
efforts condition is redundant since the proposed legitimate recycling
requirement in 40 CFR 261.2(g) ensures that hazardous secondary
materials transferred off-site are safely recycled.

EPA’s response: relationship between the reasonable efforts condition
and the legitimate recycling requirement

EPA agrees with the commenters who stated that determining whether a
recycling activity is legitimate is a sound practice that many
responsible generators already employ as a way to manage their potential
liability. The reasonable efforts condition is intended to assist
generators in determining that their chosen reclamation facilities will
properly and legitimately recycle the generators’ hazardous secondary
materials. Consequently, EPA strongly believes that the reasonable
efforts condition must contain a provision that explicitly refers
generators to their obligation to ensure that their hazardous secondary
materials are legitimately reclaimed. Including legitimacy as part of
the reasonable efforts condition means that if the generator made
reasonable efforts to ensure that its hazardous secondary materials are
legitimately recycled in a way that satisfies this condition and,
subsequently, the reclamation facility fails to recycle the materials
legitimately, the reclamation facility, not the generator, becomes
liable for violating RCRA (see section VIII.E. for more information).

Comments: periodic updates to reasonable efforts

EPA requested comment on a requirement for making periodic updates to
reasonable efforts, but did not propose an explicit time period. Some
commenters favored requiring a specific time limit for updating the
reasonable efforts provision, while others (a slightly smaller number)
favored a flexible time frame for updating reasonable efforts, to be
determined by the hazardous secondary material generator. The commenters
who supported a specific time frame for updating the reasonable efforts
condition included states, several representatives of the recycling
industry, one industry generator, and one environmental organization.
Several of these commenters stated that the hazardous material generator
needed to evaluate changes over time to the recycling facility (e.g.,
compliance status, financial assurance, permit renewals, impact of
changes in recycling markets) to ensure that their hazardous secondary
materials continue to be recycled properly and legitimately. Commenters
also suggested that generators re-evaluate recyclers whenever the
generator becomes aware of new, “material” information about or
changes to a reclamation facility. These commenters asked EPA to set a
minimum schedule for updating reasonable efforts. The suggested
schedules ranged from annually to every five years.

Several industry generators and associations, as well as one waste
management association, submitted comments in opposition to requiring
specific periodic updates of the reasonable efforts provision.
Commenters expressed concern that an arbitrary time frame would
unnecessarily change generators’ current schedules for auditing or
making inquiries of recycling facilities. Several commenters suggested
that schedules for evaluating reclaimers should vary from facility to
facility and by industry and that a generator should be allowed to
decide when to update reasonable efforts given a facility’s history
and the generator’s familiarity with the facility. One commenting
organization cited its use of an internal risk-based audit schedule to
determine when to review a reclamation facility. The stated criteria for
judging the level of risk included facilities with lower financial
health and an addition of “new processing capabilities and when
ownership changes.” Another generator requested EPA to “suggest, and
not require, the frequency of periodic updates.”

EPA’s response: periodic updates to reasonable efforts

EPA agrees with the comments stating that requiring generators to
conduct specific periodic updates of the reasonable efforts provision is
critical for ensuring that reclamation facilities continue to properly
and legitimately recycle the hazardous secondary materials into the
future. We believe that if a hazardous secondary material generator
evaluated a reclamation facility (or an intermediate facility if
hazardous secondary material is sent to such a facility) only once
before the initial transfer of hazardous secondary materials for
recycling, it would not provide adequate assurance to regulators that
hazardous secondary material generators have met the reasonable efforts
condition to ensure discard will not occur 5, 10, or 20 years into the
future. We understand that generators often evaluate recyclers or
intermediate facilities on a recurring schedule determined by the
generator’s particular interests, concerns, and experience. However,
EPA believes that hazardous secondary material generators are also
interested in having regulatory certainty regarding the time frame for
which reasonable efforts must be conducted, rather than a completely
discretionary “generator decides” approach, which will present many
disagreements and challenges as to what a “reasonable” schedule is.
We are also aware that many generators do not currently conduct
reasonable efforts, let alone re-evaluate such facilities over time. For
these reasons, we are requiring that generators update their reasonable
efforts evaluation at least every three years, at a minimum. Based on
public comments, this appears to represent general industry practice and
to be within the average time frame for those generators who currently
conduct environmental audits of facilities to which they send their
hazardous secondary materials.

By specifying a time frame for periodic updates, EPA in no way intends
to limit a generator to conducting evaluations only every three years.
In fact, we acknowledge that shorter time frames could be appropriate
for certain industries. Additionally, we would expect that any hazardous
secondary material generator who has concerns about a reclamation or
intermediate facility, or who gains new knowledge of significant changes
or extraordinary situations at such facilities, would conduct reasonable
efforts regardless of the minimum required update schedule.

Comments: requiring generators to certify reasonable efforts

EPA solicited comment on requiring hazardous secondary material
generators to certify that they made reasonable efforts prior to
arranging for transport of hazardous secondary materials to be recycled.
As discussed in the preamble to the March 2007 supplemental proposal,
the certification statement would be a form of documentation necessary
for each reclamation facility and would be signed and dated by an
authorized representative of the generator company. We also provided
certification language as an example.

Several commenters including recyclers, all responding states, and a few
generators, commented in favor of requiring hazardous secondary material
generators to certify that they had met the reasonable efforts
condition. All commenters that responded regarding the example
certification statement supported the language. A few commenters
reiterated that generators must certify reasonable efforts for each
reclamation facility and that certification should not be necessary for
RCRA Part B permitted facilities. One commenter requested that the
certification must be made “prior to implementing exempt
operations.” Another commenter believed that a certification statement
would improve the enforceability of the reasonable efforts condition. A
generator that currently audits its waste facilities stated that “a
letter signed and dated by the department manager is mailed to the
audited facility stating the results of the audit,” and that the
letter should act as a certification. Another commenter suggested that
given the large number of facilities for which reasonable efforts is
required, having a company representative, as opposed to an
“authorized representative,” sign and date a certification should be
sufficient and would be less burdensome. One recycler requested that the
generator certification and signature be built into the one-time
notification that EPA is requiring for the exclusion.

A smaller number of comments from generators opposed the certification
requirement. A few generators found the certification statement to be
overly burdensome and stated that it would stifle the use of third-party
reclaimers. One generator, who currently audits reclamation facilities,
stated it could not certify the accuracy of information prepared by
third parties, nor could it certify responses by reclamation facilities
to questions B through E, which EPA discussed in the preamble. Another
generator responded that without further clarification as to the minimum
requirements for satisfying reasonable efforts, the generator could not
certify that the condition was met. A commenter also suggested that
requiring certification of reasonable efforts for reclamation facilities
that recycle hazardous secondary materials was unnecessary if
certification is not required for the storage, treatment, and disposal
of hazardous waste.

EPA’s response: requiring generators to certify reasonable efforts

After evaluating the comments, EPA has concluded that that certifying
the reasonable efforts provision is a necessary and minimally burdensome
requirement for ensuring that the reasonable efforts condition is met
prior to transferring the hazardous secondary materials to a reclamation
facility. We also strongly believe that requiring the signature of an
authorized representative of the generator company, who can be any
appointed company representative, is critical for ensuring
accountability for satisfying the condition. In the event of an
enforcement action, we believe that the certification will lend support
to hazardous secondary material generators needing to prove that the
reasonable efforts condition was met. Therefore, in today’s final
rulemaking, we are finalizing a requirement that hazardous secondary
material generators must certify that reasonable efforts were made for
each reclamation and intermediate facility prior to transferring
hazardous secondary materials to such facilities.

With respect to those commenters who opposed certification and
specifically argued that requiring such certification would stifle the
use of third-party auditors, it is our understanding that third-party
auditors do not generally draw any conclusions based on their audits,
but simply report the results. In addition, the reasonable efforts
condition requires that the hazardous secondary material generator
decide whether a reclaimer is acceptable. Therefore, we disagree with
those commenters who stated that requiring a certification would
constitute a significant new burden. Rather, EPA believes that requiring
a hazardous secondary material generator to certify the reasonable
efforts condition would provide them the flexibility to use audits or
other information necessary in certifying that the condition of the
exclusion was met. We find that the commenter example of an existing
practice of sending a letter with audit results to an audited facility
would need to include the certification language in 40 CFR
261.4(a)(24)(v)(C)(2) in order to meet the reasonable efforts condition.

Comments: documenting of reasonable efforts

While EPA proposed that generators conduct reasonable efforts before
sending hazardous secondary materials to the reclamation facility, we
did not propose that documentation records must be kept of such
demonstrations. However, EPA requested comment on whether to require
hazardous secondary material generators to maintain documentation at the
generating facility demonstrating that the reasonable efforts condition
was satisfied prior to transferring the hazardous secondary materials to
a reclamation facility. No form of documentation or format was
specified, although EPA did cite audits as one type of documentation
that could be relevant. Additionally, EPA requested comment on whether
hazardous secondary material generators should be required to maintain
certification statements that reasonable efforts were conducted for each
reclamation facility to which the generator transferred the hazardous
secondary materials to be reclaimed.

A majority of commenters supported a requirement that generators
maintain documentation of reasonable efforts. A few commenters asked
that documentation be kept on-site, while a few commenters asked that
the documentation could be kept at a headquarters or other off-site
location. Other commenters specifically requested that EPA not specify a
location for the documentation. Commenters in favor of this requirement
stated that documentation would be necessary for showing the basis for
the reasonable efforts determination, as well as for improving the
enforceability of the condition. A few commenters suggested that
documentation be maintained for three years and one industry commenter
asked that EPA set a time requirement specifying how long such
documentation must be kept.

On the other hand, a few commenters were opposed to a documentation
requirement. These commenters cited the confidential and proprietary
nature of the audits and reports used by generators for making
reasonable efforts and stated they did not believe they should share
this information with regulators. A few commenters, including one state,
also argued that a certification statement of having made reasonable
efforts, signed by an authorized representative of the generator
company, would provide adequate documentation that reasonable efforts
were made. One state commenter also suggested that it would be difficult
for states to enforce the requirement of documentation, presumably
because EPA proposed that “any credible evidence available” could be
used to demonstrate that the condition is met.

EPA’s response: documenting reasonable efforts

After evaluating the comments, EPA has concluded that it is important
for hazardous secondary material generators to produce documentation to
demonstrate that the reasonable efforts condition has been met prior to
transferring hazardous secondary materials to a reclamation and/or
intermediate facility. We believe this requirement helps generators
support their position that hazardous secondary materials have not been
discarded and helps regulators determine whether a generator has
satisfied this condition. Since updates of reasonable efforts are
required at a minimum of every three years, EPA believes that such
generators should maintain documentation for a minimum of three years to
show that the requirement to update reasonable efforts has been
satisfied.

We understand that audits and evaluations of reclamation facilities are
not always kept on-site and may be maintained at a generator’s
headquarters or at another off-site location. For this reason, EPA is
requiring that documentation must be made available upon request by a
regulatory authority within 72 hours, or within a longer period of time
as specified by the regulatory authority. We understand that in the age
of near-instantaneous communication, a hazardous secondary material
generator that performed reasonable efforts prior to transferring
hazardous secondary materials should be able to retrieve documentation
with relative ease. We also note that time frames for producing
documentation are generally determined by regulatory authorities on a
case-by-case basis and time frames are clearly outlined by authorities
within RCRA Section 3007 information request letters.

C. Financial assurance requirement

In EPA’s March 2007 supplemental proposal, EPA proposed that
reclamation facilities receiving and recycling hazardous secondary
materials under the transfer-based exclusion be required to demonstrate
financial assurance in accordance with the requirements of subpart H of
40 CFR part 265. As part of this proposal, EPA sought comment on whether
the existing subpart H requirements should be modified in some way
specifically for reclamation facilities affected by the proposed
exclusion. EPA also requested comment on whether EPA should tailor the
costing requirements associated with the subpart H financial assurance
requirements. Because of these comments, EPA has made some revisions to
the financial assurance condition, as explained below.

Comments: financial assurance

Many commenters supported EPA’s proposal that reclamation facilities
receiving and recycling hazardous secondary materials under the
transfer-based approach be required to demonstrate financial assurance
in accordance with the current requirements of subpart H of 40 CFR part
265 in order to demonstrate that the hazardous secondary materials are
not being discarded. Commenters argued that without a codified financial
assurance requirement, recyclers that mismanage hazardous secondary
materials could simply close their doors (as has happened previously)
and abandon their hazardous secondary materials, leaving an
environmental problem for the public to address and imposing the
financial burden of cleaning up recycling facilities on states and local
authorities, which may not have the resources to do so. Commenters also
noted that EPA’s environmental problems study shows that the primary
cause of damage incidents has been the business failure of recycling
facilities. Without financial assurance, the commenters argue that
states and taxpayers have been left with the bill for cleaning up these
abandoned sites. Finally, these commenters stated that a recycling
facility that does not meet the financial test, cannot obtain an
insurance policy or other financial instrument, and does not have the
resources to establish a trust fund or other mechanism, should not be
handling hazardous secondary materials under the conditional exclusion.

Other commenters supported EPA’s proposal on financial assurance, but
also made suggestions for modifications. One commenter recommended that
a financial assurance program be developed specifically for reclaimers.
A few commenters recommended that reclamation facilities taking
advantage of the exclusion maintain a closure plan that would be
available for review, upon request, that substantiates and verifies the
amount of financial assurance required.

Still other commenters stated that reclamation facilities that receive
hazardous secondary materials from off-site generators under the
transfer-based approach should not be held to the same financial
assurance standards as facilities with permits to manage hazardous
waste. Instead, the financial assurance requirements for recycling
facilities should reflect the relatively lower risks associated with the
manufacturing/recycling activities. Commenters claimed that reclamation
facilities are essentially processing raw materials for beneficial use
as opposed to RCRA-permitted facilities that are treating, storing, and
disposing hazardous waste.

Finally, some commenters disagreed completely with EPA’s approach to
financial assurance. Commenters stated that EPA lacks the authority to
subject facilities to the requirements or conditions when using
hazardous secondary materials in production operations in which these
materials are never discarded. Commenters stated that proposed
conditions for the exclusion do not define the absence of discard and
would effectively impose a waste management requirement upon a
non-waste.

EPA’s response: financial assurance

	EPA finds those comments that support the financial assurance condition
persuasive and agrees with their conclusions. Requiring financial
assurance for reclamation facilities (and intermediate facilities, which
are included in the final rule) operating under the transfer-based
exclusion is appropriate and reasonable for the Agency to determine that
the hazardous secondary materials managed at these facilities are not
discarded and is supported by the findings of the recycling studies we
conducted as part of this rulemaking effort. Financial assurance as a
condition will ensure that the reclamation and intermediate facilities
either have the financial wherewithal themselves, as demonstrated by
qualifying for self insurance under the financial test, or that funds
from a third party will be available to ensure that the hazardous
secondary materials will not be abandoned. An owner or operator who must
fully fund a trust to cover the retirement cost estimate will be careful
not to discard the hazardous secondary materials so that he may recover
the funds from the trust. Sureties, banks providing letters of credit
and insurers will screen applicants to ensure that they are only
providing assurance for good risks who are unlikely to abandon or
discard such materials, thus demonstrating that the hazardous secondary
material is not being discarded. As noted by the commenters, at least
138 of the 208 damage cases were firms that had gone out of business and
abandoned the “hazardous secondary material,” a material that they
presumably believed could be reclaimed.

In addition, the market forces study indicates that recyclers of
hazardous secondary materials can behave differently from traditional
manufacturers due to differences in the economic forces and incentives
involved in recycling. Unlike manufacturing, where the cost of raw
materials or intermediates (or inputs) is greater than zero and revenue
is generated primarily from the sale of the output, some models of
hazardous secondary materials recycling involve generating revenue
primarily from receipt of the hazardous secondary materials. This
situation can lead to over-accumulation and abandonment of hazardous
secondary materials, particularly in cases where the product of the
recycling process has low value, the prices are unstable, and/or the
firm has a low net worth.

By requiring financial assurance, the public and federal, state and
local governments can have confidence that the recycler’s business
model takes these market factors into consideration and that it will
therefore not abandon the hazardous secondary materials, even if
unforeseen market changes occur. The study of current good recycling
practices indicated that one of the main reasons that generators audit
recyclers is to evaluate their financial health and resources to respond
to accidents or other problems that could cause adverse environmental or
human health consequences. This is primarily because of the
joint-and-several liability provisions of CERCLA, under which a
generator becomes a "responsible party" obligated to pay (in part or in
whole) for remediation expenses if (in this example) a recycler to whom
he sent recyclable hazardous secondary materials were to create
contamination problems, but lacked the resources to pay for the cleanup.

Because American manufacturers have considerable experience with these
types of CERCLA liability issues, evaluating the financial health of the
reclamation facility before shipping recyclable hazardous secondary
materials to them has become a standard business precaution for
responsible generators. The condition for financial assurance thus can
be seen as a way of addressing the same concern, thus ensuring that the
reclamation and intermediate facility owner/operators who operate under
the terms of this exclusion are financially sound and will not abandon
or otherwise discard their hazardous secondary materials.

Thus, EPA disagrees with the commenters who argued that recycling
hazardous secondary materials is, as a general matter, the same as
processing raw materials for beneficial use. Because of the nature of
these materials (i.e., hazardous spent materials and listed by-products
and listed sludges), they are frequently more difficult to process than
most raw materials, and the nature of the economics of the transfer of
these materials can create an incentive for discard. Requiring financial
assurance is essential for helping to define those situations where the
hazardous secondary material is not being discarded.

	However, EPA agrees that some adjustments to the existing 40 CFR part
265 financial assurance requirements would help better tailor them to
hazardous secondary material reclamation and intermediate facilities.
The current hazardous waste financial assurance regulations include
provisions (such as post-closure) not appropriate to hazardous secondary
material units, and the terminology is directed towards permitted TSDFs.
EPA also agrees that the regulations need to be more explicit as to the
documentation requirements for the financial assurance cost estimate.
The financial assurance requirements in 40 CFR part 265 subpart H in
turn reference and rely on certain requirements in the 40 CFR part 265,
subpart G closure regulations. Although the hazardous secondary material
units are not required to undergo Subtitle C closure, some of the
provisions of 40 CFR part 265, subpart G are important to implementing
40 CFR part 265 subpart H and need to be clarified. As a convenience to
the regulated community, EPA has placed the financial assurance
requirements applicable to hazardous secondary materials in a
stand-alone regulation (see 40 CFR part 261 subpart H). Substantively,
these regulations generally mirror and include the same requirements as
the 40 CFR part 265 financial assurance regulations, but they have been
condensed and reframed to refer to reclamation and intermediate
facilities rather than TSDFs and to directly incorporate (rather than
just referencing) those aspects of 40 CFR part 265, subpart G that are
necessary for implementing the financial assurance condition.

For further discussion of how the financial assurance condition operates
and how the provisions map to the requirements in 40 CFR part 265, see
section VIII.C of today’s preamble.

D. Ability of Excluded Reclamation Facility to Accept Manifested
Hazardous Waste

In the March 2007 supplemental proposal, EPA proposed that reclaimers
receiving hazardous secondary materials from generators that continue to
manage such materials under the current hazardous waste regulatory
system would still be able to claim the exclusion for those hazardous
secondary materials. In essence, this would allow manifested hazardous
waste to be sent to an unpermitted facility, as long as that facility
met the conditions of the exclusion.

Comments and EPA’s response: excluded reclamation facilities accepting
manifested waste

Most of the commenters on this issue raised serious concerns about this
provision, among other things arguing the fact that it would be
unworkable. Commenters also raised concerns about the generator’s
liability under such a situation, particularly if the reclaimer failed
to inform the generator that its hazardous waste would be managed under
the exclusion. Commenters also noted that the lack of a requirement for
“reasonable efforts” on the part of the generator is contrary to the
basic premise of the exclusion, which is that generators will be
responsible and ensure reclaimers properly manage and recycle the
hazardous materials.

Thus, in today’s final rule, EPA is not allowing reclaimers to manage
manifested federal hazardous waste under the exclusion. Although this
provision may have increased recycling opportunities, the fact that the
hazardous secondary material generator manages the hazardous secondary
materials as manifested hazardous wastes would have decoupled the
exclusion from the underlying rationale that the materials are not
discarded.

E. Imports and Exports

	In the March 2007 supplemental proposal, the Agency proposed to exclude
hazardous secondary materials that are exported from the United States
for reclamation at a facility located in a foreign country, provided the
hazardous secondary material generator complies with the generator
requirements under the transfer-based exclusion (e.g., notification,
reasonable efforts, etc.), as well as notice and consent regarding
planned exports of such hazardous secondary materials. We also requested
comment on whether the Agency should allow exports under the
generator-controlled exclusion.

Comments: scope of exports

Overall, commenters expressed few concerns with the specifics of the
proposed export regulations, although a few disagreed with allowing
exports of hazardous secondary materials under the proposed rule
altogether. These commenters believed that allowing exports of such
materials would run contrary to international agreements (such as
agreements established by the Organization for Economic and Cooperation
and Development (OECD) and the Basel Convention regarding transport of
hazardous waste) and may also increase the risk of environmental damage
in other countries. At least two commenters suggested limiting exports
to our bilateral partners only (i.e., Canada and Mexico). On the other
hand, some industry commenters argued that many companies have worldwide
operations and would therefore benefit from broader provisions allowing
exports of hazardous secondary materials to be managed under the control
of the generator because it would improve the companies’ ability to
recycle hazardous secondary materials.

EPA’s response: scope of exports

After considering these comments, the Agency is largely maintaining the
export provisions as proposed, with some minor modifications described
below. We believe that hazardous secondary materials exported for
reclamation in accordance with today’s final rule are not discarded
and, thus, not solid wastes and, therefore, we have no basis for
prohibiting exports when a hazardous secondary material generator
complies with the regulatory requirements.

We also disagree with commenters who believe today’s rule runs
contrary to international agreements controlling the movement of
hazardous waste. We note the U.S. is an OECD Member and is, therefore,
legally bound to comply with the OECD’s “Decision of the Council
C(2001)107/FINAL, Concerning the Control of Transboundary Movements of
Wastes Destined for Recovery Operations, as amended by C(2004)20,”
which provides a framework for OECD Member countries to control
transboundary movements of recoverable waste in an environmentally sound
manner. This Amended 2001 Decision recognizes that Member countries may
develop their own regulations to determine whether or not materials are
controlled as hazardous wastes. Under today’s rule, hazardous
secondary materials meeting certain conditions and exported for
reclamation are not solid wastes under U.S. regulation. The Agency
notes, however, that once hazardous secondary materials reach the border
of the receiving country, the hazardous secondary material is regulated
in accordance with the receiving country’s laws and regulations. In
other words, such materials that are not solid and hazardous wastes
under U.S. hazardous waste regulations may be solid and hazardous wastes
under the receiving country’s regulations and, therefore, facilities
should be aware of the requirements that competent authorities of
receiving countries may impose

Additionally, some commenters asserted that today’s rule was
inconsistent with the Basel Convention, a separate multilateral
international agreement governing the transboundary movements of
hazardous wastes. The U.S., however, is not a party to the Basel
Convention and thus is not held to the Convention’s agreements
(although, because the Convention prohibits exports between a Basel
party and a non-Basel party, the U.S. may not export hazardous waste to
any Basel party, absent a bilateral or multilateral agreement with that
party). Beyond this point, EPA, in any case, considers today’s rule to
be consistent with Basel for the same reason that it is consistent with
the OECD agreement described above.

 In response to comments on allowing exports under the
generator-controlled exclusion, we note this exclusion is subject to few
restrictions and is largely based on the assumption that hazardous
secondary materials are unlikely to be discarded because they would be
closely managed and monitored by a single entity. However, this same
assumption does not pertain to exports of hazardous secondary materials
because EPA would not be able to ensure the close management and
monitoring by a single entity of hazardous secondary materials in a
foreign country. Accordingly, we believe that hazardous secondary
materials exported for reclamation is excluded only if the receiving
country has consented and is provided an opportunity to determine and
ensure that hazardous secondary materials exported to its reclamation
facilities are not discarded.

Additionally, we note that in today’s rule we have replaced the term
“exporter,” which was used in the March 2007 supplemental proposal,
with the term “hazardous secondary material generator.” This is
because, under the exclusion for hazardous secondary materials exported
for reclamation (today’s 40 CFR 261.4(a)(25)), the “exporter” is
required to comply with the generator responsibilities listed under the
transfer-based exclusion (such as reasonable efforts), as well as notice
and consent and annual reports. By replacing the term “exporter”
with “hazardous secondary material generator,” we are clarifying
that for hazardous secondary materials exported for reclamation, the
hazardous secondary material generator is responsible for notice and
consent and for submitting annual reports. We would also like to clarify
that intermediate facilities can still be used for exports (as with the
transfer-based exclusion), but the generator, not the intermediate
facility, must comply with the notice and consent and annual report
requirements. This is because the intermediate facility cannot perform
the generator responsibilities under the transfer-based exclusions and,
therefore, cannot perform the duties of the 'exporter' under this rule.

Comments: annual reports

In the proposed rule, we solicited comment on whether facilities
managing hazardous secondary materials under the exclusions should be
required to submit periodic (e.g., annual) reports detailing their
recycling activities, such as information on the types or volumes of
hazardous secondary materials recycled or other relevant information.

With respect to exports, a few commenters suggested that we add to 40
CFR 261.4(a)(25) a requirement that hazardous secondary material
generators submit annual reports regarding the exports of their
hazardous secondary materials. This requirement would be similar to the
requirement currently in 40 CFR part 262 subpart E, in which primary
exporters must submit annual reports regarding exports of hazardous
waste. Conversely, a few commenters urged EPA to finalize the export
requirements, as proposed with at least one commenter explicitly
agreeing with EPA’s proposal not to require annual reports for
hazardous secondary material generators.

EPA’s response: annual reports

The Agency agrees with those commenters who supported a requirement for
hazardous secondary material generators to submit to EPA annual reports
regarding the exports of their hazardous secondary materials. We believe
that such a requirement will help determine that hazardous secondary
materials exported for reclamation are handled  as commodities and not
discarded. We have, therefore, added a provision to 40 CFR 261.4(a)(25)
requiring hazardous secondary material generators who export hazardous
secondary materials to file a report with the Office of Enforcement and
Compliance Assurance that summarizes the types, quantities, frequency,
and ultimate destination of all hazardous secondary materials exported
during the previous calendar year. Such reports would document the total
amount of hazardous secondary materials exported during the calendar
year, which is often not the same as the amount specified in an export
notice. Such a report would also enable EPA to compare actual shipments
in the annual report against proposed shipments in the export notice to
ensure that the shipments occurred under the terms approved by the
receiving country. Finally, such a report would enable EPA to provide
summary information, if requested by a receiving country, that could
assist the receiving country in determining what amount of hazardous
secondary materials was received in that country.

Comments and EPA’s response: tacit consent

In the March 2007 supplemental proposal, we specified that the hazardous
secondary material generator must receive consent (through EPA) in
writing from the receiving country before the hazardous secondary
materials could be exported. Some commenters pointed out that under the
existing export regulations for hazardous wastes exported to OECD Member
countries, the receiving country may use tacit consent to respond to the
notification (40 CFR part 262 subpart H). Commenters expressed concern
that this was a point of confusion, as fully regulated hazardous wastes
are eligible for tacit consent, whereas excluded hazardous secondary
materials would require consent in writing. To eliminate this confusion,
EPA has added a provision to the regulations that allows tacit consent
for hazardous secondary materials exported to OECD Member countries
similar to that allowed for hazardous wastes under 40 CFR part 262,
subpart H. We note that Canada and Mexico, though OECD Member countries,
typically require written consent for exports to their countries.

For a detailed description of today’s exclusion for hazardous
secondary materials exported for reclamation, see section VIII.C.5. of
today’s preamble.

F. Notification and other Recordkeeping and Reporting Requirements

EPA proposed a total of three recordkeeping and reporting requirements
in the March 2007 supplemental proposal: (1) a one-time notification to
be submitted by hazardous secondary material generators and reclaimers
(required for both the generator-controlled and the transfer-based
exclusions); (2) for the transfer-based exclusion, a requirement for
both the hazardous secondary material generator and reclaimer to
maintain for three years records of all off-site shipments of excluded
hazardous secondary materials (either sent by the generator or received
by the reclaimer); and (3) notice and consent for hazardous secondary
materials exported for reclamation in foreign countries.

Comments: general recordkeeping and reporting requirements

Many commenters supported increasing the recordkeeping and reporting
requirements in order to monitor compliance with the exclusions
adequately and to measure increases in safe hazardous waste recycling.
Alternatively, some commenters urged EPA to finalize the requirements as
proposed, cautioning that onerous reporting and recordkeeping
requirements would discourage facilities from taking advantage of the
exclusions. A few commenters questioned EPA’s authority for including
recordkeeping and reporting requirements altogether; these commenters
argued that, since hazardous secondary materials are not solid wastes
and thus not subject to regulation, recordkeeping and reporting
requirements should not apply.

EPA’s response: general recordkeeping and reporting requirements

EPA agrees with the majority of commenters and believes that additional
recordkeeping and reporting requirements are necessary to enable
effective and credible oversight. We therefore consider the
recordkeeping and reporting requirements in today’s rule to be the
minimum information necessary to determine that hazardous secondary
materials are reclaimed and not discarded. Some of the recordkeeping
requirements that we are finalizing today are discussed in detail within
other relevant sections of today’s preamble (see section XVII for our
response to comments on documentation and certification of reasonable
efforts and section VII.C. for a detailed description of financial
assurance). This section focuses on our response to comments regarding
the notification requirement and the requirement that the generator
maintain confirmations of receipt of hazardous secondary materials from
the reclamation facility and intermediate facility (applicable for the
transfer-based exclusion only).

Comments: notification as a condition of the exclusion

In the March 2007 proposal, EPA noted that the one-time notification
requirement under the authority of RCRA section 3007 would not be a
condition of the exclusions, and that failure to notify, while
constituting a violation of the notification regulations, would not
affect the excluded status of the hazardous secondary materials.

A number of commenters disagreed with this rationale and argued instead
that the notification requirement should be made a condition of the
exclusions. These commenters stated that, as proposed, the notification
requirement would create an unintended incentive for hazardous secondary
material generators and reclaimers not to notify, because those who
choose not to notify would likely evade oversight for many years and, if
caught, could simply regard the “paperwork violation,” and possible
penalty for that violation, as a cost of doing business. These
commenters maintained that the failure of a hazardous secondary material
generator or recycler to provide notification is a strong indication
that these entities are either unaware of or trying to circumvent the
regulatory requirements, in both cases possibly increasing the
likelihood for environmental damage. Therefore, these commenters argued
that failure to notify should be regarded as more serious than a
reporting violation and should, therefore, remove the excluded status of
the hazardous secondary materials.

Conversely, some commenters supported EPA’s proposed approach,
agreeing that if an entity fails to notify, it does not necessarily
indicate that hazardous secondary materials were discarded and,
therefore, should not automatically affect the excluded status of the
materials.

EPA’s response: notification as a condition of the exclusion

At issue here is not the requirement to submit a notification, but
rather the consequences an entity would face for failing to notify.
Notification as a requirement under the authority of RCRA section 3007
of the exclusion means failure to notify would constitute a violation of
the notification regulations. On the other hand, notification as a
condition of the exclusion means failure to notify would potentially
result in the loss of the exclusion for the hazardous secondary
materials (i.e., the hazardous secondary materials would become solid
and hazardous wastes and subject to full Subtitle C regulation). In
context with this issue, EPA considered the intent of the notification,
which is to provide basic information to regulatory agencies about who
will be managing hazardous secondary materials under the exclusions.
This basic information enables regulatory agencies to administer
oversight and set enforcement priorities, but does not allow regulatory
agencies to directly determine that hazardous secondary materials were
discarded. In other words, a generator or reclaimer could fail to notify
yet still be legitimately recycling their hazardous secondary materials
according to the conditions of the exclusion. Therefore, EPA is
retaining notification as a requirement under the authority of RCRA
section 3007, and, thus, notification is not a condition of today’s
exclusions.

Comments: format of notification

In the March 2007 supplemental proposal, EPA requested comment on
whether the notification should be submitted in a particular format and
discussed the option of using the Subtitle C Site Identification Form
(EPA Form 8700-12) to collect the information. By far, the majority of
commenters were in favor of using this Site ID form, pointing out that
EPA would effectively minimize burden by leveraging this form because it
is already familiar to the regulated community. Of the very few
commenters opposed to using the Site ID form, some argued that the form
was not appropriate for collecting information on hazardous secondary
materials because it is primarily used to collect information regarding
hazardous wastes. However, other commenters thought the Site ID form was
appropriate because it is currently used to collect information on other
types of recycling activities not subject to full Subtitle C regulation,
such as used oil and universal waste activities. Finally, some
commenters supported use of the Site ID form because it would result in
standardized and consistent data that users could electronically access
through EPA’s databases.

EPA’s response: format of notification

EPA agrees with the majority of commenters and is requiring hazardous
secondary material generators, tolling contractors, toll manufacturers,
reclaimers and intermediate facilities managing hazardous secondary
materials to use the Site ID form (EPA Form 8700-12) when notifying in
accordance with today’s rule. We believe that the Site ID form will
provide standardized data, while minimizing the collection burden
because many facilities notifying under today’s rule are already
familiar with the form and will not need to invest resources in learning
a new form and process. EPA also agrees with commenters who stated that
the form is appropriate for today’s rule, since it already collects
information on other types of recycling activities. EPA will modify the
current Site ID form in order to accommodate the notification
requirement for today’s rule.

Comments: types of information in notification

In the March 2007 supplemental proposal, EPA proposed that generators
and reclaimers of hazardous secondary materials include in the
notification the name, address, and EPA ID number (if applicable) of the
generator or reclaimer; the name and number of a contact person; the
type of hazardous secondary materials that would be managed according to
the exclusion; and when the hazardous secondary materials would begin to
be managed in accordance with the exclusion. Many commenters,
particularly states, argued that this information was insufficient to
monitor hazardous secondary material generators and reclaimers of
hazardous secondary materials adequately and, instead, suggested
additional types of information to include in the notification, such as
quantity of the hazardous secondary materials managed under the
exclusion, the name and EPA ID number of the reclaimer receiving the
hazardous secondary materials and a description of the recycling
process. Commenters argued that additional information was important to
monitor compliance of the facilities with the exclusions and to measure
increases in safe hazardous secondary materials recycling.

On the other hand, some commenters urged EPA to retain the basic
information in the notification as proposed. These commenters questioned
how additional information would assist with defining discard and also
noted that EPA, historically, has not required notification for the
existing self-implementing exclusions from the definition of solid waste
located in 40 CFR 261.4.

EPA’s response: types of information in notification

After carefully considering these comments, we agree with those
commenters who support requiring additional information in the
notification in order to monitor compliance with the exclusions
adequately. We believe today’s notification requirement reflects the
minimum amount of information needed to identify which facilities will
be managing hazardous secondary materials under today’s rule in order
to enable regulatory agencies to administer oversight to ensure that
hazardous secondary materials are reclaimed and not discarded. We,
however, did not include suggested data elements that might be difficult
or complex to collect, such as a description of the recycling process,
and did not include information that is more appropriately documented
and maintained at the facility. For example, some commenters suggested
adding a requirement that generators indicate the identity of the
reclaimer receiving their hazardous secondary materials for reclamation;
however, under today’s transfer-based exclusion, this information is
already documented as part of the requirement for hazardous secondary
material generators to keep records of all off-site shipments.

We consider the information we are requiring in the notification under
today’s rule to reflect what responsible companies would routinely
collect as part of their normal business operations. For example,
responsible companies track quantities of valuable commodities that are
managed on-site or shipped off-site and, thus, we believe reporting
quantities of hazardous secondary materials managed in the notification
will not present an undue burden.

Furthermore, we note that EPA currently requires notification under some
261.4 exclusions, such as for spent materials generated and recovered
within the primary mineral processing industry (40 CFR 261.4(a)(17)) and
for hazardous secondary materials used to make zinc micronutrient
fertilizers (40 CFR 261.4(a)(20)) and, thus, we do not agree with
commenters who believe that the notification requirement is inconsistent
with the existing solid waste exclusion requirements.

For a detailed discussion on the notification requirement that EPA is
finalizing today, see sections VII.C. and VIII.C.

Comments: periodic reporting

In the March 2007 supplemental proposal, EPA proposed that hazardous
secondary material generators and reclaimers submit a one-time
notification, but asked for comment on whether facilities using the
exclusion should be required to submit periodic (e.g., annual) reports
detailing their recycling activities.

Several commenters supported requiring periodic reports (or periodic
notification). These commenters argued that data collected in a one-time
notification would become obsolete very quickly and would likely require
substantial investment in order to ‘clean up’ the information before
it could be used, a resource burden that would likely fall on the
states. For example, over time, some facilities that originally
submitted a one-time notification would cease managing hazardous
secondary materials according to the exclusion. Some commenters argued
that, by using a one-time notification approach, it would be a challenge
to identify these facilities and, subsequently, a challenge to compile a
list of facilities who are currently managing hazardous secondary
materials according to the exclusions, thereby inhibiting the states’
ability to monitor compliance at these facilities.

Furthermore, as one state commenter said, some generators managing
hazardous secondary materials will go out of business and without a
steady feed of updated information, states have no way of knowing which
generating facilities have closed and, thus, are unable to ensure that
their hazardous secondary materials were reclaimed and not discarded.
This leaves states acutely vulnerable to costs incurred from potential
environmental damage caused by abandonment of hazardous secondary
materials.

Other commenters noted that periodic notifications would allow public
agencies to compile credible information regarding hazardous secondary
materials recycling that can be used to demonstrate success, target
additional recycling opportunities, and improve the public’s
understanding and acceptance of recycling practices. One commenter also
supported a clear requirement to file periodically in order to reduce
confusion regarding when to re-notify and also to ensure information was
kept accurate and current.

On the other hand, some commenters urged EPA to finalize the
notification requirements as proposed and stressed that numerous
recordkeeping and reporting requirements may inhibit facilities from
taking advantage of the exclusions, thereby discouraging further
increases in recycling.

EPA’s response: periodic reporting

In considering these comments, EPA reflected on the intent of the
notification requirement, which is to provide basic information to
regulatory agencies about who is managing hazardous secondary materials
under the exclusions in order to monitor compliance with the exclusions.
As commenters noted, with a one-time notification approach, there is no
assurance that the information collected in EPA’s databases over time
will accurately reflect facilities that are managing hazardous secondary
materials according to the exclusion. Therefore, the Agency can imagine
instances where precious resources are required to be spent on
‘cleaning up’ the data before regulatory authorities can use it to
identify facilities who are currently managing hazardous secondary
materials under the exclusions. With a one-time notification, we can
also foresee problems where regulatory agencies spend time and resources
monitoring compliance at facilities that have since stopped managing
hazardous secondary materials at some point in the past. This
inefficient use of resources would serve to lower the effectiveness of
regulators to monitor compliance overall and could potentially increase
the risk of environmental damage from abuse of today’s exclusions.

EPA further believes that responsibility for submitting and maintaining
updated information lies with the hazardous secondary material
generators, reclaimers, and intermediate facilities that use today’s
exclusions. We understand arguments made by commenters that, as
originally proposed, the one-time notification would in effect reverse
this responsibility, placing an unreasonable burden on the states and
EPA to ‘clean up’ the data every time a regulating agency sought to
use the information. Instead, the incremental burden to facilities who
must submit periodic notifications is minimal compared to the
considerable public expense that states and EPA would likely incur over
time in order to use information submitted in a one-time notification.
Once an initial notification is submitted, to re-notify, a facility need
only review the previous notification and either make changes if
necessary or confirm that the information remains accurate. EPA has
chosen to use the Site ID form for this notification because it is
standardized, electronically-accessible, and familiar to the regulated
community and, therefore, will assist facilities by reducing the overall
time and effort required to report the information. Currently, large
quantity generators on average spend $364 a year on biennial reporting
under full Subtitle C regulation, whereas under today’s rule, an
initial notification is estimated to be only a third of that cost, with
subsequent notifications likely costing even less. EPA has designed the
notification requirement in today’s rule to strike an appropriate
balance between providing essential information to regulators, while
keeping additional burden at a minimum.

We are convinced of the validity of the above arguments raised by
commenters in support of periodic reporting and agree that the
limitations of a one-time notification approach would undermine the
purpose of the notification. Therefore, EPA is requiring hazardous
secondary material generators, tolling contractors, toll manufacturers,
reclaimers, and intermediate facilities managing hazardous secondary
materials to notify the Regional Administrator prior to operating under
the exclusions and at a minimum of every two years thereafter. We chose
the two-year time frame to reflect both commenters’ suggestions (of
those who supported periodic reporting, most suggested annual or
biennial reporting) and to best fit with the biennial reporting process
for hazardous wastes. Since many facilities are accustomed to the
biennial reporting process and likely have structured their processes
around the biennial report schedule, we chose to mimic the same two-year
time frame for the notification requirement in order to allow
facilities, if they so choose, to leverage their existing processes and
submit the notification at the same time their biennial report is due.
This option is, of course, up to the discretion of the facility, since
hazardous secondary material generators, tolling contractors, toll
manufacturers, reclaimers and intermediate facilities can submit
notifications at any time of the year and are not required to submit the
notification as part of the biennial reporting process (or any other
specific calendar date).

Comments: confirmation of receipt

In the March 2007 supplemental proposal, EPA requested comment on
whether hazardous secondary material generators should be required to
maintain confirmations of receipt of the hazardous secondary materials
by the reclaimer. Many commenters expressed support for this
requirement, citing that responsible commercial recyclers routinely
issue receipt confirmations or “recycling certificates” to assure
the generator that its hazardous secondary materials reached the
intended destination and were not discarded. Of those who supported the
requirement, many argued that EPA should not specify a specific form of
documentation so that facilities could leverage existing business
practices already in place to track valuable commodities. A few
commenters continued to urge EPA to be conscious of the imposition of
additional recordkeeping and reporting requirements lest the Agency
discourage recycling of hazardous secondary materials.

EPA’s response: confirmation of receipt

We agree with commenters who support requiring confirmation of receipts
and are, therefore, adding to 40 CFR 261.4(a)(24) a requirement that
generators maintain confirmation of receipts from reclaimers and
intermediate facilities for all off-site shipments of excluded hazardous
secondary materials for a period of three years. Under today’s rule,
hazardous secondary materials may be transferred to intermediate
facilities for storage or, where reclamation consists of multiple steps
occurring at separate facilities, may be transferred to more than one
reclaimer. This requirement would confirm that the hazardous secondary
materials did in fact reach the reclaimer (or each reclaimer, if
reclamation occurs at separate facilities) and any intermediate facility
as originally intended and were not discarded. EPA also agrees with
commenters that responsible companies would produce and maintain
receipts as part of their normal business operations and, thus, the
Agency believes this requirement will not pose an undue burden. The
Agency is not specifying a certain form or format for this
documentation, but instead provides examples of routine business records
that would contain the appropriate information in section VIII.C.4. of
today’s preamble.

XVIII. Major Comments on Legitimacy

A. Need for Codification of Legitimacy Factors

EPA’s proposal to codify the legitimacy criteria was in response to
the many comments that have been made over the years by both industry
and states that the existing legitimacy guidance is useful, but somewhat
hard for members of the regulated community to know about because it
could only be found in preamble discussions and guidance. The March 2007
supplemental proposal made some adjustments to the October 2003
proposal, including a change from the term “criteria” to
“factors,” but left intact the general intention to codify those
legitimacy factors. As expected, the Agency received public comments
from both state environmental agencies and from industry on our
approach.

Comments: codification of legitimacy

State commenters were unanimously in favor of codifying the legitimacy
factors in the regulations. In response to the October 2003 proposal,
twenty-three states expressed their support for codification. In
comments to the March 2007 supplemental proposal, two additional states
supported codification of the proposed factors. All twelve states that
commented on legitimacy in both proposals expressed their strong support
for codification in both their 2003 and 2007 comments.

The unanimous support in the state comments for the codification of the
legitimacy factors indicates to EPA that this is a much-needed change.
As co-regulators of the RCRA hazardous waste regulations and, in almost
all cases, the implementing agencies for the hazardous waste regulations
related to the definition of solid waste, states have long advocated for
establishing regulations that specifically address the legitimacy of
recycling. In response to EPA’s proposals, many states commented that
they are currently relying on the concept of legitimacy as laid out in
definition of solid waste preambles and in the 1989 “Lowrance memo”
guidance because they are the best sources of information that can be
used in evaluating a recycling operation. Codification is a priority to
the states because, as a regulation, the requirement for recycling to be
legitimate would be better known and understood by the regulated
community and it would be easier for states to monitor compliance. One
state commenter summed it up by writing that it makes more sense to
implement a regulation than a collection of statements found in
guidance.

Industry commenters, on the other hand, were split on the issue of
codification. Including comments from both the October 2003 proposal and
the March 2007 supplemental proposal, about one-third of the forty-two
industry commenters on the issue of whether or not to codify backed the
codification of the legitimacy factors. Many of these commenters
represented segments of the waste management industry, but a number of
representatives of generating industries also made this comment. The
industry commenters that supported codification stated that they did so
because it would provide clarity, consistency, and predictability by
making it more apparent which hazardous secondary materials and
processes are covered by recycling exclusions. One commenter noted the
value in the legitimacy factors going through the notice and comment
process since they are being used by the states in implementation of the
regulations and another expressed an expectation that codified
requirements would lead to more uniformity in interpretation between
implementing agencies. Several of these commenters stated that they also
valued the flexibility of the structure of the Lowrance memo and they
stressed the importance of the codified legitimacy factors retaining
that flexibility.

In addition to these supporters, several more industry commenters stated
that they saw the value in codifying the legitimacy factors and could
support its codification under certain conditions. The suggested
conditions included the codification of only the two proposed mandatory
factors, codification of the factors in conjunction with finalizing what
we called the “broader exclusion” option in the October 2003
proposal, and codification of legitimacy factors to be used only with
the definition of solid waste exclusions that were included within the
supplemental proposal in March 2007.

Just over half of the industry commenters opposed codification of the
legitimacy factors, though they tended to express support in their
comments for the purpose and the goals of the legitimacy factors and to
agree with the goal of identifying which processes are true recycling
and which are sham recycling. Several industry commenters stated that
the guidance is working well already and many of those opposed to
codification expressed concern that if the legitimacy factors were
codified, they would lose the flexibility in the guidance that allows
the factors to apply to many varied industrial sectors and processes,
automatically becoming more stringent. Another concern expressed by the
commenters regarding codification of the legitimacy factors was that, in
their view, the terms used in the regulatory text are too ambiguous and
should be clarified before they can be part of a regulation. These
commenters argue that codification of the factors without addressing
these concerns would automatically be more stringent than having
guidance, thereby inappropriately inhibiting legitimate recycling.

EPA’s response: codification of legitimacy

In today’s final rule, EPA is codifying the legitimacy factors. EPA is
aware of the comments that each of the terms in the legitimacy
regulations should be more clearly defined and the suggestions for
specific tests for each of the factors. We are, however, seeking a
balance between having a set of specific tests and having the
flexibility needed for a requirement that applies to a wide range of
recycling practices in various industries in different industrial or
commercial settings.

Therefore, in response to comments, the discussion of legitimacy in
today’s preamble describes more clearly what EPA means by the terms we
use in the regulatory text for this element of the final rule. The
Agency also is providing more examples of both legitimate and sham
recycling than were included in the discussions of the individual
factors in the preambles for the October 2003 proposal and March 2007
supplemental proposal to illustrate the meaning of the legitimacy
factors. The Agency also is stressing the importance of case-by-case
determinations that are based on the facts of a specific situation.

In response to the concern that the codified legitimacy factors lead to
practices previously considered legitimate now being considered sham
operations, the Agency is clarifying that it does not intend for the
current recycling legitimacy determinations to change due to the
codification of the legitimacy factors. We consider the factors we are
finalizing today to be consistent with the criteria in the Lowrance Memo
and, therefore, do not anticipate that implementing agencies will
revisit past legitimacy determinations. If recycling was considered
legitimate under the Lowrance Memo, its status would not change as a
result of today’s rule.

The public comments on this part of the proposal have helped EPA
determine that codifying the legitimacy factors will benefit the states
and EPA in our roles as regulating entities and will benefit the
regulated community by making information on what constitutes legitimate
recycling better known and more easily available. These benefits are
significant and, therefore, we are finalizing the legitimacy factors as
part of today’s action.

B. Effect on Current Determinations of Legitimate Recycling Activities

In the March 2007 supplemental proposal, EPA stated its opinion that the
concept of legitimate recycling originally proposed in October 2003 is
not substantively different from our longstanding policy, as articulated
in the 1989 Lowrance Memo and subsequent preambles. We stated that we
were simply reorganizing, streamlining, and clarifying the existing
legitimacy principles. Thus, we stated in the March 2007 supplemental
proposal that we believe that the regulatory definition of legitimate
recycling, when applied to specific recycling scenarios, would result in
determinations that were consistent with EPA’s earlier policy. We went
on to say that we did not believe the regulated community or
implementing agencies would need to revisit previous legitimacy
determinations. However, we did request examples of determinations which
could be impacted by the codification.

Comments: effect on current determinations

Commenters expressed concern that, in spite of EPA’s intentions, the
codification could prompt implementing agencies to revisit past
legitimacy determinations. In addition, comments on the October 2003
proposed rule suggested that implementing agencies could interpret the
proposed regulatory text as meaning that a recycling activity must
satisfy all four of the factors to be considered legitimate. Several
commenters on the March 2007 supplemental proposal stated that
legitimacy should not apply to the existing recycling exclusions in the
current regulations and others were concerned that codification may lead
implementing agencies to consider only the four factors and not consider
other key information about the recycling activity.

EPA’s response: effect on current determinations

The existing legitimate recycling determinations should not change due
to the codification of the legitimacy factors. We stated this point in
the March 2007 supplemental proposal and are reiterating it again today.
Review of the public comments showed that no commenters gave convincing
examples of an existing determination that would change. The final
regulatory text is consistent with the pre-existing legitimacy language
and the manner in which legitimacy determinations have been made by the
EPA Regions and authorized states. Thus, we do not expect implementing
agencies to revisit past legitimacy determinations.

Regarding the existing exclusions in the regulations, EPA acknowledges
that, in establishing a specific exclusion, we have already determined
in the rulemaking record that the specific recycling practice is
excluded from the definition of solid waste provided all the conditions
of the rule are met. However, the Agency has always enforced its rules
on the basis that any recycling must be legitimate (See U.S. v. Self, 2
F. 3d 1071, 1079 (10th Cir. 1993); U.S. v Marine Shale Processors, 81 F.
3d 1361, 1366 (5th Cir. 1996): Marine Shale Processors v. EPA, 81 F. 3d
1371, 1381-83 (5th Cir. 1996)) . This is meant to prevent a company from
claiming to be operating under an existing exclusion and simply using
that as a way to avoid full RCRA Subtitle C regulation. Thus, while EPA