EPA is clarifying here that this method of showing that the product does
not have “toxics along for the ride” is acceptable. There may be
cases in which it is easier to compare feedstocks than it is to compare
products because the recycler knows that the hazardous secondary
material is very similar in profile to the raw material. A comparison of
feedstocks may also be easier in cases where the recycler creates an
intermediate which is later processed again and may end up in two or
more products, when there is no analogous product, or when production of
the recycled product has not yet begun.

	This factor identifies three ways to evaluate whether or not
unacceptable amounts of hazardous constituents are passed through to
recycled products. (As explained above, these methods also could be used
to compare the hazardous secondary material feedstock to a raw material
feedstock, if the recycler prefers.) The first method specifies that
when analogous products made from raw materials do not contain hazardous
constituents, the recycled product should not contain significant
amounts of hazardous constituents. For example, if paint made from
reclaimed solvent contains significant amounts of cadmium, but the same
type of paint made from virgin raw materials does not contain cadmium,
it could indicate that the cadmium serves no useful purpose and is being
passed though the recycling process and discarded in the product.

	The second method addresses analogous products that do contain
hazardous constituents and asks whether the concentrations of those
hazardous constituents are significantly higher in the recycled product
than in the product made from raw materials. Concentrations of hazardous
constituents in the recycled product that are significantly higher than
in the product made from virgin raw materials could again be an
indicator of sham recycling. For example, if a lead-bearing hazardous
sludge was used as an ingredient in making ceramic tiles and the amount
of lead in the tiles was significantly higher than the amount of lead
found in similar tiles made from virgin raw materials, this would likely
be an indication that the factor is not met.

	The third method under this factor is whether the recycled product
exhibits a hazardous characteristic that analogous products do not
exhibit. Requiring an evaluation of hazardous characteristics ensures
that recycled products do not exhibit the characteristics of toxicity,
ignitability, corrosivity, or reactivity when the analogous products do
not. The Agency believes that most issues associated with “toxics
along for the ride” will involve the presence of toxic constituents,
which are addressed under the first two parts of the factor. That is, we
believe that it is likely that there are few instances where hazardous
secondary materials are used in the process and hazardous constituents
are not present at significantly higher levels, but the product made
from the hazardous secondary material nevertheless exhibits the
hazardous characteristic of toxicity when the analogous product does
not. It is possible, though, that the use of hazardous secondary
materials as an ingredient could cause a product to exhibit a hazardous
characteristic, such as corrosivity, that is not exhibited by analogous
products.

The Agency has determined that it is appropriate for this factor to be
considered in all legitimacy determinations, but thinks that there may
be situations in which the factor is not met but the recycling would
still be considered legitimate. An example of this kind of situation
would be in the use and reuse of foundry sands for mold making in a
facility’s sand loop. Because of repeated exposure to metals in a
foundry’s process, the sands used to make the molds may have
significantly higher concentrations of hazardous constituents than
virgin sand. However, because the sand is part of an industrial process
where there is little chance of the hazardous constituents being
released into the environment or causing damage to human health and the
environment when it is kept inside, this would be an example of a
situation where this factor is not met, but it does not affect the
legitimacy of the recycling process. If the used foundry sand were being
recycled into a different product, such as a material used on the ground
or in children’s play sand, the legitimacy determination would be very
different and significant levels of metals would likely render the
recycling illegitimate.

Another example of recycling that may be legitimate although this factor
has not been met could be in the mining and mineral processing industry.
In many mineral processing operations, the very nature of an operation
results in hazardous constituents concentrating in the product as it
proceeds through the various steps of the process. In many cases, there
is not an analogous product to compare the products of these processes
with so this factor may not be relevant because of the nature of the
operations. As with the above example, if a facility considers a factor
and decides that it is not applicable to its process, the Agency
suggests that the facility evaluate the presence of hazardous
constituents in its product and be prepared to demonstrate both that it
considered this factor and the reasons it believes the factor is not
relevant.

As discussed in more detail in the comments section of this preamble
(section XVIII) and in the response to comments document in the docket,
commenters on this factor requested clarification concerning what EPA
meant by the terms used in this factor. In response to some of these
comments, EPA has made two clarifications in the regulatory text by (1)
specifying that the hazardous constituents referred to in the regulation
are those that are found in Appendix VIII to 40 CFR part 261 and (2)
clarifying that the hazardous characteristics to which EPA is referring
to are those in 40 CFR part 261 subpart C.

	The Agency also received much comment on the term “significant” and
what the Agency intended by this term. EPA has decided to keep the term
in the final rule. The alternative to using “significant” or a
similarly flexible term to determine when there may be hazardous
constituents in the product made from recycled hazardous secondary
materials that are not in the analogous products made from raw materials
would be to set an absolute standard. In its October 2003 proposed rule,
EPA discussed possible “bright line” or risk-based approaches as a
way to set absolute lines to define “significant” based on either a
numerical limit or a risk level (68 FR 61587–61588). EPA recognizes
that the “bright line” or the risk-based approach may provide
greater clarity and predictability to the regulated community, but that
in both cases the Agency would have to establish a line for what is
acceptable and the line may either be somewhat arbitrary or it may
exclude recycling practices that, if carefully considered, should be
considered legitimate. Based on the comments received on those
approaches, we are convinced that they would not be workable.

On the other hand, a case-by-case analysis of a recycling process can
take into consideration the relevant principles and facts for that
activity, leading to a determination of significance based on the facts
of the activity. Because this factor must apply to many different
recycling activities, we believe the case-by-case approach is most
appropriate.

	EPA, therefore, is finalizing its proposed option of using the term
“significant” in 40 CFR 261.2(g)(3)(ii)(A) and (B). Evaluating the
significance of levels of hazardous constituents in recycled products
may involve taking into consideration several variables, such as the
type of product, how it is used and by whom, whether or not the elevated
levels of hazardous constituents compromise the efficacy of the product,
the availability of the hazardous constituents to the environment, and
others. For example, if a recycled product that will be used by children
contains hazardous constituents that are not in analogous products, that
product will likely need to be closely scrutinized. On the other hand,
low levels of a hazardous constituent in a recycled product that is used
as an ingredient in an industrial process or for another industrial
application may not be significant and must be evaluated in the context
of the product’s use.

	EPA provided several additional examples in implementing this factor in
the October 2003 proposed rule which will be repeated here. If zinc
galvanizing metal made from recycled hazardous secondary materials
contains 500 parts per million (ppm) of lead, while the same zinc
product made from raw materials typically contains 475 ppm, this
difference in concentration would likely not be considered
“significant” in the evaluation of this factor. If, on the other
hand, the lead levels in the recycled zinc product made from hazardous
secondary materials were 1,000 ppm, it may indicate that the product was
being used to illegally dispose of lead and that the activity is sham
recycling, unless other factors would demonstrate otherwise.

	In another example, if a “virgin” solvent contains no detectable
amounts of barium, while spent solvent that has been reclaimed contains
a minimal amount of barium (e.g., 1 ppm), this difference might not be
considered significant. If, however, the barium in the reclaimed solvent
were at much higher levels (such as 50 ppm), it may indicate discard of
the barium and sham recycling.

	Unfortunately, because of the wide variety of possible recycling
scenarios, we cannot provide examples for how this factor might work for
all possible recycling situations. The Agency stresses that the
determination of legitimacy for this factor should consider both the use
and the users of the product in addition to the concentration of the
hazardous constituents or the presence of a hazardous characteristic, as
well as other relevant information. In addition, in some cases, the
implementing agency may accept a risk argument from a recycler to show
that the recycling activity meets this factor. If the recycler can show
that despite elevated concentrations of hazardous constituents, such
constituents pose little or no risk to human health or the environment,
the implementing agency may consider that as evidence that the elevated
concentrations are not significant.

How consideration of economics applies to legitimacy. Consideration of
economics has long been a part of the Agency's concept of legitimacy, as
is evident in the Lowrance Memo and earlier preamble text (50 FR 638,
January 4, 1985 and 53 FR 522, January 8, 1988; see also American
Petroleum Institute v. EPA (“API II”), 216 F.3d 50, 57-58 (DC Cir.
2000)). Today’s final rule does not codify specific regulatory
language on economics, but EPA offers further guidance and clarification
on how economics may be considered in making legitimacy determinations,
which is similar to the preamble discussion in the March 2007
supplemental proposal. The Agency believes that clarifying how economics
has traditionally been implemented via the Lowrance Memo guidance will
not impact existing legitimacy determinations.

Specifically, EPA believes that consideration of the economics of a
recycling activity can be used to inform and help determine whether the
recycling operation is legitimate. Positive economic factors would be a
strong indication of legitimate recycling, whereas negative economic
factors would be an indication that further evaluation of the recycling
operation may be warranted in assessing the legitimacy factors.

Considering the economics of a recycling activity can also inform
whether the hazardous secondary material inputs provide a useful
contribution and whether the product of recycling is of value. Economic
information that may be useful could include (1) the amount paid or
revenue generated by the recycler for recycling hazardous secondary
materials; (2) the revenue generated from the sale of recycled products;
(3) the future cost of processing existing inventories of hazardous
secondary materials; and (4) other costs and revenues associated with
the recycling operation. The economics of the recycling transaction may
be more of an issue when hazardous secondary materials are sent to a
third-party recycler, but even when the hazardous secondary materials
are recycled under the control of the generator, the generator must
still show that the hazardous secondary materials are, at a minimum,
providing a useful contribution and producing a valuable product.

Useful economic information:

(1) The amount paid or revenue generated by the recycler for recycling
hazardous secondary materials is one example of how economic information
can help support a legitimacy determination. We have three primary
illustrations to exemplify this. First, the basic economic flows can
suggest whether the recycling operation will process inputs, including
hazardous secondary materials, and produce products over a reasonable
period of time, recognizing that there will be lean and slow times. A
general accounting of the major costs, revenues, and economic flows for
a recycling operation over a reasonable period of time can provide
information for considering whether recycling is likely to continue at a
reasonable rate, compared to the rate at which inputs are received, or
whether it is likely that significant amounts of hazardous secondary
materials would be accumulated and then abandoned when the facility
closes. Any bona fide sources of revenues would be included in this
consideration, such as payments by generators to recyclers for accepting
hazardous secondary materials and subsidies supporting recycling.
However, in order to have some level of confidence that beneficial
products are or will be produced over a reasonable time frame, we
believe that at least some portion of the revenues should be from
product sales (or savings due to avoided purchases of products if the
hazardous secondary materials are used directly by the recycler). This
is consistent with the factor requiring that the hazardous secondary
material must be recycled to make a valuable product or intermediate.

Two scenarios illustrate this first example: a recycling operation that
generates revenues from the sale of recycled products that greatly
exceed the costs of the operation is an indication of a process that
turns the hazardous secondary materials into useful products, and is
unlikely to over accumulate them. A very different example is an
operation that has, relative to its revenues, large inventories of
unsold product and large future liabilities in terms of stocks of
unprocessed hazardous secondary materials. This operation could
potentially fail the “useful contribution” and “produces a
valuable product or intermediate” legitimacy factors, and would draw
closer attention to determine whether it is engaged in treatment and/or
abandonment in the guise of recycling.

 	Second, when the economics of a recycling operation that uses
hazardous secondary materials to produce and sell final products are
similar to a manufacturing operation using raw materials to produce and
sell final products, we believe that such an operation is likely to be
legitimate. For instance, if the recycler pays for hazardous secondary
materials as a manufacturer would pay for raw materials, the recycler
sells products from the recycling process as a manufacturer would sell
products from manufacturing, and the revenues generated equal or exceed
costs, then the hazardous secondary materials appear to be valuable
(i.e., the recycler is willing to pay for them) and appear to make a
useful contribution to a valuable recycled product.

However, we also recognize that the economics of many legitimate
recycling operations that utilize hazardous secondary materials differ
from the economics of more traditional manufacturing operations. For
example, many recyclers are paid by generators to accept hazardous
secondary materials. Generators may be willing to pay recyclers because
generators can save money if the recycling is less expensive than
disposing of the hazardous secondary materials in landfills or
incinerators. Also, some recyclers receive subsidies that may be
designed to develop recycling infrastructure and markets or to achieve
other benefits of recycling. For instance, the recycling of electronic
materials can be legitimate even when the recycler is subsidized for
processing the material.

 	Third, any analysis of the economics of a recycling operation should
recognize that a recycler may be able to charge generators and still be
a legitimate recycling operation. Because these hazardous secondary
materials are hazardous wastes if disposed of, typically the generators'
other alternative management option already carries a cost that is based
on the existing market for hazardous waste transportation, treatment,
and disposal. Hence, unless there is strong competition in recycling
markets or the hazardous secondary materials are extremely valuable, a
recycler may be able to charge generators simply because alternative
disposal options cost more.

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

(2) A comparison of revenue from sales of recycled products to payments
by generators is another example of how economic information can help
support an evaluation of “valuable product.” It is possible that
product sales revenues could be dwarfed by the acceptance of fees
because markets for particular products are highly competitive or
because high alternative disposal costs allow for high acceptance fees.
However, relatively low sales revenues could also require a review to
see whether product sales prices are lower than other comparable
products, products are being stockpiled rather than sold, or very little
product is being produced relative to the amount of inputs to the
recycling operation. These indicators may suggest that the recycled
product is not valuable and, thus, sham recycling may be occurring.

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

 	(4) An analysis of costs and revenues specific to on-site recycling is
an additional, albeit specific, example of economic information to
consider. When recycling is conducted under the control of the
generator, the recycler may not account formally for some of the costs
and savings of the operation. Still, when deciding whether to undertake
or continue the recycling operation or to utilize alternative outside
recycling or disposal options, the on-site recycler (under the control
of the generator) will evaluate the basic economic factors as a part of
doing business. One such factor could be an accounting of the costs of
virgin materials avoided by using hazardous secondary materials.
Similarly, sales of recycled products under the control of the generator
that are sold to an external market may support the valuable product
criterion.

4. Enforcement

	The Agency will continue to treat the implementation of the legitimacy
factors as a self-implementing mechanism, which is the same way the
former guidance had been used. That is, we expect the regulated
community to continue to evaluate their recycling operations using the
codified definition, and to reach their own conclusions without prior
approval by an overseeing agency. Such conclusions would remain subject
to review by EPA or the authorized state should the need arise. In
addition, we note that we do not expect the regulated community or
implementing regulatory agencies to revisit previous legitimacy
determinations and expect that any existing written determinations from
these agencies will not change under the codified definition of
legitimacy.

	If EPA or an authorized state agency determines that a process is not
legitimate recycling, the activity would be considered waste treatment
or disposal and would thus be subject to the RCRA Subtitle C hazardous
waste requirements, provided the hazardous secondary material was a RCRA
hazardous waste. As stated previously, the legitimacy factors apply to
all hazardous secondary materials recycling. If the person conducting
the recycling claims it is legitimate, but the appropriate regulatory
agency determines that the process is sham recycling, the recycler
and/or the generator(s) of the recycled hazardous secondary material may
be subject to an enforcement action. The provision in 40 CFR 261.2(f)
states explicitly that the burden of proof is on the persons claiming
that their hazardous secondary materials are not a solid waste or are
conditionally exempt from regulation.

The Agency affirms in this preamble that §261.2(f) applies to claims
that hazardous secondary materials are not solid waste because they are
being legitimately recycled. Respondents in enforcement cases should be
prepared to demonstrate that they meet the terms of the exclusion or
exemption, which includes demonstrating that the recycling is legitimate
in cases where the exclusion or exemption is dependent upon the material
being recycled. Appropriate documentation must be provided to the
enforcing agency to demonstrate that the material is not a solid waste
or is exempt from regulation (for example, in the case of a hazardous
secondary material being used as an ingredient in a production process
at another company, contracts could be produced). In addition, the
recycler of the hazardous secondary material should be prepared to show
they have the necessary equipment to perform the recycling operation.
Furthermore, any release of the hazardous secondary materials to the
environment that is not immediately cleaned up would be considered
discarded and, thus, the hazardous secondary material that was released
would be a solid waste and potentially subject to the RCRA hazardous
waste regulations.

X. Non-Waste Determination Process

A. What is the Purpose of this Provision?

The purpose of the non-waste determination process is to provide persons
with an administrative procedure for receiving a formal determination
that their hazardous secondary materials are not discarded and,
therefore, are not solid wastes when recycled. This process is available
in addition to the solid waste exclusions in today’s rule. Once a
non-waste determination has been granted, the hazardous secondary
material is not subject to the limitations and conditions discussed
elsewhere in today’s rule (e.g., prohibition on speculative
accumulation, storage standard, or, for the transfer-based exclusion,
recordkeeping, reasonable efforts, financial assurance, and export
notice and consent); however, the regulatory authority may specify that
a hazardous secondary material meet certain conditions and limitations
as part of the non-waste determination.

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

EPA is finalizing two types of non-waste determinations: (1) a
determination for hazardous secondary materials reclaimed in a
continuous industrial process; and (2) a determination for hazardous
secondary materials indistinguishable in all relevant aspects from a
product or intermediate. The process for applying for a non-waste
determination is found at 40 CFR 260.34.

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

B. Scope and Applicability

As with any solid and hazardous waste that is recycled, hazardous
secondary materials presented for a non-waste determination must be
legitimately recycled and, therefore, must meet the legitimacy criteria
under 40 CFR 261.2(g) of today’s rule. For further discussion of
legitimacy and the factors to be considered, see section IX of today’s
preamble.

In addition, today’s rule limits non-waste determinations to
reclamation activities and does not apply to recycling of “inherently
waste-like” materials (40 CFR 261.2(d)); recycling of materials that
are “used in a manner constituting disposal,” or “used to produce
products that are applied to or placed on the land”(40 CFR
261.2(c)(1)); or for “burning of materials for energy recovery” or
materials “used to produce a fuel or otherwise contained in fuels”
(40 CFR 261.2(c)(2)). Today’s rule does not affect how these recycling
practices are regulated.

C. Types of Non-Waste Determinations

1. Non-Waste Determination for Hazardous Secondary Materials Reclaimed
in a Continuous Industrial Process

As discussed earlier in today’s preamble, previous court decisions
have indicated that hazardous secondary materials that are reclaimed in
a continuous industrial process are not discarded and, therefore, not a
solid waste. EPA believes, in most instances, hazardous secondary
materials reclaimed in a continuous process would be excluded under
today’s self-implementing exclusions. However, production processes
can vary widely from industry to industry and it is possible that the
regulatory status of certain materials may be unclear under a
self-implementing exclusion (including those exclusions finalized
today). Thus, to determine whether individual hazardous secondary
materials are reclaimed in a continuous industrial process, and,
therefore, not a solid waste, EPA has developed the non-waste
determination process to evaluate case-specific fact patterns.

EPA is finalizing four criteria for making the non-waste determination
for hazardous secondary materials reclaimed in a continuous industrial
process. The first is the extent that the management of the hazardous
secondary material is part of the continuous production process and is
not waste treatment. At one end of the spectrum, if the hazardous
secondary material is handled in a manner identical to virgin feedstock,
then it would appear to be fully integrated into the production process.
At the other end of the spectrum, hazardous secondary materials
indisputably discarded prior to being reclaimed are not a part of the
continuous primary production process, (“AMC II”), 907 F. 2d 1179
(D.C. Cir. 1990) (listed wastes managed in units that are part of
wastewater treatment units are discarded materials (and solid wastes),
especially where it is not clear that the industry actually reuses the
materials). For cases that lie within the spectrum, persons applying for
a non-waste determination need to provide sufficient information about
the production process to demonstrate that the management of the
hazardous secondary material is an integral part of the production
process and is not waste treatment. It is important to note that this
non-waste determination is not necessarily limited to cases under the
control of the generator. For example, hazardous secondary materials
that are hard piped from one facility to another facility that is under
separate control would appear to be fully integrated into the production
process and may therefore be eligible for this non-waste determination,
provided the other criteria are met.

The second criterion examined under this non-waste determination is the
capacity of the production process to use the hazardous secondary
material in a reasonable time frame and ensure that it will not be
abandoned. This criterion can be satisfied by a consideration of past
practices, market factors, the nature of the hazardous secondary
material, or any contractual arrangements. Abandonment of stockpiled
hazardous secondary materials is one way that discard can occur at
recycling operations and is one of the major causes of environmental
problems. As indicated in the recycling studies, 69 of the 208 incidents
of environmental damage involve abandonment of the hazardous secondary
materials as the primary cause of damage. For today’s
self-implementing exclusions for hazardous secondary materials, EPA is
using speculative accumulation (as defined in 40 CFR 261.1(c)(8)) as the
method for determining when a hazardous secondary material is discarded
by abandonment. For the non-waste determination, a person does not need
to demonstrate that the hazardous secondary material meets the
speculative accumulation limits per 40 CFR 261.1(c)(8), but he must
provide sufficient information about the hazardous secondary material
and the process to demonstrate that the hazardous secondary material
will in fact be reclaimed in a reasonable time frame and will not be
abandoned. EPA is not explicitly defining “reasonable time frame”
because such time frames could vary according to the hazardous secondary
material and industry involved and, therefore, determining this time
frame should be made on a case-specific basis. However, a person may
still choose to use the speculative accumulation time frame as a
default.

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

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

2. Non-Waste Determination for Hazardous Secondary Materials
Indistinguishable in All Relevant Aspects from a Product or
Intermediate.

Although the courts have indicated that hazardous secondary materials
recycled within a continuous industrial process are not discarded and,
therefore, are not solid wastes, they have also said that hazardous
secondary materials destined for recycling in another industry are not
automatically discarded. However, there may be some situations where the
regulatory status of a certain material is unclear under a
self-implementing exclusion and thus may benefit from a non-waste
determination that evaluates case-specific fact patterns. EPA is
finalizing five criteria for making a non-waste determination for
hazardous secondary materials indistinguishable in all relevant aspects
from a product or intermediate.

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

The second criterion for this non-waste determination is the chemical
and physical identity of the hazardous secondary material and whether it
is comparable to commercial products or intermediates. This “identity
principle” is a second key factor that the Court in Safe Foods found
useful in determining whether a material is indistinguishable from a
product. It is important to note that the identity of a material can be
comparable to a product without being identical. However, to qualify for
a non-waste determination, any differences between the hazardous
secondary material in question and commercial products or intermediates
should not be significant from either a statistical or from a health and
environmental risk perspective.

The third criterion for making this non-waste determination is the
capacity of the market to use the hazardous secondary material in a
reasonable time frame and ensure that it will not be abandoned.
Abandonment of stockpiled hazardous secondary materials is one way that
discard can occur at recycling operations and is one of the major causes
of environmental problems (a key finding from the recycling studies
discussed earlier). For today’s self-implementing exclusions for
hazardous secondary materials, EPA is using speculative accumulation (as
defined in 40 CFR 261.1(c)(8)) as the method for determining when a
hazardous secondary material is discarded by abandonment. For the
non-waste determination, a person does not need to demonstrate that the
hazardous secondary material meets the speculative accumulation limits
per 40 CFR 261.1(c)(8), but he must provide sufficient information about
the hazardous secondary material and the market demand for it to
demonstrate that the hazardous secondary material will in fact be
reclaimed in a reasonable time frame and will not be abandoned. EPA is
not explicitly defining “reasonable time frame” because such time
frames could vary according to the hazardous secondary material and
industry involved, and therefore determining this time frame should be
made on a case-specific basis. However, a person may still choose to use
the speculative accumulation time frame as a default.

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

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

D. Non-Waste Determination Process

The process for the non-waste determination is the same as that for the
solid waste variances found in 40 CFR 260.30. In order to obtain a
non-waste determination, a facility that manages hazardous secondary
materials that would otherwise be regulated under 40 CFR part 261 as
either a solid waste or a conditionally excluded waste must apply to the
Administrator or the authorized state per the procedures described in 40
CFR 260.33, which EPA is amending today to apply to non-waste
determinations. The application must address the relevant criteria
discussed in detail above. The Administrator will evaluate the
submission and issue a draft notice tentatively granting or denying the
application. Notification of this tentative decision will be provided by
newspaper advertisement or radio broadcast in the locality where the
facility is located. The Administrator will accept comment on the
tentative decision for 30 days, and may also hold a public hearing. The
Administrator will issue a final decision after receipt of comments and
after the hearing (if held). If the application is denied, the facility
may still pursue a solid waste variance or exclusion (for example, one
of the solid waste variances under 40 CFR 260.30 or solid waste
exclusions under 40 CFR 261.4).

After a formal non-waste determination has been granted, if a change
occurs that affects how a hazardous secondary material meets the
relevant criteria contained in 40 CFR 260.34, persons must re-apply to
the Administrator for a formal determination that the hazardous
secondary material continues to meet the relevant criteria and is not
discarded and not a solid waste.

As discussed in more detail in section XX of today’s preamble, under
section 3006 of RCRA, EPA would authorize states to administer the
non-waste determinations as part of their base RCRA program. Because
states are not required to implement federal requirements that are less
stringent or narrower in scope than the current requirements, authorized
states are not required to adopt the non-waste determination process.
Ordinarily this provision could not go into effect in an authorized
state until the state chooses to adopt it. However, because the
non-waste determination process is a formalization of determinations
that states may already perform, states that have not formally adopted
this non-waste determination process may participate if the following
conditions are met: (1) the state determines that the hazardous
secondary material meets the criteria in either paragraph (b) or (c) of
40 CFR 260.34; (2) the state requests EPA to review its determination;
and (3) EPA approves the state determination. In addition, of course,
states may continue to make regulatory determinations under their
authorized state regulations, as they do now.

E. Enforcement

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

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

EFFECT ON OTHER PROGRAMS

XI. Effect on Other Exclusions

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

Thus, in the March 2007 supplemental proposal, we proposed to retain the
existing exclusions exactly as written (72 FR 14205). In addition,
recycling of such hazardous secondary materials at new facilities, or at
existing facilities that are not currently operating under the terms of
an existing exclusion, would also be subject to the existing applicable
regulatory exclusions, rather than the proposed exclusions.

We did request comment, however, on the option of allowing a regulated
entity to choose which exclusion it is subject to in those cases where
more than one exclusion could apply and, if so, whether that entity
should be required to document the choice made. One state supported
allowing a regulated entity to choose if that entity documents its
choice and the few comments that were submitted by industry on this
matter, generally, preferred to have the option to choose which
exclusion they would be subject to. EPA has determined, however, that
the conditions that were developed for those exclusions were found to be
necessary under case-specific rulemakings that determined when the
hazardous secondary material in question is not a solid waste. For
example, broken cathode ray tubes must be transported in closed
containers (40 CFR 261.4(a)(22)) and shredded circuit boards need to be
free of mercury switches and relays (40 CFR 261.4(a)(14)).

Therefore, the final rule requires that hazardous secondary materials
specifically subject to these exclusions must continue to meet the
existing conditions or requirements in order to be excluded from the
definition of solid waste. Moreover, industry and the states are
familiar with these requirements and EPA believes that changing them
would only lead to confusion in the regulated community. In addition,
the current exclusions would apply to facilities not currently operating
under terms of an existing exclusion. They would also be subject to the
conditions for that exclusion if they decide to recycle the particular
excluded wastes in the future.

In the March 2007 supplemental proposal, we also requested comment on
whether any specific regulatory exclusion would need revision in order
to avoid confusion or contradictions. With a few exceptions, public
comments did not discuss this issue in depth. Only three states
commented on this issue. One supported the requirement that
currently-excluded facilities must stay under their specific exclusions
and two requested clarifications on how such a requirement would be
implemented. Industry, in a few cases, had specific comments on the
provisions already in place.

One commenter asked that EPA clarify that wood preserving waste be
allowed to be reclaimed off-site under the new exclusion. This would be
an expansion of the existing exclusion, which is limited to on-site
reuse. Another comment was in regards to whether hazardous secondary
materials currently regulated under the closed-loop exclusion would be
eligible for the new exclusions that do not require closed-loop
operations. The third comment, from both reclaimers of spent lead-acid
batteries and spent lead-acid battery manufacturers requested that EPA
clarify that spent lead-acid battery recycling continue to be regulated
under 40 CFR 266.80 or as a universal waste at 40 CFR part 273. The
mining industry requested that EPA clarify that the proposed exclusions
would have “no impact” on 40 CFR 266.70 (precious metals exclusion)
and 40 CFR 266.100(d) and (g) (conditional exclusions from boiler and
industrial furnace (BIF) regulations for “smelting, melting, and
refining furnaces” and precious metals recovery furnaces).

A. Solid waste exclusions found in 40 CFR 261.4(a)

EPA agrees that the current solid waste exclusion for wood preserving
hazardous secondary materials in 40 CFR 261.4(a)(9) is limited to
on-site recycling. Thus, if managed on-site, these materials would need
to comply with the existing conditions to be eligible for an exclusion
from the definition of solid waste. However, since the current exclusion
does not apply to hazardous secondary materials sent off-site, and the
substance of the exclusion (i.e., drip pad requirements) applies to a
management method not applicable to off-site transfers, the new
exclusion in today’s rule would apply to hazardous secondary materials
that are sent off-site for reclamation. Thus, if sent off-site for
legitimate reclamation, these materials could be eligible for today’s
exclusion if the restrictions and/or the conditions are met.

EPA also agrees that hazardous secondary materials recycled via the
closed-loop exclusion at 40 CFR 261.4(a)(8) could be recycled under a
different process and still be eligible for today’s exclusions. The
closed-loop exclusion is based on the premise that hazardous secondary
materials reclaimed in a continuous process within an industry are not
discarded and, therefore, are not solid wastes subject to EPA’s RCRA
jurisdiction (See AMC I.) In fact, closed loop recycling is a subset of
materials reclaimed in a continuous industrial process, since materials
may be reclaimed in a continuous process outside of a closed loop
system. EPA did not make a finding that any particular hazardous
secondary material must be reclaimed in a continuous process. The Agency
only determined that closed-loop recycling, in general, should be
excluded. Today’s exclusions, however, allow any hazardous secondary
materials to be excluded if reclamation meets the restrictions and/or
conditions set forth in the rules. Thus, a facility currently engaged in
closed-loop recycling could change their processes and still be
excluded, as long as all applicable restrictions and/or conditions are
met.

In addition to the solid waste exclusions currently in 40 CFR 261.4(a),
EPA is planning to propose—in a separate rulemaking from today’s
final rule—to amend its hazardous waste regulations to conditionally
exclude from the definition of solid waste spent hydrotreating and
hydrorefining catalysts generated in the petroleum refining industry
when these hazardous secondary materials are reclaimed (see entry in the
Introduction to the Fall 2007 Regulatory Plan, 72 FR 69940, December 10,
2007). Spent hydrotreating and hydrorefining catalysts generated in the
petroleum refining industry are routinely recycled by regenerating the
catalyst so that it may be used again as a catalyst. When regeneration
is no longer possible, these spent catalysts are either treated and
disposed of as listed hazardous wastes or sent to RCRA-permitted
reclamation facilities, where metals, such as vanadium, molybdenum,
cobalt, and nickel are reclaimed from the spent catalysts.

EPA originally added spent hydrotreating and hydrorefining catalysts
(waste codes K171 and K172) to the list of RCRA hazardous wastes found
in 40 CFR 261.31 on the basis of toxicity (i.e., these materials were
shown to pose unacceptable risk to human health and the environment when
mismanaged) (63 FR 42110, August 6, 1998). In addition, EPA based its
decision to list these materials as hazardous due to the fact that these
spent catalysts can at times exhibit pyrophoric or self-heating
properties.

It is largely because of these pyrophoric properties that EPA is
considering a separate proposal to conditionally exempt these catalysts
from hazardous waste regulation. This future proposal will allow the
agency to consider and seek comment on specific conditions to address
the pyrophoric properties of these hazardous secondary materials,
particularly during transportation and storage prior to reclamation, in
order for the Agency to determine that they are not being discarded. As
a result of this separate effort, these spent catalysts will not be
eligible for today’s exclusions. Once EPA has proposed a conditional
exclusion specifically for these spent catalysts, and after
consideration of public comments, EPA will either finalize a conditional
exclusion specific to these spent catalysts or may decide that the
conditions being promulgated in today’s final rule are fully adequate
for the management of these spent catalysts when recycled, and therefore
would remove the restriction preventing these spent catalysts from being
eligible for today’s exclusions.

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

EPA also agrees that spent lead-acid battery recycling should continue
to be regulated under 40 CFR 266.80 or 40 CFR part 273. This is because
these regulations are actually hazardous waste regulations and are not
solid waste exclusions. Continuing the regulation of spent lead-acid
battery (SLAB) recycling as hazardous waste is necessary due to the
unique nature of these batteries. Also, as noted by the commenters, the
current battery recycling regulations are working well. More than 95% of
SLABs are currently recycled and generators of SLABs are exempt from
Superfund liability under the Superfund Recycling Equity Act (SREA),
provided that they meet the requirements of the exemption, including the
requirement to take "reasonable care" to determine that the accepting
facility is in compliance with the substantive environmental
regulations.

Because SREA was based on the current SLAB hazardous waste regulations
under RCRA, changing the regulation of SLABs could have unintended
consequences. For example, the current regulations prohibit
battery-breaking without a permit because such battery-breaking
operations have been high-risk activities. In addition, as noted in our
recycling study, 12% of our damage cases were from battery-breaking
operations. Moreover, the high value of the lead plates and low entry
cost for a battery-breaking facility provides a strong market incentive
for facilities to recycle without investing in adequate management
systems for the discarded battery acid and casings.

In addition, because the RCRA-regulated “generator” of a SLAB is
often the garage or junkyard that removed the battery from the
automobile (rather than the original owner who discarded the battery),
the generator-controlled exclusion could be read to apply to these
operations. Therefore, the reasonable efforts and financial assurance
conditions that are a part of the transfer-based exclusion would not
apply, despite the fact that their activities would resemble waste
management rather than production. Because, in these cases, the SLABs
have effectively already been discarded by the original owners before
they enter the RCRA hazardous waste regulatory system, EPA will continue
to regulate SLABs as solid and hazardous waste under 40 CFR 266.80 or 40
CFR part 273.

EPA also agrees with comments that the exclusions should have no impact
on 40 CFR 266.70 (precious metals exclusion) and 40 CFR 266.100(d) and
(g) (conditional exclusions from the boiler and industrial furnace (BIF)
regulations for “smelting, melting, and refining furnaces” and
precious metals recovery furnaces). Because these exclusions are
exclusions from certain hazardous waste regulations, not solid waste
exclusions, as a general matter, EPA believes that facilities should
have a choice of whether they manage their materials as hazardous waste
under these exclusions or seek an exclusion from the definition of solid
waste through today’s final rule.

	However, part of what 40 CFR 266.100(d) accomplishes is to define when
an operation involving burning is solely a metals recovery operation
rather than a burning for energy recovery or destruction operation,
neither of which is eligible for today’s exclusions. This distinction
is an important one to make, and EPA did not intend to revise how such
material recovery operations were identified, nor did EPA ask for
comment on such a revision.

Thus, for the purpose of defining the type of burning for metals
recovery to be allowed under these exclusions, EPA will reference the
requirements in 40 CFR part 266, subpart H that defines when a
“smelting, melting, and refining” furnace is solely engaged in
metals recovery, but will not require the other conditions that are not
related to distinguishing legitimate materials recovery from burning.
Therefore, under today’s final rule, hazardous secondary materials
burned for metals recovery would still be required to meet the minimum
metals and maximum toxic organic metals content specified in 40 CFR part
266 (as part of the definition of this activity), and would continue to
be exempt from BIF permits, but they would not be subject to hazardous
waste manifests and storage permits, as long as the conditions of the
exclusions promulgated in today’s rule are met.

C. Other Recycling Exclusions

For other hazardous secondary materials currently eligible for
management under other exclusions or alternative regulatory structures
that do not include an exclusion from the definition of solid waste
(such as the universal waste regulations in 40 CFR part 273), the
facility would have the choice of either continuing to manage the
hazardous secondary material as a hazardous waste under the existing
regulations or under today’s exclusions from the definition of solid
waste.

In addition, it should be noted that, for the purposes of
§261.2(a)(2)(ii) and §261.4(a)(2)(23), when a facility collects
hazardous secondary materials that have been discarded by other persons
(for example, when mercury-containing equipment is collected through a
special collection program), it is not the hazardous secondary material
generator. Therefore, a universal waste handler who collects hazardous
secondary materials that have been discarded by other persons would not
be eligible for the generator-controlled exclusion, even if it would be
considered a “generator” for purposes of the Universal Waste
regulations.

XII. Permitted and Interim Status Facilities

A. Permitted Facilities

Facilities that currently have RCRA permits or interim status and manage
hazardous wastes that are excluded under today’s final rule will be
affected in a number of ways, depending on the situation at the
facility. At some facilities, some of the hazardous waste management
units will be converted solely to manage excluded hazardous secondary
materials, and others may continue to manage hazardous wastes. At other
facilities, all of the hazardous waste management units will be
converted to manage wastes excluded under today’s final rule. In still
other cases, individual units may manage both excluded materials and
hazardous wastes. In all cases, the owner or operator of the facility
must comply with the applicable conditions and limitations of the
exclusion (including the containment of the hazardous secondary material
in units operating under the exclusion and the prohibition against
speculative accumulation of excluded hazardous secondary materials) to
maintain the exclusion.

	Permitted facilities that continue to manage hazardous wastes in
addition to managing hazardous secondary materials excluded under this
final rule must continue to maintain their Part B permits. Individual
units may be converted solely to manage excluded hazardous secondary
materials; however, the permit requirements applicable to the newly
excluded units will remain in effect until they are removed from the
permit. Owners and operators that seek to remove permit conditions
applicable to units that are no longer hazardous waste management units
must submit a permit modification request to the implementing agency. In
the March 26, 2007, supplemental proposed rule, the Agency requested
comment on requiring owners and operators seeking to modify their
permits to remove units that are no longer regulated to follow the
procedures of 40 CFR 270.42(a) for Class 1 permit modifications, with
prior Agency approval. The Agency received few comments on this issue,
and is proceeding in this final rule with the proposed approach. Thus,
this final rule modifies 40 CFR 270.42 by adding an entry to Appendix 1
that classifies permit modifications to remove units that are no longer
regulated as a result of this rule as Class 1 with prior Agency
approval.

	As was discussed in the preamble of the March 26, 2007, supplemental
proposal, under the Class 1 with prior Agency approval approach, the
owner or operator must submit notification of the permit modification to
the implementing agency, along with documentation demonstrating that the
operations at the unit meet the conditions of the exclusion and that the
unit is used solely to manage excluded hazardous secondary materials. In
addition, the owner or operator must comply with the requirements of 40
CFR 270.42(a)(ii) for public notification. Under §270.42(a)(ii), the
permit modification will not become effective until the owner or
operator receives written approval by the implementing agency. The
implementing agency will approve the permit modification so long as the
owner or operator has complied with the procedural requirements of
§270.42(a) and has demonstrated that the operations meet the conditions
of the exclusion, and that the unit does not manage non-excluded
hazardous wastes.

	One commenter disagreed with the Agency’s approach, and believed that
the Class 2 permit modification procedures were necessary to provide the
public an opportunity to comment on the removal of the unit from the
permit. The Agency disagrees with this commenter. The regulations that
govern permit modification classify modifications to the permit term, to
allow for earlier permit termination, as Class 1 with prior Agency
approval. The Agency believes that removing permit conditions for units
that are no longer regulated is, in effect, allowing earlier permit
termination at those units. Thus, the Agency believes that Class 1 with
prior Agency approval is the appropriate designation for these permit
modifications.

In the preamble of the March 26, 2007, supplemental proposal, the Agency
discussed the issue of whether closure requirements at formerly
regulated units would be triggered when this rule becomes effective and
the hazardous secondary materials they are receiving is no longer
hazardous waste. This issue was also discussed in the October 2003
proposal, in which EPA expressed the view that requiring closure of
units in these situations would serve little environmental purpose,
since after closure the unit would be immediately reopened and used to
store the same (now excluded) hazardous secondary material (68 FR
61580–61581).

	In today’s final rule, a permitted unit that is converted solely to
manage excluded hazardous secondary materials will not be subject to the
40 CFR part 264 closure requirements, since, typically, it will be
managing the same material, with the only difference being that the
material is now excluded from regulation as a hazardous waste. However,
we expect that any funds in closure or post-closure financial assurance
mechanisms will be converted to provide financial assurance under
today’s exclusion, assuming the facility is operating under the
transfer-based exclusion. In addition, as described in sections VII.D.
and VIII.D of this preamble, at the end of the operating life of these
units, all owners and operators (i.e., of units operating under either
exclusion promulgated in this final rule) must manage any hazardous
secondary materials that are not recycled, and remove or decontaminate
all hazardous residues and contaminated containment system components,
equipment structures, and soils.

	A permitted facility that converts to manage only hazardous secondary
materials excluded under this final rule, and is, therefore, no longer a
hazardous waste management facility, will no longer be required to
maintain a hazardous waste operating permit (although, as discussed
below, may still be subject to corrective action). However, permits
issued to these facilities remain in effect until they are terminated.

	In the March 2007 supplemental proposal, the Agency also requested
comment on requiring owners and operators seeking to terminate their
operating permits (as opposed to just removing units from their permit)
by modifying the permit term to follow the procedures of 40 CFR
270.42(a) for Class 1 permit modifications, with prior Agency approval.
The Agency received few comments on this issue, and is proceeding in
this final rule with the proposed approach. Thus, this final rule
modifies §270.42 by adding an entry to Appendix 1 that classifies
permit modifications to terminate operating permits by modifying the
permit term, at facilities at which all units are excluded as a result
of this final rule, as Class 1 with prior Agency approval. Under this
approach, owners and operators seeking to terminate their operating
permits must submit a permit modification request to the overseeing
agency following the procedures of §270.42(a) for Class 1 modifications
with prior Agency approval, as described above.

	To support a request for permit termination by modifying the permit
term, the owner or operator must demonstrate that the operations meet
the conditions of the exclusion, and that the facility does not manage
non-excluded hazardous wastes.

	In addition, as was explained in the October 28, 2003, proposal (see 68
FR 61580) and again in the March 26, 2007, supplemental proposal (72 FR
14206), the obligation of 40 CFR 264.101 to address facility-wide
corrective action at permitted facilities, which attaches at permit
issuance, is not affected by this final rule, and remains in effect
until corrective action at the facility is completed. Therefore, an
owner or operator of a facility that manages only hazardous secondary
materials excluded under this final rule, who seeks to terminate the
facility’s permit by modifying the permit term, must demonstrate as
part of the permit modification request that the corrective action
obligations at the facility have been addressed. If facility-wide
corrective action has not been addressed, the permit generally should
not be terminated, but, rather, modified to include only corrective
action requirements. The Agency’s corrective action authority at such
facilities is not affected by this rulemaking and the Agency thus
retains its authority to address corrective action at such facilities
using all authorities applicable prior to this rulemaking.

In some cases, however, it may be appropriate for the overseeing agency
to use an alternative federal or state enforcement mechanism, or other
federal or state cleanup authority, to address the facility's corrective
action obligations, rather than continue to pursue corrective action
under a permit. In these cases, if the alternate authority or mechanism
is enforceable and adequate to ensure that facility-wide corrective
action will be completed, maintenance of the permit may no longer be
necessary.

B. Interim Status Facilities

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

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

	Commenters on the October 28, 2003, proposal stated that one of the
main purposes of the RCRA Subtitle C closure requirements is to identify
and remediate any releases originating from the units. In response, the
Agency noted in the March 26, 2007, supplemental proposal that releases
from these units are discarded solid and, therefore, potentially
hazardous wastes, and agreed with commenter's concern that such releases
should be addressed. The Agency suggested in that preamble that the
specific Subtitle C closure requirements may not be the most appropriate
means of addressing cleanup of releases from these units, if any have
occurred. Rather, the Agency suggested that a better approach to address
historical releases from these units, as well as any future releases,
would be as part of corrective action for all releases at the
facility—an approach that the Agency believed would achieve the same
environmental results and would provide the owner or operator the option
of integrating the cleanup more closely into the broader facility
response.

	Some commenters on the March 26, 2007, supplemental proposal objected
to this approach of addressing releases from units that previously
managed hazardous wastes and, as a result of today’s rule, would
subsequently only receive hazardous secondary materials excluded from
Subtitle C control. These commenters requested that EPA expressly
recognize that units storing or managing hazardous secondary materials
excluded as a result of this rule would no longer be regulated as solid
waste management units and are not subject to RCRA’s corrective action
requirements. EPA disagrees with this approach, as we have discussed
previously in this section and as discussed below, and continues to
believe that the best approach to addressing releases from conditionally
excluded units is, generally, to address them as part of corrective
action for all releases at the facility.

	The Agency discussed the issue of its corrective action authority to
address non-SWMU-related releases at RCRA treatment, storage, or
disposal facilities in the May 1, 1996, Advance Notice of Proposed
rulemaking (see 61 FR 19442–3). There, the Agency stated, “[g]iven
the legislative history of RCRA section 3004(u), which emphasizes that
RCRA facilities should be adequately cleaned up, in part, to prevent the
creation of new Superfund sites, EPA believes that corrective action
authorities can be used to address all unacceptable risks to human
health and the environment from RCRA facilities. In the permitting
context, remediation of non-SWMU related releases may be required under
the “omnibus” authority…In other contexts, orders under RCRA
sections 3008(h) or 7003 may require remedial action to address releases
regardless of whether a SWMU is present.”

	The Agency envisions three scenarios that might apply to units from
which releases have occurred. The first will arise in situations where
an owner or operator fails to comply with the applicable conditions and
limitations of the exclusion, and the unit consequently loses its
exemption. In these situations, the unit itself will once again become a
hazardous waste management unit, and the unit, as well as materials in
the unit, will become subject to all requirements that were applicable
prior to this final rule. Not only will corrective action authority be
available at such a unit, but the closure requirements of 40 CFR part
264 or 265 will once again apply at the unit as well, and releases from
that unit may be addressed through either the corrective action or the
closure process.

	The second scenario will arise in situations where releases occur at an
excluded unit but, based on the site-specific factors, the Agency does
not consider the release to be significant and, therefore, the release
does not cause the unit to lose its exclusion. Failure on the part of
the owner or operator to respond to such releases could be considered an
act of illegal disposal. The Agency generally would address these
situations by issuing an enforcement action under RCRA section 3008(a),
or other applicable authorities, to compel cleanup actions and/or impose
penalties. It should be noted that this approach is consistent with the
approach taken by the Agency in a 2002 final rule, in which the Agency
excluded hazardous secondary materials used to make zinc fertilizers
from the definition of solid waste (see “Zinc Fertilizers Made from
Recycled Hazardous Secondary Materials,” 67 FR 48400, July 24, 2002).

	The third scenario will arise in situations where releases from the
unit, of either the now excluded hazardous secondary material and/or
other hazardous or solid wastes previously managed in the unit, were not
addressed prior to the unit obtaining its exclusion. At permitted and
interim status facilities, the status of those releases is unaffected by
this rulemaking, and the Agency retains its authority to address them
under all authorities applicable to them prior to this final rule,
including sections 3004(u) and (v), and section 3008(h).

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

	The requirements in 40 CFR parts 264 and 265 subpart H, which applied
at these units prior to their exclusion under this final rule, provide
for the release of financial assurance upon certification by the
facility owner or operator that closure has been completed in accordance
with the approved closure plan, and after the Agency has verified that
certification (see 40 CFR 264.143(i) and 265.143(h)).

	Under the approach discussed in section VII.D. and VIII.D. of this
preamble, hazardous waste management units that convert to managing only
hazardous secondary materials that are excluded under this final rule
will no longer be subject to the 40 CFR part 264 or part 265 closure
requirements. Further, while reclaimers who receive hazardous secondary
materials that have been excluded under the new 40 CFR 261.4(a)(24) are
required to meet certain financial assurance requirements, persons who
recycle hazardous secondary materials under the exclusions for materials
recycled under the control of the generator (§261.2(a)(2)(ii) and
§261.4(a)(23)) are not required to meet the financial assurance
requirements.

	Under the requirements of 40 CFR parts 264 and 265 subpart G, owners
and operators of units now eligible for the exclusion of
§261.2(a)(2)(ii) and §261.4(a)(23) would have been required to remove
and decontaminate all contaminated structures, equipment, and soils (see
§264.114 and §265.114). The financial assurance provided under 40 CFR
parts 264 and part 265 subpart H was designed to assure that funds would
be available for these activities. In the case of generator controlled
units, where financial assurance is no longer required, previous
releases from the unit, which would have been addressed during closure
and for which financial assurance was obtained will, as a result of this
rule, now be addressed through corrective action authority. The question
raised by the Agency in the March 26, 2007, supplemental proposal was
whether funds obtained for closure should, therefore, be directed to
corrective action activities at the unit.

	Commenters on the March 26, 2007, supplemental proposal generally
agreed that funds obtained for closure at units excluded under
§261.2(a)(2)(ii) and §261.4(a)(23) (under the control of the
generator) should be directed to address releases from the unit. The
Agency agrees with these commenters, and encourages regulators to work
with owners and operators that seek to modify their permits to remove
conditions applicable to these units that will operate under the
exclusion of §261.2(a)(2)(ii) and §261.4(a)(23), to verify that there
are no unaddressed releases from the unit. In situations where
corrective action is necessary at the unit, the Agency encourages
regulators to work with owners and operators to assure that the releases
from the unit are addressed promptly.

XIII. Effect on CERCLA

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

XIV. Effect on Imports and Exports

	The exclusion for hazardous secondary materials generated and reclaimed
under the control of the generator is limited to recycling performed in
the United States or its territories. However, the exclusion for
hazardous secondary materials exported for reclamation and the non-waste
determinations included in today’s final rule do not place any
geographic restrictions on movements of such hazardous secondary
materials, provided they meet the conditions of the exclusion or, if
stipulated, conditions of the non-waste determination. It is therefore
possible that in some cases excluded hazardous secondary materials could
be generated in the United States or its territories and subsequently
exported for reclamation to a facility in a foreign country. It is also
possible that hazardous secondary materials could be generated in a
foreign country and imported for reclamation in the United States. Under
today’s exclusion for hazardous secondary materials exported for
reclamation, hazardous secondary materials are only excluded from the
definition of solid waste in the U.S. and, thus, may be considered solid
and hazardous wastes in the foreign country under that country’s laws
and regulations. If this is the case, the U.S. facility that exports or
imports hazardous secondary materials will also need to comply with any
applicable laws and regulatory requirements of the foreign country. For
further discussion, see section VIII.C.5. of today’s preamble
regarding specific export and import conditions for hazardous secondary
materials excluded under today’s rule.

MAJOR COMMENTS

XV. General Comments on the Proposed Revisions to the Definition of
Solid Waste

EPA received hundreds of sets of comments on the October 2003 proposal
and the March 2007 supplemental proposal, most of which were quite
detailed and raised multiple issues. Below is an overview of some of the
major comments on general aspects of the proposals and a summary of
EPA’s responses to those comments. For a complete discussion of all
the comments and EPA’s responses to those comments, please see
Response to Comment Document: Revisions to the Definition of Solid Waste
found in the docket to today’s rulemaking.

A. EPA’s Legal Authority to Determine Whether a Material is a Solid
Waste

Comments: legal authority

EPA received many comments from environmental groups and the waste
treatment and recycling industry regarding EPA’s authority to define
when recyclable hazardous secondary materials are solid wastes, and how
EPA used this authority in the proposed rulemaking. Some commenters
argued that EPA has no authority under the RCRA statute to broadly
exclude hazardous secondary materials from the definition of solid
waste. These commenters asserted that Congress intended for hazardous
secondary materials to be classified as solid wastes even when they are
recycled. The commenters argued that the proposed exclusions are
contrary to the plain statutory language of RCRA and that EPA may not
lawfully exclude pollution control sludges and materials resulting from
industrial, commercial, mining, and agricultural operations, according
to accepted principles of statutory interpretation. Although the
commenters acknowledged that EPA has promulgated such exclusions in the
past, and that one such exclusion was recently upheld in court in Safe
Food and Fertilizer v. EPA, they stated that they believed that the D.C.
Circuit erred in Safe Food. The commenters argue that, in the fertilizer
rule upheld in Safe Food, EPA considered impermissible factors (e.g.,
market participation, management practices, and chemical identity) in
defining which materials are not discarded under RCRA, and that the
Agency has done so again in the current rulemaking effort.

EPA’s response: legal authority

	EPA disagrees with comments that state that we have exceeded our
authority by the exclusions being finalized today. While EPA clearly has
the authority to regulate hazardous secondary materials that are
reclaimed under Subtitle C of RCRA when discard is involved, the Agency
also believes (and the courts have generally confirmed) that when
hazardous secondary materials are reclaimed and such recycling
operations do not involve discard, the hazardous secondary materials
involved are not solid wastes under RCRA. EPA also has the authority to
determine which types of recycling do not involve discard and,
therefore, which types of hazardous secondary materials are not solid
wastes. As EPA noted in the March 2007 supplemental proposal, “[u]nder
the RCRA Subtitle C definition of solid waste, many existing hazardous
secondary materials are not solid wastes and, thus, not subject to
RCRA’s ‘cradle-to-grave’ management system if they are recycled.
The basic idea behind this construct is that recycling of such materials
often closely resembles normal industrial manufacturing, rather than
waste management” (72 FR 14197). Existing exclusions, found in 40 CFR
261.4(a), provide a long historical precedent for EPA’s authority to
exclude reclaimed materials from the definition of solid waste. EPA
refers these commenters to the discussion of case law, above, and
asserts that this rule follows valid precedent in the D.C. Circuit,
including the court’s opinion in Safe Food.

B. Adequacy of Conditions and Restrictions Used to Determine Whether a
Material is a Solid Waste

Comments: adequacy of conditions

Other commenters did not dispute EPA’s authority to exclude hazardous
secondary materials from the definition of solid waste, but instead
argued that before EPA can lawfully claim that excluded materials are
not discarded, the Agency would need to strengthen the conditions to
protect human health and the environment. For example, one commenter
believed that all legitimacy criteria should be mandatory, that
performance standards such as secondary containment are needed for
materials stored in tanks and containers, and that EPA should require
engineered liner systems and monitoring for materials stored in
land-based units.

EPA’s response: adequacy of conditions

	EPA disagrees that the restrictions to the under the control of the
generator exclusions or the conditions we are requiring for the
transfer-based exclusion are inadequate. Each of the restrictions and/or
conditions is specifically linked to defining when the hazardous
secondary materials are not discarded and to ensuring that the
regulatory authority has the information needed to oversee the
exclusion. Specifically, for hazardous secondary materials reclaimed
under the control of the generator, the fact that the generator
maintains control and liability for the hazardous secondary materials,
either by managing them on-site, within the same company, or under a
specific tolling contract, is itself an indication that the materials
are not discarded. The prohibition on speculative accumulation (as
defined in 261.1(c)(8)), addresses both the situation in which a large
percentage of the hazardous secondary material is accumulated over the
year without being recycled and the situation where there is no feasible
means of recycling the hazardous secondary material, regardless of
volume. Finally, the requirement that the hazardous secondary materials
must be contained in the unit recognizes the reality that hazardous
secondary materials that are released to the environment are discarded.

For hazardous secondary materials transferred to another party for
reclamation, the fact that the generator is required to make reasonable
efforts to ensure that its hazardous secondary materials are properly
and legitimately reclaimed demonstrates that the generator is not simply
disposing of the material, but instead is taking responsibility that the
hazardous secondary materials will be recycled. In addition, by
maintaining a record of each shipment and a confirmation of receipt, the
generator demonstrates that it continues to take responsibility for
knowing the ultimate disposition of its hazardous secondary materials.
Furthermore, by obtaining financial assurance, the reclamation facility
demonstrates that it has also taken on the responsibility to ensure that
the hazardous secondary materials will not be abandoned in the event
that circumstances make it impossible for the facility to reclaim the
hazardous secondary materials. For further discussion of how these and
other restrictions and/or conditions of the exclusions are linked to
defining when hazardous secondary materials are not discarded, see
section V of this preamble, as well as sections VII–IX and sections
XVI–XVIII. Support for the Agency’s determination regarding which
materials are not discarded is also found throughout the rulemaking
record in this proceeding.

EPA also disagrees that specifying further engineering conditions, such
as secondary containment, liners, and leak detection systems, is needed
to determine which hazardous secondary materials are not being
discarded. The restrictions EPA has established and the conditions that
EPA is finalizing today address a variety of hazardous secondary
materials and reclamation operations that are linked to defining the act
of discard, rather than specifying a particular technology that may not
be appropriate in some cases.

Furthermore, hazardous secondary materials excluded under today’s rule
may remain subject (or become subject) to requirements under other
statutory programs. For example, hazardous secondary material
generators, transporters, intermediate facilities and reclaimers may be
subject to regulations developed under:

The Occupational Safety and Health Act of 1970, which requires hazard
communication programs, labeling, material safety data sheets (MSDS) and
employee information and training (29 CFR part 1910). The Occupational
Safety and Health Administration (OSHA) regulations also require
emergency response planning and training under their Emergency Response
Program to Hazardous Substance Releases (29 CFR 1910.120);

The Hazardous Materials Transportation Act of 1975 and the subsequent
Hazardous Materials Transportation Uniform Safety Act of 1990, which
requires hazardous secondary materials meeting the Department of
Transportation’s defining criteria for hazard classes and divisions to
comply with hazard identification, shipping papers, labeling and
placarding, incident reporting and security plans (49 CFR part 107 and
parts 171–180);

The Comprehensive Environmental Response, Compensation and Liability Act
(CERCLA), Emergency Planning and Community Right-to-Know Act (EPCRA) and
the Superfund Amendments and Reauthorization Act (SARA) of 1986 which,
combined, require notification of hazardous substance releases above a
reportable quantity, emergency planning and, if applicable, MSDS and
inventory reporting (40 CFR 302.6, 40 CFR parts 355 and 370). Hazardous
secondary material generators and reclaimers meeting defined criteria
are also subject to toxic chemical release reporting (i.e., Toxics
Release Inventory (TRI) under EPCRA (40 CFR part 372).

While not exhaustive, this list provides examples of regulatory programs
designed to protect human heath and the environment developed under
other statutory authorities alongside of RCRA. For more useful
information on these regulatory programs, please see “Memorandum:
Requirements that other Regulatory Programs would place on Generators,
Reclaimers and Transporters of Hazardous Secondary Materials” located
in the docket for this rulemaking.

C. EPA’s Authority to Regulate Recycling

Comments: EPA’s authority

EPA also received comments from the hazardous waste generating industry
disputing EPA’s authority to promulgate today’s rule. Unlike the
environmental groups’ and waste treatment and recycling industry’s
comments, which argued that EPA has no authority to deregulate hazardous
secondary materials recycling, many of the generator industry comments
asserted that EPA has no authority to regulate such recycling, even to
prohibit speculative accumulation or require that the hazardous
secondary materials be contained.

While most such commenters applauded EPA’s decision in the March 2007
supplemental proposal to explicitly link the proposed exclusions to the
concept of defining when hazardous secondary materials are not
discarded, many of these comments argued that EPA has over-reached its
statutory authority by imposing restrictions or conditions that the
commenters argued have no relationship to discard.

Some commenters asserted that limiting the exclusions for hazardous
secondary materials recycled under the control of the generator and
imposing conditions on the exclusion for hazardous secondary materials
transferred to a third party for recycling, EPA has misread the intent
of Congress. These comments cite previous court cases, noting the
“analysis of the statute reveals clear Congressional intent to extend
EPA’s authority only to materials that are truly discarded, disposed
of, thrown away, or abandoned” (AMC I, 824 F2d. at 1190). They go on
to argue that materials being recycled do not fall into one of these
enumerated activities.

Specifically, many of the comments cite the ABR decision (which in turn
cites earlier court decisions), where the court noted that EPA’s
authority is “limited to materials that are ‘discarded’ by virtue
of being disposed of, abandoned, or thrown away” and that
“[s]econdary materials destined for recycling are obviously not of
that sort. Rather than throwing them away, the producer saves them,
rather than abandoning them, the producer reuses them” (ABR 208 F.3d
at 1051). “To say that when something is saved it is thrown away is an
extraordinary distortion of the English language” (Id. at 1053). The
commenters assert that, by limiting the exclusion to hazardous secondary
materials intended for recycling that are “contained” in the unit,
EPA is illegally imposing conditions on a material that has not been
discarded.

Other comments take issue with EPA’s decision to impose conditions for
the transfer-based exclusion, These comments criticize EPA's rationale
that, in part, bases the conditions on the fact that “subsequent
activities are more likely to involve discard, given that the generator
has relinquished control of the hazardous secondary material” (72 FR
14178).  One commenter specifically challenged the proposed financial
assurance requirement, claiming that the condition does not define the
absence of discard and would effectively impose a waste management
requirement upon a non-waste.

EPA’s response: EPA’s authority

EPA disagrees with the comments that Congress did not intend to give EPA
the authority to regulate hazardous waste recycling. As EPA noted in
both the October 2003 proposal and the March 2007 supplemental proposal,
the RCRA statute and the legislative history suggest that Congress
expected EPA to regulate as solid and hazardous wastes certain materials
that are destined for recycling (see 45 FR 33091, citing numerous
sections of the statute and U.S. Brewers’ Association v. EPA, 600 F.
2d 974 (D.C. Cir. 1979); 48 FR 14502–04, April 3, 1983; and 50 FR
616–618). Moreover, the case law discussed above clearly shows
instances where EPA properly regulated the recycling of solid and
hazardous wastes.

EPA also disagrees that requiring the hazardous secondary materials to
be “contained” contradicts the court’s finding in ABR that EPA
does not have the authority to define when hazardous secondary materials
are not discarded. By limiting the exclusion to hazardous secondary
materials that are contained, EPA is defining “discard” for this
material. While it is true that the court has said that materials
recycled in a continuous process by the generating industry are not
solid wastes, commenters have failed to demonstrate how hazardous
secondary materials that are not contained meet that description. It is
a self-evident fact that hazardous secondary materials released to the
environment (e.g., causing soil and groundwater contamination) are not
“destined for recycling” or “recycled in a continuous process”;
thus, they are part of the waste management problem. Moreover, as
discussed above in section VII.C, to the extent that significant
releases to the environment from a unit remain unaddressed, it is
reasonable to conclude that the material remaining in the unit is also
actively being discarded. It is important to note that the hazardous
secondary materials that remain in the unit are not solid wastes, unless
the releases from the storage unit indicate that these materials are not
being managed as valuable commodities and are, in fact, discarded. For
examples of releases from a hazardous secondary materials storage unit
that indicate that the hazardous secondary material in the unit is
discarded and examples of releases that do not indicate discard, see
section VII.C. of this preamble.

EPA also disagrees with comments that, under the transfer-based
exclusion, EPA cannot consider the fact that the generator has
relinquished control of the hazardous secondary material (along with
other factors that indicate discard) in determining what conditions are
needed for this exclusion. EPA’s authority to regulate such transfers
is clear: as the Court noted in Safe Food, “materials destined for
future recycling by another industry may be considered ‘discarded’;
the statutory definition does not preclude application of RCRA to such
materials if they can reasonably be considered part of the waste
disposal problem” (350 F.3d at 1268).

EPA’s record for today’s rulemaking demonstrates that third-party
recycling of hazardous secondary materials has been and continues to be
part of the waste disposal problem, and, without the conditions being
finalized today, these hazardous secondary materials would be solid
wastes. Of the 208 damage cases in EPA’s study of environmental
problems associated with post-RCRA, post CERCLA hazardous secondary
materials recycling, 94% appeared to take place at commercial off-site
facilities. Moreover, EPA’s study of how market forces impact
recycling demonstrates that these damages are consistent with our
understanding of how the business model for commercial recycling can
lead to sub-optimal results. As opposed to manufacturing, where the cost
of inputs, either raw materials or intermediates, is greater than zero
and revenue is from the sale of the output, recycling conducted by
commercial hazardous secondary materials recyclers involves generating
revenue from receipt of the hazardous secondary materials, as well as
from the sale of output. Recyclers of hazardous secondary materials in
this situation can have a short-term incentive to accept more hazardous
secondary materials than they can economically or safely recycle,
resulting in the hazardous secondary materials eventually being
discarded.

The financial assurance condition for the transfer-based exclusion being
finalized today is directly linked to this situation. By obtaining
financial assurance, the owner or operator of the reclamation facility
is making a direct demonstration that it will not abandon the hazardous
secondary material. Of the 208 damage cases, 69 (or 33%) were primarily
caused by abandonment of the hazardous secondary material by the
recycler. None of 69 facilities whose damages were primarily caused by
abandonment had financial assurance.

Under the transfer-based exclusion, financial assurance is the means by
which the recycler demonstrates an investment in the future of the
recycled materials; even if the market changes in such a way that the
recycler can no longer process the hazardous secondary materials, by
obtaining financial assurance, it has made certain that the hazardous
secondary materials will not be abandoned and therefore not discarded.
EPA therefore disagrees with the comment that the financial assurance
condition is not related to discard of the material.

Moreover, financial assurance also addresses the correlation of
financial health of a reclamation facility with the absence of discard
of hazardous secondary materials. According to the successful recycling
study, an examination of a company’s finances is an important part of
many of the environmental audits generators currently use to determine
that their hazardous secondary materials will not be discarded. In
addition, the environmental problems study showed that bankruptcies or
other types of business failures were associated with 138 (66%) of the
damage cases, and the market forces study identified a low net worth of
a firm as a strong indication of a sub-optimal outcome of recycling
(i.e., over-accumulation of hazardous secondary materials, resulting in
releases to the environment and abandonment of hazardous secondary
materials).

In the March 2007 supplemental proposal, EPA proposed to require that
reclamation facilities obtain financial assurance to ensure that the
reclamation facility owner/operators who would operate under the terms
of this exclusion are financially sound (72 FR 14191), and many
commenters supported this condition and EPA’s rationale. EPA continues
to believe that the findings in the recycling studies indicate a
correlation between financial health of a reclaimer and the likelihood
he will not discard the hazardous secondary materials.

D. Comments on Recycling Studies

1. Environmental Problems Study.

EPA completed An Assessment of Environmental Problems Associated with
Recycling of Hazardous Secondary Materials in order to identify and
characterize environmental problems attributed to hazardous secondary
materials recycling activities and to provide the stakeholders with a
clearer picture of the recycling industry in the United States.

The environmental problems study (or study) was conducted in response to
public comments received on the October 2003 proposal and to guide
EPA’s deliberations on how to proceed with the March 2007 supplemental
proposal. In the public comments to the October 2003 proposal, a number
of commenters expressed concern that deregulating hazardous secondary
materials that are reclaimed in the manner described in that proposal
could result in mismanagement of the hazardous secondary materials, and
thus could create new cases of environmental damage requiring remedial
action under federal or state authorities. Some of these commenters
illustrated their concern by citing specific examples of environmental
damage related to hazardous secondary materials recycling. A number of
other commenters expressed the view that the great majority of the
damage cases cited by commenters had occurred before RCRA, CERCLA, or
other environmental regulatory programs were established in the early
1980s and, therefore, that the cases represent “historical”
recycling-related environmental damage and are not particularly relevant
or instructive for revising the RCRA Subtitle C definition of solid
waste. These commenters further argued that the environmental
programs—most notably RCRA’s hazardous waste regulations, and the
liability provisions of CERCLA—have created strong incentives for the
proper management of recyclable hazardous secondary materials and
recycling residuals.

In response to the March 2007 supplemental proposal and to the study,
made public in the rulemaking docket in conjunction with that proposal,
EPA received comments on the study from a variety of commenters. In
general, the comments pertain to the scope and methodology of the study
and how the study reflects on today’s exclusions and restrictions
and/or conditions of the exclusions.

Comments: scope and methodology

 With respect to the scope and methodology of the study, a few
commenters agreed with excluding historical damage cases from the study
and stated that recycling operations have in fact improved since RCRA
was enacted. A few states provided several types of recycling-related
environmental problems familiar to state agencies and a few commenters
suggested the review of several additional damage cases. A few
commenters argued that inclusion of their facility in the study, or the
inclusion of their industry representatives’ facilities, was unfounded
due to one or more of the following reasons: hazardous secondary
materials were exempt from RCRA when environmental problems occurred;
environmental problems stem from historical or pre-RCRA activities;
numerous facilities in the study shut down during the 1980s in response
to the creation of regulatory disincentives; environmental problems were
addressed pursuant to CERCLA; and problematic activities were clearly a
result of non-compliance. Also, a commenter suggested that one damage
case profiled in the study “is not a good example of a contaminated
site caused by recycling.” In support of their comment, the commenter
cited a Record of Decision (ROD) which stated that the site’s former
foundry operations, which existed pre-RCRA, caused soil and groundwater
contamination.

One commenter suggested EPA overlooked potential sources of information
for the study, including television commentary, media reports, books,
and other reports (specifically one state report), and one commenter
suggested that EPA “may have missed reviewing relevant files” by not
analyzing state and regional paper files. Another commenter expressed
concern that the study was not peer reviewed.

EPA’s response: scope and methodology

EPA acknowledged in the preamble to the March 2007 supplemental proposal
that we did not search every possible information source for damage
cases for the study of environmental problems. For example, we did not
systematically survey all state environmental agencies for relevant
cases, nor did we search paper files in EPA Regional offices. We did
solicit damage cases from regional representatives and we solicited
additional cases through the public comment process. We recognize that
there are likely to be additional cases that we did not identify.
However, we have no reason to think that additional cases would
substantially change the overall picture. In fact, information submitted
to EPA does not indicate that EPA has failed to find a representative
sample of environmental damage caused by recycling activities.

EPA maintains that historical recycling-related damage cases are much
less relevant and instructive than cases which have occurred within the
current regulatory and liability landscape, and several commenters
shared our belief. We value state commenters’ general discussion of
environmental problems encountered at recycling operations and note that
any facility taking advantage of today’s exclusion will need to comply
with all applicable protective restrictions and conditions. We also
appreciate the suggestion of additional damage cases to review for the
study. Based on our analysis of these cases, we have added four new
damage case sites to the study; updated two existing damage case
profiles with more information about environmental problems; determined
that two damage cases were previously included in the study and
additional information was not revealed to supplement the profiles; and
determined one damage case was previously reviewed and the damage was
deemed unrelated to recycling, and no additional information was exposed
to change the prior conclusion (see Addendum I of the Environmental
Problems Study in the rulemaking docket to review new and updated
damages cases). We concluded that the new damage cases and the
supplemental information added to existing cases are consistent with the
damage cases previously cited in the study; therefore, the additional
facts do not substantially change our understanding of hazardous
secondary materials recycling damage cases.

EPA maintains that the damage cases captured in the study of
environmental problems fall within the study’s scope and, as such, are
relevant for guiding the development of today’s rulemaking. As we
discussed in the study, we are interested in whether damage may be more
or less prevalent for hazardous secondary materials that are explicitly
exempted or excluded from RCRA regulatory controls and we are less
interested in historical or pre-RCRA cases (defined in the study as
before 1982). We also indicated in the study that we are interested in
“whether or not the recycler… went out of business” and which
“government program is responsible for overseeing the cleanup of the
site,” and clearly we are interested in acts of non-compliance that
resulted in environmental damage. These points of interest, among others
cited on pages 4–5 of the study, are informative for the purpose of
this rulemaking and are within the scope of the study. Consequently, we
disagree with industry and association commenters who argued that
certain damage cases did not warrant inclusion in the Environmental
Problems Study.

We acknowledge that the particular damage case referenced by a commenter
as “not a good example” for the study does in fact exhibit
environmental damage which can be partially attributed to foundry
operations pre-1982. However, as indicated in the damage case profile in
Appendix II of the study, the damage case was included in the study due
to the following factors, which do not include damage associated with
pre-1982 operations: abandonment of drums of spent catalyst, bankruptcy,
and business closure. As a result, we maintain that this damage case is
within the scope of the study.

While we acknowledge that we did not review all possible sources of
information for our study and generally relied on readily available
material, we did in fact rely on media reports for information and we
collaborated with regional representatives who are very knowledgeable
about the damage cases and who assisted us in fact checking and
suggesting damage cases. With respect to a commenter’s suggestion that
we review the “Final Report of the Waste and Hazardous Materials
Division, Fire & Explosions Task Force,” produced by Michigan DEQ, we
regret that the state has not yet made the report publicly available.
However, we note that the scope of the draft Michigan study was not
limited to hazardous secondary materials recycling operations, and shows
that accidents can and do occur in all types of manufacturing
facilities.

Despite the fact that we did not conduct an exhaustive review of all
possible sources of damage case information, we believe that the
restrictions and conditions of today’s exclusions are sufficient to
ensure safe recycling activities. For facilities operating under the
transfer-based exclusion, sudden accidental liability coverage for
bodily injury and property damage to third parties is required for all
units, and non-sudden accidental liability coverage is required for
land-based units (see section VIII.C.4. for a more detailed discussion
of liability coverage). We also note that facilities may be subject to
other regulations that ensure facility safety, such as OSHA requirements
and state and local requirements (see “Memorandum: Requirements that
other Regulatory Programs Would Place on Generators, Reclaimers and
Transporters of Hazardous Secondary Materials” made available in the
docket for today’s final rulemaking). While EPA has not done a
definitive study of other regulatory requirements, we are reasonably
comfortable with the fact that oversight by other regulatory agencies
would significantly mitigate potential damage from the non-discarded
materials.

With respect to the comment regarding peer review, we believe that while
the study was not peer reviewed, the scope and methodology are sound, as
evidenced by the small number of comments received on this issue.
Additionally, peer review was not warranted by EPA peer-review standards
because the study is not a scientific and/or technical work product.
Rather, the study is an analysis of existing and publicly available
information compiled to provide a representative view of hazardous
secondary materials recycling.

Comments: study’s relation to today’s actions

EPA received a number of comments alleging that the study does not
support today’s exclusions. Several commenters strongly believe that
the study reflected that recycling hazardous secondary materials is a
high risk activity and thus should remain fully regulated. A few
commenters wrote that the study does not support the transfer-based
exclusion and these commenters collectively predicted that the exclusion
will create future damage cases. To bolster their feedback, one
commenter stressed that the majority of all damage cases cited in the
study are located off-site from the facilities that generated the
hazardous secondary materials. Commenters also used the study’s
findings (namely damage type, damage cause, cost of cleanup) to support
their opposition to the transfer-based exclusion. In particular,
commenters stressed the financial impact to states and communities if
additional environmental clean-ups were to result from facilities taking
advantage of the exclusions.

On the other hand, EPA also received responses from several commenters
stating that the study of environmental problems supports the proposed
conditions of the transfer-based exclusion for reclaimers and
generators. While several of these commenters opposed codification of
the transfer-based exclusion, other commenters supported it as long as
there were requirements to ensure protection of public health and the
environment. For example, commenters responded that mismanagement of
hazardous secondary materials, residuals, and recycled products or
intermediaries in the damage cases clearly represented a need to have
requirements for protective management and storage, as well as a
requirement for safe residuals management. Additionally, commenters
believed in the importance of a financial assurance requirement to
protect against the damage noted in the study related to bankruptcy and
abandonment of hazardous secondary materials and residuals. A commenter
also responded that generators should assess whether the above
protections exist at reclamation facilities in order to minimize their
future liability. Additionally, in response to the study, EPA received
one comment suggesting that each of the following safeguards be added to
the exclusions: tracking materials, restriction on land-based storage,
and 90-day storage provisions in 40 CFR part 262 for all generators,
including those who recycle on-site.

EPA’s response: study’s relation to today’s actions

While EPA agrees that the study reflects the risk and problems involved
with recycling hazardous secondary materials, we disagree with those
commenters who stated that the study does not support today’s
exclusions because of the perceived risk posed by the exclusions.
Instead, we agree that the environmental problems highlighted in the
study demonstrate the need to promulgate restrictions and conditions for
the exclusions (e.g., requirements for financial assurance, reasonable
efforts, shipping documentation, hazardous secondary materials
management, and speculative accumulation). EPA maintains that the
restrictions and conditions finalized with today’s exclusions, and
discussed more in depth in sections VII.C. and VIII.C., will address the
problems identified in the study and will limit the exclusions to
materials that EPA has determined are not discarded. We also agree with
those commenters who suggest that generators should assess whether
reclamation facilities adequately manage hazardous secondary materials
in order to mitigate the risk of future environmental problems.
Consequently, we are finalizing the reasonable efforts condition for the
transfer-based exclusion.

Comments: restrictions on mining and mineral processing

A few commenters responded that the study does not support controls on
land-based storage of hazardous secondary materials at mining and
mineral processing facilities. They cited that only 1 of the 208 damage
cases is associated with a primary mineral processing facility. Thus,
the commenters argued that the small number of environmental problems
stemming from recycling at mining and mineral processing facilities does
not warrant the proposed regulatory oversight of the industry.

EPA’s response: restrictions on mining and mineral processing

EPA acknowledges that the environmental problems study included one
damage case from primary mineral processing and two damage cases from
secondary mineral processing. We note that whether an industry has a
single damage case represented in the study or numerous damage cases,
all industries are treated equally within the final rulemaking for
hazardous secondary materials generated, reclaimed, and managed in
land-based units (40 CFR 261.4(a)(23)).

Moreover, further review of publicly available data revealed nine
additional damage case profiles from primary and secondary mineral
processing facilities, which corroborates EPA's view that the findings
from the environmental problems study apply across industries, including
the mining and mineral processing industries (see Addendum I to the
environmental problems study to review new damage case profiles). Of the
nine additional damage cases, eight are primary mineral processing
facilities and one is a secondary mineral processing facility. Improper
disposal of residuals is the most frequently observed primary damage
cause at such facilities, followed by improper management of recyclables
and apparent sham recycling. Accidents and fire are the least frequently
observed, and no case had damage from abandoned materials as the primary
cause of damage. The most common primary environmental damage types
resulting from the above activities are soil contamination (present in
eight cases) and surface water contamination; air emissions and wildlife
exposure are the least common types of damage in the new profiles.

We have concluded that the additional damage cases do not substantially
change the overall picture of environmental problems caused by hazardous
secondary materials recycling activities at facilities, including mining
and mineral processing facilities. We also disagree with the
commenters’ assertion that restrictions on land-based storage units
are not supported by the study of environmental problems. Cumulative
damage causes from the study support the restrictions imposed by 40 CFR
261.4(a)(23) and the identification of additional mining and mineral
processing damage cases corroborates EPA's finding that no industry
should be exempt from restrictions and/or conditions due to the limited
number of damage case profiles exhibited in the environmental problems
study.

2. Good Recycling Practices Study

EPA completed An Assessment of Good Current Practices for Recycling of
Hazardous Secondary Materials to provide a more complete picture of the
hazardous secondary materials recycling industry in the United States.
The study examines what practices responsible generators and recyclers
currently use to ensure that their hazardous secondary materials are
recycled responsibly.

One purpose of the study was to provide the Agency with another angle
from which to view the hazardous secondary materials recycling industry.
EPA has long heard from representatives of that industry that management
of hazardous secondary materials has changed and improved since RCRA was
implemented in the early 1980s. In addition, by indicating what controls
responsible recyclers are using, the study was intended to help EPA
determine which kinds of regulatory requirements would be appropriate
and effective as conditions of the exclusions.

Some of the comments on the study of responsible practices supported the
conclusions in the study. Particularly, these commenters stated that
audits are typical, that they usually cover the subjects described in
the study, and that RCRA and CERCLA liability are drivers of responsible
recycling behavior. Several other commenters suggested that other
incentives affecting the behavior of recyclers include economic
concerns, the RCRA hazardous waste regulations, and environmental and
safety regulations under other statutes.

Comments: scope of the good recycling practices study

EPA received several critical comments in response to the study on
responsible recycling behaviors. One comment that appeared more than
once was that EPA’s study focused too much on large companies and that
many of the practices a large company undertakes with a full
environmental staff would not be possible for a smaller company and,
therefore, that the practices are not widespread among smaller
companies.

EPA’s response: scope of the good recycling practices study

EPA agrees that the focus on larger companies is a feature of the study
and discusses it in the methodology section of the report’s
introduction. Because many of the contacts for interviews for the report
came out of the public comments on the October 2003 proposed rule, much
of the information in the report came from companies large enough to
have staff responsible for submitting public comments to federal
proposed rulemakings. However, where possible and appropriate, the study
does examine the options for small businesses, as well as what small
businesses are doing that approximates the audit programs and other
practices of larger companies. The Agency did find that many small
companies are concerned with questions of liability in their hazardous
secondary materials recycling and often either belong to auditing
consortiums or already do smaller audits by mail and telephone if they
cannot afford to set up visits to the recycling facilities to examine
them in person.

Comments: purpose of the good recycling practices study

Another comment made by several commenters expressed a concern that
circular logic was in place in the March 2007 supplemental proposal. The
commenters stated that it was regulation under RCRA that led to the
growth of the good practices being described and stated that EPA was
using these practices as justification for taking away the very
regulations that led to them.

EPA’s response: purpose of the good recycling practices study

The Agency believes that those making this comment misunderstood the
relationship between the study of good recycling practices and the March
2007 supplemental proposal. The proposal did not state that this
background material was a justification for why the Agency proposed the
conditional exclusion for hazardous secondary materials not under the
control of the generator. Rather, the Agency looked to the study to
determine what the current responsible practices are and to use that
information to inform decisions on what restrictions and/or conditions
would be appropriate for the transfer-based exclusion. By promulgating
restrictions and/or conditions that will lead to responsible management
of hazardous secondary materials, the Agency intends to encourage
hazardous secondary materials recycling, while protecting human health
and the environment.

3. Market Forces Study

EPA received very few comments on Potential Effects of Market Forces on
the Management of Hazardous Secondary Materials Intended for Recycling.
The purpose of this study is to use economic theory to describe how
various market incentives can influence a firm’s decision making
process when the recycling of hazardous secondary materials is involved.
Different economic incentives between the recycling of hazardous
secondary materials and manufacturing can arise due to differences in
these two business models. As opposed to manufacturing, where the cost
of inputs of either raw materials or intermediates is greater than zero
and revenue is generated primarily from the sale of the output, some
models of hazardous secondary materials recycling involve generating
revenue primarily from receipt of the hazardous secondary materials.
Recyclers of hazardous secondary materials in this situation may thus
respond differently to economic forces and incentives from traditional
manufacturers.

Comments and EPA’s response: market forces study

Most of the commenters agreed with the underlying premise of the study
that market forces affect commercial recycling differently from how they
affect manufacturing from virgin materials, thus creating a potential
incentive for over-accumulation of hazardous secondary materials in some
circumstances. Thus, the study supports both the proposed conditions for
the transfer-based exclusion and the “useful contribution” factor
for the legitimacy criteria. EPA agrees with these comments.

One commenter stated that as a result of the market forces study, EPA
should also include a requirement that the generator evaluate the
financial health of the recycler before shipping a hazardous secondary
material to the recycler. While EPA agrees that evaluating the financial
health of a company can be useful and informative, and encourages
companies to do so, it is not an activity that lends itself to an
objective standard that would be appropriate for regulation. Instead,
EPA is requiring recyclers under the transfer-based exclusion to have
financial assurance in order to determine that negative economic factors
will not result in the hazardous secondary materials being abandoned.

One commenter disagreed with the study’s conclusion that intra- and
inter-company recyclers have more flexibility in their waste management
decisions than commercial recyclers do. The commenter noted that company
politics and internal goals can make it difficult to switch from
recycling to disposal, even if the market forces make it more
economical, and that it may take two or more months to find a disposal
contractor.

While EPA generally agrees that there are more factors at work than
those described in the study, we continue to believe that intra- and
inter-company recycling have more flexibility in waste management
decisions than a commercial recycler does. When a commercial
recycler’s entire income is from accepting hazardous secondary
materials for recycling and selling recycled products, there is no
economic alternative for it to stop recycling and continue to stay in
business unless it can afford the cost of a hazardous waste management
permit and the cost of becoming a hazardous waste disposal facility.
This finding is supported by the results of the damage cases, the
overwhelming majority of which were at commercial recycling facilities.

E. Use Constituting Disposal (UCD) and Burning for Energy (BFE)

Comments: UCD and BFE

EPA received extensive comments on both the October 2003 proposal and
the March 2007 supplemental proposal requesting that the scope of the
proposed rules be expanded to include hazardous secondary materials used
in a manner constituting disposal and hazardous secondary materials
burned for energy recovery. Commenters argued that these operations do
not involve discard, and that they can have many environmental benefits,
including resource conservation and reduction in greenhouse gas
emissions. In particular, commenters argued that hazardous waste that is
indistinguishable from a commercial fuel should be not a solid waste.
Other commenters supported keeping the exclusion focused on reclamation
and not including use constituting disposal and burning for energy
recovery. Commenters noted that these types of activities, in some
cases, are akin to discard, that precedents exist for regulation of
these hazardous secondary materials, and that recycling and reclamation
are higher on the waste management hierarchy and more likely to conserve
resources than burning for energy recovery.

EPA’s response: BFE and UCD

	EPA continues to maintain that comments on UCD and BFE are outside the
scope of the solid waste exclusions in today’s final rule, which are
focused on reclamation. EPA agrees that hazardous secondary materials
that are comparable to commercial fuels should not be solid wastes, and
the Agency has already promulgated an exclusion for certain of these
materials (40 CFR 261.4(a)(16)). However, as stated earlier, such
materials are outside the scope of today’s final exclusions and are
best addressed under separate rulemaking efforts.

XVI. Major Comments on the Exclusion for Hazardous Secondary Materials
Legitimately Reclaimed Under the Control of the Generator

A. Scope of the Exclusion

1. Exclusion for Materials Recycled On-Site

Comments: on-site exclusion

In our March 2007 supplemental proposal, EPA proposed to exclude from
the definition of solid waste hazardous secondary materials that are
generated and legitimately reclaimed at the generating facility. EPA
proposed to define “generating facility” in 40 CFR 260.10 as “all
contiguous property owned by the generator” (72 FR 14214). We noted
that our proposed definition would include situations where a generator
contracted with another company to reclaim hazardous secondary materials
at the generator’s facility, either temporarily or permanently. The
Agency solicited comment on whether facilities under separate ownership,
but located at the same site (e.g., industrial parks), should be
included within this proposed exclusion. We also solicited comment on
other definitions which might be compatible with the concept of
generator control.

Commenters who addressed this issue generally supported the proposed
on-site exclusion. They agreed with EPA that hazardous secondary
materials reclaimed by a generator at its facility are unlikely to be
discarded because the materials will be managed and monitored by a
single entity who is familiar with both the generation and recycling of
the hazardous secondary materials. Several commenters also agreed with
EPA that environmental risks were lessened if the hazardous secondary
materials were not transported off-site, and that fewer liability
questions would arise in the case of accidents or mismanagement.

With respect to companies under separate ownership, but located at the
same site, commenter reaction was more mixed. Some commenters said that
this situation is not compatible with generator control. They argued
that unrelated companies would not be as likely to have knowledge of
each other’s operations and hazardous secondary materials, and that
additional controls were necessary, such as financial assurance for the
reclaimer and reasonable efforts on the part of the generator
(conditions that EPA had proposed for the transfer-based exclusion).

Other commenters supported an exclusion for facilities under separate
ownership, but located at the same site, (i.e., co-located facilities).
These commenters said that such an exclusion would encourage recycling.
These commenters mentioned a variety of scenarios which they argued
should be eligible for the exclusion. Some commenters described
integrated chemical manufacturing operations with co-located facilities