nature of the audits and reports used by generators for making
reasonable efforts and stated they did not believe they should share
this information with regulators. A few commenters, including one
state, also argued that a certification statement of having made
reasonable efforts, signed by an authorized representative of the
generator company, would provide adequate documentation that reasonable
efforts were made. One state commenter also suggested that it would be
difficult for states to enforce the requirement of documentation,
presumably because EPA proposed that ``any credible evidence
available'' could be used to demonstrate that the condition is met.
EPA's Response: Documenting Reasonable Efforts
    After evaluating the comments, EPA has concluded that it is
important for hazardous secondary material generators to produce
documentation to demonstrate that the reasonable efforts condition has
been met prior to transferring hazardous secondary materials to a
reclamation and/or intermediate facility. We do not believe it is
necessary to mandate that, for example, audits are specifically
required for documentation and we prefer to maintain some flexibility
in terms of the format for documenting the condition based on commenter
input and the knowledge that each reasonable efforts inquiry will be
unique. This flexibility for documentation is also in response to
commenter concern about the confidentiality of audits. We do not
believe that this flexibility will in any way impact the ability of
regulatory authorities to determine whether the condition is satisfied.
We believe that the certification statement is critical for ensuring
accountability for satisfying the condition and that the act of making
reasonable efforts is in fact genuine. We believe this requirement
helps generators support their position that hazardous secondary
materials have not been discarded and helps regulators determine
whether a generator has satisfied this condition. Since updates of
reasonable efforts are required at a minimum of every three years, EPA
believes that such generators should maintain documentation for a
minimum of three years to show that the requirement to update
reasonable efforts has been satisfied.
    We understand that audits and evaluations of reclamation facilities
are not always kept on-site and may be maintained at a generator's
headquarters or at another off-site location. For this reason, EPA is
requiring that documentation must be made available, upon request by a
regulatory authority, within 72 hours, or within a longer period of
time as specified by the regulatory authority. We understand that in
the age of near-instantaneous communication, a hazardous secondary
material generator that performed reasonable efforts prior to
transferring hazardous secondary materials should be able to retrieve
documentation with relative ease. We also note that time frames for
producing documentation are generally determined by regulatory
authorities on a case-by-case basis and time frames are clearly
outlined by authorities within RCRA Section 3007 information request
letters.

C. Financial Assurance Requirement

    In EPA's March 2007 supplemental proposal, EPA proposed that
reclamation facilities receiving and recycling hazardous secondary
materials under the transfer-based exclusion be required to demonstrate
financial assurance in accordance with the requirements of subpart H of
40 CFR part 265. As part of this proposal, EPA sought comment on
whether the existing subpart H requirements should be modified in some
way specifically for reclamation facilities affected by the proposed
exclusion. EPA also requested comment on whether EPA should tailor the
costing requirements associated with the subpart H financial assurance
requirements. Because of these comments, EPA has made several revisions
to the financial assurance condition, as explained below.
Comments: Financial Assurance
    Many commenters supported EPA's proposal that reclamation
facilities receiving and recycling hazardous secondary materials under
the 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 conducted as part of this rulemaking effort.
Financial assurance as a condition will ensure that the reclamation and
intermediate facilities either have the financial wherewithal
themselves, as demonstrated by qualifying for self insurance under the
financial test, or that funds from a third party will be available to
ensure that the hazardous secondary materials will not be abandoned. An
owner or operator who must fully fund a trust to cover the retirement
cost estimate will be careful not to discard the hazardous secondary
materials so that he may recover the funds from the trust. Sureties,
banks providing letters of credit and insurers will screen applicants
to ensure that they are only providing assurance for good risks who are
unlikely to abandon or discard such materials, thus demonstrating that
the hazardous secondary material is not being discarded. As noted by
the commenters, at least 138 of the 208 damage cases were firms that
had gone out of business and abandoned the ``hazardous secondary
material,'' a material that they presumably believed could be
reclaimed.
    In addition, the market forces study indicates that recyclers of
hazardous secondary materials can behave differently from traditional
manufacturers due to differences in the economic forces and incentives
involved in recycling. Unlike manufacturing, where the cost of raw
materials or intermediates (or inputs) is greater than zero and revenue
is generated primarily from the sale of the output, some models of
hazardous secondary materials recycling involve generating revenue
primarily from receipt of the hazardous secondary materials. This
situation can lead to over-accumulation and abandonment of hazardous
secondary materials, particularly in cases where the product of the
recycling process has low value, the prices are unstable, and/or the
firm has a low net worth.
    By requiring financial assurance, the public and federal, state and
local governments can have confidence that the recycler's business
model takes these market factors into consideration and that it will
therefore not abandon the hazardous secondary materials, even if
unforeseen market changes occur. The successful recycling study
indicated that one of the main reasons that generators audit recyclers
is to evaluate their financial health and resources to respond to
accidents or other problems that could cause adverse environmental or
human health consequences. This is primarily because of the joint-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.
    After considering the comments received, EPA is not allowing
reclaimers to manage manifested federal hazardous waste under the
exclusion. Although this provision may have increased recycling
opportunities, the fact that the hazardous secondary material generator
manages the hazardous secondary materials as manifested hazardous
wastes would have decoupled the exclusion from the underlying rationale
that the materials are not discarded.

E. Imports and Exports

    In the March 2007 supplemental proposal, the Agency proposed to
exclude hazardous secondary materials that are exported from the United
States for reclamation at a facility located in a foreign country,
provided the hazardous secondary material generator complies with the
generator requirements under the transfer-based exclusion (e.g.,
notification, reasonable efforts, etc.), as well as notice and consent
regarding planned exports of such hazardous secondary materials. We
also requested comment on whether the Agency should allow exports under
the 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
hazardous secondary materials would run contrary to international
agreements (such as agreements established by the Organization for
Economic Cooperation and Development (OECD) and the Basel Convention
regarding transport of hazardous waste) and may also increase the risk
of environmental damage in other countries. At least two commenters
suggested limiting exports to our bilateral partners only (i.e., Canada
and Mexico). On the other hand, some industry commenters argued that
many companies have worldwide operations and would therefore benefit
from broader provisions allowing exports of hazardous secondary
materials to be managed under the control of the generator because it
would improve the companies' ability to recycle hazardous secondary
materials.
EPA's Response: Scope of Exports
    After considering these comments, the Agency is largely maintaining
the export provisions as proposed, with some minor modifications
described below. We believe that hazardous secondary materials exported
for legitimate reclamation in accordance with today's final rule are
not discarded and, thus, not solid wastes and, therefore, we have no
basis for prohibiting exports when a hazardous secondary material
generator complies with the regulatory requirements.
    We also disagree with commenters who believe today's rule runs
contrary to international agreements controlling the movement of
hazardous waste. We note the U.S. is an OECD Member and is, therefore,
legally bound to comply with the OECD's ``Decision of the Council
C(2001)107/FINAL, Concerning the Control of Transboundary Movements of
Wastes Destined for Recovery Operations, as amended by C(2004)20,''
which provides a framework for OECD Member countries to control
transboundary movements of recoverable waste in an environmentally
sound manner. The Amended 2001 Decision recognizes that Member
countries may develop their own regulations to determine whether or not
materials are controlled as hazardous wastes. Under today's rule,
hazardous secondary materials meeting certain conditions and exported
for reclamation are not solid wastes under U.S. regulation. The Agency
notes, however, that once hazardous secondary materials reach the
border of the receiving country, the hazardous secondary material is
regulated in accordance with the receiving country's laws and
regulations. In other words, such hazardous secondary materials that
are not solid and hazardous wastes under the U.S. hazardous waste
regulations may be solid and hazardous wastes under the receiving
country's regulations and, therefore, facilities should be aware of the
requirements that competent authorities of receiving countries may
impose.
    Additionally, some commenters asserted that today's rule was
inconsistent with the Basel Convention, a separate multilateral
international agreement governing the transboundary movements of
hazardous wastes. The U.S., however, is not a party to the Basel
Convention and thus is not held to the Convention's agreements
(although, because the Convention prohibits exports between a Basel
party and a non-Basel party, the U.S. may not export hazardous waste to
any Basel party, absent a bilateral or multilateral agreement with that
party). Beyond this point, EPA, in any case, considers today's rule to
be consistent with Basel for the same reason that it is consistent with
the OECD agreement described above.

    In response to comments on allowing exports under the generator-
controlled exclusion, we note this exclusion is subject to few
restrictions and is largely based on the assumption that hazardous
secondary materials are unlikely to be discarded because they would be
closely managed and monitored by a single entity. However, this same
assumption does not pertain to exports of hazardous secondary materials
because EPA would not be able to ensure the close management and
monitoring by a single entity of hazardous secondary materials in a
foreign country. Accordingly, we believe that hazardous secondary
materials exported for reclamation is excluded only if the receiving
country has consented and is provided an opportunity to determine and
ensure that hazardous secondary materials exported to its reclamation
facilities are not discarded.
    Additionally, we note that in today's rule we have replaced the
term ``exporter,'' which was used in the March 2007 supplemental
proposal, with the term ``hazardous secondary material generator.''
This is because, under the exclusion for hazardous secondary materials
exported for reclamation (today's 40 CFR 261.4(a)(25)), the
``exporter'' is required to comply with the generator responsibilities
listed under the transfer-based exclusion (such as reasonable efforts),
as well as notice and consent and annual reports. By replacing the term
``exporter'' with ``hazardous secondary material generator,'' we are
clarifying that for hazardous secondary materials exported for
reclamation, the hazardous secondary material generator is responsible
for notice and consent and for submitting annual reports. We would also
like to clarify that intermediate facilities can still be used for
exports (as with the transfer-based exclusion), but the generator, not
the intermediate facility, must comply with the notice and consent and
annual report requirements. This is because the intermediate facility
cannot perform the generator responsibilities under the transfer-based
exclusions and, therefore, cannot perform the duties of the
``exporter'' under this rule. We also note that this exclusion
specifically references the condition in Sec.  261.4(a)(24)(iv) that
recycling be legitimate as specified in Sec.  260.43.
Comments: Annual Reports
    In the proposed rule, we solicited comment on whether facilities
managing hazardous secondary materials under the exclusions should be
required to submit periodic (e.g., annual) reports detailing their
recycling activities, such as information on the types or volumes of
hazardous secondary materials reclaimed or other relevant information.
    With respect to exports, a few commenters suggested that we add to
40 CFR 261.4(a)(25) a requirement that hazardous secondary material
generators submit annual reports regarding the exports of their
hazardous secondary materials. This requirement would be similar to the
requirement currently in 40 CFR part 262 subpart E, in which primary
exporters must submit annual reports regarding exports of hazardous
waste. Conversely, a few commenters urged EPA to finalize the export
requirements, as proposed with at least one commenter explicitly
agreeing with EPA's proposal not to require annual reports for
hazardous secondary material generators.
EPA's Response: Annual Reports
    The Agency agrees with those commenters who supported a requirement
for hazardous secondary material generators to submit to EPA annual
reports regarding the exports of their hazardous secondary materials.
We believe that such a requirement will help determine that hazardous
secondary materials exported for reclamation are handled as commodities
and not discarded. We have, therefore, added a provision to 40 CFR
261.4(a)(25) requiring hazardous secondary material generators who
export hazardous secondary materials to file a report with the Office
of Enforcement and Compliance Assurance \19\ that summarizes the types,
quantities, frequency, and ultimate destination of all hazardous
secondary materials exported for reclamation during the previous
calendar year. Such reports would document the total amount of
hazardous secondary materials exported during the calendar year, which
is often not the same as the amount specified in an export notice. Such
a report would also enable EPA to compare actual shipments in the
annual report against proposed shipments in the export notice to ensure
that the shipments occurred under the terms approved by the receiving
country. Finally, such a report would enable EPA to provide summary
information, if requested by a receiving country, that could assist the
receiving country in determining what amount of hazardous secondary
materials was received in that country for reclamation.
---------------------------------------------------------------------------

    \19\ The Office of Enforcement and Compliance Assurance (OECA)
is the office within EPA that implements the notice and consent
process for exports.
---------------------------------------------------------------------------

Comments and EPA's Response: Tacit Consent
    In the March 2007 supplemental proposal, we specified that the
hazardous secondary material generator must receive consent (through
EPA) in writing from the receiving country before the hazardous
secondary materials could be exported. Some commenters pointed out that
under the existing export regulations for hazardous wastes exported to
OECD Member countries, the receiving country may use tacit consent to
respond to the notification (40 CFR part 262 subpart H). Commenters
expressed concern that this was a point of confusion, as fully
regulated hazardous wastes are eligible for tacit consent, whereas
excluded hazardous secondary materials would require consent in
writing. To eliminate this confusion, EPA has added a provision to the
regulations that allows tacit consent for hazardous secondary materials
exported to OECD Member countries similar to that allowed for hazardous
wastes under 40 CFR part 262 subpart H. We note that Canada and Mexico,
though OECD Member countries, typically require written consent for
exports to their countries.
    For a detailed description of today's exclusion for hazardous
secondary materials exported for reclamation, see section VIII.C.5. of
today's preamble.

F. Notification and Other Recordkeeping and Reporting Requirements

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

safe hazardous waste recycling. Alternatively, some commenters urged
EPA to finalize the requirements as proposed, cautioning that onerous
reporting and recordkeeping requirements would discourage facilities
from taking advantage of the exclusions. A few commenters questioned
EPA's authority for including recordkeeping and reporting requirements
altogether; these commenters argued that, since hazardous secondary
materials are not solid wastes and thus not subject to regulation,
recordkeeping and reporting requirements should not apply.
EPA's Response: General Recordkeeping and Reporting Requirements
    EPA agrees with the majority of commenters and believes that
additional recordkeeping and reporting requirements are necessary to
enable effective and credible oversight. We therefore consider the
recordkeeping and reporting requirements in today's rule to be the
minimum information necessary to determine that hazardous secondary
materials are reclaimed and not discarded. Some of the recordkeeping
requirements that we are finalizing today are discussed in detail
within other relevant sections of today's preamble (see section XVII.B.
for our response to comments on documentation and certification of
reasonable efforts and section VII.C. for a detailed description of
financial assurance). This section focuses on our response to comments
regarding the notification requirement and, for the transfer-based
exclusion, the requirement that the generator maintain confirmations of
receipt of hazardous secondary materials from the reclamation facility
and intermediate facility.
Comments: Notification as a Condition of the Exclusion
    In the March 2007 supplemental proposal, EPA noted that the one-
time notification requirement under the authority of RCRA section 3007
would not be a condition of the exclusions, and that failure to notify,
while constituting a violation of the notification regulations, would
not affect the excluded status of the hazardous secondary materials.
    A number of commenters disagreed with this rationale and argued
instead that the notification requirement should be made a condition of
the exclusions. These commenters stated that, as proposed, the
notification requirement would create an unintended incentive for
hazardous secondary material generators and reclaimers not to notify,
because those who chose not to notify would likely evade oversight for
many years and, if caught, could simply regard the ``paperwork
violation,'' and possible penalty for that violation, as a cost of
doing business. These commenters maintained that the failure of a
hazardous secondary material generator or reclaimer to provide
notification is a strong indication that these entities are either
unaware of or trying to circumvent the regulatory requirements, in both
cases possibly increasing the likelihood for environmental damage.
Therefore, these commenters argued that failure to notify should be
regarded as more serious than a reporting violation and should,
therefore, remove the excluded status of the hazardous secondary
materials.
    Conversely, some commenters supported EPA's proposed approach,
agreeing that if an entity fails to notify, it does not necessarily
indicate that the hazardous secondary materials were discarded and,
therefore, should not automatically affect the excluded status of the
materials.
EPA's Response: Notification as a Condition of the Exclusion
    At issue here is not the requirement to submit a notification, but
rather the consequences an entity would face for failing to notify.
Notification as a requirement under the authority of RCRA section 3007
of the exclusion means failure to notify would constitute a violation
of the notification regulations. On the other hand, notification as a
condition of the exclusion means failure to notify would potentially
result in the loss of the exclusion for the hazardous secondary
materials (i.e., the hazardous secondary materials would become solid
and hazardous wastes and subject to full Subtitle C regulation). In
context with this issue, EPA considered the intent of the notification,
which is to provide basic information to regulatory agencies about who
will be managing hazardous secondary materials under the exclusions.
This basic information enables regulatory agencies to administer
oversight and set enforcement priorities, but does not allow regulatory
agencies to directly determine that hazardous secondary materials were
discarded. In other words, a generator or reclaimer could fail to
notify yet still be legitimately recycling their hazardous secondary
materials according to the conditions of the exclusion. Therefore, EPA
is retaining notification as a requirement under the authority of RCRA
section 3007, and, thus, notification is not a condition of today's
exclusions.
Comments: Format of Notification
    In the March 2007 supplemental proposal, EPA requested comment on
whether the notification should be submitted in a particular format and
discussed the option of using the Subtitle C Site Identification Form
(EPA Form 8700-12) to collect the information. By far, the majority of
commenters were in favor of using the Site ID form, pointing out that
EPA would effectively minimize burden by leveraging this form because
it is already familiar to the regulated community. Of the very few
commenters opposed to using the Site ID form, some argued that the form
was not appropriate for collecting information on hazardous secondary
materials because it is primarily used to collect information regarding
hazardous wastes. However, other commenters thought the Site ID form
was appropriate because it is currently used to collect information on
other types of recycling activities not subject to full Subtitle C
regulation, such as used oil and universal waste activities. Finally,
some commenters supported use of the Site ID form because it would
result in standardized and consistent data that users could
electronically access through EPA's databases.
EPA's Response: Format of Notification
    EPA agrees with the majority of commenters and is requiring
hazardous secondary material generators, tolling contractors, toll
manufacturers, reclaimers and intermediate facilities managing
hazardous secondary materials to use the Site ID form (EPA Form 8700-
12) when notifying in accordance with today's rule. We believe that the
Site ID form will provide standardized data, while minimizing the
collection burden because many facilities notifying under today's rule
are already familiar with the form and will not need to invest
resources in learning a new form and process. EPA also agrees with
commenters who stated that the form is appropriate for today's rule,
since it already collects information on other types of recycling
activities. However, EPA will modify the current Site ID form in order
to accommodate the notification requirement for today's rule.
Comments: Types of Information in Notification
    In the March 2007 supplemental proposal, EPA proposed that
generators and reclaimers of hazardous secondary materials include in
the notification the name, address, and EPA ID number (if

applicable) of the generator or reclaimer; the name and number of a
contact person; the type of hazardous secondary materials that would be
managed according to the exclusion; and when the hazardous secondary
materials would begin to be managed in accordance with the exclusion.
Many commenters, particularly states, argued that this information was
insufficient to monitor hazardous secondary material generators and
reclaimers adequately and, instead, suggested additional types of
information to include in the notification, such as quantity of the
hazardous secondary materials managed under the exclusion, the name and
EPA ID number of the reclaimer receiving the hazardous secondary
materials and a description of the recycling process. These commenters
argued that additional information was important to monitor compliance
of the facilities with the exclusions and to measure increases in safe
hazardous secondary materials recycling.
    On the other hand, some commenters urged EPA to retain the basic
information in the notification as proposed. These commenters
questioned how additional information would assist with defining
discard and also noted that EPA, historically, has not required
notification for the existing self-implementing exclusions from the
definition of solid waste located in 40 CFR 261.4.
EPA's Response: Types of Information in Notification
    After carefully considering these comments, we agree with those
commenters who support requiring additional information in the
notification in order to monitor compliance with the exclusions
adequately. We believe today's notification requirement reflects the
minimum amount of information needed to identify which facilities will
be managing hazardous secondary materials under today's rule in order
to enable regulatory agencies to administer oversight and ensure that
hazardous secondary materials are reclaimed and not discarded. We,
however, did not include suggested data elements that might be
difficult or complex to collect, such as a description of the recycling
process, and did not include information that is more appropriately
documented and maintained at the facility. For example, some commenters
suggested adding a requirement that generators indicate the identity of
the reclaimer receiving their hazardous secondary materials for
reclamation; however, under today's transfer-based exclusion, this
information is already documented as part of the requirement for
hazardous secondary material generators to keep records of all off-site
shipments.
    We consider the information we are requiring in the notification
under today's rule to reflect what responsible companies would
routinely collect as part of their normal business operations. For
example, responsible companies track quantities of valuable commodities
that are managed on-site or shipped 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
certain of the 261.4 exclusions, such as for spent materials generated
and recovered within the primary mineral processing industry (40 CFR
261.4(a)(17)) and for hazardous secondary materials used to make zinc
micronutrient fertilizers (40 CFR 261.4(a)(20)) and, thus, we do not
agree with those commenters who believe that the notification
requirement is inconsistent with the existing solid waste exclusion
requirements.
    For a detailed discussion on the notification requirement that EPA
is finalizing today, see sections VII.C. and VIII.C.
Comments: Periodic Reporting
    In the March 2007 supplemental proposal, EPA proposed that
hazardous secondary material generators and reclaimers submit a one-
time notification, but asked for comment on whether facilities using
the exclusion should be required to submit periodic (e.g., annual)
reports detailing their recycling activities.
    Several commenters supported requiring periodic reports (or
periodic notification). These commenters argued that data collected in
a one-time notification would become obsolete very quickly and would
likely require substantial investment in order to `clean up' the
information before it could be used, a resource burden that would
likely fall on the states. For example, over time, some facilities that
originally submitted a one-time notification would cease managing
hazardous secondary materials according to the exclusion. Some
commenters argued that, by using a one-time notification approach, it
would be a challenge to identify these facilities and, subsequently, a
challenge to compile a list of facilities who are currently managing
hazardous secondary materials according to the exclusions, thereby
inhibiting the states' ability to monitor compliance at these
facilities.
    Furthermore, as one state commenter said, some generators managing
hazardous secondary materials will go out of business and without a
steady feed of updated information, states have no way of knowing which
generating facilities have closed and, thus, are unable to ensure that
their hazardous secondary materials were reclaimed and not discarded.
This leaves states acutely vulnerable to costs incurred from potential
environmental damage caused by abandonment of the hazardous secondary
materials.
    Other commenters noted that periodic notifications would allow
public agencies to compile credible information regarding hazardous
secondary materials recycling that can be used to demonstrate success,
target additional recycling opportunities, and improve the public's
understanding and acceptance of recycling practices. One commenter also
supported a clear requirement to file periodically in order to reduce
confusion regarding when to re-notify and also to ensure that the
information was kept accurate and current.
    On the other hand, some commenters urged EPA to finalize the
notification requirements as proposed and stressed that numerous
recordkeeping and reporting requirements may inhibit facilities from
taking advantage of the exclusions, thereby discouraging further
increases in recycling.
EPA's Response: Periodic Reporting
    In considering these comments, EPA reflected on the intent of the
notification requirement, which is to provide basic information to
regulatory agencies about who is managing hazardous secondary materials
under the exclusions in order to monitor compliance with the
exclusions. As commenters noted, with a one-time notification approach,
there is no assurance that the information collected in EPA's databases
over time will accurately reflect facilities that are managing
hazardous secondary materials according to the exclusion. Therefore,
the Agency can imagine instances where precious resources are required
to be spent on `cleaning up' the data before regulatory authorities can
use it to identify facilities who are currently managing hazardous
secondary materials under the exclusions. With a one-time notification,
we can also foresee problems where regulatory agencies spend time and
resources monitoring compliance at facilities that have since stopped
managing hazardous secondary materials at some point in the past. This
inefficient use of resources would serve to lower the effectiveness of
regulators

to monitor compliance overall and could potentially increase the risk
of environmental damage from abuse of today's exclusions.
    EPA further believes that responsibility for submitting and
maintaining updated information lies with the hazardous secondary
material generators, reclaimers, and intermediate facilities that use
today's exclusions. We understand arguments made by commenters that, as
originally proposed, the one-time notification would in effect reverse
this responsibility, placing an unreasonable burden on the states and
EPA to `clean up' the data every time a regulating agency sought to use
the information. Instead, the incremental burden to facilities who must
submit periodic notifications is minimal compared to the considerable
public expense that states and EPA would likely incur over time in
order to use the information submitted in a one-time notification. Once
an initial notification is submitted, to re-notify, a facility need
only review the previous notification and either make changes if
necessary or confirm that the information remains accurate. EPA has
chosen to use the Site ID form for this notification because it is
standardized, electronically-accessible, and familiar to the regulated
community and, therefore, will assist facilities by reducing the
overall time and effort required to report the information. Currently,
large quantity generators on average spend $364 a year on biennial
reporting under full Subtitle C regulation, whereas under today's rule,
an initial notification is estimated to be only a third of that cost,
with subsequent notifications likely costing even less.\20\ EPA has
designed the notification requirement in today's rule to strike an
appropriate balance between providing essential information to
regulators, while keeping additional burden at a minimum.
---------------------------------------------------------------------------

    \20\ Estimates are from the Regulatory Impact Analysis for U.S.
EPA's 2008 Final Rule Amendments to the Industrial Recycling
Exclusions from the Definition of Solid Waste.
---------------------------------------------------------------------------

    We are convinced of the validity of the above arguments raised by
commenters in support of periodic reporting and agree that the
limitations of a one-time notification approach would undermine the
purpose of the notification. Therefore, EPA is requiring hazardous
secondary material generators, tolling contractors, toll manufacturers,
reclaimers, and intermediate facilities managing hazardous secondary
materials to notify the Regional Administrator prior to operating under
the exclusions and by March 1 of each even-numbered year thereafter. We
chose the two-year time frame to reflect both commenters' suggestions
(of those who supported periodic reporting, most suggested annual or
biennial reporting) and to best fit with the biennial reporting process
for hazardous wastes (pursuant to 40 CFR 262.41, biennial reports are
due by March 1 of each even-numbered year). Since many facilities are
accustomed to the biennial reporting process and likely have structured
their processes around the biennial report schedule, we chose the same
calendar date for the notification requirement in order to allow
facilities to leverage their existing processes and submit the
notification at the same time their biennial report is due.
Comments: Confirmation of Receipt
    In the March 2007 supplemental proposal, EPA requested comment on
whether hazardous secondary material generators should be required to
maintain confirmations of receipt of the hazardous secondary materials
by the reclaimer. Many commenters expressed support for this
requirement, citing that responsible commercial recyclers routinely
issue receipt confirmations or ``recycling certificates'' to assure the
generator that its hazardous secondary materials reached the intended
destination and were not discarded. Of those who supported the
requirement, many argued that EPA should not specify a specific form of
documentation so that facilities could leverage existing business
practices already in place to track valuable commodities. A few
commenters continued to urge EPA to be conscious of the imposition of
additional recordkeeping and reporting requirements lest the Agency
discourage recycling of hazardous secondary materials.
EPA's Response: Confirmation of Receipt
    We agree with commenters who support requiring confirmation of
receipts and are, therefore, adding to 40 CFR 261.4(a)(24) a
requirement that generators maintain confirmation of receipts from
reclaimers and intermediate facilities for all off-site shipments of
excluded hazardous secondary materials for a period of three years.
Under today's rule, hazardous secondary materials may be transferred to
intermediate facilities for storage or, where reclamation consists of
multiple steps occurring at separate facilities, may be transferred to
more than one reclaimer. This requirement would confirm that the
hazardous secondary materials did in fact reach the reclaimer (or each
reclaimer, if reclamation occurs at separate facilities) and any
intermediate facility as originally intended and were not discarded.
EPA also agrees with commenters that responsible companies would
produce and maintain receipts as part of their normal business
operations and, thus, the Agency believes this requirement will not
pose an undue burden. The Agency is not specifying a certain form or
format for this documentation, but instead provides examples of routine
business records that would contain the appropriate information in
section VIII.C.4. of today's preamble and in today's rule.

XVIII. Major Comments on Legitimacy

A. Codification of Legitimacy Factors

    EPA's October 2003 proposal to codify the legitimacy criteria was
in response to the comments that have been made over the years by both
industry and states that the existing legitimacy guidance is useful,
but somewhat hard for members of the regulated community to know about
because it could only be found in preamble discussions and guidance.
The March 2007 supplemental proposal made some adjustments to the
October 2003 proposal, including a change from the term ``criteria'' to
``factors,'' but left intact the general intention to codify those
legitimacy factors for all recycling. As expected, the Agency received
public comments from both state environmental agencies and from
industry on our approach.
Comments: Codification of Legitimacy.
    State commenters were unanimously in favor of codifying the
legitimacy factors in the regulations. In response to the October 2003
proposal, twenty-three states expressed their support for codification.
In comments to the March 2007 supplemental proposal, two additional
states supported codification of the proposed factors. All twelve
states that commented on legitimacy in both proposals expressed their
strong support for codification in both their 2003 and 2007 comments.
    States have long advocated for establishing regulations that
specifically address the legitimacy of recycling. In response to EPA's
proposals, many states commented that they are currently relying on the
concept of legitimacy as laid out in definition of solid waste
preambles and in the 1989 ``Lowrance Memo'' guidance because they are
the best sources of information that can be used in evaluating a
recycling operation. Codification is a

priority to the states because, as a regulation, the requirement for
recycling to be legitimate would be better known and understood by the
regulated community and it would be easier for states to monitor
compliance. One commenter stated that it makes more sense to implement
a regulation than a collection of statements found in guidance.
    Industry commenters, on the other hand, were split on the issue of
codification. Including comments from both the October 2003 proposal
and the March 2007 supplemental proposal, just over half of the
industry commenters opposed codification of the legitimacy factors,
although they tended to express support in their comments for the
purpose and goals of the legitimacy factors and agree with the goal of
identifying which processes are true recycling and which are sham
recycling. Several industry commenters stated that the guidance is
working well already and many of those opposed to codification
expressed concern that if the legitimacy factors were codified, they
would lose the flexibility in the guidance that allows the factors to
apply to many varied industrial sectors and processes, automatically
becoming more stringent. Another concern expressed by the commenters
regarding codification of the legitimacy factors was that, in their
view, the terms used in the regulatory text are too ambiguous and
should be clarified before they can be part of a regulation. These
commenters argue that codification of the factors without addressing
these concerns would automatically be more stringent than having
guidance, thereby inappropriately inhibiting legitimate recycling.
    About one-third of the forty-two industry commenters on the issue
of whether or not to codify backed the codification of the legitimacy
factors. Many of these commenters represented segments of the waste
management industry, but a number of representatives of generating
industries also made this comment. The industry commenters that
supported codification stated that they did so because it would provide
clarity, consistency, and predictability by making it more apparent
which hazardous secondary materials and processes are covered by the
recycling exclusions. One commenter noted the value in the legitimacy
factors going through the notice and comment process since they are
being used by the states in implementation of the regulations and
another expressed an expectation that the codified requirements would
lead to more uniformity in interpretation between implementing
agencies. Several of these commenters also stated that they also valued
the flexibility of the structure of the Lowrance memo and stressed the
importance of the codified legitimacy factors retaining that
flexibility.
    In addition, several more industry commenters stated that they saw
the value in codifying the legitimacy factors and could support its
codification under certain conditions. The suggested conditions
included the codification of only the two proposed mandatory factors,
codification of the factors in conjunction with finalizing what we
called the ``broader exclusion'' option in the October 2003 proposal,
and codification of legitimacy factors to be used only with the
definition of solid waste exclusions that were included within the
supplemental proposal in March 2007.
EPA's Response: Codification of Legitimacy.
    In today's final rule, EPA is codifying the legitimacy factors as a
requirement for today's exclusions and for the non-waste
determinations, but not for all recycling. To avoid confusion among the
regulated community, as well as the state and other implementing
regulatory agencies about the status of recycling under the existing
exclusions, EPA is not codifying the legitimacy factors as specifically
applicable to existing exemptions in today's final rule. In developing
the codified legitimacy language, we did not intend to raise questions
about the status of legitimacy determinations that underlie existing
exclusions from the definition of solid waste, or about case-specific
determinations that have been made by EPA or the states. Current
exclusions and other prior solid waste determinations or variances,
including determinations made in letters of interpretation and
inspection reports, remain in effect.
    In codifying the legitimacy provisions for the exclusions and non-
waste determinations in today's final rule, EPA has taken into
consideration all the comments it received in response to the October
2003 proposal and March 2007 supplemental proposal on the structure of
the legitimacy factors, as well as on the individual factors themselves
and has made the appropriate changes to the factors to address those
comments.
    In response to a general comment, EPA is aware of the comments that
each of the terms in the legitimacy regulations should be more clearly
defined and the suggestions for specific tests for each of the factors.
We are, however, seeking a balance between having a set of specific
tests and having the flexibility needed for a requirement that applies
to the range of recycling practices in various industries in different
industrial or commercial settings.
    Therefore, in response to comments, the discussion of legitimacy in
today's preamble describes more clearly what EPA means by the terms we
use in the regulatory text for this element of the final rule. The
Agency also is providing more examples of both legitimate and sham
recycling than were included in the discussions of the individual
factors in the preambles for the October 2003 proposal and March 2007
supplemental proposal to illustrate the meaning of the legitimacy
factors. The Agency also is stressing the importance of case-by-case
determinations that are based on the facts of a specific situation.

B. Effect on Current Determinations of Legitimate Recycling Activities

    In the March 2007 supplemental proposal, EPA stated its opinion
that the concept of legitimate recycling originally proposed in October
2003 is not substantively different from our longstanding policy, as
articulated in the 1989 Lowrance Memo and subsequent preambles. We
stated that we were simply reorganizing, streamlining, and clarifying
the existing legitimacy principles. Thus, we stated in the March 2007
supplemental proposal that we believe that the regulatory definition of
legitimate recycling, when applied to specific recycling scenarios,
would result in determinations that were consistent with EPA's earlier
policy. We went on to say that we did not believe the regulated
community or implementing agencies would need to revisit previous
legitimacy determinations. However, we did request examples of
determinations which could be impacted by the codification.
Comments: Relationships With Existing Determinations
    Commenters expressed concern that, in spite of EPA's intentions,
the codification could prompt implementing agencies to revisit past
legitimacy determinations. In addition, comments on the October 2003
proposed rule suggested that implementing agencies could interpret the
proposed regulatory text as meaning that a recycling activity must
satisfy all four of the factors to be considered legitimate. Several
commenters on the March 2007 supplemental proposal stated that
legitimacy should not apply to the existing recycling exclusions in the
current regulations and others were

concerned that codification may lead implementing agencies to consider
only the four factors and not consider other key information about the
recycling activity.
EPA's Response: Relationships With Existing Determinations
    Regarding the existing exclusions in the regulations, EPA
acknowledges that, in establishing a specific exclusion, we have
already determined in the rulemaking record that the specific recycling
practice is excluded from the definition of solid waste provided all
the conditions of the rule are met. However, the Agency has always
enforced its rules on the basis that any recycling must be legitimate
(See U.S. v. Self, 2 F. 3d 1071, 1079 (10th Cir. 1993); U.S. v. Marine
Shale Processors, 81 F. 3d 1361, 1366 (5th Cir. 1996): Marine Shale
Processors v. EPA, 81 F. 3d 1371, 1381-83 (5th Cir. 1996)). This is
meant to prevent a company from claiming to be operating under an
existing exclusion and simply using that as a way to avoid full RCRA
Subtitle C regulation.
    However, to avoid confusion among the regulated community and state
and other implementing agencies about the status of recycling under
existing exclusions, we have decided that the focus of this rule should
be the specific changes it is making to the definition of solid waste
in the form of the exclusions and non-waste determinations finalized
today. Thus, the legitimacy factors codified in 40 CFR 260.43 only
apply to the exclusions and non-waste determination process being
finalized in this rule and we do not expect implementing agencies to
revisit past legitimacy determinations based on this final rule
preamble language.
    Also, it should be noted that the regulatory language does not
preclude other considerations when looking at the codified factors for
making legitimacy determinations. We recognize that additional
information about the recycling activity could be helpful and could be
used when assessing the four legitimacy factors and in making a
determination about whether a specific recycling activity is
legitimate. In fact, we encourage the regulated community and
implementing agencies to use any and all information about the
recycling process to come to an informed decision on the legitimacy of
a hazardous secondary material recycling operation. However, given the
public comment on the October 2003 proposed rule and the March 2007
supplemental proposal, no other factors have been identified and we
believe that the four legitimacy factors codified in this rule include
the relevant principles of legitimate recycling for the purposes of the
exclusions and non-waste determinations being finalized today.

C. Revised Structure for the Definition of Legitimate Recycling

    In the March 2007 supplemental proposal, we proposed a new
structure for the definition of legitimate recycling. The first part
consisted of those factors that must be met, which included a
requirement that the hazardous secondary materials being recycled
provide a useful contribution to the recycling process or to the
product of the recycling process and a requirement that the product of
the recycling process be valuable. EPA considers these two factors to
be fundamental to legitimate recycling and if a recycling process does
not meet them, it is sham recycling (i.e., treatment or disposal of a
hazardous waste under the guise of recycling).
    The second part of the proposed structure included two additional
factors that must be taken into account when a legitimacy determination
is being made. We explained that while these two additional factors are
important in determining whether a particular process is legitimate,
there may be circumstances under which a legitimate recycling process
might not conform to one or both of these factors. The two additional
factors are whether the hazardous secondary materials are managed as a
valuable commodity and whether the product of the recycling process
contains significant concentrations of hazardous constituents. We note,
however, that in cases where a recycling practice does not meet one or
both of these factors, the hazardous secondary material generator and/
or recycler should be able to demonstrate why the recycling is in fact
still legitimate.
Comments: Revised Structure
    The public comments on the individual factors in the March 2007
supplemental proposal showed that, as in the comments to the October
2003 proposal, there continues to be general agreement from industry
and state commenters on two factors (useful contribution and valuable
product/intermediate). Commenters were virtually unanimous in their
agreement that these two factors are crucial indicators of legitimacy
and should be included in the concept of legitimacy. In other words,
there was agreement that recycling cannot be legitimate if the material
being recycled does not provide a useful contribution to the process or
to the product and if the recycling process does not yield a product or
intermediate that is valuable to someone. Certain commenters requested
that EPA provide additional information on how it defines these terms
and, while there was some disagreement with the specifics laid out in
the preamble, there was little disagreement with the basic overarching
concepts.
    Although there was support for the structure for legitimacy that
was proposed in the March 2007 supplemental proposal, most states, the
environmental community, and the waste management industry argued that
all four of the factors should be mandatory requirements-that is, they
must all be met for the recycling activity to be considered legitimate
recycling. Industry had a more mixed response to this issue with some
supporting the proposed structure and others preferring that the
factors be finalized as balancing factors. Others expressed their
opinion that while they preferred non-mandatory criteria, the proposed
approach was reasonable. Several commenters expressed their preference
for keeping the legitimacy factors as guidance, but stated that if the
Agency decided to codify the legitimacy factors, they preferred the
structure as proposed in the March 2007 supplemental proposal.
EPA's Response: Revised Structure
    EPA agrees with the commenters on the importance of the two factors
(useful contribution and valuable product/intermediate) that were
proposed to be mandatory in evaluating legitimate recycling and, for
this final rule, we have decided that these two concepts are, in fact,
at the very core of what it means to recycle legitimately. Therefore,
the final regulatory language states in 40 CFR 260.43(b) that
``[l]egitimate recycling must involve a hazardous secondary material
that provides a useful contribution to the recycling process or to a
product of the recycling process, and the recycling process must
produce a valuable product or intermediate.'' This statement is
followed by clauses (1) and (2) that give more details on how the
Agency defines these concepts.
    EPA has determined that the other two factors are still important
in making legitimacy determinations, but do not necessarily have to be
met for the recycling activity to be considered legitimate. Instead,
the regulations state that a person making a legitimacy determination
must consider these two factors, which are found in Sec.  260.43(c) of
the final language. In stating that the factors must be considered, EPA
expects that those making legitimacy determinations will evaluate how
the

hazardous secondary materials in question are managed as compared to
analogous raw materials and how levels of hazardous constituents in
their products compare with the levels of hazardous constituents in
analogous products. If the generator or recycler determines that one or
both of these factors are not met, that person should be prepared to
explain why their recycling activity is nevertheless still legitimate.
As described in Sec.  260.43(c)(3) of the regulatory text, in
evaluating the extent to which these factors are met and in determining
whether a process that does not meet one or both of these factors is
still legitimate, persons can consider the protectiveness of the
storage methods, exposure from toxics in the product, the
bioavailability of the toxics in the product, and other relevant
considerations. We would note that the facility may be requested to
demonstrate the legitimacy of their recycling process and explain why
failure to meet one or both of these factors does not affect the
legitimacy of the recycling process.
Comments: Mandatory Factors
    As part of the October 2003 proposal, the Agency solicited comment
on whether the factors should continue to be used in the same way as
the previous guidance had been used, as factors to be balanced or
considered in making an overall determination, or whether the factors
should be structured differently in the final rule, such as in the form
of mandatory requirements that must all be met. Based on the comments
received on that proposed rulemaking, we proposed a new structure in
the March 2007 supplemental proposal with two mandatory factors and two
factors that must be taken into account, but not necessarily met in
every situation (72 FR 14198).
    Many state implementing agencies argued that all the factors should
be written as mandatory requirements that must be met. Most industry
commenters (but not all) did not. The main argument in favor of making
the factors mandatory requirements is that commenters argued that this
approach would result in legitimacy determinations that are more
objective and more enforceable. The main arguments against making all
the factors mandatory requirements is that the overall determination is
made on a case-by-case basis, which is often facility-specific, and not
all legitimate recycling can fit into such a rigid system.
EPA's Response: Mandatory Factors
    The Agency can see both state and industry viewpoints and, in the
end, as described above, has decided upon a course of action that
results in a compromise between the two approaches. In section IX of
this preamble, we explain in detail the final design of the legitimacy
factors, which includes two factors that must be met (useful
contribution and valuable product/intermediate) and two factors that
must be taken into account in making an overall legitimacy
determination. We believe this approach and the attendant regulatory
language is clearer than the existing guidance, yet retains enough
flexibility to account for the variety of legitimate hazardous
secondary materials recycling practices that exist today.

D. Comments on the Specific Factors

    In developing the legitimacy factors, the Agency sought a balance
between having a set of specific tests and having the flexibility that
is necessary to allow the four legitimacy factors to apply to hazardous
secondary material recycling practices in the many industrial or
commercial settings to which the factors would be applied. As a result,
each of the legitimacy factors included a term or terms that drew
public comments arguing that the factors were not clearly enough
defined. The underlined terms in the following excerpts from the
regulatory text demonstrate what these terms are:
     Factor 1: ``Legitimate recycling must involve a hazardous
secondary material that provides a useful contribution to the recycling
process or to a product of the recycling process.''
     Factor 2: ``The recycling process must produce a valuable
product or intermediate.''
     Factor 3: ``The generator and recycler should manage the
material as a valuable commodity * * * Where there is no analogous raw
material, the hazardous secondary material should be contained.''
     Factor 4: ``The product of the recycling process does not
contain significant concentrations of hazardous constituents [or]
contain concentrations * * * at levels that are significantly elevated
from those found in analogous products.''
    The October 2003 proposal gave some narrative descriptions of these
terms to explain what they mean in the context of legitimate recycling,
but that proposal did not provide any concrete tests for how those
specific terms are to be used when judging whether a process and/or
hazardous secondary material meets these factors.
Comments: Defining Legitimacy Terms
    For each of the four factors, the Agency received public comments
that focused specifically on the meaning of and the difficulties in
implementing these factors when the terms are not accompanied by a test
for the hazardous secondary material generators and recyclers to use
when making determinations of legitimacy. For the first factor, the
Agency received several comments on the definition of ``useful
contribution'' from the October 2003 proposal. For the second factor,
over twenty commenters submitted comments on the definition of
``valuable'' in response to the October 2003 proposal. In addition, the
Agency received several comments on the definition of ``valuable'' and
on the definition of ``contained'' related to the third factor and over
twenty comments on the definition of ``significant'' in the fourth
factor. We also received some additional comments on the March 2007
supplemental proposal relating to the same definitional terms in each
factor.
    The comments on these terms will be described in more depth in the
discussion below for each of the applicable factors, but, in general,
the comments showed a wide range of opinions: Some commenters found the
discussion in the preamble to define the terms was adequate and
appropriate, other commenters objected to the terms as not being
clearly defined, while still other commenters found the terms to be too
subjective to be a useful tool. We also received comments that
suggested alternative ways to define the terms to be clearer or to
better meet the Agency's objectives.
EPA's Response: Defining Legitimacy Terms
    The Agency has incorporated the ideas generated by the comment
process into the final rule, as appropriate. The final language and
decisions regarding the legitimacy factors are laid out below in this
section and in section IX of this preamble, where the final legitimacy
language is discussed more fully. However, after considering the
comments, we have decided that we would not develop specific
definitions or precise tests that hazardous secondary material
generators and recyclers must use when making legitimacy
determinations. Instead, the Agency has bolstered our preamble
discussion on the meaning of these terms and has included more examples
than we had in the preambles to the October 2003 proposal and the March
2007 supplemental proposal.

    EPA's decision not to include specific bright-line tests for the
final legitimacy factors reflects the fact that legitimacy
determinations do not lend themselves to the application of absolute
distinctions, especially given the breadth of recycling practices and
recycled hazardous secondary materials that exist in industry. The main
argument we received for developing specific tests was that, without
specific tests, those making legitimacy determinations may be uncertain
about whether their regulatory agency would agree with that
interpretation of the recycling scenario. This may lead to reduced
recycling rates if companies choose not to take advantage of the
exclusions for recycling rather than risk interpreting their activities
differently than the regulator does.
    Although we understand the concerns behind this argument, we are
addressing them by including more discussion and explanations of the
final factors in the preamble to the final rule. The complexities of
defining ``valuable commodity/product,'' ``useful contribution,''
``contained,'' and ``significant'' so that they can be determined
through a bright-line test and are still appropriate for all
industries, all recycling processes, and all recycled hazardous
secondary materials are too great for the Agency to be able to design a
simple and straightforward system of tests to be used in making such
determinations. The complex regulatory system of tests for different
types of industries or different processes that would be necessary
would not be efficient or accessible to most generators, especially
small businesses.
    In addition, we believe that legitimacy determinations are best
made on a case-by-case basis, which has always been the case, with the
facts of a specific situation in hand. In a case-by-case determination,
a series of specific tests may not be as useful and as accurate in
determining legitimacy as careful consideration of the hazardous
secondary material, the recycling process, and the specifics of the
situation would be. If a person has any questions as to the legitimacy
of a particular recycling activity, he can always approach the
appropriate regulatory agency for assistance in making a legitimacy
determination.
Comments: Factor 1--The Hazardous Secondary Material Provides a Useful
Contribution
    Factor 1 expresses the fundamental principle that hazardous
secondary materials must actually be useful (i.e., contribute
positively) to the recycling process and is intended to prevent the
practice of incorporating hazardous secondary materials within
manufacturing operations simply as a means of disposing of them. The
Agency firmly believes that this concept is crucial to the definition
of legitimacy and is finalizing it as part of the core definition. This
factor, along with the second factor described below, must be met for
any recycling activity to be considered legitimate recycling. The
regulatory text for this factor is found in 40 CFR 260.43(b)(1).
    In general, we received much support for and agreement with the
underlying principle of this factor--that the hazardous secondary
materials must provide some useful contribution to either the recycling
process or the recycled product. Commenters asked for clarification on
a number of issues related to this factor, specifically in regard to
the October 2003 proposal and how the economics of recycling is
connected to this factor and how the economics of recycling should be
evaluated. In the March 2007 supplemental proposal, we described how
the economics of recycling relates not only to the useful contribution
factor but, in fact, to all of the factors of legitimacy and explained
our thinking about how evaluating the economics of recycling
transactions should be undertaken.
EPA's Response: Factor 1--The Hazardous Secondary Material Provides a
Useful Contribution
    The Agency is today finalizing this factor as part of the core
definition of legitimate recycling and as a factor that must be met for
the recycling to be considered legitimate under Sec.  260.43. We also
revised the October 2003 proposal discussion regarding the
consideration of economics related to this criterion, and we expanded
its consideration beyond just the useful contribution criterion. Today,
we are offering further guidance, similar to the March 2007
supplemental proposal, which explains how economics may be considered
in making legitimacy determinations and how it may apply to the
mandatory factors and the factors that must be taken into account.
Comments and EPA's Response: Factor 1--Contribution to the Process
    EPA also received comments on our statements in the October 2003
proposal that indicated that not every component of a hazardous
secondary material does or must contribute to the recycling process or
product of the recycling process in order for there to be an overall
contribution. In particular, one state agency favored allowing the non-
hazardous component of hazardous secondary materials to provide the
useful contribution and one industry commenter agreed that not all of
the hazardous secondary material would have to contribute for this
factor to be met. Another state agency asked us to clarify that the
statement ``not every component of a hazardous secondary material would
necessarily have to contribute to the product or the process to meet
this criterion'' was applicable only in the context of this factor.
    It has been the Agency's longstanding policy that in a legitimacy
determination not every constituent or component in a hazardous
secondary material would have to contribute to a product of the
recycling process or intermediate or to the recycling process in order
for there to be an overall contribution and this applies to the
provision in Sec.  260.43 as well. For example, the use of hazardous
secondary materials in zinc fertilizer is considered legitimate
recycling when the zinc, a non-hazardous constituent, is the main
contribution to the fertilizer. Another example is the use of CRT glass
used in copper smelters as a fluxing agent. In this case, the glass
provides a useful contribution by facilitating the manufacturing
process. Thus, we agree with those commenters who raised questions
about this issue and are restating our position here.
Comments and EPA's Response: Factor 1--Efficiency of the Process
    Another issue that was discussed in the October 2003 proposal
arising in the context of useful contribution was the efficiency of a
recycling process in recovering or regenerating the useful component of
the hazardous secondary material. One example we used was the recovery
of copper from a hazardous secondary material. We stated that where the
process was reasonably efficient and recovered all but a small
percentage of the copper, it looked like legitimate recycling. However,
where a small percentage of copper in the hazardous secondary material
is recovered, sham recycling may be indicated. However, we did not
discuss recovery rates in the middle range (e.g., 50% of copper
recovered from a particular recycling process) and some commenters
asked for clarification, including how the factor applies to hazardous
secondary materials that are contributing to the recycling process
either as a carrier or a catalyst.
    The Agency is clarifying in today's preamble and regulatory text
that the useful contribution of a hazardous secondary material to the
recycling

process or product can be demonstrated in a number of ways. We provided
a number of different ways such a material could contribute to the
process in the preamble to the October 2003 proposed rule (68 FR 61584-
61585) and did not mean to imply that the hazardous secondary material
would have to meet all of the examples to provide a useful
contribution. For example, hazardous secondary materials could provide
a useful contribution to a process by serving as a carrier or catalyst
and the process efficiency would not factor into the demonstration of
this factor in this example.
    In general, the regulated community should look to typical industry
recovery rates to determine if the recycling recovery rates are
reasonably efficient in terms of making a useful contribution to the
recycling process or product. In addition, it should be noted that EPA
would generally look at the quantity or the rate of recovery of the
overall process, not the recovery rate of a single step in the process,
when analyzing this factor for legitimacy. For example, if one step in
the process recovers a small percentage of the constituent, but the
overall process recovers a much larger percentage, the Agency would
consider the overall efficiency of the recycling process in determining
whether hazardous secondary materials are providing a useful
contribution. This assumes that there is enough of the target
constituent present in the hazardous secondary materials to contribute
meaningfully to the recycling activity.
Comments and EPA's Response: Factor 1--Residuals
    In the discussion of useful contribution in the October 2003
proposal, in the context of process efficiency, we stated that a
``pattern of mismanagement of the residues'' may be an indicator of
sham recycling (68 FR 61584). We received several comments asking us to
explain the connection between useful contribution of the hazardous
secondary materials and management of residues. Several commenters
questioned this statement and disagreed that how a facility managed its
residues had any bearing on whether the hazardous secondary materials
going into a recycling process were being legitimately recycled.
    We agree with the commenters who suggested that the management of
residuals from the recycling process is not an indicator of whether the
hazardous secondary materials provide a useful contribution and thus is
not a factor in determining whether legitimate recycling is occurring.
For these reasons, we are making it clear that the management of
recycling residuals is not a consideration in making legitimacy
determinations. Instead, as part of today's final rule, we are
requiring that any residuals that are generated from the recycling
process be managed in a manner that is protective of human health and
the environment. Specifically, there is a requirement for hazardous
secondary material generators to make reasonable efforts to ensure that
the hazardous secondary materials are legitimately recycled and, among
other things, that the reclaimer manages the hazardous secondary
materials in a manner that is protective of human health and the
environment, including how any recycling residuals are managed.
Finally, we note that the generation of residuals that are solid wastes
are subject to the waste characterization and identification
requirements in 40 CFR Part 261 as a newly generated waste.
Comments: Factor 2--The Recycling Process Yields a Valuable Product/
Intermediate
    This factor is intended to capture the fundamental concept that
legitimate recycling must produce something of value. For the purposes
of evaluating this factor, a product of the recycling process or
intermediate would be considered valuable if it can be shown to have
either economic value or value that is more intrinsic (i.e., it is
useful to the end user, even though it may not be salable as a product
or commodity in the open marketplace). The regulatory text for this
factor can be found in 40 CFR 260.43(b)(2).
    In general, most commenters agreed with the concept that the
recycling process must produce something of value. Many commenters also
stressed the importance of keeping the concept of ``intrinsic'' value--
that is, a product does not have to be sold to have value. Instead, it
can be used as an effective substitute for a commercial product or as a
useful ingredient in an industrial process. However, other commenters
disagreed, contending that intrinsic value is too subjective to use to
determine compliance. One commenter also thought this factor was
redundant with the factor that hazardous secondary materials must
provide a useful contribution and should be deleted.
    Another common concern in the comments was how to evaluate whether
the product or intermediate is valuable. Some commenters stressed the
importance of evaluating this factor over time, given that markets and
prices fluctuate, and others argued that it must be done on a case-by-
case basis.
EPA's Response: Factor 2--The Recycling Process Yields a Valuable
Product
    In general, the Agency agrees with the commenters who stated that a
product's value can be either monetary or intrinsic. Clearly, not all
valuable products are sold. For example, many legitimate recycling
situations exist where the intermediate or product of the recycling
process has value and is used on-site, sent off-site to another
facility owned by the same company, or even traded between companies.
There are a number of already established networks where hazardous
secondary materials are exchanged among and across industries. This
rule does not interfere with those ongoing exchanges where such
materials are being legitimately recycled. One example of such a
program is the U.S. Business Council for Sustainable Development's by-
product synergy program which has conducted a number of regional pilots
in which diverse industries are brought together to facilitate
feedstock and by-product exchanges. No money is exchanged in these
types of programs.
    We are also clarifying in the regulatory text that the product of
the recycling process can be either a commercial product or
intermediate, as long as it has value to the end user. In addition, we
are further clarifying that the regulated community does not need to
evaluate each step in the recycling process to determine if the final
products or intermediates are valuable. Rather, an individual recycler
or generator would look at its final product or intermediate and must
be able to demonstrate why it has value.
    We understand the concerns of some commenters that intrinsic value
is harder to demonstrate than the value of a product of the recycling
process that is sold in the open marketplace. While this demonstration
is not as straightforward, there are a number of ways the end user can
demonstrate the intrinsic value of the recycled intermediate or
product. Some examples include showing that the product of the
recycling process replaces an alternative product or material that
would otherwise have to be purchased or by demonstrating that a product
of the recycling process or intermediate meets specific product
specifications or established industry standards. Another approach to
demonstrating the value of a product of the recycling process or
intermediate would be to compare its characteristics (e.g., its
physical/chemical properties or its usefulness for

certain applications) with comparable products or intermediates made
from raw materials.
    Finally, we disagree with the commenter who stated that this factor
is equivalent to the hazardous secondary material making a useful
contribution to a product or intermediate. It is certainly possible for
a recycling process to result in the production of a valuable product
or intermediate without the hazardous secondary materials added to the
process making any contribution whatsoever. For example, this would be
the case when hazardous secondary materials are added to the process
and all of the hazardous secondary materials, including the hazardous
constituents, end up in the residuals, which are discarded, and the
materials added to the process provide no benefit whatsoever. This is
the essence of sham recycling. A vast majority of the commenters saw
the need for both factors and after exploring the concept of legitimate
recycling further, we were unable to find any examples of legitimate
recycling that did not meet both of the core factors (i.e., the
hazardous secondary material provides a useful contribution and the
recycling process produces a product of value), nor did any commenters
provide us with such examples. Thus, we are retaining both concepts as
factors that must be met in order for a process to be considered
legitimate recycling.
Comments: Factor 3--How the Hazardous Secondary Material To Be Recycled
Is Managed
    This factor on the management of hazardous secondary materials was
designed to illustrate that hazardous secondary materials that are
bound for recycling should be managed to prevent releases into the
environment in the same way that valuable commodities would reasonably
be expected to be managed. Hazardous secondary materials that are
recycled are valuable production inputs. As such, we believe that such
materials should be managed in a way that retains their value and
prevents significant losses to the environment. Hazardous secondary
materials that are mismanaged to the extent that they are released into
the environment are not recycled.
    This factor is one of the two legitimacy factors that EPA believes
needs to be considered. However, in some cases, it may not be clear
that the factor is met or it may not be met, yet the recycling activity
can still be legitimate. The regulatory text for the factor can be
found in 40 CFR 260.43(c)(1) and it states that the handler should
manage the hazardous secondary material ``as a valuable commodity.'' If
an analogous raw material exists, the hazardous secondary material
should be managed, ``at a minimum, in a manner consistent with the
management of the raw material.'' If there is no analogous raw
material, the proposal states that the hazardous secondary material
should be ``contained.''
    The response from commenters on this factor was mixed in response
to both the October 2003 proposal and the March 2007 supplemental
proposal. Many states and environmental organizations commented that
the factor should be mandatory and some argued that it should include a
strict test. Many commenters from the generating industry and the waste
management industry stated that they support this factor and believe
that it is a fair and reasonable indicator of legitimacy. Some industry
commenters thought that this factor should be mandatory, whereas others
commented that the factor should neither be codified nor mandatory. At
least one commenter stated that the factor was not necessary because of
other existing disincentives for mismanagement. Representatives from
extractive industries were most strongly opposed to this factor,
stating that EPA cannot include legitimacy requirements on secondary
materials that are going to be recycled because they are not in EPA's
jurisdiction.
EPA's Response: Factor 3--How the Hazardous Secondary Material To Be
Recycled Is Managed
    Today, we are finalizing this factor as one of the two factors that
must be considered during a legitimacy determination, but not
necessarily met. We modified the language of this factor since the
October 2003 proposal and are finalizing it basically as proposed in
the March 2007 supplemental proposal.
    EPA has decided that it is most appropriate to finalize this factor
as one of the factors that must be considered rather than as a
mandatory factor. Although we believe that this factor is an important
part of a legitimacy determination because hazardous secondary
materials that are not being managed carefully may be materials that
the recycler does not value for its process, the factor is not part of
what the Agency considers the core of legitimacy. In addition, as
discussed in section IX of this preamble, EPA and commenters were able
to identify situations in which this factor is not met, but the
recycling appears to be legitimate because the hazardous secondary
materials are still being managed in a responsible manner. EPA does not
want to restrict legitimate recycling and, therefore, in these cases,
the facility could make a determination of legitimacy without meeting
this factor, but should be prepared to explain why its recycling is
legitimate.
    EPA also believes that this factor can be critical when considering
whether hazardous secondary materials are legitimately recycled and EPA
disagrees with commenters who argued that evaluating ``materials
management'' is outside the scope of RCRA because hazardous secondary
materials are not solid wastes due to being excluded. EPA believes that
the commenters' argument is circular. The hazardous secondary materials
are excluded only if the recycling is legitimate. How materials are
managed is part of determining legitimate recycling. EPA has the
authority to define legitimate recycling and, therefore, has the
authority to require this evaluation.
Comments: Definition of Terms in Factor 3
    Commenters stated that compliance with this factor is dependent on
the regulated community and regulators understanding what EPA means by
it. In the October 2003 proposal, we proposed that the factor read,
``[w]here there is no analogous raw material, the secondary material
should be managed to minimize the potential for releases to the
environment.'' Many commenters stated that the term ``minimize'' in
this context was particularly unclear. State commenters argued that the
term ``minimize'' did not provide enough guidance or could be
interpreted to allow unclear amounts of hazardous secondary materials
to be released, leaving room for potential mismanagement of that
material, whereas some industry commenters asked if this standard meant
they would have to meet or exceed controls required for regulated
hazardous wastes in their recycling operations. Several commenters also
asked about the term ``valuable commodity'' and how ``valuable'' is
defined.
EPA's Response: Definition of Terms in Factor 3
    EPA agrees that terms for this factor should be more clear to
facilitate compliance. Although we have not developed a specific test
or codified definitions to explain this factor, we have adjusted some
of the language in the factor to address this concern and are providing
further explanation of what we intend by this factor in today's
preamble so that it is better understood and can be consistently
applied.

    In the March 2007 supplemental proposal, we modified the language
for this factor to state instead that ``[w]here there is no analogous
raw material, the hazardous secondary material should be contained.''
This change addressed the ambiguity of the word ``minimize,'' as well
as state comments that the storage requirements in this factor needed
to be better defined. The Agency believes that facilities that value
hazardous secondary materials as part of their manufacturing process
will contain those materials to prevent their release. The term
``contained'' is also being used elsewhere in the exclusions being
finalized. EPA is defining this term in the same way throughout: A
recyclable material is ``contained'' if it is placed in a unit that
controls the movement of that material out of the unit into the
environment. We also believe that the standard for contained is more
clear for states and industry than the standard to minimize potential
releases to the environment was in the October 2003 proposal.
    We also want to clarify the use of several other terms on which we
received comments. These terms are discussed briefly here and in more
depth in section IX of this preamble, where the legitimacy factors are
fully described. ``Analogous raw material,'' also defined elsewhere in
the exclusions, is a raw material for which a hazardous secondary
material is a substitute and which serves the same function and has
similar physical and chemical properties as the hazardous secondary
material. Materials generally would not be considered analogous if
their chemical makeup were very different from one another--
particularly if the hazardous secondary materials contain hazardous
constituents that necessitate management processes that the raw
material does not--or if their physical properties are different.
    Regarding the term ``valuable commodity,'' EPA believes that
hazardous secondary materials should be managed in the same or similar
manner as raw materials that have been purchased or obtained at some
cost. The legitimacy criteria are designed to determine whether a
process is like manufacturing rather than like waste management. We
believe that the standard for management of the hazardous secondary
materials is reasonable for helping assess whether disposal in the
guise of normal manufacturing is occurring.
Comments: Factor 4--Comparisons of Toxics in the Product
    This factor was designed to prevent hazardous constituents from
being ``discarded'' by being incorporated into a product made from
hazardous secondary materials. The factor identifies this situation as
being hazardous constituents that are in a product made from hazardous
secondary materials when they are not in analogous products, or when
hazardous constituents are at significantly higher levels in products
made from hazardous secondary materials than in analogous products that
contain such hazardous constituents, or when the product exhibits one
or more of the hazardous characteristics and the analogous product does
not. An analogous product can either be the final product of
manufacturing or, in some cases, an intermediate in a process. These
hazardous constituents are often called ``toxics along for the ride''
(TARs) and, if present, could be an indicator of discard.
    This factor is the second of the two legitimacy factors that EPA
believes needs to be considered but, in some cases, does not need to be
met for the recycling activity to be considered legitimate. We modified
the language of this factor since the October 2003 proposal and are
finalizing the factor basically as proposed in the March 2007
supplemental proposal. The regulatory text for the factor can be found
in 40 CFR 260.43(c)(2) and it states that the person making the
determination should look at the product of the recycling process and
compare it to analogous products that are made without hazardous
secondary materials. The person making the determination should examine
the concentrations of hazardous constituents to learn whether the
product of the recycling process contains significant concentrations of
hazardous constituents when the analogous product contains none,
whether it contains significantly elevated levels of hazardous
constituents when compared to the analogous product that contain such
hazardous constituents, or whether it exhibits a hazardous
characteristic when the analogous product does not.
    The Agency received many comments on the fourth factor in response
to both the October 2003 proposal and the March 2007 supplemental
proposal. The comments the Agency received on Factor 4 were very mixed,
ranging from commenters who argued that this factor should be one of
the factors that must be met to those who stated that the factor is
irrelevant and should not be considered as part of a legitimacy
determination.
EPA's Response: Factor 4--Comparisons of Toxics in the Product
    Today, we are finalizing this factor as one of the two factors that
must be considered during a legitimacy determination, but not
necessarily met. EPA maintains that this factor is an important way of
determining whether a recycling process is, in fact, true recycling
rather than a ``sham.''
    If hazardous secondary materials with a toxic constituent or toxic
constituents in amounts or concentrations greater than analogous raw
materials are simply being run through a manufacturing process, it is
an indication that those hazardous secondary materials may be being
discarded in the guise of recycling. Toxics that are illegally disposed
of in this manner can become exposure risks and could harm human health
and the environment. EPA has jurisdiction over materials being
discarded and, therefore, is requiring that this factor be considered
in legitimacy determinations. The factor is not one of the mandatory
factors because the Agency has identified situations where higher
levels of toxic constituents may not be relevant or applicable and,
thus, would not be an indicator of ``sham'' recycling if this factor is
not met, as discussed in section IX of this preamble. In these cases,
the facility could make a determination of legitimacy without meeting
this factor, but should be prepared to explain why its recycling is
legitimate.
Comments: Factor 4--the Term ``Significant'' and Alternative Approaches
    Many of these comments sought further guidance on the meaning of
the term ``significant'' in the proposed regulatory text, stating that
the definition in the proposal was unclear or subjective, which may
lead to a wide range of possible interpretations of the term.
Commenters also expressed concern that a definition that is too vague
may discourage recycling. In a related topic, commenters also responded
to EPA's request for comments on two alternate approaches in the
October 2003 proposal: (1) An approach that would establish a ``bright
line'' for complying with the factor by specifically defining the terms
``significant amounts'' and ``significantly elevated'' in the
regulatory text and (2) an approach that would require the use of risk
assessment tools to determine if a product with elevated levels of a
hazardous constituent due to use of hazardous secondary materials in
its manufacture process posed a greater risk to human

health or the environment than the analogous product made from raw
materials.
    On the whole, commenters were not enthusiastic about the two
alternative approaches that EPA suggested. Most commenters stated that
a specific test of either nature would not be appropriate because of
the wide variety of recycling situations to which it would have to
apply.
EPA's Response: Factor 4--the Term ``Significant'' and Alternative
Approaches
    The Agency believes that designing a specific test, such as those
described in the preamble to the October 2003 proposal, that is
applicable to the many different recycling scenarios possible in the
exclusions and non-waste determinations would be difficult, if not
impossible. Thus, we agree with those commenters who argued against
adopting such a specific test. Therefore, the Agency has more clearly
described in this preamble to the final rule what it means by
``significant'' so that members of the regulated community can be
confident in their evaluations of whether their products made from
hazardous secondary materials contain ``toxics along for the ride.''
Therefore, members of the regulated community will neither be
discouraged from recycling nor be forced to seek an opinion from a
regulatory agency in every case. Details on implementation of this
factor are in section IX of today's preamble.
Comments: Factor 4--Comparing the Products Instead of Hazardous
Secondary Materials
    Most commenters responded positively to a change the Agency made in
its October 2003 proposal to compare the product of the recycling
process to the analogous product made from raw materials rather than
comparing the hazardous secondary materials to the analogous raw
materials. EPA discussed this shift in its October 2003 proposal at 68
FR 61586-61587.
    However, several commenters argued that the change is an attempt by
the Agency to regulate products or stated that certain unique elements
of their production processes made it so that this factor should not
apply to their industry or their particular process. In addition, some
commenters were concerned that under this factor, in some cases, the
generator would have to know what was being done with its hazardous
secondary material several steps downstream in the recycling process
when it was incorporated into a final product.
EPA's Response: Factor 4--Comparing the Products Instead of Hazardous
Secondary Materials
    The Agency believes that for an entity to ensure that hazardous
secondary materials are being legitimately recycled and not discarded,
it needs to know what happens to the hazardous secondary materials once
they leave the generator's control. However, in response to these
comments, we are clarifying in today's preamble that the final
legitimacy factor allows the entity conducting the legitimacy
determination to make the comparison on ``toxics'' either between the
final products or between the hazardous secondary material and the
analogous raw material it replaces. If the comparison of materials
going into the process shows no significant difference in levels of
toxics, the product of the recycling process will not significantly
differ from analogous products in those levels either. In cases where
the generator finds it too complex to compare the product from its
recycling process to the analogous product made from the virgin raw
material, it can, instead, compare the chemistry of the materials going
into the process to evaluate this factor.
Comments and EPA's Response: Relevance of Factor 4 to a Particular
Process
    Regarding the implementation of this factor, several commenters
raised the concern that many products that are made from hazardous
secondary materials do not have analogous products made from raw
materials because they are always or have always been made from a
combination of primary and in-process materials and that these are
cases where this factor is not relevant to that particular recycling
process. The commenters stated that this is especially true in the
mineral extraction industries, but also may be the case in other
industries as well.
    The Agency is aware that there are situations where there may not
be analogous products made from raw materials. In that case, the
facility can opt to compare the toxic constituents in the hazardous
secondary material it is using against those in an analogous raw
material instead. We also note that while this factor needs to be
considered, it is not mandatory because EPA recognizes that in some
situations, it will not be relevant to a particular industrial process.
In the case where the facility considers this factor and decides that
it is not applicable to its process, the Agency suggests that the
facility evaluate the presence of hazardous constituents in its product
and document both that it considered this factor and the reasons it
believes the factor is not relevant.

E. Consideration of Economics in Legitimacy

Comments: Economics Considerations
    EPA received several comments in response to the preamble
discussion about how to consider economics in the context of making
legitimacy determinations in the March 2007 supplemental proposal. EPA
did not propose that economic consideration be codified within the
regulatory definition of legitimate recycling and instead offered
guidance on how economic consideration is relevant to determining the
legitimacy of a recycling operation.
    EPA received only positive comments on the preamble discussion
about consideration of economics in legitimacy. Specifically, EPA
agrees with commenters who supported our position on the following: The
economics of recycling are relevant to making legitimacy
determinations, the economics of recycling are in fact different from
traditional manufacturing, a recycling activity can be legitimate if a
recycler charges a fee to accept hazardous secondary materials,
economic considerations need to take into account the fluctuations in
market prices of raw materials, and negative economic factors can
contribute to environmental problems, such as speculative accumulation,
abandonment, and sham recycling.
    However, EPA received many comments from both industry and
recycling associations that opposed the October 2003 proposal to codify
the economics consideration as a separate ``factor to be considered.''
These commenters generally argued that consideration of economics was
inherent within the four legitimacy factors (e.g., both of the
mandatory factors, as well as the two factors which must be considered)
and, therefore, a separate factor was not warranted. On the other hand,
a few commenters (primarily states) requested that EPA codify a
separate economics factor to be considered and they supported the
inclusion of an enforceable factor for legitimacy determinations.
EPA's Response: Economics Considerations
    EPA agrees with those commenters who argued that economic
considerations are inherent within the legitimacy factors. We believe
that one specific factor cannot encompass all

economic scenarios for the entire universe of hazardous secondary
materials recycling. Furthermore, we do not believe that a separate
enforceable factor in the regulations strengthens the definition of
legitimate recycling, but we do believe that articulating how economic
considerations can influence the legitimacy factors adds real value to
the legitimacy determinations made by state regulators and the
regulated community.
    Based on the comments we received, the Agency is not codifying
specific regulatory language on economic considerations. Instead,
today's preamble offers guidance and clarification on how economics may
be considered in making legitimacy determinations, similar to the
preamble discussion in the March 2007 supplemental proposal. For more
detailed information on economic considerations, please refer to ``How
consideration of economics applies to legitimacy'' in section IX of
today's rulemaking.
Comments and EPA's Response: Specific Test for Economics
    EPA received some comments on the need for a specific test for
consideration of economics. Commenters that supported a specific test
believed it could include an accounting of economic flows over a period
of time to determine longevity; an annual regulatory review of markets
and a facility's economics; a ``rebuttable presumption that the
recycling is legitimate where the recycler pays for the secondary
materials,'' similar to manufacturing operations; and a requirement
that payment for recycled products and intermediates be more than
nominal if considered to be a sign of positive economics. One comment
was also submitted which expressly opposed a specific test, citing that
markets fluctuate too much to analyze the flows of revenues.
    EPA believes that none of the examples suggested by the commenters
are applicable to a broad universe of recycling activities. We also
acknowledge that fluctuations in markets for hazardous secondary
materials and recycled products, and subsequent impacts in revenue
flows, create another challenging aspect of developing a test for the
consideration of economics. Therefore, we believe that it is not
possible to craft an economic test for legitimacy that can accommodate
all legitimate recycling activities. As stated in section IX of today's
rulemaking, we believe that this preamble discussion provides
sufficient guidance on how to consider economics in legitimacy
determinations.

F. Documentation of Legitimacy

Comments and EPA's Response: Documentation of Legitimacy
    Several of the public comments stated that it is important that the
hazardous secondary material generator or recycler of a recycled
material maintain documentation that substantiates how the recycling
activity complies with the legitimacy requirements. The comments stated
that these records would show how the recycling activity meets the
factors or, if a factor is not applicable, the records would document
why it is not necessary for it to meet that factor. In this way, the
hazardous secondary material generator or recycler could show that it
considered all the factors. Other commenters objected to any
recordkeeping requirements documenting that a recycling activity is
legitimate.
    After considering the comments, the Agency has determined that for
the purpose of the legitimacy factors in the final rule, 40 CFR
261.2(f) applies. Section 261.2(f) states that, in the context of an
enforcement action to implement Subtitle C of RCRA, a person claiming
that a material is not a solid waste or is conditionally exempt from
regulation is responsible for showing that they meet the terms of the
exclusion and must provide appropriate documentation to show why they
are eligible. For the legitimacy requirements finalized today, this
provision would require that persons claiming that their recycling
activity is legitimate would have the burden to provide documentation
showing how the hazardous secondary materials provide a useful
contribution to the recycling process and how the product of the
recycling activity--whether it is a consumer product or a process
intermediate--is valuable. In addition, the documentation would have to
show that the hazardous secondary material generator or recycler
considered the other two factors and determined for each of them that
either the activity meets the factor or that the factor does not apply
to this recycling activity and why it is not relevant or appropriate to
consider.
    In addition, as part of today's transfer-based exclusion, the
hazardous secondary material generator has to undertake reasonable
efforts to ensure its hazardous secondary materials will be
legitimately recycled pursuant to Sec.  260.43. As part of the
reasonable efforts requirements, generators must document their
reasonable efforts per Sec.  261.4(a)(24)(v)(C).

XIX. Major Comments on the Non-Waste Determination Process

    In the March 2007 supplemental proposal, EPA proposed a non-waste
determination process that would provide persons with an administrative
process for receiving a formal determination that their hazardous
secondary materials are not discarded and, therefore, not solid waste.
The process would be voluntary and available in addition to the two
self-implementing exclusions. EPA proposed three types of non-waste
determinations: (1) For hazardous secondary materials reclaimed in a
continuous industrial process; (2) for hazardous secondary materials
indistinguishable in all relevant aspects from a product or
intermediate; and (3) for hazardous secondary materials reclaimed under
the control of the generator, such as through contracts similar to
tolling arrangements. For each type of non-waste determination, EPA
proposed a set of criteria which the hazardous secondary materials
would have to meet in order to receive a formal non-waste determination
from the regulatory authority. For a detailed description of the non-
waste determination process that EPA is finalizing today, see section X
of today's preamble.
Comments: Finalizing the Non-Waste Determination Process
    Overall, many commenters supported the non-waste determination
process because it provides persons with regulatory certainty and
offers a flexible alternative to the self-implementing exclusions
included in today's rule. On the other hand, some commenters argued
that the non-waste determination process would be resource-intensive,
placing a significant burden on the states that would have to perform a
case-by-case review of each application. One commenter said that,
historically, many hazardous waste facilities have sought formal
approval of their recycling practices from regulators and that EPA may
be underestimating the number of applications that states would receive
from the regulated community. Additionally, one state commenter
mentioned that the non-waste determination process would increase
regulatory inconsistency between states and at least two state
commenters saw no reason to establish a formal non-waste determination
process since they viewed the current variance procedure under 40 CFR
260.33 and their own state

determination processes as an effective means to the same end. Finally,
a few commenters did not support the non-waste determination process
because of its lack of explicit conditions, such as those conditions
required for the two self-implementing exclusions in today's rule.
EPA's Response: Finalizing the Non-Waste Determination Process
    EPA agrees with the majority of commenters who support the non-
waste determination process as an alternative way for hazardous
secondary material generators to seek regulatory certainty in
circumstances involving reclamation of hazardous secondary materials
which do not clearly fit under today's self-implementing exclusions.
EPA, however, does not agree with commenters who believe the non-waste
determination would cause significant burden to states. Instead, we
anticipate that the vast majority of persons will choose to use the
self-implementing exclusions because this would be less resource
intensive for the facility. In fact, the Agency does not envision any
person submitting such an application if they are considered ``under
the control of the generator'' because there are relatively few
restrictions for this exclusion, and, indeed, it would probably require
less effort than seeking a non-waste determination. Thus, the Agency
only expects a limited number of persons to submit applications where
the regulatory status is unclear under today's exclusions and a formal
non-waste determination may be appropriate. EPA further believes that,
by modeling the non-waste determination process after the current
variance procedures, it has kept the additional burden to the states at
a minimum because states can leverage their existing processes.
    EPA believes that requiring explicit conditions, such as those
required for today's self-implementing exclusions, is not warranted for
hazardous secondary materials receiving non-waste determinations
because persons are, instead, required to make specific demonstrations
as to how the hazardous secondary materials meet the eligibility
criteria. Furthermore, regulatory authorities, if they so choose, may
stipulate conditions within the non-waste determination as appropriate
and relevant on a case-by-case basis. One purpose of the non-waste
determination is to provide a measure of flexibility not provided by
the self-implementing solid waste exclusions and specifying the
conditions to be imposed would defeat this purpose.
    With respect to the comment regarding inconsistency among state
non-waste determinations, EPA notes that, by allowing states to become
authorized to conduct their own RCRA hazardous waste programs, the RCRA
statute provides states flexibility to regulate hazardous waste more
stringently than required under the federal regulations. Additionally,
states sometimes take different interpretations of the same or similar
regulations. This situation ultimately leads to variations between
state regulations and interpretations, which EPA views as inherent to
the RCRA structure and, thus, not a quality unique to the non-waste
determination process.
    We also want to clarify that, although today's non-waste
determination process is similar to the current variance procedures,
non-waste determinations are technically not variances in which EPA
regulations otherwise classify materials as solid wastes and facilities
may apply for an exception. Instead, the new procedure would apply to
cases in which hazardous secondary materials are not discarded, but
which do not fit within the self-implementing exclusions, or for which
the restrictions and conditions of the exclusions are not applicable.

A. Eligibility for Non-Waste Determination Process

Comments: Scope of Non-Waste Determinations
    In the March 2007 supplemental proposal, EPA indicated that non-
waste determinations would be limited to reclamation activities and
would not apply to recycling of ``inherently waste-like'' materials, as
defined at 40 CFR 261.2(d), recycling of materials that are ``used in a
manner constituting disposal,'' or ``used to produce products that are
placed on the land,'' (40 CFR 261.2(c)(1)), or ``burning materials for
energy recovery'' or ``used to produce a fuel or otherwise contained in
fuels'' (40 CFR 261.2(c)(2)).
    EPA received a number of comments urging the Agency to broaden the
non-waste determinations to include all recycling scenarios in which
hazardous secondary materials are not discarded. Some commenters
supported expanding the scope to allow recycling for ``burning for
energy recovery'' and ``use constituting disposal.'' These commenters
argued that EPA could achieve further increases in recycling if the
Agency broadened the scope of the hazardous secondary materials
eligible to apply for a non-waste determination. On the other hand,
some commenters agreed with EPA's proposed scope and supported limiting
eligibility to only hazardous secondary materials being reclaimed.
Alternatively, a few commenters supported limiting eligibility only to
those circumstances where the recycling of hazardous secondary
materials would not meet either a condition of the self-implementing
exclusions or one of the legitimacy criteria, but still would not be
considered discard. These commenters also argued that narrowing the
eligibility would effectively limit the number of applications
submitted and thus reduce the overall burden on the states.
EPA's Response: Scope of Non-Waste Determinations
    EPA agrees with those commenters who supported limiting non-waste
determinations to reclamation activities. With respect to ``burning for
energy recovery'' and ``use constituting disposal,'' EPA confirms that
these types of recycling are ineligible for today's non-waste
determination process. EPA believes that these types of recycling
activities would best be left to other rulemaking proceedings.
Furthermore, we disagree with those commenters who suggest further
limiting the eligibility to only those cases where reclamation of the
hazardous secondary materials would specifically violate a condition of
today's self-implementing exclusions. We believe that by modeling the
non-waste determination procedure after the existing variance
procedure, we have ensured that any additional burden to the states
will be kept at a minimum and thus further limits on eligibility are
not necessary.
Comments: Whether the Hazardous Constituents in the Hazardous Secondary
Materials Are Reclaimed Rather Than Released to the Air, Water, or Land
    Overall, we received only a few comments that discussed the
specific criteria that EPA proposed for the non-waste determinations.
For the criterion regarding whether the hazardous constituents in the
hazardous secondary materials are reclaimed rather than released to the
air, water, or land at significantly higher concentrations, some
commenters argued that this criterion was inappropriate for determining
discard because these types of releases are inevitable when reclaiming
hazardous secondary materials. At least two commenters suggested that
EPA should establish a ``bright line'' to clearly define
``significantly higher concentrations'' in order to provide persons
with greater

regulatory certainty. Other commenters expressed concern that this
criterion (as well as the other criteria within 40 CFR 260.34) would be
construed to apply to other types of recycling, including those
eligible for today's self-implementing exclusions.
EPA's Response: Whether the Hazardous Constituents in the Hazardous
Secondary Materials Are Reclaimed Rather Than Released to the Air,
Water, or Land
    EPA disagrees with commenters who believe this criterion is not
relevant for determining if hazardous secondary materials are being
discarded. By indicating that such releases must not be at
``significantly higher concentrations'' than would otherwise be
released during the production process, we believe we have set a
reasonable and meaningful bar that applicants must meet in order to
demonstrate that their hazardous secondary materials are reclaimed and
not discarded. Hazardous secondary materials that fail to meet this
criterion may exhibit an indication that they are discarded and that
such handling may present a greater risk of adverse impacts to human
health and the environment. Regarding those commenters who support a
``bright line'' in order to define ``significantly higher
concentrations,'' EPA believes that, given the wide variety of
production processes and recycling practices, establishing a ``one size
fits all'' objective standard is not practical and would invite
inefficiency.
    EPA also confirms that this criterion, and the other criteria in 40
CFR 260.34, are specific to the relevant non-waste determinations, and
thus are not required for the self-implementing exclusions or those
exclusions found in 40 CFR 261.4, unless they are specifically included
under state regulations as a criteria to consider.
Comments and EPA's Response: Whether the Capacity of the Production
Process Would Allow for Use of the Hazardous Secondary Material in a
Reasonable Time Frame
    For the criterion regarding whether the capacity of the production
process would allow for use of the hazardous secondary material in a
reasonable time frame (proposed explicitly for the non-waste
determination for hazardous secondary materials reclaimed in a
continuous industrial process), some commenters regarded this criterion
as consistent with judicial direction and, thus, supported adding this
criterion to the other non-waste determinations. Since EPA would
consider hazardous secondary materials that were eternally ``stored''
for future recycling to be akin to discard, EPA agrees with these
commenters that all non-waste determinations should take into account
whether the hazardous secondary materials will be reclaimed within a
``reasonable time frame.'' Therefore, in this final rule, EPA has added
this criterion (with appropriate modifications to the language) to the
non-waste determination for hazardous secondary materials
indistinguishable in all relevant aspects from a product or
intermediate. As with the non-waste determination for hazardous
secondary materials reclaimed in a continuous industrial process, a
person does not need to demonstrate that the hazardous secondary
material meets the speculative accumulation limits per 40 CFR
261.1(c)(8), but he must provide sufficient information about the
hazardous secondary material and the process to demonstrate that the
material will in fact be reclaimed in a reasonable time frame and will
not be abandoned. However, a person may still choose to use the
speculative accumulation time frame as a default if he so chooses.
Comments: Non-Waste Determination for Hazardous Secondary Materials
Reclaimed Under the Control of the Generator
    A few commenters disagreed with the non-waste determination for
hazardous secondary materials reclaimed under the control of the
generator via a tolling arrangement or similar contractual arrangement.
These commenters believed that the generator would be unable to
maintain control over its hazardous secondary materials and residuals
once at the reclamation facility and, thus, could not reliably meet the
criteria for this non-waste determination. One state foresaw major
enforcement problems with situations involving a commercial facility
that handles hazardous secondary materials from multiple customers in a
single process and then mismanages the residuals from that unit. As the
residuals would be linked back to multiple generators, the liability
for the mismanaged residuals would be difficult to detangle. On the
other hand, some commenters felt that all tolling arrangements,
including those eligible for the self-implementing exclusion, would
best be evaluated through the non-waste determination process. These
commenters argued that the regulatory authority should be required to
review all tolling arrangements and their respective liability
provisions in order to ensure that the hazardous secondary materials
will not be discarded.
EPA's Response: Non-Waste Determination for Hazardous Secondary