costs (such as monitoring, manifesting and reporting requirements) and
costs associated with liability and future risks.  Both direct costs and
the indirect costs mentioned above can be considered internal costs to
the firm.  Fleet (1993) stressed that firms should also include other
categories of indirect costs in their waste management decisions, such
as internal and external indirect costs that are intangible to the firm.
 One group of these intangible costs is the social cost of waste
management choices.  A second group of these intangible costs is costs
to the firm, such as public perception of the firm’s environmental
performance.  Literature on the economics of hazardous waste recycling
is discussed below in relation to these different cost components.

Information on the direct costs of hazardous waste recycling was found
from a number of articles discussing recycling within specific
industries.  Several of these articles compared the direct costs of
hazardous waste recycling to the costs of conventional disposal options.
 For the industries represented in these articles, a general consensus
was that the direct costs of recycling hazardous waste were comparable
to the costs of disposal.  One study, for example, compared the cost of
three different disposal methods for fluorescent lamps used in
industrial areas (Tansel et al. 1998).  In terms of disposal options, it
was found that splitting the waste stream into hazardous and
non-hazardous waste was a less economical choice than treating the whole
waste stream as hazardous waste.  A comparison of the direct costs of
disposal versus recycling found the costs to be similar ($0.93-$1.19 per
lamp for recycling and $0.83-$1.21 for disposal as hazardous waste).
Another study found the direct costs of landfill disposal for F006
wastewater treatment sludges from the plating industry in bulk to be the
same ($250-$300 per ton) as recycling these materials (Rosenbaum, 1990).
 This study noted that, while these costs are currently the same,
disposal costs will likely rise much faster than recycling costs due the
reliance of disposal on dwindling landfill space.  Another study came up
with very favorable results in comparing the costs of disposal and
treatment by offsite recyclers for hydraulic fluids.  This study
estimated annual disposal costs and recycling costs for used hydraulic
fluid from the Naval Air Station in North Island, CA, and found the
disposal costs ($5,232) to be almost twice as high as the recycling
costs ($2,766).  This study cautioned, however, that costs should be
considered on a case-by-case basis due to possible variability in
disposal and recycling costs (Joint Service P2 Technical Library, 2003).

Another important consideration in the comparison of the direct costs of
disposal and recycling options are the benefits associated with the
recovered materials.  While the study of fluorescent lamps found
disposal and recycling costs were roughly equal, this study stressed
that recycling had the added benefit of the recovery and resale of
glass, aluminum, mercury and powder (Tansel et al. 1998).  A study of
used consumer electronic products also highlighted the importance of the
material obtained from recycling in the economic attractiveness of
recycling to a firm.  In comparing the recycling of cell phones and
computers, the authors noted that the existence of viable markets for
the recovered materials could be what makes recycling an economically
viable option for the firm (Bhuie et al. 2004).   The importance of the
recovered materials was also stressed in the study of wastewater
sludges, which noted that the average ton of F006 sludge contains over
$200 of recoverable metals and was an economic benefit that could be
shared between the generator of the waste and the recycler (Rosenbaum,
1990).

Besides the influence of direct costs on hazardous waste management
decisions, some studies stressed the importance of internal indirect
costs on the economics of waste management options.  Several studies
discussed how hazardous waste recycling decreases costs by cutting the
indirect costs associated with waste management.  A study of recycling
metal-bearing hazardous waste found that, while the recycling was not a
favorable alternative in terms of direct costs, the reduced regulatory
responsibility associated with recycling could make it an economically
feasible alternative (Ramachandran, 1993).  Although the direct costs of
recycling hydraulic fluid were already attractive compared to disposal,
the study on this issue noted that the less stringent regulations
associated with recycling were an additional economic incentive (Joint
Service P2 Technical Library, 2003).  The study of wastewater sludge
noted that recycling of hazardous waste cut down on future liability
since the waste is converted into usable products and does not stockpile
in the waste stream.  This removal of waste from the regulatory
framework removes the future costs that would be needed for monitoring
disposed hazardous wastes (Rosenbaum, 1990).

Studies of the economics of hazardous waste recycling also stressed that
other external indirect costs are important to consider in waste
management decisions.  As discussed above, one category of these
intangible costs is the social costs associated with hazardous waste
management.  These costs include potential environmental benefits and
potential avoided costs from the extraction of virgin materials and
using up additional landfill space (Fleet, 1993; Sigman, 1999).  In
examining the economics of recycling personal computers, one study
concluded that computer recycling was not economically feasible through
comparisons of direct costs alone, but that it could likely be feasible
if the environmental benefits associated with recycling could be
included in the cost analysis (Bhuie, 2004).

Another category of intangible costs that could influence firm waste
management decisions is “green image” costs, or the potential
influence of the perceived environmental performance of a company on
their revenues.  While this is a difficult cost to quantify, some
studies identified this as an important factor that could influence a
firm’s waste management decisions.  Both Fleet (1993) and Rosenbaum
(1990) stress that these costs could be significant and influence waste
management decisions if dollar terms could be applied to them.
Needleman (1994) also noted that positive public perceptions around
recycling could influence firms to recycle hazardous waste, even if the
recycling process ended up causing more environmental harm than other
disposal options.

Appendix II – Empirical Analysis

The main objective of this section is to describe and characterize the
recycling markets for five selected hazardous wastes: lead-acid
batteries, brass dust, spent pickle liquor, solvents and empty drums.
Using publicly available data and information obtained from interviews
with trade associations and industry members, the recycling markets for
the five materials are discussed in terms of ideas and concepts
expressed in the theoretical section.  For each of the five selected
hazardous wastes, this section provides some background information on
waste management options, waste flows, generation and recycling rates,
number and characteristics of recycling entities, and the financial data
for the recycling of the wastes.  Due to data limitations, this section
does not present any empirical tests of the hypotheses laid out in the
theoretical section.

Several criteria were used for selecting the wastes, including data
availability, recycling rates, and characteristics of the recycling
markets.  The selected five materials are not necessarily representative
of all hazardous wastes.  Therefore, the conclusions reached in this
paper are not necessarily valid for hazardous wastes, industries and
markets other than those analyzed here.

A.1	Data Sources

The discussion presented in the empirical section is based on the
information from two main sources:

Industry (e.g., trade groups and manufacturers), and

The 2003 EPA Biennial Reporting System (BRS).

Information from relevant industry sources was obtained via a telephone
interview.  Industry provided information on the size of the hazardous
waste market (in term of the number of recyclers or the amount recycled)
and the characteristics of the market.  The information was provided
voluntarily and was not required to be submitted.  The information
provided has not been independently verified by EPA.

The BRS contains data on the generation, management, and minimization of
hazardous waste.  These data are provided to EPA by hazardous waste
generators and treatment, storage, and disposal facilities, as required
under 40 CFR 262.41 and 264.75.  This provides detailed data on the
generation of hazardous waste from large quantity generators and data on
waste management practices from treatment, storage, and disposal
facilities.  Data on hazardous waste activities is reported for odd
number years (beginning with 1989) to EPA.  The BRS data are required to
be submitted.  In addition, EPA has provided guidance on the forms used
to submit these data and how those forms should be completed.  Failure
to submit this information, and the submission of inaccurate or
incomplete information, is punishable by fines or imprisonment.

The information from the BRS is likely to be more accurate and complete
that the industry information.  The mandatory nature of the data
collection process and EPA guidance are likely to result in a higher
quality of information than the industry data.  Due to the different
data sources and information collection methods for the industry data
and the BRS, these data may not completely agree.  The industry data,
however, are included in this paper because they provide an industry
perspective on the specific hazardous waste recycling markets.

A.2.	Recycling Markets

A.2.1.	Tipping Fees

In the Pollution Prevention Act of 1990, the US Congress established a
national waste management policy stating that:

Pollution should be prevented or reduced at the source whenever
feasible;

Pollution that cannot be prevented should be recycled in an
environmentally safe manner whenever feasible;

Pollution that cannot be prevented or recycled should be treated in an
environmentally safe manner whenever feasible; and

Disposal or other releases into the environment should be employed only
as a last resort and should be conducted in an environmentally safe
manner.

The established national waste management hierarchy induces hazardous
waste generators to treat landfill disposal as the option of last
resort.

This section presents average tipping fees for two waste management
options: (1) reuse through fuel substitution, and (2) disposal.  The
average fees are based on the survey data collected by the Environmental
Technology Council (ETC).

A waste management option available to facilities that generate
hazardous waste with high BTU value is fuel substitution, where
hazardous waste is used as a substitute for fossil fuels in boilers and
industrial furnaces.  The ETC data indicate that the average tipping fee
for a 55-gallon drum of liquids was, on average, close to $110 per drum
in 2004.  There is some evidence that, due to high fuel prices in 2005,
recyclers are currently either not charging acceptance fees or are even
paying generators for hazardous waste that can be used as substitute
fuel.

Hazardous waste generators are encouraged to use disposal as the waste
management option of last resort.  Before being disposed, some hazardous
wastes must be treated to meet the land-disposal restrictions contained
in 40 CFR 268.  Based on the ETC data, treatment activities account, on
average, for 30 to 50 percent of the landfill costs for hazardous
wastes.  For example, in 2004, the landfill fees for landfilling drummed
waste without treatment were $99 per 55-gallon drum, while the fees for
treatment of drummed waste followed by landfilling were $173 per
55-gallon drum.

Exhibit A-1 presents average tipping fees paid by hazardous waste
generators in the period 2002-2004 for the two waste management options.
 The ETC does not present tipping fees by hazardous waste.  The fees may
vary greatly depending on the characteristics of wastes, including the
BTU value, halogen content, and compatibility with other waste.  For
example, in 2004, landfill tipping fees for treated drummed waste ranged
from $104 to $261 per 55-gallon drum, with the average fee of $173 per
55-gallon drum.

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  1 : Average Cost of Hazardous
Waste Management

	2002	2003	2004

Fuels

	    Drummed Liquids ($/drum)	-	$108	$106

    Drummed Solids ($/drum)	-	$200	$207

Commercial Landfill

	    Debris ($/ton)	$199	$206	$191

    Bulk with Treatment ($/ton)	$162	$133	$131

    Bulk without Treatment ($/ton)	$83	$76	$89

    Drummed with Treatment ($/drum)	$114	$174	$173

    Drummed without Treatment ($/drum)	$105	$100	$99

    Soil Treated and Landfilled ($/ton)	$139	$134	$133

    Soil direct to Landfill ($/ton)	$70	$71	$69

Note: Transportation costs not included.  All fees are in 2003 dollars.

Source: Environmental Technology Council (ETC), available at   HYPERLINK
"http://www.etc.org/costsurvey8.cfm"  http://www.etc.org/costsurvey8.cfm
. Average costs are based on a survey of ETC members.

The data presented in Exhibit A-1 suggest that the landfill tipping fees
for treatment and landfilling of hazardous waste were, on average, $140
per ton for treated bulk and soil, and between $100 and $200 per
55-gallon drum for treated drummed wastes in the period 2002 to 2004.
We would expect that, on average, the landfill disposal fees for
lead-acid batteries, brass dust, spent pickle liquor and solvents were
in those ranges in the period 2002 to 2004.

As explained in Section 2 of the paper, the acceptance fees charged by
commercial recyclers are expected to be closely related to landfill
disposal fees, since commercial recyclers are competing with landfills,
and with each other, to obtain waste from generators.  We therefore use
the landfill disposal fees as a proxy for acceptance fees in the
sections below to ascertain whether the acceptance fees or the revenues
generated from the sale of recycled hazardous materials is the dominant
revenue stream for commercial recyclers.

A.2.2.	Lead-Acid Batteries

The discussion presented in this section is based on information from
two main sources:

The Battery Council International (BCI), a trade association of
lead-acid battery manufacturers in North America, and

The 2003 EPA Biennial Reporting System (BRS).

BCI Data

The information presented in this section was provided by BCI during a
telephone interview conducted in November, 2005.  This information has
not been independently verified by EPA.

The process of recycling a lead-acid battery involves breaking the
battery, draining out the acid, separating out the metal, and running
the metallic material through a smelting process to melt it and separate
the lead from other materials.  Lead-acid batteries are a unique
industry in that virtually all (99.5 percent) lead batteries are
recycled.  There are about 15 secondary smelters that obtain used
batteries, recover the lead in them using secondary smelting, and sell
the lead back to battery companies.  Vertical integration is present in
the industry, where some battery manufacturers own secondary smelters.
Tolling agreements are common in the industry, which involve fixed
prices for accepting the lead by recyclers, recycling the lead, and
delivering the recycled lead to the battery manufacturers.  Such
contractual arrangements help shield the recyclers from price
volatility.  Because the cost of lead accounts for a significant portion
of the production of lead-acid batteries and because recycling lead is
less costly than producing lead from ore, the battery manufacturers have
a big incentive in seeing that battery lead is recovered.  The recycling
of lead-acid batteries is facilitated by the simple distribution chain
between manufacturers and smelters.

BRS and Other Publicly Available Data

The BRS does not explicitly track lead-acid batteries.  Facilities
handling lead-acid batteries were identified using both waste codes and
form codes from BRS.  The BRS contains form codes, one of which is
“W309 - Batteries, battery parts, cores, casings (lead-acid or other
types).”  Because this form code can include some batteries that do
not contain lead, waste codes were also used.  Waste code D008, which
indicates that the waste exhibits the characteristic of toxicity for
lead, was also used to identify facilities handling lead-acid batteries.
 We assumed that all waste lead-acid batteries would carry this waste
code.  Wastes that carried both form code W309 and waste code D008 were
assumed to be lead-acid batteries.  Exhibit A-2 lists the number of
facilities handling wastes carrying this combination of form and waste
code by waste handling method.

The BRS data contained information on a total of 71 unique facilities
that handled lead-acid batteries, of which 29 were actively involved in
some type of waste management and 42 were solely engaged in waste
transfer (i.e., transport and/or temporal storage).  Of the 29 waste
management facilities, seven facilities were engaged in waste
transferring in addition to waste management.  Recycling was conducted
at 14 facilities.  Only one of those facilities, a battery manufacturer,
was an intra-industry recycler (i.e., the entity both generated and
recycled waste).  The highest concentration of recycling facilities was
in the southern and western regions of the US, with the South, South
Central, West, and Midwest regions comprising 85 percent of the total
number of facilities engaged in recycling.

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  2 : Waste Handling Method and
Geographic Distribution for 71 Facilities Handling Lead-Acid Batteries
(2003)

	Recycling	Disposal	Energy

Recovery	Transfer	Treatment	Total

Northeast	1	-	-	5	3	9

Mid-Atlantic	1	1	-	4	-	6

South	3	2	1	7	1	14

Midwest	3	-	-	14	2	19

South Central	3	1	-	11	1	16

West Central	-	2	-	1	1	4

West	3	1	-	7	2	13

Total	14	7	1	49	10	711

1) The total facility count is less than the column summation because
some facilities engage in more than one type of waste handling activity.

Source: ICF Analysis, 2003 BRS.

Exhibit A-3 presents data on the amount of lead-acid batteries managed
by method.  Over 165,000 tons of lead-acid batteries were managed by
facilities in 2003, of which 141,000 tons were recycled (or 85 percent
of the total waste managed).  The BRS data indicate that a single entity
dominated the recycling market with over 100,000 tons of lead-acid
batteries recycled (or over 70 percent of the total lead-acid batteries
recycled).

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  3 : Waste Management Methods for
Lead-Acid Batteries at 29 Facilities (2003)

	Amount Managed

	Recycling	Disposal	Energy Recovery	Treatment	Total

Total  (tons)	141,032	13	2	24,110	165,157

Total (percent)	85	<1	<1	15	100

Average per Facility (tons)	 10,074 	 2 	 2 	 2,411 	5,695

Note: 55 tons of lead-acid batteries were transferred in 2003. Because
activities related to transportation of waste are not considered waste
management, information on the amount transported in 2003 is not
included in the Exhibit.

Source: ICF Analysis, 2003 BRS.

Exhibit A-4 provides information on the flow of hazardous waste for
lead-acid batteries.  The first set of columns presents the NAICS codes
for the generators of lead-acid batteries that went to recycling
facilities, and the second set of columns presents the NAICS codes for
the recycling facilities.  The exhibit shows that battery manufacturers
(NAICS code 335911) generated nine percent of the waste recycled by
secondary smelters (NAICS code 331492) in 2003.

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  4 : Recycling of Lead-Acid
Batteries – Flow of Hazardous Waste, by Industry (2003)

Generators	NAICS	Percent of Waste Supplied1	Recycling Facilities	NAICS

Storage Battery Manufacturing	335911	9	Secondary Smelting, Refining and
Alloying of Nonferrous Metal (except Copper and Aluminum)	331492

Recyclable Material Merchant Wholesalers	42393	7

Secondary Smelting, Refining and Alloying of Nonferrous Metal (except
Copper and Aluminum)	331492	4

Primary Battery Manufacturing	335912	87	Secondary Smelting, Refining,
and Alloying of Copper	331423

Storage Battery Manufacturing	335911	12

Secondary Smelting, Refining, and Alloying of Nonferrous Metal (except
Copper and Aluminum)	331492	7	All Other Plastic Product Manufacturing
326199

Hazardous Waste Treatment and Disposal	562211	61	Recyclable Material
Merchant Wholesalers	42393

National Security	92811	21

Space Research and Technology	92711	18

Battery Manufacturing	335911	100	Battery Manufacturing	335911

Other Chemical and Allied Products Merchant Wholesalers	42469	54	Other
Business Service Centers (including Copy Shops)	561439

Audio and Video Equipment Manufacturing	33431	8

Deep Sea Passenger Transportation	483112	4

1) Waste supplied by generators in each industry as a percentage of the
total waste recycled.

Note: The exhibit presents only the top three industries (in terms of
the amount of waste supplied) for which NAICS codes were available.  For
example, secondary smelters (NAICS code 331492) recycled 133,321 tons of
lead-acid batteries in 2003, of which 11,438 tons, or nine percent, were
supplied by storage battery manufacturers (NAICS code 335911).  Close to
80 percent of waste was supplied by industries for which data on the
generators’ NAICS codes are not available in the BRS database.

Source: ICF Analysis, 2003 BRS.

Exhibit A-5 presents additional information on the firms that were
involved in recycling lead-acid batteries.  The most common category was
from the “Secondary Smelting, Refining and Alloying of Nonferrous
Metal” industry, with a total of nine firms (NAICS code 331492).
Firms in this industry recycled 95 percent of the total lead-acid
batteries recycled in 2003, with the average recycling rate per firm of
close to 15,000 tons.  The second highest amount of waste recycled
(close to 4,500 tons, or three percent of the total) was recycled by a
firm in the “Secondary Smelting, Refining, and Alloying of Copper”
industry (NAICS code 331423).

The information on the flow of lead-acid battery recycling materials
presented in Exhibit A-4 and the information on the amount of hazardous
waste recycled by industry presented in Exhibit A-5 indicate that most
lead-acid battery recyclers are inter-industry recyclers that receive
their waste from firms in industries other than the one in which they
operate.  The theoretical model on industrial inter-company recycling
(presented in Section 2.3) may best describe market behavior of these
entities.

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  5 : Distribution of Facilities
Recycling Lead-Acid Batteries, by Industry (2003)

Industry	NAICS	Total Amount Recycled (tons)	Amount Recycled as a
Percentage of the Total	Number of Facilities	Average Amount Recycled per
Facility (tons)

Secondary Smelting, Refining and Alloying of Nonferrous Metal (except
Copper and Aluminum)	331492	133,321	95	9	14,813

Secondary Smelting, Refining, and Alloying of Copper	331423	4,491	3	1
4,491

All Other Plastic Product Manufacturing	326199	3,192	2	1	3,192

Recyclable Material Merchant Wholesalers	42393	13	<1	1	13

Storage Battery Manufacturing	335911	12	<1	1	12

Other Business Service Centers (including Copy Shops)	561439	3	<1	1	3

Total

141,032	100	14	10,074

Note: Totals may not add due to rounding.

Source: ICF Analysis, 2003 BRS.

Exhibit A-6 presents revenue data for each industry that performs
battery recycling.  The revenue data in Exhibit A-6 includes all revenue
for the industry, including revenue not related to battery recycling.
For the majority of firms in these industries, recycling is not their
primary business.  Because revenue data were available for entire
industries, and not for individual facilities that perform battery
recycling, the data in Exhibit A-6 includes facilities that are not
engaged in recycling.

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  6 : Characteristics of
Industries in Which Some Facilities are Engaged in Recycling Lead-Acid
Batteries

Industry	NAICS	Total Number of  Companies	Percent of Facilities
Conducting Recycling1	Total Industry Revenue

(millions)	Average Revenue per Facility

(millions)

Secondary Smelting, Refining and Alloying of Nonferrous Metal (except
Copper and Aluminum)	331492	211	4	$2,796	$13.3

Secondary Smelting, Refining, and Alloying of Copper	331423	30	3	$611
$20.4

All Other Plastic Product Manufacturing	326199	6,701	<1	$72,894	$10.9

Recyclable Material Merchant Wholesalers	42393	7,145	<1	$28,207	$3.9

Storage Battery Manufacturing	335911	97	1	$3,415	$35.2

Other Business Service Centers (including Copy Shops)	561439	5,852	1
$6,414	$1.1

1) The percentage is calculated using the total number of recyclers
presented in Exhibit A-5.

Source: ICF Analysis, Census 2002, 2003 BRS.

Exhibit A-7 presents information on the level of primary and secondary
production of lead.  The graph shows an increasing trend in secondary
production and decreasing trend in primary production.

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  7 : Primary and Secondary
Production of Lead, 1970-2002

Notes: Primary production – the amount of refined lead produced in the
U.S.

Secondary production – the amount of old lead scrap (scrap including,
but not limited to, metal articles that have been discarded after
serving a useful purpose).

Source: ICF Analysis, United States Geological Survey.

Exhibit A-8 provides information on the amount of lead recovered from
scrap.  As shown in the table, battery lead comprised the vast majority
(about 95 percent) of lead generated from secondary production in 2002
and 2003.  This translates to about 75 percent of total lead produced by
both primary and secondary production methods.

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  8 : Lead Recovered from Scrap
Processed, 2002-2003

Lead Recovered from:	2002	2003

Total New Scrap	42,800	40,900

Old Scrap

     Battery Lead	1,010,000	1,060,000

     Other	59,500	48,970

Total Old Scrap	1,070,000	1,110,000

Grand Total	1,120,000	1,150,000

Battery Lead as a Percentage of Total Old Scrap Production	94.4%	95.5%

Notes: Metric tons, unless otherwise noted.

Source: ICF Analysis, United States Geological Survey.

Exhibit A-9 presents information on the price of lead over time, with
summary statistics presented in Exhibit A-10.  The price of lead has
declined in real terms over the past 30 years.  The average annual price
in that period was $1,303 per ton, with a standard deviation of $453 per
ton (or 35 percent of the average annual price).

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  9 : Annual Price of Lead,
1970-2002

     Source: United States Geological Survey.

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  10 : Summary Statistics for the
Annual Price of Lead ($/ton)

	1970-2002	1970-1989	1990-2002

Minimum  	$698	$698	$862

Maximum 	$2,845	$2,845	$1,379

Mean 	$1,303	$1,465	$1,053

Median	$1,225	$1,428	$996

Standard Deviation	$453	$513	$136

	Note: All values are in 2003 dollars.

	Source: United States Geological Survey.

In their 2002 study “Booms and Slumps in World Commodity Prices,”
Cashin, P. et al. analyzed the monthly data for the period 1957:1 to
1999:8 for 36 primary commodities, including lead.  Their analysis of
the historical price of lead shows that:

Price slumps are slightly longer in duration than price booms, with
slumps lasting on average 28 months and booms lasting on average 26
months;

The average percentage change in the price of lead during slumps is
-47.3 percent, while the average percentage change in the price of lead
during booms is 40.8 percent; and

The probability of a slump (boom) ending is independent of the time
spent in the slump (boom).

Exhibit A-11 summarizes the results of the Cashin et al. (2002) study.
The results indicate that the price of lead has shorter price cycles
than all other metals analyzed in the study.  Shorter price cycles may
make it harder for lead recycles to forecast demand.  The average
percentage change in the price of lead during a slump (boom) is very
close to the average percentage change for all 36 commodities.  The
magnitude of a drop in the price of lead (in percentage terms) during a
slump, however, tends to be higher than for most other metals the
authors analyzed.

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  11 : Booms and Slumps in the
Commodity Prices

	Slumps	Booms

Commodity	Duration (months)	Average Percent Change in Price	Is there
Duration Dependence?	Duration (months)	Average Percent Change in Price
Is there Duration Dependence?

Lead	27.8	-47.3	No	25.7	40.8	No

Aluminum	34.8	-33.3	No	22.5	29.3	No

Copper	34.4	-48.7	No	31.7	46.1	No

Gold	48.6	-35.0	No	29.0	32.9	No

Nickel	43.0	-42.7	No	31.3	39.3	No

Zinc	31.8	-41.2	No	24.1	43.2	No

Average for 36 Commodities	39.0	-46.0	No	29.0	42.0	No

Note: The null hypothesis tested by the authors was that the probability
of exiting a slump (boom) 	is independent of the length of time spent in
that phase.

Source: Cashin, P. et al. (2002).

Exhibit A-12 presents information on the consumption of lead broken down
by various products.  As shown in the table, storage batteries accounted
for the majority of the consumption of lead (over 80 percent) in both
years.

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  12 : Consumption of Lead by
Product (in metric tons), 2002-2003

Uses	2002	2003

Storage Batteries

	1,190,000	1,170,000

Miscellaneous Uses	71,400	71,620

Ammunitions, Shot and Bullets

	57,600	48,800

Other Oxides (Including Pain, Glass and Ceramics Products)	51,900	35,700

Other Metal Products	34,800	31,700

Sheet Lead	25,600	24,200

Solder	6,450	6,310

Pipes, Traps, Other Extruded Products	2,250	1,670

Total	1,440,000	1,390,000

Consumption of Lead in Storage Batteries as a Percent of Total
Consumption	82.6%	84.2%

Source: ICF Analysis, United States Geological Survey.

Conclusions

The following conclusions can be drawn from this empirical analysis:

Most lead-acid battery recyclers are inter-industry recyclers that
receive their waste from firms in industries other than the one in which
they operate.

A high recycling rate of lead from lead-acid batteries and its use in
battery manufacturing indicate that recycled lead is freely substituted
for lead produced from virgin materials.

Because recycled lead tends to be less expensive than lead produced from
virgin materials, the battery manufacturers have a financial incentive
to use recycled lead.

The price of lead has shorter price cycles compared to the price of
aluminum, copper, gold, nickel and zinc.  Shorter price cycles may make
it harder for lead recycles to forecast demand.

The average percentage change in the price of lead during a slump (boom)
is very close to the average percentage change for primary commodities.
The magnitude of a drop in the price of lead (in percentage terms)
during a slump, however, tends to be higher than for most other metals.

A.2.3.	Brass Dust

The discussion in this section is primarily based on the 2003 BRS data.
Some brass dust may not be regulated as a solid waste under RCRA under
the exclusion for scrap metal when it is reclaimed [40 CFR
261.4(a)(13)], and would not be reported to the BRS.  Thus, the BRS may
underreport the amount of brass dust that is recycled.  The data sources
used for this paper did not contain information on the amount of brass
dust that is recycled but not reported to the BRS.

Brass dust recyclers were identified using the following BRS form codes:
(1) “W504 - Other sludges from wastewater treatment or air pollution
control;” (2) “W505 - Metal bearing sludges (including plating
sludge) not containing cyanides;” and (3) “W519 - Other inorganic
sludges.”  Because the BRS does not explicitly track brass dust, the
number of brass dust recyclers and the amount of brass dust recycled
presented in this study may be under- or over-estimated.

Exhibit A-13 presents the number of facilities that handled (i.e.,
managed and/or transported) brass dust in 2003, broken down by number of
facilities conducting each waste handling method and geographic region.
The BRS data contained information on a total of 73 unique facilities
that handled brass dust, of which 43 were actively involved in some type
of waste management and 30 were solely engaged in waste transfer (i.e.,
transport and/or temporal storage).  Of the 43 waste management
facilities, 12 facilities were engaged in waste transferring in addition
to waste management.

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  13 : Waste Handling Method and
Geographic Distribution for 73 Facilities Handling Brass Dust (2003)

	Recycling	Disposal	Energy

Recovery	Transfer	Treatment	Total

Northeast	2	1	-	6	2	11

Mid-Atlantic	2	-	-	3	4	9

South	-	2	2	8	3	15

Midwest	1	-	1	16	7	25

South Central	1	1	1	5	6	14

West Central	-	1	-	-	2	3

West	1	3	-	4	3	11

Total	7	8	4	42	27	731

1) The total facility count is less than the column summation because
some facilities engage in more than one type of waste handling activity.

Source: ICF Analysis, 2003 BRS.

Exhibit A-14 presents data on the amount of hazardous waste managed by
method for facilities managing brass dust.  A total of 28,233 tons of
brass dust was managed by 43 facilities in 2003, with facilities
managing 657 tons of waste on average.  Treatment was the most common
waste management method in 2003, with 26,500 tons of brass dust treated
(or 94 percent of the total brass dust managed).  Significantly smaller
amount (slightly over 500 tons or 2 percent of the total brass dust
managed) was recycled in 2003.  The average amount recycled per facility
was 76 tons.

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  14 : Waste Management Methods
for Brass Dust at 43 Facilities (2003)

	Amount Managed

	Recycling	Disposal	Energy Recovery	Treatment	Total

Total  (tons)	534	1,145	66	26,488	28,233

Total (percent)	2	4	<1	94	100

Average per Facility (tons)	76	143	17	981	657

Note: 926 tons of brass duct were transferred in 2003. Because
activities related to transportation of waste are not considered waste
management, information on the amount transported in 2003 is not
included in the Exhibit.

Source: ICF Analysis, 2003 BRS.

Exhibit A-15 provides information on the flow of hazardous waste for
brass dust.  The first set of columns presents the NAICS codes for the
generators of waste that went to recycling facilities, and the second
set of columns presents the NAICS codes for the recycling facilities.

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  15 : Recycling of Brass Dust -
Flow of Hazardous Waste, by Industry (2003)

Generators 	NAICS	Percent of Waste Supplied1	Recycling Facilities	NAICS

Storage Battery Manufacturing	335911	92	Secondary Smelting, Refining,
and Alloying of Copper	331423

Primary Battery Manufacturing	335912	8

Storage Battery Manufacturing	335911	99	Secondary Smelting, Refining,
and Alloying of Nonferrous Metal (except Copper and Aluminum)	331492

Vitreous China, Fine Earthenware, and Other Pottery Product
Manufacturing	327112	1

Other Pressed and Blown Glass and Glassware Manufacturing	327212	94
Nonferrous Metal (except Aluminum) Smelting and Refining	33141

Jewelry (except Costume) Manufacturing	339911	100	Testing Laboratories
54138

Bare Printed Circuit Board Manufacturing	334412	3	Hazardous Waste
Treatment and Disposal	562211

1) Waste supplied by generators in each industry as a percentage of the
total waste recycled.

Notes: The exhibit presents only the industries for which the NAICS
codes are available in the BRS database.  For example, the nonferrous
metal smelting and refining facility (NAICS code 33141) recycled 9 tons
of brass dust in 2003, of which 8.5 tons, or 94 percent, were supplied
by facilities in the pressed and blown glass and glassware manufacturing
industry (NAICS code 327212).  The BRS database does not contain
information on the NAICS codes for the generators who supplied the
remaining waste.

The BRS database does not contain information on the industries that
supplied waste to the recycling facility in the primary smelting and
refining of nonferrous metal industry (NAICS code 331419).  For that
reason, the recycling facility with NAICS code 331419 is not shown in
the above exhibit.

Source: ICF Analysis, 2003 BRS.

Exhibit A-16 presents additional information on the firms that were
involved in recycling brass dust in 2003.  The most common category was
“Secondary Smelters,” with a total of three firms (NAICS codes
331492 and 331423).  There was only one commercial recycler managing
brass dust in 2003 (NAICS code 562211).  The amount managed by that
facility was relatively small (six tons).  Such a small amount managed
could indicate that the commercial recycler may be recycling materials
other than brass dust.

The information on the flow of brass dust materials presented in Exhibit
A-15 and the information on the amount of hazardous waste recycled by
industry presented in Exhibit A-16 indicate that most brass dust
recyclers are inter-industry recyclers that receive their waste from
firms in industries other than the one in which they operate.  The
theoretical model on industrial inter-company recycling (presented in
Section 2.3) may best describe market behavior of these entities.

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  16 : Distribution of Facilities
Recycling Brass Dust, by Industry (2003)

Industry	NAICS	Total Amount Recycled (tons)	Amount Recycled as a
Percentage of the Total	Number of Facilities	Average Amount Recycled per
Facility (tons)

Secondary Smelting, Refining, and Alloying of Copper	331423	384	72	1	384

Secondary Smelting, Refining, and Alloying of Nonferrous Metal (except
Copper and Aluminum)	331492	127	24	2	64

Nonferrous Metal (except Aluminum) Smelting and Refining	33141	9	2	1	9

Testing Laboratories	54138	7	1	1	7

Hazardous Waste Treatment and Disposal	562211	6	1	1	6

Primary Smelting and Refining of Nonferrous Metal (except Copper and
Aluminum)	331419	1	<1	1	1

Total

534	100	7	76

 Source: ICF Analysis, 2003 BRS.

In terms of average annual amount recycled, brass dust recycling
activity is dominated by three secondary smelting plants.  Based on the
2003 BRS figure, these three secondary smelting plants appear to have
over 96 percent of the recycled brass dust market, with the market share
of the top plant being over 72 percent.  All other things being equal,
we would expect the price of a product to be higher in a market
dominated by a few firms than in a market with a large number of firms.
Given the average annual amount recycled, it is highly unlikely that the
hazardous waste treatment and disposal facility (NAICS code 562211) is
exclusively engaged in recycling brass dust.

Exhibit A-17 presents data on all facilities managing brass dust in a
specific industry, including both facilities engaged in recycling and
those that are not.  The majority of the firms were not involved in
recycling as their primary business.  For the one firm in the hazardous
waste treatment and disposal industry (NAICS code 562211) recycling is
assumed to be its primary business.

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  17 : Characteristics of
Industries in Which Some Facilities are Engaged in Recycling Brass Dust

Industry	NAICS	Total Number of  Companies	Percent of Facilities
Conducting Recycling1	Total Revenue

(million)	Average Revenue per Facility

Secondary Smelting, Refining, and Alloying of Copper	331423	30	3	$611
$20.4

Secondary Smelting, Refining, and Alloying of Nonferrous Metal (except
Copper and Aluminum)	331492	211	1	$2,796 	$13.3

Nonferrous Metal (except Aluminum) Smelting and Refining	33141	11	9
$2,615 	$237.7

Testing Laboratories	54138	5,948	<1	$8,794 	$1.5

Hazardous Waste Treatment and Disposal	562211	696	<1	$3,466 	$5.0

Primary Smelting and Refining of Nonferrous Metal (except Copper and
Aluminum)	331419	153	1	$2,246 	$14.7

1) The percentage is calculated using the total number of recyclers in
each industry presented in Exhibit

A-16.

Source: ICF Analysis, Census 2002.

Exhibit A-18 shows trends of primary and secondary production of zinc
over time.  Roughly two thirds of the zinc supply is produced from ore
(primary production), and the remaining third is produced from scrap and
residues including brass dust (secondary production).  The majority of
zinc used in the US is imported.  In 2002, for example, 0.3 million tons
of zinc were produced domestically, while almost 0.9 million tons were
imported.

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  18 : Primary and Secondary
Production of Zinc, 1970-2002

     Source: ICF Analysis, United States Geological Survey.

Exhibit A-19 shows the annual price of zinc from 1970 to 2005, with
summary statistics presented in Exhibit A-20.  The price has exhibited a
decreasing trend in real terms over the past 35 years.  The average
annual price in that period was close to $1,657 per ton, with a standard
deviation of $513 per ton (or about 31 percent of the average annual
price).

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  19 : Annual Price of Zinc,
1970-2005

    		Source: United States Geological Survey.

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  20 : Summary Statistics for the
Annual Price of Zinc

	1970-2005	1970-1989	1990-2005

Minimum  	$827	$1,368	$827

Maximum 	$2,867	$2,867	$2,243

Mean 	$1,657	$1,933	$1,311

Median	$1,565	$1,833	$1,266

Standard Deviation	$513	$461	$343

	Note: All values are in 2003 dollars.

	Source: United States Geological Survey.

As discussed in the theoretical section of the paper, one of the factors
that affects the acceptance fee is the availability of other disposal
options in the area.  If generators were indifferent between sending
their waste to a landfill versus a recycler, we would expect the
acceptance fee to be somewhere between $100/ton and $150/ton in the
period 2002-2004, the period for which the landfill tipping-fee data are
available (see Exhibit A-1).  Given the high price of zinc, however,
commercial recyclers may set the acceptance fee significantly lower than
the landfill tipping fee to induce brass-dust generators to choose
recycling over disposal.  Thus, we would expect that the dominant
revenue source for commercial brass dust recyclers is the revenue
generated from the sale of zinc rather than the revenue generated from
acceptance fees.

The data on the commodity prices presented in Exhibit A-21 show that
slumps in the price of zinc are, on average, eight months longer than
booms in the price of zinc (32 and 24 months, respectively).  This means
that any period of a relatively high zinc price is followed by a longer
period of a relatively low zinc price.  The price of zinc has shorter
price cycles than all other metals presented in Exhibit A-21, except
lead.  The average percentage change in the price of zinc is -41.2
percent during slumps and 43.2 percent during booms.  The average change
in the price of zinc during a slump (boom) is close to the average price
change across 36 primary commodities (measured in percentage terms).
The probability of a slump (boom) ending in the world zinc market is
independent of the time spent in the slump.

Roughly three quarters of the supply of zinc is used in the iron and
steel industry, with the rest being used in the rubber, chemical, paint,
and agricultural industries.  We would therefore expect that a main
driving force behind the price of zinc is the supply and demand of iron
and steel.  Exhibit A-21 shows that the price of zinc has fluctuated
historically with the price of iron and steel.  The correlation
coefficient for the price of the two materials is 0.75, indicating that
the price of zinc is strongly influenced by the price of iron and steel.

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  21 : Price Index of Zinc
Compared to Price Index of Iron and Steel,

1970-2002

      Source: United States Geological Survey.

Conclusions

	The following conclusions can be drawn from this empirical analysis:

Most brass dust recyclers are inter-industry recyclers that receive
their waste from firms in industries other than the one in which they
operate.  Only about one percent of the total amount of brass dust
recycled in 2003 was recycled by commercial recyclers.

Roughly three quarters of the supply of zinc is used in the steel and
iron industry.

A low recycling rate of brass dust indicates that recycled zinc is not
freely substituted for zinc produced from virgin materials.

There is asymmetry in the duration of zinc price slumps and booms, with
slumps lasting, on average, eight months longer.

The average change in the price of zinc during a slump (boom) is very
close to the average price change across 36 primary commodities
(measured in percentage terms).

A.2.4.	Spent Pickle Liquor

Pickle liquor is an acid solution used to clean and condition steel in
various steelmaking processes.   Through re-use in the steel pickling
process, the metals content in the solution builds up causing the
solution to lose its desired chemical properties (i.e., to become
“spent”).   Thus, spent pickle liquor needs to be processed (i.e.,
regenerated) before it can be used again in steelmaking processes.
Spent pickle liquor is considered hazardous waste (K062) by EPA and
regulated under RCRA.

The discussion presented in this section is based on information from
two main sources:

US Steel and Mittal Steel, US steel manufacturers, and

The 2003 EPA BRS.

US Steel and Mittal Steel Data

Unless otherwise noted, the information presented in this section was
provided by US Steel and Mittal Steel during a telephone interview
conducted in November, 2005. The information provided has not been
independently verified by EPA.

Waste Management Options.  There are three main options for spent pickle
liquor.  These options are disposal, reuse, and recycling, which is
commonly referred to as regeneration.

Disposal. Before the enactment of RCRA, it was a common industry
practice to dispose of spent pickle liquor into lagoons.  After RCRA
labeled the material as a hazardous waste, deep-well injection became
the most prevalent waste management option.   Disposal is a common
management method for spent pickle liquor largely due to cost and
regulatory issues.  It is often the cheapest option and also the
simplest option for companies that are concerned about the regulatory
issues around reusing it.  It is thought, though, that cost does not
totally drive these issues, as some companies would likely be willing to
incur higher costs to recycle due to wanting to be perceived as
environmentally sensitive.  Based on the most recent industry data, 19
percent of generated spent pickle liquor was disposed of.

Direct Use. Spent pickle liquor is used as a substitute for certain
chemicals, with one example being use as a chemical additive at
wastewater treatment plants.  Some reusable products also result from
the regeneration process.  Based on the most recent industry data, 18
percent of generated spent pickle liquor is used in wastewater treatment
plants.

Regeneration. Prompted to some degree by environmental concerns, there
has been a move to regeneration of spent pickle liquor within the steel
industry.  In the early 1980s, approximately two percent (or 28 million
gallons) of spent pickle liquor was recycled. Regeneration is currently
the most widely used waste management option, with over 60 percent of
waste (or 114 million gallons) regenerated (AISI, 2005).  The
regeneration process is carried out both by commercial and
intra-industry recyclers.

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  22 : Spent Pickle Liquor –
Industry Management (2004)

Total Generated	Total Regenerated	Direct Use WWTP Chemical	Use as
Product Ingredient	Deep Well Injection

186,403,516	113,667,701	34,081,116	15,422,220	35,232,479

Note: All values are expressed in gallons.

Source: American Iron and Steel Institute, Memorandum to EPA, 2005.

Recycling Market.  The steel industry is both a producer of spent pickle
liquor and a main consumer of regenerated pickle liquor.  Steel
companies vary in whether they do regeneration onsite or offsite, with
larger steel companies traditionally having regenerating facilities on
one of their sites.  Currently, there are no more than ten
K062-regenerating facilities operating in the US.

K062-regeneration has relatively large capital cost requirements.  The
capital costs for building a spent acid regeneration plant can be as
much as $30 million.  High start-up costs indicate that economies of
scale are needed to recover the investment.   It is therefore a common
practice for a regeneration plant to serve more than one steel mill,
whether it is commercially owned or operated by a steel company.  For
the same reasons, the most economical way for a small steel company to
regenerate its spent pickle liquor is to send it offsite.

The need to gain economies of scale by regenerating a greater quantity
of spent pickle liquor than used in its own production implies that
regeneration would likely need to be treated as a separate production
process within a steel company.  For example, because the consumers of
finished steel products and regenerated pickle liquor are not the same,
a steel company with a regeneration plant would likely need to develop
two supply channels.  This need to divert resources from its main
operation (i.e., making steel) may discourage a steel company from
operating a generation plant onsite.  A steel company may find it more
profitable to concentrate on making steel and outsource
K062-regeneration.

Multi-year tolling arrangements are common in the industry.  Such
contracts benefit steel mills to the extent that they offer some
protection from price fluctuations and a guarantee of a stable supply of
fresh acid solution.  Such contracts, however, give the industry less
flexibility in switching between waste management options when, due to
market conditions, other waste management methods become more
economically favorable.  For example, market conditions in the chemical
industry may drive down the price of virgin pickle liquor, a byproduct
of that industry, making it more cost effective for steel mills to use
virgin acid solution instead of regenerated pickle liquor.

The production of steel and regeneration of spent pickle liquor are both
energy-intensive processes.  Energy is a significant cost factor in the
regeneration process since regeneration plants are designed to run
continuously.  Multi-year tolling arrangements usually have a provision
that allows for adjustments in electricity prices.  With a multi-year
tolling arrangement in place, a generator (i.e., steel mill) pays a
regenerating facility for pickle liquor, the cost associated with the
regeneration of spent pickle liquor, and transportation costs.  Whether
the generator pays commercial and inter-industry recyclers to take their
spent pickle liquor or gets paid for it depends, in addition to market
conditions, on transportation costs.  Generators must usually pay if
they are located far away from commercial and inter-industry recyclers.

Generators of spent pickle liquor also may send it to facilities for
direct reuse.  Depending on market conditions, entities using spent
pickle liquor as a direct input (e.g., wastewater treatment plants) may
pay the generators for the wastes.

Because spent pickle liquor is considered hazardous waste, environmental
and health and safety regulations must be observed during its
management.  As a way of minimizing potential future liability, steel
producers visit commercial recyclers that handle their spent pickle
liquor on a regular basis to ensure they are handling the wastes
properly.

The production level of the steel industry is the main driver of the
market conditions for pickle liquor.  Exhibit A-23 shows that the
domestic annual production of iron and steel decreased significantly in
the 70s, from 83 million tons in 1970 to 62 million tons in 1980.  In
the period 1981 to 2002, the production levels varied between 40 and 50
million tons per year.  The average annual production in that period was
about 47 million tons, with a standard deviation of 5.7 million tons (or
twelve percent of the average annual production in that period).

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  23 : Iron and Steel Production,
1970 – 2002

     	   Source: United States Geological Survey.

BRS and Other Publicly Available Data

The discussion in this section is based on the 2003 BRS data.
Facilities handling spent pickle liquor were identified using both form
codes and waste codes from BRS.  The following BRS form codes were used
in the selection: (1) “W101 - Very dilute aqueous waste containing
more than 99% water (land disposal restriction defined wastewater that
is not exempt under NPDES or POTW discharge);” (2) “W103 - Spent
concentrated acid (5% or more);” (3) “W105 - Acidic aqueous wastes
less than 5% acid (diluted but pH <2);” (4) “W110 - Caustic aqueous
waste without cyanides (pH >12.5);” and (5) “W113 - Other aqueous
waste or wastewaters (fluid but not sludge).”  In addition, waste code
K062, which indicates that the waste exhibits the characteristic of
toxicity for spent pickle liquor, was also used to identify facilities
handling spent pickle liquor.  We assumed that all waste spent pickle
liquor would carry this waste code.

Exhibit A-24 presents the number of facilities that handled (i.e.,
managed and/or transported) spent pickle liquor in 2003, broken down by
waste handling method and geographic region.  The BRS data contained
information on a total of 34 unique facilities that handled spent pickle
liquor, all of which were actively involved in some type of waste
management.  Of the 34 waste management facilities, 10 facilities were
engaged in waste transferring in addition to waste management.

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  24 : Waste Handling Method and
Geographic Distribution for 34 Facilities Handling Spent Pickle Liquor
(2003)

	Recycling	Disposal	Energy

Recovery	Transfer	Treatment	Total

Northeast	-	1	-	2	2	5

Mid-Atlantic	-	-	-	2	5	7

South	-	3	-	1	2	6

Midwest	-	3	-	4	5	12

South Central	-	1	1	1	3	6

West Central	-	-	-	-	-	-

West	-	-	-	-	2	2

Total	-	8	1	10	19	341

1) The total facility count is less than the column summation because
some facilities engage in more than one type of waste handling activity.

Source: ICF Analysis, 2003 BRS.

Exhibit A-25 presents data on the amount of hazardous waste managed by
method for facilities managing spent pickle liquor.  A total of 281,733
tons of spent pickle liquor was managed by 34 facilities in 2003, with
facilities managing 8,287 tons of waste on average.  The vast majority
of spent pickle liquor (233,433 tons or 83 percent) was disposed.  A
significantly smaller amount (slightly over 48,301 tons or 17 percent of
the total waste managed) was treated in 2003.

The BRS data indicate that no recycling of spent pickle liquor was
conducted in 2003.  The industry data, however, indicated that a
significant amount of recycling is being conducted.  One potential
reason for underreporting of spent pickle liquor recycling in the BRS
could be that this waste is commonly reported as another applicable
waste code in the BRS, as this waste is typically corrosive and contains
metals.  Facilities reporting spent pickle liquor to BRS may be using
the code for wastes that are corrosive (D002) or one of the codes for
wastes that are considered toxic due to the presence of metals.

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  25 : Waste Management Methods
for Spent Pickle Liquor at 34 Facilities (2003)

	Amount Managed

	Recycling	Disposal	Energy Recovery	Treatment	Total

Total  (tons)	-	233,433	39	48,301	281,773

Total (percent)	-	83	<1	17	100

Average per Facility (tons)	-	29,179	39	2,542	8,287

Note: 154 tons of spent pickle liquor were transferred in 2003. Because
activities related to transportation of waste are not considered waste
management, information on the amount transported in 2003 is not
included in the Exhibit.

Source: ICF Analysis, 2003 BRS.

Conclusions

	The following conclusions can be drawn from this empirical analysis:

Industry data indicate that most spent pickle liquor recyclers are
commercial recyclers, as individual steel mills may not produce enough
spent pickle liquor on a continuing basis to operate a recycling unit
efficiently.

High start-up costs indicate that economies of scale are needed to
recover the investment.  These characteristics imply that regeneration
would likely need to be treated as a separate production process within
a steel company.

Like lead-acid battery recyclers, the main supplier of spent pickle
liquor and the main consumer of the recycled spent pickle liquor are in
the same industry, which simplifies the supply chain.

Industry data indicate that, in 2004, about 60 percent of spent pickle
liquor was regenerated and used in the steel industry.

Because spent pickle liquor is considered a hazardous waste,
environmental and safety concerns are high.  As a way of minimizing
potential future liability, steel producers visit commercial recyclers
that handle their spent pickle liquor on a regular basis to ensure they
are handling the wastes properly.  Although such visits would increase
the current operating costs of steel mills, they could help reduce their
future liability risks.

The iron and steel production has been relatively stable in the period
1980-2002, which would imply, all other things equal, that the demand
for pickle liquor in that period was relatively stable as well.

A.2.5.	Solvents

This study is primarily interested in industrial solvents used in dry
cleaning of fabrics, and cleaning and degreasing of metal.  As solvents
are reused in industrial processes, they lose their cleaning/degreasing
properties (i.e., become spent).  Some spent solvents are considered
hazardous waste by EPA and regulated under RCRA.

The discussion presented in this section is based on information from
two main sources:

Safety-Kleen, a US commercial recycler of industrial solvents, and

The 2003 EPA BRS.

Safety-Kleen Data

Unless otherwise noted, the discussion in this section is based on the
information provided by Safety-Kleen during a telephone interview
conducted in November, 2005.  The information provided has not been
independently verified by EPA.

Safety-Kleen is the largest US commercial recycler of spent solvents.
It operates more than 200 service and recycling centers throughout the
North America.  The company recycles about 21 million gallons of
solvents per year, with the majority being mineral spirits.  Its primary
customers are auto repair shops and other small business that use
solvents.

A small part of Safety-Kleen’s business is done through tolling
agreements, likely because such arrangements are impractical for small
quantities of solvents it collect from its main customer base.  Its
dominant business strategy is to collect spent solvents from its
customers and supply them with regenerated solvents.  Its wide
geographic presence of collection and recycling centers enables
Safety-Kleen to gain from economies of scale while minimizing
transportation costs.

Solvent recycling involves capital and operating costs which may deter
some small generators form recycling onsite.  For example, in addition
to a RCRA permit, an onsite recycler would need to have a trained person
to oversee recycling process and make sure that regulations are being
followed.

Commercial recyclers mostly get paid to accept spent solvents from their
customers (unless the virgin solvent is very valuable, in which case the
recycler may pay for spent solvent).  The acceptance fee is dynamic and
can change quickly.  These fluctuations would likely be harder for
smaller, more specialized companies to handle.  The acceptance fee also
is correlated with fuel costs where spent solvents are commonly being
used as fuel substitution.  The price for recycled solvents, although
relatively stable, has been eroding over time most likely due to
over-capacity in the industry and downsizing related to waste and waste
handling in the late 1990’s.  Market prices for recycled solvents have
a regional component, since demand and transportation costs vary.  The
price for recycled solvents is not always lower than the price of virgin
solvents.

BRS and Other Publicly Available Data

The discussion in this section is primarily based on the 2003 BRS data.
Solvent recyclers were identified using both the form codes and the
waste codes from BRS.  The following BRS form codes were used: (1)
“W202 - Concentrated halogenated (e.g., chlorinated) solvent;” (2)
“W203 - Concentrated non-halogenated (e.g., non-chlorinated) solvent
;”(3) “W204 -  Concentrated halogenated/ non-halogenated solvent
mixture; and (4) “W219 - Other organic liquid.”  The following BRS
waste codes were used: (1) F001 – Carbon Tetrachloride, Methylene
Chloride, Trichloroethane, Perchloroethylene (Tetrachloroethylene), and
Trichloroethylene; (2) F002 – Chlorobenzene, O-Dichlorobenzene,
Methylene Chloride, Trichloroethane, Perchloroethylene
(Tetrachloroethylene), Trichloroethylene, Trichlorofluoromethane, and
Trichlorotrifluoroethane; and (3) F005 – Benzene, Carbon Disulfide,
2-Ethoxyethanol, Isobutanol, Methyl Ethyl Ketone, Pyridine, and Toluene.
 Wastes that carried any combination of the above listed form codes and
waste codes were assumed to be solvents.

Exhibit A-26 presents the number of facilities that handled (i.e.,
managed and/or transported) solvents in 2003, broken down by waste
handling method and geographic region.  The BRS data contained
information on a total of 426 unique facilities that handled solvents,
all of which were actively involved in some type of waste management.
Of the 426 waste management facilities, 235 facilities were engaged in
waste transferring in addition to waste management.  The BRS data
indicate that 153 entities were engaged in recycling of spent solvents
in 2003.  Of the 153 entities, 27 were commercial recyclers (3-digit
NAICS code 562).

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  26 : Waste Handling Method and
Geographic Distribution for 426 Facilities Handling Solvents (2003)

	Recycling	Disposal	Energy

Recovery	Transfer	Treatment	Total

Northeast	25	2	6	19	7	59

Mid-Atlantic	20	1	10	20	9	60

South	32	-	16	46	12	106

Midwest	36	-	25	46	14	121

South Central	12	4	15	63	17	111

West Central	11	1	4	19	4	39

West	17	1	7	22	7	54

Total	153	9	83	235	70	4261

1) The total facility count is less than the column summation because
some facilities engage in more than one type of waste handling activity.

Source: ICF Analysis, 2003 BRS.

Exhibit A-27 presents data on the amount of hazardous waste managed by
method for facilities managing solvents.  A total of 1,033,615 tons of
solvents was managed by 426 facilities in 2003, with facilities managing
2,426 tons of waste on average.  The vast majority of solvents (694,170
tons or 67 percent) was used as a substitute for fossil fuels in boilers
and industrial furnaces.  This practice is especially common in chemical
and cement industries.  Significantly smaller amount (slightly over
107,000 tons or 10 percent of the total waste managed) was recycled in
2003.  The average amount recycled per facility was 700 tons.

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  27 : Waste Management Methods
for Solvents at 426 Facilities (2003)

	Amount Managed

	Recycling1	Disposal	Energy Recovery	Treatment	Total

Total  (tons)	107,465	19,894	694,170	212,086	1,033,615

Total (percent)	10	2	67	21	100

Average per Facility (tons)	702	2,210	8,363	3,030	2,426

1) Solvents recycling may include some or all of the following
activities: phase separation, batch distillation, thin film evaporation
and fractional distillation (SRI Consulting, 1998).

Note: 174,672 tons of solvents were transferred in 2003. Because
activities related to transportation of waste are not considered waste
management, information on the amount transported in 2003 is not
included in the Exhibit.

Source: ICF Analysis, 2003 BRS.

Exhibit A-28 provides information on the flow of hazardous waste for
solvents.  The first set of columns presents the NAICS codes for the
generators of waste that went to recycling facilities, and the second
set of columns presents the NAICS codes for the recycling facilities.

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  28 : Recycling of Solvent -
Flow of Hazardous Waste, by Industry (2003)

Generators 	NAICS	Percent of Waste Supplied1	Recycling Facilities	NAICS

Pharmaceutical and Medicine Manufacturing	32541	27	Hazardous Waste
Treatment and Disposal	562211

Pharmaceutical Preparation Manufacturing	325412	21

Medicinal and Botanical Manufacturing	325411	7

Metal Coating, Engraving (except Jewelry and Silverware), and Allied
Services to Manufacturers	332812	2	Materials Recovery Facility	56292

Rolling and Drawing of Purchased Steel	33122	1

Fabric Coating Mills	31332	1

Paint and Coating Manufacturing	32551	100	Paint and Coatings
Manufacturing	32551

Paint and Coating Manufacturing	32551	67	Other Chemical and Allied
Products Merchant Wholesalers	424692

Metal Coating, Engraving (except Jewelry and Silverware), and Allied
Services to Manufacturers	332812	17

Adhesive Manufacturing	32552	6

Laminated Plastics Plate, Sheet (except Packaging), and Shape
Manufacturing	32613	100	Laminated Plastics Plate, Sheet (except
Packaging), and Shape Manufacturing	32613

1) Waste supplied by generators in each industry as a percentage of the
total waste recycled.

2) The NAICS code recorded in the BRS database was not valid (NAICS code
42269).  After checking the company’s name and activities, we
determined that the appropriate NAICS code was 42469.

Note: The exhibit presents only the top three industries (in terms of
the amount of waste supplied) for which NAICS codes were available.  For
example, the hazardous waste treatment and disposal facilities (NAICS
code 562211) recycled 33,504 tons of solvents in 2003, of which 9,209
tons, or 27 percent, were supplied by facilities in the pharmaceutical
and medicine manufacturing industry (NAICS code 32541).  Close to 20
percent of waste was supplied by industries for which data on the
generators’ NAICS codes are not available in the BRS database.

Source: ICF Analysis, 2003 BRS.

There are three main types of commercial recycling arrangements.  They
are: toll recycling, speculative recycling and commercial waste brokers.
 In a toll recycling arrangement, a recycler collects spent solvents
from a generator, recycles them and returns regenerated solvents to the
generator.  With speculative recycling arrangements, a recycler collects
spent solvents from generators, recycles them and sells them on the
market as regenerated solvents.  If the value of a virgin solvent is
high, a recycler engaged in speculative recycling is likely to pay the
generator for the spent solvent.  Wastes also can be handled by
commercial waste brokers.  A broker facilitates trade between generators
and recyclers and/or facilities which use waste as a feedstock.  In some
cases, brokers may warehouse spent solvents until they find a buyer.

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  29 : Distribution of Facilities
Recycling Solvents, by Industry

(Top Five Industries; 2003)

Industry	NAICS	Total Amount Recycled (tons)	Amount Recycled as a
Percentage of the Total	Number of Facilities	Average Amount Recycled per
Facility (tons)

Hazardous Waste Treatment and Disposal	562211	33,504	31	24	1,396

Materials Recovery Facility	56292	21,498	20	2	10,749

Paint and Coatings Manufacturing	32551	12,150	11	15	810

Other Chemical and Allied Products Merchant Wholesalers	42269	10,844	10
1	10,844

Laminated Plastics Plate, Sheet (except Packaging), and Shape
Manufacturing	32613	4,791	4	3	1,597

Source: ICF Analysis, 2003 BRS.

The BRS data indicate that 107,465 tons of solvents were recycled in
2003, of which 53 percent was recycled by commercial recyclers.  The
commercial recycling market was dominated by two facilities in 2003; one
recycled close to 11,000 tons and the other recycled over 9,000 tons of
solvents.  The data presented in Exhibit A-28 and Exhibit A-29 indicate
that at least 15 percent of the total amount of solvents recycled in
2003 was recycled by intra-company recyclers (NAICS codes 32551 and
32613).

Exhibit A-30 presents revenue data for each industry that performs
solvents recycling.  The revenue data in Exhibit A-30 includes all
revenue for the industry, including revenue not related to solvents
recycling.  Because revenue data were available for entire industries,
and not for individual facilities that perform solvents recycling, the
data in Exhibit A-30 includes facilities that are not engaged in
recycling.

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  30 : Characteristics of
Industries in Which Some Facilities are Engaged in Recycling Solvents

Industry	NAICS	Total Number of  Companies	Percent of Facilities
Conducting Recycling1	Total Industry Revenue

(millions)	Average Revenue per Facility

(millions)

Hazardous Waste Treatment and Disposal	562211	696	3	$3,466	$5.0

Materials Recovery Facility	56292	838	<1	$1,835	$2.2

Paint and Coatings Manufacturing	32551	1,409	1	$19,257	$13.7

Other Chemical and Allied Products Merchant Wholesalers	42269	11,117	<1
$88,065	$7.9

Laminated Plastics Plate, Sheet (except Packaging), and Shape
Manufacturing	32613	294	1	$2,314	$7.9

1) The percentage is calculated using the total number of recyclers
presented in Exhibit A-29.

Source: ICF Analysis, Census 2002, 2003 BRS.

The exhibits below illustrate demand and prices for production of virgin
trichloroethylene, methyl ethyl ketone, and perchloroethylene for the
period 1996 to 2002.,

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  31 : Demand of Virgin
Trichloroethylene, Methyl Ethyl Ketone, and Perchloroethylene (1996 –
2002)

Notes: (1) Demand equals production plus imports minus exports. (2)
Empty cells indicate years 	for which data were not available. (3) Data
were converted from pounds to tons.

Source: The Innovation Group, available in “Chemical Profiles” at
HYPERLINK "http://www.the-innovation-"  http://www.the-innovation-
group.com/welcome.htm.

The price of trichloroethylene decreased in real terms in the period
from 1996 to 2001 (in nominal terms, the price was constant).  The price
of perchloroethylene also decreased (in real terms) over the same
period.  There was, however, a one-year spike in the price in 1997.  The
price of methyl ethyl ketone was the most volatile of the three
solvents.  Caution should be exercise when drawing conclusion based on
these data as they are available only for a short period of time and
thus may not be representative of the historical prices.

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  32 : Price of Virgin
Trichloroethylene, Methyl Ethyl Ketone, and Perchloroethylene (1996 –
2002)

Note: Data for methyl ethyl ketone for 1996 were not available. Data for
trichloroethylene and 	perchloroethylene for 2002 were not available.

Source: The Innovation Group, available in “Chemical Profiles” at
HYPERLINK "http://www.the-innovation-"  http://www.the-innovation-
group.com/welcome.htm.

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  33 : Summary Statistics for the
Annual Price of Virgin Trichloroethylene, Methyl Ethyl Ketone and
Perchloroethylene (1996 – 2002)

	Annual Price (2003$/ton)

	Trichloroethylene 	Methyl Ethyl Ketone	Perchloroethylene

Minimum	$306	$184	$150

Maximum	$333	$226	$186

Mean	$320	$207	$162

Median	$321	$207	$158

Standard Deviation	$10	$16	$13

Note: All Values are in 2003 dollars. Source: ICF Analysis, The
Innovation Group.

Exhibit A-34 presents the prices for virgin and reclaimed
trichloroethylene, methyl ethyl ketone, and perchloroethylene in 1997.
The data indicate that, on average, reclaimed solvents were 30 to 65
percent less expensive than virgin solvents in that year.  We combine
these data with the information presented in Exhibit A-32 to estimate
the price of reclaimed solvents for one of the years for which we have a
proxy for the acceptance fee.  The calculations, presented in Exhibit
A-35, are based on a simplifying assumption that the difference between
the price of a reclaimed and virgin solvent (in percentage terms) stayed
constant.

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  34 : Price for Virgin and
Reclaimed Trichloroethylene, Methyl Ethyl Ketone and Perchloroethylene
(1997)

	Price in $/gallon	Price of Reclaimed Solvent as a Percentage of Price
of Virgin Solvent

	Reclaimed	Virgin

	Trichloroethylene	4.00 – 5.44	7.93	50% - 69%

Methyl Ethyl Ketone	2.10	3.09	68%

Perchloroethylene	2.69 – 4.71	7.40	36% - 64%

	Source: SRI Consulting, 1998.

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  35 : Estimated Price for
Reclaimed Trichloroethylene, Methyl Ethyl Ketone and Perchloroethylene
(2001)

	Formula	Trichloroethylene 	Methyl Ethyl Ketone	Perchloroethylene

Price of Virgin Solvent in 2001 ($/ton)	A	$306	$226	$150

Price of Reclaimed Solvent as a Percentage of Price of Virgin Solvent	B
69%	68%	64%

Derived Price of Reclaimed Solvent in 2001 ($/ton)	C = A*B	$211	$154	$96

Derived Price of Reclaimed Solvent in 2001 ($/gallon)	D = C/[1/(density/

120)*

2,200]	$1.17	$0.47	$0.59

Derived Price of Reclaimed Solvent in 2001 ($/drum)	D * 55	$64	$26	$32

Note: Density of trichloroethylene = 1,460 Kg/m3; density of methyl
ethyl ketone = 805 Kg/m3; density of perchloroethylene = 1,622 Kg/m3.

We estimate that the price of reclaimed trichloroethylene was $64 per a
55-gallon drum in 2001.  That amount is significantly lower than the
proxy acceptance fee of about 112$/drum.  The difference between the
price of regenerated solvents and the acceptance fee is even more
pronounced for the other two solvents.  These results indicate that some
commercial recyclers may have generated more revenue from the acceptance
fees than from the sale of regenerated solvents in 2001.

Conclusions

	The following conclusions can be drawn from this empirical analysis:

Over 50 percent of the total amount of solvents recycled in 2003 was
recycled by commercial recyclers. At least 15 percent of the total
amount of solvents recycled in the same year was recycled by
intra-company recyclers.

The commercial recycling market is dominated (in terms of the amount
recycled) by a single recycling firm.

Some commercial recyclers may generate more revenue from the acceptance
fees than from the sale of reclaimed solvents.

A.2.6.	Drums

The discussion presented in this section is based primarily on the
information received during a telephone interview with a representative
from the Reusable Industrial Packaging Association (RIPA), conducted in
November, 2005.  Based on availability, data from other sources were
used to support or verify the information received from the RIPA.

Drums are used for transporting chemical products, and can be made out
of steel or plastic.  The main product in the drum industry is the
55-gallon drum.  There are roughly 40 million steel drums manufactured
every year and roughly the same amount that are reconditioned for reuse.

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  36 : Number of Drums
Reconditioned Annually

Container Type  	Number of Drums Reconditioned (in millions)

Steel Drums  	31.2

Plastic Drums  	8.3

IBCs  	0.5

Total	40.0

		      Note: IBC - intermediate bulk containers.

		      Source: EPA, Preliminary Data Summary for Industrial Container
and

		      Drum Cleaning Industry, June 2002.

Waste Management Options.  Two main waste management options for
handling used empty drums are reconditioning and scrapping.

Reconditioning.  The drum reconditioning industry is dominated by
commercial reconditioners who handle only “RCRA empty” drums.  To be
considered “RCRA empty,” a used drum needs to have less than one
inch of product remaining in it.  Drums meeting this standard are
outside of RCRA jurisdiction, i.e., they are not considered hazardous
waste by EPA.  Drums that are not “RCRA empty” are returned to the
generator.  One factor that determines whether it is cost effective to
recondition a drum is its condition.  Damaged drums that cannot be
reconditioned to a specific standard are sold to a scrap yard.

Scrap. Used steel drums may be scrapped for metal rather than
reconditioned.  Drums that are damaged are more likely to be scrapped.
Thinner drums are more likely to get damaged and thus less likely to be
reconditioned.  The trend in the drum manufacturing industry has been to
reduce the thickness of drums.  The characteristics of new drums thus
affect to some extent the rate at which drums are scrapped.  Even when
drums are scrapped, a reconditioning facility will wash it before
selling it to a scrap yard.

Recycling Market.  Drum reconditioning involves significant capital
costs, as there is very specialized equipment used to clean out drums.
Most drum reconditioning is done by commercial facilities whose primary
business is industrial container and drum cleaning (i.e., rather than
manufacturing of drums or products transported in drums).  More than
half of the container and drum cleaning facilities also engage in
transportation equipment cleaning.  EPA estimates that there are close
to 300 industrial container and drum cleaning facilities.

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  37 : Total Number of Industrial
Container and Drum Cleaning (ICDC) Facilities

Type of ICDC Facilities	Number of Facilities	Small Business

Non TEC Facilities	118	60%1

TEC Facilities	173	30%2

Total	291	42%3

1) The Reusable Industrial Packaging Association (RIPA) estimate; size
cutoff unknown.

2) EPA estimate with a threshold of less than 5 million in annual
revenue.

3) Weighted average.

Note: TEC - transportation equipment cleaning.

Source: EPA, Preliminary Data Summary for Industrial Container and Drum
Cleaning Industry, 	June 2002.

There are about 75 companies that are part of the RIPA.  These companies
have about 120 plants in total.  These firms primarily operate by
accepting drums, reconditioning them, and then selling reconditioned
drums on the market.  Tolling agreements are less common in this
industry.  There has been very little entry or exit in the drum
reconditioning market, and most of the companies in the industry have
been in operation for several generations.  The average reconditioning
plant processes about 1,500 to 3,000 drums per day.  There are some
economies of scale in the industry, as it would be hard to recover costs
by reconditioning a small amount of drums.  The 3,000 drums per day per
facility is likely to be the maximum capacity.  At any greater
production, the supply of reconditioned drums would likely exceed the
demand.  This limitation may indicate that most drum reconditioning
facilities operate locally.

Larger drum reconditioning facilities are likely to have the equipment
(i.e., at least one truck and a few trailers) to offer storage and
transportation services to their customers.  For instance, a drum
reconditioner may leave an empty trailer at a customer’s manufacturing
site to be used for storing empty drums.  Once the trailer is full, the
reconditioner will haul the empty drums to its reconditioning facility.

There is a potential liability cost associated with putting a drum on
the market that does not meet required safety specifications.  Each
reconditioned drum must be certified by the reconditioner and thus can
be tracked back to him should it fail the Department of Transportation
safety test.  The failure to meet the test carries a financial penalty.
Thus, the reconditioning facilities have an incentive to maintain high
quality standards.

Reconditioned drums are about 20 percent less expensive than new ones.
To some extent, the difference in price may be explained by the
perceived risk of contamination.  Specifically, some manufacturers may
not use reconditioned drums at all or may not use them for high value
products for the fear that there may be waste residue that could
contaminate their product.  Therefore, reconditioned drums are most
often used for lower value products.

A main factor that determines recycling and reconditioning rates is the
price of steel.  When the price of steel is high, less new steel drums
are demanded as consumers shift to less costly options (e.g., plastic
drums).  Less new drums produced means that there are fewer drums
available for reconditioning.  The price of steel also determines
whether drum reconditioners pay or get paid to accept drums.  When the
price of steel is high, used drums are more scarce and reconditioners
usually pay a small amount to accept them.  There is a tipping point in
the price of scrap steel at which it is more cost effective for a drum
reconditioner to pay for a used drum, wash it, and then scrap it rather
than recondition it and sell it on the market.

Conclusions

	The following conclusions can be drawn from this empirical analysis:

Based on the profile of the RIPA members, the drum reconditioning market
is likely dominated by commercial recyclers, with daily capacity of
1,500 to 3,000 drums.

Reconditioners are expected to deal only with “RCRA empty” drums and
are thus not regulated under RCRA. Lower regulatory constraints would
imply lower operating costs.

Based on the RIPA information, there has been very little entry or exit
in the drum reconditioning market.  The relatively constant number of
recyclers, all other things equal, would imply that the market is
stable.

Drum-reconditioning rate is affected by the price of steel.  There is a
tipping point in the price of scrap steel at which it is more cost
effective for a recycling facility to sell drums to a scrap yard than to
recondition them.

Reconditioned drums are, on average, 20 percent less expensive than new
ones and are mostly used for lower value goods.

A.3.	Summary

Exhibit A-38 summarizes recycling market characteristics for the five
hazardous wastes.

Exhibit A-  SEQ Exhibit \* ARABIC \s 1  38 : Characteristics of the
Markets for Recycled Materials

Variables	Implications	Used Lead-Acid Batteries	Brass Dust	Spent Pickle
Liquor	Spent Solvents	Empty Used Drums

Effect on Price

Are generator and consumer in the same industry?	If yes, it may be
easier for recyclers to forecast demand.	Yes	Yes	Yes	Not necessarily	Not
necessarily

Are consumers heterogeneous

(in terms of NAICS)?	If yes:

- Potentially lower volatility in total demand

- Potentially higher marketing costs.

	No	No	No	No	Yes

Are tolling agreements dominant?	If yes, recyclers are at least to some
extent protected from price fluctuations.	Yes	NA	Yes	No	No

Is there no clear substitute?	If yes, recyclers have more market power,
recycled materials have a higher price, and there is less price
volatility.

	No, virgin lead	No, zinc	No, virgin pickle liquor	No, virgin solvents
No, new steel drums or plastic drums (for some goods)

Is the substitute more expensive?	If yes, it may reduce volatility
introduced by substitutes, and the recycled product has a clear market
niche for lower-valued uses.	Yes	Yes	Varies	Varies	Yes

Effect on Costs

Are recycling facilities mainly commercial?	If yes, capital costs or
potential liability may be perceived to be too high by potential
industrial recyclers.	No	No	Yes	Yes	Yes

Is the market dominated by a few large recycling facilities?	If yes,
smaller facilities may need to be innovative to stay in the market or
gain market share (i.e., larger facilities may have advantage through
economies of scale).	The BRS data indicate that a single facility
dominates the market 	Yes	Likely	Yes	No

Does the material fall under RCRA jurisdiction?	If yes,

- recycling may be discouraged by the regulatory complexities involved

- there are liability implications.	Yes	Some brass dust may not be
regulated as a solid waste under RCRA under the exclusion for scrap
metal 	Yes	Yes	No, emptied drums are supposed to be “RCRA empty”

Note: NA – information not available.

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 Information for this section is taken primarily from the EPA RCRA
Orientation Manual, January 2003, EPA530-R-02-016

 It is also possible that the commercial recycler might need to pay to
obtain waste from a generator, instead of getting paid for it.  This
situation could be represented in Exhibit 2-2 by showing the MR (Pr+R)
line as below the price (Pr) line instead of above it.

 An implicit assumption in this model is that one unit of hazardous
waste (Qhw) will produce one unit of the recycled product (Qr). This is
a simplifying assumption since it is likely that one unit of Qhw would
produce less than one unit of Qr, after impurities in Qhw have been
removed.

 Data available in the EPA’s 2003 RCRA Hazardous Waste Biennial Report
on the quantity of hazardous materials recycled by type and quantity and
the number of recycling facilities indicate that annual average amount
of waste processed by an individual commercial recycler is 0.02 million
tons.  Compared to the total waste recycled by both commercial and
industrial recyclers totaling 4.5 million tons, the amount recycled by
individual recyclers is too small for them to influence the market.

 The firm’s average cost curve is initially downward sloping,
indicating that costs are decreasing with each additional unit produced.
 As more units are produced, the curve begins to slope upward,
indicating that the average costs are increasing for each unit being
produced.

 In the figures presented in this paper, the marginal revenue of the
firm (Pr+R for commercial recyclers or Pr for industrial recyclers)
intersects with the firm’s cost curves at the lowest point of ATC.
This represents the minimum value at which MR would need to be for the
firm to enter the market.  The firm will choose to enter the market and
produce recycled materials as long as MR intersects with MC at any point
equal to or above this point (where MC and ATC cross, or the minimum
point of ATC).

 Commodity brokers can be involved in transactions of hazardous waste.
Brokers may be involved only to the extent that they facilitate the
transaction, but do not handle hazardous waste themselves in any manner.
 In some cases, however, brokers do handle hazardous waste (for example,
store it until they find a buyer).  In those cases, if hazardous wastes
are stored longer than ten days, brokers do need to have a RCRA permits.

 It is important to note the simplifying assumptions in the situation
presented in this model.  The actual input choices of a firm would
likely be a mix of both virgin and recycled material, and not
exclusively one or the other.  For example, it is possible that recycled
materials may be lower quality for production, and that some virgin
materials would need to be used as production inputs alongside recycled
materials.  The firm interested in using recycled materials could
substitute them for some quantity of virgin materials, but there would
still be some virgin materials expected to be used in their production
process.

 Other factors that influence the price elasticity of demand are the
degree of necessity for consuming the good, the time period allowed for
the price to adjust, and consumption patterns (e.g., peak demand vs.
off-peak demand).

 The graph of the firm in Exhibit 2-9 could represent either a
commercial or industrial facility.  For the sake of simplifying the
graph, the marginal revenue for the firm is shown as equal to the price
of the recycled materials, as opposed to the price plus the acceptance
fee as it would be for a commercial firm.  This simplification does not
affect the relevant analytical points to be gained from the graph.

 “RCRA empty” drums are not regulated by EPA as hazardous waste.

 Conducted as part of EPA’s effort to revise the current “definition
of solid waste” under RCRA, the study’s goal was to identify and
characterize as many cases of environmental damage as possible that have
attributed to some type of hazardous material recycling activity and
have occurred after 1982.

 We use landfill disposal fees as a proxy for acceptance fees.

 The producer price index (PPI) measures the average change over time in
the selling prices received by domestic producers for their output.
Source: US Bureau of Labor Statistics.

 Habicht, H. Memorandum: EPA Definition of Pollution Prevention. US EPA,
May 28, 1992, available at   HYPERLINK
"http://www.epa.gov/ttn/nsr/gen/memo-u.html"
http://www.epa.gov/ttn/nsr/gen/memo-u.html .

 Based on a telephone conversation with Scott Slesinger, of ETC,
conducted in January 2006.

 BCI indicated that the cost of lead accounts for close to half of the
wholesale price of a battery.

 A boom (slump) is defined as a period of generally rising (falling)
prices.

 Although this is an important point, we should note that, based on the
BRS data, commercial recyclers recycle a very small amount of brass
dust.

 In the process of regeneration, the water is cooked off and the iron is
precipitated out.  Fresh acid is then added to it so that it can be
reused for pickling.

 Ferrante, J.G. and Sage, S.H. Spent Pickle Liquor in the Steel
Industry: Finding the Path to P2. Pollution Prevention Review, Spring
1999.

 The price per ton of virgin pickle liquor may not be directly
comparable to the price per ton of regenerated solution, since, due to
their different acidity levels, different quantities are needed to
pickle a ton of steel.

 Hoovers, available at
http://www.hoovers.com/safety-kleen-systems,-inc./--ID__11287--/free-co-
factsheet.xhtml.

 SRI Consulting estimated that there were 32 commercial recycling
companies at the end of 1997 (SRI Consulting, 1998).

 Michigan Department of Environmental Quality. 1998. “Considerations
in Selecting a Commercial (Off-site) Solvent Recycling Service.” Fact
Sheet.

 In addition to the commercial recyclers presents in Exhibit A-29 (NAICS
codes 562211 and 56292), the BRS data indicate that additional 1,660
tons of solvents (or two percent of the total amount recycled in 2003)
were recycled by commercial recyclers with the NAICS code 56221.

 Comparable data for recycled solvents were not publicly available from
the same source.

 Uses:  Trichloroethylene - hydrofluorocarbon intermediate (67%); metal
degreasing (30%);miscellaneous (3%). Methyl ethyl ketone - coatings
solvent (55%); adhesives (14%); chemical intermediates (7%); lube oil
de-waxing (6%); magnetic tapes (5%); printing inks (4%); miscellaneous
(9%). Perchloroethylene - chemical precursor (65%); dry cleaning (15%);
metal cleaning and vapor degreasing  (10%); miscellaneous (10%) (Source:
The Innovation Group).

 We defined volatility as the standard deviation of the annual percent
changes.

 As explained in Section 3.2.1, we use the landfill disposal fees as a
proxy for acceptance fees.  We hypothesize that the landfill disposal
fee for “drummed with treatment waste” in 2002, the earliest year
for which we have data, approximates the acceptance fee for a 55-gallon
of spent trichloroethylene in 2001.

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Recyclable Material

Recycling Process

Recycled Product

Waste (disposal)

Generator

Recycler

Pr+R = MR

Qr

Pr

ATC

MC

Price

Quantity of hazardous

 material recycled

ATC – Average total cost of producing recycled materials

MC – Marginal cost of producing recycled materials

R – Acceptance fee for hazardous waste

MR – Marginal revenue of the firm

Pr – Market price of recycled materials

Qr – Quantity of recycled materials produced by firm

Recyclable Material

Raw Material

Product

Waste (disposal)

Manufacturing Process

Recycling Process

Recycled Product

Recycler

Sell to other firms

ATC

MC

QE

Unit Cost

Quantity of hazardous waste recycled

ATC – Average total cost of recycling waste internally

MC – Marginal cost of recycling waste internally

CE – Per-unit cost of external waste management

QE – Quantity of hazardous waste recycled

CE

DM

Recyclable Material

Recycling Process

Product

Waste (disposal)

Manufacturing Process

Raw Material

Waste (disposal)

Generator

Recycler

ATCv

MCv

P=MR

Qv   Qr

Price

Quantity of primary product

ATCr

MCr

ATCr – Average total cost of production using recyclable materials

ATCv – Average total cost of production using virgin materials

MCr – Marginal cost of production using recyclable materials

MCv – Marginal cost of production using virgin materials

MR – Marginal revenue of the firm

P – Market price of primary product

Qr – Quantity of product when recycled materials are used as inputs

Qv – Quantity of product when virgin materials are used as inputs

ATC1

MC1

P=MR

Qr

MC2

ATC2

Price

Quantity of hazardous material recycled

ATC1 – Firm’s perceived average total cost of producing recycled
materials

ATC2 – True average total cost of producing recycled materials

MC1 – Firm’s perceived marginal cost of producing recycled materials

MC2 – True marginal cost of producing recycled materials

Qr – Quantity of recycled material produced with firm’s perceived
costs

PE

P’

P

       Q’         Q

                          Q

S’

S

ATC’

ATC

MC

MC’

Firm

Market

Price

Quantity of hazardous material recycled

ATC – Firm’s average total cost of producing recycled materials

ATC’ – Firm’s average total cost of producing recycled materials
after the increase in

             the production costs

MC – Firm’s marginal cost of producing recycled materials

MC’ – Firm’s marginal cost of producing recycled materials after
the increase in

           the production costs

DP – Perceived market demand curve for recycled materials (relatively
inelastic)

DT – True market demand curve for recycled materials (relatively
elastic)

S – Market supply curve

S’ – Market supply curve after the increase in the production costs

P – Market price of recycled material

P’ – Market price of recycled material after the increase in the
production costs

PE– Expected market price of recycled material after the increase in
the production costs

Q – Quantity of recycled material produced

Q’ – Quantity of recycled material produced after the increase in
the production costs

DT

DP

PS

PP

       QS   Qp

               Qp

SS

SP

ATCS

ATCP

MCP

MCS

Firm

Market

Price

Quantity of hazardous material recycled

ATCP – Firm’s perceived average total cost of producing recycled
materials

ATCS – True (social) average total cost of producing recycled
materials

MCP – Firm’s perceived marginal cost of producing recycled materials

MCS – True (social) marginal cost of producing recycled materials

DM – Market demand curve for recycled materials

SP – Market supply curve as determined by the firm’s private costs
only

SS – Market supply curve as determined by the true (social) costs

PP – Price of recycled material as determined by private supply curve

PS – Price of recycled material as determined by true (social) supply
curve

QP – Quantity of recycled material produced with private supply curve

QS – Quantity of recycled material produced with true (social) supply
curve