other accidents, and the lack of conditions to address these problems
is a significant regulatory gap in the 2008 DSW exclusions. In
addition, the President recently released an Executive Order to address
these types of concerns (EO 13650--Improving Chemical Facility Safety
and Security). EPA finds that planning and preparing for an emergency
demonstrates a generator's intent to not only protect human health and
the environment, but also to reduce potential loss of valuable
hazardous secondary materials. In the absence of such requirements,
hazardous secondary materials pose a greater risk of being released and
discarded to the environment.
    Therefore, EPA is requiring that generators must follow certain
emergency preparedness and response regulations under the verified
recycler exclusion. These regulations are found in 40 CFR part 261
subpart M and are dependent on the amount of hazardous secondary
material the generator accumulates on site at any time.\16\ Under the
final rule, generators that accumulate less than or equal to 6,000 kg
of hazardous secondary material on site must meet regulations like the
emergency preparedness and response regulations currently required for
small quantity generators of hazardous waste. Generators that
accumulate more than 6,000 kg of hazardous secondary material on site
must meet regulations like the emergency preparedness and response
regulations currently required for large quantity generators of
hazardous waste. EPA chose to set the threshold at 6,000 kg based on
the current hazardous waste generator regulations, which require
generators that accumulate greater than 6,000 kg of hazardous waste on
site to comply with large quantity generator regulations, including
emergency preparedness and response regulations. EPA finds that
generators that accumulate greater amounts of hazardous secondary
material on site inherently pose greater risk to human health and the
environment from a potential release caused by a fire or explosion and
thus it is more appropriate for these generators to take additional
steps to prepare for such events.
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    \16\ Intermediate facilities and reclamation facilities must
also follow emergency prepared and response regulations, either
through the requirement of their RCRA permit or through the criteria
that must be met to obtain a verified recycler variance under 40 CFR
260.31(d).
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    Specifically, EPA is requiring that generators that accumulate less
than or equal to 6,000 kg of hazardous secondary material on site
comply with the emergency preparedness and response requirements
equivalent to those in part 265 subpart C, which discuss maintaining
appropriate emergency equipment on site, having access to alarm
systems, maintaining needed aisle space, and making arrangements with
local emergency authorities. A generator must also have a designated
emergency coordinator who must respond to emergencies and must post
certain information next to the telephone in the event of an emergency.
    For generators that accumulate more than 6,000 kg of hazardous
secondary material on site, EPA is requiring that they comply with
requirements equivalent to those in part 265 subparts C and D, which
includes all the requirements already discussed above for those
accumulating less than or equal to 6,000 kg, as well as requiring a
contingency plan and sharing the plan with local emergency responders.
EPA

recommends that the contingency plan be based on the National Response
Team's Integrated Contingency Plan Guidance (One Plan), discussed in
the Federal Register on June 5, 1996 (61 FR 28642). Under the One Plan
Guidance, the generator can develop one contingency plan that meets all
the regulatory standards for the various statutory and regulatory
provisions for contingency planning, such as EPA's Oil Pollution
Prevention Regulation or Risk Management Programs regulations, the U.S.
Coast Guard's (USCG) Facility Response Plan regulations, OSHA's
Hazardous Waste Operations and Emergency Response (HAZWOPER)
regulations, and several others.
    EPA has determined that adding these emergency preparedness and
response conditions meets the goals of the Chemical Safety EO and also
will ensure that those facilities managing hazardous secondary material
under the exclusion will be doing so in a manner that allows them to
safely recycle the hazardous secondary material and limit loss into the
environment of materials that are supposed to be recycled. These
provisions are the common-sense steps that a facility that manages
hazardous materials should take to reduce risk to their workers and the
public. Additionally, structuring the emergency preparedness and
response conditions of the verified recycler exclusion after the
existing hazardous waste requirements serves to reduce burden on
generators, as generators are already familiar and complying with this
regulations.
    Exclusion is limited to recycling performed within the United
States. Because the verified recycler exclusion requires that hazardous
secondary materials are sent to a verified reclamation facility (or
facilities) that has been granted either a RCRA permit or interim
status that addresses the hazardous secondary material or has received
a variance from EPA or the authorized state, this exclusion is limited
to recycling performed within the United States or its territories.
Because hazardous secondary materials that are exported for recycling
passes out of the regulatory control of the federal government, it is
not possible to verify whether the foreign reclaimer will safely and
legitimately recycle the hazardous secondary material and not discard
it.
2. Provisions Applicable to the Hazardous Secondary Material Generator
    Transport to a Verified Recycler. The hazardous secondary material
generator must transport hazardous secondary materials to a verified
reclamation facility (or facilities) within the United States or its
territories. A verified reclamation facility is a facility that has
been granted a variance by EPA or an authorized state under Sec.
260.31(d) or a reclamation facility where the management of the
hazardous secondary materials is addressed under a RCRA Part B permit
or interim status standards. If the hazardous secondary material will
be passing through an intermediate facility, the intermediate facility
must have been granted a variance under Sec.  260.31(d) or the
management of the hazardous secondary materials at that facility must
be addressed under a RCRA Part B permit or interim status standards.
The hazardous secondary material generator must also make contractual
arrangements with the intermediate facility to ensure that the
intermediate facility sends the hazardous secondary material to the
verified reclamation facility identified by the hazardous secondary
material generator.
    Note that in the case of a permitted facility the management of the
hazardous secondary materials must be addressed under the RCRA part B
permit or interim status standards. In other words, if the permit
standards do not extend to the hazardous secondary materials being
reclaimed, then the reclamation or intermediate facility is required to
either modify the permit to cover those materials or obtain a solid
waste variance from EPA or the authorized state before operating under
the exclusion.
    This condition addresses the major regulatory gap in the transfer-
based exclusion of lack of oversight and public participation for
hazardous secondary material recycling facilities that do not have RCRA
permits. Given the evidence of past damage cases leading to significant
risk to human health and the environment from hazardous secondary
materials originally intended for recycling and the underlying perverse
incentives of the recycling market to over-accumulate such hazardous
secondary materials intended for recycling, resulting in discard of the
material, additional oversight of recycling beyond the self-
implementing measures of the transfer-based exclusion are needed to
ensure that the hazardous secondary material is legitimately recycled
and not discarded.
    This condition replaces the self-implementing ``reasonable
efforts'' environmental audits of the recycling facility required under
the 2008 transfer-based exclusion. EPA has determined that it more
appropriate for the state or EPA to make the determination that a
facility can safely and legitimately recycle hazardous secondary
material. While EPA has found that many large companies do conduct
environmental audits of recycling facilities, many smaller generators
would not have the technical expertise or resources to conduct such an
effort.\17\ In addition, it is more efficient for the EPA or the
authorized state to perform one evaluation of a recycler via the permit
or variance process rather than have multiple evaluations of a recycler
conducted by each generator using that recycler.
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    \17\ An Assessment of Good Current Practices for Recycling of
Hazardous Secondary Materials (EPA-HQ-RCRA-2002-0031-0354).
---------------------------------------------------------------------------

    Recordkeeping. EPA is requiring hazardous secondary material
generators to maintain at the generating facility certain records that
document off-site shipments of hazardous secondary materials for a
period of three years. Specifically, for each shipment of hazardous
secondary material, the generator must maintain documentation of when
the shipment occurred, who the transporter was, the name and address of
the reclaimer(s) and, if applicable, each intermediate facility, and
the type and quantity of the hazardous secondary materials in the
shipment. This recordkeeping requirement may be fulfilled by ordinary
business records, such as bills of lading.
    In addition, hazardous secondary material generators are required
to maintain confirmations of receipt from each reclaimer and
intermediate facility for all off-site shipments of hazardous secondary
materials in order to verify that the hazardous secondary materials
reached their intended destination and were not discarded. These
receipts must be maintained at the generating facility for a period of
three years. Specifically, the hazardous secondary material generator
must maintain documentation of receipt that includes the name and
address of the reclaimer or intermediate facility, the type and
quantity of hazardous secondary materials received, and the date which
the hazardous secondary materials were received. The Agency is not
requiring a specific template or format for confirmations of receipt
and anticipates that routine business records (e.g., financial records,
bills of lading, copies of Department of Transportation (DOT) shipping
papers, electronic confirmations of receipt) could contain the
appropriate information sufficient for meeting this requirement.
    We recognize that, in some cases, reclamation of a hazardous
secondary material may involve more than one

reclamation step. In these cases, the recordkeeping condition under the
terms of the exclusion applies for each reclaimer and intermediate
facility, regardless of how many reclamation steps were involved. For
example, if a hazardous secondary material generator shipped hazardous
secondary materials to one reclaimer for partial reclamation and then
arranged for the partially-reclaimed material to be subsequently sent
to another reclaimer for ``final'' reclamation, the generator must
maintain confirmations of receipt from each reclaimer involved in the
reclamation process.
    The recordkeeping requirements are the same as those in the 2008
transfer-based exclusion and Agency continues to believe that the
recordkeeping requirements in today's rule comprise the minimum
information needed to enable effective oversight to ensure the
hazardous secondary materials were sent for reclamation and were not
discarded.
3. Provisions Applicable to the Transportation of Hazardous Secondary
Materials
    Hazardous secondary materials may be stored for up to 10 days at a
transfer facility and still be considered in transit. However, if the
facility stores the hazardous secondary materials for more than 10
days, then it would be considered an intermediate facility and subject
to the conditions in 40 CFR 261.4(a)(24)(vi). While at the transfer
facility, the hazardous secondary materials must continue to meet all
applicable DOT standards. Hazardous secondary materials may be
consolidated for shipping, but cannot be intermingled in a way that
would constitute waste management. This provision is unchanged from the
2008 transfer-based exclusion and describes the intersection of the
RCRA and DOT requirements for these shipments.
4. Provisions Applicable to the Reclamation Facility and any
Intermediate Facilities
    Recordkeeping. Reclaimers and intermediate facilities who operate
under the verified recycler exclusion must maintain certain records,
similar to the records we are requiring for hazardous secondary
material generators. Specifically, reclaimers and intermediate
facilities must maintain at their facilities for a period of three
years records of all shipments of hazardous secondary materials that
were received at the facility and, if applicable, records of all
shipments of hazardous secondary materials sent off-site from the
facility. For hazardous secondary materials received at the reclamation
and intermediate facility, such records must document the name and
address of the hazardous secondary material generator, the type and
quantity of hazardous secondary materials received at the facility, any
intermediate facilities that managed the hazardous secondary materials,
the name of the transporter that brought the hazardous secondary
materials to the facility, and the date such materials were received at
the facility.
    For hazardous secondary materials that, after being received by the
reclaimer or intermediate facility, are subsequently sent off-site for
further reclamation, reclaimers and intermediate facilities must
document the name and address of the hazardous secondary material
generator, when the shipment occurred, who the transporter was, the
name and address of the subsequent reclaimer and, if applicable, each
subsequent intermediate facility, and the type and quantity of
hazardous secondary materials in the shipment. This recordkeeping
requirement may be fulfilled by ordinary business records, such as
bills of lading.
    Reclaimers and intermediate facilities must also send confirmations
of receipt to the hazardous secondary material generator for all off-
site shipments of hazardous secondary materials received at the
facility in order to verify for the hazardous secondary material
generator that their materials reached the intended destination and
were not discarded. Specifically, the reclaimer (or each reclaimer,
when more than one reclamation step is required) and, if applicable,
each intermediate facility, must send documentation of receipt to the
hazardous secondary material generator that includes the name and
address of the reclaimer or intermediate facility, the type and
quantity of the hazardous secondary materials received and the date
which the hazardous secondary materials were received. The Agency is
not requiring a specific template or format for confirmations of
receipt and anticipates that routine business records (e.g., financial
records, bills of lading, copies of DOT shipping papers, electronic
confirmations of receipt) could contain the appropriate information
sufficient for meeting this requirement.
    In addition, reclaimers and intermediate facilities must also meet
the recordkeeping requirements under financial assurance discussed
below in this section.
    Storage of Hazardous Secondary Materials. In addition to the
condition that the hazardous secondary materials must be contained (40
CFR 261.4(a)(24)(v)(A)), reclamation facilities and intermediate
facilities must also manage the hazardous secondary materials in a
manner that is at least as protective as that employed for the
analogous raw material, where there is an analogous raw material. Where
there is no analogous raw material, the hazardous secondary material
must be contained.
    An ``analogous raw material'' is a material for which a hazardous
secondary material substitutes and which serves the same function and
has similar physical and chemical properties as the hazardous secondary
material. A raw material that has significantly different physical or
chemical properties would not be considered analogous even if it serves
the same function. For example, a metal-bearing ore might serve the
same function as a metal-bearing air pollution control dust, but
because the physical properties of the dust would make it more
susceptible to wind dispersal, the two would not be considered
analogous. Similarly, hazardous secondary materials with high levels of
toxic volatile chemicals would not be considered analogous to a raw
material that does not have these volatile chemicals or that has only
minimal levels of volatile chemicals. Storage conditions for
reclamation facilities and intermediate facilities that operate under
today's exclusion demonstrate that the materials are not discarded, but
instead are treated valuable commodities which would be used and not
lost to the environment.
    This condition is the same as the parallel condition in the 2008
transfer-based exclusion and is based on the fact that the great
majority of damage cases documented in the environmental problems study
occurred at commercial reclamation and intermediate storage facilities,
and mismanagement of hazardous secondary materials was found to be a
cause of environmental problems in approximately 40% of the incidents.
Accordingly, EPA has determined that this condition for storage is
necessary and appropriate for reclamation facilities and intermediate
facilities that take advantage of this exclusion to show that storage
of these materials is not just another way of disposing of them. In
addition, it will establish an expectation for the owner/operators of
such facilities that they must manage hazardous secondary materials in
a manner at least as protective as they would an analogous raw material
and in such a way that materials would not be released into the
environment.

    Management of recycling residuals. Another condition of the
verified recycler exclusion is that any residuals that are generated
from the reclamation processes must be managed in a manner that is
protective of human health and the environment. If any residuals
exhibit a hazardous characteristic according to subpart C of 40 CFR
part 261, or themselves are listed hazardous wastes, they are hazardous
wastes (if discarded) and must be managed according to the applicable
requirements of 40 CFR parts 260 through 273.
    This condition is the same as the parallel condition in the 2008
transfer-based exclusion and the purpose of this condition is to
clarify the regulatory status of these waste materials and to emphasize
in explicit terms that residuals that are generated from the
reclamation of hazardous secondary materials must be managed properly
so that the reclamation operation does not become another way of
avoiding waste management and simply becomes another way of discarding
unwanted material. The study of recent (i.e., post-CERCLA and post-
RCRA) recycling-related environmental problems revealed that
mismanagement of residuals was the cause of such problems in one-third
of the incidents that were documented. Some common examples of these
mismanaged residuals were acids and casings from the processing of
lead-acid batteries, solvents and other liquids generated from cleaning
drums at drum reconditioning facilities, and PCBs and other oils
generated from disassembled transformers. In many of these damage
incidents, the residuals were simply disposed of on-site with little
regard for the environmental consequences of such mismanagement or
possible CERCLA liabilities associated with cleanup of these releases.
By making proper management of the recycling residuals a condition of
the exclusion, EPA ensures that the reclamation operation is not just
another way of discarding hazardous constituents. This has the added
benefit of ensuring that the reclamation operation does not pose a
significant risk to human health and the environment.
    Financial Assurance. The financial assurance condition is another
condition that is the same as the parallel condition in the transfer-
based exclusion. By obtaining financial assurance, the reclamation or
intermediate facility is making a direct demonstration that it will not
abandon the hazardous secondary materials, it will properly
decontaminate equipment, and it will clean up any unacceptable
releases, even if events beyond its control make its operations
uneconomical. Moreover, financial assurance also addresses the
correlation of the financial health of a reclamation or intermediate
facility with the absence of discard. In essence, financial assurance
will help demonstrate that the reclamation facility or intermediate
facility owner/operators who would operate under the terms of this
exclusion are financially sound and will not discard the hazardous
secondary materials, or if the facility faces financial difficulties,
that funds would have been set aside to address any issues and,
therefore, these costs will not be imposed on the U.S. taxpayer.
    The financial assurance requirement has been retained in 40 CFR
part 261 subpart H because the substance of the requirement is
unchanged from the financial assurance requirement for the 2008 DSW
transfer-based exclusion. However, the financial assurance condition is
now one of the criteria that is evaluated under the verified recycler
solid waste variance, allowing the state or EPA to verify that the
financial assurance obtained by the reclamation facility or
intermediate facility is sufficient and accessible (in contrast, the
financial assurance condition in the 2008 DSW transfer-based exclusion
was self-implementing and not subject to review by EPA or the
authorized state prior to the facility beginning operation).
    A detailed discussion of the 40 CFR part 261 subpart H financial
assurance provisions can be found in the 2008 DSW final rule at 73 FR
64692-8, October 30, 2008.
    Verification of the Recycler. As discussed earlier, the condition
requiring verification of the recycler is the one of the major
differences between the transfer-based exclusion and the verified
recycler exclusion and addresses the major regulatory gap in the
transfer-based exclusion of lack of oversight and public participation
for hazardous secondary material recycling facilities that do not have
RCRA permits. The reclaimer and intermediate facility must have been
granted a solid waste variance by EPA or an authorized state under
Sec.  260.31(d) or must have a RCRA Part B permit or interim status
standards that address the management of the hazardous secondary
materials. An intermediate or reclamation facility may apply for a
solid waste variance to accept hazardous secondary materials by
addressing the substantive criteria of the ``reasonable efforts''
condition that had previously applied to the hazardous secondary
material generator under 40 CFR 261.4(a)(24)(B). In addition, the
variance must address the potential for risk to proximate populations
from unpermitted releases of the hazardous secondary material to the
environment.
    Specifically, to qualify for the solid waste variance, the facility
must address the following criteria:
    (1) The intermediate or reclamation facility must demonstrate that
the reclamation process for the hazardous secondary materials is
legitimate pursuant to Sec.  260.43;
    (2) The intermediate or reclamation facility must satisfy the
financial assurance condition in Sec.  261.4(a)(24)(vi)(F);
    (3) The intermediate or reclamation facility must not be subject to
a formal enforcement action in the previous three years and must not be
classified as a significant non-complier under RCRA Subtitle C, or must
provide credible evidence that the facility will manage the hazardous
secondary materials properly. Credible evidence may include a
demonstration that the facility has taken remedial steps to address the
violations and prevent future violations, or that the violations are
not relevant to the proper management of the hazardous secondary
materials;
    (4) The intermediate or reclamation facility must have the
equipment and trained personnel to safely manage the hazardous
secondary material and must meet emergency preparedness and response
requirements;
    (5) If residuals are generated from the reclamation of the excluded
hazardous secondary materials, the reclamation facility must have the
permits required (if any) to manage the residuals, have a contract with
an appropriately permitted facility to dispose of the residuals, or
present credible evidence that the residuals will be managed in a
manner that is protective of human health and the environment; and
    (6) The intermediate or reclamation facility must address the
potential for risk to proximate populations from unpermitted releases
of the hazardous secondary material to the environment (including
releases that are not covered by a permit, such as a permit to
discharge to water or air, and may include, but are not limited to,
potential releases through surface transport by precipitation runoff,
releases to soil and groundwater, wind-blown dust, fugitive air
emissions, and catastrophic unit failures), and must include
consideration of potential cumulative risks from other nearby potential
stressors.
    The rationale for each of these criteria is discussed below.
    Criterion (1) is based on the first reasonable efforts question in
the 2008

transfer-based exclusion and focuses on whether the reclamation
facility receiving hazardous secondary materials from a generator
legitimately recycles such materials. Determining whether a recycling
operation is legitimate is a fundamental basis for establishing that a
generator's hazardous secondary materials will not be discarded. For
further discussion of legitimate recycling, see section VIII.
    Criterion (2) is based on the second reasonable efforts question in
the 2008 transfer-based exclusion and addresses whether the facility
has the necessary financial assurance to cover the costs of managing
any hazardous secondary materials that remain if the facility closes.
If a facility was found to have failed to meet the condition to have
financial assurance, then it also would have failed to show a good
faith effort towards demonstrating that it intends to recycle the
hazardous secondary materials (or, in the case of the intermediate
facility, properly store the hazardous secondary material) and not
discard them. Note that the second reasonable efforts question also
required the generator to verify that the regulatory authority had been
notified by the recycler under the 2008 transfer-based exclusion, but
under the verified recycler exclusion, the state or EPA can verify that
directly, thus, it is not included here.
    Criterion (3) is based on the third reasonable efforts question in
the transfer-based exclusion and focuses on the compliance history of
the recycler or the intermediate facility (to the extent that the
hazardous secondary material generator uses an intermediate facility).
The language of this requirement has been simplified from the
corresponding reasonable efforts question because the information is
submitted to the regulatory agency who already has access to the
pertinent enforcement information, rather than obtained by the
generator who would need to rely on publicly-available data. This
criterion requires that the facility must either not be subject to a
formal enforcement action in the previous three years and not be
classified as a significant non-complier under RCRA Subtitle C, or must
provide credible evidence that the facility will manage the hazardous
secondary materials properly.
    ``Formal enforcement'' is a written document that mandates
compliance and/or initiates a criminal, civil or administrative
process, with or without appeal rights before a trial of fact that
results in an enforceable agreement or order and an appropriate
sanction. For EPA, formal enforcement action is a referral to the U.S.
Department of Justice for the commencement of a criminal or civil
action in the appropriate U.S. District Court, or the filing of an
administrative complaint, or the issuance of an order, requiring
compliance and a sanction. For states, formal enforcement action is a
referral to the state's Attorney General for the commencement of a
criminal, civil or administrative action in the appropriate forum, or
the filing of an administrative complaint, or the issuance of an order,
requiring compliance and a sanction. ``Significant non-complier'' is a
defined term in EPA's Hazardous Waste Civil Enforcement Response Policy
and means the violators have caused actual exposure or a substantial
likelihood of exposure to hazardous waste or hazardous waste
constituents; are chronic or recalcitrant violators; or deviate
substantially from the terms of a permit, order, agreement, or from the
RCRA statutory or regulatory requirements. In evaluating whether there
has been actual or likely exposure to hazardous waste or hazardous
waste constituents, EPA and the states consider both the environmental
and human health concerns, including the potential exposure of workers
to hazardous waste or hazardous waste constituents. For both terms, see
EPA's Hazardous Waste Civil Enforcement Response Policy (Dec. 2003) at
http://www.epa.gov/compliance/resources/policies/civil/rcra/finalerp1203.pdf.
    While a facility being designated as a significant non-complier
and/or the subject of a formal enforcement action does not
automatically mean that the facility would not reclaim the hazardous
secondary materials properly, it does raise questions that we believe
the facility requesting the variance should address. That is, if any
formal enforcement actions were taken against the facility in the
previous three years for such non-compliance and the facility was
alleged to be a significant non-complier, the facility must adequately
explain how it has resolved any issues or how the reclamation facility
will properly manage the hazardous secondary materials to avoid future
violations and/or enforcement actions.
    Criterion (4) is based on the fourth reasonable efforts question
from the 2008 transfer-based exclusion and addresses the technical
capability of the recycler or intermediate facility, the most basic
requirement for ensuring proper and legitimate recycling of hazardous
secondary materials. If a reclamation or intermediate facility was
found to have no equipment or inadequate equipment for storing the
hazardous secondary material or was found to have personnel who have
not been trained for reclaiming the hazardous secondary materials, it
raises serious questions as to whether the facility would properly
manage such materials and avoid discarding them to the environment.
This criterion also includes the addition of verifying that the
facility meets the new emergency preparedness and response condition
discussed earlier.
    Criterion (5) is based on the fifth reasonable efforts question in
the 2008 transfer-based exclusion and addresses another major cause of
environmental problems from recycling hazardous secondary materials:
the management of residuals. This criterion relates to discard through
the concept that a generator or reclaimer may actually be discarding
hazardous secondary materials through the release of residuals from the
recycling process. While the product made from recycling may be a
legitimate product, the whole recycling process could be considered
discard if hazardous constituents from the recycled hazardous secondary
materials are released to the environment. Roughly one-third of the
damage cases documented in EPA's environmental problems study were
caused by mismanagement of the residuals from recycling. To address
criterion (5), the petitioner would need to demonstrate that the
reclamation facility has practices in place to ensure that residuals
are managed in a manner that is protective of human health and the
environment and according to applicable federal or state standards.
    Criterion (6) is a new standard not included in the 2008 transfer-
based exclusion and is a case-specific performance-based criterion that
addresses the risk to proximate populations from unpermitted releases
of the hazardous secondary material to the environment (including
releases that are not covered by a permit, such as a permit to
discharge to water or air, and may include, but are not limited to,
potential releases through surface transport by precipitation runoff,
releases to soil and groundwater, wind-blown dust, fugitive air
emissions, and catastrophic unit failures), and must include
consideration of potential cumulative risks from other nearby potential
stressors. The purpose of this criterion is to specifically address the
differences in the preventative measures between a RCRA-permitted
facility as compared to a facility managing excluded hazardous
secondary material, including the lack of prescriptive standards for
storage and containment (including air emissions standards). In
addition, this criterion would address the finding that many of the
populations

likely to be proximate to hazardous secondary materials recycling
facilities are subject to multiple environmental stressors, including
other industrial facilities, landfills, transportation-related air
emissions, poor housing conditions (e.g., lead-based paint), leaking
underground tanks, pesticides, and incompatible land uses.
    The steps the petitioner would take to address this criterion would
depend on case-specific circumstances. For example, a facility that is
recycling a hazardous secondary material that is not particularly
mobile in the environment (e.g., a non-liquid material that does not
pose a risk of wind-blown dust) and is not located near population
centers would simply need to document these facts in order to meet this
criterion. On the other hand, a facility recycling a hazardous
secondary material that is volatile, ignitable, or otherwise has a high
potential to adversely impact nearby populations in case of a release
would need to document the specific steps taken to prevent releases.
EPA recommends that the petitioner engage the potentially affected
community in developing this document to ensure that they have
addressed the concerns expressed by the community.

E. Procedure for Obtaining a Verified Recycler Solid Waste Variance

    The process for obtaining a verified recycler solid waste variance
is the same as that for the other solid waste variances found in 40 CFR
260.30. In order to obtain a variance, a facility that manages
hazardous secondary materials that would otherwise be regulated under
40 CFR part 261 as either a solid waste or a hazardous 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
verified recyclers and intermediate facilities. The application must
address the relevant criteria discussed in detail above. The
Administrator or authorized state 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 or authorized state will accept comment on
the tentative decision for 30 days and may also hold a public hearing.
The Administrator or authorized state 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). (Note that
today's rule includes several modifications to the variances procedure
in 40 CFR 260.33, which would also apply in this case. For further
discussion see Section IX of today's preamble).

F. Termination of the Exclusion

    As with the generator-controlled exclusion (and the 2008 transfer-
based exclusion), units managing hazardous secondary materials excluded
under the verified recycler exclusion are not subject to the closure
regulations in 40 CFR parts 264 and 265 subpart G. However, when the
use of these units is ultimately discontinued, owners and operators of
reclamation facilities and intermediate facilities must manage any
remaining hazardous secondary materials, including any residues that
are not reclaimed, as hazardous waste and remove or decontaminate
contaminated containment system components, equipment structures, and
soils. These hazardous secondary materials and residues, if no longer
intended for reclamation, would also no longer be eligible for the
exclusion (which only applies to hazardous secondary materials that are
reclaimed). Failure to remove these materials within a reasonable time
frame after operations cease could cause the facility to become subject
to the full Subtitle C requirements if the Agency determines that
reclamation is no longer feasible. While this final rule does not set a
specific time frame for these activities, they typically should be
completed within the time frames established for analogous activities.
For example, the requirements for product tanks under 40 CFR 261.4(c)
allow 90 days for removal of hazardous material after the unit ceases
to be operated for manufacturing. This time frame should serve as a
guideline for regulators in determining, on a case-by-case basis,
whether owners and operators of reclamation facilities and intermediate
facilities have completed these activities within a reasonable time
frame. In any event, these hazardous secondary materials remain subject
to the speculative accumulation restrictions in 40 CFR 261.4(a)(8),
which includes both a time limitation of recycling 75% of the hazardous
secondary material within a year and a requirement that the facility be
able to show there is a feasible means of recycling the hazardous
secondary material.

VII. Remanufacturing Exclusion

    Today, EPA is also finalizing an exclusion from the definition of
solid waste for higher-value solvents transferred from one manufacturer
to another for the purpose of extending the useful life of the original
solvent product by keeping such materials in commerce to reproduce a
commercial grade of the original solvent product provided that certain
conditions are met. For the purpose of this preamble discussion, EPA is
defining this process as ``remanufacturing.'' Remanufacturing that
conforms to these conditions would not involve discard, and therefore
the hazardous secondary materials would not be regulated as solid
waste. As with all recycling-related exclusions and exemptions, such
excluded hazardous secondary materials would also need to be recycled
legitimately. (A discussion of the public comments on the July 2011
proposal and the Agency's responses can be found in section XVI of this
preamble and the full response to comment document is in the docket for
the rulemaking.)

A. Purpose of the Remanufacturing Exclusion

    In finalizing this conditional exclusion, EPA's objective is to
encourage sustainable materials management by identifying specific
types of transfers of hazardous secondary materials to third parties,
that under appropriate conditions, do not involve discard and can
result in extending the useful life of a commercial-grade chemical.
Remanufacturing these higher-value hazardous secondary materials can
have a significantly lower environmental impact than manufacturing
these chemicals for a one-time use and then transferring them for
disposal. Thus, remanufacturing allows the hazardous secondary material
product to be used again, lowering their life-cycle environmental
impacts significantly.
    Specifically, EPA has determined that, under appropriate
conditions, the potential for discard in inter-company remanufacturing
transfers for certain higher-value spent solvents would be low because
they will be incorporated into the manufacturing process rather than
accumulated or disposed of. Once these solvents are remanufactured to
commercial grade, they can be used as replacements for virgin
commercial grade solvents. The economic incentive for a company
receiving the spent solvents would be to sell or directly use (avoiding
purchase of virgin product) the remanufactured solvent products to
realize an economic value. The company sending these higher-value spent
solvents for remanufacturing is expected to have little economic
incentive to pay the receiving company more than a nominal amount of
money,

since it would already be transferring something of intrinsic market
value (materials that can be easily remanufactured for profit). So,
unlike the RCRA-permitted waste handler which can charge a considerable
fee for receiving discarded waste, the company receiving these higher-
value spent solvents for remanufacturing is expected to realize most of
its profit from the sale or use of the remanufactured solvents.
    Once remanufacturing processes are in place, EPA expects that
solvent remanufacturers would be competitive with other solvent
manufacturers even in the event of a downturn in the sizable chemical
market. Companies would also have the flexibility to redirect
remanufacturing capacity to manufacturing should it ever make economic
sense to do so, leaving little economic reason to accumulate unsold or
unused remanufactured solvents.

B. Scope and Applicability

1. Designated Solvents
    The conditional exclusion for remanufacturing applies to hazardous
spent solvents that are currently regulated as hazardous wastes because
their recycling involves reclamation. Only the following 18 spent
solvents are eligible for the remanufacturing exclusion: Toluene,
xylenes, ethylbenzene, 1,2,4-trimethylbenzene, chlorobenzene, n-hexane,
cyclohexane, methyl tert-butyl ether, acetonitrile, chloroform,
chloromethane, dichloromethane, methyl isobutyl ketone, NN-
dimethylformamide, tetrahydrofuran, n-butyl alcohol, ethanol, and/or
methanol.
    These 18 solvents are used in large volumes as chemical
manufacturing aids, chemical processing aids, and chemical formulation
aids (generally referred to as ``processing aids'' for the purpose of
this rule). The processing aid solvents assist in the reaction,
extraction, purification, and blending of ingredients and reactive
products, but are not themselves reacted. These processing aid
solvents, once used, can then be remanufactured to commercial grade
again. These higher-value solvents were selected because there are
existing markets for all these solvents to be remanufactured to serve
similar purposes to those of the original commercial-grade materials.
    Note that, as explained below, these hazardous spent solvents are
only eligible if they are remanufactured to serve certain types of
chemical functions, and if their originating use was of a specific
type. This restriction limits the exclusion to higher-value materials
and processes that resemble manufacturing rather than waste management.
    Hazardous spent solvents are particularly appropriate for the
remanufacturing exclusion because they are derived from a non-renewable
resource (petroleum), and they are manufactured in the industrial
chemicals sector, which, according to EPA's report on sustainable
materials management, ranks third overall as far as direct adverse
overall impact to the environment.\18\
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    \18\ U.S. EPA. 2020 Vision Report: Sustainable Materials
Management: The Road Ahead, Table 1, page 25. .www.epa.gov/waste/
inforesources/pubs/vision.htm. The other top ranked sectors are
electric services (#1) and cotton production (#2).
---------------------------------------------------------------------------

    In addition, remanufacturing these spent solvents represents an
opportunity for risk reduction. Risk is a function of hazard and
exposure, and, from a hazard perspective, all of these chemicals have
suspected or recognized hazardous health effects associated with their
manufacture, processing, and use.\19\ Although EPA and industry have
been working to find substitutes for the more hazardous of these
solvents, or find ways to use less of them, this has not yet been fully
achieved.20 21 With respect to the pharmaceutical sector in
particular, complex chemical processes already registered with the Food
and Drug Administration are involved, and EPA has found this a very
challenging area to address.
---------------------------------------------------------------------------

    \19\ Allen, D., Shonnard, D, Green Engineering: Environmentally
Conscious Design of Chemical Processes, Risk Concepts, chapter 2,
pgs 35-62, Austin, S., US EPA Editor, Published by Prentice-Hall,
2001.
    \20\ For information on U.S. EPA's Green Chemistry Program, see
http://www.epa.gov/gcc/.
    \21\ Information on the American Chemical Society's Green
Chemistry Institute's Pharmaceutical Roundtable is available via the
ACS Web site http://portal.acs.org/portal/acs/corg/content.
---------------------------------------------------------------------------

    In addition, some of these solvents are building block and primary
intermediate chemicals, making them difficult to replace. Until lower-
risk substitutes for these solvents are found, it is appropriate from a
health risk standpoint to minimize the volume of solvents manufactured
and to limit exposure to those already manufactured. This is the
intention of the remanufacturing exclusion.
    The exclusion can reduce exposure to these solvents in three ways.
First, the exclusion would extend the useful life of existing solvents,
which would reduce the health risks associated with their manufacture
by slowing the rate at which they are manufactured. Second, the
exclusion would reduce exposure to solvents already manufactured by
reducing the fuel blending of spent solvents. That is, remanufacturing
a spent solvent will eliminate the need for blending it with another
spent solvent to satisfy the fuel-ratio requirements of incinerators
and cement kilns. This, in turn, will reduce the fugitive emissions
associated with unloading and loading containers of volatile solvents
at fuel-blending facilities.\22\ Third and finally, the exclusion can
reduce the potential exposure from any transportation incidents, since
it is likely that spent solvents can be transported shorter distances
for remanufacturing purposes than they can for disposal purposes.\23\
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    \22\ All solvents are volatile, and virtually all spent solvents
must go through the fuel-blending process prior to disposal (U.S.
EPA, Selection of Industry Sectors, Chemicals and Functions in the
Remanufacturing Exclusion, June 2011).
    \23\ Id.
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2. Chemical Functions
    After remanufacturing, the continuing use of the solvent is limited
to reacting, extracting, purifying, or blending chemicals (or for
rinsing out the process lines associated with these functions), or
using them as ingredients in a product in the pharmaceutical, organic
chemical, plastics and resins manufacturing sectors, or the paint and
coatings sector. Furthermore, the continuing use of the solvent, after
remanufacturing, cannot involve cleaning or degreasing oil, grease, or
similar material from textiles, glassware, metal surfaces, or other
articles.
    EPA has selected these chemical functions because the
remanufactured chemical product should serve a similar functional
purpose as the original commercial-grade material so that it can
substitute for virgin product, since it is this substitution that
displaces some manufacturing of virgin product and fosters a system
where the original solvent remains in commerce and is not discarded. In
these functions, the solvents do not get contaminated by substances,
such as inks and greases that are difficult to separate, but only get
mixed with pure product ingredients, from which they can be separated
readily in a commercially feasible manner.
    Furthermore, manufacturing and processing operations can be more
easily controlled in terms of exposure and releases, whereas the spent
solvents from downstream uses, such as degreasing and cleaning
operations are of inherently lower-value and these downstream
operations result in more widespread exposure and releases and a higher
potential for discard.
    In addition, more environmental benefits will be obtained by
maximizing the number of times a chemical product can be used at high-
purity grade as an

aid to chemical manufacturing and processing, before it is used for at
lower-purity as a cleaner or degreaser. While it is possible to extend
the product life of a used chemical as a cleaner/degreaser, it takes
significantly less energy to bring solvents used as chemical
manufacturing aids back to commercial grade than to bring solvents used
as cleaners and degreasers back to lower grade functionality, making
remanufacturing of the higher-value solvents more economically
feasible.
3. Manufacturing Sectors
    The remanufacturing exclusion is limited to companies whose primary
business is manufacturing, rather than waste management, as indicated
by particular NAICS codes. Four manufacturing sectors are eligible for
the remanufacturing exclusion: Pharmaceutical manufacturing (NAICS
325412), basic organic chemical manufacturing (NAICS 325199), plastics
and resins manufacturing (NAICS 325211), and the paints and coatings
manufacturing sectors (NAICS 325510). Manufacturers within these four
sectors all use one or more of the 18 identified solvents as chemical
manufacturing, processing, and formulation aids in high volumes. Based
on the Toxics Release Inventory information, these four sectors are
also closely associated with the chemical functions identified in the
exclusion and currently use a high volume of the solvents for the
functional purposes included in this exclusion.\24\
---------------------------------------------------------------------------

    \24\ U.S. EPA, Selection of Industry Sectors, Chemicals and
Functions in the Remanufacturing Exclusion, June 2011.
---------------------------------------------------------------------------

    EPA is limiting the remanufacturing exclusion to companies whose
business is primarily manufacturing because the nature of the exclusion
relies on the fact that the eligible spent solvents are
indistinguishable from a risk perspective from the virgin chemicals
that manufacturers in these sectors are already accustomed to
handling--no special equipment and personal training beyond what the
facility already has would be needed. Chemical manufacturers in these
sectors are also subject to the Occupational Safety and Health Act
(OSHA) and Clean Air Act (CAA) standards that cover the management of
these chemicals.

C. Conditions

    Facilities operating under the remanufacturing exclusions must meet
the following conditions.
1. Notification
    Hazardous secondary material generators and remanufacturers must
submit a notification prior to operating under the exclusion and by
March 1 of each even-numbered year thereafter using EPA form 8700-12 to
the EPA Regional Administrator or the State Director, in an authorized
state. Additionally, these facilities would have to notify within 30
days of stopping management of hazardous secondary materials under the
exclusion.
    The intent of the notification condition is to provide basic
information to the regulatory agencies about who will be managing the
hazardous secondary spent solvents under the remanufacturing exclusion.
The specific information included in the notification--that is, the
information on EPA form 8700-12--enables regulatory agencies to monitor
compliance and to ensure that the hazardous secondary spent solvents
are managed in accordance with the exclusion and not discarded.\25\
---------------------------------------------------------------------------

    \25\ As with the generator-controlled exclusion in 40 CFR
261.4(a)(23), notification is a condition of the remanufacturing
exclusion. See section XIV.F for further discussion.
---------------------------------------------------------------------------

2. Remanufacturing Plan
    A key issue for the remanufacturing exclusion is how the facilities
operating under the exclusion would demonstrate that they meet the
requirements (e.g., that the hazardous spent solvents, functions, and
manufacturing sectors are those identified in the exclusion). A
straightforward solution is requiring a remanufacturing plan to be
prepared and maintained by both the hazardous secondary material
generator and remanufacturer that includes information on the types and
expected annual quantities of excluded spent solvents, the processes
and industry sectors that generate the spent solvents, and the specific
uses and industry sectors--for the remanufactured solvents.
    The hazardous secondary material generator is also required to make
arrangements with the remanufacturer to jointly develop this plan and
to verify the appropriateness of the hazardous spent solvents for the
remanufacturing process before claiming the exclusion, thus helping
ensure that the hazardous spent solvents will be remanufactured and not
discarded.
    Finally, to help ensure that the remanufacturer is a legitimate
remanufacturer, the plan must include a certification from the
remanufacturer stating ``on behalf of [insert remanufacturer facility
name], I certify that this facility is a remanufacturer under the
pharmaceutical manufacturing (NAICS 325412), basic organic chemical
manufacturing (NAICS 325199), plastics and resins manufacturing (NAICS
325211), and/or the paints and coatings manufacturing sectors (NAICS
325510), and will accept the spent solvent(s) for the sole purpose of
remanufacturing into commercial-grade solvent(s) that will be used for
reacting, extracting, purifying, or blending chemicals (or for rinsing
out the process lines associated with these functions) or for use as
product ingredients. I also certify that the remanufacturing equipment,
vents, and tanks are equipped with and are operating air emission
controls in compliance with CAA regulations under 40 CFR part 60, part
61 or part 63,\26\ or, absent such CAA standards for the particular
operation or piece of equipment covered by the remanufacturing
exclusion, are in compliance with the appropriate standards in 40 CFR
part 261 subparts AA (vents), BB (equipment) and CC (tank storage).''
---------------------------------------------------------------------------

    \26\ This condition is parallel to the provisions found at 40
CFR 264.1030(e) for AA, 40 CFR 264.1064(m) for BB, and 40 CFR
264.1080(7) for CC.
---------------------------------------------------------------------------

    One of the issues raised in the comments was concern that the
remanufacturing plan would stifle competitiveness by locking the
generator into a single remanufacturer for their hazardous spent
solvents. That was not the Agency's intention, and EPA would like to
clarify that the remanufacturing plan can be updated any time to
reflect a new remanufacturer without triggering a re-notification
requirement on the part of the generator. (If the new remanufacturer
has not notified before, then he would need to do so under the
exclusion.) As long as the remanufacturing plan that is kept on-site
reflects the current practices, including making sure that there is a
remanufacturer that will accept the hazardous spent solvents, the
generator would be in compliance with this condition.
3. Record of Shipments and Confirmation of Receipts
    Under the remanufacturing exclusion, generators and remanufacturers
need to maintain at the facility records of shipments of hazardous
spent solvents for a period of three years. Specifically, for each
shipment of hazardous spent solvent, the generator and remanufacturer
need to maintain documentation of when the shipment occurred, who the
transporter was, and the type and quantity of the hazardous spent
solvent in the shipment. This recordkeeping requirement may be

fulfilled by ordinary business records, such as bills of lading.
    In addition, generators must maintain confirmations of receipt for
all off-site shipments of hazardous spent solvent in order to verify
that the hazardous spent solvent reached their intended destination and
were not discarded. These receipts must be maintained at the facility
for a period of three years from when they were created. Specifically,
the documentation of receipt would include the name and address of the
remanufacturer, and the type and quantity of hazardous spent solvents
and date that the hazardous spent solvents were received. The Agency is
not requiring a specific template or format for confirmation of receipt
since routine business records (e.g., financial records, bills of
lading, and electronic confirmation of receipt) would contain the
appropriate information sufficient for meeting this requirement.
    This provision is necessary so all parties responsible for the
excluded hazardous spent solvent would be able to demonstrate that the
materials were in fact sent for remanufacturing and arrived at the
intended facility and were not discarded in transit.
4. Management in Tanks and Containers
    Basic good management practices dictate that solvents, whether
virgin or spent, are best stored in tanks or containers that possess
inherent controls to address issues, such as volatile air emissions,
leaks, and fires or explosions. Solvents present particular management
challenges associated with the storage of liquids containing volatile
organic chemicals and include both halogenated and non-halogenated
organic chemicals, which represent a broad range of chemicals and
associated hazards.
    By focusing on higher-value spent solvents going to
remanufacturing, the remanufacturing exclusion reduces the chance of
mismanagement of the spent solvents. However, given the history of
spent solvent mismanagement, as demonstrated in the damage cases found
in environmental problems study, EPA has determined that it is
appropriate to make an explicit condition that spent solvents excluded
under the remanufacturing exclusion be stored prior to remanufacturing
in tanks or containers that are labeled and that meet technical
standards that will ensure the hazardous spent solvents will go to
remanufacturing and will not be discarded via leaks, spills or
explosions.\27\
---------------------------------------------------------------------------

    \27\ U.S. EPA, An Assessment of Environmental Problems
Associated with Recycling of Hazardous Secondary Materials
(Updated), December 2014.
---------------------------------------------------------------------------

    For ease of implementation, EPA is establishing explicit tank and
container standards in 40 CFR part 261 subparts I and J. These
technical standards are the same as those found in 40 CFR part 264
subparts I and J, except that the part 261 subparts I and J specify
that the material is ``hazardous secondary material'' rather than
hazardous waste, omit references to RCRA permitting requirements, and
include other minor conforming changes, as discussed below. Although
the 40 CFR part 264 tank and container standards were developed for
hazardous wastes, an analysis of the full set of technical requirements
under subparts I and J shows that they are comparable to product
storage standards, including regulations promulgated under OSHA, DOT,
and industry standards.\28\ In addition to being comparable to product
storage standards, technical standards that mirror subparts I and J of
40 CFR part 264 have the benefit of being technical standards that the
regulated community is familiar with, and are designed to prevent the
spent solvents from being discarded through leaks or explosions.
---------------------------------------------------------------------------

    \28\ U.S. EPA Equivalent Containment Standards for the
Remanufacturing Exclusion, June 2011.
---------------------------------------------------------------------------

    During remanufacturing and storage prior to remanufacturing, good
management practices also include effective controls of hazardous air
emissions. Under the remanufacturing exclusion, this is ensured by
requiring that the remanufacturer certifies, as part of the
remanufacturing plan, that the remanufacturing equipment, vents, and
tanks are equipped with and are operating air emission controls in
compliance with CAA regulations under 40 CFR part 60, part 61 or part
63.\29\ Absent such CAA standards for the particular operation or piece
of equipment covered by the remanufacturing exclusion, then the
appropriate standards in 40 CFR part 261 subparts AA (vents), BB
(equipment) and CC (tank storage), which are equivalent to the
technical standards found in 40 CFR part 264 and 265 subparts AA, BB,
and CC, would apply.
---------------------------------------------------------------------------

    \29\ This condition is parallel to the provisions found at 40
CFR 264.1030(e) for subpart AA, 40 CFR 264.1064(m) for subpart BB,
and 40 CFR 264.1080(7) for subpart CC.
---------------------------------------------------------------------------

    The air emission requirements on remanufacturing equipment, vents,
and tanks will ensure that the remanufactured solvents do not become
discarded through fires and explosions, guard against the
volatilization of hazardous spent solvents, and protect workers,
handlers and transporters from spent solvent emissions. EPA notes that
most manufacturers in the pharmaceutical manufacturing (NAICS 325412),
basic organic chemical manufacturing (NAICS 325199), plastics and
resins manufacturing (NAICS 325211), and the paints and coatings
manufacturing sectors (NAICS 325510) will already have their solvent
management practices covered under the CAA regulations, but for any
remanufacturer that is not covered under CAA, 40 CFR part 261 subparts
AA, BB, and CC will ensure that they meet good management practices
appropriate for solvent management.
    In modifying the tank and container standards and the air emission
standards to apply specifically to solvents being remanufactured under
the remanufacturing exclusion, EPA has made other minor conforming
regulatory changes to 40 CFR part 261. These changes include (1)
reserving certain subparts, such as subparts K through L and N though
Z, in order to maintain the same numbering as is found in part 264 for
the tank and container standards and the air emission standards, (2)
codifying 40 CFR 261.197 to address termination of the remanufacturing
exclusion (rather than closure, as is required in part 264), and (3)
deleting references to the uniform hazardous waste manifest in 40 CFR
261.1086 because manifest requirements are not applicable under the
remanufacturing exclusion.
5. Prohibition on Speculative Accumulation
    In addition to the other conditions, hazardous spent solvents under
the remanufacturing exclusion are subject to the speculative
accumulation restrictions in 40 CFR 261.1(c)(8). Speculative
accumulation ensures that the hazardous spent solvents are
remanufactured and not discarded.

D. Closure of Tank Units

    Units managing excluded hazardous spent solvent are not subject to
the closure regulations in 40 CFR parts 264 and 265 subpart G. However,
when the use of these units is ultimately discontinued, all owners and
operators must manage any remaining hazardous spent solvents that are
not remanufactured as hazardous waste and remove or decontaminate all
hazardous residues and contaminated containment system components,
equipment structures, and soils. These hazardous spent solvents and
residues, if no longer

intended for remanufacturing, would also no longer be eligible for the
exclusion (which only applies to materials that will be remanufactured)
and would therefore be hazardous waste. These systems would be subject
to the requirements for product tanks under 40 CFR 261.4(c), which
allow 90 days for removal of hazardous material after the unit ceases
to be operated for manufacturing.

E. Petition Process for Additional Remanufacturing Exclusions

    As EPA noted in the 2011 DSW proposal, it is possible that other
hazardous secondary materials, industry sectors, and/or functional uses
beyond those being finalized today may also be suitable candidates for
the remanufacturing exclusion if they involve the transfer of a higher-
value hazardous secondary material from one manufacturer to another,
for the purpose of remanufacturing a material with significant
commercial value. In the 2011 DSW proposal, EPA requested comment on
whether to also include a specific petition process, similar to 40 CFR
260.20, where petitioners may apply to EPA to request a hazardous
secondary material, industry sector, and/or functional use be added to
the exclusion.
    After reviewing the comments, EPA has determined that a separate
rulemaking petition process is not necessary and that the current
process in 40 CFR 260.20, including the administrative procedure for
processing the petition would be the best vehicle for addressing
additional hazardous secondary materials, industry sectors, and/or
functional uses to the remanufacturing exclusion. Given the variety of
hazardous secondary materials, manufacturing processes, and markets for
potential remanufactured materials, a general process gives the most
flexibility for petitioners to submit information on potential excluded
materials.
    In addition, the Agency would like to encourage the research,
development, and demonstration of innovative recycling processes that
could be used to recover higher-value hazardous secondary materials.
Therefore EPA encourages companies to explore using the existing
regulatory flexibilities, such as treatability study exemptions in 40
CFR 261.4(e) and (f) and research development and demonstration permits
allowed under 40 CFR 270.65, to assess and develop recycling
technologies to facilitate remanufacturing of higher-value materials.
    In submitting a rulemaking petition under 40 CFR 260.20,
petitioners must include (1) the petitioner's name and address, (2) a
statement of the petitioner's interest in the proposed action, (3) a
description of the proposed action, including (where appropriate)
suggested regulatory language, and (4) a statement of the need and
justification for the proposed action, including any supporting tests,
studies, and other information. With respect to the fourth factor, EPA
would encourage petitioners to provide any information they believe
demonstrates that their hazardous secondary material is suited for a
solid waste exclusion under the remanufacturing exclusion. Below are
some considerations that may assist petitioners in developing their
petitions; however, these are guidelines only and should not constrain
suggested rulemaking revisions if the petitioner otherwise has
information that the hazardous secondary material should be excluded
from regulation.
    (1) Is the hazardous secondary material generated from a
manufacturing process that results in minimal contamination, and does
the hazardous nature of the hazardous secondary material stem chiefly
from the inherent nature of the commercial product that is to be
recovered, and not from any contamination?
    For example, the remanufacturing exclusion being promulgated today
is focused on materials that originated from using commercial grade
solvents for reacting, extracting, purifying, or blending chemicals (or
for rinsing out the process lines associated with these functions) in
the pharmaceutical manufacturing, organic chemical manufacturing,
plastics and resins manufacturing, or paint and coatings sector. As a
result, the solvents in question are only lightly contaminated, chiefly
with other commercial-grade chemicals or minor impurities. Moreover,
because the hazardous nature of the material stems from the recycled
product (or at least a significant portion of the recycled product) and
not from the contamination, the remanufacturing exclusion helps reduce
overall risk by keeping hazardous chemicals in commerce, rather than
discarding them.
    (2) Does the hazardous secondary material present a similar risk
profile as an analogous raw material or product and require no special
storage or handling beyond what is normally used for the analogous raw
material or product?
    For example, the spent solvents eligible for the remanufacturing
exclusion present the same risk profile as solvent products. The same
tanks, containers, and transportation standards that are used for
solvent products also work for the spent solvents intended for
remanufacturing.
    (3) Is there any special equipment or personnel training required
for the remanufacturing of the material or for the management of the
residuals?
    For example, under the remanufacturing exclusion being promulgated
today, the same distillation columns used to manufacture solvents from
raw materials can be used to remanufacture spent solvents. The still
bottoms generated from both processes can be managed in a similar
fashion.
    (4) Is the market for the remanufactured product stable enough to
ensure that neither the hazardous secondary material nor the
remanufactured products are over-accumulated?
    For example, the remanufacturing exclusion being promulgated today
focuses on solvents that are known to be widely used in a variety of
industries for the purposes described.

VIII. Revisions to the Definition of Legitimacy and Prohibition of Sham
Recycling

    EPA has a long-standing policy that all recycling of hazardous
secondary materials must be legitimate, including both excluded
recycling and the recycling of regulated hazardous wastes. The
legitimacy provision in today's final rule is designed to distinguish
between real recycling activities--legitimate recycling--and ``sham''
recycling, an activity undertaken by an entity to avoid the
requirements of managing a hazardous secondary material as a hazardous
waste. Because of the economic advantages in managing hazardous
secondary materials as recycled materials rather than as hazardous
wastes, there is an incentive for some handlers to claim they are
recycling when, in fact, they are conducting waste treatment and/or
disposal.
    In this final rulemaking, EPA is codifying in its regulations the
requirement that all recycling must be legitimate by adding a
prohibition on sham recycling to 40 CFR 261.2(g). In addition, EPA has
changed the definition of legitimate recycling in Sec.  260.43. The new
definition specifies four factors that must be met for recycling to be
legitimate. However, it also provides new ways that a facility can show
that it meets factors 3 and 4 of the legitimacy standard.
    The four legitimacy factors are as follows:

     Factor 1: Legitimate recycling must involve a hazardous
secondary material that

provides a useful contribution to the recycling process or to a
product or intermediate of the recycling process.
     Factor 2: The recycling process must produce a valuable
product or intermediate.
     Factor 3: The generator and the recycler must manage
the hazardous secondary material as a valuable commodity when it is
under their control.
     Factor 4: The product of the recycling process must be
comparable to a legitimate product or intermediate.

A. Background

    Under the RCRA Subtitle C definition of solid waste, many existing
hazardous secondary materials are not solid wastes and, thus, are 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 more closely resembles normal industrial
manufacturing than waste management. However, since there can be
significant cost savings from managing hazardous secondary materials
outside the RCRA Subtitle C regulatory system, some handlers may claim
that they are recycling, when, in fact, they are conducting waste
treatment and/or disposal in the guise of recycling. For example, a
facility whose primary business was mixing electric arc furnace dust
(K061) with agricultural lime for sale as a micronutrient lost its
customers and could not sell its product, but continued to accept K061
even though there was no prospect of it being used to produce a
product. To guard against practices like these, EPA has long
articulated the need to distinguish between ``legitimate'' (i.e., true)
recycling and ``sham'' (i.e., fake) recycling, beginning with the
preamble to the 1985 regulations that established the definition of
solid waste (50 FR 638, January 4, 1985).
    The prohibition on sham recycling being finalized in this
rulemaking is consistent with the Agency's longstanding policy and
interpretation of legitimate recycling that has been expressed in those
earlier preamble discussions and policy statements. The January 4,
1985, preamble to the definition of solid waste regulations established
EPA's concept of legitimacy and described several indicators of sham
recycling.
    On April 26, 1989, the Office of Solid Waste (OSW) issued a
memorandum that consolidated preamble statements concerning legitimate
recycling that had been articulated previously into a list of criteria
to be considered in evaluating legitimacy [OSWER directive
9441.1989(19)]. This memorandum, known to many as the ``Lowrance
Memo,'' has been a primary source of guidance for the regulated
community and for implementing agencies in distinguishing between
legitimate and sham recycling for many years. The October 2003 and
March 2007 DSW proposals and the October 2008 DSW final rule also all
include extensive discussions of EPA's legitimacy policy.
    In the 2008 DSW final rule, EPA promulgated a codified legitimacy
requirement for the specific exclusions in that rulemaking. Today's
final rule expands that legitimacy requirement to all hazardous
secondary material recycling, as the Agency proposed to do in the July
22, 2011, proposal (76 FR 44094). Section VIII.B discusses these final
legitimacy provisions and describes the requirements. Section VIII.C
discusses the changes EPA made from the proposed regulations. A
discussion of the public comments on the July 2011 proposal and Agency
responses can be found in section XVII of this preamble and the full
response to comment document is in the docket for the rulemaking.

B. Legitimate Recycling Provisions Being Finalized

    This section discusses the rationale and the requirements being
finalized in this rulemaking for ensuring that all recycling of
hazardous secondary material is legitimate.
1. Legitimacy for All Recycling
    In today's final rule, EPA is retaining its long-standing policy
that all recycling of hazardous secondary materials must be legitimate.
If a facility is engaged in sham recycling, this, by definition, is not
real recycling and that hazardous secondary material is being discarded
and is a solid waste. Today, we are codifying that the legitimate
recycling provision applies to all hazardous secondary materials that
are excluded or exempted from Subtitle C regulation because they are
recycled and that it also applies to recyclable hazardous wastes that
remain subject to the hazardous waste regulations. However, instead of
changing the language of each recycling exclusion or exemption to
include the requirement as we proposed in the 2011 DSW proposal, we
have instead added language in Sec.  261.2(g) that specifically
prohibits sham recycling to ensure that all recycling, including
recycling under the pre-2008 exclusions is legitimate (i.e., real
recycling). We have also determined that documentation of legitimacy is
not necessary or required for the pre-2008 recycling exclusions and
exemptions, except in the rare case where the recycling is legitimate,
but does not meet factor 4.
    EPA has determined that the four legitimacy factors being codified
in 40 CFR 260.43 are substantively the same as the existing legitimacy
policy. These factors are a simplification and clarification of the
policy statements in the 1989 Lowrance Memo and in various DSW Federal
Register notices. This policy is well understood throughout the
regulated community and among the state implementing agencies. By
providing one standard of legitimacy for all recycling, the Agency
expects there will be more clarity, consistency, and predictability for
making legitimate recycling determinations. Having one standard in the
regulations will also lead to increased knowledge and understanding of
the basic requirement that any recycling must be legitimate, leading to
better implementation and enforcement of the RCRA hazardous waste
regulations.
    In developing the codified legitimacy language, we did not intend
to raise questions about the status of general legitimacy
determinations that underlie existing exclusions from the definition of
solid waste (e.g., the solid waste exclusions in 40 CFR 261.4(a)), or
about case-specific determinations that have already been made by EPA
or the states. Current exclusions and other prior solid waste
determinations or variances that are based on the hazardous secondary
material being legitimately recycled, including determinations made in
letters of interpretation and inspection reports, remain in effect.
    Some stakeholders have raised concerns with the application of the
codified legitimacy factors to these existing waste-specific and
industry specific exclusions. In particular, as we noted in the October
2003 DSW proposal and the March 2007 DSW supplemental proposal, EPA has
examined in depth a number of waste-specific and industry-specific
recycling activities and has promulgated specific regulatory exclusions
or provisions that address the legitimacy of these practices in much
more specific terms than the general legitimacy factors as described in
40 CFR 260.43.
    EPA expects that the vast majority of recycling being performed
under these existing exclusions is currently being undertaken
conscientiously and would be considered legitimate under the new
legitimacy provision with no further action required on the part of the
company. If a company is meeting the conditions of its exclusion while
managing the hazardous secondary material responsibly and using it to
make a legitimate product, that company would not have to change any

of its existing business practices or otherwise take action to show
that its recycling meets the legitimacy factors. EPA is not requiring
documentation of compliance with the four legitimacy factors, except in
the case where the recycling does not meet factor 4 on its face, but
the facility believes that its recycling operation is nonetheless
legitimate. Many of the measures the companies take in order to meet
the terms of the conditional exclusions or to follow best management
practices are the same actions that indicate that a recycling process
is legitimate. These measures and business practices were generally
evaluated as part of the original legitimacy determination by the
agency, and therefore employment of those or similar practices
indicated legitimate recycling as addressed by the original legitimacy
determinations.
    One example is the regulation for zinc fertilizers made from
recycled hazardous secondary materials. If the hazardous secondary
material recycled under the exclusion contains recoverable amounts of
zinc, which provides a useful contribution to the recycled product
(factor 1) and results in a valuable product, i.e., zinc micronutrient
fertilizer (factor 2), EPA would consider these legitimacy factors to
be met. In addition, under the exclusion, the generator and recycler
must manage the zinc-containing hazardous secondary material as a
valuable commodity (factor 3), that is, in compliance with
261.4(a)(20)(ii)(B): Store the excluded secondary material in tanks,
containers, or buildings that are constructed and maintained in a way
that prevents releases of the secondary materials into the environment.
At a minimum, any building used for this purpose must be an engineered
structure made of non-earthen materials that provide structural
support, and must have a floor, walls and a roof that prevent wind
dispersal and contact with rainwater. Tanks used for this purpose must
be structurally sound and, if outdoors, must have roofs or covers that
prevent contact with wind and rain. Containers used for this purpose
must be kept closed except when it is necessary to add or remove
material, and must be in sound condition. Containers that are stored
outdoors must be managed within storage areas that: (1) Have
containment structures or systems sufficiently impervious to contain
leaks, spills and accumulated precipitation; and (2) provide for
effective drainage and removal of leaks, spills and accumulated
precipitation; and (3) prevent run-on into the containment system.
Finally, in the zinc fertilizer regulation, among the requirements
established by EPA are specific numerical limits on five heavy metal
contaminants and dioxins in the zinc fertilizer product at 40 CFR
261.4(a)(21). If the zinc fertilizer product meets these
concentrations, the product would meet factor 4 (assuming other
hazardous secondary contaminants have not been added to the product).
    Another example is shredded circuit boards excluded under 40 CFR
261.4(a)(14). Shredded circuit boards that contain recoverable metals
that provide a useful contribution to the product of the recycling
process (factor 1) and go to a recycling process that produces a
valuable metal product (factor 2) would meet these legitimacy factors.
In addition, under the exclusion, the shredded circuit boards must be
stored in containers sufficient to prevent a release to the environment
prior to recovery (factor 3) and must be free of mercury switches,
mercury relays and nickel-cadmium and lithium batteries (factor 4).
    Another example is hazardous secondary materials recycled in a
``closed-loop'' production process under 40 CFR 261.4(a)(8). Under this
exclusion, the hazardous secondary material is reused within the
production process from which it came, thus providing a useful
contribution to the product (factor 1) and also producing a valuable
product or intermediate (factor 2) (assuming that the production
process is, by definition, producing a product). Since the closed-loop
exclusion requires tank storage and that the entire process through
completion of reclamation is closed by being entirely connected with
pipes and other comparable enclosed means of conveyance, this
management would be considered to meet factor 3, management of the
hazardous secondary material as a valuable commodity. The product of
this type of recycling process would be comparable to a legitimate
product or intermediate because the hazardous secondary materials being
recycled are returned to the original process from which they were
generated to be reused (factor 4).
    Another example is spent wood preserving solutions and wastewaters
that have been reclaimed and reused onsite in the production process
for their original intended purpose under Sec.  261.4(a)(9). Reclaimed
wood preservatives that are used to treat wood would be making a useful
contribution to the product (factor 1) and would produce a valuable
product (factor 2). The conditions of the exclusion include a
requirement that they are managed to prevent releases, and include
specific standards for drip pads that manage the material (factor 3).
The product of this type of recycling process would be comparable to a
legitimate product or intermediate because the hazardous secondary
materials being recycled are returned to the original process from
which they were generated to be reused (factor 4).
    Another example is the long-standing exclusion for excluded scrap
metal (processed scrap metal, unprocessed home scrap metal, and
unprocessed prompt scrap metal) being recycled (40 CFR 261.4(a)(13)).
Excluded scrap metal that contains recoverable metals would provide a
useful contribution to the product of the recycling process (factor 1)
and, as long as the recycling process produces a valuable metal product
(factor 2), the recycling would meet the first two legitimacy factors.
If the recycler uses appropriate handling and good management practices
to store and manage the excluded scrap metal to prevent releases of
hazardous secondary materials to the environment, the recycler would
generally meet factor 3 for managing the scrap metal as a valuable
commodity.
    EPA notes that managing scrap metal as a valuable commodity can
include situations where it is stored on the ground. Scrap metal stored
on the ground is subject to occasional precipitation runoff that
consists essentially of water, with trace amounts of hazardous
constituents. As long as the hazardous secondary material itself is not
swept away by the runoff, this transport via precipitation runoff would
not generally be a concern. However, if metal dust, debris and pieces
of scrap metal were released into the environment, for example, by
metal falling into a waterway (as has happened in one damage case
documented by EPA), this would not be considered managed as a valuable
commodity. Finally, as long as the recovered metal meets widely-
recognized commodity standards/specifications for the metal product,
factor 4 would be satisfied.
    The conditions developed for the recycling exclusions in Sec.
261.4(a) were found to be necessary under material-specific rulemakings
that determined when the particular hazardous secondary material in
question is not a solid waste. When EPA originally made the decision
that these materials are not solid waste, the Agency took into account
the relevant factors about the hazardous secondary materials, including
how the material was managed and what toxic chemicals were present.

    In the 2011 DSW proposal, EPA explicitly did not reopen comment on
any substantive provisions of the previous recycling exclusions or
exemptions and facilities with pre-2008 exclusions can generally follow
the normal good business practices that were considered when the
exclusions were granted and still be considered to be legitimate
recycling. If the facility is complying with the terms of the exclusion
and following industry best practices to engage in legitimate recycling
activity, this would generally not raise questions as to its
legitimacy. All these examples support EPA's determination that most
current recycling under existing exclusions is legitimate, and that
companies complying with the conditions of exclusions would generally
not need to take action to show that their recycling meets the
legitimacy factors.
    However, at the same time, these material-specific exclusions from
the definition of solid waste do not negate the basic requirement that
the hazardous secondary material must be legitimately recycled.
Recycling that is not legitimate is not recycling at all, but rather
``sham recycling''--discard in the guise of recycling. Regarding the
existing exclusions in the regulations, EPA acknowledges that, in
establishing a specific exclusion, we have already determined in the
rulemaking record that the specific recycling practice is excluded from
the definition of solid waste provided all the conditions of the rule
are met. However, the Agency has always enforced its rules on the basis
that any recycling must be legitimate (See U.S. v. Self, 2 F. 3d 1071,
1079 (10th Cir. 1993); U.S. v. Marine Shale Processors, 81 F. 3d 1361,
1366 (5th Cir. 1996): Marine Shale Processors v. EPA, 81 F. 3d 1371,
1381-83 (5th Cir. 1996)). This is meant to prevent a company from
claiming to be operating under an existing exclusion and simply using
that as a way to avoid full RCRA Subtitle C regulation.
    For example, under EPA's historic guidance, a facility could not
plausibly claim the zinc fertilizer product exclusion at 40 CFR
261.4(a)(21) for a hazardous secondary material that contained
absolutely no or minimal levels of zinc, even if all the conditions of
the zinc fertilizer exclusion were met. The exclusion was developed to
encourage legitimate recycling of zinc-containing hazardous secondary
materials and the legitimacy provision prevents hazardous waste from
being discarded into purported fertilizer in the name of recycling when
the hazardous secondary material provides no recognizable benefit to
the product.
    Similarly, if a facility accepted zinc-containing hazardous waste,
claiming to make zinc fertilizer, but failed to produce a product that
was actually sold or was otherwise valuable, such a process would not
be legitimate recycling in the historic legitimacy guidance, even if
the management conditions and the constituent levels in the zinc
fertilizer exclusion were met. The consequences of the latter example
are illustrated in one of the damage cases in the environmental
problems study. A facility whose primary business was mixing electric
arc furnace dust (K061) with agricultural lime for sale as a
micronutrient lost its customers and could not sell its product.
However, the facility continued to accept K061, and, after
approximately seven months, the facility had accepted over 60,000 tons
of this hazardous waste and stored it on the ground in piles up to 30
feet high, with no prospect of it being used to produce a product and,
thus, legitimately recycled. While the initial recycling of the K061
hazardous waste was legitimate, when the facility failed to produce a
product that was actually sold, the K061 could no longer be considered
legitimately recycled. Even if the recycler were to claim that the
material may be recycled at some point in the future, the material was
being speculatively accumulated and thus, a solid and hazardous waste
at that point.
    In summary, all hazardous secondary materials recycling and
hazardous waste recycling, whether such recycling remains under
hazardous waste regulations or is excluded from the definition of solid
waste, must be legitimate. This has been our long-standing policy and
it is well known throughout the regulated community and the
implementing state regulatory agencies. To reinforce that concept and
make it clear in the regulations, we are today codifying our policy
that hazardous secondary materials being sham recycled are discarded
and thus, are solid waste. To do this, EPA has decided to codify the
following statement in Sec.  261.2 (the definition of solid waste)
instead of adding a reference to legitimacy in each of the recycling
exclusions and exemptions (as was suggested in the proposed rule): ``A
hazardous secondary material found to be sham recycled is considered
discarded and a solid waste. Sham recycling is recycling that is not
legitimate recycling as defined in Sec.  260.43.''
    For persons interested in an in-depth analysis of the evolution of
EPA's concept of legitimate recycling from policy and preamble
statements to regulations, EPA provided this analysis in the 2008 DSW
final rule that described how the promulgated legitimacy factors
compare to the previous primary guidance on legitimacy and the Lowrance
Memo. EPA continues to maintain that the legitimate recycling provision
is substantively the same as existing policy because we developed the
legitimacy factors in 40 CFR 260.43 by closely examining the questions
and sub-questions in the Lowrance Memo and in the Federal Register
preambles and converting them into four more direct factors. For a
detailed explanation of how each of the four factors is derived from
the Lowrance Memo and other existing policy statements, see 73 FR 64708
-64710, October 30, 2008.
2. All Factors Mandatory
    The structure of the legitimacy standard codified in the 2008 DSW
final rule (specifically for the exclusions promulgated in that
rulemaking) had two parts. The first part included a requirement that
hazardous secondary materials being recycled must provide a useful
contribution to the recycling process or to the product of the
recycling process and a requirement that the product of the recycling
process must be valuable. At the time, EPA considered those two factors
to make up the core of legitimacy and, therefore, a process that did
not conform to them could not be a legitimate recycling process, but
would be considered sham recycling. The second part of legitimacy in
the 2008 DSW final rule included two factors that must be considered,
but not necessarily met, when a recycler is making a legitimacy
determination. In this final rule, the Agency is changing the structure
and the application of the legitimate recycling provision so that all
four factors are written as mandatory requirements that must be met,
except as otherwise noted. The Agency has determined that this action
will improve the effectiveness and protectiveness of the legitimacy
provision. The Agency's experience with implementing the legitimate
recycling structure finalized in the 2008 DSW final rule has led us to
this realization. Even though we stressed the importance of considering
each factor in the 2008 DSW final rule, some stakeholders continue to
be under the mistaken impression that the factors defined as ``to be
considered'' were actually optional and could be ignored. We made it
clear in the 2008 DSW final rule that failing to meet a ``non-
mandatory'' factor could, in some cases, be enough to determine that a
recycling process is not legitimate. We did not intend for the ``to-be-
considered'' factors

to be less important and thus, have determined that the only way to
correct this perception and give these factors the proper weight is to
make them requirements that must be met, except as otherwise noted, on
equal footing with the other legitimacy factors.
    However, to address concerns raised, both factor 3 (managed as a
valuable commodity) and factor 4 (products must have comparable levels
of hazardous constituents) have been revised from the 2008 DSW final
rule to add flexibility to address situations where the recycling is
legitimate, but the specific situation might not meet the legitimacy
factor . For example, under factor 3, we proposed and are finalizing
the following language to more closely reflect the intent of the
provision: ``Where there is an analogous raw material, the hazardous
secondary material, must be managed, at a minimum, in a manner
consistent with the management of the raw material or in an equally
protective manner.'' Thus, a generator or recycler would meet this
factor if their hazardous secondary material is stored in a different
manner than the analogous raw material, as long as that storage is as
protective as the way the analogous raw material is stored.
    Under factor 4, we have also added more explanation and flexibility
for situations where there is no analogous product to compare to the
product made from hazardous secondary materials. For example, in some
cases, the Agency will consider a product of a recycling process that
meets widely-recognized commodity standards/specifications, such as
scrap metal, to meet factor 4. Within factor 4, the Agency is also
creating a provision for hazardous secondary materials that are
recycled by being returned to the original process from which they were
generated, such as in a closed-loop recycling process, to meet the
factor. The specific changes to factor 3 and factor 4 are described in
greater detail below.
    In making all legitimacy factors mandatory requirements, the first
sentence of the regulatory language of both factors was revised to
indicate that these factors must be met. For factor 3, the first
sentence now reads as follows: ``The generator and the recycler must
manage the hazardous secondary material as a valuable commodity when it
is under their control.'' For factor 4, the first sentence now reads as
follows: ``The product of the recycling process must be comparable to a
legitimate product or intermediate.''
    In the 2011 DSW proposal, we proposed a petition process for
facilities that believe their recycling is legitimate despite not
meeting one or both of these two factors. After review and
consideration of the public comment on this issue, the Agency has
decided that instead of a petition process, facilities that do not meet
factor 4 and yet are still legitimately recycling must notify the
Regional Administrator (or State Director, if the state is authorized)
and keep documentation and a certification in their files explaining
how the recycling is still legitimate.\30\ See section VIII.B.6 below
for a full discussion of the documentation and notification process
under factor 4.
---------------------------------------------------------------------------

    \30\ As noted above, and as described in more detail in Section
VIII.B.6, products of a recycling process that meet widely-
recognized commodity standards/specifications and hazardous
secondary materials that are recycled by being returned to the
original process from which they were generated are considered to
meet factor 4 of the legitimacy standard.
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3. Factor 1: Useful Contribution--Sec.  260.43(a)(1)
    (1) Legitimate recycling must involve a hazardous secondary
material that provides a useful contribution to the recycling process
or to a product or intermediate of the recycling process. The hazardous
secondary material provides a useful contribution if it:
    (i) Contributes valuable ingredients to a product or intermediate;
or
    (ii) Replaces a catalyst or carrier in the recycling process; or
    (iii) Is the source of a valuable constituent recovered in the
recycling process; or
    (iv) Is recovered or regenerated by the recycling process; or
    (v) Is used as an effective substitute for a commercial product.
    This factor expresses the principle that hazardous secondary
materials must contribute value to the recycling process. Providing a
useful contribution is an essential element to legitimate recycling
because real or legitimate recycling is not occurring if the hazardous
secondary material being added or recovered does not add to the
process. This factor is intended to prevent the practice of adding a
hazardous secondary material to a recycling process simply as a means
of disposing of it, or recovering only small amounts of a constituent,
which EPA would consider sham recycling.
    Paragraphs (i) through (v) of Sec.  260.43(a)(1) list five ways
that a hazardous secondary material can provide a useful contribution:
(i) Contributing valuable ingredients to a product or intermediate;
(ii) replacing a catalyst or carrier in the recycling process; (iii)
providing a valuable constituent to be recovered; (iv) being
regenerated; or (v) being used as an effective substitute for a
commercial product. Any one of these can demonstrate that the hazardous
secondary material provides a useful contribution.
    An important note in applying this factor is that not every
constituent or component of the hazardous secondary material has to
make a contribution to the recycling activity to meet the useful
contribution factor. For example, a legitimate recycling operation
involving precious metals might not recover all of the components of
the hazardous secondary material, but would recover precious metals
with sufficient value to consider the recycling process legitimate. In
addition, the recycling activity does not have to involve the hazardous
component of the hazardous secondary materials if the value of the
contribution of the non-hazardous component justifies the recycling
activity. One example of this factor from an existing exemption is
where hazardous secondary materials containing large amounts of zinc, a
non-hazardous component, are recycled into zinc micronutrient
fertilizers. However, in cases where the hazardous component is not
being used or recycled, the Agency stresses that the recycler is
responsible for the proper management of any hazardous residuals of the
recycling process.
    In a situation where more than one hazardous secondary material is
used in a single recycling process and the hazardous secondary
materials are mixed or blended as a part of the process, each hazardous
secondary material would need to satisfy the useful contribution
factor. This requirement prevents situations where a worthless
hazardous secondary material could be mixed with valuable and useful
hazardous secondary materials in an attempt to disguise and dispose of
it. In addition, a situation in which hazardous secondary materials
that can be useful to a process, but are added to that process in much
greater amounts than needed to make the end-product or to otherwise
provide its useful contribution, would also be sham recycling.
    Another way the usefulness of the hazardous secondary material's
contribution could be demonstrated is by looking at the efficiency of
the material's use in the recycling process--that is, how much of the
constituent in a hazardous secondary material is actually being used.
As an example, if there is a constituent in the hazardous secondary
material that could add value to the recycling process, but, due to
process design, most of it is not being

recovered, but is being disposed of in the residuals, this would be a
possible indicator of not meeting this factor and thus, could be sham
recycling. However, this consideration must take the actual process
being considered into account as there are certainly recycling
scenarios where a low recovery rate could still be legitimate. For
example, under an existing exclusion, if the concentration in a metal-
bearing hazardous secondary material is low (e.g., 2-4%) and a
recycling process was able to recover a large percentage of the target
metal, this factor could be met and the recycling may be legitimate
(depending on the outcome of the analysis of the other legitimacy
factors).
    When evaluating a hazardous secondary material's useful
contribution, the process can be compared to typical industry recovery
rates from raw materials to determine if the recycling process is
reasonably efficient. This method should involve an examination of the
overall process, not just a single step of the process. For example, if
one step in the process recovers a small percentage of the constituent,
but the overall process recovers a much larger percentage, the Agency
would consider the overall efficiency of the recycling process in
determining whether hazardous secondary materials are providing a
useful contribution.
4. Factor 2: Valuable Product or Intermediate--Sec.  260.43(a)(2)
    The recycling process must produce a valuable product or
intermediate. The product or intermediate is valuable if it is: (i)
Sold to a third party or (ii) used by the recycler or the generator as
an effective substitute for a commercial product or as an ingredient or
intermediate in an industrial process.
    This factor expresses the principle that the product or
intermediate coming out of the recycling process should be a material
of value, either to a third party who buys it from the recycler, or to
the generator or recycler itself, who can use it as a substitute for
another material that it would otherwise have to buy or obtain for its
industrial process. Legitimate recycling is not occurring if the
product or intermediate from the process is not of use to anyone and,
therefore, is not a real product. This factor is intended to prevent
the practice of running a hazardous secondary material through an
industrial production process to make something just for the purpose of
avoiding the costs of hazardous waste management, rather than for the
purpose of using the product or intermediate of the recycling activity.
Such a practice would be sham recycling.
    For the purpose of this factor, a recyclable product may be
considered ``valuable'' if it can be shown to have either economic
value or intrinsic value to the end user. Evaluations of ``valuable''
for the purpose of this factor should be done on a case-by-case basis,
but one way to determine that the recycling process yields a valuable
product would be if the product of the recycling process is sold to a
third party. This transaction could include money changing hands or, in
other circumstances, may involve trade or barter. A recycler that has
not yet arranged for the sale of its product to a third party could
establish value by demonstrating that it can replace another product or
intermediate that is available in the marketplace. A product of the
recycling process may be sold at a loss in some circumstances, but the
recycler should be able to demonstrate how the product is clearly
valuable to the purchaser.
    EPA also knows that many recycling processes produce outputs that
are not sold or traded to another party, but are instead used by the
generator or recycler. A product of the recycling process may be used
as a feedstock in a manufacturing process, but have no established
monetary value in the marketplace. Such recycled products or
intermediates would be considered to have intrinsic value, though it
might be less straightforward in this situation to demonstrate value if
it is necessary to do so. Demonstrations of intrinsic value could
involve showing that the product of the recycling process or
intermediate replaces an alternative product that would otherwise have
to be purchased or could involve a showing that the product of the
recycling process or intermediate meets specific product specifications
or specific industry standards. Another approach could be to compare
the product or intermediate's physical and chemical properties or
efficacy for certain uses with those of comparable products or
intermediates made from raw materials.
    Some recycling processes may consist of multiple steps that may
occur at separate facilities. In some cases, each processing step will
yield a valuable product or intermediate, such as when a metal-bearing
hazardous secondary material is processed to reclaim a precious metal
and is then put through another process to reclaim a different mineral.
When each step in the process yields a valuable product or intermediate
that is salable or usable in that form, the recycling activity would
conform to this factor.
    Like the other factors, this factor should be examined and
evaluated on a case-by-case basis looking at the specific facts of a
recycling activity. If, for instance, a recycling activity produces a
product or intermediate that is used by the recycler itself, but does
not serve any purpose and is just being used so that the product or
intermediate appears valuable, that would be an indicator of sham
recycling. An example of this would be a recycler that reclaims a
hazardous secondary material and then uses that material to make blocks
or building materials for which it has no market and then ``uses''
those building materials to make a warehouse in which it stores the
remainder of the building materials that it is unable to sell.
5. Factor 3: Managed as a Valuable Commodity--Sec.  260.43(a)(3)
    The generator and the recycler must manage the hazardous secondary
material as a valuable commodity when it is under their control. Where
there is an analogous raw material, the hazardous secondary material
must be managed, at a minimum, in a manner consistent with the
management of the raw material or in an equally protective manner.
Where there is no analogous raw material, the hazardous secondary
material must be contained. Hazardous secondary materials that are
released to the environment and are not recovered immediately are
discarded.
    This factor expresses the principle that hazardous secondary
materials being recycled should be managed in the same manner as other
valuable materials. This factor requires those making a legitimacy
determination to look at how the hazardous secondary material is
managed before it enters the recycling process. In EPA's view, a
recycler will value hazardous secondary materials that provide an
important contribution to its process or product and, therefore, will
manage those hazardous secondary materials in a manner consistent with
how it manages a valuable feedstock. If, on the other hand, the
recycler does not manage the hazardous secondary materials as it would
a valuable feedstock, the hazardous secondary materials might not be
recycled, but rather released into the environment and discarded,
thereby indicating sham recycling.
    This factor may be particularly important in the case where a
recycler has been paid by a generator to take its materials as a result
of the economic incentives in the hazardous secondary materials market.
By looking at the management of the hazardous secondary material before
it enters the recycler's process, the entity making the

legitimacy determination can tell that a material being managed like an
analogous raw material is, in fact, valued by the recycler. If the
hazardous secondary material is not being managed like a valuable raw
material because it is uncontrolled or is being released, that
indicates that the fee the recycler obtains for taking the hazardous
secondary material may be its only value to that recycler. If the fee
received were the only value to the recycler, it could mean that
discard was taking place.
    This factor addresses the management of hazardous secondary
materials in two distinct situations. The first situation is when a
hazardous secondary material is analogous to a raw material which it is
replacing in the process. In this case, the hazardous secondary
material should be managed prior to recycling similarly to the way the
analogous raw materials are managed in the course of normal
manufacturing, or in an equally protective manner.
    EPA expects that all parties handling hazardous secondary materials
destined for recycling--generators, transporters, intermediate
facilities and reclamation facilities--will handle them in generally
the same manner in which valuable raw materials would otherwise be
handled if used in the process. ``Analogous raw material'' is a raw
material for which the hazardous secondary material substitutes and
which serves the same function and has similar physical and chemical
properties as the hazardous secondary material.
    EPA proposed and is finalizing an addition to the language of this
factor as compared to the 2008 DSW final rule to include the words ``or
in an equally protective manner.'' This change means that a recycling
process would meet this factor if the hazardous secondary material is
stored in a different manner than the analogous raw material as long as
that storage was as protective as the way the analogous raw material
was stored.
    For example, a hazardous secondary material in powder form that is
shipped in a woven super sack in good condition (i.e., that does not
leak or spill) and stored in an indoor containment area would be
considered managed ``in an equally protective manner'' as an analogous
raw material that is shipped and stored in drums.
    In addition, managing a hazardous secondary material in a manner
consistent with the management of an analogous raw material can include
situations where the raw material and the hazardous secondary material
(e.g., scrap metal) are both stored on the ground.
    The second situation the factor addresses is the case where there
is no analogous raw material that the hazardous secondary material is
replacing. This could be either because the process is designed around
a particular hazardous secondary material--that is, the hazardous
secondary material is not replacing anything--or it could be because of
physical or chemical differences between the hazardous secondary
material and the raw material that are too significant for them to be
considered ``analogous.''
    Hazardous secondary materials that have significantly different
physical or chemical properties when compared to the raw material would
not be considered analogous even if they serve the same function
because it may not be appropriate to manage them in the same way. In
this situation, the hazardous secondary material would have to be
contained for this factor to be met. The term ``contained'' as
discussed in section V of this preamble, means that the unit in which
the material is stored is in good condition, with no leaks or releases
to the environment, and that the unit is designed to prevent such
releases. In addition, to meet the contained standard, the unit must be
labeled or have a system to identify the hazardous secondary material
in it and must not hold incompatible materials or pose a risk of fires.
Hazardous secondary materials in units that meet the applicable
requirements of 40 CFR parts 264 or 265 are presumed to be contained.
Land-based units can meet the definition of contained.
    The requirement that a hazardous secondary material be contained
when there is no analogous raw material to compare it to is consistent
with the idea that normal manufacturing would ensure that the valuable
material inputs are managed properly, rather than allow them to be
released into the environment.
    An example of when this provision would be used would be if a
manufacturer decided to replace a dry raw material in its process with
a liquid having the same constituents. It would not be sufficient, nor
would it make sense, for the liquid to be managed in supersacks, like a
dry material might. Instead, the liquid would have to be contained (for
example, in a tank or container).
    An important part of this factor is the statement in the regulatory
text clarifying that hazardous secondary materials that are released to
the environment and are not recovered immediately are discarded.
Valuable feedstocks or products should not be allowed to escape into
the environment through poor management and this factor clarifies that
those hazardous secondary materials that are released (and are not
immediately recovered) are clearly discarded and a solid waste. Either
a large release or ongoing releases of smaller amounts could indicate
that, in general, the hazardous secondary material is not being managed
as a valuable product, which could indicate sham recycling. Hazardous
secondary materials that are immediately recovered before they disperse
into the environment--air, soil, or water--and are reintroduced in the
recycling process are not discarded. This determination on factor 3
must be made on a case-by-case basis, however.
    In EPA's 2008 DSW final rule, this factor was one of the two
factors that was ``to be considered'' rather than one of the two
mandatory factors because EPA believed that there may be some
situations in which this factor was not met, but the recycling was
still legitimate. With the addition of the language clarifying that the
materials can be managed in a different way than the analogous raw
material as long as that management system is equally protective, EPA
has determined that there is no reason that a facility that is
legitimately using a hazardous secondary material that has value to
them in a recycling process would not meet this factor. EPA's intent
with this factor is that hazardous secondary materials are managed in
the same manner as materials that have been purchased or obtained at
some cost, as raw materials are. Just as it is good business practice
to ensure that raw materials enter the manufacturing process rather
than being spilled or released, we would expect hazardous secondary
materials to be managed effectively and efficiently in order that their
full value to the manufacturing process would be realized.
6. Factor 4: Comparison of Toxics in the Product--Sec.  260.43(a)(4)
    The product of the recycling process must be comparable to a
legitimate product or intermediate:
    (i) Where there is an analogous product or intermediate, the
product of the recycling process is comparable to a legitimate product
or intermediate if:
    (A) The product of the recycling process does not exhibit a
hazardous characteristic (as defined in part 261 subpart C) that
analogous products do not exhibit, and
    (B) The concentrations of any hazardous constituents found in
Appendix VIII of part 261 of this chapter that are in the product or

intermediate are at levels that are comparable to or lower than those
found in analogous products or at levels that meet widely-recognized
commodity standards and specifications, in the case where the commodity
standards and specifications include levels that specifically address
those hazardous constituents.
    (ii) Where there is no analogous product, the product of the
recycling process is comparable to a legitimate product or intermediate
if:
    (A) The product of the recycling process is a commodity that meets
widely recognized commodity standards and specifications (e.g.,
commodity specification grades for common metals), or
    (B) The hazardous secondary materials being recycled are returned
to the original process or processes from which they were generated to
be reused (e.g., closed loop recycling).
    (iii) If the product of the recycling process has levels of
hazardous constituents that are not comparable to or unable to be
compared to a legitimate product or intermediate per subparagraphs (i)
or (ii) of this paragraph, the recycling still may be shown to be
legitimate, if it meets the requirements specified below. The person
performing the recycling must conduct the necessary assessment and
prepare documentation showing why the recycling is, in fact, still
legitimate. The recycling can be shown to be legitimate based on lack
of exposure from toxics in the product, lack of the bioavailability of
the toxics in the product, or other relevant considerations which show
that the recycled product does not contain levels of hazardous
constituents that pose a significant human health or environmental
risk. The documentation must include a certification statement that the
recycling is legitimate and must be maintained on-site for three years
after the recycling operation has ceased. The person performing the
recycling must notify the Regional Administrator of this activity using
EPA Form 8700-12.
    This factor requires that those making a legitimacy determination
look at the concentrations of the hazardous constituents found in the
product made from hazardous secondary materials and, except where
otherwise specified, compare them to the concentrations of hazardous
constituents in analogous products. A product that contains high levels
of hazardous constituents that originate in a hazardous secondary
material feedstock could indicate that the recycler incorporated
hazardous constituents into the final product when they were not needed
to make that product effective as a way to avoid proper disposal of
that material, which would be sham recycling. This factor, therefore,
is designed to determine when toxics that are ``along for the ride''
are discarded in a final product and the hazardous secondary material
is not being legitimately recycled.
    As proposed, factor 4 was unsatisfactory to many of the
stakeholders of this rulemaking. Many representatives from the
industrial sector argued that they would not be able to meet factor 4
or would not be able to easily know if they met factor 4. EPA had
expected that a small number of facilities would have this concern and
had proposed a petition process to address this problem, but many
commenters argued that petitions would take a long time to be
processed, creating uncertainty in the industrial sector, and that a
petition process would be a drain on state and industry resources.
    As a result of comments received on the proposal, EPA has made some
revisions to this factor to ensure that long-standing legitimate
recycling processes will still be considered legitimate under this
factor. The requirements that are being promulgated today are described
in full below and include different requirements for when there is an
analogous product and when there is not, provisions for using widely-
recognized commodity standards and specifications to meet this factor,
a provision to address recycling that includes hazardous secondary
materials being put back into the process from which they came, and a
documentation, certification and notification process for facilities
that cannot meet these requirements, but still believe their recycling
is legitimate. A full description of how the requirement being
finalized differs from what was proposed in the 2011 DSW proposal can
be found in section VIII.C.3 of the preamble.
    In addition to these changes, EPA has also retained the proposed
language of this factor that states that the concentrations of
hazardous constituents in the product of the recycling process must be
``comparable to'' or lower than those found in analogous products. This
is a change from the 2008 DSW final rule, which used language stating
that the concentrations of hazardous constituents should not be
``significantly higher'' than concentrations in analogous products.
    Factor 4 starts with the statement that the product of the
recycling process made from hazardous secondary materials must be
comparable to a legitimate product or intermediate. It is important to
note that the comparison that EPA is requiring here involves the
product that comes out of a recycling process. That is, a recycler will
ordinarily compare the product of the recycling process to an analogous
product made of raw materials. For example, if a recycling process
produces paint, the levels of hazardous constituents in the paint will
be compared with the levels of the same constituents found in similar
paint made from virgin raw materials.
    However, a recycler is also allowed to perform this evaluation by
comparing the hazardous constituents in the hazardous secondary
material feedstock with those in an analogous raw material feedstock.
If the hazardous secondary material feedstock contains concentrations
of hazardous constituents that are comparable to or lower than the
concentrations in the raw material feedstock, then the end product of
the recycling process would not contain excess hazardous constituents
``along for the ride'' either. This method of showing that the product
meets factor 4 is acceptable. There may be cases in which it is easier
to compare feedstocks than it is to compare products because the
recycler knows that the hazardous secondary material is very similar in
profile to the raw material. A comparison of feedstocks may also be
easier in cases where the recycler creates an intermediate which is
later processed again and may end up in two or more products, when
there is no analogous product, or when production of the product of the
recycling process has not yet begun. Note, however, that EPA is
allowing other ways to make the comparable demonstration in cases where
there is no analogous product, as described below in section
VIII.B.6.b.
    a. Factor 4 when there is an analogous product. Paragraph
260.43(a)(4)(i) describes how a facility can meet factor 4 when the
recycled product can be compared to an analogous product that is made
without the use of hazardous secondary material as a feedstock. First,
the product of the recycling process cannot exhibit any of the
hazardous characteristics that analogous products do not exhibit. Most
issues associated with ``toxics along for the ride'' involve the
presence of hazardous constituents rather than the characteristics of
hazardous waste. It is possible, however, 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 hazardous characteristics are found in 40 CFR part 261 subpart
C and are used to identify those materials that are hazardous wastes,
but that EPA has not specifically listed in part 261 subpart D. The
characteristics are ignitability, corrosivity, reactivity, and
toxicity. The toxicity characteristic includes a list of 40
contaminants and the levels at which the material would be considered
hazardous waste when tested using the Toxicity Characteristic Leaching
Procedure. If a product produced with hazardous secondary material
exhibited a characteristic of hazardous waste that an analogous product
did not exhibit, this would be an indication that sham recycling could
be occurring as a significant hazardous constituent or characteristic
would be in the product only as a result of the recycling of the
hazardous secondary material. This requirement is in Sec.
260.43(a)(4)(i)(A). In most cases, a recycler will be familiar enough
with the material it is producing to be able to easily determine
whether it would meet any of these characteristics, but if there are
any questions, the methods for testing for the characteristics are
found in 40 CFR part 261 subpart C.
    In addition to this requirement, the product of the recycling
process must also meet Sec.  260.43(a)(4)(i)(B). This paragraph can be
met in two ways. The first way is if the concentrations of any
hazardous constituent (as defined by Appendix VIII to part 261) that is