SEQ CHAPTER \h \r 1 ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 260 and 261

[RCRA-2002-0031 - FRL -7577-7]

RIN 2050-AE98

Revisions to the Definition of Solid Waste

AGENCY: Environmental Protection Agency.

ACTION: Supplemental Proposed Rule.

SUMMARY: The Environmental Protection Agency (EPA) is today publishing a
supplemental proposal which would revise the definition of solid waste
to exclude certain hazardous secondary materials from regulation under
Subtitle C of the Resource Conservation and Recovery Act (RCRA).  We are
also soliciting comments on regulatory criteriafactors to be used to
determine whether recycling of hazardous secondary materials is
legitimate. The Agency first proposed changes to the definition of solid
waste on October 28, 2003 (68 FR 61558). The purpose of today’s
proposal is to encourage safe, environmentally sound recycling and
resource conservation and to respond to several court decisions
concerning the definition of solid waste.

DATES: Comments must be received on or before [Insert date] 60 days from
date of federal registerafter publication] in the Federal Register.
Under the Paperwork Reduction Act, comments on the information
collection provisions must be received by OMB on or before [insert
date], thirty days after date of publication in the Federal Register.

ADDRESSES:  Submit your comments, identified by Docket ID No. EPA-HQ
-RCRA 2002-0031 by one of the following methods:

  HYPERLINK "http://www.regulations.gov"  www.regulations.gov :  Follow
the on-line instructions for submitting comments.

Email:  Comments may be sent by electronic mail (e-mail) to   HYPERLINK
<EMAIL_ADDRESS><EMAIL_ADDRESS>, Attention Docket ID
No. EPA-HQ-RCRA-2002-0031.

Fax:  Fax comments to:<PHONE_NUMBER>, Attention Docket ID No.
EPA-HQ-RCRA 2002-0031.

Mail:  Send comments to:  OSWER Docket, EPA Docket Center, Mail Code
5305T, Environmental Protection Agency, 1200 Pennsylvania Avenue N.W.
Washington D.C. 20460, Attention Docket ID No. EPA-HQ-RCRA-2002-0031.
In addition, please mail a copy of your comments on the information
collection provisions to the Office of Information and Regulatory
Affairs, Office of Management and Budget (OMB), Attn:  Desk Officer for
EPA, 725 17th St., Washington D.C. 20503.

Hand delivery:  Deliver comments to:  Environmental Protection Agency,
EPA Docket Center, Room B102, 1301 Constitution Avenue, N.W., Washington
D.C., Attention Docket ID No. EPA-HQ-RCRA-2002-0031.  Such deliveries
are only accepted during the docket’s normal hours of operation, and
special arrangements should be made for deliveries of boxed information.

Instructions:  Direct your comments to Docket ID Number EPA-
HQ-RCRA-2002- 0031.  EPA’s policy is that all comments received will
be included in the public docket without change and may be made
available online at   HYPERLINK "http://www.regulations.gov"
www.regulations.gov , including any personal information provided,
unless the comment includes information claimed to be Confidential
Business Information (CBI) or other information whose disclosure is
restricted by statute. Do not submit information that you consider to be
CBI or otherwise protected through   HYPERLINK
"http://www.regulations.gov"  www.regulations.gov  or e-mail.  The
HYPERLINK "http://www.regulations.gov"  www.regulations.gov  website is
an “anonymous access” system, which means EPA will not know your
identity or contact information unless you provide it in the body of
your comment.  If you send an e-mail comment directly to EPA without
going through   HYPERLINK "http://www.regulations.gov"
www.regulations.gov  your e-mail address will be automatically captured
and included as part of the comment that is placed in the public docket
and made available on the Internet.  If you submit an electronic
comment, EPA recommends that you include your name and other contact
information in the body of your comment and with any disk or CD-ROM you
submit.  If EPA cannot read your comment due to technical difficulties
and cannot contact you for clarification, EPA may not be able to
consider your comment.  Electronic files should avoid the use of special
characters, any form of encryption, and be free of any defects or
viruses.

Docket:  All documents in the docket are listed in the   HYPERLINK
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listed in the index, some information is not publicly available, such as
CBI or other information whose disclosure is restricted by statute.
Certain other material, such as copyrighted material, will be publicly
available only in hard copy.  Publicly available docket materials are
available either electronically in   HYPERLINK
"http://www.regulations.gov"  www.regulations.gov  or in hard copy at
the OSWER Docket, EPA/DC, EPA West, Room B102, 1301 Constitution Ave.,
N.W., Washington DC.  The Public Reading Room is open from 8:30 a.m. to
4:30 p.m. Monday through Friday, excluding legal holidays.  The
telephone number for the Public Reading Room is<PHONE_NUMBER>, and the
telephone number for the OSWER Docket is<PHONE_NUMBER>.  Copies cost
$0.15 per page.

The EPA Docket Center suffered damage due to flooding the last week of
June 2006.  The Docket Center is continuing to operate.  However, during
the cleanup, there will be temporary changes to Docket Center telephone
numbers, addresses, and hours of operation for people who wish to make
hand deliveries or visit the Public Reading Room to view documents.
Consult EPA’s Federal Register notice at 71 FR 38147 (July 5, 2006) or
the EPA website at   HYPERLINK "http://www.epa.gov/epahome/dockets.htm"
www.epa.gov/epahome/dockets.htm  for current information on docket
operations, locations, and phone numbers.  The Docket Center’s mailing
address for U.S. mail and the procedures for submitting comments to
HYPERLINK "http://www.regulations.gov"  www.regulations.gov  are not
affected by the flooding and will remain the same.

FOR FURTHER INFORMATION CONTACT: For more detailed information on
specific aspects of this rulemaking, contact Marilyn Goode, Office of
Solid Waste, Hazardous Waste Identification Division, MC 5304P,
Environmental Protection Agency, 1200 Pennsylvania Ave. N.W., Washington
DC 20460,<PHONE_NUMBER>,  (  HYPERLINK<EMAIL_ADDRESS><EMAIL_ADDRESS> or Tracy Atagi, Office of Solid Waste, Hazardous
Waste Identification Division, MC 5304P, Environmental Protection
Agency, 1200 Pennsylvania Ave. N.W., Washington DC 20460, at (703)
308-8672 (  HYPERLINK<EMAIL_ADDRESS><EMAIL_ADDRESS>.

SUPPLEMENTARY INFORMATION:

A.  Regulated Entities.  Entities potentially affected by this action
include about 4600 facilities in 530 industries in 17 economic sectors
that generate or recycle hazardous secondary materials which are
currently regulated as RCRA Subtitle C hazardous wastes (e.g.,
industrial co-products, by-products, residues, unreacted feedstocks).
About 80 percent of these affected facilities are classified in NAICS
code economic sectors 31, 32, and 33 (manufacturing), and the remainder
are in NAICS code economic sectors 21 (mining), 22 (utilities), 23
(construction), 42 (wholesale trade), 44 and 45 (retail trade), 48 and
49 (transportation), 51 (information), 54 (professional, scientific and
technical services), 56 (administrative support, waste management and
remediation), 61 (educational services), 62 (health care and social
assistance, and 81 (other services).  About 0.65 million tons per year
of recyclable industrial materials handled by these entities may be
affected, of which the most common types are metal-bearing hazardous
secondary materials (e.g., sludges and spent catalysts) for commodity
metals recovery, and organic chemical liquids for recycling as solvents.
 This proposed rule, if promulgated, is expected to result in regulatory
and materials recovery cost savings to these industries of approximately
$107 million per year.  Taking into account impact estimation
uncertainty factors, this rule, if promulgated, could affect between 0.3
to 1.7 million tons per year of industrial hazardous secondary materials
handled by 3600 to 5400 entities in 460 to 570 industries, resulting in
$93 million to $205 million per year of net cost savings.  More detailed
information on the potentially affected entities, industries, and
industrial materials, as well as the economic impacts of this rule (with
impact uncertainty factors), is presented in section XVI.A of this
preamble and in the “Economics Background Document” available in the
docket for this rulemaking.

B.  What to Consider When Preparing Comments for EPA.

1.  Submitting CBI.  Do not submit this information to EPA through
HYPERLINK "http://www.regulations.gov"  www.regulations.gov  or email.
Clearly mark part of all information that you claim to be CBI.  For CBI
information in a disk or CD ROM that you mail to EPA, mark the outside
of the disk or CD ROM as CBI and then identify electronically within the
disk or CD ROM the specific information that is claimed as CBI.  In
addition to one complete version of the comment that includes
information claimed as CBI, a copy of the comment that does not contain
the information claimed as CBI must be submitted for inclusion in the
public docket.  Information so marked will not be disclosed, except in
accordance with procedures set forth in 40 CFR Part 2.

2.  Tips for Preparing Your Comments.  When submitting comments,
remember to:

Identify the rulemaking by docket number and other identifying
information (subject heading, Federal Register date and page number).

Follow directions.  The Agency may ask for commenters to respond to
specific questions or organize comments by referencing a Code of Federal
Regulations (CFR) part or sectionSection number.

Explain why you agree or disagree; suggest alternatives and substitute
language for your requested changes.

Describe any assumptions and provide any technical information and/or
data that you used.

If estimating burden or costs, explain methods used to arrive at the
estimate in sufficient detail to allow for it to be reproduced.

Provide specific examples to illustrate any concerns and suggest
alternatives.

Make sure to submit comments by the comment period deadline identified
above.

Preamble Outline

I.	Statutory Authority

II.	What Is the Scope of This Supplemental Proposal?

III.	What Is the Intent of This Supplemental Proposal?

IV.	How Does This Supplemental Proposal Relate to the October 2003
Proposal?

V.	How Is Hazardous Waste Recycling Currently Regulated?

VI.	What Is the History of Recent Court Decisions on the Definition of
Solid Waste?

VII.	How Does the Concept of Discard Relate to These Proposed
Exclusions?

VIII.	Recycling Studies

IX.	Exclusion for Hazardous Secondary Materials that Are Legitimately
Reclaimed Under the Control of the Generator.:  Proposed 40 CFR 260. 10,
261.2(a)(1), 261.2(a)(2), 261.2(c)(3), 261.4(a)(23).

X.	Conditional Exclusion for Hazardous Secondary Materials that Are
Transferred for the Purpose of Reclamation.:  Proposed 40 CFR
261.2(c)(3), 261.4(a)(24), 261.4(a)(25).

XI.	What Changes is EPA Proposing to the Legitimacy Criteria?Legitimacy:
 Proposed 40 CFR 261.2(g).

XII.     Petitions for Non-waste Classification.:  Proposed 40 CFR
260.30(d), 260.30(e), 260.30(f), 260.34.

XIII.	Effect of This Proposal on Other Programs.

XIV.    Measurement of the Performance Outcomes of This Supplemental
Proposal.

XV.	How Would These Proposed Regulatory Changes Be Administered and
Enforced in the States?

XVI.	How Has EPA Fulfilled the Administrative Requirements for this
Rulemaking?

I.	Statutory Authority

These regulations are proposed under the authority of sections 2002,
3001, 3002, 3003, 3004, 3007, 3010, and 3017 of the Solid Waste Disposal
Act of 1970, as amended by the Resource Conservation and Recovery Act of
1976 (RCRA), as amended by the Hazardous and Solid Waste Amendments of
1984 (HSWA), 42 U.S.C. 6921, 6922, 6923, and 6924.

II. What Is the Scope of This Supplemental Proposal?

	In today’s notice, EPA is proposing to revise the definition of solid
waste in order to exclude from regulation under Subtitle C of RCRA
certain hazardous secondary materials sent for recycling.  We are also
seeking comment on certain  changes to the proposed regulatory
criteriafactors for determining whether recycling is legitimate. The
Agency first proposed changes to the definition of solid waste, as well
as regulatory criteria for legitimacy, on October 28, 2003 (68 FR
61581-61588).

	The scope of the regulatory changes proposed today are as follows:

A.   Exclusion for Materials That Are Legitimately Reclaimed under the
Control of the Generator  in Non-Land-Based Units

This provision, with regulatory language proposed in 40 CFR
261.2(a)(2)(ii), would exclude certain hazardous secondary materials
(i.e., spent materials, listed sludges, and listed byproducts) that are
generated and legitimately reclaimed within the United States or its
territories. and are only handled in non-land-based units (e.g., tanks,
containers, containment buildings).  The exclusion would apply to
hazardous secondary material that is reclaimed under the control of the
generator, if the materials are not speculatively accumulated.  In
addition, EPA is proposing to include in 40 CFR 260.42 a requirement
that the generator would be required to submit a one-time notification
to EPA or the authorized state.  Furthermore, hazardous secondary
materials that are stored in land-based units (surface impoundments,
waste piles, injection wells, land treatment facilities, salt dome
formations, salt bed formations, or underground mines or caves) prior to
reclamation or that are reclaimed in the land-based units would have to
be contained in such units.  Hazardous secondary material would be
considered “under the control of the generator” under the following
circumstances:

(1) it is generated and then reclaimed at the generating facility; or

(2) it is generated and reclaimed by the same company, if the generator
certifies that it is under the same ownership as the reclaimer and that
the owner company has acknowledged responsibility for safe management of
the hazardous secondary materials; or

(3) it is generated and reclaimed pursuant to a written agreement
between a tolling contractor and batch manufacturer, if the tolling
contractor retains ownership of, and responsibility for, the hazardous
secondary materials that are generated during the course of the
manufacture.

	This proposed exclusion would not include recycling practices that
involve discard of materials.  These practices include recycling of
inherently waste-like materials (40 CFR 261.2(d)), recycling of
materials that are used in a manner constituting disposal or used to
produce products that are applied to or placed on the land (40 CFR
261.2(c)(1)), and burning of materials for energy recovery or used to
produce a fuel or otherwise contained in fuels (40 CFR 261.2(c)(2)).
This proposed exclusion is further described in section IX of this
preamble.  We note that the Agency is considering expanding its
regulations for comparable fuels in a separate rulemaking.

B. Exclusion for Materials That Are Legitimately Reclaimed under the
Control of the Generator in Land-Based Units

This provision, with regulatory language proposed in 40 CFR
261.4(a)(23), would exclude certain hazardous secondary materials  that
are generated and legitimately reclaimed within the United States or its
territories and  handled in land-based units (e.g., surface
impoundments, waste piles).  This provision requires that hazardous
secondary materials managed in land-based units must be contained in
such units.

C.	Conditional Exclusion for Materials that are Transferred For the
Purpose of Reclamation

  	This conditional exclusion, with regulatory language proposed in 40
CFR 261.4(a)(24), (hereinafter referred to as the “transfer-based
exclusion”) would apply to hazardous secondary materials (i.e., spent
materials, listed sludges, and listed byproducts) that are generated and
subsequently transferred to a different person or company for the
purpose of reclamation.  As  long as the conditions to the exclusion are
satisfied, the hazardous secondary materials would not be subject to
Subtitle C regulation.  The conditions are intended to ensure that such
materials are handled as commodities rather than wastes.  They will also
help guarantee that protection of human health and the environment will
not be compromised in the absence of hazardous waste regulatory
requirements for these materials. It is important to note that when
hazardous secondary materials are generated and reclaimed within the
United States pursuant to a written agreement between a tolling
contractor and a batch manufacturer as defined in proposed 40 CFR
260.10, these materials would be subject to the requirements of proposed
40 CFR 261.2(a)(ii) or 261.4(a)(23) rather than the more extensive
requirements of  proposed 40 CFR 261.4(a)(24).

	If any of the hazardous secondary materials under this
exclusionproposed 40 CFR 261.4(a)(24) are generated and then exported to
another country for reclamation, we are also proposing that the exporter
notify the receiving country of the export through EPA and obtain
consent from that country before shipment of the material. This
requirement is proposed to be codified in 40 CFR 261.4(a)(25). Like the
previously discussed exclusion for hazardous secondary materials
recycled under the control of the generator, this exclusion would not
cover recycling of inherently waste-like materials, recycling of
materials that are used in a manner constituting disposal, and burning
of materials for energy recovery.  The proposed exclusion is described
in more detail in section X of this preamble.

CD.  Petition Process for Non-waste Determinations

In addition to the exclusions discussed above, the Agency also is
proposing a petition process, with regulatory language found in proposed
40 CFR 260.30(d), 260.30(e), 260.30(f), and 260.34, for obtaining a
case-specific non-waste determination for certain hazardous secondary
materials that are recycled.  This process would allow a petitioner to
receive a formal determination from the Agency that its hazardous
secondary material is clearly not “discarded” and therefore is not a
solid waste.  The procedure would allow EPA or the authorized state to
take into account the particular fact pattern of the recycling and to
determine that the hazardous secondary material in question is not a
solid waste without imposing additional requirements.  The determination
would be available to petitioners who could demonstrate that their
hazardous secondary materials were recycled in a continuous industrial
process, or that the materials were indistinguishable in all relevant
aspects from a product or intermediate, or that the materials arewere
under the control of the generator via a tolling arrangement or similar
contractual arrangement.  The petition process for the non-waste
determinationdeterminations would be the same as that for the variances
from the definition of solid waste found in 40 CFR 261.31.  This
process, as well as and the criteria for making these determinations,
are described in section XIXII of this preamble.

DE. Legitimacy

On October 28, 2003 (68 FR 61581-61588), EPA extensively discussed our
position on the relevance of legitimacy to hazardous waste recycling in
general and to the redefinition of solid waste specifically. We proposed
to codify in the RCRA regulations four general criteria to be used in
determining whether recycling of hazardous secondary materials is
legitimate. In today’s action, we are proposing a change changes to
the proposed legitimacy criteria and asking for public comment on these
revisions.  The change is changes consist of a restructuring of the
proposed criteria, called factors in this proposal, by making two of
these factors mandatory and two non-mandatory  considerations, and
providing further guidance and clarification on how the economics of
recycling should be considered in making legitimacy determinations.  The
changes are described in section XII of this preamble.

III. What Is the Intent of This Supplemental Proposal?

	Today’s supplemental proposal would revise and clarify the RCRA
definition of solid waste as it pertains to certain types of hazardous
secondary materials that would not be considered wastes subject to
regulation under RCRA Subtitle C.  This notice builds on our October 28,
2003 proposal (68 FR 61558) which was initiated partially in response to
decisions by the United States Court of Appeals for the D.C. Circuit,
which, taken together, have provided the Agency with additional
direction in this area.

	This proposal represents an important restructuring of the RCRA
regulations that distinguish wastes from non-waste materials for RCRA
purposes, and that ensure environmental protections over hazardous
secondary materials recycling practices.  As such, it also is an
opportunity for the Agency to clarify in a regulatory context the
concept of “legitimate recycling,” which has been and is a key
component of RCRA’s regulatory program for recycling, but which to
date has been implemented without regulatory criteria.  Today’s
supplemental proposal thus includes specific regulatory provisions for
determining when hazardous secondary materials are recycled
legitimately.

	Today’s supplemental proposal is de-regulatory in nature because
certain recyclable materials that have heretofore been subject to the
hazardous waste regulations would no longer be regulated as hazardous
waste.  The criteriafactors to consider for legitimate recycling codify
existing principles, without increasing regulation.  This proposal is
not intended to bring new wastes into the RCRA regulatory system.

	By removing unnecessary hazardous waste regulatory controls over
certain recycling practices, and by providing more explicit criteria for
determining the legitimacy of recycling practices in general, EPA
expects that this proposal will encourage the safe, beneficial recycling
of hazardous secondary materials.  This regulatory initiative is thus
consistent with the Agency’s longstanding policy of encouraging the
recovery and reuse of valuable resources as an alternative to land
disposal, while at the same time maintaining protection of human health
and the environment.  It also is consistent with one of the primary
goals of the Congress in enacting the RCRA statute (as evidenced by its
name), and with the Agency’s vision of how the RCRA program could
evolve over the longer term to promote sustainability and more efficient
use of resources.

IV. How Does This Supplemental Proposal Relate to the October 2003
Proposal?

	On October 28, 2003 (68 FR 61558), the Agency proposed to exclude from
the definition of solid waste any material generated and reclaimed in a
continuous process within the same industry, provided the reclamation
was legitimate. “Same industry” was defined as industries sharing
the same 4-digit North American Industry Classification System (NAICS)
code.  The basis for that exclusion was the holding in American Mining
Congress v. EPA (“AMC I”), 824 F.2d 1177 (D.C. Cir. 1987)) that
materials destined for beneficial reuse of recycling in a continuous
process by the generating industry are not discarded.  In order to be
eligible for the exclusion, the hazardous secondary material could not
be speculatively accumulated under 261.1(c)(8).  In addition, the
generator of such materials would be required to submit a one-time
notification to EPA or the authorized State with contact information,
the type of material that would be excluded, and the industry that
generated the material.  In the October 2003 proposal, the Agency also
proposed to codify in the RCRA regulations four criteria to be used in
determining whether recycling of hazardous secondary material was
legitimate.  We also solicited comment on a broader conditional
exclusion from RCRA regulation for essentially all hazardous secondary
materials that are legitimately recycled. For a discussion of public
comments received on our proposed exclusion, see section IX of this
preamble.

	After evaluating comments received on the October 2003 proposal and
conducting an independent analysis, EPA decided to restructure its
approach.  Following the decision of the D.C. Circuit Court in
Association of Battery Recyclers v. EPA (“ABR”)( 208 F.3d 1047 (D.C.
Cir. 2000), EPA has decided to examine the principles behind the
court’s holdings on the definition of solid waste, rather than trying
to fit materials into specific fact patterns addressed by the court.
EPA is therefore proposing (1) an exclusion for hazardous secondary
materials that are generated and then reclaimed under the control of the
generator;  (2) a conditional exclusion for hazardous secondary
materials that are generated and then transferred to another person for
the purpose of reclamation; and (3) a petition process for obtaining a
case-specific non-waste determination for certain hazardous secondary
materials that are recycled.  Today’s notice also proposes a
restructuring of the previously proposed legitimacy criteria and further
clarification and guidance on how the economics of the recycling
transaction should be considered in making legitimacy determinations.  A
detailed description of today’s proposed regulatory changes and the
reasons for not finalizing the October 2003 proposal are discussed in
sections IX, X, XI, and XII of this preamble.

V. How Is Hazardous Waste Recycling Currently Regulated?

	The basic regulatory provisions for defining “solid wastes” and
“hazardous wastes” under RCRA are found in Part 261 of Title 40 of
the Code of Federal Regulations (CFR).  To be subject to RCRA’s
hazardous waste regulatory program, a material must first be a solid
waste that is also a hazardous waste.  A solid waste is a hazardous
waste if it is explicitly listed as such (in Subpart D of Part 261), or
if it exhibits one or more of the hazardous characteristics (as
specified in Subpart C of Part 261).

	In general, hazardous wastes are subject to RCRA’s full “cradle to
grave” regulatory system from the time they are generated to the time
that they are ultimately disposed.  However, hazardous secondary
materials often can be recycled instead of being disposed, which can
change how those wastes are regulated. The “definition of solid
waste” regulations in Part 261 in effect separate recyclable hazardous
secondary materials into two broad categories – those that are
classified as solid wastes when recycled, and are therefore subject to
regulation under Subtitle C of RCRA if they are listed or characteristic
hazardous wastes, and those that are not considered solid wastes when
they are recycled, and thus are not regulated. It should be understood
that the term “hazardous secondary material” as it is used in
today’s rule and preamble therefore refers to both categories of
recyclable materials; that is, materials that are regulated as hazardous
wastes when recycled, and materials that are not considered wastes when
recycled.

	Hazardous secondary materials that are currently not regulated as
wastes when they are recycled include, for example, those which are used
or reused directly as effective substitutes for commercial products, and
those which can be used as ingredients in an industrial process,
provided the materials are not being reclaimed. See 40 CFR 261.2(e). In
essence, EPA considers these types of recycling practices to be more
akin to normal industrial production rather than waste management.

	In contrast, in some recycling practices, the hazardous secondary
material cannot be used as is and must be significantly processed before
it can be reused in a manner similar to products in commerce.  In these
cases, EPA has found that the material may be more “waste-like” and
the hazardous secondary materials therefore have been regulated as
hazardous wastes. One type of recycling that falls within this category
and that is especially relevant to this rule is reclamation of certain
types of hazardous secondary materials. Reclamation involves the
processing of hazardous secondary materials in some way in order so that
they can be used or reused. See 40 CFR 261.1(c)(4) and 40 CFR
261.2(c)(3). An example of reclamation is processing of a spent solvent
to restore its solvent properties before it is suitable for reuse as a
solvent. As explained elsewhere in today’s preamble, this supplemental
proposal would reexamine the regulatory status of these hazardous
secondary materials and de-regulate a specific subset of these materials
that are recycled by being reclaimed.

	In the existing Part 261 regulations, EPA identified other types of
recycling practices that are fully regulated because, we concluded, they
involve discard of materials. These practices include recycling of
“inherently waste-like” materials (40 CFR 261.2(d)), recycling of
materials that are “used in a manner constituting disposal,” or
“used to produce products that are applied to or placed on the
land,”(40 CFR 261.2(c)(1)) and “burning of materials for energy
recovery” or “used to produce a fuel or otherwise contained in
fuels” (40 CFR 261.2(c)(2)). Today’s supplemental proposal is not
intended to affect how these recycling practices are regulated.

	The current regulations also provide certain specific exemptions and
exclusions from the definition of solid waste for particular recycling
practices. For example, pulping liquors from paper manufacturing that
are reclaimed in a pulping liquor recovery furnace and then reused in
the pulping process are excluded from regulation under 40 CFR
261.4(a)(6). In some cases, these exclusions specify certain conditions
that must be met in order to qualify for and maintain the excluded
status of the recycled material. An example of such a “conditional
exclusion” is the one provided in 40 CFR 261.4(a)(9) for spent wood
preserving solutions that are reclaimed and reused.  EPA is proposing
that hazardous secondary materials that are currently excluded with
specific requirements or conditions should be required to continue to
meet those requirements (e.g., the drip pad requirements for the wood
preserving exclusion). In addition, recycling of such materials at new
facilities, or at existing facilities that are not currently operating
under the terms of an existing exclusion, would also be subject to the
existing applicable regulatory exclusion, rather than today’s proposed
exclusions.  For a fuller discussion of this issue, see section XIII of
this preamble.  In that section, we solicit comment on allowing
regulated entities to choose which exclusion they would be subject to in
cases where more than one exclusion could apply.

VI. What Is the History of Recent Court Decisions on the Definition of
Solid Waste?

A. Background

	RCRA gives EPA the authority to regulate the disposal of “solid
wastes” under its non-hazardous waste program. See, e.g., RCRA
sections 1008(a), 4001 and 4004(a).  RCRA also gives EPA authority to
regulate hazardous wastes. See, e.g., RCRA sections 3001-3004.
“Hazardous wastes” are the subset of solid wastes that present
threats to human health and the environment. See section 1004(5). EPA
also may address solid and hazardous wastes under its endangerment
authorities in section 7003. (Similar authorities are available for
citizen suits under section 7002.) Materials that are not solid wastes
are generally not subject to regulation under RCRA Subtitle C. Thus, the
definition of “solid waste” plays a key role in defining the scope
of EPA’s authorities under RCRA.

	The statute defines “solid waste” as “...any garbage, refuse,
sludge from a waste treatment plant, water supply treatment plant, or
air pollution control facility and other discarded material... resulting
from industrial, commercial, mining, and agricultural operations, and
from community activities...” (RCRA Section 1004 (27) (emphasis
added)). In its RCRA hazardous waste regulations, EPA has historically
defined certain hazardous secondary materials destined for recycling as
“waste,” while excluding others.

	Since 1980, EPA has interpreted “solid waste” under its Subtitle C
regulations to encompass both materials that are destined for final,
permanent placement in disposal units, as well as some materials that
are destined for recycling.  45 FR 33090-95 (May 19, 1980); 50 FR 604 -
656 (Jan. 4, 1985) (see especially pages 616-618). EPA has offered three
arguments in support of this approach:

The statute and the legislative history suggest that Congress expected
EPA to regulate as solid and hazardous wastes certain materials that are
destined for recycling (see 45 FR 33091, citing numerous sections of the
statute and U.S. Brewers’ Association v. EPA, 600 F. 2d 974 (D.C. Cir.
1979); 48 FR 14502-04 (April 3, 1983); and 50 FR 616-618).

Hazardous secondary materials stored or transported prior to recycling
have the potential to present the same types of threats to human health
and the environment as hazardous wastes stored or transported prior to
disposal. In fact, EPA found that recycling operations have accounted
for a number of significant damage incidents. For example, materials
destined for recycling were involved in one-third of the first 60
filings under RCRA’s imminent and substantial endangerment authority,
and 20 of the initial sites listed under CERCLA. (48 FR 14474, April 4,
1983.) Congress also cited some damage cases which can be interpreted to
involve recycling. (H.R. Rep. 94-1491, 94th Cong., 2d Sess., at 17, 18,
22).  More recent data (i.e., information on damages occurring after
1982) included in the rulemaking docket for today’s supplemental
proposal corroborate the fact that recycling operations can result in
significant damage incidents. (See Sectionsection IV.B.2 of today’s
preamble.)

Excluding all hazardous secondary materials destined for recycling would
allow materials to move in and out of the hazardous waste management
system depending on what any person handling the material intended to do
with it. This seems inconsistent with the mandate to track hazardous
wastes and control them from “cradle to grave.”

	EPA has interpreted the statute to confer jurisdiction over at least
certain hazardous secondary materials destined for recycling. The Agency
has therefore developed in Part 261 of 40 CFR a definition of “solid
waste” for Subtitle C regulatory purposes. (Note:  This definition is
narrower than the definition of “solid waste” for RCRA endangerment
and information-gathering authorities. See 40 CFR 261.1(b) and
Connecticut Coastal Fishermen’s Association v. Remington Arms Co., 989
F.2d 1305, 1315 (2d Cir.1993), holding that EPA’s use of a narrower
and more specific definition of solid waste for Subtitle C purposes is a
reasonable interpretation of the statute. See also Military Toxics
Project v. EPA, 146 F.3d 948 (D.C. Cir. 1998).)

	Under its current Subtitle C regulations, EPA classifies as solid
wastes some – but not all – hazardous secondary materials that are
recycled by “reclamation.” The regulations define “spent
materials” as being “discarded” if they are destined for
reclamation. However, “commercial chemical products” are not defined
as “discarded” when reclaimed.  In addition, byproducts and sludges
are defined as “discarded” when reclaimed on a case-by-case basis.
That is, EPA considers these materials to be “discarded” when they
are specifically listed as a hazardous waste at 40 CFR 261 Subpart D.
See Table 1 to 40 CFR 261.2.   EPA has also promulgated three exceptions
from the Subtitle C definition for materials destined for reclamation.
See 260.31(b) and (c); 40 CFR 261.4(a) (8).

	Finally, EPA has always asserted that materials are not excluded from
its jurisdiction simply because someone claims that they will be
recycled. EPA has consistently considered hazardous secondary materials
destined for “sham recycling” to be discarded and, hence, to be
solid wastes for Subtitle C purposes.  See 45 FR 33093 (May 19, 1980),
50 FR 638-39 (Jan. 4, 1985).  The U.S. Court of Appeals for the D.C.
Circuit has agreed that materials undergoing sham recycling are
discarded and, consequently, are solid wastes under RCRA. See American
Petroleum Institute v. EPA, 216 F.3d 50, 58-59 (D.C.Cir. 2000).

B. A Series of D.C. Circuit Court Decisions

	Trade associations representing mining and oil refining interests
challenged EPA’s 1985 regulatory definition of solid waste.  In 1987,
the D. C. Circuit held that EPA exceeded its authority “in seeking to
bring materials that are not discarded or otherwise disposed of within
the compass of ‘waste.’” American Mining Congress v. EPA (“AMC
I”), 824 F.2d 1177, 1178 (D.C. Cir. 1987). Although the Court clearly
articulated this concept, it did not specify which portions of the rules
exceeded EPA’s authority. It more generally “granted the petition
for review.”

	The Court held that certain of the materials EPA was seeking to
regulate were not “discarded materials” under section 1004(27).
After reviewing numerous statutory provisions and portions of the
legislative history, the Court held that Congress used the term
“discarded” in its ordinary sense, to mean “disposed of” or
“abandoned.” 824 F.2d at 1188-89. The Court further held that the
term “discarded materials” could not include materials ...destined
for beneficial reuse or recycling in a continuous process by the
generating industry itself (because they) are not yet part of the waste
disposal problem.” 824 F.2d at 1190. The Court held that Congress had
directly spoken to this issue, so that EPA’s use of a conflicting
definition was not entitled to deference under Chevron U.S.A., Inc. v.
NRDC, 467 U.S. 837 (1984). 824 F.2d at 1183, 1189-90, 1193.

	At the same time, the Court did not hold that no recycled materials
could be discarded. The Court mentioned at least two examples of
recycled materials that EPA properly considered within its statutory
jurisdiction, noting that used oil can be considered a solid waste. 824
F.3d at 1187 (fn 14).  Also, the Court suggested that materials disposed
of and recycled as part of a waste management program are within EPA’s
jurisdiction. 824 F. 2d at 1179. Subsequent decisions by the D.C.
Circuit also indicate that some materials destined for recycling are
“discarded” and therefore within EPA’s jurisdiction. In
particular, the Court held that emission control dust from steelmaking
operations listed as hazardous waste “K061" is a solid waste, even
when sent to a metals reclamation facility, at least where that is the
treatment method required under EPA’s land disposal restrictions
program. American Petroleum Institute v. EPA (“API I”), 906 F.2d 729
(D.C. Cir. 1990). The Court held that it is reasonable for EPA to
consider as discarded (and solid wastes) listed wastes managed in units
that are part of wastewater treatment units, especially where it is not
clear that the industry actually reuses the materials. (“AMC II”),
907 F. 2d 1179 (D.C. Cir. 1990). Also, the Court found that EPA
potentially had jurisdiction over oil-bearing wastewaters recycled at
petroleum refineries, although in the rule under review EPA failed to
provide a rational basis for asserting jurisdiction. American Petroleum
Institute v. EPA (“API II”), 216 F.3d 50, 57-58 (D.C. Cir. 2000).

	It also is worth noting that two other Circuits also have held that EPA
has authority over at least some materials destined for reclamation
rather than final discard. The U.S. Court of Appeals for the 11th
Circuit found that “[i]t is unnecessary to read into the term
‘discarded’ a congressional intent that the waste in question must
finally and forever be discarded.”  U.S. v. ILCO, 996 F.2d 1126 , 1132
(11th Cir. 1993) (finding that used lead batteries sent to a reclaimer
have been “discarded once” by the entity that sent the battery to
the reclaimer). The Fourth Circuit found that slag held on the ground
untouched for six months before sale for use as road bed could be a
solid waste. Owen Electric Steel Co. v. EPA, 37 F.3d 146, 150 (4th Cir.
1994).

	Considering all of these decisions (except the API case decided in
2000), in 1998, EPA promulgated a rule in which EPA claimed Subtitle C
jurisdiction over hazardous secondary materials recycled by reclamation
within the mineral processing industry (the “LDR Phase IV rule”).
”) (63 FR 28556 (May 26, 1998)). In that rule, EPA promulgated a
conditional exclusion for all types of mineral processing hazardous
secondary materials destined for reclamation. EPA imposed a condition
prohibiting land-based storage prior to reclamation because it
considered hazardous  secondary materials from the mineral processing
industry that were stored on the land to be part of the waste disposal
problem.   (63 FR at 28581). The conditional exclusion decreased
regulation over spent materials stored prior to reclamation, but
increased regulation over by-products and sludges that exhibit a
hazardous characteristic, and that are stored prior to reclamation. EPA
noted that the statute does not authorize it to regulate “materials
that are destined for immediate reuse in another phase of the
industry’s ongoing production process.” EPA, however, took the
position that materials that are removed from a production process for
storage are not “immediately reused,” and therefore are
“discarded.”  ” (63 FR at 28580).

	The mining industry challenged the rule, and the D.C. Circuit vacated
the provisions that expanded jurisdiction over characteristic
by-products and sludges destined for reclamation.  Association of
Battery Recyclers v. EPA (“ABR”), 208 F.3d 1047 (D.C. Cir. 2000).
The Court held that it had already resolved the issue presented here in
its opinion in AMC I, where it found that “...Congress unambiguously
expressed its intent that ‘solid waste’ (and therefore EPA’s
regulatory authority) be limited to materials that are ‘discarded’
by virtue of being disposed of, abandoned, or thrown away.” 208 F.2d
at 1051. It repeated that materials reused within an ongoing industrial
process are neither disposed of nor abandoned.  208 F.3d at 1051-52. It
explained that the intervening API I and AMC II decisions had not
narrowed the holding in AMC I. 208 F.3d at 1054-1056.

	At the same time, the Court did not hold that storage before
reclamation automatically makes materials “discarded.” Rather, it
held that “... at least some of the secondary material EPA seeks to
regulate as solid waste (in the mineral processing rule) is destined for
reuse as part of a continuous industrial process and thus is not
abandoned or thrown away.” 208 F.3d at 1056.

	In its most recent opinion dealing with the definition of solid waste,
Safe Food and Fertilizer v. EPA, 350 F.3d 1263 (D.C. Cir. 2003), the
Court upheld an EPA rule that excludes from the definition of solid
waste hazardous secondary materials used to make zinc fertilizers, and
the fertilizers themselves, so long as the recycled materials meet
certain handling, storage and reporting conditions and the resulting
fertilizers have concentration levels for lead, arsenic, mercury,
cadmium, chromium, and dioxins that fall below specified thresholds.
Final Rule, “Zinc Fertilizers Made From Recycled Hazardous Secondary
Materials” (“Fertilizer Rule”), (67 FR 48393 (2002)).  EPA
determined that if these conditions are met, the recycled materials have
not been discarded.  The conditions apply to a number of recycled
materials not produced in the fertilizer production industry, including
certain zinc-bearing hazardous secondary materials such as brass foundry
dusts.

	EPA’s reasoning was that market participants, consistent with the
EPA-required conditions in the rule, would treat the exempted materials
more like valuable products than like negatively-valued wastes and,
thus, would manage them in ways inconsistent with discard.  In addition,
the fertilizers derived from these recycled feedstocks are chemically
indistinguishable from analogous commercial products made from raw
materials.  350 F.3d at 1269.  The court upheld the rule based on
EPA’s explanation that market participants manage materials in ways
inconsistent with discard, and the fact that the levels of contaminants
in the recycled fertilizers were “identical” to the fertilizers made
with raw materials.  The court held that this interpretation of
“discard” was reasonable and consistent with the statutory purpose.
The court noted that the identity principle was defensible because the
differences in health and environmental risks between the two types of
fertilizers are so slight as to be substantively meaningless.

	However, the Court specifically stated that it “need not consider
whether a material could be classified as a non-discarded exclusively on
the basis of the market-participation theory.”  350 F.3d at 1269.
The court only determined that the combination of market participants’
treatment of the materials, EPA required management standards and the
“identity principle” are a reasonable set of tools to establish that
the recycled secondary materials and fertilizers are not discarded.

 C. 2003 Proposed Revisions to the Definition of Solid Waste

	As a result of the court decision in ABR to vacate the provisions in
the May 1998 final rule that increased regulation of characteristic
by-products and sludges from mineral processing, EPA promulgated a final
rule removing from the Code of Federal Regulations the byproduct and
sludge provisions.  (67 FR 11251 (Mar. 13, 2002)).  Later, prompted by
concerns articulated in the various Court opinions up to the ABR
decision, EPA issued the October 2003 notice, which proposed that
material generated and reclaimed in a continuous process within the same
industry is not discarded for purposes of Subtitle C, provided that the
recycling process is legitimate. However, for the reasons described
elsewhere in today’s notice, we are proposing different types of
exclusions from the definition of solid waste in this supplemental
proposal that we believe more directly consider whether particular
materials are not considered “discarded”, and are not solid and
hazardous wastes subject to regulation under Subtitle C of RCRA.   The
October 2003 proposal and how it relates to today’s supplemental
proposal is further discussed elsewhere in today’s preamble.

VII. How Does the Concept of Discard Relate to These Proposed
Exclusions?

	The concept of "discard" is the central organizing idea behind
today’s supplemental proposal, which reflects the fundamental logic of
the RCRA statute. As stated in RCRA Section 1004(27), "solid waste" is
defined as ". . . any garbage, refuse, sludge from a waste treatment
plant, or air pollution control facility and other discarded material .
. . resulting from industrial, commercial, mining and agricultural
activities. . ."  Therefore, in the context of this supplemental
proposal, a key issue is the circumstances under which a material that
is recycled by reclamation is or is not discarded.

	In the series of decisions discussed above relating to the RCRA
definition of solid waste, the Court of Appeals for the D.C. Circuit has
consistently cited a plain language definition of discard, as meaning
"disposing, abandoning or throwing away." EPA believes that this is a
workable and logical definition of the term, and the underlying logic of
today's proposed exclusions is consistent with this definition.

	The basic rationale that EPA is applying in this case differentiates
between recycled hazardous secondary materials over which the generator
maintains control and recycled hazardous secondary materials over which
the generator relinquishes control.  If the generator maintains control
over the recycled hazardous secondary material and it is legitimately
recycled under the standards established in this proposal and the
material is not speculatively accumulated within the meaning of EPA’s
regulations, the hazardous secondary material is not discarded.  This is
because the material is being treated as a valuable commodity rather
than as a waste.  By maintaining control over, and potential liability
for, the recycling process, the generator ensures that the materials are
not discarded.  See ABR 208 F.3d at 1051 (“Rather than throwing these
materials [destined for recycling] away, the producers saves them;
rather than abandoning them, the producer reuses them.”).  However,
when the hazardous secondary materials are managed in land-based units
(e.g., waste piles, surface impoundments, etc), the hazardous secondary
materials must be contained, or they may be considered discarded, even
if they remain under the control of the generator.  While placement on
the land would not in itself constitute discard, when hazardous
secondary materials are not being managed as a valuable product and, as
a result, a significant release occurs, such materials would be
considered discarded.  Further discussion of these concepts appears in
Sectionsection IX of this preamble.

	In those cases, however, where generators of hazardous secondary
materials do not re-use or recycle the materials themselves, it often
may be a sound business decision to ship the material to be recycled to
a commercial facility or another manufacturer in order to avoid the
costs of disposing of the material. In such situations, the generator
has relinquished control of the hazardous secondary material and the
entity receiving such materials may not have the same incentives to
manage the hazardous secondary material as a useful product.
Accordingly, the Agency believes that conditions are needed for the
Agency to determine that this material is not discarded.  However, if
the recycler legitimately recycles the hazardous secondary material, it
is not regulated as a solid waste, provided certain additional
conditions are met.  Further discussion of the Agency’s rationale for
this concept appears in Sectionsection X.A. of this preamble.

	This is the general logic we have used in developing the exclusions in
today's supplemental proposal. The proposed exclusion for hazardous
secondary materials that are recycled under the control of the generator
is based on the notion that as long as the generator has control over
the recycling process, has chosen to legitimately reclaim it within the
United States or its territories, retains liability in the event that
the hazardous secondary materials (be they the materials that were
generated, residuals from a reclamation process, or both) are somehow
released into the environment, these materials are not discarded. In
addition, if the materials are managed in a land-based unit, the
generator must ensure that the materials are contained.  Of course, if
such hazardous secondary materials are released into the environment and
are not recovered in a timely manner, these materials have been
discarded and the generator is subject to all applicable federal and
state regulations, and applicable cleanup authorities.   The "broader"
exclusion for materials that are transferred by the generator to another
person or company for reclamation is based on the idea subsequent
activities are more likely to involve discard, given that the generator
has relinquished control of the hazardous secondary material, and
additional conditions are needed for the Agency to determine that these
materials are not discarded.

VIII. Recycling Studies

A. Purpose of Studies

	In response to the October, 2003, proposal, a number of commenters
criticized the Agency specifically for not having conducted a thorough
study of the potential impacts of the proposed regulatory changes. These
commenters expressed the general concern that deregulating hazardous
secondary materials that are reclaimed in the manner proposed could
result in mismanagement of these materials, and thus could create new
cases of environmental damage that would require remedial action under
federal or state authorities. Some of the commenters further cited a
number of examples of environmental damage that waswere attributed to
hazardous material recycling, including a number of sites listed on the
Superfund National Priorities List (NPL).

	However, a number of other commenters expressed the view that the great
majority of these cases of recycling-related environmental problems
occurred before RCRA, CERCLA or other environmental programs were
established in the early 1980s. These commenters further argued that
these environmental programs—most notably, RCRA's hazardous waste
regulations, and the liability provisions of CERCLA—have created
strong incentives for proper management of recyclable materials and
recycling residuals. Several commenters further noted that because of
these developments, industrial recycling practices have changed
substantially since the early 1980s, and present day generators and
recyclers are much better environmental stewards than in the
pre-RCRA/CERCLA era. Thus, they argued, cases of “historical”
recycling-related environmental damage are not particularly relevant or
instructive with regard to modifying the current RCRA hazardous waste
regulations for hazardous material recycling.

	In light of these comments and in deliberating on how to proceed with
this rulemaking effort, the Agency decided that additional information
on hazardous material recycling would benefit the regulatory
decision-making process, and would provide stakeholders with a clearer
picture of the hazardous material recycling industry in this country.
Accordingly, the Agency examined three basic issues that we believed
were of particular importance to informing this rulemaking effort:

How do responsible generators and recyclers of hazardous secondary
materials ensure that recycling is done in an environmentally safe
manner?

To what extent have hazardous secondary material recycling practices
resulted in environmental problems in recent years, and why?

Are there certain economic forces or incentives specific to hazardous
secondary material recycling that can explain why environmental problems
can sometimes originate from such recycling activities?

Reports documenting these studies are in the administrative record for
this rulemaking, under the following titles:

"An Assessment of Current Good Practices for Recycling of Hazardous
Secondary Materials"

"An Assessment of Environmental Problems Associated With Recycling of
Hazardous Secondary Materials"

"Potential Effects of Market Forces on the Management of Hazardous
Recyclable Materials"

	The findings of these background studies have informed many of the
Agency's policy decisions in developing this regulatory proposal.
However, it should be understood that these three reports are not
definitive, peer-reviewed documents of a technical nature. We fully
acknowledge that in some respects they may not paint a complete picture,
or capture every detail of the subject matter that was examined.
However, we believe that the information in the studies provides an
important perspective on current recycling practices, and that it
supports our policy direction in developing today’s supplemental
proposal.   EPA is planning to investigate the need for peer review of
these documents, and we solicitsolicits comment on the policy and
regulatory implications of the information in these studies.

B. Results

1. Successful recycling practices

	One of the studies that EPA has completed is an examination of what
practices responsiblemany generators and recyclers currently use to
ensure that their hazardous secondary materials are recycled safely and
responsibly. One purpose of this study was to provide the Agency and the
rulemaking record with another angle from which to view the hazardous
secondary material recycling industry. In addition, the results of this
study suggest what kinds of regulatory controls might be appropriate for
these hazardous secondary materials to determine that they are handled
as commodities rather than wastes.  The practices have helped the Agency
develop elements of the supplemental proposal presented today.

	The Agency has long heard from various representatives of industry and
other stakeholders that management of hazardous secondary materials has
changed and improved since the inception of the RCRA hazardous waste
regulations in the early 1980s and that these hazardous secondary
materials are being managed much more carefully than they were
historically. The successful recycling study examines which improved
practices are used by responsiblemany companies in the industry and the
reasons the practices are implemented.

To complete this study, EPA spoke with representatives from multiple
organizations that regularly manage hazardous secondary materials, both
for recycling and for treatment followed by disposal, and examined
literature and publicly available information on the Internet focused on
the subject of recycling of hazardous secondary materials. The study
uses these sources to assemble an overall picture of the good practices
that are currently in use by a number of responsible companies. The full
study can be found in the docket for today’s supplemental proposal,
available at   HYPERLINK "http://www.regulations.gov"
http://www.regulations.gov .

The successful recycling study found two main drivers behind companies
adopting responsible recycling practices in the management of their
hazardous secondary materials. The first is concern of liability under
the Comprehensive Environmental Response, Compensation, and Liability
Act (CERCLA), also known as Superfund. Under CERCLA, a company can be
held liable as an arranger for disposal for contamination caused by its
materials sent for recycling at another facility’s site. Therefore, it
is in that company’s best interest to ensure that the facility to
which it sends its waste is not likely to become a Superfund site or to
fall under CERCLA in the future either because of financial failure or
because of bad materials management practices. The threat of Superfund
liability was cited by many of the sources for the responsible recycling
study as the main reason for the development of their audit programs in
this area.

The other reason for adoption of responsible recycling practices cited
falls into a broad category of concerns about corporate responsibility
and public relations. Many companies now have very public environmental
policies and have implemented environmental management systems that are
part of their programs for corporate responsibility. Although the real
effects of these corporate policies are hard to gauge, EPA observed
during this study that audit programs that were developed in response to
CERCLA, now are maintained as part of a philosophy of corporate
responsibility, which is part of the image a corporation sells to its
customers.

EPA found that responsible recycling practices used by generators and
recyclers to manage hazardous secondary materials fall into two general
categories. The first category includes the audit activities and
inquiries performed by a generator of a material to determine whether
the entity to which it is sending the hazardous secondary material is
equipped to responsibly manage those materials without the risk of
releases or other environmental damage. These recycling and waste audits
of other companies’ facilities form a backbone of many of the
transactions in the hazardous secondary materials market. The second
category of responsible recycling practices consists of the control
practices that ensure responsible management of any given shipment of
hazardous secondary material, such as the contracts under which the
transaction takes place and the tracking systems in place that can
inform a generator that its hazardous secondary material has been
properly managed.

In this study, EPA found that certain generators of hazardous secondary
materials perform facility audits—a kind of environmental due
diligence—on the facilities to which they send their materials. These
audits can take many forms and can be of varying degrees of complexity,
depending on the secondary material or, in some cases, on the size and
sophistication of the generator. Although large companies are more
likely to perform in-depth facility audits, possibly because they more
frequently have environmental health and safety divisions coordinating
audits or because they may have greater amounts of hazardous secondary
materials they are sending off-site, some smaller companies are also
performing some kind of audit on the recycling facility receiving the
hazardous secondary material.

The exact nature of each generator’s audit process will vary, but
there are some common elements. Often the audit has two parts: (1) a
remote screening audit during which the auditor examines the
recycler’s compliance history and financial records and the recycler
may fill out a questionnaire about its operations and facility and (2) a
visit to the recycler’s facility, which can take anywhere from several
hours to several days. Some common elements examined in both phases of
an audit include: (1) site history; (2) history of compliance with
environmental requirements and permits; (3) general appearance and
housekeeping at the facility; (4) description of process design and
capability; (5) residuals management; (6) financial soundness of the
recycler; and (7) possession of adequate pollution liability and general
insurance.

In addition to generators auditing recycling facilities, another example
of a practice that EPA believes helps to ensure responsible management
is the design of hazardous secondary materials recycling contracts and
tracking systems to manage information about the location of a
particular container and to document its eventual recycling.

Recycling contracts are normal business practice and minimize the
potential for recyclers to receive shipments of hazardous secondary
materials that they are not equipped to recycle. In these contracts, the
two parties can lay out specifications for the make-up of materials
being shipped to the recycler and describe the protocol for actions
taken if a material not meeting these specifications arrives at the
recycling facility. In some cases, the recycler can still handle the
material, but may charge the generator an additional fee for having to
alter the material to meet specifications. In other cases, the recycler
may not be able to accept the material at all. Through the contract
mechanism, both parties then agree on whether that hazardous secondary
material should be returned to the generator or sent to a different
recycler or waste disposal facility.

EPA also found that knowing whether materials conform to the contract
specifications necessitated sampling of the hazardous secondary material
arriving at a recycler. Several recyclers told EPA that they sample each
rail car, truck, and drum arriving at their facilities before accepting
them. Legitimate recycling practices operate as a manufacturing process
might and there is tight control over the nature of the materials being
recycled. Recyclers who are seeking to make a salable product will make
sure that the inputs meet specifications.

Due to time and resource limitations, EPA’s examination of successful
recycling practices was not exhaustive, as we were able to gather
information from a limited number of sources. We believe that the
practices and situations outlined in the study are representative of
industry practices performed by responsiblemany companies, but ask today
for comments on the results of the study and for relevant information
not represented therein.

2.  Environmental problems associated with recycling of hazardous
secondary materials.

a. Scope and objectives of the study

	The general goal of this study was to identify and characterize
environmental problems that have been attributed to some type of
hazardous secondary material recycling activity, and that are relevant
for the purpose of this rulemaking effort.  The Agency believes that
discard is more likely to occur if environmental problems exist.
Specifically, we sought to identify the following types of cases:

Cases where environmental damage clearly can be attributed to some type
of recycling activity. In conducting this study, we limited our search
to those environmental problems in which environmental damages were
clearly caused by some type of recycling-related activity. In this
context, “recycling-related activities” included—

accumulation or storage of hazardous secondary materials by the
generator, the recycler or an intermediary;

illegal disposal or abandonment of recyclable hazardous secondary
materials or recycling residuals;

transportation of recyclable hazardous secondary materials;

“sham” recycling operations (i.e., illegal disposal or treatment
disguised as recycling);

production and/or use of contaminated products from recycled hazardous
secondary materials, reclamation and/or production processes;

management of residuals from reclamation or production processes, or

other activities associated with the management of recyclable hazardous
secondary materials, recycling residuals, or the products of recycling
processes.

The study identified a number of cleanup sites at which a recycling
process had operated, but where other sources of contamination made it
extremely difficult to determine with any certainty that the recycling
activity contributed to the environmental problems at the site. These
cases were not included in this study.

Relatively recent cases. Many of the environmental problems that were
examined in the course of this study occurred before RCRA, CERCLA or
other environmental programs were established in the early 1980s. The
Agency believes that, for the purpose of this rulemaking effort, these
“historical” recycling-related damage cases are much less relevant
and instructive than cases which have occurred within the current
regulatory and liability "landscape." This belief is based in large part
on the findings of our companion study of current good hazardous
secondary material recycling practices, which indicate that in today's
era (though there are exceptions), most generators and recyclers are
aware of their environmental responsibilities, and generally make
considerable efforts to ensure that materials are recycled and otherwise
managed responsibly. Therefore, all the cases included in the data for
this study occurred after 1982.

Cases involving recycling of regulated hazardous secondary materials
that are specifically excluded from RCRA regulation. The study was
intended to identify environmental problems associated with recycling of
regulated hazardous secondary materials, as well as those involving the
recycling of hazardous secondary materials that are not regulated
because they are subject to a specific regulatory exemption or exclusion
(see, for example, the exclusions in 40 CFR 261.4). The Agency was
interested in these types of problems because they may indicate the
extent to which environmental damages can occur even when recycling is
conducted under a stringent regulatory regime, and whether such
environmental problems may be more or less prevalent for materials that
are not regulated as hazardous wastes. The study was not designed to
identify cases involving recycling of non-hazardous materials such as
paper, glass, rubber, or plastics.

b. Methodology

	The initial task of this study was to identify as many
recycling-related environmental problems that were relevant to the scope
and purpose of the study as possible (the preceding section of this
preamble describes the types of cases that were considered relevant to
the study). Potential cases were identified from a variety of sources,
including:

Comments on the October 28, 2003, proposed rule

The Superfund National Priorities List

National EPA data bases maintained for the CERCLA, RCRA, and enforcement
programs

Contacts with staff in state environmental agencies

Contacts with staff in EPA Regional Offices

State agency databases maintained for state Superfund programs and other
environmental programs

Internet searches

News media reports

	For those environmental problems found at recycling facilities or
resulting in the mismanagement of hazardous secondary materials to be
recycled that were relevant to the study, we gathered available
information to identify certain key facts relating to when the problem
occurred, the type of recycling practice involved, the types of
materials recycled, how and why the environmental damage occurred, and
other key data (these data are summarized in tabular form in Appendix 1
of the report entitled The Assessment of Environmental Problems
Associated With Recycling of Hazardous Secondary Materials). A written
description of each case was then prepared—these are in Appendix 2 of
the same report.

	Many of the cases that were investigated, including many of the
Superfund sites, were well-documented, and we were able to assemble
relatively complete profiles for those cases. For many other cases,
however, much less complete information was available, while at some of
the sites, we were able to collect only very basic information.

In addition, because of time and resource limitations, the search for
potentially relevant cases was not exhaustive. For example, we did not
systematically survey all state environmental agencies for relevant
cases, nor did we search paper files in EPA Regional Offices. Because of
this relatively limited scope, we believe that the cases we have
identified and described in this report in effect represent those that
were relatively easy to find, and that there are likely to be additional
cases that we did not identify.  However, we have no reason to think
that additional cases would substantially change the overall picture.
Nevertheless, the Agency requests information on relevant cases of
environmental problems that we did not identify, as well as comments or
supplemental information on those that were characterized in the report.
If you provide data on additional cases of environmental problems from
recycling, Appendix 2 of the study is a good resource for the types of
information most useful to the Agency, particularly when the problem
occurred; the type of recycling practice involved; whether recycling
occurred at an on-site or off-site recycling facility; the types of
hazardous secondary materials being recycled; and how and why the
problem occurred.

c. Summary of findings

	The study identified 208 cases in which environmental damages of some
kind occurred from some type of recycling activity and that fit the
scope of the study. Such damages included leaks, spills, dumps, or other
types of releases that were serious enough to require some type of
cleanup action. They also included instances where materials were
abandoned (e.g., in warehouses) and which required removal overseen by a
government agency and expenditure of public funds. However, the study
did not include situations in which environmental regulatory violations
occurred, but did not result in actual damage to the environment or
human health.

	With regard to the types of materials associated with the cases that
were documented in the study, most common were scrap metals, solvents,
used oil, non-ferrous metals, lead-acid batteries, and used drums sent
for cleaning and reconditioning. Less common were cases involving
mercury, precious metals, and hazardous foundry sands.

	The types of environmental damage that occurred varied widely; many
were relatively small incidents involving contaminated soils and/or
residuals, such as battery casings, while a number were much more
substantial and expensive, with large-scale soil and ground water
contamination, and remediation costs in the tens of millions of dollars.
A surprising number of cases (sixty-nine) involved materials that were
abandoned in one way or another.

	The study also tried to identify the cause of the environmental
problems for each case that was investigated. In large part, we were
able to identify, or at least infer, how the problems occurred, although
for eightfour percent of the cases examined, we were unable to determine
the primary cause of damage. However, in only a few cases were we able
to identify with any certainty why they occurred. For example, in
approximately one-third of the cases, we were able to conclude that
mismanagement of recycling residuals was at least partly the cause of
contamination problems. We were unable, however, to identify why the
residuals were managed improperly.

	Mismanagement of the hazardous secondary materials prior to their
reclamation or reuse caused contamination at thirty-fiveforty percent of
sites, whereas mismanagement of recycling residuals was the primary
cause at thirty-threefour percent of the sites. Often, at the latter
category of sites, reclamation processes generated residuals in which
the toxic components of the recycled materials became concentrated, and
these wastes were then mismanaged. Examples of this include a number of
drum reconditioning facilities, where large numbers of used drums were
cleaned out to remove small amounts of remaining product such as
solvent, and these wastes were then improperly stored or disposed of.

	As already noted, sixty-nine of the cases examined in the study
involved abandonment of recyclable hazardous secondary materials as the
primary cause of damage. In most of these cases, business failure
appears to have been the main reason the hazardous secondary materials
were abandoned. SixSeven of the cases that were examined appear to have
been outright “sham” recyclers. In most of these cases, companies
advertised themselves to local generators as recyclers and accumulated
considerable quantities of waste materials, but did not actually recycle
them.  These sites were also then abandoned.

	Since a considerable number of commenters to the October 2003 proposal
supported the idea of a regulatory exclusion for on-site recycling
(i.e., at the generating facility), the study also distinguished between
environmental problems from recycling that occurred at off-site,
commercial recycling facilities, and those from recycling on-site.
TenThirteen (6%) of the 208 cases were determined to be from recycling
that occurred on-site. This relatively small proportion of cases may
signify that on-site recycling is inherently less likely to result in
environmental problems, for various reasons. However, it may also be
that recycling conducted at facilities generating hazardous secondary
materials occurs at fewer facilities than recycling by commercial
facilities or that these types of environmental problems are not as well
documented, or for other reasons are more difficult to identify, given
the scope and methodology of the study. The Agency solicits comment and
additional data on the issue of environmental problems from on-site
recycling that occurred since 1982 and where the problems are clearly
attributable to the recycling activity. We are particularly seeking
facts about any instances that are not captured in the study,
particularly answering the questions of when the recycling took place,
what type of recycling practices were involved, what the environmental
problem was, and what caused the problem.

	The study also addressed whether or not instances of environmental
damage occurred at hazardous waste recycling facilities with RCRA
permits (Note: RCRA does not require Part B permits for the recycling
processes themselves; typically, permits are issued to such facilities
when hazardous secondary materials are stored prior to recycling.)  RCRA
permitted hazardous waste management facilities are subject to
relatively stringent, facility-specific requirements, and in general are
given more oversight by regulatory agencies than facilities without
permits. For these reasons, these cases are of particular interest to
the Agency with regard to this rulemaking.

	Twenty-four of the cases identified were, at one time or another,
operating under RCRA hazardous waste permits. However, only nine clearly
appear to have been operating under RCRA permits at the time the damage
occurred. Two of these cases involved fires and/or explosions.

	The study also looked at some of the financial circumstances regarding
clean up of environmental problems. At thirteen of the twenty-four
hazardous waste permitted facilities, all or part of the funds used to
clean up environmental damages were contributed by the owner/operator of
the facility, either voluntarily or under some form of consent
agreement. In at least two of these cases, it appears that cleanup funds
became available by means of a RCRA-required financial assurance
mechanism, such as a surety bond. Thirteen of the facilities appear to
have been cited for serious permit violations, either before or as a
result of the damage incident. In four cases, the facility permits were
revoked because of compliance issues. Eleven of the twenty-four
facilities were found to be no longer in business, because of bankruptcy
or for other reasons.

	Of the 208 cases that were documented in the study, fifty-one were or
are listed on the CERCLA National Priorities List (NPL). Twenty-four
Fifty-five additional cases were addressed under CERCLA authorities, but
the sites were not listed on the NPL. State cleanup authorities were
used to address fifty-ninesixty-five of the cases, while
forty-fourthirty were addressed using RCRA corrective action
authorities. For thirty-one nineteen of the cases, we were unable to
identify what remedial program, if any, was used to clean up the sites.
(In some cases, there was more than one type of cleanup action at a
site).

	For eighty-nine of the cases, we were able to identify the costs, or at
least cost estimates, associated with addressing the environmental
problems caused by recycling activities. Thirty-seven of these cases
required less than one million dollars to clean up; forty-four cost
between one and ten million dollars; and eight cost more than ten
million dollars to remediate.

	It is possible that these cost data are incomplete and are not an
accurate representation of actual cleanup costs for the entire sample of
208 cases. For one thing, cost data were much easier to find for
CERCLA-lead cleanups than cleanups done under other programs.  Another
uncertainty with regard to these cost data is that in some cases, it was
not possible to distinguish between cleanup costs that were incurred
specifically to address recycling-related contamination, and costs for
other cleanup activities at the site. The Agency solicits additional
information from commenters regarding cleanup costs (actual or
estimated) incurred in remediating these recycling-related environmental
problems.

C. Potential Effects of Market Forces on the Management of Recyclable
Hazardous Secondary Materials

EPA also has completed a study of how market forces can affect the
management of recyclable hazardous secondary materials. This study uses
economic theory to describe how various market incentives can influence
a firm’s decision making process when the recycling of hazardous
secondary material is involved.  Because the study is largely
theoretical, the results should be interpreted with caution, but it does
provide insights that can explain some of the possible fundamental
economic drivers of both the successful and unsuccessful recycling
practices, which in turn help us to design the exclusions that we are
proposing today

The October 2003 proposal was based in part on the premise that some
types of recycling are more akin to manufacturing than waste management
and therefore are not appropriate for regulation as waste management.
[“In EPA’s view, a recycler will value secondary materials that
provide an important contribution to his process or product and will
manage them in a manner consistent with a valuable feedstock material
(i.e., will manage them to minimize their loss)”; 68 FR 61583].

However, as pointed out by some commenters to the proposed rule, the
economic forces shaping the behavior of firms that recycle hazardous
secondary materials can be different from those at play in manufacturing
processes using virgin materials.  For example, the inherent value of
hazardous secondary materials can be much lower than virgin materials
used in manufacturing, resulting in a different set of economic
incentives.  Additionally, different economic incentives between the
recycling of hazardous secondary materials and manufacturing may arise
due to differences in these two business models.  As opposed to
manufacturing, where the cost of raw materials or intermediates (or
inputs) is greater than zero and revenue is generated primarily from the
sale of the output, some models of hazardous materials recycling involve
generating revenue primarily from receipt of the hazardous secondary
materials.  Recyclers of hazardous secondary materials in this situation
may thus respond differently from traditional manufacturers to economic
forces and incentives.

An increased understanding of these aspects of hazardous secondary
material recycling can help to craft a rule that takes advantage of the
positive economic forces, and compensates for the negative ones, in
order to produce an optimal amount of recycling.  An optimal amount of
recycling is one that maximizes the net benefits (private and social
benefits minus private and social costs).  One sub-optimal outcome of
not providing a proper balance could be too little recycling, resulting
in inefficiencies.  In this case, increasing the rate of recycling (for
example, via today’s proposed changes) would realize additional net
benefits.  However, sub-optimal outcomes can also result from too much
of an activity.  For hazardous secondary material recycling, this
situation occurs when firms accumulate more hazardous secondary material
than can be recycled in a reasonable timeframe, or operate their
recycling process in a way that imposes excessive costs on society (such
as excess pollution or mishandling of hazardous secondary material) and
that can result in the material being discarded.

The market incentive study uses economic theory to provide information
on how certain characteristics can influence three different recycling
models to encourage or discourage an optimal outcome.  The three
recycling models examined are: (1) commercial recycling, where the
primary business of the firms is recycling hazardous secondary
materials, which are accepted for recycling from offsite industrial
sources (which usually pay a fee); (2) industrial intra-company
recycling, where firms generate hazardous secondary materials as
byproducts of their main production processes and recycle the hazardous
secondary materials for sale or for their own reuse in production; and
(3) industrial inter-company recycling, where firms whose primary
business is not recycling, but use or recycle hazardous secondary
materials obtained from other firms with the objective of reducing the
cost of their production inputs.

For each of these recycling models, the report looks at how they are
potentially affected by three market characteristics: (1) value of the
recycled product; (2) price stability of recycling output or inputs; and
(3) net worth of the firm.

For all three models of hazardous secondary material recycling, a
recycled product with a high value appears to contribute to an optimal
outcome for hazardous secondary material recycling.  For commercial and
industrial inter-company firms, the value of the product can serve as a
strong incentive for the firm to recycle the product with care and bring
it to the market.  Recycling by these firms would thus be driven
primarily by the potential revenues from the recycled product, and not
by other factors such as an acceptance fee.  For industrial
intra-company recyclers, the value of the recycled product would
contribute to optimal recycling behavior even if the firm is reusing the
product in its own production process instead of selling it to outside
firms. Conversely, for all three models of hazardous secondary material
recycling, a recycled product with a low value could be a potential
indicator of sub-optimal recycling outcomes.  For commercial firms in
particular, the acceptance fee is likely to be a much more prevalent
factor in the firm’s revenue structure when the recycled product has a
low value.  If the value of the recycled product is low, the firm may
have more of an incentive to focus on accepting hazardous secondary
material than properly recycling it and selling a low-value recycled
product.

Price stability is another potential indicator of hazardous secondary
material recycling markets that produce optimal outcomes, particularly
for commercial recyclers.  When prices are stable, firms can more easily
adjust their production in response to the price signals they receive
from the market.  They are thus less subject to sudden upsets to their
revenue streams or costs which could force them to operate at a short or
long-term loss.  Unstable markets can contribute to sub-optimal
outcomes, due to an unexpected fall in revenues or rise in costs, such
that the firm is no longer able to cover the costs incurred to make the
product. This could encourage the stockpiling of hazardous secondary
material by the firm in order to continue collecting the acceptance fee.
 A commercial firm’s choice to shut down can also contribute to
sub-optimal recycling outcomes if this involves the abandonment of
hazardous secondary material that the firm was stockpiling on-site.
Since industrial intra- and inter-company recyclers are also recycling
to produce a marketable product, they are subject to similar forces as
commercial firms.  They are less constrained in their responses to these
forces, however, since recycling is not their primary business
operation, and are able to switch from recycling to disposal, or from
using recycled materials to raw materials, if market conditions shift.

For all three recycling models, firms that have a higher net worth have
more to lose from liability issues and thus have a greater incentive to
invest in safe hazardous secondary material management and recycling
practices.  These firms would have more incentive to practice recycling
in an environmentally safe manner and also to insure against possible
liability risks that would jeopardize their investments.  Firms that
have a relatively low worth and do not have an established history in
the market could be potentially more likely to face incentives that
could cause them to engage in recycling practices that impose few
controls or cut corners in order to boost revenues. While we recognize
that it should not be assumed that all low-value firms would engage in
such practices, this can be viewed as one potential indicator of risky
behavior.

As mentioned earlier, using economic theory to interpret recycling
behavior should be done with extreme caution. An individual firm’s
decision-making process is based on many factors, and attempting to
extrapolate a firm’s likely behavior from a few factors, particularly
based on theoretical considerations, could lead to erroneous
conclusions.  However, when used in conjunction with other pieces of
information, the economic theory can be quite illuminating. For example,
because the industrial intra- and inter-company recyclers have more
flexibility (e.g., during price fluctuations, these companies can more
easily switch from recycling to disposal or from recycled inputs to
virgin inputs), they would be less likely to have environmental problems
from over-accumulated materials.  This outcome appears to be supported
by the results of the assessment of environmental problems study (see
Sectionsection VIII.B.2 of today’s supplemental proposal).

On the other hand, certain specific types of commercial recycling, where
the product has low value, the prices are unstable, and/or the firm has
a low net worth, could indicate that it is more likely for environmental
problems to occur from over-accumulation of recycled materials, compared
to recycling by a well-capitalized firm that yields a product with high
value.  Again, this outcome appears to be the supported by the results
of the assessment of environmental problems study (see Sectionsection
VIII.B.2 of today’s supplemental proposal).

However, as shown by the study of successful recycling practices,
generators who might otherwise bear a large liability from poorly
managed recycling at other companies have addressed this issue by
carefully examining the recyclers to which they send their hazardous
secondary materials to ensure the recyclers are technically and
financially capable of performing the recycling (see section VIII.B.1 of
today’s supplemental proposal). In addition, we have seen that
successful recyclers (both commercial and industrial) have often taken
advantage of mechanisms such as tolling contracts to help stabilize
price fluctuations, allowing recyclers to plan their operations better.

For further discussion of this study, please see A Study of Potential
Effects of Market Forces on the Management of Hazardous Secondary
Materials in the docket for today’s supplemental proposal.

IX. Exclusion for Hazardous Secondary Materials that Are Legitimately
Reclaimed Under the Control of the Generator.:  Proposed 40 CFR 260.10,
261.2(a)(1), 261.2(a)(2), 261.2(c)(3), 261.4(a)(23).

A. Purpose of the Exclusion

	In the October 2003 proposal, EPA proposed to exclude from the
definition of solid waste hazardous secondary materials generated and
reclaimed in a continuous industrial process within the same industry.
“Same industry” was defined as industries sharing the same 4-digit
North American Industry Classification System (NAICS) code. We also
co-proposed a second option, under which such materials would not be
eligible for the exclusion if the reclamation took place at a facility
that also recycled regulated hazardous wastes generated in a different
industry.   EPA chose the NAICS system as a way to define “same
industry” because the system is already widely used to classify
different industries.  We recognized that the system was developed for
statistical rather than regulatory purposes.  However, the NAICS scheme
employs a production-oriented concept, grouping together industries that
have similar or identical production processes.  In addition, the
regulated community is generally familiar with the NAICS system.  For
these reasons, the Agency proposed this system to define “same
industry”.

EPA chose the four-digit NAICS level (rather than the three or
five-digit level) because that level appeared to be an appropriate
compromise between being too broad or too restrictive.  The Agency
evaluated the potential recycling opportunities available through
defining “same industry” at the three, four, and five digit levels.
We performed the analysis for the chemical manufacturing sector, which
contains many RCRA hazardous waste generators and served as a surrogate
for other manufacturing sectors.  In general, we found that
classification at the three-digit level led to grouping facilities that
did not have similar production processes.  Classification at the five
digit level, on the other hand, led to grouping similar processes, but
greatly reduced opportunities for recycling.

In the same notice, EPA also solicited comment on several different
alternatives to the proposed exclusion.  The first alternative was
whether to exclude from the definition of solid waste those hazardous
secondary materials that are generated and reclaimed in a continuous
process on-site (as defined in 40 CFR 260.10), even if different
industries were involved. This option would also have required the same
notification and speculative accumulation provisions proposed for the
proposed option. This exclusion would be based on the premise that
materials recycled on-site in a continuous process are unlikely to be
discarded because they would be closely managed and monitored by a
single entity who is intimately familiar with both the generation and
reclamation of the material.  In addition, no off-site transport of the
hazardous secondary material (with its attendant risks) would occur, and
there would be few questions about potential liability in the event of
mismanagement or mishap.  An example of such recycling given in the
proposal was a facility that produces petrochemicals, as well as
pharmaceuticals.  Under the 4-digit NAICS-based proposal, such
reclamation would not have been excluded even if both establishments
were located at the same site and operated by the same company.  Another
example might be a situation where a generator contracts with a
different company to reclaim material at the generator’s facility,
possibly through a mobile treatment unit.

The second alternative was an exclusion for certain situations within
the chemical manufacturing industry that might present unique recycling
situations.  Specifically, within the chemical manufacturing industry,
the first manufacturer  will contract out production of certain
chemicals to another manufacturer (referred to as batch or tolling
operations).  The second manufacturer may generate hazardous secondary
materials that could be returned to the larger chemical manufacturer for
reclamation.  In the proposal, we inquired whether some recycling could
be precluded as a result of uncertain application of the NAICS
classification approach due to frequently changing product slates, or
different products being produced from the same equipment at different
times.

The third alternative would have provided a broader conditional
regulatory exclusion from RCRA regulation for essentially all hazardous
secondary materials that are legitimately recycled by reclamation.  The
purpose of this broader exclusion would be to encourage recycling and
lower costs, while still protecting human health and the environment.
The Agency suggested that additional requirements or conditions might be
appropriate to protect human health and the environment for this
exclusion, compared to the same-industry exclusion that we proposed.
Examples of such additional conditions could include record-keeping and
reporting requirements, along with safeguards on storage or handling.
Although the Agency solicited comment on additional conditions, the
discussion in the preamble of this approach was brief and may not have
provided sufficient information to commenters.  Like the other
exclusions discussed in the October 28, 2003 proposal, hazardous
secondary materials used in a manner constituting disposal, burned for
energy recovery, or materials that were inherently waste-like would not
be eligible. The Agency solicited comment on the increased recycling and
reuse that would result from broadening the rule in this way, as well as
comment on the potential effects to human health and the environment.

	EPA received many comments on the NAICS “same industry” scheme from
various stakeholders.  Many commenters did not agree that NAICS was an
appropriate way to define “same industry,”; more importantly, most
commenters did not agree that excluding recycling within the same
industry was justified on legal or pragmatic grounds. These commenters
generally stated that EPA’s proposed exclusion did not accurately
reflect Congressional intent or court mandates concerning EPA’s
authority over legitimate recycling. They reiterated that EPA’s RCRA
authority extends only to materials that are truly discarded (i.e.,
disposed of, thrown away, or abandoned) and that have not yet become
part of the waste disposal problem.  Many of these commenters
interpreted the relevant court decisions to mean that any legitimately
reclaimed material (whether recycled within the same industry or between
industries) is not “discarded” and thus cannot be regulated as a
solid waste.  Some of these commenters cited the “Safe Foods”
decision (Safe Food and Fertilizer, et. al., v. EPA, 350 F.3d 1263, D.C.
Cir. 2003) as support for their contention that materials recycled in
different industries were not discarded.

	Other commenters said that they would not benefit from the proposed
exclusion because so many recycling opportunities occur among different
industries.  These commenters included companies in the metals recycling
industry, mining and mineral processors, specialty batch chemical
manufacturers, some solvent recyclers, the paint and coatings industry,
spent pickle liquor generators, and small businesses.

	Still other commenters argued that the Agency had read the court
decisions too broadly rather than too narrowly, but some of these
commenters also said that EPA had failed to present a reasoned analysis
of the indicia of discard.  One commenter stated that EPA did not
analyze potential environmental harm from the proposed rule.

	Many commenters, on the other hand, responded positively to the
Agency’s solicitation of comment about excluding on-site recycling
from the definition of solid waste.  These commenters agreed with
EPA’s suggestion that generators who recycle materials on-site (even
if the reclamation takes place in a different NAICS code) are likely to
be familiar with the material and more likely to maintain responsibility
for the materials.  Some commenters wanted any exclusion confined to
on-site recycling, but other commenters suggested that EPA expand any
on-site exclusion to include recycling (including off-site recycling)
conducted within the same company. These commenters believed that the
principal reasoning applied to on-site recycling would also apply to
same-company recycling – i.e., that the same entity would be familiar
with the material and would remain responsible for it.

	Concerning our solicitation of comments on tolling arrangements, some
stakeholders commented that the specialty batch chemical industry, in
particular, might present unique situations regarding appropriate
exclusions, principally due to the varying nature of production and
hence of potential hazardous secondary materials available for
recycling.  Because of these circumstances, stakeholders believed that
exclusions targeted to the types of tolling arrangements common in this
industry would be easier to implement.

	After evaluating the comments, the Agency has concluded that its
proposed approach to “same industry recycling” does not accurately
delineate EPA’s RCRA jurisdiction over hazardous secondary materials.
We agree with the many commenters who said that whether materials are
recycled within the same NAICS code is not an appropriate indication of
whether they are discarded.  NAICS designations are designed to be
consistent only with product lines, so that the effect of our October
2003 proposal would be that materials generated and reclaimed under the
control of the generator would not be excluded, even though the
generator has not abandoned the material and has every opportunity and
incentive to maintain oversight of, and responsibility for, the material
that is reclaimed (see ABR, 208 F.2d at 1051 (noting that discard has
not taken place where the producer saves and reuses secondary
materials)).  Under these circumstances, we believe that discard has
generally not occurred.  For example, of the 208 recycling cases that
caused environmental damage, only tenthirteen (approximately fivesix
percent) occurred as a result of on-site recycling. We also agree with
those commenters who said that most of this rationale would apply just
as reasonably to reclamation taking place within the same company.  In
the case of same-company recycling, both the generating facility and the
reclamation facility (if they are different) would be familiar with the
hazardous secondary materials and the parent company would be ultimately
liable for any mismanagement of the hazardous secondary materials.
Under these circumstances, the incentive to avoid such mismanagement
would be so strong that mismanagement also would be very unlikely.

	Concerning tolling arrangements, we also believe that the type of
tolling contract common in the specialty batch chemical industry does
not constitute discard as long as the recycling is legitimate and the
hazardous secondary material is not speculatively accumulated.  Under a
typical type of arrangement, one company (the tolling contractor)
contracts with a second (often smaller) company (the batch manufacturer)
to produce a specialty chemical (sometimes because of a temporary lack
of capacity, or because the batch manufacturer has specialized equipment
or expertise).  The batch manufacturer produces the chemical and the
production process generates a hazardous secondary material (such as a
solvent) which is routinely reclaimed at the tolling contractor’s
facility through an exempt closed-loop recycling process when it has the
capacity to manufacture the chemical in question at its own facility.
However, if the batch manufacturer transports the hazardous  secondary
material back to the tolling contractor for reclamation, the tolling
contractor would be deemed under existing regulations to be reclaiming a
spent material, and a RCRA storage permit would generally be required.
The typical contract in the specialty batch chemical industry contains
detailed specifications about the product to be manufactured, including
management of any hazardous secondary materials that are produced and
returned to the tolling contractor for reclamation. Under this scenario,
the hazardous secondary material continues to be managed as a valuable
product, so discard has not occurred. Moreover, if hazardous secondary
materials are generated and reclaimed pursuant to a written contract
between a tolling contractor and a batch manufacturer, and if the
contract specifies that the tolling contractor retains ownership of, and
responsibility for, the hazardous secondary materials, there is a strong
incentive to avoid any mismanagement or release.

	In today’s supplemental notice, EPA has described three general
situations where we believe that discard has not taken place and where
the potential for environmental releases is therefore low. The three
situations involve circumstances under which hazardous secondary
materials are generated and reclaimed within the United States or its
territories.  They are either generated and reclaimed at the generating
facility, at a different facility, but within the same company, or
though a tolling arrangement.  Because the facility owner in these
situations still finds value in the hazardous secondary materials, has
retained control over them, and intends to use them, EPA is proposing to
exclude these materials from being a solid waste and thus from
regulation under Subtitle C of RCRA, if the recycling is legitimate (see
40 CFR 261.4(g)), and if the hazardous secondary materials are not
speculatively accumulated.  We are proposing slightly different
exclusions, depending on whether or not the excluded hazardous secondary
materials are stored in land-based units prior to reclamation or as part
of the reclamation process.    The scope and applicability of the
exclusions are described below.

B. Scope and Applicability

1.  Hazardous Secondary Materials Managed Under the Control of the
Generator in  Non-Land-Based Units

	As stated above, the Agency generally believes that discard has not
occurred if hazardous secondary materials are legitimately recycled
under the control of the generator, provided they are not speculatively
accumulated, and provided they are reclaimed within the United States or
its territories.  We are therefore proposing an exclusion for these
hazardous secondary materials under §261.2(a)(2)(ii), except if such
materials are managed in a land-based unit prior to reclamation or as
part of the reclamation process.  See section B.2 below for discussion
of management in land-based units.  The definition of recycling that is
“under the control of the generator” is proposed in 40 CFR 260.10.

The first part of the exclusion proposed today at 40 CFR
261.2(a)(2)(ii)(A) would apply to hazardous secondary materials
generated and reclaimed at the generating facility that are contained in
a non-land-based unit.  Examples of non-land-based units include, but
are not limited to, tanks, containers, and containment buildings.

The definition of “hazardous secondary material generated and
reclaimed under the control of the generator” is proposed in 40 CFR
260.10 and consists of three parts.  The first part of the definition
would apply to hazardous secondary materials generated and reclaimed at
the generating facility.   This exclusion definition would include
situations where a generator contracts with a different company to
reclaim hazardous secondary materials at the generator’s facility,
either temporarily or permanently.  For purposes of this exclusion,
“generating facility” means all contiguous property owned by the
generator.  We are proposing to exclude hazardous secondary material
that is reclaimed “at the generating facility” rather than
“on-site” as defined in 40 CFR 260.10 (as we proposed in October
2003) because the later definition may encompass facilities not under
the control of the generator.  For example, an industrial park meets the
definition of “on-site,” even though facilities operating at an
industrial park may be completely separate and under separate ownership.
However, EPA solicits comment on whether facilities under separate
ownership, but located at the same site, should be included within this
proposed exclusion.  Additionally, EPA solicits comment on other
definitions which might be equally compatible with generator control as
the definition proposed in today’s notice.

	The second part of the exclusion proposed today at 40 CFR
261.2(a)(2)(ii)(B) definition of hazardous secondary materials generated
and reclaimed under the control of the generator would apply to
hazardous secondary materials generated and reclaimed by the same
company (i.e., by the same “person” as defined in §260.10),
provided the materials are stored in non-land-based units.).  The
generator must certify that the hazardous secondary materials will be
sent to a company under the same ownership as the generator, and that
the owner corporation has acknowledged full responsibility for the safe
management of the hazardous secondary materials.  Because of existing
complexities in corporate ownership and liability, we are proposing to
require the generator to certify regarding ownership and responsibility
for the recyclable hazardous secondary materials.  EPA solicits comment
on any other certification language that might accomplish the same end,
and we also seek comment on other definitions of “same-company.”

	The third part of the exclusion proposed today at 40 CFR
261.2(a)(2)(ii)(C) definition of hazardous secondary materials generated
and reclaimed under the control of the generator would apply to
hazardous secondary materials that are generated pursuant to a written
contract between a tolling contractor and batch manufacturer and
reclaimed by the tolling contractor, if the hazardous secondary
materials are stored in non-land-based units.  Under today’s proposal,
the tolling contractor must retain ownership of, and responsibility for,
the hazardous secondary materials that are generated during the course
of the manufacture.  For purposes of this exclusion, tolling contractor
means a person who arranges for the production of a product made from
raw materials through a written contract with the batch manufacturer.
Batch manufacturer means a person who produces a product made from raw
materials pursuant to a written contract with a tolling contractor.  As
stated above, this type of contract appears to be common within the
specialty batch chemical manufacturing industry.

EPA notes that in order to be eligible for this exclusion, it is not a
requirement that the contractual arrangement in question refer
specifically to “tolling” or “batch manufacturing,” as long as
the person commissioning the manufacture of the product retains
ownership of, and responsibility for, the hazardous secondary materials
that are generated during the course of the manufacture.  The Agency
also solicits comment on other types of tolling arrangements or other
contractual arrangements under which discard is unlikely to happen and
which could appropriately be covered by an exclusion for
“generator-controlled” hazardous secondary material.  For example,
one company may enter into a contractual arrangement for a second
company to reclaim and reuse (or return for reuse) the first company’s
hazardous secondary material.  The first company could create a
contractual instrument that exhibits the same degree of control over how
the second company manages the hazardous secondary material as is found
in a tolling agreement.  EPA solicits comment on whether hazardous
secondary materials recycled under such contracts also should be
included within the scope of the exclusion.

2.	Hazardous Secondary Materials Managed Under the Control of the
Generator in Land-Based Units

As stated above in section B.1 of this preamble, the exclusion proposed
today at 40 CFR 261.2(a)(2)(ii) would apply to materials generated and
reclaimed within the United States or its territories that are under the
control of the generator and that are stored in non-land-based units.
However, some hazardous secondary materials that are generated and
reclaimed within the United States or its territories under the control
of the generator (i.e., at the generating facility, within the same
company, or through a tolling arrangement) are managed in units that are
land-based.  For these materials, we are proposing a slightly different
exclusion at 40 CFR 261.4(a)(23).

The Agency is proposing to place this exclusion in 40 CFR 261.4(a)(23)
because while we recognize that raw materials and hazardous secondary
materials can be and are stored in land-based units (such as mineral
processing residues or pulping liquors), we also recognize that such
management clearly presents a greater potential for releases to the
environment than management in non-land-based units.   Therefore, we are
proposing an additional requirement which provides that if hazardous
secondary materials are managed in land-based units, such materials must
be contained in the units.  We are not proposing that the units meet any
particular design requirement or that the hazardous secondary materials
in the unit be managed in a particular way.  Rather, we are only
proposing that the hazardous secondary material in the unit be
“contained” and not released into the environment.  The definition
of land-based unit is proposed in §260.10, and is taken from section
3004(k) of RCRA (i.e., landfill, surface impoundment, waste pile,
injection well, land treatment facility, salt dome formation, salt bed
formation, or underground mine or cave).  Examples of surface
impoundments include ditches and sumps.

Whether the hazardous secondary material is “contained” in the
land-based unit will necessarily be determined on a case-by-case basis.
Generally, however, recyclable material is “contained” if it is
placed in a unit that controls the movement of the hazardous secondary
material out of the unit.  Hazardous secondary material that remains
contained in a land-based unit that experiences a release would still
meet the terms of the exclusion in 261.4(a)(23), unless the hazardous
secondary material is not managed as a valuable product and as a result,
a significant release from the unit occurs.  In this situation, the
hazardous secondary material in the land-based unit would be considered
discarded.  In determining whether hazardous secondary materials in a
land-based unit are contained, a facility should consider the
circumstances under which the materials are stored.  For example,
materials that are stored in direct contact with the soil in a natural
or man-made impoundment may be more likely to leak.  However, the local
geological and meteorological conditions can greatly influence whether
such materials would be contained.  These local conditions, along with
specific measures that a facility employs, such as liners, leak
detection measures, inventory control and tracking, control of releases,
or monitoring and inspection during construction and operation of the
unit, may be used in determining whether the hazardous secondary
material is contained in the land-based unit.

3.  Hazardous Secondary Materials Managed Under the Control of the
Generator:  General Provisions

	Hazardous secondary materials released from any storage unit, whether
land-based or non-land based, are discarded and if such materials upon
discard would be either a listed hazardous waste or exhibit a hazardous
waste characteristic, the hazardous secondary materials would be part of
the waste disposal problem and would be subject to the hazardous waste
regulations, unless they are immediately cleaned up.

We also note that hazardous secondary materials excluded from the
definition of solid waste generally become wastes when they are
speculatively accumulated, because at that point they are considered to
be discarded.  For this reason, all hazardous secondary materials
excluded under proposed 40 CFR 261.2(a)(2)(ii) or 261.4(a)(23) would be
subject to the speculative accumulation provisions of 40 CFR
261.1(c)(8).  In addition, as with other excluded recycling operations,
residuals from the recycling process are considered to be newly
generated solid wastes, which can also be hazardous wastes if they
exhibit a hazardous characteristic under Subpart C of Part 261 or if
they are specifically listed under Subpart D of Part 261.

The Agency is soliciting comment on whether additional requirements
might be necessary to demonstrate absence of discard when hazardous
secondary materials are recycled under proposed 40 CFR 261.2(a)(2)(ii)
or 261.4(a)(23).  Our analysis has led us to conclude that discard has
not occurred and releases are highly unlikely when hazardous secondary
materials are generated and reclaimed under these circumstances, except
possibly when such materials are managed in land-based units.
Nevertheless, we are requesting comment on other points of view.  An
example of such conditions would be recordkeeping requirements, such as
those proposed today in 40 CFR 261.4(a)(24)).  Another example would be
appropriate limitations on storage, such as performance-based standards
designed to address releases to the environment. The Agency solicits
comment on whether additional management requirements are appropriate
for hazardous secondary materials that are generated and reclaimed under
the control of the generator.  If commenters  believe such additional
requirements are appropriate, they should specify the technical
rationale for each requirement suggested, and why the requirement is
necessary if the hazardous secondary material remains under the control
of the generator.

For all hazardous secondary materials that would be excluded under 40
CFR 261.2(a)(2)(ii) or 261.4(a)(23), we We are also proposing that
generators (and reclaimers, where the generator and reclaimer are
located at different facilities) of hazardous secondary materials
recycled under the control of the generator, whether managed in a
land-based or non-land based unit, would be required to submit a
one-time notice to the EPA Regional Administrator or, in an authorized
state, to the state Director. The notice would need to identify the
name, address, and EPA ID number (if it has one) of the generator or
reclaimer, the name and phone number of a contact person, the type of
hazardous secondary material that would be managed according to the
exclusion, and when the hazardous secondary materials would begin to be
managed in accordance with the exclusion.  A revised notice would be
required to be submitted in the event of a change to the name, address,
or EPA ID number of the generator or reclaimer or a change in the type
of hazardous secondary material being recycled.

The intent of this proposed notification requirement is to provide basic
information to regulatory agencies about who will be managing hazardous
secondary materials under the exclusion, and the types of hazardous
secondary materials that would be recycled.  For hazardous secondary
materials that would be excluded under 40 CFR 261.2(a)(2)(ii), this
proposed notification requirement would be specified in 40 CFR 260.42
(i.e., separate from 40 CFR 261.2).  For hazardous secondary materials
that would be excluded under 40 CFR 261.4(a)(23), this proposed
notification requirement is included in the exclusion.   We note that in
both cases, the requirement to provide this notification would not be a
condition of the exclusion.  Thus, failure to comply with the
requirement would constitute a violation of RCRA, but would not affect
the excluded status of the waste.

We believe our authority to request such information is inherent in our
authority to determine whether a material is discarded, and we consider
this to be the minimum information needed to enable credible evaluation
of the status of a hazardous secondary material under section 3007 of
RCRA.  EPA further believes that RCRA section 3007 allows it to gather
information with regard to any material when the Agency has reason to
believe that the material may be a solid waste and possibly a hazardous
waste within the meaning of RCRA section 1004(5).  Section 2002 also
gives EPA authority to issue regulations necessary to carry out the
purposes of  RCRA.

We also note that after EPA promulgates regulations listing a material
as a hazardous waste or identifying it by its characteristics, section
3010 of RCRA requires generators of such materials to submit a
notification to EPA within 90 days.  Since the changes proposed today
could substantially affect this universe of facilities in the Subtitle C
system, we believe the notifications are appropriate and useful.

EPA notes that the information discussed above can be difficult for
regulatory authorities to retrieve and use if it is not placed into a
data management system.  Similarly, using different notification
procedures and data management systems for different regulated materials
can be confusing and time-consuming for the regulated community.  For
these reasons, the Agency requests comment on whether the Subtitle C
Site Identification Form (EPA Form 8700-12) or the comparable state form
should be used to provide the information required in this supplemental
proposal.  This form is used to enter data into the RCRAInfo data
management system managed by the states and EPA.  To implement use of
this form for the notification requirements proposed today, we would
revise the form to include a section for materials covered by this
exclusion, with spaces for the appropriate data elements.

  In addition, we are considering including additional information in
the notification in order to measure the impact of the proposed
rulemaking.  More data would assist EPA in targeting future resources
and activities to further increase recycling and to report to the public
the impacts of the proposed rulemaking.  The additional data elements
for which we are requesting comment are discussed in Sectionsection XIV
of today’s notice.

We note that this exclusion applies only to hazardous secondary
materials generated and reclaimed within the United States or its
territories, because most of our information about recycling comes from
these geographical areas.  We do not have sufficient information about
most recycling activities outside of the United States to decide whether
discard is likely or unlikely. However, we are soliciting comment on
whether EPA should promulgate a conditional exclusion for exported
material otherwise meeting the criteria for this exclusion.

C.  Enforcement

	Under today’s proposal, hazardous secondary materials generated and
reclaimed within the United States under the control of the generator
would be excluded from RCRA Subtitle C regulation, but would be subject
to certain  restrictions, principally speculative accumulation.  Persons
that handle these hazardous secondary materials would be responsible for
maintaining the exclusion by ensuring that these restrictions are met.
If the hazardous secondary materials were not managed pursuant to these
restrictions, they would not be excluded.  They would then be considered
solid and hazardous wastes if they were listed or they exhibited a
hazardous waste characteristic for Subtitle C purposes from the time
they were generated.  Persons operating under the exclusion would also
be required to notify EPA or the authorized state.

Persons taking advantage of today’s proposed exclusion that fail to
meet the requirements may be subject to enforcement action and the
materials could be considered hazardous waste from the point of their
generation.  EPA could choose to bring an enforcement action under RCRA
section 3008(a) for all violations of the hazardous waste requirements
occurring from the time they are generated through the time they are
ultimately disposed or reclaimed.  The Agency believes that this
approach provides generators with an incentive to handle (or in the case
of tolling or other contractual arrangements, ensure that their
contractors handle) the hazardous secondary materials pursuant to the
requirements.  It also encourages each person to take appropriate steps
to ensure that such materials are safely handled and legitimately
recycled by others in the management chain. If there is a release of the
hazardous secondary materials into the environment, they are considered
discarded and subject to all applicable hazardous waste regulations.

X. Conditional Exclusion for Hazardous Secondary Materials that Are
Transferred for the Purpose of Reclamation.:  Proposed 40 CFR
261.2(c)(3), 261.4(a)(24), 261.4(a)(25).

       EPA is today proposing an exclusion from the definition of solid
waste for hazardous secondary materials that are generated and
subsequently transferred to another company or person for the purpose of
reclamation, provided that certain conditions are met.  Recycling that
conforms to these conditions would not involve discard and therefore the
recyclable materials would not be regulated as solid waste.  Such
excluded hazardous secondary materials would also need to be recycled
legitimately, as determined according to the provisions of 40 CFR
261.2(g), which also are being proposed today, and could not be
speculatively accumulated, as defined in 40 CFR 261.1(c)(8).

	The conditions that EPA is proposing today are based on our
understanding of how successful third-party recycling currently operates
(and, conversely, how unsuccessful recycling practices can result in
recyclable hazardous secondary materials being discarded), and are
supported by the information included in the recycling studies that are
described in section VIII of this preamble.  For example, the study of
current good recycling practices indicates that responsiblemany
generators examine the recycler's technical capabilities, business
viability, environmental track record, and other relevant questions
before sending hazardous secondary materials for recycling.  These
recycler audits, which can be thought of as a form of environmental "due
diligence," are in essence a precaution to minimize the prospect of
incurring CERCLA liability in the event that the recycling, or lack
thereof, results in discard of the material.  The fact that responsible
these companies are willing to incur the expense of auditing recyclers
as a business practice is of itself a marketplace affirmation that
sending hazardous secondary materials to other companies for recycling
involves some degree of risk.  Although these risks may be small when
the recycler is a well established, successful enterprise with a good
record of environmental stewardship, it also is apparent that not all
recyclers fit this profile, as evidenced in the study of environmental
problems associated with hazardous secondary material recycling.  Thus,
we believe that there is amplesufficient reason for the Agency to place
certain conditions on this proposed exclusion for the Agencygenerator to
determine that the material is not discarded, particularly since we
expect that this rulemaking, if implemented, could encourage some number
of companies that may be unfamiliar with recycling to enter the
hazardous secondary material recycling business.

A. What is the Intent of Today's Proposed Conditional Exclusion?

In proposing this conditional exclusion, EPA's objectives are to
encourage recycling of hazardous secondary materials, and reduce
unnecessary regulatory compliance costs to industry, while maintaining
protection of human health and the environment.  We believe that this
proposed conditional exclusion is a workable, common sense approach to
meeting these objectives, is well supported by the record for this
rulemaking, including the recent recycling studies that EPA has
conducted, and in important ways reflectreflects current good industry
practices that are used by certain generators for recycling of hazardous
secondary materials.

B. Scope and Applicability

	The conditional exclusion for transferred materials would potentially
apply to materials that are currently regulated as hazardous wastes
because their recycling involves reclamation—specifically, spent
materials, and listed sludges and listed by-products.

This is the same universe of materials that would have potentially been
eligible for the exclusion proposed in October, 2003, except that that
proposed exclusion would have applied only to these types of hazardous
secondary materials that were recycled within the “same industry.”
It would not be available for recycled materials that are regulated as
hazardous wastes for other reasons, such as "inherently waste-like
materials," materials that are “used in a manner constituting
disposal," or “materials burned for energy recovery.”

The exclusion proposed today also would not address materials that are
currently excluded from the definition of solid waste according to
other, existing provisions of 40 CFR Part 261.  For example, the wood
preserving exclusion in 40 CFR 261.4(a)(9) includes conditions for
managing materials on drip pads.  Today's proposed exclusion, if
finalized, would not supersede or otherwise affect this conditional
exclusion; such hazardous secondary materials would need to continue
being managed in accordance with that existing exclusion.

Today's proposed exclusion specifies three restrictions, in addition to
conditions for both generators and the reclaimers to whom excluded
materials would be transferred.  One restriction is that materials that
are speculatively accumulated would not be eligible for the exclusion.
Restrictions on speculative accumulation (see 40 CFR 261.1(c)(8)) have
been an important element of the RCRA recycling regulations since they
were promulgated on January 4, 1985.  According to this regulatory
provision, a hazardous secondary material is accumulated speculatively