[Federal Register Volume 76, Number 141 (Friday, July 22, 2011)]
[Proposed Rules]
[Pages 44094-44154]
[FR Doc No: 2011-17031]

Vol. 76

Friday,

No. 141

July 22, 2011

Part II

Environmental Protection Agency

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40 CFR Part 260, 261 and 266

Definition of Solid Waste; Proposed Rule

Federal Register / Vol. 76 , No. 141 / Friday, July 22, 2011 /
Proposed Rules

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 260, 261 and 266

[EPA-HQ-RCRA-2010-0742; FRL-9431-4]
RIN 2050-AG62

Definition of Solid Waste

AGENCY: Environmental Protection Agency.

ACTION: Proposed rule.

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SUMMARY: The Environmental Protection Agency (EPA or the Agency) is
proposing to revise certain exclusions from the definition of solid
waste for hazardous secondary materials intended for reclamation that
would otherwise be regulated under Subtitle C of the Resource
Conservation and Recovery Act (RCRA). The purpose of these proposed
revisions is to ensure that the recycling regulations, as implemented,
encourage reclamation in a way that does not result in increased risk
to human health and the environment from discarded hazardous secondary
material.

DATES: Comments must be received on or before September 20, 2011.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
RCRA-2010-0742 by one of the following methods:
     http://www.regulations.gov: Follow the on-line
instructions for submitting comments.
     E-mail: Comments may be sent by electronic mail (e-mail)
to<EMAIL_ADDRESS>Attention Docket ID No. EPA-HQ-RCRA-2010-0742.
     Fax: Fax comments to:<PHONE_NUMBER>, Attention Docket ID
No. EPA-HQ-RCRA-2010-0742.
     Mail: Send comments to: OSWER Docket, EPA Docket Center,
Mail Code 28221T, Environmental Protection Agency, 1200 Pennsylvania
Avenue, NW., Washington DC 20460, Attention Docket ID No. EPA-HQ-RCRA-
2010-0742. Please include two copies of your comments. In addition,
please mail a copy of your comments on the information collection
provisions to the Office of Information and Regulatory Affairs, Office
of Management and Budget (OMB), Attn: Desk Officer for EPA, 725 17th
St., Washington DC 20503.
     Hand delivery: Deliver two copies of your comments to:
Environmental Protection Agency, EPA Docket Center, Room 3334, 1301
Constitution Avenue, NW., Washington DC, Attention Docket ID No. EPA-
HQ-RCRA-2010-0742. Such deliveries are only accepted during the
docket's normal hours of operation and special arrangements should be
made for deliveries of boxed information.
    Instructions: Direct your comments to Docket ID Number EPA-HQ-RCRA-
2010-0742. EPA's policy is that all comments received will be included
in the public docket without change and may be made available online at
http://www.regulations.gov, including any personal information
provided, unless the comment includes information claimed to be
Confidential Business Information (CBI) or other information whose
disclosure is restricted by statute. Do not submit information that you
consider to be CBI or otherwise protected through http://www.regulations.gov or e-mail. The http://www.regulations.gov Web site
is an ``anonymous access'' system, which means EPA will not know your
identity or contact information unless you provide it in the body of
your comment. If you send an e-mail comment directly to EPA without
going through http://www.regulations.gov, your e-mail address will be
automatically captured and included as part of the comment that is
placed in the public docket and made available on the Internet. If you
submit an electronic comment, EPA recommends that you include your name
and other contact information in the body of your comment and with any
disk or CD-ROM you submit. If EPA cannot read your comment due to
technical difficulties and cannot contact you for clarification, EPA
may not be able to consider your comment. Electronic files should avoid
the use of special characters, any form of encryption, and be free of
any defects or viruses.
    Docket: All documents in the docket are listed in the http://www.regulations.gov index. Although listed in the index, some
information is not publicly available, such as CBI or other information
whose disclosure is restricted by statute. Certain other material, such
as copyrighted material, will be publicly available only in hard copy.
Publicly available docket materials are available either electronically
at http://www.regulations.gov or in hard copy at the OSWER Docket, EPA/
DC, EPA West, Room 3334, 1301 Constitution Ave., NW., Washington, DC.
The Public Reading Room is open from 8:30 a.m. to 4:30 p.m. Monday
through Friday, excluding legal holidays. The telephone number for the
Public Reading Room and the OSWER Docket is<PHONE_NUMBER>.

FOR FURTHER INFORMATION CONTACT: For more detailed information on
specific aspects of this rulemaking, contact Marilyn Goode, Office of
Resource Conservation and Recovery, Materials Recovery and Waste
Management Division, MC 5304P, Environmental Protection Agency, 1200
Pennsylvania Ave., NW., Washington, DC 20460,<PHONE_NUMBER>,
<EMAIL_ADDRESS>or Tracy Atagi, Office of Resource Conservation
and Recovery, Materials Recovery and Waste Management Division, MC
5304P, Environmental Protection Agency, 1200 Pennsylvania Ave., NW.,
Washington, DC 20460, at<PHONE_NUMBER> (atagi.tracy@epa.gov). For
information on future public meetings on this proposal, contact Amanda
Geldard, Office of Resource Conservation and Recovery, Materials
Recovery and Waste Management Division, MC 5304P, Environmental
Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460,
at<PHONE_NUMBER><EMAIL_ADDRESS>Information regarding these
public meetings will also be posted at EPA's Web site at: http://www.epa.gov/epawaste/hazard/dsw/rulemaking.htm.

SUPPLEMENTARY INFORMATION:

A. Does this action apply to me?

    Entities potentially affected by today's action include between
6,500 to 9,100 industrial facilities (depending on the regulatory
option(s) selected) in upwards of 622 industries that generate or
recycle hazardous secondary materials that are (1) Currently regulated
as RCRA Subtitle C hazardous wastes, (2) hazardous secondary materials
currently excluded under the 2008 DSW final rule (three exclusions), or
(3) hazardous secondary materials currently excluded from RCRA Subtitle
C under other recycling exclusions (32 exclusions). Most of the 622
industries have relatively few counts of potentially affected entities
and are not listed here. There are 27 industries with the largest
counts of potentially affected entities which EPA evaluated in detail
in its ``Regulatory Impact Analysis'' (RIA) for today's action. These
industries in ascending code order by 6-digit NAICS codes are: (1)
323110 Commercial Lithographic Printing; (2) 324110 Petroleum
Refineries; (3) 325188 All Other Basic Inorganic Chemical
Manufacturing; (4) 325199 All Other Basic Organic Chemical
Manufacturing; (5) 325211 Plastics Material and Resin Manufacturing;
(6) 325412 Pharmaceutical Preparation Manufacturing; (7) 325510 Paint
and Coating Manufacturing; (8) 325998 All Other Miscellaneous Chemical
Product and Preparation Manufacturing; (9)

326199 All Other Plastics Product Manufacturing; (10) 331111 Iron and
Steel Mills; (11) 331492 Secondary Smelting, Refining & Alloying of
Nonferrous Metal (except Copper, Aluminum); (12) 332312 Fabricated
Structural Metal Manufacturing; (13) 332812 Metal Coating, Engraving
(except Jewelry and Silverware) and Allied Services to Manufacturers;
(14) 332813 Electroplating, Plating, Polishing, Anodizing and Coloring;
(15) 332999 All Other Miscellaneous Fabricated Metal Product
Manufacturing; (16) 333415 Air Conditioning, Warm Air Heating
Equipment, and Commercial and Industrial Refrigeration Equipment
Manufacturing, (17) 334412 Bare Printed Circuit Board Manufacturing;
(18) 334413 Semiconductor and Related Device Manufacturing; (19) 334418
Printed Circuit Assembly, (20) 336399 All Other Motor Vehicle Parts
Manufacturing; (21) 336412 Bare Printed Circuit Board Manufacturing;
(22) 336413 Other Aircraft Part and Auxiliary Equipment Manufacturing;
(23) 541710 Research & Development in the Physical, Engineering, and
Life Sciences; (24) 562211 Hazardous Waste Treatment and Disposal; (25)
611310 Colleges, Universities and Professional Schools; (26) 622110
General Medical and Surgical Hospitals; and (27) 928110 National
Security.
    In aggregate, the RIA estimates the future average annualized costs
to industry to comply with the seven proposed revisions at between $7.2
million to $13.1 million per year under a lower-bound state adoption
scenario, which results in 13% of recycling facilities implementing the
revisions, and between $7.4 million to $47.5 million per year under an
upper-bound state adoption scenario, which results in 74% of recycling
facilities implementing the revisions. This range reflects uncertainty
about the ultimate number of states which may voluntarily adopt the
proposed revisions. More information on the potentially affected
entities, industries, and industrial materials, as well as the economic
impacts of this proposed rule, is presented in Section XVII.A of this
preamble and in the Regulatory Impact Analysis available in the docket
for this final rule.

B. What To Consider When Preparing Comments for EPA

    1. Submitting CBI. Do not submit this information to EPA through
http://www.regulations.gov or e-mail. Clearly mark all information that
you claim to be CBI. For CBI information in a disk or CD-ROM that you
mail to EPA, mark the outside of the disk or CD-ROM as CBI and then
identify electronically within the disk or CD-ROM the specific
information that is claimed as CBI. In addition to one complete version
of the comment that includes information claimed as CBI, a copy of the
comment that does not contain the information claimed as CBI must be
submitted for inclusion in the public docket. Information so marked
will not be disclosed, except in accordance with procedures set forth
in 40 CFR part 2.
    2. Tips for Preparing Your Comments. When submitting comments,
remember to:
     Identify the rulemaking by docket number and other
identifying information (subject heading, Federal Register date and
page number).
     Follow directions. The Agency may ask for commenters to
respond to specific questions or organize comments by referencing a
Code of Federal Regulations (CFR) part or section number.
     Explain why you agree or disagree; suggest alternatives
and substitute language for your requested changes.
     Describe any assumptions and provide any technical
information and/or data that you used.
     If estimating burden or costs, explain methods used to
arrive at the estimate in sufficient detail to allow for it to be
reproduced.
     Provide specific examples to illustrate any concerns and
suggest alternatives.
     Make sure to submit comments by the comment period
deadline identified above.

Preamble Outline

I. Statutory Authority
II. List of abbreviations and acronyms
III. What is the intent of this proposal?
IV. What is the scope of this proposal?
V. History of the Definition of Solid Waste
VI. Definition of Solid Waste Environmental Justice Analysis
VII. Exclusion for Hazardous Secondary Materials That Are
Transferred for the Purpose of Legitimate Reclamation
VIII. Alternative Subtitle C Regulation for Hazardous Recyclable
Materials
IX. Revisions to the Exclusion for Hazardous Secondary Materials
That Are Legitimately Reclaimed Under the Control of the Generator
X. Revisions to the Definition of Legitimacy
XI. Revisions to Solid Waste Variances and Non-Waste Determinations
XII. Request for Comment on Re-Manufacturing Exclusion
XIII. Request for Comment on Revisions to Other Recycling Exclusions
and Exemptions
XIV. Effect of This Proposal on Other Programs
XV. Implementation Issues With 2008 DSW Final Rule
XVI. State Authorization
XVII. Administrative Requirements for This Rulemaking

I. Statutory Authority

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

II. List of Abbreviations and Acronyms

    CERCLA--Comprehensive Environmental Response, Compensation, and
Liability Act.
    CFR--Code of Federal Regulations.
    DOT--Department of Transportation.
    DSW--Definition of Solid Waste.
    EPA--Environmental Protection Agency.
    HSWA--Hazardous and Solid Waste Amendments of 1984.
    LDR--Land Disposal Restrictions.
    NAICS--North American Industry Classification System.
    NPL--National Priority List.
    RCRA--Resource Conservation and Recovery Act of 1976.
    RIA--Regulatory Impact Analysis.

III. What is the intent of this proposal?

    Today's proposal would revise and clarify the RCRA definition of
solid waste (DSW) for certain types of hazardous secondary materials
that are currently conditionally excluded from the definition of solid
waste. These exclusions were promulgated in October 2008 (73 FR 64688,
October 30, 2008) and were intended to encourage the recovery and reuse
of valuable resources as an alternative to land disposal or
incineration, while at the same time maintaining protection of human
health and the environment.
    In response to concerns raised by stakeholders about potential
increases in risks to human health and the environment from hazardous
secondary materials, EPA is proposing to revise the 2008 DSW final rule
in order to ensure that the rule, as implemented, encourages
reclamation in a way that protects human health and the environment
from the mismanagement of hazardous secondary materials.

IV. What is the scope of this proposal?

    In today's notice, EPA is proposing to revise the definition of
solid waste regulations that were promulgated in October 2008 and that
deal with the regulatory status of certain types of

hazardous secondary materials sent for reclamation. The 2008 DSW final
rule does not apply to recycling of ``inherently waste-like'' materials
(40 CFR 261.2(d)); recycling of hazardous secondary materials that are
``used in a manner constituting disposal,'' or ``used to produce
products that are applied to or placed on the land''(40 CFR
261.2(c)(1)); or for ``burning of hazardous secondary materials for
energy recovery'' or ``used to produce a fuel or otherwise contained in
fuels'' (40 CFR 261.2(c)(2)).
    The regulatory changes being proposed today are summarized below.
The intent of this summary is to give a brief overview of the proposed
changes. More detailed discussions, including the Agency's rationale
for the changes, are discussed in later sections. In addition, to aid
commenters in their review, EPA has also included in the docket for
today's proposal an informational redline/strikeout version of the
proposed revised regulations as compared to the current Code of Federal
Regulations.

A. Exclusion for Hazardous Secondary Materials That Are Transferred for
the Purpose of Reclamation

    EPA is proposing to replace the exclusion at 40 CFR 261.4(a)(24)
and (25) for hazardous secondary materials that are transferred from
the generator to other persons for the purpose of reclamation with an
alternative Subtitle C regulation for hazardous recyclable
materials.\1\ (See Section VIII for a detailed discussion of the
alternative regulatory approach.) EPA's new analyses of potential
hazards posed by the 2008 DSW final rule indicate that, when
implemented, the transfer-based exclusion may pose significant risk to
human health and the environment from hazardous secondary material that
may become discarded. While the transfer of materials is inherent in
ordinary commerce and does not automatically indicate discard has
occurred, in the case of hazardous secondary materials transferred for
reclamation, EPA has determined that only a specific set of hazardous
secondary materials and reclamation practices clearly do not involve
discard. Based on new EPA analyses, EPA believes that in most cases,
hazardous secondary materials transferred to another party for
reclamation are discarded and are best regulated under RCRA Subtitle C.
Further discussion of this proposed withdrawal can be found in Section
VII of this preamble.
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    \1\ A hazardous secondary material is a secondary material
(e.g., spent material, by-product, or sludge) that, when discarded,
would be identified as hazardous waste under 40 CFR part 261. A
hazardous recyclable material is a hazardous wastes that is
recycled. Unlike hazardous secondary materials, hazardous recyclable
materials have clearly been discarded and therefore are always solid
wastes.
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B. Alternative Subtitle C Regulation for Hazardous Recyclable Materials

    EPA is proposing to replace the transfer-based exclusion with an
alternative Subtitle C regulation in 40 CFR 266.30 for hazardous
recyclable materials, with the intention of promoting the safe and
sustainable reclamation of these materials. Under these alternative
requirements, the hazardous recyclable materials must be managed
according to the current RCRA Subtitle C requirements, including
manifesting and hazardous waste permits for storage, except that
generators may accumulate hazardous recyclable materials for up to a
year without a RCRA permit if the generator makes advance arrangements
for legitimate reclamation and documents those arrangements in a
reclamation plan. EPA also requests comment on setting an upper limit
on the amount of hazardous recyclable material accumulated at the
generator at any one time. Further discussion of these proposed
alternative standards can be found in Section VIII of this preamble.

C. Revisions to the Exclusion for Hazardous Secondary Materials
Reclaimed Under the Control of the Generator

    EPA is proposing to retain the exclusion for hazardous secondary
materials reclaimed under the control of the generator with certain
revisions, including (1) adding a regulatory definition of
``contained'' to 40 CFR 260.10; (2) making notification a condition of
the exclusion; (3) adding a recordkeeping requirement for speculative
accumulation in 40 CFR 261.1(c)(8); and (4) adding a recordkeeping
requirement for reclamation under toll manufacturing agreements in 40
CFR 261.4(a)(23)(i)(C). EPA is also requesting comment on whether to
withdraw the toll manufacturing provision of the exclusion. Further
discussion of these proposed revisions can be found in Section IX of
this preamble.

D. Legitimacy

    EPA is also proposing revisions to the definition of legitimacy in
40 CFR 260.43, including (1) applying the codified definition to all
recycling activities regulated under 40 CFR 260-266; (2) making all
legitimacy factors mandatory, with a petition process for instances
where a factor is not met, but the recycling is still legitimate; and
(3) requiring documentation of legitimacy. Further discussion of these
proposed revisions can be found in Section X of this preamble.

E. Revisions to Solid Waste Variances and Non-Waste Determinations

    EPA is also proposing revisions to the solid waste variances and
non-waste determinations found in 40 CFR 260.30-260.34 in order to
foster greater consistency on the part of implementing agencies and
help ensure the protectiveness of the implementation of the solid waste
variances and non-waste determinations. Proposed revisions include (1)
requiring facilities to re-apply for a variance in the event of a
change in circumstances that affects how a material meets the criteria
upon which a solid waste variance has been based; (2) requiring
facilities to re-notify every two years with updated information; (3)
revising the criteria for the partial reclamation variance to more
clearly explain when the variance applies and to require, among other
things, that the criteria for this variance must be reviewed and
evaluated collectively; (4) revising the criteria for the non-waste
determination in 40 CFR 260.34 and requiring that petitioners
demonstrate why the existing solid waste exclusions would not apply to
their hazardous secondary materials; and (5) designating the Regional
Administrator as the EPA recipient of petitions for variances and non-
waste determinations. Further discussion of these proposed revisions
can be found in Section XI of this preamble.

F. Request for Comment on Re-Manufacturing Exclusion

    EPA is also requesting comment on an exclusion from the definition
of solid waste for specific types of higher-value hazardous secondary
materials sent for re-manufacturing into similar products and on a
petition process for higher-value hazardous secondary materials that
are not included within this exclusion, but that are destined to be re-
manufactured into similar products. This exclusion would help promote
sustainable materials management by extending the productive use of
these materials and thus minimizing the amount of raw materials used
overall and all the associated environmental impacts of production.
Further discussion of this possible exclusion can be found in Section
XII of this preamble.

G. Request for Comment on Revisions to Other Recycling Exclusions and
Exemptions

    EPA is also requesting comment on revisions that would affect other
definition of solid waste exclusions and hazardous waste exemptions for
recyclable materials. These possible revisions include (1)
recordkeeping for speculative accumulation in all cases; (2) requiring
facilities to re-notify every two years with updated information on
their operating status under the various exclusions and exemptions; and
(3) containment standards for excluded hazardous secondary material.
Further discussion of these possible revisions can be found in Section
XIII of this preamble.

V. History of the Definition of Solid Waste

A. Background

    RCRA gives EPA the authority to regulate hazardous wastes (see,
e.g., RCRA sections 3001-3004). The original statutory designation of
the subtitle for the hazardous waste program was Subtitle C and the
national hazardous waste program is referred to as the RCRA Subtitle C
program. Subtitle C is codified at 42 USC 6921 through 6939f.
``Subtitle C'' regulations are found at 40 CFR parts 260 through 279.
``Hazardous wastes'' are those that, because of their quantity,
concentration, or physical, chemical, or infectious characteristics,
may (1) cause, or significantly contribute to an increase in mortality
or an increase in serious irreversible or incapacitating reversible
illness, or (2) pose a substantial present or potential hazard to human
health or the environment when improperly treated, stored, transported,
or disposed of, or otherwise managed (see RCRA section 1004(5)).
Hazardous wastes are a subset of solid wastes.
    Materials that are not solid wastes are not subject to regulation
as hazardous wastes under RCRA Subtitle C. Thus, the definition of
``solid waste'' plays a key role in defining the scope of EPA's
authorities under Subtitle C of RCRA. The statute defines ``solid
waste'' as ``* * * any garbage, refuse, sludge from a waste treatment
plant, water supply treatment plant, or air pollution control facility
and other discarded material * * * resulting from industrial,
commercial, mining, and agricultural operations, and from community
activities * * *'' (RCRA Section 1004 (27) (emphasis added)).
    Since 1980, EPA has interpreted ``solid waste'' under its Subtitle
C regulations to encompass both materials that are destined for final,
permanent treatment and placement in disposal units, as well as certain
materials that are destined for recycling (see 45 FR 33090-95, May 19,
1980; 50 FR 604-656, January 4, 1985 (see in particular pages 616-
618)). EPA has offered three arguments in support of this:
     The statute and the legislative history suggest that
Congress expected EPA to regulate certain materials that are destined
for recycling as solid and hazardous wastes (see 45 FR 33091, citing
numerous sections of the statute and U.S. Brewers' Association v. EPA,
600 F. 2d 974 (DC Cir. 1979); 48 FR 14502-04, April 3, 1983; and 50 FR
616-618, January 4, 1985).
     Hazardous secondary materials stored or transported prior
to recycling have the potential to present the same types of threats to
human health and the environment as hazardous wastes stored or
transported prior to disposal. In fact, EPA has found that recycling
operations have accounted for a number of significant damage incidents.
For example, hazardous secondary materials destined for recycling were
involved in one-third of the first 60 filings under RCRA's imminent and
substantial endangerment authority and in 20 of the initial 160 sites
listed under the Comprehensive Environmental Response, Compensation and
Liability Act (CERCLA) (48 FR 14474, April 4, 1983). Congress also
cited some damage cases which involve recycling (H.R. Rep. 94-1491,
94th Cong., 2d Sess., at 17, 18, 22). More recent data (i.e.,
information on damage incidents occurring after 1982) included in the
rulemaking docket for today's proposed rule corroborate the fact that
recycling operations can and have resulted in significant damage
incidents.
     Excluding all hazardous secondary materials destined for
recycling would allow materials to move in and out of the hazardous
waste management system depending on what any person handling the
hazardous secondary materials intended to do with them, which is
inconsistent with the RCRA mandate to track hazardous wastes and
control them from ``cradle to grave.''
    Hence, RCRA confers on EPA the authority to regulate discarded
hazardous secondary materials even if they are destined for recycling
and may be beneficially reused. The Agency has therefore developed in
part 261 of 40 CFR a definition of ``solid waste'' for Subtitle C
regulatory purposes. (Note: This definition is narrower than the
definition of ``solid waste'' for RCRA endangerment and information-
gathering authorities. (See 40 CFR 261.1(b). Also Connecticut Coastal
Fishermen's Association v. Remington Arms Co., 989 F.2d 1305, 1315 (2d
Cir.1993) holds that EPA's use of a narrower and more specific
definition of solid waste for Subtitle C purposes is a reasonable
interpretation of the statute. See also Military Toxics Project v. EPA,
146 F.3d 948 (DC Cir. 1998).)
    EPA has consistently asserted that hazardous secondary materials
are not excluded from regulation as solid wastes merely because of a
claim that they will be recycled. EPA has consistently considered
hazardous secondary materials intended for ``sham recycling'' (i.e.,
disposal performed in the guise of recycling) to be discarded and,
hence, to be solid wastes for Subtitle C purposes (see 45 FR 33093, May
19, 1980; 50 FR 638-639, January 4, 1985). The U.S. Court of Appeals
for the DC Circuit has agreed that materials undergoing sham recycling
are discarded and, consequently, are solid wastes under RCRA (see
American Petroleum Institute v. EPA, 216 F.3d 50, 58-59 (DC Cir.
2000)).

B. A Series of DC Circuit Court Decisions on the Definition of Solid
Waste

    Because the interpretation of what constitutes a solid waste is the
foundation of the hazardous waste regulatory program, there has been
quite a bit of litigation over the meaning of ``solid waste'' under
Subtitle C of RCRA. Specifically, industries representing mining and
oil refining interests challenged EPA's January 1985 regulatory
definition of solid waste. In 1987, the DC Circuit held that EPA
exceeded its authority ``in seeking to bring materials that are not
discarded or otherwise disposed of within the compass of `waste' ''
(American Mining Congress v. EPA (``AMC I''), 824 F.2d 1177, 1178 (DC
Cir. 1987)). The Court held that certain of the materials EPA was
seeking to regulate were not ``discarded materials'' under RCRA section
1004(27). The Court also held that Congress used the term ``discarded''
in its ordinary sense, to mean ``disposed of'' or ``abandoned'' (824
F.2d at 1188-89). The Court further held that the term ``discarded
materials'' could not include materials `` * * * destined for
beneficial reuse or recycling in a continuous process by the generating
industry itself (because they) are not yet part of the waste disposal
problem'' (824 F.2d at 1190). The Court held that Congress had directly
spoken to this issue, so that EPA's definition was not entitled to
deference under Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984) (824
F.2d at 1183, 1189-90, 1193).
    At the same time, the Court held that recycled materials could be
regulated as

discarded materials. The Court mentioned at least two examples of
recycled materials that may be regulated as wastes, noting that used
oil can be considered a solid waste (824 F.3d at 1187 (fn 14)). Also,
the Court suggested that materials disposed of and recycled as part of
a waste management program may be regulated as solid wastes (824 F. 2d
at 1179).
    Subsequent decisions by the DC Circuit also indicate that some
materials destined for recycling may be considered ``discarded.'' In
particular, the Court held that emission control dust from steelmaking
operations listed as hazardous waste ``K061'' is a solid waste, even
when sent to a metals reclamation facility, at least where that is the
treatment method required under EPA's land disposal restrictions
program (American Petroleum Institute v. EPA (``API I''), 906 F.2d 729
(DC Cir. 1990)). In addition, the Court held that it is reasonable for
EPA to consider as discarded (and solid wastes) listed wastes managed
in units that are in part wastewater treatment units, especially where
it is not clear that the industry actually reuses the materials (AMC
II, 907 F. 2d 1179 (DC Cir. 1990)).
    It also is worth noting that two other Circuits also have held that
EPA may regulate at least some materials destined for reclamation
rather than final discard. The U.S. Court of Appeals for the Eleventh
Circuit found that ``[i]t is unnecessary to read into the term
`discarded' a congressional intent that the waste in question must
finally and forever be discarded'' (U.S. v. ILCO, 996 F.2d 1126, 1132
(Eleventh Cir. 1993) (finding that used lead batteries sent to a
reclaimer have been ``discarded once'' by the entity that sent the
battery to the reclaimer)). In addition, the Fourth Circuit found that
slag held on the ground untouched for six months before sale for use as
road bed could be a solid waste (Owen Electric Steel Co. v. EPA, 37
F.3d 146, 150 (4th Cir. 1994)).
    In 1998, EPA promulgated a rule in which EPA regulated under
Subtitle C hazardous secondary materials recycled by reclamation within
the mineral processing industry, the ``LDR Phase IV rule'' (63 FR
28556, May 26, 1998). In that rule, EPA promulgated a conditional
exclusion for all types of mineral processing hazardous secondary
materials destined for reclamation. As a condition of the exclusion,
EPA prohibited the land-based storage of these mineral processing
secondary materials prior to reclamation because it considered
hazardous secondary materials from the mineral processing industry that
were stored on the land to be solid wastes (63 FR 28581, May 26, 1998).
The conditional exclusion decreased regulation over spent materials
stored prior to reclamation, but increased regulation over by-products
and sludges that exhibit a hazardous characteristic and that are stored
prior to reclamation. EPA noted that the statute does not authorize it
to regulate ``materials that are destined for immediate reuse in
another phase of the industry's ongoing production process.'' EPA,
however, took the position that hazardous secondary materials that are
removed from a production process for storage are not ``immediately
reused,'' and therefore are ``discarded'' (63 FR 28580, May 26, 1998).
    The mining industry challenged the rule, and the DC Circuit vacated
the provisions that expanded EPA regulation over characteristic by-
products and sludges destined for reclamation (Association of Battery
Recyclers v. EPA (``ABR''), 208 F.3d 1047 (DC Cir. 2000)). The Court
held that it had already resolved the issue presented in ABR in its
opinion in AMC I, where it found that ``* * * Congress unambiguously
expressed its intent that `solid waste' (and therefore EPA's regulatory
authority) be limited to materials that are `discarded' by virtue of
being disposed of, abandoned, or thrown away'' (208 F.2d at 1051). It
repeated that materials reused within an ongoing industrial process are
neither disposed of nor abandoned (208 F.3d at 1051-52). It explained
that the intervening API I and AMC II decisions had not narrowed the
holding in AMC I (208 F.3d at 1054-1056).
    Notably, the Court did not hold that storage before reclamation
automatically makes materials ``discarded.'' Rather, it held that ``* *
* at least some of the secondary material EPA seeks to regulate as
solid waste (in the mineral processing rule) is destined for reuse as
part of a continuous industrial process and thus is not abandoned or
thrown away'' (208 F.3d at 1056).
    In its most recent opinion dealing with the definition of solid
waste, Safe Food and Fertilizer v. EPA (``Safe Food''), 350 F.3d 1263
(DC Cir. 2003), the DC Circuit upheld an EPA rule that excludes from
the definition of solid waste hazardous secondary materials used to
make zinc fertilizers, and the fertilizers themselves, as long as the
recycled materials meet certain handling, storage, and reporting
conditions and the resulting fertilizers have concentration levels for
lead, arsenic, mercury, cadmium, chromium, and dioxins that fall below
specified thresholds (Final Rule, ``Zinc Fertilizers Made From Recycled
Hazardous Secondary Materials'' (``Fertilizer Rule''), 67 FR 48393,
July 24, 2002). EPA determined that if these conditions are met, the
hazardous secondary materials used to make the fertilizer have not been
discarded. The conditions also apply to a number of recycled materials
not produced in the fertilizer production industry, including certain
zinc-bearing hazardous secondary materials, such as brass foundry
dusts.
    EPA's reasoning was that market participants, consistent with the
EPA-required conditions in the rule, would treat the exempted materials
more like valuable products than like negatively-valued wastes and,
thus, would manage them in ways inconsistent with discard. In addition,
the fertilizers derived from these recycled feedstocks are chemically
indistinguishable from analogous commercial products made from raw
materials (350 F.3d at 1269). The Court upheld the rule based on EPA's
explanation that market participants manage materials in ways
inconsistent with discard, and the fact that the levels of contaminants
in the recycled fertilizers were ``identical'' to the fertilizers made
with virgin raw materials (also called ``the identity principle''). The
Court held that this interpretation of ``discard'' was reasonable and
consistent with the statutory purpose. The Court noted that the
identity principle was defensible because the differences in health and
environmental risks between the two types of fertilizers are so slight
as to be substantively meaningless.
    The Court also stated that it ``need not consider whether a
material could be classified as a non-discard exclusively on the basis
of the market-participation theory'' (350 F.3d at 1269). The Court only
determined that the combination of market participants' treatment of
the materials, EPA-required management standards, and the ``identity
principle'' constitutes a reasonable set of tools to establish that the
recycled hazardous secondary materials and fertilizers are not
discarded.

C. October 2003 Proposal To Revise the Definition of Solid Waste

    Prompted by concerns articulated in various Court opinions decided
up to that point, in October 2003, EPA proposed a rule which defined
those circumstances under which hazardous secondary materials would be
excluded from RCRA's hazardous waste regulations because they are
generated and reclaimed in a continuous process within the same
industry. In addition, the Agency also clarified in a regulatory
context the concept of ``legitimate recycling,'' which has been a key
component of RCRA's regulatory

program for hazardous material recycling, but which up to that point,
had been implemented without specific regulatory criteria (68 FR 61558,
October 28, 2003).
    In response to the October 2003 DSW proposal, a number of
commenters criticized the Agency for not having conducted a study of
the potential impacts of the proposed regulatory changes. These
commenters expressed the general concern that deregulating hazardous
secondary materials that are reclaimed in the manner proposed could
result in the mismanagement of these materials, and could create new
cases of environmental damage that would require remedial action under
Federal or state authorities. Some of the commenters further cited a
number of examples of environmental damage that were attributed to
hazardous secondary material recycling, including sites listed on the
Superfund National Priorities List (NPL).
    Other commenters to the 2003 DSW proposal expressed the view that
the great majority of these cases of recycling-related environmental
problems occurred before RCRA, CERCLA, or other environmental programs
were established in the early 1980s. These commenters argued that these
environmental programs--most notably, RCRA's hazardous waste
regulations and the liability provisions of CERCLA--have created strong
incentives for proper management of recyclable hazardous secondary
materials and recycling residuals. Several commenters further noted
that, because of these developments, industrial recycling practices
have changed substantially since the early 1980s and present day
generators and recyclers are much better environmental stewards than in
the pre-RCRA/-CERCLA era. Thus, they argued that cases of
``historical'' recycling-related environmental damage are not
particularly relevant when modifying the current RCRA hazardous waste
regulations for hazardous secondary materials recycling.

D. Recycling Studies

    In light of these comments on the 2003 DSW proposal, and in
deliberating on how to proceed with the rulemaking effort, the Agency
decided that additional information on hazardous secondary material
recycling would benefit its regulatory decision-making, and would
provide stakeholders with a clearer picture of the hazardous secondary
material recycling industry in this country. Accordingly, the Agency
examined three issues that we believed were of particular importance to
revising the definition of solid waste:
     How do responsible generators and recyclers of hazardous
secondary materials ensure that recycling is done in an environmentally
safe manner?
     To what extent have hazardous secondary material recycling
practices resulted in environmental problems since enactment of major
waste management statutes, and why?
     Are there certain economic forces or incentives specific
to hazardous secondary material recycling that can explain why
environmental problems can sometimes originate from such recycling
activities?
    Reports documenting these studies are available in the docket for
the 2008 DSW final rule under the following titles:
     An Assessment of Good Current Practices for Recycling of
Hazardous Secondary Materials (EPA-HQ-RCRA-2002-0031-0354) (``study of
successful recycling'').
     An Assessment of Environmental Problems Associated With
Recycling of Hazardous Secondary Materials (EPA-HQ-RCRA-2002-0031-0355)
(``environmental problems study'').
     A Study of Potential Effects of Market Forces on the
Management of Hazardous Secondary Materials Intended for Recycling
(EPA-HQ-RCRA-2002-0031-0358) (``market forces study'').
    In the study of successful recycling, EPA found that responsible
recycling practices used by generators and recyclers to manage
hazardous secondary materials fall into two general categories. The
first category includes the audit activities and inquiries performed by
a generator of a hazardous secondary material to determine whether the
entity to which it is sending such material is equipped to manage it
responsibly without the risk of releases or other environmental damage.
These recycling and waste audits of other companies' facilities are
common to those generators that responsibly recycle in the hazardous
secondary materials market. The second category of responsible
recycling practices consists of the control practices that ensure
responsible management of any given shipment of hazardous secondary
material, such as the contracts under which the transaction takes place
and the tracking systems that can inform a generator that its hazardous
secondary material has been properly managed.
    The goal of the environmental problems study was to identify and
characterize environmental problems that have been attributed to some
types of hazardous secondary material recycling that are relevant for
the purpose of this rulemaking effort. To address commenters' concerns
that historic damages are irrelevant to current practices because
environmental programs (post-RCRA and -CERCLA implementation) have
created strong incentives for proper management of recyclable hazardous
secondary materials, EPA only included cases where damages occurred
after 1982. The study identifies 208 cases in which environmental
damages of some kind occurred from some type of recycling activity and
that otherwise fit the scope of the study.\2\ The Agency believes that
the occurrence of certain types of environmental problems associated
with post-1982 recycling practices shows that discard has occurred. In
particular, instances where hazardous secondary materials were
abandoned (e.g., in warehouses) and which required removal overseen by
a government agency and the expenditure of public funds clearly
demonstrate that the hazardous secondary material was discarded. Of the
208 damage cases, 69 cases (33%) involve abandoned materials. The
relatively high incidence of abandoned materials likely reflects the
fact that bankruptcies or other types of business failures were
associated with 138 (66%) of the cases.
---------------------------------------------------------------------------

    \2\ EPA initially identified over 800 potential damage cases,
most of which were not included in the analysis because (1) the
damages occurred before 1982, (2) the damages were not caused by
recycling, or (3) there was not enough information to determine when
the damages occurred or whether recycling contributed to the
damages. The cases EPA considered, but did not include, were listed
in an appendix to the report to allow the public to comment on
whether additional cases should be included in the analysis. As a
result of public comment, EPA identified one new damage case and
updated two existing damage case profiles with more information
about environmental problems, as detailed in Addendum: An Assessment
of Environmental Problems Associated with Recycling of Hazardous
Secondary Materials (EPA-HQ-RCRA-2002-0031-0601). EPA determined
that the new damage case and supplemental information were
consistent with the damage cases previously cited in the study.
---------------------------------------------------------------------------

    In addition, the pattern of environmental damages that resulted
from the mismanagement of recyclable materials (including contamination
of soils, groundwater, surface water and air) is a strong indication
that the hazardous secondary materials were generally not managed as
valuable commodities and were discarded. Of the 208 damage cases, 81
cases (40%) primarily resulted from the mismanagement of recyclable
hazardous secondary materials, while mismanagement of recycling
residuals was the primary cause in 71 cases (34%). Often, in the case
of mismanagement of recycling residuals,

reclamation processes generated residuals in which the toxic components
of the recycled materials were separated from the non-toxic components,
and these portions of the hazardous secondary material were then
mismanaged and discarded. Examples of this include a number of drum
reconditioning facilities, where large numbers of used drums were
cleaned out to remove small amounts of remaining product, such as
solvent, and these wastes were then improperly stored or disposed,
while the drums were reused or recycled.
    The market forces study used accepted economic theory to describe
how various market incentives can influence a firm's decision-making
process when recycling hazardous secondary materials. This study helps
explain some of the possible fundamental economic drivers of both the
successful and unsuccessful recycling practices.
    As pointed out by some commenters to the 2003 DSW proposed rule,
the economic forces shaping the behavior of firms that recycle
hazardous secondary materials are often different from those at play in
manufacturing processes using virgin materials. The market forces study
used economic theory to provide information on how certain
characteristics can influence three different recycling models to
encourage or discourage an optimal outcome. The three recycling models
examined were (1) commercial recycling, where the primary business of
the firm is the recycling of hazardous secondary materials that are
accepted from off-site industrial sources (which usually pay a fee);
(2) industrial intra-company recycling, where firms generate hazardous
secondary materials as by-products of their main production processes
and recycle the hazardous secondary materials for sale or for their own
reuse in production; and (3) industrial inter-company recycling, where
firms either use or recycle hazardous secondary materials obtained from
other firms, with the objective of reducing the cost of their
production inputs. The report looked at how the outcome from each model
is potentially affected by three market characteristics: (1) The value
of the recycled product, (2) the price stability of recycling output or
inputs, and (3) the net worth of the firm.
    An individual firm's decision-making is based on many factors and
extrapolating a firm's likely behavior from a few factors could be an
over-simplification. However, when used in conjunction with other
information, the economic theory can be quite illuminating. For
example, according to the market forces study, industrial intra- and
inter-company recyclers have more flexibility in adjusting to unstable
recycling markets (e.g., during price fluctuations, these companies can
more easily switch from recycling to disposal or from recycled inputs
to virgin inputs). Therefore, they would be expected to be less likely
to have environmental problems from over-accumulated materials.
    On the other hand, in certain types of commercial recycling, the
product has low value, the prices are unstable, and/or the firm has a
low net worth. Facilities in these situations can be more susceptible
to environmental problems from the over-accumulation or mishandling of
hazardous secondary materials, especially when compared to recycling by
a well-capitalized firm that yields a product with high value. These
predicted outcomes appear to be supported by the results of the
environmental problems study, which showed the majority of
environmental damages occur at off-site commercial recyclers.
    However, as shown by the study of successful recycling, generators
who might otherwise bear a large liability from poorly-managed
recycling at other companies have addressed this issue by carefully
examining the recyclers to which they send their hazardous secondary
materials to ensure that they are technically and financially capable
of performing the recycling. In addition, we have seen that successful
recyclers (both commercial and industrial) have often taken advantage
of mechanisms, such as long-term contracts to help stabilize price
fluctuations, allowing recyclers to plan their operations more
effectively.
    Further discussion of the recycling studies, including the
methodology and limitations of the studies, can be found in the March
2007 supplemental proposal (72 FR 14178-83), and the October 2008 DSW
final rule (73 FR 64673-74) and the studies themselves can be found in
the docket for the 2008 DSW final rule (EPA-HQ-RCRA-2002-0031-0355).

E. March 2007 Supplemental Proposal To Revise the Definition of Solid
Waste

    In March 2007, EPA published a supplemental proposal that provided
the public the opportunity to comment on these studies. The Agency also
re-structured the proposed rule and proposed (1) two exclusions for
hazardous secondary materials recycled under the control of the
generator (one exclusion would apply to hazardous secondary materials
managed in non-land-based units, and the other exclusion would apply to
hazardous secondary materials managed in land-based units) and (2) an
exclusion for hazardous secondary materials transferred to another
party for reclamation. The Agency also proposed a non-waste
determination petition process, and re-proposed the legitimacy
criteria, with certain modifications (72 FR 14172, March 26, 2007).
    For the exclusions of hazardous secondary materials reclaimed under
the control of the generator, EPA described three circumstances under
which we believed that discard does not take place and where the
potential for environmental releases is low. The three situations
involve hazardous secondary materials that are generated and
legitimately reclaimed at the generating facility, legitimately
reclaimed at a different facility within the same company, or
legitimately reclaimed through a tolling arrangement. Under all three
circumstances, the hazardous secondary materials must be generated and
reclaimed within the United States or its territories. Because the
hazardous secondary material generator in these situations still finds
value in the hazardous secondary materials, has retained control over
them, and intends to use them, EPA proposed to exclude these materials
from the definition of solid waste and, thus, from regulation under
Subtitle C of RCRA, provided the reclamation is legitimate and the
hazardous secondary materials are contained and not speculatively
accumulated. In addition, EPA proposed that facilities generating and
reclaiming hazardous secondary materials under the control of the
generator must submit notification to their regulatory authority.
    For the exclusion of hazardous secondary materials transferred to
another party for reclamation (referred to as the transfer-based
exclusion), the Agency proposed conditions that, when met, would
indicate that these hazardous secondary materials were not discarded.
For example, one of the conditions would require the generator to make
reasonable efforts, a form of due diligence, to determine that its
hazardous secondary materials would be properly and legitimately
recycled (and that the hazardous secondary material would not be
discarded). Another condition would require the reclamation facility to
have adequate financial assurance (thus demonstrating that the
hazardous secondary material would not be abandoned). In addition, EPA
proposed that both the generator and reclaimer would be required to
maintain shipping records (to demonstrate that the hazardous

secondary material was sent for reclamation and was received by the
reclaimer). Furthermore, the reclaimer would be subject to additional
storage and residual management standards (to address the instances of
discard observed at off-site reclamation facilities in the damage
cases). Finally, facilities operating under the transfer-based
exclusion must also submit notification to their regulatory authority.
    In addition, the 2007 DSW supplemental proposal included a case-by-
case non-waste determination petition process that would allow
applicants to receive a formal determination from EPA that their
hazardous secondary materials were not discarded and therefore were not
solid wastes. The case-by-case petition process would allow EPA or the
authorized state to take into account the particular fact pattern of
the recycling and to determine that the hazardous secondary materials
in question were not solid wastes. The petition process for the non-
waste determination was the same as that for the variances from the
definition of solid waste found at 40 CFR 260.31.
    EPA also proposed a definition of legitimate recycling that
restructured the legitimacy factors originally proposed in October
2003. The proposed legitimacy factors would be used to determine that
the recycling of hazardous secondary materials is not a ``sham'' and is
not waste treatment.

F. October 2008 Final Rule To Revise the Definition of Solid Waste

    In October 2008, EPA promulgated a final rule largely as proposed
in March 2007, with some revisions and clarifications, including (1)
clarifying that hazardous secondary materials held at a transfer
facility for less than 10 days are considered to be in transport (and
therefore such transfer facilities are not considered to be storing the
hazardous secondary materials for the purpose of the DSW exclusion),
(2) allowing the use of intermediate facilities that store hazardous
secondary materials for more than 10 days under the transfer-based
exclusion, provided the facilities comply with the same conditions
applicable to reclamation facilities, (3) requiring facilities
operating under the generator-controlled and/or the transfer-based
exclusion to notify their regulatory authority prior to operating under
the exclusion and every other year thereafter, and (4) making
legitimacy a condition of the exclusions and the non-waste
determinations in that rule, but not finalizing the legitimacy language
for all recycling activities.

G. Section 7004 Petition Submitted by the Sierra Club and Industry
Response

    On January 29, 2009, the Sierra Club submitted an administrative
petition under RCRA section 7004(a), 42 U.S.C. 6974(a), to the
Administrator of EPA requesting that the Agency repeal the October 2008
revisions to the definition of solid waste rule and stay the
implementation of the rule.
    The administrative petition was submitted at the same time that the
American Petroleum Institute (API) and Sierra Club filed judicial
Petitions for Review under RCRA section 7006(a), 42 U.S.C. 6976(a)
challenging the rule in the United States Court of Appeals for the
District of Columbia Circuit (DC Circuit). These cases, designated as
Docket Nos. 09-1038 and 1041, respectively, are currently before the DC
Circuit.
    The petition argued that the revised regulations are unlawful and
that they increase threats to public health and the environment without
producing compensatory benefits and, therefore, should be repealed.
Among other things, the petition singled out the lack of regulatory
definitions for key conditions of the rule and disagreed with the
Agency's findings that the rule would have no adverse environmental
impacts, including the finding there would be no adverse impact to
environmental justice communities or children's health.
    On March 6, 2009, a coalition of industry associations (``industry
coalition'') submitted a letter to the Administrator of EPA in response
to the Sierra Club petition. This letter requested that EPA deny Sierra
Club's petition on the grounds that the 2008 DSW final rule comports
with court cases construing the scope of the definition of solid waste
under RCRA, and that the 2008 DSW final rule achieves significant
economic and conservation benefits, while imposing significant controls
on the hazardous secondary material recycling industry that are fully
protective of the environment. The letter also responds to each of the
specific points raised by Sierra Club in its petition.

H. June 2009 Public Meeting and the Draft DSW Environmental Justice
Analysis Methodology

    In response to Sierra Club's administrative petition and the
industry coalitions letter to the Administrator, EPA issued a May 27,
2009, Federal Register notice (74 FR 25200) describing possible actions
and optional paths forward, as well as announcing a public meeting on
June 30, 2009, to allow the public and interested stakeholders the
opportunity to provide input to the decision-making process.
    In the May 27, 2009, Federal Register notice announcing the public
meeting, EPA described the scope of possible action, which is governed
by the concept of ``discard.'' As stated in RCRA section 1004(27),
``solid waste'' is defined as ``* * * any garbage, refuse, sludge from
a waste treatment plant, water supply treatment plant, or air pollution
control facility and other discarded material * * * resulting from
industrial, commercial, mining and agricultural activities.'' The May
2009 public meeting notice said that ``[b]ecause the final revisions to
the definition of solid waste are closely tied to EPA's interpretation
of ``discard,'' EPA does not expect to completely repeal the rule or
stay its implementation, because such an action could result in
hazardous secondary materials that are not discarded being regulated as
hazardous waste. In particular, EPA said that it does not expect to
repeal either the exclusion for hazardous secondary materials reclaimed
under the control of the generator or the non-waste determination
petition process. However, the Agency stated that it could revise other
parts of the definition of solid waste rule, such as the definition of
legitimacy and the transfer-based exclusion, in ways that could
increase environmental protection, while still appropriately defining
when a hazardous secondary material being reclaimed is a solid waste''
(74 FR 25203).
    Thirty-three people spoke at the public meeting, and approximately
4,000 written comments were received, of which the majority were from
private citizens who wrote in via a mass e-mail campaign to repeal the
rule. The remaining comments came from state and local governments
(17), the generating industry (28), the waste management/recycling
industry (15), environmental, public health and community organizations
(12), and academics (2). Industry comments were uniformly in favor of
denying the Sierra Club petition to repeal the rule, citing legal
issues and the protectiveness of the rule's conditions. Environmental
and community organizations, on the other hand, were uniformly in favor
of repealing the rule, expressing concerns over the protectiveness,
enforceability and environmental justice and children's health impacts
of the rule. Waste management/recycling industry comments were split,
with hazardous waste recyclers generally advocating that EPA retain and
improve the rule with more stringent standards. Other

waste management industry comments, particularly those from companies
representing landfills and incinerators, were in favor of repealing the
rule. State comments expressed concerns about implementing the rule,
particularly given the economic climate, and generally were in favor of
repealing or significantly revising the transfer-based exclusion. EPA
appreciates all the comments that were provided and has carefully
considered them in deciding to revisit the definition of solid waste in
today's proposal. A copy of the public meeting transcript and the
comments submitted in response to the public meeting notice are
available in the docket for the public meeting (Docket ID number EPA-
HQ-RCRA-2009-0315).
    Many commenters (including those at the public meeting and those
who responded with written comments) expressed strong concerns that the
Agency did not adequately address environmental justice in the
rulemaking. In response to the concerns over the environmental justice
analysis, EPA committed to perform a more rigorous and thorough
analysis of the environmental justice impacts of the 2008 DSW final
rule. On January 15, 2010, EPA released for public input a draft
methodology for conducting the DSW Environmental Justice Analysis. The
draft methodology was presented to the National Environmental Justice
Advisory Committee (NEJAC) and discussed at three public roundtable
meetings.

I. Settlement Agreement With the Sierra Club

1. Overview of Settlement Agreement
    On September 7, 2010, EPA signed a settlement agreement with the
Sierra Club under which the Sierra Club agreed to withdraw their
administrative petition and EPA agreed to prepare a notice of proposed
rulemaking to be signed no later than June 30, 2011, which would
address, at a minimum, the issues raised in the Sierra Club's
administrative petition, including the four issues discussed in the May
27, 2009, public meeting Federal Register notice (74 FR 25200). The
settlement agreement did not specify the outcome of the final rule or
specifically what regulatory changes EPA would propose. A notice taking
final administrative action concerning the notice of proposed
rulemaking is to be signed no later than December 31, 2012.
    The settlement agreement was approved by the court on January 11,
2011. Today's proposal represents EPA's fulfillment of the portion of
the settlement agreement concerning the proposed rule.
    The four issues in the settlement agreement are (1) the definition
of ``contained'' (which includes the issue of defining ``significant
releases'') (addressed in Section IX.B.1 of this preamble), (2)
notification before operating under the exclusion (addressed in Section
IX.B.2 of this preamble), (3) the definition of ``legitimacy''
(addressed in Section X of this preamble) and (4) the transfer-based
exclusion (addressed in Section VII of this preamble). Other issues
presented in the administrative petition are discussed below.
2. Request to Immediately Stay the Implementation of and Revoke the
2008 DSW Rule
    The Sierra Club's administrative petition included a request to
immediately stay and revoke the 2008 DSW final rule. To support this
request, the petition asserted that the damage case study demonstrates
that hazardous waste recycling has caused substantial harm to health
and the environment and that the 2008 DSW final rule increases the
likelihood of greater future harm. The petition also asserted that the
2008 DSW final rule does not account for the possibility that unstable
recycling markets or financial conditions increase the risk of
hazardous waste abandonment. In addition, the petition asserted that
the 2008 DSW final rule will not substantially increase recycling and
that the economic benefits are few and will only accrue to deregulated
industries. Additionally, the petition claimed that there would be job
losses in the hazardous waste treatment industry and increased worker
health problems as a result of the rule.
    EPA addressed Sierra Club's request to revoke the 2008 DSW final
rule in whole and stay its implementation in the May 27, 2009, public
meeting notice, which continues to reflect EPA's current thinking. In
that notice, EPA stated at 74 FR 25202:

    The scope of possible changes to the definition of solid waste
is governed by the concept of ``discard.'' As discussed in the
preamble to the DSW final rule, EPA used the concept of discard as
the central organizing idea behind the October 2008 revisions to the
definition of solid waste. As stated in RCRA section 1004(27),
``solid waste'' is defined as ``* * * any garbage, refuse, sludge
from a waste treatment plant, water supply treatment plant, or air
pollution control facility and other discarded material * * *
resulting from industrial, commercial, mining and agricultural
activities'' (emphasis added). Therefore, in the context of the DSW
final rule, a key issue relates to the circumstances under which a
hazardous secondary material that is recycled by reclamation is or
is not discarded (73 FR 64675). In exercising its discretion in the
DSW final rule to define what constitutes ``discard'' for hazardous
secondary materials reclamation, EPA included an explanation of how
each provision of the final rule relates to discard (73 FR 64676-
64679).
    For example, in the DSW final rule, EPA determined that if the
generator maintains control over the recycled hazardous secondary
material and if the material is legitimately recycled under the
standards established in the final rule and not speculatively
accumulated within the meaning of EPA's regulations, then the
hazardous secondary material is not discarded. This is because the
hazardous secondary material is being treated as a valuable
commodity rather than as a waste. By maintaining control over, and
potential liability for, the reclamation process, the generator
ensures that the hazardous secondary materials are not discarded.
(See 73 FR 64676.)
    Because the final revisions to the definition of solid waste are
closely tied to EPA's interpretation of the concept of ``discard,''
EPA does not plan to repeal the rule in whole or stay its
implementation. Such an action could result in hazardous secondary
materials that are not discarded being regulated as hazardous
wastes. In particular, EPA does not expect to repeal either the
exclusion for hazardous secondary materials reclaimed under the
control of the generator or the non-waste determination petition
process.
    However, EPA believes that there may be opportunities to revise
or clarify the definition of solid waste rule, particularly with
respect to the definition of legitimacy and the transfer-based
exclusion, in ways that could improve implementation and enforcement
of the provisions, thus increasing environmental protection, while
still appropriately defining when a hazardous secondary material
being reclaimed is a solid waste and subject to hazardous waste
regulation.

    Today's proposal includes a discussion of several potential changes
to the generator-controlled exclusion and to the non-waste
determination petition process, but, for the reasons stated above, EPA
did not stay the rule and is not proposing to withdraw either
provision.
3. Adequacy of EPA's Analyses
    Finally, the Sierra Club petition asserted that EPA's conclusion
that the 2008 DSW final rule would have no adverse environmental
impacts, and therefore would have no disproportional adverse impacts to
minority and low-income communities, is unsupported by the
administrative record. In response to these comments and similar
comments by other stakeholders at the 2009 public meeting, EPA
committed to producing an expanded analysis of the potential
disproportionate impacts of the 2008

DSW final rule. A draft methodology for the analysis was shared with
the public in January 2010, and three public roundtable discussions
were held to discuss the draft methodology.\3\ EPA considered the
comments raised in those discussions and conducted an analysis. The
analysis has undergone peer review, the results of which are included
in the docket for today's proposed rule. The environmental justice
analysis is discussed in detail in the next section (Section VI) below.
---------------------------------------------------------------------------

    \3\ U.S. EPA. Draft Environmental Justice Methodology for the
Definition of Solid Waste Rule, January 2010, http://www.epa.gov/epawaste/hazard/dsw/ej.htm.
---------------------------------------------------------------------------

J. Commitment to Sustainable Materials Management

    In addition to addressing the environmental and public health
concerns raised by the Sierra Club and other commenters, EPA also
envisions today's proposal as an opportunity to discuss focused
approaches to revising the hazardous waste recycling regulations to
promote sustainable materials management, while ensuring protection of
human health and the environment. Sustainable materials management is
an approach to serving human needs by using/reusing resources most
productively and sustainably throughout their life cycles, generally
minimizing the amount of materials involved and all the associated
environmental impacts. Sustainable materials management is a core
element of RCRA's resource conservation objectives.
    The shift to sustainable materials management by taking a life-
cycle approach to managing materials is articulated in EPA's 2020
Vision Report: Sustainable Materials Management: The Road Ahead,\4\
which was endorsed by both the Environmental Council of the States
(ECOS) and the Association of State and Territorial Solid Waste
Management Officials (ASTSWMO).\5\ Sustainable materials management, as
articulated in the ``2020 Vision Report,'' is aligned also with the
vision and efforts of the World Business Council for Sustainable
Development.\6\
---------------------------------------------------------------------------

    \4\ http://www.epa.gov/waste/inforesources/pubs/vision.htm.
    \5\ Environmental Council of the States Resolution 10-1 on
National Sustainable Materials Management, approved March 23, 2010,
and Letter from Gary Baughman, president, ASTSWMO, to Matt Hale,
Director, Office of Solid Waste, U.S. EPA, February 3, 2010.
    \6\ http://www.wbcsd.org/web/projects/BZrole/Vision2050-FullReport_Final.pdf.
---------------------------------------------------------------------------

    Sustainable materials management helps identify opportunities to
reduce environmental impacts, including greenhouse gas reductions, and
societal impacts across the life cycle of materials from how they are
extracted, manufactured, distributed, used, reused, recycled, and
disposed. It works to ensure unintended consequences are avoided.
Efficiencies gained in a sustainable materials management approach,
especially with respect to non-renewable materials, can result in less
energy used, more efficient use of materials, more efficient movement
of goods and services, conservation of water, and reduced volume and
toxicity of waste.
    By considering system-wide impacts, sustainable materials
management casts a far broader net than traditional waste and chemicals
management approaches and represents a change in how we think about
environmental protection. Hazardous waste regulations can only
influence a small part of the picture, but to the extent that the
Agency can use today's proposal to help advance these goals, while
ensuring protection of human health and the environment, EPA believes
that it makes sense to do so.

VI. Definition of Solid Waste Environmental Justice Analysis

    To achieve the goals of Executive Order 12898, Federal Actions to
Address Environmental Justice in Minority Populations and Low-Income
Populations, EPA must consider environmental justice when developing a
regulation. Because decisions involving a regulation must be informed
by a consideration of a number of different issues, an environmental
justice analysis is one of several analyses the Agency uses when
developing regulations. The environmental justice analysis may be
qualitative and/or quantitative and is designed to provide the
appropriate information on disproportionately high and adverse impacts
to minority and/or low-income populations to decision-makers. To the
extent an environmental justice analysis reveals potential
disproportionately high adverse impacts on minority and/or low-income
populations, this result can affect how EPA uses its policy discretion
under applicable authorities to pursue specific regulatory options or
provide opportunities to involve the public in the implementation of
regulations.
    The purpose of the DSW environmental justice analysis is two-fold.
First, the analysis represents a systematic examination of the
potential for an increase in adverse impacts under the 2008 DSW final
rule (considered independently from which communities might be
impacted). Second, the analysis includes a demographic analysis
characterizing the extent any potential adverse impacts are likely to
affect minority and/or low-income communities. The results of this
analysis have informed EPA's decision-making on which regulatory
options to pursue, within scope of the Agency's authority to regulate
hazardous waste.
    The methodology for the DSW environmental justice analysis consists
of six steps:

------------------------------------------------------------------------

------------------------------------------------------------------------
Step 1: Hazard                 Includes two phases: (1) Identifying
 characterization.              potential hazards that could pose risks
                                to human health and the environment from
                                recycling of hazardous secondary
                                materials, including accidental releases
                                of hazardous constituents and (2)
                                analyzing the likelihood of such hazards
                                occurring under the requirements of the
                                2008 DSW exclusions as compared to the
                                pre-2008 DSW hazardous waste
                                regulations.
Step 2: Identification of      Modeling the locations of facilities
 potentially affected           (including potential new facilities)
 communities.                   that are likely to choose to take
                                advantage of the 2008 DSW final rule.
Step 3: Demographics of        Mapping the location of the facilities
 potentially affected           modeled in Step 2 and identifying the
 communities.                   demographics (e.g., minority population
                                and income level) of the surrounding
                                communities.
Step 4: Identifying other      Identifying important vulnerability
 factors that affect            factors. These include factors that may
 vulnerability in potentially   increase the likelihood of ``damages,''
 affected communities.          the likelihood that a facility is sited
                                within a community, or the likelihood of
                                health risks in the event of releases.
                                Examples include the presence of other
                                pollution sources and any information
                                about the public health of the
                                surrounding population.
Step 5: Information            Synthesizing all the information to
 synthesis: assessment of       characterize whether the 2008 DSW rule
 disproportional impact.        will facilitate the occurrence of any
                                adverse impacts and whether some
                                population groups (e.g., minority or low
                                income populations) would be
                                overrepresented in the impacted
                                communities.

Step 6: Identification of      Identifying potential strategies to
 potential preventive and       prevent non-compliance and releases to
 mitigation strategies.         the environment and also strategies to
                                mitigate any impacts identified under
                                step 5.
------------------------------------------------------------------------

    A brief description of the six steps is presented below.

A. Step 1--Hazard Characterization

    The first step of the methodology is hazard characterization, which
includes both identifying the potential hazards that hazardous
secondary materials recycling could pose to human health and the
environment, and evaluating the likelihood of such hazards resulting in
increased risk under the 2008 DSW final rule. In conducting this
analysis, EPA, assessed a number of different scenarios, which reflect
how such hazardous secondary materials may be managed.
    With respect to the first part of the analysis, because hazardous
secondary materials sent to recycling are physically and chemically
similar, if not identical to many of the hazardous wastes sent for
treatment and disposal, the potential risks from their management are
similar, if not the same, as from hazardous wastes sent for treatment
and disposal. The most commonly recycled hazardous secondary materials
are spent solvents and electric arc furnace dust (which is recycled to
reclaim metals). Spent solvents present particular management
challenges in that recycling them involves the storage of liquids
containing volatile organic chemicals and includes both halogenated and
non-halogenated organic chemicals, which represent a broad range of
chemicals and associated hazards. Electric arc furnace dust, which is
usually in a solid state, presents different management challenges,
including that the dust contains high concentrations of toxic metals,
the storage of the dust is typically in waste piles, and the potential
for the dust to become wind-blown, or otherwise released, and the
potential for toxic metals contained in this waste to leach into the
ground water.
    These two classes of hazardous secondary materials (as well as
other hazardous secondary materials that are recycled) can pose risks
via a wide variety of exposure routes and include a range of potential
adverse health effects, both carcinogenic and non-carcinogenic, as well
as a potential for acute impacts, such as fires and explosions.
    The second part of the hazard characterization step--determining
whether these hazards could result in increased risk to human health
and the environment--is a complex issue because of the interactions
between how the regulations are written and how they are actually
implemented. Under the 2008 DSW final rule, EPA believed that the
conditions of the rule, which were designed to determine when a
hazardous secondary material is not discarded, would also prevent any
increase in risk. For example, the condition that the hazardous
secondary materials be ``contained'' was intended to address this
issue. If the material is not released to the environment, there would
be no increased exposure or associated risk.
    However, what the 2008 analysis failed to take into account was
whether the conditions of the rule--such as the ``contained''
standard--would operate as effectively in the real world as the more
prescriptive requirements of the RCRA hazardous waste regulations. One
of the most common criticisms of the January 2010 draft environmental
justice methodology was that it did not include consideration of the
potential for adverse impact from removing some of the important
protections of the hazardous waste regulations, particularly the public
participation requirements, which were also not considered by the
Agency when developing the 2008 DSW final rule.
    A more detailed comparative analysis of the regulatory requirements
under the 2008 DSW final rule with the hazardous waste regulations
reveals potentially significant gaps in environmental protection under
the 2008 DSW final rule, particularly the incentives to accumulate
larger volumes of hazardous secondary materials, the reduction in
oversight resulting from eliminating the permit requirement for
storage, and the reduction in the public's access to information and
the opportunity for public participation. The specific gaps vary
depending on the baseline scenario and the post-DSW scenario being
considered,\7\ and in some cases, there is also a potential for
increased benefits, primarily from resource conservation and from
reduced transportation distances.\8\
---------------------------------------------------------------------------

    \7\ The specific scenarios evaluated were (1) generator
continues current recycling practices; (2) generator switches from
off-site disposal to on-site reclamation; (3) generator switches
from off-site disposal to off-site recycling under the control of
the generator; (4) generator switches from off-site disposal to off-
site recycling at a RCRA-permitted facility; (5) generator switches
from off-site disposal to off-site recycling at a U.S. facility
without a RCRA permit; (6) generator switches from off-site disposal
to exporting for recycling; (7) generator switches from off-site
recycling at a facility without a permit to another type of
recycling under the 2008 DSW final rule; and (8) generator switches
from off-site recycling at a RCRA-permitted facility or exporting
waste for recycling to another type of recycling under the 2008 DSW
final rule.
    \8\ By reporting the potential for increased benefits under
certain scenarios, EPA does not intend to imply that such benefits
could justify increased risk to human health and the environment
from discarded hazardous secondary material. Promoting resource
conservation and recovery is a major goal of RCRA, but this goal
does not supersede the mandate to assure that hazardous waste
management practices are protective of human health and the
environment.
---------------------------------------------------------------------------

B. Step 2--Identification of Potentially Affected Communities

    The second step of the methodology identified those potential
facilities that can represent the facilities that are likely to take
advantage of the 2008 DSW final rule. These facilities are grouped into
four different categories: (1) Facilities that have already notified
under the 2008 DSW final rule (``Notification Facilities''), (2)
facilities from the environmental problems study (many of which
operated under various exclusions or reduced regulations) which have
documented environmental damages from recycling activities (``Damage
Case Facilities''), (3) hazardous waste facilities that are likely to
recycle under the rule (including hazardous waste generators producing
more than a truckload (25 tons) of recyclable hazardous secondary
materials annually, and hazardous waste recyclers) (``Hazardous Waste
Facilities''), and (4) facilities currently recycling non-hazardous
industrial waste (e.g., antifreeze) that could most easily switch or
expand to recycling under the 2008 DSW final rule (``Non-Hazardous
Industrial Waste Facilities'').

C. Step 3--Demographics of Potentially Affected Communities

    The third step characterized the demographics of the communities
within a three-kilometer radius around these facilities and determined
whether they had a larger proportion of minority and/or low-income
individuals as compared to the nation as a whole, and as compared to
the population in the state.\9\ The comparison was done at both at the
community and at the population level.
---------------------------------------------------------------------------

    \9\ EPA chose a three-kilometer radius as an approximation of
the potential area that could be affected by an acute release
scenario (such as a fire or explosion) at a reclamation facility.
EPA focused on the acute scenario because such a scenario posed the
most immediate harm to public health.
---------------------------------------------------------------------------

    For the community-level analysis, the question is whether the
communities

around a facility had a higher or lower percentage of minority and/or
low-income population as compared to the comparison population (i.e.,
national or state population). In general, some communities will have a
higher percentage than the comparison population, while some
communities will have a lower percentage. As long at these differences
have a regular, or uniform, distribution, they generally would not
indicate potential for disproportionate adverse impact. However, if the
number of communities with a higher percentage of minority and/or low-
income population is greater than that of the comparison populations,
then there is a potential for disproportionate adverse impact. The
higher the average differences between the potentially affected
communities and the comparison group, the greater the potential for a
disproportionate adverse impact.
    In the chart below, the category that consistently demonstrates the
potential for disproportionate adverse impact are the damage case
facilities, which is the third category of facilities identified in
Step 2, although a few other categories indicates the potential for
disproportionate adverse impact in a few instances.\10\ For both the
national and the state comparison populations, more than 50 percent of
the damage case facilities are located in communities with minority and
low-income populations that have a higher representation than the
comparison populations. In addition, the average difference in these
cases (i.e., the average amount that these facilities have a higher-
than-average percentage of minorities or low-income populations) ranges
from 6-8 percent.
---------------------------------------------------------------------------

    \10\ For the damage cases, EPA notes that demographic data is
not necessarily matched to the temporal period associated with the
beginning of the damage case. For example, if the damage case began
in 1990, EPA did not examine demographics from 1990, but rather the
demographics were from 2000.

  Community-Level Analysis of Potential Disproportionate Adverse Impacts of 2008 DSW Final Rule to Minority and
                                             Low-Income Communities
                      [Values greater than 50% indicate potential disproportionate impact]
----------------------------------------------------------------------------------------------------------------
                                                     National        National          State           State
                                                   comparison %    comparison %    comparison %    comparison %
                                                    communities     communities     communities     communities
                                                    with higher     with higher     with higher     with higher
                                                     minority       low-income       minority       low- income
                                                  representation  representation  representation  representation
                                                     (average        (average        (average        (average
                                                    difference)     difference)     difference)     difference)
----------------------------------------------------------------------------------------------------------------
Facilities that Have Notified (40 total)........            7.5%           32.5%      50.0% (IA)      64.0% (IA)
                                                        (-20.7%)         (-2.0%)          (3.1%)          (1.7%)
                                                                                20.0% (NJ)         0% (NJ)
                                                                                (-11.0%)         (-3.7%)
                                                                                31.3% (PA)        50% (PA)
                                                                                (-2.3%)          (2.6%)
Damage Case Facilities (217 total)..............             53%             65%           55.8%             69%
                                                          (8.2%)          (5.9%)          (8.2%)          (6.7%)
Hazardous Waste Facilities (2,677 total)........             42%             48%           47.9%           50.6%
                                                          (0.9%)          (1.5%)          (4.0%)          (1.8%)
Non-Hazardous Industrial Waste Facilities (25                36%             40%             36%             44%
 total).........................................         (-5.0%)         (-0.5%)        (-2.55%)         (-0.3%)
----------------------------------------------------------------------------------------------------------------

    The population-level analysis examines the demographics of the
total potentially affected population \11\ as compared to the total
comparison population to determine (1) whether there is a substantially
greater probability of members in a population group of concern
(minority or low-income) being present as compared to members of the
comparison population, and (2) whether members of the population group
of concern comprised a substantially greater proportion of the
potentially affected population than the comparison populations. These
two comparisons are referred to as (1) the Affected Population Ratio,
and (2) the Demographic Ratio. In both cases, if the ratio is greater
than 1.0, then there is a potential for disproportionate adverse impact
to the population of concern, and the larger the ratio, the greater the
disproportionality.
---------------------------------------------------------------------------

    \11\ The total affected population is the sum of each of the
populations around all the facilities in a category.

   Population-Level Analysis of Potential Disproportionate Impacts of 2008 DSW Rule to Minority and Low-Income
                                                   Communities
    [Ratios greater than 1.0 indicate potential disproportionate impact to population of concern all results
                                   statistically significant (p-value <0.05)]
----------------------------------------------------------------------------------------------------------------
                                                     National        National          State           State
                                                    comparison    comparison low-   comparison    comparison low-
                                                     minority         income         minority         income
                                                    population      population      population      population
                                                     affected        affected        affected        affected
                                                    population      population      population      population
                                                       ratio           ratio           ratio           ratio
                                                    demographic     demographic     demographic     demographic
                                                       ratio           ratio           ratio           ratio
----------------------------------------------------------------------------------------------------------------
Notification Facilities (40 total)..............            0.70            1.05       1.80 (IA)       1.34 (IA)
                                                            0.76            1.04       1.76 (IA)       1.32 (IA)
                                                                                1.02 (NJ)  0.64 (NJ) 0.65
                                                                                1.01 (NJ)            (NJ)
                                                                                1.46 (PA)       1.74 (PA)
                                                                                1.47 (PA)       1.63 (PA)
Damage Case Facilities (217 total)..............            2.87            1.98            2.59            2.04
                                                            1.86            1.80            1.64            1.90
Hazardous Waste Facilities (2,677 total)........            1.90            1.39            1.94            1.47
                                                            1.80            1.50            2.04            1.83
Non-Hazardous Industrial Waste Facilities (25               1.19            1.16            1.34            1.17
 total).........................................            1.12            1.14            1.20            1.15
----------------------------------------------------------------------------------------------------------------

    The chart above shows that the population level analysis has a
greater incidence of potential disproportionate adverse impact to
minority and low-income populations than the community-level analysis.
For the population-level analysis, the potential for disproportionate
impact (i.e., ratios greater than one) occurs under all categories,
while the community-level analysis exhibits the potential for
disproportionate impact primarily in the damage case facility category.
This difference can occur when the populations of those communities
that do have a greater percentage of minority or low-income individuals
also have a significantly higher total population than those
communities that do not. In other words, for the categories of
facilities, except the damage case facilities, the facilities of
concern generally do not appear to be disproportionately located in
minority or low-income communities. The facilities that are located in
minority and low-income communities have the potential to adverse
impact much larger populations than those which are not, resulting in
an overall potential disproportionate adverse impact to minority and
low-income populations as a whole.

D. Step 4--Other Factors That Affect Vulnerability in Potentially
Affected Communities

    In addition to considering the potential for the 2008 DSW final
rule to result in adverse impacts that disproportionately affect
minority and low-income communities, the DSW environmental justice
analysis also considers other factors that could affect the impacts of
the rule, based on categories from EPA's interim guidance on
incorporating environmental justice into rulemaking.\12\ Two of these
factors are of particular concern to the 2008 DSW final rule: Ability
to participate in the decision-making process, and multiple and
cumulative effects.\13\
---------------------------------------------------------------------------

    \12\ U.S. EPA Interim Guidance on Considering Environmental
Justice During the Development of an Action July 2010. http://www.epa.gov/environmentaljustice/resources/policy/considering-ej-in-rulemaking-guide-07-2010.pdf.
    \13\ The other factors are (1) susceptible populations, (2)
unique exposure pathways, and (3) physical infrastructure. Because
of the wide variety of locations of the facilities and the many
different hazardous secondary materials involved, any one of these
factors could be present at a site, but EPA does not have specific
information on these factors being particularly associated with the
2008 DSW final rule.
---------------------------------------------------------------------------

1. Ability To Participate in the Decision-Making Process
    A key element of environmental justice is ensuring that all people
have an opportunity for meaningful involvement in decision-making which
may impact them. Certain groups may not have historically participated
in decision-making because of economic (e.g., income), social (e.g.,
language barriers, education levels, distrust of government), and
infrastructural reasons (e.g., access to public transportation). A
critical concern is whether, and the extent to which, communities have
the ability to influence the types and number of regulated activities
taking place in their community, as well as the requirements,
conditions, and parameters under which such activities must operate
(e.g., permit conditions). Under the 2008 DSW final rule, facilities
claiming an exclusion must submit an initial and biennial notification
to EPA or the state, providing general facility information and
describing hazardous secondary material types and activities under the
exclusion.
    However, under the 2008 DSW final rule, this information is not
made directly available to potentially affected communities, and
facilities and regulators are not required to solicit or consider
community input into the decision-making process as is the case with
RCRA-permitted facilities.\14\ Thus, by removing the RCRA permitting
requirement for facilities that manage excluded hazardous secondary
materials, the 2008 DSW final rule also removed one of the key
provisions for allowing communities to participate in the regulatory
process (at least as it concerns the management of the hazardous
secondary materials excluded under the rule). Communities with lower
participation levels may experience greater adverse impacts from
environmental decision-making because their input has not been
considered fully, particularly if competing interests are set forth
more effectively. This effect is most likely to occur in communities
that have traditionally been excluded from the decision-making process.
---------------------------------------------------------------------------

    \14\ Although not required, EPA has posted on the Internet a
list of facilities that have notified under the DSW exemption. The
most recent list can be found at http://www.epa.gov/epawaste/hazard/dsw/notify-sum.pdf.

---------------------------------------------------------------------------

2. Multiple and Cumulative Effects
    Minority, low-income, and indigenous communities that have been
affected by multiple pollution sources may be at risk for increased
health consequences. Potential sources of pollution can include, for
example, industrial facilities, landfills, transportation-related air
emissions, poor housing conditions (e.g., lead-based paint), leaking
underground storage tanks, pesticides, and incompatible land uses. An
analysis of the cumulative effects from multiple stressors can provide
a more complete evaluation of a population's health risks from
pollutants. For example, an analysis of discrete stressors and effects
on a population might conclude that nearby pollution sources are within
regulatory limits; however, an analysis of cumulative effects might
determine that a person's collective exposure to a contaminant from
multiple sources exceeds a health-based limit.
    An examination of the facilities that have already notified under
the 2008 DSW final rule shows that multiple environmental hazards are a
potential concern for communities around these facilities.\15\ All have
multiple facilities reporting to EPA, either under RCRA, the Clean Air
Act (CAA), or the Comprehensive Environmental Response, Compensation
and Liability Act (CERCLA--also known as Superfund), within a three-
kilometer radius of the facility.
---------------------------------------------------------------------------

    \15\ See U.S. EPA Environmental Justice Analysis of the
Definition of Solid Waste Rule, Section 5.2, Table 5.1.
---------------------------------------------------------------------------

E. Step 5--Assessment of Disproportionate Impact

    As discussed under Step 1 in Section VI.A. of this preamble, the
environmental justice analysis demonstrates that hazardous secondary
material recycling can pose significant potential hazards to human
health and the environment, and that it is reasonable to conclude that
the potential for hazards from hazardous secondary materials recycling
adversely impacting human health and the environment has increased
under the 2008 DSW final rule. Of particular concern are (1) the
absence of required measures (e.g., weekly inspections, training,
contingency plans, etc.) at hazardous secondary materials reclaimers to
prevent problems (e.g., spills, fires, explosions, etc.), (2) the
incentives to accumulate larger volumes of hazardous secondary
materials due to longer storage time limits and (3) the reduction in
access to information and opportunity for public participation.
    Moreover, as discussed under Step 3 in Section VI.C. of this
preamble, some of the communities potentially impacted by this increase
in risk of adverse impacts are minority and low-income communities, and
in most cases the populations potentially impacted are
disproportionately minority and/or low income. In particular, the
population-level analysis shows a potential disproportionate impact to
minority and low-income populations, with the damage case facilities,
the hazardous waste facilities and the non-hazardous waste facilities
all consistently showing potential statistically significant
disproportionate representation in potentially affected communities. In
addition, as discussed under Step 4 in Section VI.D. of this preamble,
underlying vulnerabilities traditionally associated with minority and
low-income communities can pose the potential to exacerbate potential
adverse impacts of the 2008 DSW final rule. The ability of communities
to participate in the decision-making process and potential for
multiple and cumulative effects are of particular concern.

F. Step 6--Identification of Potential Strategies To Mitigate Adverse
Impacts

    Potential strategies to mitigate adverse impacts of the 2008 DSW
final rule, including the disproportionate impacts to minority and low-
income communities, include both possible regulatory changes and
implementation strategies.
1. Regulatory Changes
    Regulatory changes to the 2008 DSW final rule were made according
to EPA's authority under RCRA to regulate discarded material. As
discussed in the preamble to the 2008 DSW final rule, EPA used the
concept of discard as the central organizing idea behind the October
2008 revisions to the definition of solid waste.
    As stated in RCRA section 1004(27), ``solid waste'' is defined as
``* * * any garbage, refuse, sludge from a waste treatment plant, water
supply treatment plant, or air pollution control facility and other
discarded material * * * resulting from industrial, commercial, mining
and agricultural activities.'' In exercising its discretion in the 2008
DSW final rule to define what constitutes ``discard'' for hazardous
secondary materials reclamation in the 2008 DSW final rule, EPA
included an explanation of how each provision of the final rule relates
to discard (73 FR 64676-64679).
    While the concept of discard also is the central organizing
principle in this proposed rule since EPA only has authority under RCRA
to regulate materials that have been discarded, the Federal Register
notice announcing the June 2009 public meeting identified areas or
opportunities to revise the 2008 DSW final rule in ways that could
increase environmental protection, including in environmental justice
communities, while still appropriately defining when a hazardous
secondary material being reclaimed is a solid waste and subject to
hazardous waste regulation (74 FR 25202). The purpose of today's
proposal is to provide notice and the opportunity to comment on
potential regulatory revisions to address the potential for adverse
impacts to human health and the environment from discarded material,
including disproportionate impacts to minority and low income
communities.
    In particular, the proposed withdrawal of the transfer-based
exclusion and its replacement with an alternative Subtitle C standard
could be one way of addressing the concerns regarding third-party
recyclers, including the impact of longer accumulation times, the lack
of preventative measures under the containment standard, the lack of
public participation requirements, the lack of RCRA air standards, and
concerns regarding certain transportation issues. In addition, the
proposed codification of the ``contained'' standard could be one way of
addressing the lack of preventative measures and the lack of RCRA air
standards under the generator-controlled exclusion. The proposed
additional recordkeeping requirements for speculative accumulation and
legitimacy could be one way of helping ensure that hazardous secondary
material is being legitimately recycled and not simply discarded
through over-accumulation and abandonment, and recordkeeping under the
tolling and same-company provisions will help ensure that the hazardous
secondary materials meet their intended destinations. Each of these
proposed changes are discussed in more detail in Sections VII-X of this
preamble. EPA requests comment on whether there are additional or
alternate regulatory approaches for addressing the potential adverse
impacts of the 2008 DSW final rule.
2. Implementation Measures
    In addition to considering regulatory changes to address potential
adverse impacts of the 2008 DSW final rule, EPA can take steps in
implementing the 2008 DSW final rule that would help mitigate any
potential adverse impacts. These steps include closely monitoring the

facilities notifying under the 2008 DSW final rule, making information
about the DSW facilities available to the public, and working with the
states and EPA Regions to ensure they have the information they need to
ensure compliance with the provisions of the rule, and making available
to the public information about the facilities that have notified. EPA
has begun this process for the states and territories currently
operating under the 2008 DSW final rule and plans to continue these
efforts in order to help prevent potential adverse impacts at the same
time that revisions to the rule are under consideration.

VII. Exclusion for Hazardous Secondary Materials That Are Transferred
for the Purpose of Legitimate Reclamation

    EPA is proposing to replace the exclusion for hazardous secondary
materials that are transferred for the purpose of legitimate
reclamation with an alternative Subtitle C standard. EPA believes that
such a standard would be more appropriate for hazardous secondary
material because (1) the Agency reasonably believes (as explained in
detail in the 2008 DSW final rule) that, absent specific conditions,
transfers of hazardous secondary materials to third-party reclaimers
generally involve discard, and (2) the conditions of the 2008 DSW final
rule have serious gaps, particularly the incentives to accumulate
larger volumes of hazardous secondary materials, the reduction in
oversight resulting from eliminating the permit requirement for
storage, and the reduction in the public's access to information and
the opportunity for public participation, that could create a
potentially unacceptable likelihood of adverse effects to human health
and the environment from such discarded material.

A. Summary of Transfer-Based Exclusion

    The exclusion for hazardous secondary materials that are
transferred for the purpose of legitimate reclamation, 40 CFR
261.4(a)(24) and (25),\16\ applies to hazardous secondary materials
(i.e., spent materials, listed sludges, and listed by-products) that
are generated and subsequently transferred to a different person or
company for the purpose of reclamation. As long as the conditions and
restrictions to the exclusion are satisfied, the hazardous secondary
materials would not be subject to the Subtitle C hazardous waste
regulations.
---------------------------------------------------------------------------

    \16\ 40 CFR 261.4(a)(24) is the primary transfer-based exclusion
and 40 CFR 261.4(a)(25) contains the export requirements for the
transfer-based exclusion.
---------------------------------------------------------------------------

    General requirements under this exclusion include that:
     Hazardous secondary material generators, reclaimers, and
intermediate facilities (i.e., facilities that would not reclaim the
hazardous secondary material, but would store them for more than 10
days) must submit a notification prior to operating under the exclusion
and by March 1 of each even-numbered year thereafter to the EPA
Regional Administrator or, in an authorized state, to the State
Director (see 40 CFR 260.42), reporting volumes and types of hazardous
secondary materials being reclaimed and
     Hazardous secondary materials managed at such facilities
must not be speculatively accumulated as defined in Sec.  261.1(c)(8)
and must be legitimately reclaimed as specified in Sec.  260.43.
    Conditions applicable to generators of hazardous secondary
materials are found at 40 CFR 261.4(a)(24)(v) and include:
     Containment of such hazardous secondary materials,
     Reasonable efforts, a form of due diligence, to ensure
that the intermediate facility or reclaimer intends to manage or
recycle the hazardous secondary material properly and legitimately, and
     Retention of records of off-site shipments for three
years.
    Conditions applicable to intermediate facilities and reclaimers of
hazardous secondary materials are found at 40 CFR 261.4(a)(24)(vi) and
include:
     Containment of such materials,
     Transmittal of confirmations of receipt to generators,
     Retention of records for hazardous secondary materials
received and sent off-site,
     Financial assurance equivalent to that required of
hazardous waste facilities, and
     (For reclaimers) proper management of any residuals
generated from the reclamation activities.

In addition, if any of the hazardous secondary materials excluded under
40 CFR 261.4(a)(24) are generated and then exported to another country
for reclamation, the exporter must notify and obtain consent from the
receiving country and file an annual report. This export requirement is
codified in 40 CFR 261.4(a)(25).

B. EPA's Rationale for Replacing the Transfer-Based Exclusion

    The first part of the Agency's rationale for replacing the
transfer-based exclusion is based on the fact that EPA has already
determined that, absent specific conditions, it is reasonable to
conclude that transfers of hazardous secondary materials to third-party
recyclers generally involve discard except for instances where EPA has
promulgated a case-specific exclusion that a hazardous secondary
material is not a solid waste. This determination is unchanged from the
2008 DSW final rule. As noted in the preamble to the 2008 DSW final
rule, generators of hazardous secondary materials who do not reclaim
these materials themselves often ship these materials to a commercial
facility or another manufacturer for reclamation in order to avoid the
costs of disposing of the material. Because of the low commercial value
and the high potential liability associated with most types of
hazardous secondary materials (i.e., spent materials and listed
hazardous waste by-products and sludges), generators will typically pay
the reclamation facility to accept these hazardous secondary materials
or receive a salvage fee that only partially offsets the cost of
transporting and managing them. In such situations, the generator has
relinquished control of the hazardous secondary materials and the
entity receiving such materials may not have the same incentives to
manage them as a useful product (73 FR 64675).
    This behavior of hazardous secondary materials not being managed as
a useful product is evidenced by the results of the environmental
problems study, found in the docket of the 2008 DSW final rule. Of the
208 damage cases discussed in the 2008 DSW final rule, 195 (or
approximately 94%) were from reclamation activities of off-site third-
party recyclers, with clear instances of discard resulting in risk to
human health and the environment, including cases of large-scale soil
and ground water contamination with remediation costs in some instances
in the tens of millions of dollars (73 FR 64673).
    In addition, the market forces study in the docket for the 2008 DSW
final rule supports the conclusion that the pattern of discard at off-
site, third-party reclaimers is a result of inherent differences
between commercial recycling and normal manufacturing. As opposed to
manufacturing, where the cost of raw materials or intermediates (or
inputs) is greater than zero and revenue is generated primarily from
the sale of the output, hazardous secondary materials recycling can
involve generating revenue primarily from the receipt of the hazardous
secondary materials. Recyclers of hazardous secondary materials in this
situation

may thus respond differently from traditional manufacturers to economic
forces and incentives, accumulating more inputs (hazardous secondary
materials) than can be processed (reclaimed). In addition, commercial
recyclers have less flexibility than in-house recyclers in changing how
they manage their hazardous secondary materials (e.g., during price
fluctuations, in-house recyclers can more easily switch from recycling
to disposal or from recycled inputs to virgin inputs, while commercial
recyclers cannot switch to disposal without obtaining a RCRA permit)
(73 FR 64674).
    The 2008 DSW final rule attempted to address this pattern of
adverse impacts to human health and the environment from hazardous
secondary materials transferred to a third party for recycling by
setting conditions for the transfer-based exclusion. The intent of
these conditions was to define when transfers to third-party recyclers
would not result in discard. The link between each of the conditions
and their ability to prevent discard is discussed in detail in the 2008
DSW final rule preamble at 73 FR 64675-79. However, EPA failed to take
into account how the conditions of the 2008 transfer-based exclusion
would work when actually implemented. EPA's analysis of the 2008 DSW
final rule assumed that DSW conditions would operate with the same
level of oversight as the Subtitle C hazardous waste regulations.
    Which leads to the second part of EPA's rationale for replacing the
transfer-based exclusion. Before excluding materials that have already
been determined to be hazardous wastes, the Agency needs adequate
assurance that the conditional exclusion will not result in discarded
hazardous materials posing significant risks to human health and the
environment (e.g, fires/explosion, soil and water contamination, air
emissions, and abandoned hazardous secondary materials). Because EPA
has already evaluated these hazardous secondary materials (for example,
during a hazardous waste listing determination) and determined them to
be solid and hazardous wastes, a conditional exclusion must be
reasonably expected not to result in the excluded hazardous secondary
material being discarded.
    As discussed in more detail in Section XIII of this preamble, over
the years EPA has developed many such conditional exclusions (found in
40 CFR 261.4(a)). In each of these cases, EPA did so by examining the
specific hazardous secondary material, or the specific recycling
practice, or both, before making a determination that they are not
solid waste. However, unlike these types of specific transfer-based
exclusions from the definition of solid waste (found in 40 CFR
261.4(a)), the 2008 transfer-based exclusion in 40 CFR 261.4(a)(24) and
(25) did not focus on the chemical or physical properties of any
particular type of hazardous secondary material, or on how it is
typically managed. Instead, the transfer-based exclusion is broadly
applicable to a wide range of hazardous spent materials and listed by-
products and sludges. Thus, while other solid waste exclusions were
developed based on EPA's knowledge of the specific hazardous secondary
materials, the industries generating them, or the current recycling
management practice for those hazardous secondary materials, the 2008
DSW transfer-based exclusion relied entirely on the conditions that
were developed by EPA operating as the Agency anticipates they should.
The conditions themselves were developed in a reasoned manner,\17\ but
without specific evidence that they would work as intended (i.e., would
not result in significant risk to human health and the environment from
discarded materials).
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    \17\ See Chapter 11, Regulatory Impact Analysis: EPA's 2008
Final Rule Amendments to the Industrial Recycling Exclusions of the
RCRA Definition of Solid Waste, EPA-HQ-RCRA-2002-0031-0602.
---------------------------------------------------------------------------

    However, the conditions for the transfer-based exclusion in the
2008 DSW final rule lack several important implementation provisions
that the Subtitle C requirements for treatment, storage, and disposal
facilities provide. These provisions ensure a greater level of
oversight of the Subtitle C requirements, thereby increasing the
likelihood of compliance and decreasing the potential for risk to human
health and the environment from discarded hazardous secondary material.
Most important of these is the permit requirement under RCRA section
3005, which ensures that EPA or the state has reviewed a facility's
planned operations before waste management begins and which allows
public participation in the environmental decision-making process under
RCRA section 7004. Subtitle C requirements for treatment, storage, and
disposal facilities also include a statutory provision that such
facilities be inspected every two years under RCRA section 3008(e).
Finally, the detailed regulatory standards for hazardous waste
management help ensure that both the regulatory authority and the
regulated community have the specific information they need to comply
in such a way that meets EPA's expectations when the rule was
promulgated. EPA has performed a detailed regulatory comparison of the
2008 DSW final rule with the hazardous waste regulations, identifying
significant differences that could lead to the potential for an
increased likelihood of environmental and public health hazards,
including fires/explosion, soil and water contamination, air emissions,
and abandoned hazardous secondary materials.\18\
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    \18\ See Chapter 2 and Attachment A of EPA's Environmental
Justice Analysis of the Definition of Solid Waste Rule, available in
the docket for today's proposal.
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    EPA has also carefully monitored the implementation of the 2008 DSW
final rule since it came into effect in December 2008. A total of 27
facilities are operating under the transfer-based exclusion, 23 of
which are generators transferring off-site and 4 which are reclamation
facilities.\19\ All four reclamation facilities are RCRA permitted.
(There are no unpermitted reclaimers currently operating under the
transfer-based exclusion.) Of the 23 generators operating under the
transfer-based exclusion, 6 generators appear to have either started or
substantially increased their recycling as a result of the 2008 DSW
exclusions. These six generators had previously reported in their 2007
or 2009 biennial report that they sent their solvents offsite for fuel
blending, and then in 2009 or 2010 notified that they are sending their
spent solvents for reclamation under the 2008 DSW final rule.\20\ To
date, no environmental problems have been reported at facilities
claiming the DSW exclusions. However, because all reclaimers operating
under the transfer-based exclusion also have RCRA hazardous waste
permits, most of the novel conditions of the transfer-based exclusion
(e.g., reasonable efforts audits and financial assurance for
reclamation facilities without a RCRA permit) have not been tested.
---------------------------------------------------------------------------

    \19\ Some of these facilities are also managing hazardous
secondary materials under the generator-controlled exclusion.
    \20\ U.S. EPA, EPA's Evaluation of Data Collected from
Notifications Submitted under the 2008 Definition of Solid Waste
Exclusions, June 30, 2011.
---------------------------------------------------------------------------

    Based on this reconsideration of the DSW transfer-based exclusion
conditions, EPA is now proposing that hazardous secondary materials
transferred for the purpose of legitimate reclamation are most
appropriately regulated under Subtitle C of RCRA. The evidence of past
damage cases leading to significant risk to human health and the
environment from hazardous secondary materials originally intended for
recycling and the underlying

perverse incentives of the recycling market to over-accumulate such
hazardous secondary materials intended for recycling, resulting in
discard of the material, indicate the need to regulate these hazardous
secondary materials as hazardous waste, unless there is specific
information about a hazardous secondary material or reclamation
practice that indicates discard is not occurring. EPA is therefore
proposing to withdraw the transfer-based exclusion found in 40 CFR
261.4(a)(24) and (25). EPA requests comment on this withdrawal, and is
particularly interested in any information commenters can provide about
alternative approaches that would address the concerns regarding
ensuring that a transfer-based exclusion does not result in significant
risk to human health and the environmental from discarded hazardous
secondary material (e.g., by adding more conditions, such as requiring
the reclamation facility be inspected every five years, or by requiring
the reclamation facility certify annually that there have been no
releases).
    At the same time, EPA acknowledges that some specific types of
hazardous secondary materials are more like valuable commodities than
solid wastes, and the act of transferring them to a third-party does
not automatically involve discard. Many of the other exclusions in 40
CFR 261.4(a) are for these types of materials, and the non-waste
determination process under 40 CFR 260.34(c) provides an administrative
process for determining that additional hazardous secondary materials
are indistinguishable from products and therefore are not waste. In
addition, in Section XII of this preamble, EPA is requesting comment on
a possible re-manufacturing exclusion from the definition of solid
waste for certain higher-value hazardous secondary materials whose
management is more like manufacturing than waste management. EPA also
requests comment if there are other specific hazardous waste streams or
recycling practices, that, similarly to those found in 40 CFR
261.4(a)(6)-(21), would be most appropriately addressed through a
conditional exclusion due to their physical or chemical properties and/
or current management practices.

VIII. Alternative Subtitle C Regulation for Hazardous Recyclable
Materials

A. Purpose of the Alternative Subtitle C Regulatory Standards for
Hazardous Recyclable Materials

    As discussed above, after examining the potential adverse impacts
to human health and the environment from discarded hazardous secondary
materials transferred to another party for reclamation, EPA is
proposing to replace the transfer-based exclusion with an alternative
regulatory scheme for hazardous recyclable materials transferred from
the generator to other persons for the purpose of reclamation. EPA
recognizes the environmental benefits of safe recycling and how
recycling can contribute to the goal of sustainable materials
management, and acknowledges that in some cases the additional costs of
Subtitle C regulation can be an economic disincentive to such
recycling. However, as discussed in Section VII above, because (1) the
Agency reasonably believes that, absent specific conditions, transfers
of hazardous secondary materials to third-party reclaimers generally
involve discard, and (2) the conditions of the 2008 DSW final rule have
serious gaps that could create a potentially unacceptable likelihood of
adverse effects to human health and the environment from such discarded
material, the Agency has decided to replace the transferred based
exclusion with an alternative hazardous waste standard.
    Specifically, EPA is proposing alternative hazardous waste
standards under 40 CFR part 266 subpart D for generators of hazardous
recyclable materials sent for reclamation. ``Hazardous recyclable
materials'' would be defined as hazardous waste being reclaimed. EPA is
proposing to use this term to be consistent with other standards for
the management of specific hazardous wastes in 40 CFR part 266, and to
distinguish them from the ``hazardous secondary materials'' reclaimed
under the control of the generator and excluded under 40 CFR
261.4(a)(23). These proposed alternative standards are designed to be
as protective as the current hazardous waste standards, but tailored to
the specific circumstances faced by generators of hazardous waste who
would want to send their materials to a reclaimer, but are not able to
do so because they cannot accumulate enough hazardous waste during the
generator accumulation time limits to make such recycling economically
viable.
    Under these alternative standards, the hazardous recyclable
material would, for the most part, be subject to all hazardous waste
regulations (i.e., accumulated in Subtitle C storage units, transported
under a hazardous waste manifest, sent to a RCRA-permitted facility or
a facility operating under 40 CFR 261.6(c)(2)). However, in order to
allow generators time to accumulate enough hazardous recyclable
material to make reclamation more economical, EPA is proposing
alternative regulatory standards that would allow hazardous recyclable
materials to be accumulated up to one year without a permit or interim
status (although the hazardous waste generator standards would continue
to apply).
    To guard against the risks of over-accumulation and possible
abandonment of hazardous recyclable materials, EPA is proposing that
before operating under the alternative standard and by March 1 of each
even-numbered year thereafter, a generator must notify the EPA Regional
Administrator (or the State Director, if the state is authorized). In
addition, before operating under the alternative standard, the
generator must develop a reclamation plan that provides details of
where the hazardous recyclable material will be sent for reclamation, a