One commenter noted they oppose the new structure for the same reason
they oppose codifying any of the legitimacy criteria. They believe that
legitimacy of recycling by its nature should be a fact-based
determination and think it is unlikely that any list of codified
requirements or criteria could account for the diversity of
circumstances under which legitimate recycling could take place. They
believe that the proposed criteria will complicate recycling decisions
(520).

Another commenter believes that the new structure does not go far enough
and urges EPA to promulgate the six criteria set forth in the
“Lowrance Memo,” which have been in operation since 1989. This
commenter is unaware of any meaningful situations where a legitimate
recycling process was deemed illegitimate through evaluation of the six
criteria. This commenter is also concerned that if EPA varies from the
existing legitimacy criteria, the states are unlikely to promulgate the
modified criteria, which could result in a crazy quilt of confusing
regulations (525).

One commenter stated that it was not clear if EPA intended to apply the
legitimacy criteria to just hazardous secondary wastes or all recycled
hazardous wastes. They expressed the opinion that if it was intended to
apply to all hazardous wastes, they believe it is more restrictive than
existing requirements and it is adding additional conditions on existing
recycled wastes. This commenter stated that generators would need time
to come into compliance when the rule is finalized (442).

One commenter was specifically concerned with the impact of having to
meet the legitimacy criteria for closed loop systems and suggested
either revising the regulation to retain the closed loop exemption or to
add a presumption that a facility engaged in onsite recycling in such a
manner is presumptively engaged in legitimate recycling (60).

9.1.2 – Response

It has been the Agency's longstanding position that any definition of
solid waste exclusion that is based on the hazardous secondary material
being recycled applies only to materials that are legitimately recycled.
This principle can be traced back to the original definition of solid
waste regulations that were promulgated on January 4, 1985 (50 FR 638).
EPA stresses in the preamble to this final rule that this principle is
unchanged: all recycling of hazardous secondary materials, whether
performed under the final exclusions in this final rule or under one of
the existing exclusions to the definition of solid waste, must be
legitimate recycling. Nonetheless, to avoid confusion among the
regulated community and state and other implementing regulatory agencies
about the status of recycling under the existing exclusions, the Agency
has decided not to codify the legitimacy factors for existing exclusions
in this rule. We expect that states and other implementing agencies will
continue to use the existing legitimacy concept for all recycling as
they have in the past in order to ensure that recycling is real and not
sham.

In developing the codified legitimacy language, EPA did not intend to
raise questions about the status of legitimacy determinations that
underlie existing exclusions from the definition of solid waste, or
about case-specific legitimacy determinations that have been made by EPA
or the state implementing agencies. Current exclusions and other prior
solid waste determinations or variances, including determinations made
in written letters of interpretation and inspection reports are
unchanged by this rule.

The Agency made this decision in part because a number of commenters (as
summarized above) raised concerns about the application of the codified
legitimacy factors to these existing waste-specific and
industry-specific exclusions. EPA did note in the October 2003 proposal
that we had examined in depth a number of waste-specific and
industry-specific recycling activities and had promulgated specific
regulatory exclusions or provisions that address some aspects of the
legitimacy of these practices in more specific terms than the general
codified legitimacy factors. Examples include the zinc fertilizer
exclusion in 40 CFR 261.4(a)(21), the shredded circuit board exclusion
in 40 CFR 261.4(a)(14), and the comparable fuels exclusion in
261.4(a)(16).  These exclusions all have specific conditions that
address some aspects of legitimate recycling for these specific
hazardous secondary materials. By limiting the codified legitimacy
provision to the recycling exclusions and non-waste determinations
finalized in this rule, EPA is avoiding any implication that we are
revisiting the earlier definition of solid waste exclusions.

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. For example,
any aspect of legitimacy that is not specifically addressed by the
conditions of a particular exclusion is nonetheless generally applicable
through the fact that all recycling exclusions only apply to legitimate,
or real, recycling.  The Agency reiterates that recycling that is not
legitimate is not recycling at all, but rather “sham recycling” –
discard in the guise of recycling. Hazardous secondary materials that
are sham recycled are discarded and thus, are solid waste. This is true
for all hazardous secondary materials recycled under the new
generator-controlled exclusion, the new transfer-based recycling
exclusion, and the new non-waste determinations, as well as hazardous
secondary materials recycled under the prior definition of solid waste
exclusions.

EPA also maintains that the legitimacy provision being finalized as part
of the recycling exclusions and non-waste determinations is
substantively the same as the existing policy because we developed the
legitimacy factors in 40 CFR 260.43 by closely examining the questions
and sub-questions in the OSWER directive 9441.1989(19) (April 26, 1989)
(a.k.a. the “Lowrance Memo”) and in the various Federal Register
preambles that address legitimate recycling and converting them into
four more direct questions. The analysis showing how the four factors
are derived from the Lowrance memo and other existing policy statements
is contained in the preamble to the final rule. This analysis shows why
EPA believes that the legitimacy factors in 40 CFR 260.43 are equivalent
to the existing legitimacy policy that applies to all hazardous
secondary material recycling.

One reason the Agency chose not to codify the legitimacy factors for
existing exclusions in this rule is to avoid any implication that the
regulated community or implementing agencies would be expected to
revisit and reevaluate past legitimacy determinations, which was a
concern expressed by commenters.  Nevertheless, although we have not
codified the legitimacy factors for existing exclusions in this rule, it
is especially important that the regulated community and implementing
agencies clearly understand that the concept of legitimate recycling,
which is obviously inherent in the existing recycling regulations, is
unchanged and remains applicable and relevant to all hazardous secondary
material recycling, including any recycling excluded under RCRA Subtitle
C. Because the concept of legitimacy (both in existing explanations and
in the codified legitimacy factors) appropriately explains the very
heart of what real recycling is, it is obvious that existing recycling
exclusions only apply to legitimate recycling.

We are not expecting the regulated community that has been operating
under an existing exclusion to make additional efforts to prove that the
recycling is legitimate but reiterate that all recycling must be
legitimate, whether that recycling is done under an existing exclusion
or under one of the newly promulgated recycling exclusions of this
rulemaking. To be clear that the codified legitimacy provision of the
final rule will not affect how the current legitimacy policy applies to
recycling under existing exclusions, the Agency explicitly designates
the 260.43 legitimacy provision as applying only to the exclusions and
non-waste determinations being finalized in the rule.

In addition, for the reasons discussed above, we do not believe it is
appropriate or necessary to specifically identify recycling conducted
under the existing closed loop recycling exclusion of 261.4(a)(8) to be
presumptively legitimate recycling, as was requested by some commenters.
 The final rule specifies that the codified legitimacy provision in
260.43 only applies to the new recycling exclusions and non-waste
determinations that are being promulgated in this rulemaking. Thus, the
codified legitimacy provisions do not apply to 261.4(a)(8).  However,
the Agency reiterates that all hazardous secondary materials recycling
and hazardous waste recycling must be legitimate, including recycling
that occurs under all of the existing exclusions, including the closed
loop recycling exclusion.

9.1.3 - All legitimacy factors should/ should not be mandatory

9.1.3 - Summary

One commenter from the 2003 proposal supported a broad exclusion from
the definition of solid waste for all materials that are legitimately
recycled.  This commenter stated that the legitimacy criteria can be
appropriately used to define the boundaries of this broad exclusion and
should only be codified if a broader exclusion is adopted (199).

9.1.3 - Response

In this rulemaking EPA is promulgating two conditional exclusions from
the definition of solid waste, one of which is a broad exclusion for
hazardous secondary materials being reclaimed. As a condition of these
exclusions and the non-waste determinations, EPA is also codifying a
legitimate recycling provision, including four factors that are
applicable to hazardous secondary material recycling under the
exclusions and non-waste determinations. We believe we have struck the
appropriate balance in the legitimacy factors that will result in more
consistent legitimacy determinations but still allow for the flexibility
necessary to apply to a variety of hazardous secondary materials
recycled in a variety of ways. Thus, we believe the legitimacy
principle, as finalized, is flexible enough to be used with the variety
of recycling that will occur under the new recycling exclusions and the
non-waste determinations of this rulemaking. In addition, this
construction of legitimacy, together with the restrictions and
conditions of the new exclusions, appropriately and reasonably defines
which recycled materials are and are not discarded under the new
exclusions.

<IP_ADDRESS> - Make all legitimacy factors mandatory

<IP_ADDRESS> - Summary

In the October 2003 proposal, the Agency requested comment on how the
legitimacy criteria (now called factors) should be structured, including
whether the criteria should all be mandatory. A number of commenters,
particularly the state environmental agencies, did recommend that all
the criteria be mandatory (68, 77, 92, 95, 119, 146, 153, 160, 177, 182,
185, 196, 211, 470, 489, 495, 507, 530, 531, 536, 538, 541, 543, 544,
548, 559, 563, 564, 558). Some of the common reasons given for
recommending all of the legitimacy criteria be mandatory included
concerns about the enforceability of optional criteria (68, 119, 470,
489, 495, 538, 543) and inconsistencies in application if only some of
the criteria are required (77, 177). Of the commenters that believe all
four criteria should be mandatory, several also suggested some type of
variance or petition procedure could be provided for legitimate
recycling that does not meet all of the criteria but can be demonstrated
to still be legitimate (146, 160, 507, 544, 548).

One commenter supported codification of mandatory legitimacy criteria
with an economic/financial component and a prohibition of storage on the
land (92). Another commenter who is concerned about the enforceability
of legitimacy stated their opinion that codifying criteria “to be
considered” would fail to draw a bright line test that is necessary to
ensure legitimate recycling (119). The Association of State and
Territorial Solid Waste Management Officials (ASTSWMO)'s hazardous waste
recycling task force stated that they believe all of the criteria are
important and that a majority of the task force believe that all four
criteria must be met by the generator and/or recycler (153, 543). NEWMOA
states agreed that all four elements of legitimacy should be mandatory
and requested specific guidance regarding the level of diligence and
recordkeeping required (541). Another commenter expressed its opinion
that if a reclaimer only has to consider two of the factors (manage as a
valuable commodity and no significant hazardous constituents in the
product); EPA is opening a loophole that would exclude from regulation
many streams that are not being legitimately reclaimed for the benefit
of a few streams that would be legitimately reclaimed. They feel this
approach would threaten human health and the environment and is
completely unnecessary (507). One commenter stated that EPA is requiring
mandatory consideration of the useful contribution and valuable product
factors but optional consideration of the other two factors (531).

Another commenter felt that EPA's proposed definition of legitimacy does
not go far enough and urged EPA to promulgate the six criteria set forth
in the 1989 “Lowrance memo.” This commenter feels EPA has
essentially shunted aside all but two of the criteria in the Lowrance
memo, giving far greater weight to two of the six criteria and not even
proposing to make these criteria mandatory (525).

One commenter expressed their opinion that EPA making two of the
legitimacy criteria discretionary is arbitrary, capricious, and contrary
to substantial evidence. This commenter believes the two non-mandatory
factors are critical to the concept of legitimate recycling and to the
protection of human health and the environment (559).

At least two commenters specifically expressed concern about the
“managed as a valuable commodity” factor being non-mandatory (538,
543). One commenter stated that if this factor is not mandatory,
discovery of releases may not occur until significant harm has already
taken place since this is a self-implementing program and the evaluation
of this factor is not within the generator's reasonable efforts
evaluation (538). ASTSWMO also stated that codification of this factor
would ensure consistency in determining when an activity is legitimate
recycling and not discard (543).

ASTSWMO also noted that a vast majority of the states that responded to
their survey believed that a legitimacy factor regarding the
concentration of hazardous constituents in the HSM-derived product
should be codified and mandatory (often referred to as the TAR factor)
(543). Another commenter expressed its opinion that the legitimacy
factor on toxics along for the ride is the most important one of all and
must be mandatory (558).

<IP_ADDRESS> - Response

Based on comments received on the October 2003 proposal, the Agency
proposed a new structure in the March 2007 supplemental proposal with
two mandatory legitimacy factors and two legitimacy factors that must be
considered, but not necessarily met in every situation. While most state
implementing agencies argued for making all four legitimacy factors
mandatory, most (but not all) industry commenters did not. The Agency
can see both viewpoints and, in the end, decided upon a course of action
that has resulted in a compromise between the two approaches. The final
design of the legitimacy factors, as reflected in the final regulatory
language codified at 40 CFR 260.43, consists of two factors that must be
met (useful contribution and valuable product/intermediate) and two
factors that must be taken into consideration in making an overall
legitimacy determination. We believe this approach and the associated
regulatory language is clearer than the existing discussions, yet
retains enough flexibility to account for the variety of legitimate
hazardous secondary materials recycling practices that exist today. In
addition, EPA believes that codifying the legitimacy factors in the
regulations for the new recycling exclusions and non-waste
determinations, coupled with the existing documentation provisions of 40
CFR 261.2(f) will provide the state implementing agencies with enough
regulatory authority to successfully enforce these recycling provisions.

EPA also notes that there appears to be some confusion about what it
means to consider the mandatory factors and the two other factors. In
making a legitimacy determination, it is the Agency's position that all
four legitimacy factors must be considered and evaluated. It is not
optional about whether to consider the “manage as a valuable
commodity” and “no significant hazardous constituents” (also known
as no TARs) factors. EPA continues to believe these two factors are also
very important in making legitimacy determinations. They must be
considered and if they are not met, the generator or recycler must be
prepared to demonstrate why the recycling is, nevertheless, legitimate.
The Agency believes this is an enforceable standard and codifying the
legitimate recycling provision in the regulations will go a long ways
towards establishing a well-known, consistent, and enforceable standard
for legitimate recycling.

The Agency did consider the option of codifying all the legitimacy
factors as mandatory with a petition or variance procedure for those
cases where the recycling did not meet one or more of the factors but
was nonetheless still legitimate recycling. However, the Agency decided
the regulatory structure being finalized provides enough flexibility to
the regulated community and to implementing agencies to evaluate those
cases which do not meet one of the two factors that must be considered.
The Agency did not see any additional advantage in setting up a new
petition process when the current system is working and will allow for
consideration of the more unusual legitimate recycling cases. EPA also
notes that commenters did not provide any examples of legitimate
recycling that did not meet the two mandatory factors and only a few
examples of legitimate recycling where the factors that must be
considered were not met.

It should also be noted that other provisions of the RCRA regulations
continue to apply and will help ensure protection of human health and
the environment when hazardous secondary materials are recycled. For
example, under both exclusions being promulgated, the hazardous
secondary materials must be contained. Any releases from the management
of a hazardous secondary material prior to recycling would be considered
discard if not immediately cleaned up and EPA and the implementing state
agencies have statutory authority to require the cleanup of those
hazardous secondary materials that have been released. In addition,
under the transfer-based recycling exclusion, generators must undertake
“reasonable efforts” to ensure that the hazardous secondary material
will be legitimately recycled. The Agency has revised the reasonable
efforts requirement in this final rule to be more clear that it includes
the generator considering the entire legitimate recycling concept being
promulgated in 40 CFR 260.43.

<IP_ADDRESS> - Make all legitimacy factors non-mandatory

<IP_ADDRESS> - Summary

A number of commenters, mainly from industry, expressed their support
for the legitimacy criteria being guidelines and not rigid standards or
regulatory requirements that all have to be met (60, 83, 85, 89, 102,
112, 127, 138, 149, 152, 157, 162, 169, 179, 180, 181, 199, 203, 222,
468, 481, 490, 491, 526, 534, 557). These commenters expressed their
opinion that EPA needs to retain the flexibility necessary to properly
assess the legitimacy of varying recycling operations and that the
legitimacy criteria should be considered on a case-by-case basis after
all the relevant facts are weighed and balanced (83, 89, 102, 112, 127,
149, 157, 169, 171, 179, 180, 181, 199, 203, 222, 225, 468, 481, 491,
526, 534). One commenter stated that if EPA believes the 1989 guidance
needs to be updated, then EPA should amend the guidance itself but
advised against any hard and fast storage or TAR criteria (89). Another
commenter recommended EPA issue a new guidance document with real-world
examples to assist generators in making such determinations but advised
against inserting legitimacy criteria into the definition of solid waste
(550). Several commenters also agreed with the preamble statements that
there may be situations when a recycling activity does not conform to
one or more of the criteria but is still legitimate recycling and felt
that the Agency should make clear that not all criteria will necessarily
be relevant in any given case (89, 102, 112, 149, 152, 169, 179, 181,
199, 222, 225, 468).

Some commenters felt that expressing the legitimacy criteria as
regulatory requirements would definitely not result in increased
recycling (62, 85, 555). One commenter said that an “all or nothing”
determination system would be markedly more stringent than the current
system and inconsistent with the stated objectives of the original
proposal (62).

One commenter also noted that the term “criteria” itself may suggest
a standard that must be achieved and asked that the original proposed
criteria be renamed factors, which would highlight that they are
considerations to help guide determinations of legitimacy (152). Another
commenter suggested the criteria be renamed “factors for
consideration” (225).

One commenter stated that given that EPA's authority to regulate
recycling activities varies along a continuum, the criteria should be
applied differently to different types of recycling activities, and they
gave as an example in-process materials from the primary metals and
minerals industry. They believe there should be a strong presumption
that, unless the in-process materials make no useful contribution to the
production process, the recycling is legitimate. For materials recycled
outside of the generating industry, this commenter said a more searching
evaluation of the legitimacy criteria may be appropriate (225).

One commenter supported keeping the legitimacy criteria as guidance for
greater flexibility and for the ability to provide explanations,
examples, and narrative discussions. Furthermore, this commenter
believes that any regulatory language seeking to distinguish between
sham recycling and legitimate recycling is a powerful signal that all
recycling will be viewed with suspicion and states its opinion that
there is a not-so-subtle implication that recycling is presumed to be
illegitimate unless one can overcome that presumption by demonstrating
to the contrary (481).

Two commenters, while stating their general belief that the two
mandatory criteria are directly related to evaluating whether a material
is being discarded, also said that they do not agree with EPA that the
two criteria should be mandatory for purposes of evaluating whether a
generator meets the proposed exclusions or is engaged in a
“non-waste” activity. They feel making these factors mandatory will
reduce regulatory flexibility and call into question years of prior
regulatory determinations (526, 528).

<IP_ADDRESS> - Response

After considering the public comments on both the original October 2003
proposal and the March 2007 supplemental proposal, EPA has decided to
finalize the legitimacy structure basically as proposed in 2007. The
first part consists of two factors that must be met, including a
requirement that the hazardous secondary materials being recycled
provide a useful contribution to the recycling process and a requirement
that the product of the recycling process be valuable. EPA considers
these two factors to be fundamental to legitimate recycling and if a
recycling process does not meet them, it is sham recycling. The second
part of the legitimacy structure includes two additional factors that
must be taken into account when a legitimacy determination is made. The
two additional factors are whether the hazardous secondary materials are
managed as a valuable commodity and whether the product of the recycling
process contains significant concentrations of hazardous constituents.
If one or both of these factors are not met, the generator and/or
recycler should be able to demonstrate why the recycling is in fact
still legitimate. There was broad consensus among the public commenters
on both proposals that the two mandatory factors are crucial indicators
of legitimacy.

The Agency notes that in general there was acknowledgement that the 2007
proposed approach was reasonable even among those commenters who
preferred a different approach. While some commenters expressed their
preference that the legitimacy factors should be guidance or guidelines,
some did state that if the Agency decided to codify the legitimacy
factors, they preferred the structure as proposed in March 2007. Others
expressed the opinion that while they preferred non-mandatory criteria,
the proposed approach was reasonable. Many state implementing agencies,
on the other hand, argued that all the factors should be written as
mandatory requirements that must be met.

In deciding to finalize the structure as proposed in March 2007 for
these recycling exclusions and non-waste determinations, EPA has decided
upon a course of action that results in a compromise between the two
approaches (all mandatory requirements versus all factors to be balanced
or considered). We believe this approach and the associated regulatory
language is clearer than existing guidance, yet retains enough
flexibility to account for the variety of legitimate hazardous secondary
materials recycling practices that exist today, including those recycled
in-process and those recycled outside of the generating industry. For
those who agreed with EPA that there may be cases where a recycling
practice does not meet one or more of the legitimacy factors, yet is
still legitimate, EPA believes the approach taken in this rulemaking
provides for that possibility where appropriate with the structure where
the two factors must be considered.

EPA agrees with the commenter who suggested factors to be a better term
than criteria and changed the wording in the March 2007 supplemental
proposal to reflect that. This final rulemaking refers to the legitimacy
factors as the key principles of legitimate recycling.

For the commenters who expressed support for keeping the legitimacy
criteria or factors as guidance or suggested simply updating the
guidance, the Agency believes that its preamble to the original
proposal, the supplemental proposal, and the final rulemaking provide a
good deal of guidance on the individual legitimacy factors, as well as
how to make overall legitimate recycling determinations. Many examples
and explanations, as well as much narrative discussion, are provided in
the final rulemaking and the Agency believes that the final rule
preamble contains much of what the commenters suggest would be included
in updated guidance. EPA plans to continue to explore further means of
providing guidance and assistance on legitimacy in the future.

The Agency strongly disagrees with the commenter who suggests EPA views
all hazardous secondary material recycling with suspicion and has a
general presumption that recycling is not legitimate. Nothing could be
farther from the truth. EPA has long recognized that a great deal of
legitimate hazardous secondary material recycling is occurring and is
promulgating these regulations, including two new recycling exclusions,
to encourage even more of that recycling. However, the Agency also
recognizes, and it is borne out by the recycling studies that were done
as a part of this rulemaking, that the economics of hazardous secondary
material recycling can provide a perverse incentive to claim to be
recycling when in fact treatment or disposal is occurring.

For the two commenters who agreed that the two mandatory legitimacy
factors are directly related to evaluating whether the hazardous
secondary material is being discarded but disagreed that they should be
mandatory in evaluating whether a generator can use one of the new
recycling exclusions, the Agency respectfully disagrees. The concept of
discard is at the crux of this final rulemaking. If a generator is not
meeting one or both of the mandatory legitimacy factors (useful
contribution and valuable product/intermediate), then that generator is
not truly recycling and thus is not eligible for any exclusion that is
based on the hazardous secondary material being recycled. The Agency
does not believe this will reduce regulatory flexibility and has
specifically stated that we see no reason for prior legitimacy
determinations to be called into question as a result of codifying the
legitimate provision as a condition of the new recycling exclusions and
non-waste determinations. We have also stated that states and other
implementing agencies should continue to use the existing legitimacy
concept for all recycling as they have done in the past in order to
ensure the recycling is real and not sham.

<IP_ADDRESS> - Clarify legitimacy structure

<IP_ADDRESS> - Summary

After the October 2003 proposal, commenters expressed concern that EPA's
proposed legitimacy criteria could be construed as creating four hard
and fast rules or a checklist that must be satisfied in all cases in
order for the recycling to be considered legitimate (89, 181, 442).
Other commenters viewed the four criteria favorably but asked for
clarification on whether all or only some of the four criteria must be
met in order for the recycling to be considered legitimate (104, 164,
185, 196, 219).

One commenter suggested EPA make clear that where all four criteria of
legitimacy are met, the recycling practice would not be found to lack
legitimacy based on a subjective evaluation (i.e., there should be a
safe harbor for legitimate recycling where all four criteria are
satisfied) (178).

With the March 2007 supplemental proposal, EPA proposed a new structure
for legitimacy, with two factors that must be met and two factors that
must be considered. One commenter noted that they believe three criteria
should be mandatory: the two proposed by EPA and the “toxics along for
the ride” criterion (457). Another commenter agreed with the approach
in the 2007 proposal and noted that they are concerned about the
difficulty that small companies and businesses would have in the event
that EPA changed course and decided to make all four factors mandatory
(471.2). This commenter, an association that represents a number of
small businesses, noted that its members were most concerned with having
to interpret the two factors that must be considered and urged EPA to
not alter that aspect of the proposal. This commenter also urged EPA to
add an additional listing for “other relevant factors” to the
legitimacy determination. They felt that absent such language,
regulators would not feel authorized to consider additional information
that companies may be able to provide to demonstrate the legitimacy of
emerging recycling opportunities (471.2).

One commenter noted that while EPA proposed to make two of the four
criteria in 2003 factors for consideration, the commenter did not find
any reassurance that implementing agencies would properly apply these
two as factors instead of mandatory criteria (481).

Two commenters asked the Agency to provide sufficient clarity or
approval with respect to legitimacy determinations and suggested one
piece of objective information might be to require recyclers to be
registered under the International Standards Organization (ISO) for
ISO-9001 and ISO-14001. The commenters noted that there would be other
indicia of qualification that would have to be taken into consideration
in selecting a recycler but that could be one qualification (72, 101,
555).

One company commented that the legitimacy factors set forth in proposed
40 CFR 261.2(g)(2)(i)(A) and 261.2(g)(2)(i)(C) are redundant because
they both require the secondary material contribute an ingredient that
is recovered (557).

One commenters suggested minor wording changes to the legitimacy
regulatory text (182).

<IP_ADDRESS> - Response

The Agency has decided on a course of action for legitimacy whereby two
factors must be met (useful contribution and valuable product) and two
factors must be considered (managed as a valuable commodity and no
significant hazardous constituents in the product). If one or both of
the two factors that must be considered are not met, the generator
and/or recycler should be able to demonstrate why the recycling is,
nevertheless, legitimate. The Agency has clarified the preamble and
regulatory language in this final rulemaking to be clear on what factors
must be met for the recycling to be deemed legitimate and notes that we
are essentially finalizing the legitimacy structure as proposed in March
2007 for the two new recycling exclusions and the non-waste
determinations. For the commenters who supported making three or all
four factors mandatory, we have explained in the preamble and in more
detail in this response to comment document that there may be
circumstances under which a legitimate recycling process might not
conform to one or both of the factors that must be considered. The
Agency stresses that we expect those recycling practices to be the
exception, rather than the rule, and in any case, the generator and/or
recycler should be able to demonstrate why the recycling is in fact
still legitimate.

As for the comment to add a listing for “other relevant factors,”
after two public comment periods, no additional factors were identified
and we believe the four factors codified in the legitimacy provision at
40 CFR 260.43 appropriately identify the core principles of legitimate
recycling. Nothing in the regulatory language precludes the regulated
community and the implementing state agencies from considering other
information. In fact, EPA has stressed in the preamble to the final rule
that additional information about the recycling activity may be helpful
and could be used when assessing the four legitimacy factors and in
making a determination about whether a specific recycling activity is
legitimate. We encourage the regulated community and implementing
agencies to use any and all information about the recycling process to
come to an informed decision on the legitimacy of a hazardous secondary
material operation.

In regard to the commenter that requested a safe harbor if a specific
recycling practice meets all four criteria, the Agency is not entirely
sure what the commenter is requesting. If a specific recycling practice
meets all four factors of legitimacy, the Agency would consider that
practice to be legitimate: Implementing agencies do and should have the
right to ask for information to show that the recycling is legitimate.
The Agency does not see the need to provide a specific “safe harbor”
for a given legitimate recycling practice.

In response to the commenter who suggested ISO certification for
recyclers be required, the Agency is not convinced the ISO certification
is essential for legitimate recycling. It may be indicative of a good
recycler but we do not believe it necessarily covers the same principles
as the legitimate recycling concept and thus, are not requiring ISO
certification on the part of recyclers as a criterion for legitimate
recycling.

In regard to the commenter that thought that proposed 40 CFR
261.2(g)(2)(i)(A) and 261.2(g)(2)(i)(C) were redundant, the Agency sees
those provisions (§260.43(b)(1)(i) and §260.43(b)(1)(iii) in the final
regulatory text) as different ways a hazardous secondary material can
contribute and notes that in order to provide a useful contribution, the
hazardous secondary material only needs to meet one.

In response to the commenter who suggested inserting the word
“listed” before hazardous wastes, the Agency is not making the
change because we think the original wording is clearer.

9.1.4 - The legitimacy factors should/ should not be codified

9.1.4 – Summary

In response to EPA’s proposals to codify the legitimacy factors in the
regulations, EPA received a variety of general comments in addition to
comments specifically supporting or opposing codification.

(1) One commenter stated that legitimacy is too central of an issue to
leave to guidance and is very relevant to determining whether discard
has occurred, especially compared to some of the considerations EPA has
long included in the definition of solid waste. The commenter stated
that EPA should codify the two factors that EPA proposed to be mandatory
in 2007 but should delete the two factors for consideration. (465)

(2) Another commenter stated that codification of legitimacy may result
in additional costs and benefits that are not included in the RIA (even
though the codification of the factors is not intended to impose
additional requirements). The commenter asked what EPA thinks those
costs and benefits would be. (479)

(3) One commenter stated that EPA's statement that the proposal is
deregulatory and less stringent in nature is inaccurate because of the
codification of the legitimacy factors and their applicability on all
recycled materials, which is broader than the existing requirements,
even when they only have to be considered. This commenter specifically
mentioned the role of the consideration of the factor for comparing
toxics in the product. The commenter states that EPA appears to address
comments opposed to the codification of this factor by making it a
consideration, but because it can still “overrule” the other three
factors, it is still a primary part of the determination. (506)

(4) Commenters stated that the factors, if codified, must be codified to
ensure flexibility and must be codified with preamble discussion on how
they are to be applied. One commenter stated specifically that they
should be codified as general principles to be balanced. (91, 93)

(5) One commenter stated that legitimacy factors are adequate
substitutes for management standards in the exclusions being finalized
in this rulemaking. (492)

9.1.4 - Response

(1) EPA agrees with the commenter's statement that legitimacy is a very
important issue in determining whether an entity is operating under an
exclusion. As part of this final rule, EPA has codified legitimacy
provisions as a condition of the new exclusions and of the non-waste
determinations, but, to avoid confusion about the status of recycling
under the existing exclusions, has not codified legitimacy for those
existing exclusions. The existing legitimacy policy continues to apply
for all recycling as it has in the past.

EPA does not agree with the commenter’s statement that the two factors
to be considered should not be codified with the mandatory factors.
Although the factors to be considered are not always relevant to every
recycling process, EPA still thinks they are often important in
determining legitimacy and has addressed this by making it mandatory
that they be considered, but not necessarily met in every case.

(2) Although EPA is not codifying the legitimacy provision for all
recycling, we believe that the codified legitimacy factors are
substantively the same as the policy that has been in effect and,
therefore, are not more stringent.

(3) EPA does not agree with the comment that the legitimacy factors
being finalized in this rulemaking would be more stringent than the
existing policy. EPA is clarifying that it considers these factors to be
consistent with the criteria in the 1989 Lowrance Memo—a main guidance
document on legitimacy. In response to the comment that not meeting the
toxics along for the ride factor can still result in a determination
that recycling is not legitimate even when the other three factors are
met even though it is just a factor for consideration, EPA responds that
this is correct and appropriate. EPA has maintained the factors to be
considered as part of the factors being codified because those factors
are important in the determination of legitimacy. Although they are
sometimes not appropriate to a specific recycling process, EPA does
believe they are important and that in some cases they may indicate that
a recycling process is not legitimate even when other factors are met.
However, EPA notes that it does not think there are frequent cases of
sham recycling that fail just one of the factors: more frequently, the
process will fail several or all of the factors.

(4) EPA agrees with the comment that the legitimacy factors should be
codified in such a way as to ensure flexibility and with preamble
discussion on how they should be applied. EPA has sought a balance in
its rulemaking between having specific tests and having the flexibility
needed to apply the factors to a wide range of recycling practices in
different industrial and commercial settings. EPA has also added
additional explanation of the factors and additional examples of
legitimate and sham recycling to the preamble of the final rule to
provide guidance on how to apply the factors. EPA has not finalized all
four factors as general principles to be balanced because it believes
that the two mandatory factors must always be met for a recycling
process to be legitimate. The hazardous secondary material must make a
useful contribution to the process or the recycled product and the
recycling process must result in a valuable product.

(5) EPA does not agree with the comment that the legitimacy factors are
adequate substitutes for management standards in the rulemaking. EPA
believes that these factors are appropriate for distinguishing between
real and sham recycling, but believes that in the case of exclusions
from the definition of solid waste, further conditions or restrictions
may be appropriate depending on the universe of materials covered by the
exclusion and is finalizing those that are appropriate for each of the
exclusions finalized in this rulemaking.

<IP_ADDRESS> - Codify the legitimacy factors

<IP_ADDRESS> - Summary

(1) In response to its requests for comments in both the 2003 proposal
and the 2007 supplemental proposal regarding whether it should codify
the legitimacy factors, EPA received many comments. A large number of
commenters expressed their agreement with EPA's plan to codify the
legitimacy factors. Twelve entities commented on both the 2003 and the
2007 actions and supported codification in both sets of comments. (43,
44, 52, 68, 73, 77, 91, 92, 95, 97, 98, 104, 110, 112, 119, 122, 129,
130, 217, 140, 144, 145, 146, 148, 149, 153, 164, 167, 171, 177, 185,
193, 194, 210, 211, 213, 219, 456, 457, 458, 470, 488, 471.2, 489, 495,
509, 510, 518, 521, 524, 531, 538, 539, 541, 543, 544, 558, 560, 563)

Several commenters added statements about why they thought it was
important to codify the legitimacy factors. The reasons mentioned were
that codifying legitimacy will be more protective of human health and
the environment, that it will encourage recycling, that it will bring
more clarity to what the requirements are for recycling to be legitimate
and the process for making determinations, that it will lead to more
consistency in how legitimacy is applied in the various states, that it
will provide a basis for enforcing against sham recycling, and that it
puts the burden of proof for legitimacy on industry. One commenter
stated that if the legitimacy requirements are not codified it creates a
system that is not fair to the legitimate recyclers, is unenforceable,
and can only be called a sham itself. (68, 73, 98, 185, 219, 456, 457,
470, 489, 509, 558)

One commenter in this category specifically reiterated EPA's proposal
that the legitimacy factors should apply to all recycling. (68)

In addition, several commenters also stated that they only supported the
codification of legitimacy for the new exclusions discussed in EPA's
proposal and not for already existing recycling exclusions. One
commenter argued that if legitimacy were to apply to existing
exclusions, that could reopen determinations already made and the
overall rule proposed would not be deregulatory. (473, 492)

Other suggestions mentioned by commenters were that legitimacy should be
codified if the 2003 exclusion EPA called the “Broader exclusion for
legitimate recycling” was finalized or that just the factors that make
up the core of legitimacy (2003's criteria 2 and 3) should be codified.
(74, 119, 460)

(2) Several commenters supported the codification of legitimacy
conditionally. Several commenters expressed that they only wanted the
factors to be codified if they were all non-mandatory and were to be
considered on a case-by-case basis. (74, 93, 180, 199/468, 203)

<IP_ADDRESS> - Response

(1) It has been the Agency's longstanding position that any definition
of solid waste exclusion that is based on the hazardous secondary
material being recycled applies only to materials that are legitimately
recycled. This principle can be traced back to the original definition
of solid waste regulations that were promulgated on January 4, 1985 (50
FR 638). EPA stresses in the preamble to this final rule that this
principle is unchanged: all recycling of hazardous secondary materials,
whether performed under the final exclusions in this final rule or under
one of the existing exclusions to the definition of solid waste, must be
legitimate recycling. Nonetheless, to avoid confusion among the
regulated community and state and other implementing regulatory agencies
about the status of recycling under the existing exclusions, the Agency
has decided not to codify the legitimacy factors for existing exclusions
in this rule. We expect that states and other implementing agencies will
continue to use the existing legitimacy concept for all recycling as
they have in the past in order to ensure that recycling is real and not
sham.

The Agency made this decision in part because a number of commenters (as
summarized above) raised concerns about the application of the codified
legitimacy factors to these existing waste-specific and
industry-specific exclusions. EPA did note in the October 2003 proposal
that we had examined in depth a number of waste-specific and
industry-specific recycling activities and had promulgated specific
regulatory exclusions or provisions that address some aspects of the
legitimacy of these practices in more specific terms than the general
codified legitimacy factors. Examples include the zinc fertilizer
exclusion in 40 CFR 261.4(a)(21), the shredded circuit board exclusion
in 40 CFR 261.4(a)(14), and the comparable fuels exclusion in
261.4(a)(16).  These exclusions all have specific conditions that
address some aspects of legitimate recycling for these specific
hazardous secondary materials. By limiting the codified legitimacy
provision to the recycling exclusions and non-waste determinations
finalized in this rule, EPA is avoiding any implication that we are
revisiting the earlier definition of solid waste exclusions. 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 and that all aspects of
legitimacy must be taken into account when evaluating the applicability
of these exclusions to potential recycling operations.

(2) In response to the comments that if the factors are codified, they
should be non-mandatory and they should be considered on a case-by-case
basis and the comment that just the factors that make up the core of
legitimacy (2003's criterion 2 and criterion 3 which are the mandatory
factors in the final rule) should be codified, EPA agrees that there is
need for some flexibility in the implementation of legitimacy and has
tried to establish that in the structure of its codified factors. EPA
believes that the two mandatory factors, that the hazardous secondary
materials being recycled provide a useful contribution to the recycling
process or product and that the product of the recycling process be
valuable, are both necessary for a process to be legitimate. EPA
believes that the two other factors, which are the factors that must be
considered, are important in determining legitimacy, but understands
that there will be some situations in which a recycling process does not
conform to one of these factors, but would still be considered
legitimate. Each case will be different and the facts of a specific
situation should be evaluated individually against the two mandatory
factors and the two factors that must be considered.

<IP_ADDRESS> - Do not codify the legitimacy factors

<IP_ADDRESS> - Summary

(1) EPA received a variety of comments expressing differing degrees of
the opinion that EPA should not codify the legitimacy factors.

Commenters stated that they are against the codification of the
legitimacy factors in the regulations. (62, 70, 89, 93/472, 102,
123/537, 126, 150, 152/481, 154, 173, 179, 181, 190, 197, 200, 204, 222,
442, 476, 520, 526, 534, 555)

Commenters stated that they do not see the need to codify the legitimacy
factors. One commenter stated that codification is not needed because
the value of the material is more motivating than the avoidance of
disposal costs for it, so it will be managed properly. (83, 102/506,
152, 486, 506, 550)

There were several comments that compared the proposed codification of
legitimacy to the existing guidance in the form of the Lowrance memo.
Commenters stated that they see no benefit in codification over the
guidance and that they are comfortable using the Lowrance guidance.
Three reasons given were that there is more flexibility to the factors
when they are guidance, that there is no simple formula for weighing
factors, and that the guidance is more widely available to the regulated
community than it was in the past. One commenter expressed concern that
over time the codified factors would become less flexible. (83, 93, 102,
152/481, 154, 181/520, 203, 222, 442, 520, 534)

Commenters suggested that EPA should issue an updated guidance and make
sure it is broadly available to the regulated community instead of
codifying legitimacy. One commenter added that this should at least be
the case for currently deregulated materials. (62, 89, 102/506, 222,
550)

Commenters stated that guidance is better than rulemaking. One commenter
stated that this is because there is more opportunity in guidance to
discuss the factors and to provide explanations and examples, since you
cannot fit all that in regulatory text. (152/ 481, 173)

One commenter stated that there would not be a gain from codification
because the existing guidance already puts the burden on the party doing
the recycling to document why they claim to be legitimate. (520)

In opposing the codification of the factors, commenters also expressed
the opinion that, if codified, legitimacy would be more restrictive than
it was before. Commenters stated that codifying legitimacy would mean
that the factors are more restrictive than they are currently. One
commenter added that if the factors are applied to existing exclusions,
the rulemaking would not be deregulatory. Another commenter argued that
the legitimacy rule would create high compliance burdens, requiring the
collection of information and requiring evaluations not currently
required and not warranted. (102/506, 442, 486, 537)

One commenter stated that the legitimacy rule appears to create a new
“uber-criterion” that regulators can use to trump any and all
existing recycling exclusions as necessary to regulate or preclude any
recycling activity they do not approve of and would provide a basis for
them to regulate materials whether they are discarded or not. (537)

Commenters stated that codification would not increase recycling or
would lead to less recycling. One commenter stated that the structured
nature of the legitimacy factors may cause this outcome while the other
singled out codification of factor 4 as being problematic. Another
commenter stated that codifying legitimacy would lead to mandatory
recordkeeping not previously required. (154, 181, 203, 204, 506, 555)

One commenter stated that, if codified, the legitimacy factors would
sever the legitimacy analysis from any recognizable mooring. Rather than
asking whether a particular recycling exclusion really applies, the new
analysis would require a completely independent overall legitimacy
analysis in which any number of specified and unspecified factors could
be considered—generally without the application of objective
standards—to resolve a question that is not clearly defined anywhere.
(537)

One commenter stated that it would be difficult for small businesses to
comply with the legitimacy factors. (222)

Commenters stated that they oppose the codification of the legitimacy
factors because of the nature of the factors themselves and potential
problems with their implementation. Commenters stated that they do not
think that hard and fast factors are appropriate or workable for
legitimacy. One concern about set factors was that they would not
appropriately capture all recycling scenarios and there will be
implementation problems if they are codified. (89, 190, 222, 534)

Commenters stated that the proposed criteria would lead to too much
uncertainty because of the subjective evaluation and balancing involved
in a determination. There would be real questions about the
enforceability of the criteria as regulatory requirements. (150, 179)
Another commenter added that codification would only be appropriate if
there were rigid tests available to determine when the factors had been
met. (481)

Commenters stated that putting the generic criteria in the regulations
would serve no purpose when a determination on legitimacy is
fact-specific. (126, 154, 197)

Commenters stated that the legitimacy principles are inappropriate when
the secondary material being recycled is an in-process metal-bearing
secondary material from mineral processing operations that is being
further processed in a beneficiation or primary mineral processing
operation. (89)

One commenter stated that the legitimacy factors EPA proposed are flawed
because they do not incorporate many of the key concepts and
considerations that should be taken into account in a legitimacy
determination. (222)

Commenters expressed concern that codification of legitimacy would send
a negative message about recycling. Commenters stated that codifying
legitimacy would say that all recycling should be viewed with suspicion
and should be disfavored unless there is nothing any regulator could
find objectionable. (152/481, 173, 537) One commenter added that the
codified legitimacy criteria would call into question the status of
recycling that otherwise falls squarely within the scope of recycling
exclusions. (123)

Commenters stated that they opposed codification of the legitimacy
factors because of EPA's basis for requiring them or because of what the
commenters perceive as EPA's purpose or reason for codifying the
factors. One commenter stated that EPA is trying to justify codification
of legitimacy by saying it will address the universe of recyclers who
conduct marginal operations, but only six percent of the damage cases in
the Agency's study involved on-site recycling. (102/506)

One commenter stated that the codification of legitimacy is not based on
any direction from the D.C. Circuit Court and is, in fact, a new layer
of regulation on materials that are already exempt and which the Court
already told EPA it does not have authority to regulate. (102) Another
commenter added that codifying legitimacy would essentially allow EPA to
regulate secondary materials that are excluded from regulation and
expressed the opinion that this would lead to less reclamation. (204)

One commenter stated that EPA should not codify the legitimacy factors
because they have not said that they can not enforce without
codification. (506)

In addition to these comments, commenters suggested that if EPA wants to
codify legitimacy, it should do so as it previously has, on
waste-specific and industry-specific bases. (126, 197)  One commenter
stated that EPA has already published rules to address industry-specific
practices and that these would overlap. (173)

Commenters stated that the codified legitimacy factors should not apply
to previously existing exclusions, just to the intra-industry recycling
exclusion. (70, 74)

One commenter stated that codifying legitimacy will stimulate new rounds
of interpretation and assessment that would not be productive. (222)

(2) Commenters on the 2003 proposal stated that codification of the
factors would result in a presumption that all four criteria must be
met, a change that would constrain recycling. (181, 222)

(3) Another commenter added that generators do not have the knowledge or
expertise to make the complex technical and engineering judgments to
evaluate these factors as required under reasonable efforts. (476)

<IP_ADDRESS> - Response

(1) As discussed above in section 9.1.2. of this chapter, to avoid
confusion among the regulated community and state and other implementing
regulatory agencies about the status of recycling under the existing
exclusions, the Agency has decided not to codify the legitimacy factors
for existing exclusions in this rule. We expect that states and other
implementing agencies will continue to use the existing legitimacy
concept for all recycling as they have in the past in order to ensure
that recycling is real and not sham. However, it has been the Agency's
longstanding position that any definition of solid waste exclusion that
is based on the hazardous secondary material being recycled applies only
to materials that are legitimately recycled. This principle can be
traced back to the original definition of solid waste regulations that
were promulgated on January 4, 1985 (50 FR 638). EPA stresses in the
preamble to this final rule that this principle is unchanged: all
recycling of hazardous secondary materials, whether performed under the
final exclusions in this final rule or under one of the existing
exclusions to the definition of solid waste, must be legitimate
recycling.

In developing the codified legitimacy language, EPA did not intend to
raise questions about the status of legitimacy determinations that
underlie existing exclusions from the definition of solid waste, or
about case-specific legitimacy determinations that have been made by EPA
or the state implementing agencies. Current exclusions and other prior
solid waste determinations or variances, including determinations made
in written letters of interpretation and inspection reports are
unchanged by this rule.

The Agency made this decision in part because commenters raised concerns
about the application of the codified legitimacy factors to these
existing waste-specific and industry-specific exclusions. 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. For example, any
aspect of legitimacy that is not specifically addressed by the
conditions of a particular exclusion is nonetheless generally applicable
through the fact that all recycling exclusions only apply to legitimate,
or real, recycling. The Agency reiterates that recycling that is not
legitimate is not recycling at all, but rather “sham
recycling”—discard in the guise of recycling. Hazardous secondary
materials that are sham recycled are discarded and thus, are solid
waste. This is true for all hazardous secondary materials recycled under
the new generator-controlled exclusion, the new transfer-based recycling
exclusion, and the new non-waste determinations, as well as hazardous
secondary materials recycled under the prior definition of solid waste
exclusions.

EPA also maintains that the legitimacy provision being finalized as part
of the recycling exclusions and non-waste determinations is
substantively the same as the existing policy because we developed the
legitimacy factors in 40 CFR 260.43 by closely examining the questions
and sub-questions in the OSWER directive 9441.1989(19) (April 26, 1989)
(a.k.a. the “Lowrance Memo”) and in the various Federal Register
preambles that address legitimate recycling and converting them into
four more direct questions. The analysis showing how the four factors
are derived from the Lowrance memo and other existing policy statements
is contained in the preamble to the final rule. This analysis shows why
EPA believes that the legitimacy factors in 40 CFR 260.43 are equivalent
to the existing legitimacy policy that applies to all hazardous
secondary material recycling.

One reason the Agency chose not to codify the legitimacy factors for
existing exclusions in this rule is to avoid any implication that the
regulated community or implementing agencies would be expected to
revisit and reevaluate past legitimacy determinations, which was a
concern expressed by commenters. Nevertheless, although we have not
codified the legitimacy factors for existing exclusions in this rule, it
is especially important that the regulated community and implementing
agencies clearly understand that the concept of legitimate recycling,
which is obviously inherent in the existing recycling regulations, is
unchanged and remains applicable and relevant to all hazardous secondary
material recycling, including any recycling excluded under RCRA Subtitle
C. Because the concept of legitimacy (both in existing explanations and
in the codified legitimacy factors) appropriately explains the very
heart of what real recycling is, it is obvious that existing recycling
exclusions only apply to legitimate recycling.

We are not expecting the regulated community that has been operating
under an existing exclusion to make additional efforts to prove that the
recycling is legitimate but reiterate that all recycling must be
legitimate, whether that recycling is done under an existing exclusion
or under one of the newly promulgated recycling exclusions of this
rulemaking. To be clear that the codified legitimacy provision of the
final rule will not affect how the current legitimacy policy applies to
recycling under existing exclusions, the Agency explicitly designates
the 260.43 legitimacy provision as applying only to the exclusions and
non-waste determinations being finalized in the rule.

(2) Although EPA is not codifying legitimacy for all recycling, EPA does
want to respond to this comment with the statement that it believes that
the structure of legitimacy in its 2007 supplemental proposal and in the
final rule are clear on the question of which of the four factors are
mandatory and which only need to be considered. The two factors in
§260.43(b) must be met and the factors in §260.43(c) must be
considered in the legitimacy determination.

(3) In response to the comment that generators do not have the knowledge
or expertise to make the complex technical and engineering judgments to
evaluate these factors under reasonable efforts, EPA believes that the
commenter is referring to the reasonable efforts condition in one of the
exclusions in this final rulemaking and responds that the generator
could use information provided by the reclaimer and their own knowledge
of their hazardous secondary materials to determine if the reclaimer is
meeting the legitimacy factors. They would not, for example, need to
test the products of recycling for TARS themselves.

9.2 - General comments on the legitimacy factors

9.2 - Summary

A number of commenters expressed support and substantial agreement with
certain aspects of the October 2003 proposal and the March 2007
supplemental proposal with regard to the proposed definition of
legitimate recycling. Some commenters noted they were in substantive
agreement with EPA on the first three criteria or factors but had
significant concerns with the “toxics along for the ride” (TAR)
criterion (70, 102, 104). Some commenters expressed their general
support for simplifying the current legitimacy criteria (from the six
criteria in guidance to the proposed four criteria in 2003) and
encouraging recycling by codifying the legitimacy criteria (110, 112,
164, 185, 212).

One commenter specifically noted that they did not anticipate any
problems between the generic legitimacy criteria and more specific
regulatory provisions for a particular recycling practice (138). Another
commenter noted that the legitimacy criteria have merit and would help
ensure that the reuse of hazardous wastes is conducted in an
environmentally appropriate manner. This commenter believes the criteria
will be effective in preventing sham recycling and environmental
degradation from inappropriate hazardous constituent releases (145).
Another commenter noted that in order to distinguish what is legitimate
recycling, EPA has articulated guidelines for making these
determinations based on whether or not the recycling activities closely
resemble production or disposal. This commenter stated this is a viable
approach that can be used to define the boundaries of discard for a
broad recycling exclusion (199). Another commenter supported the need to
distinguish between legitimate (i.e., true recycling) and “sham”
recycling and stated that it is the responsibility of the regulated
entity to ensure legitimacy and, if requested, to demonstrate that its
recycling activity is legitimate (457).

Others expressed their support for the use of legitimacy criteria for a
broad recycling exclusion but noted there should be some practical
limitations with its use. For example, one commenter thought the use of
legitimacy criteria for onsite transportation of secondary materials is
not necessary (74). Another commenter found the criteria workable for
the recycling business but did not support them as necessary for the
primary metals business (143).

A number of commenters expressed support for EPA's efforts to clarify
and codify the legitimacy criteria but felt the criteria are too
general. Specifically, some commenters want more objective, numerical or
specific criteria and others requested EPA better define terms used in
the legitimacy criteria including “valuable,” “useful,” and
“significant” (84, 165, 175, 188, 231, 484, 536). One commenter went
on to state that EPA should more clearly define legitimate recycling
relative to (1) dilutive recycling practices, (2) value of recovery
versus treatment costs, and (3) fate of hazardous constituents (484).
Others expressed support for clarifying the criteria but wanted the
flexibility provided by the current guidance to be retained, in order
for criteria to be applicable to a wide diversity of recycling practices
(180). Two commenters representing the environmental community stated
their opinion that the vagueness inherent in the legitimacy criteria and
EPA's failure to define clear parameters of what is and is not
legitimate recycling render the criteria virtually meaningless (231,
559).

One commenter objected to the adoption of legitimacy criteria, stating
that the proposed rule gave little indication of how the criteria would
apply and did not provide clear standards. This commenter stated there
are serious practical problems with any approach that leaves the
regulated community dependent on informal “case-by-case”
determinations. First, the commenter noted that agency time and
resources are scarce and it can take too long to get an issue resolved
by a state agency. Second, this commenter noted that the more subjective
the criteria and the more “case-by-case” the determination, the
greater the risks to the regulated community (123).

One commenter stated that the legitimacy criteria should be re-evaluated
to eliminate inconsistency and redundancy (106).

One commenter requested that proposed §261.2(g) be revised to ensure
that persons claiming that their recycling process is exempt from
regulation under 40 CFR 261.6(c)(1) must be able to demonstrate that
their recycling activity is legitimate (140, 563).

9.2 - Response

The Agency agrees with the commenters who expressed support for the
legitimacy factors and believes that the codified legitimacy factors
will result in a simplified approach to legitimacy for the new recycling
exclusions and non-waste determinations and, at the same time,
distinguish between real recycling and sham recycling. The Agency is
also hopeful that the concept of legitimate recycling, along with the
two recycling exclusions and non-waste determinations being promulgated
in this final rule, will increase the amount of hazardous secondary
material recycling being undertaken and ultimately result in the
conservation of natural resources.

We disagree with the commenters who felt that the concept of legitimate
recycling should be limited to off-site recycling. The Agency is not
aware, after two public comment periods, of any legitimate recycling
that is occurring that does not meet the two mandatory factors of
legitimate recycling and can not foresee any situations under which
those two factors are not relevant. As we reiterated in the preamble,
the legitimacy provision in 40 CFR 260.43 is substantively the same as
the existing legitimacy policy that applies to all recycling.

In response to the commenters who sought additional clarity, definition,
or bright-line tests for various terms in the legitimacy factors, the
Agency has incorporated the ideas generated during the comment process
into the final rule, as appropriate. We have decided not to develop
specific definitions or precise tests but instead have bolstered our
preamble discussion on the meaning of these terms and included more
explanation and examples in the final rule preamble on each factor. Our
decision not to include specific bright-line tests for the final
legitimacy factors reflects the fact that legitimacy determinations do
not lend themselves to the application of absolute distinctions,
especially given the breadth and depth of recycling practices and
recycled hazardous secondary materials that exist in industry today. The
complexities of defining such terms as “valuable product,” “useful
contribution,” and “significant” so that they can be determined
through a bright-line test and are still appropriate across industries,
different recycling processes, and a variety of recycled hazardous
secondary materials are too great for the Agency to be able to design a
simple and straightforward system of tests to be used in making such
determinations. In addition, we believe that legitimacy determinations
are best made on a case-by-case basis, with the facts of a specific
situation in hand.

The Agency would also like to reiterate that legitimacy determinations
are self-implementing (which has always been the case) and the regulated
community is not required or expected to receive approval or
authorization from a state implementing agency. However, if a person has
any questions as to the legitimacy of a particular recycling activity,
it is certainly appropriate to approach the appropriate regulatory
agency for assistance in making a legitimacy determination. EPA is also
interested in providing further guidance to the states and regulated
community on making legitimacy determinations and will be exploring
those options further.

The Agency has further refined the legitimacy regulatory text, found at
40 CFR 260.43 in this final rulemaking, and believes that any
inconsistencies or redundancies within the legitimacy provisions have
been addressed.

In response to the commenter who requested the Agency specifically refer
to 40 CFR 261.6(c)(1), the Agency has decided to codify the legitimacy
provision as a condition of the new recycling exclusions and the
non-waste determinations. Recycling that is occurring under 40 CFR
261.6(c)(1) is unchanged by this final rule. Of course, all recycling,
whether performed under the final exclusions or under one of the
existing exclusions to the definition of solid waste, must be
legitimate.

9.2.1 - General comments on the mandatory factors of legitimacy

9.2.1 - Summary

One commenter noted that it was generally supportive of codification of
the two mandatory factors, assuming that additional language was added
regarding the weighing and balancing of the criteria and the need for
case-by-case assessments. This commenter noted that the two mandatory
factors should be relevant in all circumstances and would be evaluated
in advance in the ordinary course of business before a company would
embark on a recycling or reclamation activity (471.2).

9.2.1 - Response

The Agency agrees with this commenter and is finalizing the two
mandatory factors in the legitimacy provision of 40 CFR 260.43 in this
final rule. We have determined that the two factors that must be met are
crucial to evaluating legitimate recycling and are at the very core of
what it means to recycle legitimately. EPA also believes the other two
factors are still very important in making legitimacy determinations but
has realized that there are situations where one or both of these
factors may not be met and the recycling is still legitimate. The Agency
has not added specific language to the legitimacy regulatory text about
weighing and balancing the factors but has emphasized in the preamble to
this final rule that legitimacy determinations need to be made on a
case-by-case basis after considering all the information about the
recycling practice.

<IP_ADDRESS> - General comments on Legitimacy Factor 1: Useful contribution

<IP_ADDRESS> - Summary

Several commenters expressed the opinion that when materials are
legitimately recycled as evident by the fact that the materials are
still “useful,” the materials are not discarded (143). One commenter
went on to state that the very purpose of the legitimacy criteria is to
ensure that recyclable materials are providing a useful function and
serving a true purpose in the marketplace without any elements of
discard (149). Another commenter stated that they believe the current
motivation for recycling is not economic gain but proper stewardship of
resources. They further commented that, in some instances, the costs of
recycling may be higher than hazardous waste disposal but this could be
threatened if these generic legitimacy criteria are adopted as
regulations and applied strictly (154). Another commenter felt that the
original criterion as proposed in 2003 needed further clarification,
particularly the part of the factor that stated, “evaluating this
criterion should include consideration of the economics of the recycling
transaction.” This commenter felt that this statement could be
misconstrued and urged EPA to either delete this reference in this
factor entirely or to make it crystal clear that there is no presumption
of illegitimacy just because the generator pays the recycler (178).

<IP_ADDRESS> - Response

The Agency agrees with the commenters who believe that providing a
useful contribution is central and fundamental to the concept of
legitimate recycling and, as such, is finalizing it as part of the core
part of the legitimate recycling provision in §260.43.

Additionally, the Agency has clarified the role of economics in
relationship to this factor. In the original October 2003 proposal,
criterion 2 read, “The secondary material provides a useful
contribution to the recycling process or to a product of the recycling
process and evaluating this criterion should include consideration of
the economics of the recycling transaction. The recycling process itself
may involve reclamation, or direct reuse without reclamation.” In the
March 2007 supplemental proposal EPA revised its position on the
consideration of economics as explained in the preamble (72 FR
14200–14201).  Instead of being a consideration under the old
criterion 2 (now called Factor 1 in the regulatory language), EPA now
believes that the economics of the recycling transaction is better taken
into consideration as part of the overall legitimacy determination.
Thus, we believe we have addressed the commenters' concerns about too
strict a reading of economics in regard to this factor.

<IP_ADDRESS>.1 - Support for Factor 1

<IP_ADDRESS>.1 - Summary

A number of commenters supported EPA's position that 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 1) (70, 74, 83, 85, 93,
97, 104, 112, 122, 124, 127, 137, 152, 168, 178, 197, 199, 203, 225,
454, 457, 458, 465, 473, 476, 478, 481, 489, 492, 521, 524, 528, 534,
543). The supportive comments include the following statements: this
factor is a reasonable indicator/measure of legitimacy (70, 93, 476);
this is one of the criteria that are essential in distinguishing
legitimate recycling from waste management (i.e., sham recycling) (104);
this is the only criterion that may be appropriate because it relates
directly to the issue of legitimacy (152); we believe these criteria are
sound (178); this is the most important criterion for evaluating the
legitimacy of recycling (197); we believe such criterion is the key to
the legitimacy of recycling (225); this factor is fundamental to the
definition of legitimacy (457); this factor is necessary to real
recycling (465); and the factor is reasonably objective but allows for
necessary flexibility in making legitimacy determinations (473). One
commenter noted that if a material does not contribute in any way to a
production or recycling process or a product of the process, it clearly
is not being recycled in any meaningful way (481). Others stated that if
the hazardous secondary material does not provide a useful contribution,
the process is obviously sham recycling (489). ASTSWMO (the Association
and State and Tribal Solid Waste Management Officials) noted that the
vast majority of states (86%) believe that useful contribution is a
basic and vital factor that distinguishes recycling from waste
treatment. In addition, several commenters also mentioned that they
supported the examples EPA used in the preamble discussion of this
factor (122, 127, 152).

One commenter also expressly agreed with the Agency that not every
component of the hazardous secondary material would have to contribute
to the process in order to meet this factor (85). Others expressed their
opinion that the contributing aspect of the hazardous secondary material
does not automatically have to be the hazardous component. One example
provided was the plastic component of spent blast media providing the
useful contribution in the manufacture of composite lumber (104).

One commenter noted that they concur with the Agency on this factor and
illustrated how recyclable materials are typically handled in their
industry. Shipments must meet conditions of acceptance and the industry
has developed a number of internationally accepted commodity
specifications that their customers have come to rely on. If the
specifications are not met, the shipments are rejected (97).

A couple of commenters did express the opinion that while they supported
the useful contribution factor for the exclusions being promulgated in
this final rule, they did not think EPA should apply the factor to
existing exclusions (74, 473).

<IP_ADDRESS>.1 - Response

EPA appreciates all the supportive comments received on Factor 1, which
reads that 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 Agency agrees
with the majority of commenters that this factor is essential to
legitimate recycling and as such, is codifying this factor as part of
the core part of the legitimate recycling provision in 40 CFR 260.43(b)
of this final rule.

The Agency has reiterated its longstanding position that not every
constituent or component in a hazardous secondary material would have to
contribute to a recycled product or intermediate or to the recycling
process in order for there to be an overall contribution. Thus, we agree
with commenters who raised questions about this and have restated our
position in the preamble to the final rule to be more clear.

In addition, the Agency has responded to comments on how legitimacy
applies to existing exclusions in Section 9.1.2 of this response to
comment document.

<IP_ADDRESS>.2 - Opposition to Factor 1

<IP_ADDRESS>.2 - Summary

One commenter opposed this factor entirely, stating “it is an
artificial and unnecessary disincentive to require the secondary
material to positively contribute to the recycling/manufacturing process
or product in order for that activity to be covered under the
‘legitimacy criteria’ of the proposed rule.” The commenter went on
to explain its opinion that legitimate reuse of secondary materials can
be achieved if the inclusion of these materials does not negatively
impact the process or product but positive contribution may not be able
to be demonstrated (99). Another commenter felt that adding the two
mandatory factors would add considerable text to the CFR without
accomplishing anything beyond reciting principles that are clear on the
face of existing regulations (537).

<IP_ADDRESS>.2 - Response

EPA respectfully disagrees with the commenter's statement that as long
as the hazardous secondary material does not negatively impact the
process or product that should be enough to be deemed legitimate
recycling. Putting a hazardous secondary material into a process where
it provides no benefit is simply avoiding disposal by pretending to use
the material in production. This is not recycling. In addition, such
activity avoids responsible and safe management of the hazardous
constituents involved with no benefit through production or resource
conservation. The Agency is aware of sham recycling situations where the
hazardous secondary materials do not contribute to the process or the
recycled product, yet may not actually negatively impact the process or
product, especially in situations where the hazardous secondary
materials are introduced in much smaller volumes than the other
ingredients to the process. As part of finalizing this factor, the
Agency added a number of different ways a material could contribute to
the regulatory text at 40 CFR 260.43(b)(1).

The Agency also disagrees with the commenter who believes adding the
mandatory factors to the Code of Federal Regulations only adds
considerable language that does not accomplish anything. The vast
majority of commenters agree that this factor is a necessary and
critical component of any legitimate recycling. Although we do agree
that this concept is already part of the existing regulations, we
believe that codifying the concept in the legitimacy provision in 40 CFR
260.43 for the two new recycling exclusions and the non-waste
determinations will make that much clearer to users of those
regulations.

<IP_ADDRESS>.3 - Consideration of economics for useful contribution (only
2003 comments)

<IP_ADDRESS>.3 - Summary

In October 2003, EPA proposed that one of the criteria for defining
legitimate recycling include “consideration of the economics of the
recycling transaction.” This consideration was within criterion (2)
for “useful contribution” and we included in the preamble a
discussion of how the consideration worked and its relationship to
existing legitimacy policy.

Our preamble discussion was supported by many commenters that agreed
with the following points:

“Who pays whom” can be an indicator of legitimacy.

In many legitimate recycling transactions, the generator pays the
recycler to accept materials; this is not uncommon, particularly where
recycling profit margins are narrow or the cost of transportation and/or
deconstruction of the product to obtain the material to be recycled can
outweigh the value of the material to be recycled. These costs can be
disproportionably higher for small generators with more frequent
shipping needs.

The economic consideration is important to a legitimacy determination,
but no test should be established.

Some commenters believed secondary material must be marketable to the
public in order for it to have sufficient value for the recycling
process to be legitimate recycling.

Some commenters also stated that they support a specific requirement to
consider economic factors as a part of legitimacy criterion (2). Many
commenters responded with the following examples of how to consider the
economics of a recycling transaction:

If the generator pays more than the transportation costs, the
transaction could be questionable.

If the recycler pays the generator for a recyclable material, it is a
clear indicator of useful contribution.

If more than 50% of the revenue is from generator fees rather than from
selling the finished recycled product, then the purported recycling is
really waste disposal and should be considered sham recycling.

If the value of the end product is less than 50% of the price for
generator fees, this should be evidence that the material is
“waste-like” and should be recycled at a RCRA permitted facility.

If the material has a negative value, then it should be regulated under
RCRA universal waste regulations or another less burdensome RCRA
regulatory alternative.

Recyclers rely on up front processing fees since the product can have
little or no value or is produced at cost exceeding market value. In
these situations, market failure and bankruptcy are common and have been
observed in the market place.

If a net positive sum is paid for a material, it is a product;
conversely, if the cost of managing the material's disposal is greater
than the value received from the sale of recycled products, then the
material is a waste.

An activity is manufacturing if it involves the use of materials with a
greater value than the cost of its management; conversely, materials
with a value that is less than the cost of management is a waste and
should be regulated.

We also heard from many commenters that they opposed the codification of
criterion (2) and/or any test for evaluating economics and they gave the
following reasons:

All commodities, virgin or secondary, fluctuate in price, so a numerical
test for evaluating all recycling transactions for economic sufficiency
is not possible.

The consideration of economics may get applied inflexibly if the current
guidance is adopted in the criteria.

Economic viability must be viewed on a long-term basis due to price
fluctuations.

A test should not focus on which way funds flow in the recycling
transaction.

A company may enter into a long-term contract to supply a material that
may later be considerably less valuable, and this should not jeopardize
the validity of the transaction.

The economics of recycling transactions vary greatly by industry and
activity so one test would not work for all recycling scenarios.

It may be more expensive to recycle than to dispose, as is the case
under the current regulatory scheme, but generators may choose to pay
the price to recycle in order to reduce their environmental footprint;
therefore, they should not be penalized for paying to recycle, but
rather rewarded.

All criteria and specific facts must be evaluated.

Recycling does not need to be profitable to be legitimate and may be
“economical only relative to disposal.” A few commenters suggested
EPA incorporate preamble language about economics from another
rulemaking that supports its position.

We also received one comment on each of the following positions
representing some form of opposition to consideration of economics:

One commenter does not support codification of criterion (2), but, if it
were codified, the commenter argued EPA should reiterate that recycling
does not need to be profitable to be legitimate and that an evaluation
should compare the cost of treatment and disposal by the generator
versus the cost of recycling or reuse. Avoiding higher disposal costs
can make the difference between turning a profit on a production run or
not, especially at the research and development stage.

Economic considerations should not be the primary criterion for
evaluating the legitimacy of recycling operations.

EPA should delete the reference to economic consideration because it is
complex and changing; many factors should be considered to determine
whether material provides a useful contribution, and economic
consideration is the least relevant.

EPA must clarify the ambiguity between the legitimacy criteria;
specifically, in some situations, the value of the recycled product will
not cover the cost of recycling (criterion (3)), but could provide a
useful contribution to the product (criterion (2)).

The preamble discussion of the economics of the recycling transaction is
too different from the impression left by the proposed regulatory
language.

Recycling small-scale batch materials may not be profitable because of
the limited quantity and infrequency of availability, and the ability to
recycle these materials is particularly important during a research and
development phase when the cost of managing materials has a great impact
on production.

Finally, some commenters provided another suggestion for improving this
consideration:

Include within the final rule language that “EPA is not proposing a
particular economic test for evaluating this criterion, nor [does the
Agency] necessarily believe that a secondary material must be marketable
to the public in order for it to have sufficient value for the recycling
process to be legitimate recycling.”

(0067, 0070, 0091, 0093, 0112, 0119, 0122, 0129, 0138, 0149, 0152, 0153,
0154, 0159, 0162, 0168, 0178, 0180, 0199, 0203, 0204, 0222, 0225)

<IP_ADDRESS>.3 - Response

This final rule does not codify specific regulatory language on
economics, but EPA offers further guidance and clarification on how
economics may be considered in making an overall legitimacy
determinations. The Agency has removed the economic consideration from
the “useful contribution” legitimacy factor and, instead, has
explained in preamble language how the economics of a recycling
transaction can be considered under all the legitimacy factors. This
guidance is similar to the preamble discussion in the March 2007
supplemental proposal, which was built upon the discussion from the
October 2003 proposal. The Agency believes that clarifying how economics
has traditionally been implemented via previous preamble and policy
statements will not impact existing legitimacy determinations.

Specifically, EPA believes that consideration of the economics of a
recycling activity can be used to inform and help determine whether the
recycling operation is legitimate. Positive economic factors would be a
strong indication of legitimate recycling, whereas negative economic
factors would be an indication that further evaluation of the recycling
operation may be warranted in assessing the legitimacy factors. This
approach recognizes the concerns expressed by commenters about codifying
language related to the consideration of economics. We also believe that
by taking out the economic consideration from criterion (2) (as proposed
in 2003) and making it an overall consideration for informing a
legitimacy determination, we have removed the ambiguity of its
application to other criteria as cited by one commenter.

EPA believes that none of the examples suggested by the commenters for
consideration the economics of a recycling transaction are applicable to
a wide universe of recycling activities. We also acknowledge that
fluctuations in markets for hazardous secondary materials and recycled
products, and subsequent impacts in revenue flows, create another
challenging aspect of developing a test for the consideration of
economics. Therefore, we believe that it is not possible to craft an
economic test for legitimacy that can accommodate all legitimate
recycling activities. As stated in section IX of the final rule, we
believe that this preamble discussion provides sufficient guidance on
how to consider economics in legitimacy determinations without
interfering with business decisions related to recycling hazardous
secondary materials.

<IP_ADDRESS>.4 - Other

<IP_ADDRESS>.4.1 - Factor 1: Contribution to the process

<IP_ADDRESS>.4.1 - Summary

Several commenters spoke directly to the issue of how a hazardous
secondary material contributes to the recycling process or product of
the recycling process. In our October 2003 proposal, EPA indicated that
not every component of a hazardous secondary material does or must
contribute to the recycling process or recycled product in order for
there to be an overall contribution and we received comments directly on
that point. In particular, one state agency favored allowing the
non-hazardous component of hazardous secondary materials to provide the
useful contribution (104) and several commenters agreed that not all of
the hazardous secondary material would have to contribute for this
factor to be met (149, 179). Another state agency asked us to clarify
that the statement “not every component of a hazardous secondary
material would necessarily have to contribute to the product or the
process to meet this criterion” was applicable only in the context of
this factor (182).

One commenter thought in general that our examples were appropriate with
one exception. The commenter thought using a hazardous secondary
material to replace a carrier or catalyst in a recycling process should
be looked at differently from other examples where a material
contributes directly to the process. Where there is no direct
contribution to the product, this commenter felt that the consideration
of the economics should be more important, particularly the economic
value of the carrier/catalyst being replaced (65).

ASTSWMO commented that their task force members believe a secondary
material's contribution to the process or product must be transparent,
able to be demonstrated, and evident (153). In addition, the state
association noted that if some value in the hazardous secondary material
is not regained or put to valuable use, then the recycling is not
manufacturing but actually waste treatment (543).

Another commenter expressed the opinion that this factor raises awkward
and unnecessary questions. Specifically, this commenter asked about an
example where there is direct use of secondary materials for a useful
purpose that does not actually “produce” a useful product, such as
using a secondary material to decontaminate equipment (537). Another
commenter, the association that represents industrial laundries, noted
that reusable shop towels are themselves valuable commodities that are
recycled by being cleaned and returned to service and thus are both the
secondary material and the product of the recycling process (493).

<IP_ADDRESS>.4.1 - Response

It has been the Agency's longstanding policy that not every constituent
or component in a hazardous secondary material would have to contribute
to a recycled product or intermediate or to the recycling process in
order for there to be an overall contribution. For example, the use of
hazardous secondary materials in zinc fertilizer is considered
legitimate recycling when the zinc, a non-hazardous constituent, is the
main contribution to the fertilizer. Another example is the use of glass
from cathode ray tubes (CRTs) used in copper smelters as a fluxing
agent. In this case, the glass provides a useful contribution by
facilitating the manufacturing process. Thus, we agree with commenters
who supported this approach and have restated our position in the
preamble to this final rule. We also agree that this statement is
applicable to Factor 1 (useful contribution) and not specifically
relevant or applicable to the other legitimacy factors, including Factor
4 (concentrations of hazardous constituents).

In response to the commenter who believes that economics should be of
increased importance when the useful contribution is indirect (i.e., as
a catalyst or carrier in the recycling process), we have further
explained our thinking on how the economics of the recycling transaction
may be considered in making a legitimacy determination and agree with
the commenter that it may be particularly relevant in cases where the
useful contribution is indirect.

The Agency also agrees with ASTSWMO that the useful contribution must be
able to be demonstrated as evident by the regulatory language being
adopted in 40 CFR 260.43(b)(1). Furthermore, EPA agrees with the
relative importance of this factor and as such is codifying it as a
mandatory factor that must be met in order for the recycling to be
considered legitimate.

In response to the commenters who asked if the direct use of a secondary
material could ever be considered legitimate recycling, the Agency
agrees that there are situations in which a secondary material can be
used directly and believes in those situations, the secondary material
would be considered the product and the legitimacy determination would
be undertaken by assessing whether it is a legitimate product or
substitute for a commercial product.

<IP_ADDRESS>.4.2 - Factor 1: Efficiency of the process

<IP_ADDRESS>.4.2 - Summary

Another issue related to Factor 1 (useful contribution) that was
discussed in the October 2003 proposal was the efficiency of a recycling
process in recovering or regenerating the useful component of the
hazardous secondary material. One example the Agency provided was the
recovery of copper from a hazardous secondary material. We stated that
where the process was reasonably efficient and recovered all but a small
percentage of the copper, it looked like legitimate recycling. However,
where a small percentage of copper in the hazardous secondary material
is recovered, sham recycling may be indicated. However, we did not opine
on recovery rates in the middle range (e.g., 50% of copper recovered
from a particular recycling process) and some commenters asked for
clarification, including how the factor applies to hazardous secondary
materials that are contributing to the recycling process either as a
carrier or a catalyst (152, 197, 225, 231). One commenter noted that a
recycling process may be inefficient for a variety of technical or
economic reasons and that alone does not mean it is illegitimate. The
commenter went on to give a number of industry-specific examples (152).
Another commenter disagreed with EPA's statement that one should look to
the efficiency of a recycling process in recovering or regenerating the
useful component of a recyclable material. Specifically, the commenter
noted that extractive metallurgy proceeds incrementally and that all
metal cannot be extracted in one fell swoop (197).  Another commenter
agreed with the earlier commenter's concern about the preamble
discussion about efficiency of recycling and noted that they were
especially concerned that it could be interpreted as requiring 90-95% of
the target metal, a recovery rate they stated often cannot be achieved
even with virgin materials. They asked EPA to clarify in the final rule
that it intends only a reasonable efficiency of recovery (225). Another
commenter noted that the proposed regulation does not indicate at what
point a hazardous waste will be considered to not provide a “useful
contribution” to the recycling process. That commenter went on to
state that the regulation does not explain whether recovery of something
more than a “small fraction” and less than 90% would satisfy this
legitimacy factor (231).

<IP_ADDRESS>.4.2 - Response

The Agency is clarifying in the final rule preamble and regulatory text
that the useful contribution of a hazardous secondary material to the
recycling process or product can be demonstrated in a number of ways. We
provided a number of different ways a material could contribute to the
process in the preamble to the October 2003 proposed rule and did not
mean to imply that the hazardous secondary material would have to meet
all of the examples to provide a useful contribution. For example,
hazardous secondary materials could provide a useful contribution to a
process by serving as a carrier or catalyst and the process efficiency
would not weigh in the demonstration of this factor in that case. In
general, the regulated community should look to typical industry
recovery rates in similar manufacturing processes to determine if the
recycling recovery rates are reasonably efficient in terms of making a
useful contribution to the recycling process or product. In addition, it
should be noted that EPA would generally look at the quantity or the
rate of recovery of the overall process, not the recovery rate of a
single step in the process, when analyzing this factor for legitimacy.
For example, if one step in the process recovers a small percentage of
the constituent, but the overall process recovers a much larger
percentage , the Agency would consider the overall efficiency of the
recycling process in determining whether the hazardous secondary
materials are providing a useful contribution. This assumes that there
is enough of the target constituent present in the hazardous secondary
materials to contribute meaningfully to the recycling activity.

While EPA believes that the efficiency of the recycling process is a
valid factor [for the reasons stated above], the Agency notes that,
while relevant, efficiency would not necessarily be dispositive of
whether the recycling is legitimate. This is suggested by the D.C.
Circuit in the API II case.  The court did consider, in that case,
whether the relatively small amount of oil recovered from primary
oil-bearing wastewater treatment could support EPA's decision that the
process was treatment, rather than production. The fact that the court
considered the issue seems to indicate that the efficiency of the
process has some relevance to whether a material is discarded or not.
The API II court was not able to draw a conclusion from EPA's reasoning,
but its consideration of the issue shows that it has some relevance.
With respect to the oil-bearing wastewaters in API II, the court said
that a small amount of oil relative to facility output is not
sufficient, by itself, to show discard.  216 F.3d at 57. Specifically,
“The rock of a diamond mine may only contain a tiny portion of
precious carbon, but that is enough to keep miners busy.” Id. This
seems to indicate that the efficiency of a recycling process would be a
relevant consideration as the recycler or the Agency evaluates a
process, although it would need to be considered along with all relevant
factors in the overall legitimacy determination.

Furthermore, the Agency appreciates commenters who provided
site-specific/industry-specific examples that they believe demonstrate
how process efficiency can be evaluated and reiterates that the breadth
of recycling practices and recycled hazardous secondary materials that
exist in industry is the main reason why legitimacy determinations must
be made on a case-by-case basis after considering the facts of a
specific recycling operation. We reiterate that looking at process
efficiency is simply one way (of several) that one can demonstrate that
the hazardous secondary material is providing a useful contribution to
the recycling process or product of the recycling process.

<IP_ADDRESS>.4.3 - Factor 1: Residuals

<IP_ADDRESS>.4.3 - Summary

In the discussion of useful contribution in the October 2003 proposal,
in the context of process efficiency, we stated that a “pattern of
mismanagement of the residues” may be an indicator of sham recycling.
We received several comments asking us to explain the connection between
useful contribution of the hazardous secondary materials and management
of residues. Several commenters questioned this statement and disagreed
that how a facility managed its residues had any bearing on whether the
hazardous secondary materials going into a recycling process were being
legitimately recycled (104, 152, 160, 225).

One commenter noted that while the ultimate disposition of the hazardous
component of the hazardous secondary material should be evaluated, they
do not believe that how it is disposed of should cause the recycling to
be “sham.” This commenter noted that if the hazardous constituents
appear in the end-product, that aspect should be considered under Factor
4 of legitimacy (104). Another commenter noted that whether a material
is legitimately recycled and the disposition of the residues from that
legitimate recycling process should be independently evaluated (160).

Two commenters also stated that the handling of residues should have no
bearing on the issue of whether the inputs to the recycling process are
being legitimately recycled or instead discarded. The commenters went on
to note that if the residues are mismanaged, any amount released to the
environment might be viewed as wastes and thus subject to regulation but
that the status of the recycling process itself and of inputs to the
process should not be affected (152, 225).

<IP_ADDRESS>.4.3 - Response

The Agency agrees with the commenters who suggested that how the
residuals from the recycling process are managed is not an indicator of
whether the hazardous secondary materials provide a useful contribution
and thus is not a factor in determining whether legitimate recycling is
occurring. For these reasons, we are making it clear that the actual
management of recycling residuals is not a specific consideration in
making legitimacy determinations. However, it should be noted that if
only a small percentage of the hazardous secondary material is used
(e.g., 2%) and a high percentage (e.g., 98%) ends up in the residuals,
which are then disposed of, this may be an indication that the hazardous
secondary materials are not making a useful contribution and thus are
actually being discarded (i.e., sham recycling) and not truly recycled.

Therefore, as part of the new recycling exclusions promulgated in this
final rule, we are requiring that any residuals that are generated from
the recycling process be managed in a manner that is protective of human
health and the environment. Specifically, there is a requirement for
hazardous secondary material generators to make reasonable efforts to
ensure that the hazardous secondary materials are legitimately recycled
and, among other things, that the reclaimer manages the hazardous
secondary materials in a manner that is protective of human health and
the environment, including how any recycling residuals are managed.
Finally, we note that the generation of residuals that are solid wastes
are subject to the waste characterization and identification
requirements in 40 CFR part 261 as a newly generated waste.

<IP_ADDRESS>.4.4 - Implementation of Factor 1

<IP_ADDRESS>.4.4 - Summary

Several commenters had specific concerns or questions about implementing
this legitimacy factor. One state agency asked for more explanation
about what is a useful contribution and noted that a case can be made
that “useful” is anything better than no contribution (175, 536).
Another state agency asked for further clarification on our statement
that when more than one secondary material is introduced into the
recycling process, each secondary material must make a useful
contribution. In particular, this commenter asked how it should be
determined when two or more secondary materials are combined at or near
the point of generation (69). Another commenter pointed out that
historical information about past management of a material as a waste
should not be used in isolation to dismiss a claim of legitimate
recycling and noted that technologies, markets, and products are in
constant flux and new opportunities for recycling can arise that were
previously not viable (203).

<IP_ADDRESS>.4.4 - Response

EPA has added more explanation and examples to the preamble of this
final rule that help explain and better illustrate all of the legitimacy
factors, including Factor 1 (useful contribution). In addition, the
Agency added language identifying specific ways that a hazardous
secondary material can be shown to provide a useful contribution to the
regulatory text found at 40 CFR 260.43(b)(1). As for situations where
more than one secondary material are combined at or near the point of
generation, the facility should be able to show how both materials
contribute to the recycling process or product of the recycling process.

EPA agrees with the commenter who noted that new opportunities for
recycling may come along and that past management of a hazardous
secondary material as a waste is not necessarily an indicator that it is
not being legitimately recycled if circumstances have changed that make
recycling viable.

<IP_ADDRESS>.4.5 - Factor 1: Miscellaneous comments

<IP_ADDRESS>.4.5 - Summary

Several commenters provided miscellaneous comments on Factor 1: useful
contribution. One commenter noted they concur with this factor and
offered their recyclables program as an example. Scrap recyclables
received by a scrap processor must meet conditions of acceptance, which
precludes receipt of materials that contain potentially hazardous and/or
regulated PCB materials, CFCs, mercury and other contaminants that would
prevent them from being processed to meet existing consumer
specifications. They noted that the scrap recycling industry has
developed a number of internationally accepted commodity specifications
(including approximately 300 plus grades of ferrous and non-ferrous
metals, 6 grades of glass cullet, 51 grades of paper, and 61 grades of
plastics) (97). Another commenter agreed this factor can be satisfied by
meeting the criteria laid out in proposed §261.2(g)(i) but did not
agree that those criteria should be the exclusive means of satisfying
this factor (476).

<IP_ADDRESS>.4.5 - Response

The Agency agrees that commercial or industry specifications can be
helpful in demonstrating legitimacy and in particular, Factor 1: useful
contribution.

In addition, the Agency was unable to identify and commenters did not
identify any other ways a hazardous secondary material could contribute
to the recycling process so the list in §260.43(b)(1) was not changed
in the final rule from what was proposed at §261.2(g)(i). However, the
regulatory language does not preclude other considerations when looking
at the codified factors in making a legitimacy determination. In fact,
we encourage the regulated community and implementing agencies to use
any and all information about a recycling process to come to an informed
decision on the legitimacy of that recycling operation.

<IP_ADDRESS> - General comments on Legitimacy Factor 2: Valuable product or
intermediate

<IP_ADDRESS> - Summary

Two commenters had general questions about the implementation of this
factor. One commenter indicated their basic concern with this factor was
that it did not address how much of the original hazardous secondary
material needs to be recovered for the recycling to be deemed
legitimate. The commenter gave two examples they have encountered: (1)
large quantities of wastewater contaminated with a small quantity of oil
(e.g., one inch of oil on top of 20,000 gallons of water) where the oil
is recovered and the wastewater is discarded, and (2) metal processing
of electroplating sludge containing part-per-million quantities of
metals where the metal recovered from the sludge is minimal and the
residuals are disposed. In both of these cases, the commenter believes
it is questionable whether the actual intent is truly recovery of a
“valuable commodity” or disposal of a marginally valuable waste. The
commenter thinks some type of verifiable minimum recovery volume or
percentage is needed to know whether the intent is really recovery or
disposal (482). The second commenter supports the factor but thinks the
Agency has not gone far enough in addressing all of the issues within
the factor. The commenter suggested the Agency refine the factor by
addressing the following issues: How does the recovery value versus the
treatment cost weigh in the determination? How much “useful
contribution” or “valuable product” must the recycling process
yield? Does one ounce per hundred tons qualify (484)?

<IP_ADDRESS> - Response

The D.C. Circuit specifically rejected in API II the argument that these
comments allude to that EPA has no authority to impose conditions on
material that is not “discarded.”  The point is that the conditions
imposed by the legitimacy factors, for example that product made from
hazardous secondary materials must have some monetary or intrinsic
value, in fact do regulate “discard.”  As the court stated, “[T]he
premise of EPA's rule is sound precisely because it is meant to regulate
only discarded materials. EPA can regulate material ‘discarded’
through sham recycling even though it cannot regulate under RCRA
materials that are not discarded.” 216 F.3d at 59. Of course, in any
specific case, the recycler and EPA in its regulatory capacity will need
to decide whether the recycled material is being used in a valuable
product or not.

For those commenters who asked for more clarification of the term
“valuable,” the Agency provided more guidance in the preamble to the
final rule and additional examples to help illustrate how this
legitimacy factor is to be applied. We agree with the commenter that the
examples provided where the amount of valuable product recovered is
miniscule may be an indication of sham recycling and further
investigation is warranted. However, specific questions related to this
legitimacy factor (such as a specific numeric requirement for how much
valuable product the recycling process must yield) cannot be answered in
a national rulemaking on legitimate recycling because the answers will
vary depending on the case-specific situation. The Agency plans to
explore the possibility of further guidance on site-specific legitimacy
determinations in the future.

<IP_ADDRESS>.1 - Support for Factor 2

<IP_ADDRESS>.1 - Summary

A number of commenters supported EPA's position that legitimate
recycling must include a recycling process that produces a valuable
product or intermediate (Factor 2) (70, 74, 83, 85, 91, 93, 97, 104,
112, 119, 122, 124, 127, 137, 143, 149, 153, 162, 168, 199, 203, 225,
454, 457, 458, 465, 470, 473, 476, 478, 481, 489, 492, 501, 521, 524,
528, 534, 543). The supportive comments include the following
statements: in looking at the value/usefulness of the product produced
from a secondary material, the Agency will likely get an even better
gauge of legitimacy (70); this is the other criterion that is essential
in distinguishing recycling from waste management and demonstrates that
recycling is akin to manufacturing (104); this factor is a reasonable
indicator/measure of legitimacy (112, 143, 458, 476); we agree that this
criteria is familiar and largely self-explanatory (127); these are
reasonable factors and appropriately focus on the real considerations in
a recycling transaction (149); this criterion is well-worded and
-intentioned (168); this is an important indicator of the legitimacy of
a recycling activity (203); this factor is fundamental to the definition
of legitimacy (457); this factor is necessary to real recycling (465);
‘beneficial reuse or recycling” clearly includes the concept of a
valuable product, the basis of all legitimate recycling (470, 489); the
factor is reasonably objective but allows for necessary flexibility in
making legitimacy determinations (473); the underlying logic is that a
material is being treated as a valuable commodity rather than as a
waste, which is a common sense criterion that is also embodied in the
first three legitimacy factors (492).

One commenter noted that the value of a hazardous secondary material as
a raw material or product is the basis for any legitimate recycling;
anything else is merely waste management. Production of a valuable
product from hazardous secondary materials is essential to
differentiating “sham” recycling from legitimate recycling (489).
ASTSWMO noted that it is important to a vast majority of states that a
valuable product is produced from the recycling of hazardous secondary
materials, and that this factor is codified and mandatory (543). In
addition, several commenters also mentioned that they supported the
examples EPA used in the preamble discussion of this factor (91, 97,
122, 127).

<IP_ADDRESS>.1 - Response

EPA appreciates all the supportive comments received on Factor 2, which
reads that for legitimate recycling, the recycling process must produce
a valuable product or intermediate. The Agency agrees with the majority
of commenters that this factor is essential to legitimate recycling and
as such, is codifying this factor as part of the mandatory factors of
the legitimate provision in 40 CFR 260.43(b) of this final rule.

<IP_ADDRESS>.2 - Opposition to Factor 2

<IP_ADDRESS>.2 - Summary

One commenter stated that EPA may be overstepping its authority by
imposing legitimacy criteria on products made with recycled materials
because the safety of products is a function of laws and regulations
other than RCRA, including TSCA, the Food Drug and Cosmetics Act, FIFRA
and others (102). Another commenter stated their opinion that this
proposed legitimacy criterion was of dubious merit because it is
redundant (with Factor 1: useful contribution), potentially misleading,
and could be unduly restrictive (152). A third commenter expressed their
opinion that codifying the two mandatory factors would add considerable
text to the CFR without accomplishing anything beyond reciting
principles that are clear on the face of existing regulations (537).

<IP_ADDRESS>.2 - Response

EPA disagrees with the commenter that the Agency may be overstepping its
authority because it is imposing legitimacy criteria on products made
from secondary materials.  The fact of the matter is that legitimacy
determinations do not impose requirements on products but rather impose
requirements on the hazardous secondary materials. If the hazardous
secondary materials are not included in products that have value, the
recycling would be a sham. In fact, the D.C. Circuit specifically
rejected in API II the very argument that these comments make that EPA
has no authority to impose conditions on material that is not
“discarded.” The point in that case is that the conditions imposed
by the legitimacy factors, for example whether the secondary material
being recycled is or is not useful to the product, in fact do regulate
“discard.”  As the court stated, “[T]he premise of EPA's rule is
sound precisely because it is meant to regulate only discarded
materials. EPA can regulate material 'discarded' through sham recycling
even though it cannot regulate under RCRA materials that are not
discarded.” 216 F.3d at 59. EPA also notes that contaminants in
products produced from secondary materials were specifically considered
in Safe Food, 350 F.3d at 1266-70.

EPA also disagrees that this factor is redundant with Factor 1 (useful
contribution). The factors focus on two distinct components of real
recycling: the secondary materials used in recycling must provide a
useful contribution and there must be something of value produced from
recycling those materials. The Agency is aware of sham recycling
situations where the hazardous secondary materials do not produce a
valuable product or intermediate, but where the secondary material
nonetheless may have provided a useful contribution. The two factors
address different steps in the recycling process. The Agency was unable
to determine any legitimate recycling scenarios that did not produce a
product or intermediate that was of value.

The Agency also disagrees with the commenter who believes adding the
mandatory factors to the Code of Federal Regulations only adds
considerable language that does not accomplish anything. The vast
majority of commenters agree that this factor is a necessary and
critical component of any legitimate recycling and as such, the Agency
is codifying this factor in the legitimacy provision of 40 CFR 260.43
for the two new recycling exclusions and the non-waste determinations
added by this final rule.

<IP_ADDRESS>.3 - Factor 2: Definition of “valuable”

<IP_ADDRESS>.3 - Summary

Many commenters supported the Agency's discussion of valuable product
from both a monetary and an intrinsic standpoint (74, 85, 91, 97, 112,
122, 129, 149, 199, 203, 458, 507, 524, 543). For example, one commenter
stated that value, in this case, is not only assessed based on market
value of a reclaimed product, but also its value to the industrial
process (85). Another commenter was especially supportive of EPA's
acknowledgment that recycled materials not sold to third parties can
still have value by showing that the recycled product replaces an
alternative product or material that would otherwise have to be bought
(149). A different commenter noted that, at least in regard to metals,
the price is determined through international markets and is subject to
significant cyclical variations. They did not believe a determination of
value and thus legitimacy when commodity prices are high should be
negated when prices go down and thus, they believe the main
consideration has to be whether the process recovers metals from
hazardous secondary materials as a useable intermediate or saleable
product (524). Several commenters also expressed support for the idea of
a “safe harbor” for products having positive economic value (91,
122, 129).

Several commenters expressed their support for the examples presented in
the preamble discussion of this factor (91, 97, 122). One commenter
noted their general agreement with this factor and discussed the
recycling of electroplating sludge and ion exchange canisters for metals
recovery. They noted that the metals in these materials not only make a
useful contribution to the recycling activity, but they are the product.
This commenter noted that in many cases the metal content of these
secondary materials is analogous to virgin metal ores from which the
metals are extracted. The metals recovered from these materials are
clearly valuable (478). Another commenter also supported this factor as
a prerequisite to legitimate recycling and gave an example of automotive
paint filter sludge mixed with waste solvent and slathered on automotive
underbodies as “rust-proofing.” This commenter noted that the value
of this secondary material is negligible compared to commercial
rust-proofing products (521).

Several commenters noted that in evaluating value/usefulness, a
product's fate over a reasonable stretch of time should be examined.
Market conditions fluctuate and may cause the “value” of a product
to decline precipitously at times (70, 93). One commenter suggested two
years to be a reasonable period of time (143). Another commenter noted
that in aggressively competitive markets, a manufacturer may choose to
operate at a loss for a particular product to maintain market presence
and while such situations do not continue indefinitely, EPA needs to be
sensitive to the need to respond to competitive and fluctuating global
markets (203). ASTSWMO acknowledged that organizations should be
permitted to supplement the cost of having a material legitimately
recycled. Due to fluctuations in commodity prices, ASTSWMO recognized
that some recycled products, such as recycled aluminum or recycled oil,
vary substantially in value and that there are periods of losses and
profits (543).

A number of commenters also agreed that this evaluation should be done
on a case-by-case basis (70, 93).

Some commenters simply asked for more clear use and meaning of the term
“valuable product” in the preamble (43) and/or further guidance on
what the Agency means by the term “valuable product” (69). One
commenter asked, what is a valuable product or intermediate? They felt
that the question of value is open to significant interpretation. They
asked if the value depends on the selling price and if the generator
gives away the material, is there an implication that the material does
not have value? They stated that it would be far better to define what
EPA means by “valuable” in the regulation than to use some
unenforceable guidance or interpretative document (175, 536). Another
commenter asked a number of questions about this factor, including: What
definition is used for valuable product? Does it need to be sold? Can't
the cost of delivering the product exceed the price paid? Does it need
to be sold to a third party? Are there time limits on how quickly it
must be sold (484)?

One state agency commented that they believe this criterion is essential
and support its use in defining legitimate recycling but did believe the
criterion was insufficient in the case where a generator or recycler
uses its own end-product (104). The commenter provided the following
example: a generator produces a hazardous secondary material that it
uses as an ingredient to make a product. The secondary material is
appropriately stored and managed, it is similar to a raw material
normally used in the production process, it contributes a desirable
characteristic to the product, and the levels of toxics in the product
are similar to analogous products. Furthermore, the product meets
applicable industry standards. However, sale of the product is quite
limited due to color variation in the product and the recycler has
difficulty producing the needed quantities of product of consistent
color for large applications. The recycler is only able to sell 40% of
the product that it produces in a year and continues production. The
recycler itself uses the product to reduce inventory and make the
recycling appear more successful. The commenter suggested that this
criterion be rewritten to require the end-product of an industrial
process (that uses an intermediate derived from a hazardous secondary
material or a hazardous secondary material as an ingredient) be a
valuable product and sold to a third party (104).

In addition, ASTSWMO noted that all of its task force members support
the criterion but several members were concerned that it did not guard
against a generator or recycler using its own end-product in order to
make the product appear successful and, hence, make the recycling appear
legitimate. They also stated that the criterion should be revised to
clearly state the expectation that the end-product be a valuable product
and sold to a third party. Also, several members suggested the criterion
specify a percentage of product that must be sold or used in a specific
time frame (153). In ASTSWMO's comments on the supplemental proposal,
they again stated the vast majority of states support this factor and
want it codified and mandatory. They did support the concept of valuable
in the intrinsic sense (i.e., used or purchased by others) and thought a
use or market for the product should be identified by the reclaimer and
the generator should be required to know the product manufactured from
its hazardous secondary materials (543).

Another commenter said that they generally support this criterion but
are concerned about concepts discussed in the preamble, such as
“intrinsic value,” because they are too subjective and
unenforceable. The commenter felt that allowing a waste-derived raw