is not modifying existing exclusions, there is no essential change
regarding legitimacy determinations, except that the factors are now
codified. A company’s ability to claim a recycling exclusion has
always depended on the recycling being legitimate.

The regulatory language does not preclude other considerations when
looking at the codified factors for making legitimacy determinations. We
recognize that additional information about the recycling activity could
be helpful and could be used when assessing the four legitimacy factors
and in making a determination about whether a specific recycling
activity is legitimate. In fact, we encourage the regulated community
and implementing agencies to use any and all information about the
recycling process to come to an informed decision on the legitimacy of a
hazardous secondary material recycling operation. However, given the
public comment on the October 2003 proposed rule and the March 2007
supplemental proposal, no other factors have been identified and we
believe that the four factors codified in today’s rule include the
relevant principles of legitimate recycling.

C. Revised Structure for the Definition of Legitimate Recycling

In the March 2007 supplemental proposal, we proposed a new structure for
the definition of legitimate recycling. The first part consisted of
those factors that must be met, which included a requirement that the
hazardous secondary materials being recycled provide a useful
contribution to the recycling process or to the product of the recycling
process and a requirement that the product of the recycling process be
valuable. EPA considers these two factors to be fundamental to
legitimate recycling and if a recycling process does not meet them, it
is sham recycling (i.e., treatment or disposal of a hazardous waste
under the guise of recycling).

The second part of the proposed structure included two additional
factors that must be taken into account when a legitimacy determination
is being made. We explained that while these two additional factors are
important in determining whether a particular process is legitimate,
there may be circumstances under which a legitimate recycling process
might not conform to one or both of these factors. The two additional
factors are whether the hazardous secondary materials are managed as a
valuable commodity and whether the product of the recycling process
contains significant concentrations of hazardous constituents. We note,
however, that in cases where a recycling practice does not meet one or
both of these factors, the hazardous secondary material generator and/or
recycler should be able to demonstrate why the recycling is in fact
still legitimate.

Comments: revised structure

The public comments on the individual factors in the March 2007
supplemental proposal showed that, as in the comments to the October
2003 proposal, there continues to be general agreement from industry and
state commenters on two factors (useful contribution and valuable
product/intermediate). Commenters were virtually unanimous in their
agreement that these two factors are crucial indicators of legitimacy
and should be included in the concept of legitimacy. In other words,
there was agreement that recycling cannot be legitimate if the material
being recycled does not provide a useful contribution to the process or
to the product and if the recycling process does not yield a product or
intermediate that is valuable to someone. Certain commenters requested
that EPA provide additional information on how it defines these terms
and, while there was some disagreement with the specifics laid out in
the preamble, there was little disagreement with the basic overarching
concepts.

Although there was support for the structure for legitimacy that was
proposed in the March 2007 supplemental proposal, most states, the
environmental community, and the waste management industry argued that
all four of the factors should be mandatory requirements—that is, they
must all be met for the recycling activity to be considered legitimate
recycling. Industry had a more mixed response to this issue with some
supporting the proposed structure and others preferring that the factors
be finalized as balancing factors. Several commenters expressed their
preference for keeping the legitimacy factors as guidance, but stated
that if the Agency decided to codify the legitimacy factors, they
preferred the structure as proposed in the March 2007 supplemental
proposal. Others expressed their opinion that while they preferred
non-mandatory criteria, the proposed approach was reasonable.

EPA’s response: revised structure

EPA agrees with the commenters on the importance of the two factors
(useful contribution and valuable product/intermediate) that were
proposed to be mandatory in evaluating legitimate recycling and, for
this final rule, we have decided that these two concepts are, in fact,
at the very core of what it means to recycle legitimately. Therefore,
the final regulatory language states in 40 CFR 261.2(g)(2) that
“[l]egitimate recycling must involve a hazardous secondary material
that provides a useful contribution to the recycling process or to a
product of the recycling process, and the recycling process must produce
a valuable product or intermediate.” This statement is followed by
clauses (i) and (ii) that give more details on how the Agency defines
these concepts.

EPA has determined that the other factors are still important in making
legitimacy determinations, but do not necessarily have to be met for the
recycling activity to be considered legitimate. Instead, the regulations
state that a person making a legitimacy determination must consider
these two factors, which are found in §261.2(g)(3) of the final
language. In stating that the factors must be considered, EPA expects
that those making legitimacy determinations will evaluate how the
hazardous secondary materials in question are managed as compared to
analogous raw materials and how levels of hazardous constituents in
their products compare with the levels of hazardous constituents in
analogous products. If the generator or recycler determines that one or
both of these factors are not met, that person should be prepared to
explain why their recycling activity is nevertheless still legitimate.
We would note that the facility may be requested to demonstrate the
legitimacy of their recycling process and explain why one or both of
these factors do not apply in their specific situation.

Comments: mandatory factors

As part of the October 2003 proposal to codify the definition of
legitimacy, the Agency solicited comment on whether the factors should
continue to be used in the same way as the previous guidance had been
used, as factors to be balanced or considered in making an overall
determination, or whether the factors should be structured differently
in the final rule, such as in the form of mandatory requirements that
must all be met. Based on comments received on that proposed rulemaking,
we proposed a new structure in the March 2007 supplemental proposal with
two mandatory factors and two factors that must be taken into account,
but not necessarily met in every situation (72 FR 14198).

Many state implementing agencies argued that all the factors should be
written as mandatory requirements that must be met. Most industry
commenters (but not all) did not. The main argument in favor of making
the factors mandatory requirements is that commenters argued that this
approach would result in legitimacy determinations that are more
objective and more enforceable. The main arguments against making all
the factors mandatory requirements is that the overall determination is
made on a case-by-case basis, which is often facility-specific, and not
all legitimate recycling can fit into such a rigid system.

EPA’s response: mandatory factors

The Agency can see both state and industry viewpoints and, in the end,
as described above, has decided upon a course of action that results in
a compromise between the two approaches. In section IX of this preamble,
we explain in detail the final design of the legitimacy factors, which
includes two factors that must be met (useful contribution and valuable
product/intermediate) and two factors that must be taken into account in
making an overall legitimacy determination. We believe this approach and
the attendant regulatory language is clearer than the existing guidance,
yet retains enough flexibility to account for the variety of legitimate
hazardous secondary materials recycling practices that exist today.

D. Comments on the Specific Factors

In developing the legitimacy factors, the Agency sought a balance
between having a set of specific tests and having the flexibility that
is necessary to allow the four legitimacy factors to apply to hazardous
secondary material recycling practices in the many industrial or
commercial settings to which the factors would be applied. As a result,
each of the legitimacy factors included a term or terms that drew public
comments arguing that the factors were not clearly enough defined. The
underlined terms in the following excerpts from the regulatory text
demonstrate what these terms are:

Factor 1: “Legitimate recycling must involve a hazardous secondary
material that provides a useful contribution to the recycling process or
to a product of the recycling process.”

Factor 2: “The recycling process must produce a valuable product or
intermediate.”

Factor 3: “The generator and recycler should manage the material as a
valuable commodity… Where there is no analogous raw material, the
hazardous secondary material should be contained.”

Factor 4: “The product of the recycling process does not contain
significant concentrations of hazardous constituents [or] contain
concentrations. . .at levels that are significantly elevated from those
found in analogous products.”

The October 2003 proposal gave some narrative descriptions of these
terms to explain what they mean in the context of legitimate recycling,
but that proposal did not provide any concrete tests for how those
specific terms are to be used when judging whether a process and/or
hazardous secondary materials meet these factors.

Comments: defining legitimacy terms

For each of the four factors, the Agency received public comments that
focused specifically on the meaning of and the difficulties in
implementing these factors when the terms are not accompanied by a test
for the hazardous secondary material generators and recyclers to use
when making determinations of legitimacy. For the first factor, the
Agency received several comments on the definition of “useful
contribution” from the October 2003 proposal. For the second factor,
over twenty commenters submitted comments on the definition of
“valuable” in response to the October 2003 proposal. In addition,
the Agency received several comments on the definition of “valuable”
and on the definition of “contained” related to the third factor and
over twenty comments on the definition of “significant” in the
fourth factor. We also received some additional comments on the March
2007 supplemental proposal relating to the same definitional terms in
each factor.

The comments on these terms will be described in more depth in the
discussion below for each of the applicable factors, but, in general,
the comments showed a wide range of opinions: some commenters found the
discussion in the preamble to define the terms was adequate and
appropriate, other commenters objected to the terms as not being clearly
defined, while still other comments found that the terms to be too
subjective to be a useful tool. We also received comments that suggested
alternative ways to define the terms to be clearer or to better meet the
Agency’s objectives.

EPA’s response: defining legitimacy terms

The Agency has incorporated the ideas generated by the comment process
into the final rule, as appropriate. The final language and decisions
regarding the legitimacy factors are laid out below in this section and
in section IX of this preamble, where the final legitimacy language is
discussed more fully. However, after considering the comments, we have
decided that we would not develop specific definitions or precise tests
that hazardous secondary material generators and recyclers must use when
making legitimacy determinations. Instead, the Agency has bolstered our
preamble discussion on the meaning of these terms and has included more
examples than we had in the preambles to the October 2003 proposal and
the March 2007 supplemental proposal.

EPA’s decision not to include specific bright-line tests for the final
legitimacy factors reflects the fact that legitimacy determinations do
not lend themselves to the application of absolute distinctions,
especially given the breadth of recycling practices and recycled
hazardous secondary materials that exist in industry. The main argument
we received for developing specific tests was that, without specific
tests, those making legitimacy determinations may be uncertain about
whether their regulatory agency would agree with that interpretation of
the recycling scenario. This may lead to reduced recycling rates if
companies choose not to recycle rather than risk interpreting their
activities differently than the regulator does. We reiterate the
Agency’s position that codifying the legitimacy factors is not
changing the basic tenets of legitimacy that have been in place since
1985 and believe that the preamble to this final rule provides more
guidance than was previously available.

Although we understand the concerns behind this argument, we are
addressing them by including more discussion and explanations of the
final factors in the preamble to the final rule. The complexities of
defining “valuable commodity/product,” “useful contribution,”
“contained,” and “significant” so that they can be determined
through a bright-line test and are still appropriate for all industries,
all recycling processes, and all recycled hazardous secondary materials
are too great for the Agency to be able to design a simple and
straightforward system of tests to be used in making such
determinations. The complex regulatory system of tests for different
types of industries or different processes that would be necessary would
not be efficient or accessible to most generators, especially small
businesses.

In addition, we believe that legitimacy determinations are best made on
a case-by-case basis, which has always been the case, with the facts of
a specific situation in hand. In a case-by-case determination, a series
of specific tests may not be as useful and as accurate in determining
legitimacy as careful consideration of the hazardous secondary material,
the recycling process, and the specifics of the situation would be. If a
person has any questions as to the legitimacy of a particular recycling
activity, he can always approach the appropriate regulatory agency for
assistance in making a legitimacy determination.

Comments: Factor 1—the hazardous secondary material provides a useful
contribution

	Factor 1 expresses the fundamental principle that hazardous secondary
materials must actually be useful (i.e., contribute positively) to the
recycling process and is intended to prevent the practice of
incorporating hazardous secondary materials within manufacturing
operations simply as a means of disposing of them. The Agency firmly
believes that this concept is crucial to the definition of legitimacy
and is finalizing it as part of the core definition. This factor, along
with the second factor described below, must be met for any recycling
activity to be considered legitimate recycling. The regulatory text for
this factor is found in 40 CFR 261.2(g)(2)(i).

In general, we received much support for and agreement with the
underlying principle of this factor—that the hazardous secondary
materials must provide some useful contribution to either the recycling
process or the recycled product. Commenters asked for clarification on a
number of issues related to this factor, specifically in regard to the
October 2003 proposal and how the economics of recycling is connected to
this factor and how the economics of recycling should be evaluated. In
the March 2007 supplemental proposal, we described how the economics of
recycling relates not only to the useful contribution factor but, in
fact, to all of the factors of legitimacy and explained our thinking
about how evaluating the economics of recycling transactions should be
undertaken.

EPA’s response: Factor 1—the hazardous secondary material provides a
useful contribution

The Agency is today finalizing this factor as part of the core
definition of legitimate recycling and as a factor that must be met for
the recycling to be considered legitimate. We also revised the October
2003 proposal discussion regarding the consideration of economics
related to this criterion, and we expanded its consideration beyond just
the useful contribution criterion. Today we are offering further
guidance, similar to the March 2007 supplemental proposal, which
explains how economics may be considered in making legitimacy
determinations and how it may apply to the mandatory factors and the
factors that must be taken into account.

 Comments and EPA’s response: Factor 1—contribution to the process

EPA also received comments on our statements in the October 2003
proposal that indicated that not every component of a hazardous
secondary material does or must contribute to the recycling process or
recycled product in order for there to be an overall contribution. In
particular, one state agency favored allowing the non-hazardous
component of hazardous secondary materials to provide the useful
contribution and one industry commenter agreed that not all of the
hazardous secondary material would have to contribute for this factor to
be met. Another state agency asked us to clarify that the statement
“not every component of a hazardous secondary material would
necessarily have to contribute to the product or the process to meet
this criterion” was applicable only in the context of this factor.

It has been the Agency’s longstanding policy that not every
constituent or component in a hazardous secondary material would have to
contribute to a recycled product or intermediate or to the recycling
process in order for there to be an overall contribution. For example,
the use of hazardous secondary materials in zinc fertilizer is
considered legitimate recycling when the zinc, a non-hazardous
constituent, is the main contribution to the fertilizer. Another example
is the use of CRT glass used in copper smelters as a fluxing agent. In
this case, the glass provides a useful contribution by facilitating the
manufacturing process. Thus, we agree with commenters who raised
questions about this issue and are restating our position here.

Comments and EPA’s response: Factor 1—efficiency of the process

Another issue that was discussed in the October 2003 proposal arising in
the context of useful contribution was the efficiency of a recycling
process in recovering or regenerating the useful component of the
hazardous secondary material. One example we used was the recovery of
copper from a hazardous secondary material. We stated that where the
process was reasonably efficient and recovered all but a small
percentage of the copper, it looked like legitimate recycling. However,
where a small percentage of copper in the hazardous secondary material
is recovered, sham recycling may be indicated. However, we did not opine
on recovery rates in the middle range (e.g., 50% of copper recovered
from a particular recycling process) and some commenters asked for
clarification, including how the factor applies to hazardous secondary
materials that are contributing to the recycling process either as a
carrier or a catalyst.

The Agency is clarifying in today’s preamble and regulatory text that
the useful contribution of a hazardous secondary material to the
recycling process or product can be demonstrated in a number of ways. We
provided a number of different ways such a material could contribute to
the process in the preamble to the October 2003 proposed rule (68 FR
61584–61585) and did not mean to imply that the hazardous secondary
material would have to meet all of the examples to provide a useful
contribution. For example, hazardous secondary materials could provide a
useful contribution to a process by serving as a carrier or catalyst and
the process efficiency would not factor into the demonstration of this
factor in this example.

In general, the regulated community should look to typical industry
recovery rates to determine if the recycling recovery rates are
reasonably efficient in terms of making a useful contribution to the
recycling process or product. In addition, it should be noted that EPA
would generally look at the quantity or the rate of recovery of the
overall process, not the recovery rate of a single step in the process,
when analyzing this factor for legitimacy. For example, if one step in
the process recovers 10% of the constituent, but the overall process
recovers 90%, the Agency would see this as reasonably efficient and one
way to demonstrate that the hazardous secondary materials are providing
a useful contribution. This assumes that there is enough of the target
constituent present in the hazardous secondary materials to contribute
meaningfully to the recycling activity.

Comments and EPA’s response: Factor 1—residuals

In the discussion of useful contribution in the October 2003 proposal,
in the context of process efficiency, we stated that a “pattern of
mismanagement of the residues” may be an indicator of sham recycling
(68 FR 61584). We received several comments asking us to explain the
connection between useful contribution of the hazardous secondary
materials and management of residues. Several commenters questioned this
statement and disagreed that how a facility managed its residues had any
bearing on whether the hazardous secondary materials going into a
recycling process were being legitimately recycled.

We agree with the commenters who suggested that the management of
residuals from the recycling process is not an indicator of whether the
hazardous secondary materials provide a useful contribution and thus is
not a factor in determining whether legitimate recycling is occurring.
For these reasons, we are making it clear that the management of
recycling residuals is not a consideration in making legitimacy
determinations. Instead, as part of today’s final rule, we are
requiring that any residuals that are generated from the recycling
process be managed in a manner that is protective of human health and
the environment. Specifically, there is a requirement for hazardous
secondary material generators to make reasonable efforts to ensure that
the hazardous secondary materials are legitimately recycled and, among
other things, that the reclaimer manages the hazardous secondary
materials in a manner that is protective of human health and the
environment, including how any recycling residuals are managed. Finally,
we note that the generation of residuals that are solid wastes are
subject to the waste characterization and identification requirements in
40 CFR Part 261 as a newly generated waste.

Comments: Factor 2—the recycling process yields a valuable
product/intermediate

This factor is intended to capture the fundamental concept that
legitimate recycling must produce something of value. For the purposes
of evaluating this factor, a recycled product or intermediate would be
considered valuable if it can be shown to have either economic value or
value that is more intrinsic (i.e., it is useful to the end user, even
though it may not be salable as a product or commodity in the open
marketplace). The regulatory text for this factor can be found in 40 CFR
261.2(g)(2)(ii).

In general, most commenters agreed with the concept that the recycling
process must produce something of value. Many commenters also stressed
the importance of keeping the concept of “intrinsic” value—that
is, a product does not have to be sold to have value. Instead, it can be
used as an effective substitute for a commercial product or as a useful
ingredient in an industrial process. However, other commenters
disagreed, contending that intrinsic value is too subjective to use to
determine compliance. One commenter also thought this factor was
redundant with the factor that hazardous secondary materials must
provide a useful contribution and should be deleted.

Another common concern in the comments was how to evaluate whether the
product or intermediate is valuable. Some commenters stressed the
importance of evaluating this factor over time, given that markets and
prices fluctuate, and others felt that it must be done on a case-by-case
basis.

EPA’s response: Factor 2—the recycling process yields a valuable
product

In general, the Agency agrees with the commenters who stated that a
product’s value can be either monetary or intrinsic. Clearly, not all
valuable products are sold. For example, many legitimate recycling
situations exist where the intermediate or recycled product has value
and is used on-site, sent off-site to another facility owned by the same
company, or even traded between companies. There are a number of already
established networks where hazardous secondary materials are exchanged
among and across industries. We do not intend to interfere with those
ongoing exchanges where such materials are being legitimately recycled.
One example of such a program is the U.S. Business Council for
Sustainable Development’s by-product synergy program which has
conducted a number of regional pilots in which diverse industries are
brought together to facilitate feedstock and by-product exchanges.
Typically, no money is exchanged in these types of programs.

We are also clarifying in the regulatory text that the product of the
recycling process can be either a commercial product or intermediate, as
long as it has value to the end user. In addition, we are further
clarifying that the regulated community does not need to evaluate each
step in the recycling process to determine if the final products or
intermediates are valuable. Rather, an individual recycler or generator
would look at its final product or intermediate and must be able to
demonstrate why it has value.

We understand the concerns of some commenters that intrinsic value is
harder to demonstrate than the value of a recycled product that is sold
in the open marketplace. While this demonstration is not as
straightforward, there are a number of ways the end user can demonstrate
the intrinsic value of the recycled intermediate or product. Some
examples include showing that the recycled product replaces an
alternative product or material that would otherwise have to be
purchased or by demonstrating that a recycled product or intermediate
meets specific product specifications or established industry standards.
Another approach to demonstrating the value of a recycled product or
intermediate would be to compare its characteristics (e.g., its
physical/chemical properties or its usefulness for certain applications)
with comparable products or intermediates made from raw materials.

Finally, we disagree with the commenter who stated that this factor is
equivalent to the hazardous secondary material making a useful
contribution to a product or intermediate. It is certainly possible for
a recycling process to result in the production of a valuable product or
intermediate without the hazardous secondary materials added to the
process making any contribution whatsoever. For example, this would be
the case when hazardous secondary materials are added to the process and
all of the hazardous secondary materials, including the hazardous
constituents, end up in the residuals, which are discarded, and the
materials added to the process provide no benefit whatsoever. This is
the essence of sham recycling. A vast majority of the commenters saw the
need for both factors and after exploring the concept of legitimate
recycling further, we were unable to find any examples of legitimate
recycling that did not meet both of the core factors (i.e., the
hazardous secondary material provides a useful contribution and the
recycling process produces a product of value), nor did any commenters
provide us with such examples. Thus, we are retaining both concepts as
factors that must be met in order for a process to be considered
legitimate recycling.

Comments: Factor 3—how the hazardous secondary material to be recycled
is managed

	This factor on the management of hazardous secondary materials was
designed to illustrate that hazardous secondary materials that are bound
for recycling should be managed to prevent releases into the environment
in the same way that valuable commodities would reasonably be expected
to be managed. Hazardous secondary materials that are recycled are
valuable production inputs. As such, we believe that such materials
should be managed in a way that retains their value and prevents
significant losses to the environment. Hazardous secondary materials
that are mismanaged to the extent that they are released into the
environment are not recycled.

	This factor is one of the two legitimacy factors that EPA believes need
to be considered. However, in some cases, it may not be clear that the
factor is met or it may not be met, yet the recycling activity can still
be legitimate. The regulatory text for the factor can be found in 40 CFR
261.2(g)(3)(i) and it states that the handler should manage the
hazardous secondary material “as a valuable commodity.” If an
analogous raw material exists, the hazardous secondary material should
be managed, “at a minimum, in a manner consistent with the management
of the raw material.” If there is no analogous raw material, the
proposal states that the hazardous secondary material should be
“contained.”

The response from commenters on this factor was mixed in response to
both the October 2003 proposal and the March 2007 supplemental proposal.
Many states and environmental organizations commented that the factor
should be mandatory and some argued that it should include a strict
test. Many commenters from generating industries and the waste
management industry stated that they support this factor and believe
that it is a fair and reasonable indicator of legitimacy. Some industry
commenters thought that this factor should be mandatory, whereas others
commented that the factor should neither be codified nor mandatory. At
least one commenter stated that the factor was not necessary because of
other existing disincentives for mismanagement. Representatives from
extractive industries were most strongly opposed to this factor, stating
that EPA cannot include legitimacy requirements on secondary materials
that are going to be recycled because they are not in EPA’s
jurisdiction.

EPA’s response: Factor 3—how the hazardous secondary material to be
recycled is managed

Today we are finalizing this factor as one of the two factors that must
be considered during a legitimacy determination, but not necessarily
met. We modified the language of this factor since the October 2003
proposal and are finalizing it basically as proposed in the March 2007
supplemental proposal.

EPA has decided that it is most appropriate to finalize this factor as
one of the factors that must be considered rather than as a mandatory
factor. Although we believe that this factor is an important part of a
legitimacy determination because hazardous secondary materials that are
not being managed carefully may be materials that the recycler does not
value for its process, the factor is not part of what the Agency
considers the core of legitimacy. In addition, as discussed in section
IX of this preamble, EPA and commenters were able to identify situations
in which this factor is not met, but the recycling appears to be
legitimate because the hazardous secondary materials are still being
managed in a responsible manner. EPA does not want to restrict
legitimate recycling and, therefore, in these cases, the facility could
make a determination of legitimacy without meeting this factor, but
should be prepared to explain why its recycling is legitimate.

EPA also believes that this factor can be critical when considering
whether hazardous secondary materials are legitimately recycled and EPA
disagrees with commenters who argued that evaluating “materials
management” is outside the scope of RCRA because hazardous secondary
materials are not solid wastes due to being excluded. EPA believes that
the commenters’ argument is circular. The hazardous secondary
materials are excluded only if the recycling is legitimate. How
materials are managed is part of determining legitimate recycling. EPA
has the authority to define legitimate recycling and, therefore, has the
authority to require this evaluation.

Comments: definition of terms in Factor 3

Commenters stated that compliance with this factor is dependent on the
regulated community and regulators understanding what EPA means by it.
In the October 2003 proposal, we proposed that the factor read,
“[w]here there is no analogous raw material, the secondary material
should be managed to minimize the potential for releases to the
environment.” Many commenters stated that the term “minimize” in
this context was particularly unclear. State commenters argued that the
term “minimize” did not provide enough guidance or could be
interpreted to allow unclear amounts of hazardous secondary materials to
be released, leaving room for potential mismanagement of that material,
whereas some industry commenters asked if this standard meant they would
have to meet or exceed controls required for regulated hazardous wastes
in their recycling operations. Several commenters also asked about the
term “valuable commodity” and how “valuable” is defined.

EPA’s response: definition of terms in Factor 3

EPA agrees that terms for this factor should be more clear to facilitate
compliance. Although we have not developed a specific test or codified
definitions to explain this factor, we have adjusted some of the
language in the factor to address this concern and are providing further
explanation of what we intend by this factor in today’s preamble so
that it is better understood and can be consistently applied.

In the March 2007 supplemental proposal, we modified the language for
this factor to state instead that “[w]here there is no analogous raw
material, the hazardous secondary material should be contained.” This
change addressed the ambiguity of the word “minimize,” as well as
state comments that the storage requirements in this factor needed to be
better defined. The Agency believes that facilities that value hazardous
secondary materials as part of their manufacturing process will contain
those materials to prevent their release. The term “contained” is
also being used today as part of the exclusions being finalized. EPA is
using the term in this legitimacy factor in the same way as in the
exclusion: a recyclable material is “contained” if it is placed in a
unit that controls the movement of that material out of the unit. We
also believe that the standard for contained is more clear for states
and industry than the standard to minimize potential releases to the
environment was in the October 2003 proposal.

We also want to clarify the use of several other terms on which we
received comments. These terms are discussed briefly here and in more
depth in section IX of this preamble, where the legitimacy factors are
fully described. “Analogous raw material,” also defined in today’s
preamble as part of the exclusions, is a raw material for which a
hazardous secondary material is a substitute and which serves the same
function and has similar physical and chemical properties as the
hazardous secondary material. Materials generally would not be
considered analogous if their chemical makeup were very different from
one another—particularly if the hazardous secondary materials contain
hazardous constituents that necessitate management processes that the
raw material does not—or if their physical properties are different.

Regarding the term “valuable commodity,” EPA believes that hazardous
secondary materials should be managed in the same or similar manner as
raw materials that have been purchased or obtained at some cost. The
legitimacy criteria are designed to determine whether a process is like
manufacturing rather than like waste management. We believe that the
standard for management of the hazardous secondary materials is
reasonable for helping assess whether disposal in the guise of normal
manufacturing is occurring.

Comments: Factor 4—comparisons of toxics in the product

This factor was designed to prevent hazardous constituents from being
“discarded” by being incorporated into a product made from hazardous
secondary materials. The factor identifies this situation as being
hazardous constituents that are in a product made from hazardous
secondary materials when they are not in analogous products, or when
hazardous constituents are at significantly higher levels in products
made from hazardous secondary materials than in analogous products that
contains such hazardous constituents, or when the product exhibits one
or more of the hazardous characteristics and the analogous product does
not. An analogous product can either be the final product of
manufacturing or, in some cases, an intermediate in a process. These
hazardous constituents are often called “toxics along for the ride”
(TARs) and, if present, could be an indicator of discard.

This factor is the second of the two legitimacy factors that EPA
believes need to be considered but, in some cases, does not need to be
met for the recycling activity to be considered legitimate. We modified
the language of this factor since the October 2003 proposal and are
finalizing it basically as proposed in the March 2007 supplemental
proposal. The regulatory text for the factor can be found in 40 CFR
261.2(g)(3)(ii) and it states that the person making the determination
should look at the product of the recycling process and compare it to
analogous products that are made without hazardous secondary materials.
The person making the determination should examine the concentrations of
hazardous constituents to learn whether the product of the recycling
process contains significant concentrations of hazardous constituents
when the analogous product contains none, whether it contains
significantly elevated levels of hazardous constituents when compared to
the analogous product that contain such hazardous constituents, or
whether it exhibits a hazardous characteristic when the analogous
product does not.

	The Agency received many comments on the fourth factor in response to
both the October 2003 proposal and the March 2007 supplemental proposal.
The comments the Agency received on Factor 4 were very mixed, ranging
from commenters who argued that this factor should be one of the factors
that must be met to those who stated that the factor is irrelevant and
should not be considered as part of a legitimacy determination.

EPA’s response: Factor 4—comparisons of toxics in the product

Today, we are finalizing this factor as one of the two factors that must
be considered during a legitimacy determination, but not necessarily
met. EPA maintains that this factor is an important way of determining
whether a recycling process is, in fact, true recycling rather than a
“sham.”

If hazardous secondary materials with a toxic constituent or toxic
constituents in amounts or concentrations greater than analogous raw
materials are simply being run through a manufacturing process, it is an
indication that those materials may be being discarded in the guise of
recycling. Toxics that are illegally disposed of in this manner can
become exposure risks and could harm human health and the environment.
EPA has jurisdiction over materials being discarded and, therefore, is
requiring that this factor be considered in legitimacy determinations.
The factor is not one of the mandatory factors because the Agency has
identified situations where higher levels of toxic constituents may not
be relevant or applicable and, thus, would not be an indicator of
“sham” recycling if this factor is not met, as discussed in section
IX of this preamble. In these cases, the facility could make a
determination of legitimacy without meeting this factor, but should be
prepared to explain why its recycling is legitimate.

Comments: Factor 4—the term “significant” and alternative
approaches

	Many of these comments sought further guidance on the meaning of the
term “significant” in the proposed regulatory text, stating that the
definition in the proposal was unclear or subjective, which may lead to
a wide range of possible interpretations of the term. Commenters also
expressed concern that a definition that is too vague may discourage
recycling. In a related topic, commenters also responded to EPA’s
request for comments on two alternate approaches in the October 2003
proposal: (1) an approach that would establish a “bright line” for
complying with the factor by specifically defining the terms
“significant amounts” and “significantly elevated” in the
regulatory text and (2) an approach that would require the use of risk
analysis tools to determine if a product with elevated levels of a
hazardous constituent due to use of hazardous secondary materials in its
manufacture posed a greater risk to human health or the environment than
the analogous product made from raw materials.

On the whole, commenters were not enthusiastic about the two alternative
approaches that EPA suggested. Most commenters stated that a specific
test of either nature would not be appropriate because of the wide
variety of recycling situations to which it would have to apply.

EPA’s response: Factor 4—the term “significant” and alternative
approaches

The Agency believes that designing a specific test, such as those
described in the preamble to the October 2003 proposal, that is
applicable to the many different recycling scenarios possible across all
industries would be difficult, if not impossible. Thus, we agree with
those commenters who argued against adopting such a specific test.
Therefore, the Agency has more clearly described in this preamble to the
final rule what it means by “significant” so that members of the
regulated community can be confident in their evaluations of whether
their products made from hazardous secondary materials contain “toxics
along for the ride.” Therefore, members of the regulated community
will neither be discouraged from recycling nor be forced to seek an
opinion from a regulatory agency in every case. Details on
implementation of this factor are in section IX of today’s preamble.

Comments: Factor 4—comparing the products instead of hazardous
secondary materials

Most commenters responded positively to a change the Agency made in its
October 2003 proposal to compare the product of the recycling process to
the analogous product made from raw materials rather than comparing the
hazardous secondary materials to the analogous raw materials, as was
laid out in the 1989 Lowrance Memo. EPA discussed this shift in its
October 2003 proposal at 68 FR 61586–61587.

However, several commenters argued that the change is an attempt by the
Agency to regulate products or stated that certain unique elements of
their production processes made it so that this factor should not apply
to their industry or their particular process. In addition, some
commenters were concerned that under this factor, in some cases, the
generator would have to know what was being done with its material
several steps downstream in the recycling process when it was
incorporated into a final product.

EPA’s response: Factor 4—comparing the products instead of hazardous
secondary materials

The Agency believes that for an entity to ensure that hazardous
secondary materials are being legitimately recycled and not discarded,
it needs to know what happens to the hazardous secondary materials once
they leave the generator’s control. However, in response to these
comments, we are clarifying in today’s preamble that the final
legitimacy factor allows the entity conducting the legitimacy
determination to make the comparison on “toxics” either between the
final products or between the hazardous secondary material and the
analogous raw material it replaces. If the comparison of materials going
into the process shows no significant difference in levels of toxics,
the product of the recycling process will not significantly differ from
analogous products in those levels either. In cases where the generator
finds it too complex to compare the product from its recycling process
to the analogous product made from the virgin raw material, it can,
instead, compare the chemistry of the materials going into the process
to evaluate this factor.

Comments and EPA’s response: relevance of Factor 4 to a particular
process

Regarding the implementation of this factor, several commenters raised
the concern that many products that are made from hazardous secondary
materials do not have analogous products made from raw materials because
they are always or have always been made from a combination of primary
and in-process materials and that these are cases where this factor is
not relevant to that particular recycling process. The commenters state
that this is especially true in the mineral extraction industries, but
also may be the case in other industries as well.

The Agency is aware that there are situations where there may not be
analogous products made from raw materials. In that case, the facility
can opt to compare the toxic constituents in the hazardous secondary
material it is using against those in an analogous raw material instead.
We also note that while this factor needs to be considered, it is not
mandatory because EPA recognizes that in some situations, it will not be
relevant to a particular industrial process. In the case where the
facility considers this factor and decides that it is not applicable to
its process, the Agency suggests that the facility evaluate the presence
of hazardous constituents in its product and document both that it
considered this factor and the reasons it believes the factor is not
relevant.

E. Consideration of Economics in Legitimacy

Comments: economics considerations

EPA received several comments in response to the preamble discussion
about how to consider economics in the context of making legitimacy
determinations in the March 2007 supplemental proposal. EPA did not
propose that economic consideration be codified within the regulatory
definition of legitimate recycling and instead offered guidance on how
economic consideration is relevant to determining the legitimacy of a
recycling operation.

All of the commenters that addressed the “economic considerations of
recycling,” except one, were in support of the preamble discussion.
Specifically, EPA agrees with commenters who supported our position on
the following: the economics of recycling are relevant to making
legitimacy determinations, the economics of recycling are in fact
different from traditional manufacturing, a recycling activity can be
legitimate if a recycler charges a fee to accept hazardous secondary
materials, economic considerations need to take into account the
fluctuations in market prices of raw materials, and negative economic
factors can contribute to environmental problems, such as speculative
accumulation, abandonment, and sham recycling. Only one commenter
suggested that any discussion of economics and recycling was
inappropriate and outside of the scope of environmental regulations.

	However, EPA received many comments from both industry and recycling
associations that opposed codifying economics consideration as a
separate “factor to be considered” under 40 CFR 261.2(g)(3). These
commenters generally argued that consideration of economics was inherent
within the four legitimacy factors (e.g., both of the mandatory factors,
as well as the two factors which must be considered) and, therefore, a
separate factor was not warranted. On the other hand, a few commenters
(primarily states) requested that EPA codify a separate economics factor
to be considered and they supported the inclusion of an enforceable
factor for legitimacy determinations.

EPA’s response: economics considerations

EPA agrees with those commenters who argued that economic considerations
are inherent within the legitimacy factors. We believe that one specific
factor cannot encompass all economic scenarios for the entire universe
of hazardous secondary materials recycling. Furthermore, we do not
believe that codifying a separate enforceable factor strengthens the
definition of legitimate recycling, but we do believe that articulating
how economic considerations can influence the legitimacy factors adds
real value to the legitimacy determinations made by state regulators and
the regulated community.

Based on the comments we received and historical consideration of
economics via the Lowrance Memo, the Agency is not codifying specific
regulatory language on economic considerations. Instead, today’s
preamble offers guidance and clarification on how economics may be
considered in making legitimacy determinations, similar to the preamble
discussion in the March 2007 supplemental proposal. For more detailed
information on economic considerations, please refer to “How
consideration of economics applies to legitimacy” in section IX of
today’s rulemaking.

Comments and EPA’s response: specific test for economics

EPA received some comments on the need for a specific test for
consideration of economics. Commenters that supported a specific test
believed it could include an accounting of economic flows over a period
of time to determine longevity; an annual regulatory review of markets
and a facility’s economics; a “rebuttable presumption that the
recycling is legitimate where the recycler pays for the secondary
materials,” similar to manufacturing operations; and a requirement
that payment for recycled products and intermediates be more than
nominal if considered to be a sign of positive economics. One comment
was also submitted which expressly opposed a specific test, citing that
markets fluctuate too much to analyze the flows of revenues.

EPA believes that none of the examples suggested by the commenters are
applicable to the entire universe of recycling activities. We also
acknowledge that fluctuations in markets for hazardous secondary
materials and recycled products, and subsequent impacts in revenue
flows, create another challenging aspect of developing  a test for the
consideration of economics. Therefore, we believe that it is not
possible to craft an economic test for legitimacy that can accommodate
all legitimate recycling activities. As stated in section IX of
today’s rulemaking, we believe that this preamble discussion provides
sufficient guidance on how to consider economics in legitimacy
determinations.

F. Documentation of Legitimacy

Comments and EPA’s response: documentation of legitimacy

Several of the public comments stated that it is important that the
hazardous secondary material generator or recycler of a recycled
material maintain documentation that substantiates how the recycling
activity complies with the legitimacy requirements. The comments stated
that these records would show how the recycling activity meets the
factors or, if a factor is not applicable, the records would document
why it is not necessary for it to meet that factor. In this way, the
hazardous secondary material generator or recycler could show that it
considered all the factors. Other commenters objected to any
recordkeeping requirements documenting that a recycling activity is
legitimate, arguing the policy is not new so, therefore, no new
documentation should be required.

	The Agency has determined that for the purpose of the legitimacy
factors in the final rule, 40 CFR 261.2(f) applies. Section 261.2(f)
states that, in the context of an enforcement action to implement
Subtitle C of RCRA, a person claiming that a material is not a solid
waste or is conditionally exempt from regulation is responsible for
showing that they meet the terms of the exclusion and must provide
appropriate documentation to show why they are eligible. For the
legitimacy requirements finalized today, this provision would require
that persons claiming that their recycling activity is legitimate would
have the burden to provide documentation showing how the hazardous
secondary materials provide a useful contribution to the recycling
process and how the product of the recycling activity—whether it is a
consumer product or a process intermediate—is valuable. In addition,
the documentation would have to show that the hazardous secondary
material generator or recycler considered the other two factors and
determined for each of them that either the activity meets the factor or
that the factor does not apply to this recycling activity and why it is
not relevant or appropriate to consider.

	In addition, as part of today’s transfer-based exclusion, the
hazardous secondary material generator has to undertake reasonable
efforts to ensure its hazardous secondary materials will be legitimately
recycled pursuant to §261.2(g). As part of the reasonable efforts
requirements, generators must document their reasonable efforts per
§261.4(a)(24)(iv)(C).

XIX. Major Comments on Non-Waste Determination Process

In the March 2007 supplemental proposal, EPA proposed a non-waste
determination process that would provide persons with an administrative
process for receiving a formal determination that their hazardous
secondary materials are not discarded and, therefore, not solid waste.
The process would be voluntary and available in addition to the two
self-implementing exclusions. EPA proposed three types of non-waste
determinations: (1) for hazardous secondary materials reclaimed in a
continuous industrial process; (2) for hazardous secondary materials
indistinguishable in all relevant aspects from a product or
intermediate; and (3) for hazardous secondary materials reclaimed under
the control of the generator, such as through contracts similar to
tolling arrangements. For each type of non-waste determination, EPA
proposed a set of criteria which the hazardous secondary materials would
have to meet in order to receive a formal non-waste determination from
the regulatory authority. For a detailed description of the non-waste
determination process that EPA is finalizing today, see section X of
today’s preamble.

Comments: finalizing the non-waste determination process

Overall, many commenters supported the non-waste determination process
because it provides persons with regulatory certainty and offers a
flexible alternative to the self-implementing exclusions included in
today’s rule. On the other hand, some commenters argued that the
non-waste determination process would be resource-intensive, placing a
significant burden on the states that would have to perform a
case-by-case review of each application. One commenter said that,
historically, many hazardous waste facilities have sought formal
approval of their recycling practices from regulators and that EPA may
be underestimating the number of applications that states would receive
from the regulated community. Additionally, one state commenter
mentioned that the non-waste determination process would increase
regulatory inconsistency between states and at least two state
commenters saw no reason to establish a formal non-waste determination
process since they viewed the current variance procedure under 40 CFR
260.33 and their own state determination processes as an effective means
to the same end. Finally, a few commenters did not support the non-waste
determination process because of its lack of explicit conditions, such
as those conditions required for the two self-implementing exclusions in
today’s rule.

EPA’s response: finalizing the non-waste determination process

EPA agrees with the majority of commenters who support the non-waste
determination process as an alternative way for hazardous secondary
material generators to seek regulatory certainty in circumstances
involving reclamation of hazardous secondary materials which do not
clearly fit under today’s self-implementing exclusions. EPA, however,
does not agree with commenters who believe the non-waste determination
would cause significant burden to states. Instead, we anticipate that
the vast majority of persons will choose to use the self-implementing
exclusions because this would be less resource intensive for the
facility. In fact, the Agency does not envision any person submitting
such an application if they are considered “under the control of the
generator” because there are relatively few restrictions for this
exclusion, and, indeed, it would probably require less effort than
seeking a non-waste determination. Thus, the Agency only expects a
limited number of persons to submit applications where the regulatory
status is unclear under today’s exclusions and a formal non-waste
determination may be appropriate. EPA further believes that, by modeling
the non-waste determination process after the current variance
procedures, it has kept the additional burden to the states at a minimum
because states can leverage their existing processes.

EPA believes that requiring explicit conditions, such as those required
for today’s self-implementing exclusions, is not warranted for
hazardous secondary materials receiving non-waste determinations because
persons are, instead, required to make specific demonstrations as to how
the hazardous secondary materials meet the eligibility criteria.
Furthermore, regulatory authorities, if they so choose, may stipulate
conditions within the non-waste determination as appropriate and
relevant on a case-by-case basis. One purpose of the non-waste
determination is to provide a measure of flexibility not provided by the
self-implementing solid waste exclusions and specifying the conditions
to be imposed would defeat this purpose.

With respect to the comment regarding inconsistency among state
non-waste determinations, EPA notes that, by allowing states to become
authorized to conduct their own RCRA hazardous waste programs, the RCRA
statute provides states flexibility to regulate hazardous waste more
stringently than required under the federal regulations. Additionally,
states sometimes take different interpretations of the same or similar
regulations. This situation ultimately leads to variations between state
regulations and interpretations, which EPA views as inherent to the RCRA
structure and, thus, not a quality unique to the non-waste determination
process.

We also want to clarify that, although today’s non-waste determination
process is similar to the current variance procedures, non-waste
determinations are technically not variances in which EPA regulations
otherwise classify materials as solid wastes and facilities may apply
for an exception. Instead, the new procedure would apply to hazardous
secondary materials for which facilities may have doubts as to whether
they fall within the self-implementing exclusions of this regulation and
wish to obtain some measure of certainty.

A. Eligibility for Non-Waste Determination Process

Comments: scope of non-waste determinations

In the March 2007 supplemental proposal, EPA indicated that non-waste
determinations would be limited to reclamation activities and would not
apply to recycling of “inherently waste-like” materials, as defined
at 40 CFR 261.2(d), recycling of materials that are “used in a manner
constituting disposal,” or “used to produce products that are placed
on the land,” (40 CFR 261.2(c)(1)), or “burning materials for energy
recovery” or “used to produce a fuel or otherwise contained in
fuels” (40 CFR 261.2(c)(2)).

EPA received a number of comments urging the Agency to broaden the
non-waste determinations to include all recycling scenarios in which
hazardous secondary materials are not discarded. Some commenters
supported expanding the scope to allow recycling for “burning for
energy recovery” and “use constituting disposal.” These commenters
argued that EPA could achieve further increases in recycling if the
Agency broadened the scope of hazardous secondary materials eligible to
apply for a non-waste determination. On the other hand, some commenters
agreed with EPA’s proposed scope and supported limiting eligibility to
only hazardous secondary materials being reclaimed. Alternatively, a few
commenters supported limiting eligibility only to those circumstances
where the recycling of hazardous secondary materials would not meet
either a condition of the self-implementing exclusions or one of the
legitimacy criteria, but still would not be considered discard. These
commenters also argued that narrowing the eligibility would effectively
limit the number of applications submitted and thus reduce the overall
burden on the states.

EPA’s response: scope of non-waste determinations

EPA agrees with those commenters who supported limiting non-waste
determinations to reclamation activities. With respect to “burning for
energy recovery” and “use constituting disposal,” EPA confirms
that these types of recycling are ineligible for today’s non-waste
determination process. EPA believes that these types of recycling
activities would best be left to other rulemaking proceedings.
Furthermore, we disagree with those commenters who suggest further
limiting the eligibility to only those cases where reclamation of the
hazardous secondary materials would specifically violate a condition of
today’s self-implementing exclusions. We believe that by modeling the
non-waste determination procedure after the existing variance procedure,
we have ensured that any additional burden to the states will be kept at
a minimum and thus further limits on eligibility are not necessary.

Comments: whether the hazardous constituents in the hazardous secondary
materials are reclaimed rather than released to the air, water, or land

Overall, we received only a few comments that discussed the specific
criteria that EPA proposed for the non-waste determinations. For the
criterion regarding whether the hazardous constituents in the hazardous
secondary materials are reclaimed rather than released to the air,
water, or land at significantly higher concentrations, some commenters
argued that this criterion was inappropriate for determining discard
because these types of releases are inevitable when reclaiming hazardous
secondary materials. At least two commenters suggested that EPA should
establish a “bright line” to clearly define “significantly higher
concentrations” in order to provide persons with greater regulatory
certainty. Other commenters expressed concern that this criterion (as
well as the other criteria within 40 CFR 260.34) would be construed to
apply to other types of recycling, including those eligible for
today’s self-implementing exclusions.

EPA’s response: whether the hazardous constituents in the hazardous
secondary materials are reclaimed rather than released to the air,
water, or land

EPA disagrees with commenters who believe this criterion is not relevant
for determining if hazardous secondary materials are being discarded. By
indicating that such releases must not be at “significantly higher
concentrations” than would otherwise be released during the production
process, we believe we have set a reasonable and meaningful bar that
applicants must meet in order to demonstrate that their hazardous
secondary materials are reclaimed and not discarded. Hazardous secondary
materials that fail to meet this criterion may exhibit an indication
that they are discarded and that such handling may present a greater
risk of adverse impacts to human health and the environment. Regarding
those commenters who support a “bright line” in order to define
“significantly higher concentrations,” EPA believes that, given the
wide variety of production processes and recycling practices,
establishing a “one size fits all” objective standard is not
practical and would invite inefficiency.

EPA also confirms that this criterion, and the other criteria in 40 CFR
260.34, are specific to the relevant non-waste determinations, and thus
are not required for the self-implementing exclusions or those
exclusions found in 40 CFR 261.4, unless they are specifically included
under state regulations as a criteria to consider.

Comments and EPA’s response: whether the capacity of the production
process would allow for use of the hazardous secondary material in a
reasonable time frame

For the criterion regarding whether the capacity of the production
process would allow for use of the hazardous secondary material in a
reasonable time frame (proposed explicitly for the non-waste
determination for hazardous secondary materials reclaimed in a
continuous industrial process), some commenters regarded this criterion
as consistent with judicial direction and, thus, supported adding this
criterion to the other non-waste determinations. Since EPA would
consider hazardous secondary materials that were eternally ‘stored’
for future recycling to be akin to discard, EPA agrees with these
commenters that all non-waste determinations should take into account
whether the hazardous secondary materials will be reclaimed within a
“reasonable time frame.” Therefore, in this final rule, EPA has
added this criterion (with appropriate modifications to the language) to
the non-waste determination for hazardous secondary materials
indistinguishable in all relevant aspects from a product or
intermediate. As with the non-waste determination for hazardous
secondary materials reclaimed in a continuous industrial process, a
person does not need to demonstrate that the hazardous secondary
material meets the speculative accumulation limits per 40 CFR
261.1(c)(8), but he must provide sufficient information about the
hazardous secondary material and the process to demonstrate that the
material will in fact be reclaimed in a reasonable time frame and will
not be abandoned. However, a person may still choose to use the
speculative accumulation time frame as a default if he so chooses.

Comments: non-waste determination for hazardous secondary materials
reclaimed under the control of the generator

A few commenters disagreed with the non-waste determination for
hazardous secondary materials reclaimed under the control of the
generator via a tolling arrangement or similar contractual arrangement.
These commenters believed that the generator would be unable to maintain
control over its hazardous secondary materials and residuals once at the
reclamation facility and, thus, could not reliably meet the criteria for
this non-waste determination. One state foresaw major enforcement
problems with situations involving a commercial facility that handles
hazardous secondary materials from multiple customers in a single
process and then mismanages the residuals from that unit. As the
residuals would be linked back to multiple generators, the liability for
the mismanaged residuals would be difficult to detangle. On the other
hand, some commenters felt that all tolling arrangements, including
those eligible for the self-implementing exclusion, would best be
evaluated through the non-waste determination process. These commenters
argued that the regulatory authority should be required to review all
tolling arrangements and their respective liability provisions in order
to ensure that the hazardous secondary materials will not be discarded.

EPA’s response: non-waste determination for hazardous secondary
materials reclaimed under the control of the generator

We did not intend for such circumstances where a hazardous secondary
material generator was unable to maintain control and responsibility
over his hazardous secondary materials to be eligible for a non-waste
determination for hazardous secondary materials reclaimed under the
control of the generator. Where an applicant’s hazardous secondary
materials are intermingled with materials from other hazardous secondary
material generators in a way that renders the applicant unable to
maintain control and liability over his specific materials, the
applicant would have been effectively precluded from obtaining this
formal non-waste determination since he would ultimately fail the first
criterion.

EPA, however, has decided not to finalize the non-waste determination
for materials reclaimed under the control of the generator because EPA
could not identify any comments which described in detail other specific
situations involving tolling or contractual arrangements that would not
already be covered under today’s self-implementing
generator-controlled exclusion. We, therefore, remain unclear as to what
other arrangements exist where the generator would retain control over
its hazardous secondary materials to ensure they are reclaimed and not
discarded. Without this clear picture, EPA believes we cannot finalize
this non-waste determination and thus we are not including it in
today’s final rule.

B. Process for Non-Waste Determinations

In the March 2007 supplemental proposal, EPA proposed that the non-waste
determination process would be the same as that for the solid waste
variances found in 40 CFR 260.33. In order to obtain a non-waste
determination, a facility must apply to the Administrator or the
authorized state. The Administrator or authorized state evaluates the
application and issues a draft notice and opportunity for comment in the
locality where the facility is located. The Administrator or authorized
state would then issue a final decision based on the evaluation of the
comments received.

Comments and EPA’s response: requirement to renew applications

A few commenters argued that non-waste determinations should be renewed,
either periodically or in the event of certain changes to the recycling
process, so that regulators can ensure that the hazardous secondary
materials continue to be reclaimed and not discarded.

EPA agrees with those commenters who believe that certain changes in the
recycling process should logically trigger a re-review of the
circumstances. Therefore, in the event of a change that affects how
hazardous secondary materials meet one or more of the criteria upon
which a non-waste determination has been based, EPA is requiring persons
to re-apply to the Administrator or the authorized state for a formal
determination that the hazardous secondary material continues to meet
the relevant criteria and is not discarded and, therefore, not a solid
waste.

Comments and EPA’s response: timelines for regulators

Some commenters expressed concerns about the length of time an applicant
would need to wait before receiving a formal determination from their
regulatory authority, explaining that particularly lengthy delays would
adversely affect business operations. Although we understand this
concern, requiring non-waste determinations to be made within a specific
time frame would be difficult, as each case varies in complexity with
some requiring more time to review than others. Furthermore, EPA would
be challenged to prescribe one time frame that would accommodate
numerous state regulatory agencies that vary in staffing and workloads.
Therefore, we are not requiring regulators to issue determinations
within a certain period of time.

Comments and EPA’s response: public comment process

At least two commenters suggested updating the format for public notice.
For example, instead of requiring notice through a “newspaper
advertisement or radio broadcast” (as EPA proposed), public notice
should be allowed to include electronic formats, such as posting on a
website or distribution through email, in order to reduce costs. Other
commenters supported requiring public notice for a broader audience, not
necessarily limited to the “locality where the recycler is located.”
These commenters argued that non-waste determinations may have national
implications and would be more appropriately published in the Federal
Register or made available through the EPA Docket Center.

	In response to these comments, EPA notes the non-waste determination
process was purposely structured to follow the same procedures as
outlined for solid waste variances in 40 CFR 260.33 in order to leverage
the existing structure and keep additional burden on the states to a
minimum. EPA, furthermore, believes that any changes to the type of
format required for public notice would be more appropriately handled as
part of a separate, wholesale effort to update all public notice
requirements in the federal hazardous waste regulations. Therefore, for
today’s rule, EPA is retaining the same public notice provisions as
proposed and required in 40 CFR 260.33.

STATE AUTHORIZATION

XX.	How will Today’s Regulatory Changes be Administered and Enforced
in the States?

A. Applicability of Rules in Authorized States

	Under section 3006 of RCRA, EPA may authorize qualified states to
administer the RCRA Subtitle C hazardous waste program within the state.
Following authorization, EPA retains Subtitle C enforcement authority,
although authorized states have primary enforcement responsibility. EPA
retains authority under sections 3007, 3008, 3013, 3017 and 7003. The
standards and requirements for state authorization are found at 40 CFR
part 271.

	Prior to enactment of the Hazardous and Solid Waste Amendments of 1984
(HSWA), a state with final RCRA authorization administered its hazardous
waste program entirely in lieu of EPA administering the federal program
in that state. The federal requirements no longer applied in the
authorized state and EPA could not issue permits for any facilities in
that state, since only the state was authorized to issue RCRA permits.
When new, more stringent federal requirements were promulgated, the
state was obligated to enact equivalent authorities within specified
time frames. However, the new federal requirements did not take effect
in an authorized state until the state adopted the federal requirements
as state law.

In contrast, under RCRA section 3006(g) (42 U.S.C. 6926(g)), which was
added by HSWA, new requirements and prohibitions imposed under HSWA
authority take effect in authorized states at the same time that they
take effect in unauthorized states. EPA is directed by the statute to
implement these requirements and prohibitions in authorized states,
including the issuance of permits, until the state is granted
authorization to do so. While states must still adopt HSWA related
provisions as state law to retain final authorization, EPA implements
the HSWA provisions in authorized states until the states do so.

	Authorized states are required to modify their programs only when EPA
enacts federal requirements that are more stringent or broader in scope
than existing federal requirements. RCRA section 3009 allows the states
to impose standards more stringent than those in the federal program
(see 40 CFR 271.1). Therefore, authorized states may, but are not
required to, adopt federal regulations, both HSWA and non-HSWA, that are
considered less stringent than previous federal regulations.

B. Effect on State Authorization

Today’s rule eliminates specific requirements that apply to materials
currently managed as hazardous waste. EPA believes that today’s final
rule describes the appropriate scope of the federal program under RCRA.
These exclusions will encourage recycling and are consistent with
RCRA’s statutory objective of conserving valuable material and energy
resources.

EPA strongly encourages states to adopt the regulations being finalized
today. When EPA authorizes a state to implement the RCRA hazardous waste
program, EPA determines whether the state program is consistent with the
federal program and whether it is no less stringent. This process,
codified in 40 CFR part 271, ensures national consistency and minimum
standards, while providing flexibility to the states in implementing the
rules. In making this determination, EPA evaluates the state
requirements to ensure they are no less stringent than the federal
requirements. Because today’s rule eliminates specific requirements
for hazardous secondary materials that are currently managed as
hazardous waste, state programs would no longer need to include those
specific requirements in order to be consistent with EPA’s
regulations.

However, if a state were, through implementation of state waiver
authorities or other state laws, to allow compliance with the provisions
of today's notice in advance of adoption or authorization, EPA would not
generally consider such implementation a concern for purposes of
enforcement or state authorization. Of course, the state could not
implement the requirements in a way that was less stringent than the
federal requirements in today's rule.

In the case of the case-by-case non-waste determinations found in 40 CFR
260.34, a non-waste determination may be granted by the state if the
state is either authorized for this provision or if the following
conditions are met: (1) the state determines the hazardous secondary
material meets the applicable criteria for the non-waste determination;
(2) the state requests that EPA review its determination; and (3) EPA
approves the state determination.

It should be noted that, under RCRA section 3009, a state may adopt
standards that are more stringent than the federal program. Thus, a
state is not required to adopt today’s final rule or a state may
choose to adopt only parts of today’s final rule. Some states
incorporate the federal regulations by reference or have specific state
statutory requirements that their state program can be no more stringent
than the federal regulations. In those cases, EPA anticipates that the
exclusions in today’s final rule will be adopted by these states,
consistent with state laws and state administrative procedures, unless
they take explicit action as specified by their respective state laws to
decline the revisions. We note that if states choose not to adopt the
provisions of today’s final rule concerning exports, then any
hazardous secondary materials that are exported would be subject to the
hazardous waste export requirements in 40 CFR part 262, subparts E or H,
or analogous export requirements that are part of a state’s RCRA
authorized program.

ADMINISTRATIVE REQUIREMENTS

XXI. Administrative Requirements for this Rulemaking?

A. Executive Order 12866: Regulatory Planning and Review

	Under section 3(f)(1) of Executive Order (EO) 12866 (58 FR 51735,
October 4, 1993), this action is a "significant regulatory action''
because today's action contains novel policy issues (EO 12866 Section
3(f)(4)). However, based on the results of our economic analysis for
this action described below, we do not expect that its potential impact
on the economy will be greater than the $100 million or more annual
effect, the “economically significant” threshold of EO 12866 Section
3(f)(1). Because this rule meets one of the E012866 “significant”
criteria, EPA submitted this action to the Office of Management and
Budget (OMB) for review under EO 12866 and any changes made in response
to OMB’s recommendations have been documented in the docket for this
action. EPA also prepared an analysis of the potential economic costs
and benefits associated with this proposed action. The analysis is
contained in our “Regulatory Impact Analysis” (RIA) which is
available from the docket (http://www.regulations.gov) and is briefly
summarized below.

Assuming full adoption of this final rule by all RCRA-authorized states,
EPA expects this action may result in a net annual effect of $95 million
in average annual net cost savings to about 5,600 facilities in 280
industries in 21 economic sectors. This action is expected to remove
from RCRA regulation 1.5 million tons per year of hazardous secondary
materials currently managed as RCRA hazardous waste. These affected
hazardous secondary materials consist of about 98% that are currently
reclaimed as RCRA hazardous waste, and about 2% of hazardous waste that
is currently disposed of (e.g., landfilled, incinerated, or deepwell
injected), which EPA expects may switch from disposal to reclamation as
a result of this action. This $95 million annual net cost savings
estimate is 11% less than the $107 million annual net cost savings
estimated in our 2007 RIA in support of the March 2007 supplemental
proposal for this action. This difference is largely explained by
enhancements made to the methodology of the RIA based on public comments
received from 30 organizations on our 2003 and 2007 RIA’s in support
of this action, as well as by updates of key data underlying the RIA.

These impact estimates are EPA's best estimates within the economic
impact estimation uncertainty range of $41 million to $138 million in
annual materials management cost savings, and 0.7 million to 2.2 million
tons per year in affected hazardous secondary materials, respectively,
for the net effect of the exclusions. These impact ranges reflect the
overall uncertainty range of -57% to +45% across eight different
uncertainty factors addressed as a sensitivity analysis in our RIA. The
specific uncertainty factors evaluated are (1) state government
adoption, (2) future fluctuations in affected hazardous secondary
materials generation tonnages, (3) within-year discrepancies between
hazardous secondary materials generation and corresponding management
tonnages, (4) future industrial production levels, (5) omission of SQG
facility counts in our impact estimates by artifact that we based the
impacts on LQG and TSDRF data from the RCRA Biennial Report database,
(6) Biennial Report database quality assurance considerations, (7)
physical and chemical quality of the hazardous secondary materials
affected, and (8) impact estimation methodology level of effort.
Concerning the uncertainty of state government adoption, included as one
component of potential industry cost savings is the transfer effect of
an expected $5 million reduction in future annual state government
hazardous waste fee revenues if all state governments adopt today’s
rule.

With respect to each of the regulatory exclusions in today’s action,
the $95 million per year net cost savings effect consists of
approximately (a) $7 million per year for hazardous secondary materials
reclaimed under the control of the generator in either land or non-land
based units (which includes on-site, same-company, and tolling
exclusions), plus (b) an $87 million cost savings for exclusion of other
offsite transfers, plus (c) $1 million per year in cost savings for
case-by-case non-waste determinations.

Embedded in this overall impact estimate is $4.3 million per year in
potential commodity market value of three categories of 15 constituents
in affected materials we expect may begin to be recovered from hazardous
secondary materials that would otherwise continue to be disposed of as
hazardous wastes in absence of today’s action: (1) commodity metals
(chromium, copper, lead, molybdenum disulfide, nickel, zinc), (2)
commodity solvents (acetone, alkyl benzenes, C9-C10 alkyl benzenes,
methanol, methyl ethyl ketone, toluene, xylene), and (3) other commodity
materials (acids, carbon). However, the RIA estimate of potential new
induced recycling does not include an evaluation of whether the U.S. or
global recycling markets are large enough to sustain this potential
future increase in supply of recovered materials. Market conditions for
recycled hazardous secondary materials can vary considerably over time.
Demand for recycled solvents, for example, is largely dependent on the
petroleum market: because virgin solvents are made from petroleum
products, high petroleum prices encourage solvent recycling. Similarly,
high metals prices obviously favor the recycling of metal-bearing
hazardous secondary materials.

The RIA, available from the docket (http://www.regulations.gov),
provides many more details and descriptions about these assorted
components of expected economic impacts, including potential
distributional effects on other industries not directly subject to
today’s action.

B. Paperwork Reduction Act (Information Collection Request)

The information collection requirements in this rule have been submitted
for approval to the Office of Management and Budget (OMB) under the
Paperwork Reduction Act, 44 U.S.C. 3501 et seq. The information
collection requirements are not enforceable until OMB approves them. The
information collection request has been updated since the March 2007
supplemental proposal to reflect the final rule requirements and to
respond to public comments.

	The information requirements established for this action are voluntary
to the extent that the exclusions being finalized today are voluntary
and represent an overall reduction in burden as compared with the
alternative information requirements associated with managing the
hazardous secondary materials as hazardous waste. The information
requirements help ensure that (1) entities operating under the
regulatory exclusions contained in today's action are held accountable
to the applicable requirements; (2) state inspectors can verify
compliance with the restrictions and conditions of the exclusions when
needed; and (3) hazardous secondary materials exported for recycling are
actually handled as commodities abroad.

	For the recordkeeping and reporting requirements applicable to
hazardous secondary materials sent for reclamation, the aggregate annual
burden to respondents over the three-year period covered by this ICR is
estimated to be 11,552 hours, with a cost to affected entities (i.e.,
industrial facilities) of $1,417,242. However, this represents an annual
reduction in burden to respondents of 52,050 hours, representing a cost
reduction of $3,474,035 per year. The estimated annual operation and
maintenance costs to affected entities are $739,469 per year, primarily
for purchasing audit or other similar type reports. There are no startup
costs and no costs for purchases of services. Administrative costs to
the Agency are estimated to be 1,257 hours per year, representing an
annual cost of $49,891. Burden is defined at 5 CFR 1320.3(b).

An agency may not conduct or sponsor, and a person is not required to
respond to, a collection of information unless it displays a currently
valid OMB control number. The OMB control numbers for EPA's regulations
in 40 CFR are listed in 40 CFR part 9. When this ICR is approved by OMB,
the Agency will publish a technical amendment to 40 CFR part 9 in the
Federal Register to display the OMB control number for the approved
information collection requirements contained in this final rule.

C. Regulatory Flexibility Act

	The Regulatory Flexibility Act (RFA), as amended by the Small Business
Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C. 601 et.
seq., generally requires an agency to prepare a regulatory flexibility
analysis of any rule subject to notice and comment rulemaking
requirements under the Administrative Procedure Act or any other
statute, unless the agency certifies that the rule will not have a
significant economic impact on a substantial number of small entities.
Small entities include small businesses, small organizations, and small
governmental jurisdictions.

	For purposes of assessing the impacts of today's rule on small
entities, small entity is defined as: (1) a small business as defined by
the Small Business Administration’s (SBA) regulations at 13 CFR
121.201;” (2) a small governmental jurisdiction that is a government
of a city, county, town, school district or special district with a
population of less than 50,000; and (3) a small organization that is any
not-for-profit enterprise which is independently owned and operated and
is not dominant in its field.. For more information regarding the
expected economic impact of this action, please refer to our "Regulatory
Impact Analysis" available from the docket for this final rule.

	After considering the economic impacts of this final rule on small
entities, I certify that this action will not have a significant
economic impact on a substantial number of small entities.  In
determining whether a rule has a significant economic impact on a
substantial number of small entities, the impact of concern is any
significant adverse economic impact on small entities, since the primary
purpose of the regulatory flexibility analyses is to identify and
address regulatory alternatives “which minimize any significant
economic impact of the rule on small entities.” 5 USC 603 and 604.
Thus, an agency may certify that a rule will not have a significant
economic impact on a substantial number of small entities if the rule
relieves regulatory burden, or otherwise has a positive economic effect
on all of the small entities subject to the rule.  Because today's
action is designed to lower the cost of industrial hazardous secondary
materials management for entities subject to today's requirements, this
final rule will not result in an adverse economic impact effect on
affected small entities.  EPA therefore concludes that today's action
will relieve regulatory burden for all size entities, including small
entities.

D. Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), P.L. 104-4,
establishes requirements for Federal agencies to assess the effects of
their regulatory actions on state, local, and tribal governments and the
private sector. Under section 202 of the UMRA, EPA generally must
prepare a written statement, including a cost-benefit analysis, for
proposed and final rules with "Federal mandates" that may result in
expenditures to state, local, and tribal governments, in the aggregate,
or to the private sector, of $100 million or more in any one year.
Before promulgating an EPA rule for which a written statement is needed,
section 205 of the UMRA generally requires EPA to identify and consider
a reasonable number of regulatory alternatives and adopt the least
costly, most cost-effective or least burdensome alternative that
achieves the objectives of the rule. The provisions of section 205 do
not apply when they are inconsistent with applicable law. Moreover,
section 205 allows EPA to adopt an alternative other than the least
costly, most cost-effective or least burdensome alternative if the
Administrator publishes with the final rule an explanation why that
alternative was not adopted. Before EPA establishes any regulatory
requirements that may significantly or uniquely affect small
governments, including tribal governments, it must have developed under
section 203 of the UMRA a small government agency plan. The plan must
provide for notifying potentially affected small governments, enabling
officials of affected small governments to have meaningful and timely
input in the development of EPA regulatory proposals with significant
Federal intergovernmental mandates, and informing, educating, and
advising small governments on compliance with the regulatory
requirements.

	EPA has determined that this rule does not include a Federal mandate
that may result in expenditures of $100 million or more for state,
local, or tribal governments, in the aggregate, or the private sector in
any one year. This is because this rule imposes no enforceable duty on
any state, local, or tribal governments. Although one public commenter
noted that many states choose to incorporate EPA’s regulations by
reference, EPA does not require them to do so. EPA also has determined
that this rule contains no regulatory requirements that might
significantly or uniquely affect small governments. In addition, as
discussed above, the private sector is not expected to incur costs
exceeding $100 million. Therefore, today's rule is not subject to the
requirements of sections 202 and 205 of UMRA.

E. Executive Order 13132: Federalism

  SEQ CHAPTER \h \r 1 Executive Order 13132, entitled Federalism (64 FR
43255, August 10, 1999), requires EPA to develop an accountable process
to ensure meaningful and timely input by state and local officials in
the development of regulatory policies that have federalism
implications. Policies that have federalism implications are defined in
the Executive Order to include regulations that have substantial direct
effects on the states, on the relationship between the national
government and the states, or on the distribution of power and
responsibilities among the various levels of government.

	This final rule does not have federalism implications. It will not have
substantial direct effects on the states, on the relationship between
the national government and the states, or on the distribution of power
and responsibilities among the various levels of government, as
specified in Executive Order 13132. There are no state and local
government bodies that incur direct compliance costs by this rulemaking.
State and local government implementation expenditures are expected to
be less than $500,000 in any one year. Thus, the requirements of Section
6 of the Executive Order do not apply to this final rule. Although one
public commenter noted that many states choose to incorporate EPA’s
regulations by reference, EPA does not require them to do so.

F. Executive Order 13175: Consultation and Coordination with Indian
Tribal Governments

Executive Order 13175, entitled Consultation and Coordination with
Indian Tribal Governments (65 FR 67249, November 9, 2000), requires EPA
to develop an accountable process to ensure a meaningful and timely
input by tribal officials in the development of regulatory policies that
have tribal implications. This final rule does not have tribal
implications, as specified in Executive Order 13175. It does not
significantly or uniquely affect the communities of Indian tribal
governments, nor would it impose substantial direct compliance costs on
them. Thus, Executive Order 13175 does not apply to this final rule.

G. Executive Order 13045: Protection of Children from Environmental
Health Risks and Safety Risks

This action is not subject to EO 13045 (62 F.R. 19885, April 23, 1997)
because the Agency does not believe the environmental health risks or
safety risks addressed by this action present a disproportionate risk to
children. An assessment of countervailing risk and a discussion of how
today’s rule addresses those risks can be found in Chapter 11 of the
Regulatory Impact Analysis, found in the docket for today’s
rulemaking.

H. Executive Order 13211: Actions that Significantly Affect Energy
Supply, Distribution, or Use

This final rule is not a “significant energy action” as defined in
Executive Order 13211, “Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use” (66 Fed.
Reg. 28355, May 22, 2001) because it is not likely to have a significant
adverse effect on the supply, distribution, or use of energy. This final
rule reduces regulatory burden and as explained in our Regulatory Impact
Analysis, may possibly induce fuel efficiency and energy savings from
the voluntary shifting of some types of hazardous secondary materials,
where it is cost-effective for firms to do so, from current landfill and
incineration to reclamation. It therefore should not adversely affect
energy supply, distribution, or use.

I. National Technology Transfer and Advancement Act of 1995

Section 12(d) of the National Technology Transfer and Advancement Act of
1995 (“NTTAA”), Public Law No. 104-113, 12(d) (15 U.S.C. 272 note)
directs EPA to use voluntary consensus standards in its regulatory
activities unless to do so would be inconsistent with applicable law or
otherwise impractical. Voluntary consensus standards are technical
standards (e.g., materials specifications, test methods, sampling
procedures, and business practices) that are developed or adopted by
voluntary consensus standards bodies. NTTAA directs EPA to provide
Congress, through OMB, explanations of when the Agency decides not to
use available and applicable voluntary consensus standards.

	This action does not involve technical standards. Therefore, EPA did
not consider the use of any voluntary consensus standards.

J. Executive Order 12898: Environmental Justice

Executive Order 12898, Federal Actions to Address Environmental Justice
in Minority Populations and Low-Income Population (February 11, 1994),
is designed to address the environmental and human health conditions of
minority and low-income populations. EPA is committed to addressing
environmental justice concerns and has assumed a leadership role in
environmental justice initiatives to enhance environmental quality for
all citizens of the United States. The Agency's goals are to ensure that
no segment of the population, regardless of race, color, national
origin, income, or net worth bears disproportionately high and adverse
human health and environmental impacts as a result of EPA's policies,
programs, and activities. Our goal is to ensure that all citizens live
in clean and sustainable communities. In response to Executive Order
12898, and to concerns voiced by many groups outside the Agency, EPA's
Office of Solid Waste and Emergency Response (OSWER) formed an
Environmental Justice Task Force to analyze the array of environmental
justice issues specific to waste programs and to develop an overall
strategy to identify and address these issues (OSWER Directive No.
9200.3-17).

This final rule would streamline the requirements for certain hazardous
secondary materials sent for reclamation. Facilities that would be
affected by today’s final rule include those generating hazardous
secondary materials, as well as facilities which reclaim such materials.
Disposal and treatment facilities would not be affected by this final
rule. While commenters assert that minorities now comprise a majority in
neighborhoods with commercial hazardous waste facilities, and much
larger (over two-thirds) majorities can be found in neighborhoods with
clustered facilities, EPA does not believe that such neighborhoods will
be adversely impacted by today’s rule. As explained in Chapter 11 of
the Regulatory Impact Analysis found in the docket to today’s rule,
EPA has performed an assessment of potential countervailing risks and
has determined that the conditions address those risks and no net impact
is expected. Thus, overall, no disproportionate impacts to minorities or
low income communities are expected.

K. Congressional Review Act

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by Subtitle
E of the Small Business Regulatory Enforcement Fairness Act of 1996
(SBREFA), generally provides that before a rule may take effect, the
agency promulgating the rule must submit a report containing the rule
and other required information to the U.S. Senate, the U.S. House of
Representatives, and to the Comptroller General of the United States,
prior to publication of the rule in the Federal Register. Furthermore, a
"major rule" cannot take effect until 60 days after it is published in
the Federal Register. Today's action is expected to be a "major rule''
as defined by 5 U.S.C. 804(2) according to the first of its three "major
rule" definitions: "The term "major rule" means any rule that the
Administrator of the Office of Information and Regulatory Affairs of OMB
finds has resulted in or is likely to result in-- (A) an annual effect
on the economy of $100,000,000 or more; (B) a major increase in costs or
prices for consumers, individual industries, Federal, state, or local
government agencies, or geographic regions; or (C) significant adverse
effects on competition, employment, investment, productivity,
innovation, or on the ability of United States-based enterprises to
compete with foreign-based enterprises in domestic and export markets."
EPA has submitted a copy of this rule to each House of the Congress and
to the Comptroller General, and this rule will be effective [insert date
180 days after its publication today.]

List of Subjects

40 CFR Part 260

Environmental protection, Administrative practice and procedure,
Confidential business information, Hazardous waste, Reporting and
recordkeeping requirements.

40 CFR Part 261

Environmental protection, Hazardous waste, Recycling, Reporting and
recordkeeping requirements.

Dated: ___________________________________

Stephen L. Johnson,

Administrator.

For the reasons stated in the preamble, title 40, Chapter I of the Code
of Federal Regulations is amended to read as follows:

PART 260 – Hazardous Waste Management System:  General

1.  The authority citation for part 260 continues to read as follows:

Authority: 42 U.S.C. 6905, 6912(a), 6921-6927, 6930, 6935, 6937, 6938,
6939 and 6974.

Subpart B – Definitions

2.  Section 260.10 is amended by revising the definition of “
Facility” and “Transfer facility” and by adding in alphabetical
order the definitions of “Intermediate facility,” “Land-based
unit,” “Hazardous secondary material,” “Hazardous secondary
materials generated and reclaimed under the control of the generator”
and “Hazardous secondary material generator” to read as follows:

§260.10 Definitions

*   *   *

Facility means:

    (1) All contiguous land, and structures, other appurtenances, and
improvements on the land, used for treating, storing, or disposing of
hazardous waste, or for managing hazardous secondary materials prior to
reclamation. A facility may consist of several treatment, storage, or
disposal operational units (e.g., one or more landfills, surface
impoundments, or combinations of them).

    (2) For the purpose of implementing corrective action under 40 CFR
264.101 or 267.101, all contiguous property under the control of the
owner or operator seeking a permit under Subtitle C of RCRA. This
definition also applies to facilities implementing corrective action
under RCRA Section 3008(h).

    (3) Notwithstanding paragraph (2) of this definition, a remediation
waste management site is not a facility that is subject to 40 CFR
264.101, but is subject to corrective action requirements if the site is
located within such a facility.

* * *

Hazardous secondary material means a secondary material (e.g., spent
material, by-product, or sludge) that, when discarded, would be
identified as hazardous waste under part 261 of this chapter.

*  *  *

Hazardous secondary material generated and reclaimed under the control
of the generator means:

(1) that such material is generated and reclaimed at the generating
facility (for purposes of this paragraph, generating facility means all
contiguous property owned, leased, or otherwise controlled by the
hazardous secondary material generator); or

(2) that such material is generated and reclaimed at different
facilities, if the reclaiming facility is controlled by the generator or
if both the generating facility and the reclaiming facility are
controlled by a person as defined in §260.10, and if the generator
provides  one of the following certifications: (1)  “on behalf of
[insert generator facility name],  I certify that this facility will
send the indicated hazardous secondary material to [insert reclaimer
facility name], which is controlled by [insert generator facility name]
and that [insert the name of either facility] has acknowledged full
responsibility for the safe management of the hazardous secondary
material,” or (2) on behalf of [insert facility name] I certify that
this facility will send the indicated hazardous secondary material to
[insert facility name], that both facilities are under common control,
and that [insert name of either facility] has acknowledged full
responsibility for the safe management of the hazardous secondary
material.” For purposes of this paragraph, “control” means the
power to direct the policies of the facility, whether by the ownership
of stock, voting rights, or otherwise, except that contractors who
operate facilities on behalf of a different person as defined in
§260.10 shall not be deemed to “control” such facilities, or

(3) that such material is generated pursuant to a written contract
between a tolling contractor and a toll manufacturer and is reclaimed by
the tolling contractor, if  the tolling contractor certifies the
following: “On behalf of [insert tolling contractor name], I certify
that [insert tolling contractor name], has a written contract with
[insert toll manufacturer name] to manufacture [insert name of product
or intermediate] which is made from specified virgin materials, and that
[insert tolling contractor name] will reclaim the hazardous secondary
materials generated during this manufacture. On behalf on [insert
tolling contractor name], I also certify that [insert tolling contractor
name] retains ownership of, and responsibility for, the hazardous
secondary materials that are generated during the course of the
manufacture, including any releases of hazardous secondary materials
that occur during the manufacturing process. For purposes of this
paragraph, tolling contractor means a person who arranges for the
production of a product or intermediate made from specified virgin
materials through a written contract with a toll manufacturer.  Toll
manufacturer means a person who produces a product or intermediate made
from specified virgin materials pursuant to a written contract with a
tolling contractor.

*  *  *

Hazardous secondary material generator means any person whose act or
process produces hazardous secondary materials at the generating
facility.  For purposes of this paragraph, “generating facility”
means all contiguous property owned, leased, or otherwise controlled by
the hazardous secondary material generator.  For the purposes of
§261.2(a)(2)(ii) and §261.2(a)(4)(23), a facility that collects
hazardous secondary materials that have been discarded by other persons
is not the hazardous secondary material generator.

*  *  *

Intermediate facility means any facility that stores hazardous secondary
materials for more than 10 days, other than a hazardous secondary
material generator or reclaimer of such material.

*  *  *

Land-based unit means an area where hazardous secondary materials are
placed in or on the land before recycling.

*  *  *

Transfer facility means any transportation-related facility, including
loading docks, parking areas, storage areas and other similar areas
where shipments of hazardous waste or hazardous secondary materials are
held during the normal course of transportation.

* 	*	 *	 *	 *

3.   Section 260.30 is amended by revising the section heading, the
introductory text, paragraph (b), and adding paragraphs (d) and (e) to
read as follows:

* 	*	 *	 *	 *

§ 260.30 Non-waste determinations and variances from classification as
a solid waste.

In accordance with the standards and criteria in §260.31 and §260.34
and the procedures in §260.33, the Administrator may determine on a
case-by-case basis that the following recycled materials are not solid
wastes:

 *	 *	 *

 (b) Materials that are reclaimed and then reused within the original
production process in which they were generated;

*         *          *

(d) Hazardous secondary materials that are reclaimed in a continuous
industrial process; and

(e) Hazardous secondary materials that are indistinguishable in all
relevant aspects from a product or intermediate.

* 	*	 *	 *	 *

4.  Section 260.33 is amended by revising the section heading, the
introductory text, paragraph (a) and adding paragraph (c) to read as
follows:

§ 260.33 Procedures for variances from classification as a solid waste,
for variances to be classified as a boiler, or for non-waste
determinations.

The Administrator will use the following procedures in evaluating
applications for variances from classification as a solid waste,
applications to classify particular enclosed controlled flame combustion
devices as boilers, or applications for non-waste determinations.

(a)	The applicant must apply to the Administrator for the variance or
non-waste determination.  The application must address the relevant
criteria contained in §260.31, §260.32, or §260.34, as applicable.

* 	*	 *

(c)       For non-waste determinations, in the event of a change in
circumstances that affect how a hazardous secondary material meets the
relevant criteria contained in §260.34 upon which a non-waste
determination has been based, the applicant must re-apply to the
Administrator for a formal determination that the hazardous secondary
material continues to meet the relevant criteria and therefore is not a
solid waste.

* 	*	 *	 *	 *

5.   Section 260.34 is added to Subpart C to read as follows:

§ 260.34 Standards and criteria for non-waste determinations.

(a) An applicant may apply to the Administrator for a formal
determination that a hazardous secondary material is not discarded and
therefore not a solid waste. The determinations will be based on the
criteria contained in paragraphs (b) or (c) of this section, as
applicable. If an application is denied, the hazardous secondary
material might still be eligible for a solid waste variance or exclusion
(for example, one of the solid waste variances under §260.31).
Determinations may also be granted by the State if the State is either
authorized for this provision or if the following conditions are met:

(1)	The State determines the hazardous secondary material meets the
criteria in paragraphs (b) or (c) of this section, as applicable;

(2)	The State requests that EPA review its determination; and

(3)	EPA approves the State determination.

(b)  The Administrator may grant a non-waste determination for hazardous
secondary material which is reclaimed in a continuous industrial process
if the applicant demonstrates that the hazardous secondary material is a
part of the production process and is not discarded. The determination
will be based on the following criteria:

(1) 	The extent that the management of the hazardous secondary material
is part of the continuous primary production process and is not waste
treatment;

(2)  	Whether the capacity of the production process would use the
hazardous secondary material in a reasonable time frame and ensure that
the hazardous secondary material will not be abandoned (for example,
based on past practices, market factors, the nature of the hazardous
secondary material, or any contractual arrangements);

(3) 	Whether the hazardous constituents in the hazardous secondary
material are reclaimed rather than discarded to the air, water or land
at significantly higher levels from either a statistical or from a
health and environmental risk perspective than would otherwise be
released by the production process; and

(4) 	Other relevant factors that demonstrate the hazardous secondary
material is not discarded.

(c)   The Administrator may grant a non-waste determination for
hazardous secondary material which is indistinguishable in all relevant
aspects from a product or intermediate if the applicant demonstrates
that the hazardous secondary material is comparable to a product or
intermediate and is not discarded.  The determination will be based on
the following criteria:

(1) 	Whether market participants treat the hazardous secondary material
as a product or intermediate rather than a waste (for example, based on
the current positive value of the hazardous secondary material,
stability of demand, or any contractual arrangements);

(2)	Whether the chemical and physical identity of the hazardous
secondary material is comparable to commercial products or
intermediates;

(3) 	Whether the capacity of the market would use the hazardous
secondary material in a reasonable time frame and ensure that the
hazardous secondary material will not be abandoned (for example, based
on past practices, market factors, the nature of the hazardous secondary
material, or any contractual arrangements);

(4)	Whether the hazardous constituents in the hazardous secondary
material are reclaimed rather than discarded to the air, water or land
at significantly higher levels from either a statistical or from a
health and environmental risk perspective than would otherwise be
released by the production process; and

(5)	Other relevant factors that demonstrate the hazardous secondary
material is not discarded.

6.   Section 260.42 is added to Subpart C to read as follows:

§260.42 Notification requirement for hazardous secondary materials.

Hazardous secondary material generators, tolling contractors, toll
manufacturers, reclaimers, and intermediate facilities managing
hazardous secondary materials which are excluded from regulation under
§261.2(a)(2)(ii), §261.4(a)(23),(24), or (25) must send a notification
prior to operating under the exclusion(s) and at a minimum of every two
years thereafter to the Regional Administrator using EPA Form 8700-12
that includes the following information:

The name, address, and EPA ID number (if applicable) of the facility;

The name and telephone number of a contact person;

The NAICS code of the facility;

The exclusion under which the hazardous secondary materials will be
managed (e.g., §261.2(a)(2)(ii), §261.4(a)(23),(24), and/or (25));

For reclaimers and intermediate facilities managing hazardous secondary
materials in accordance with §261.4(a)(24) or (25), whether the
reclaimer or intermediate facility has financial assurance (not
applicable for persons managing hazardous secondary materials generated
and reclaimed under the control of the generator);

When the facility expects to begin managing the hazardous secondary
materials in accordance with the exclusion;

A list of hazardous secondary materials that will be managed according
to the exclusion (reported as the EPA hazardous waste numbers that would
apply if the hazardous secondary materials were managed as hazardous
wastes);

For each hazardous secondary material:

i. Whether the hazardous secondary material, or any portion thereof,
will be managed in a land-based unit;

ii. The quantity of hazardous secondary material to be managed annually.

The certification (included in EPA Form 8700-12) signed and dated by an
authorized representative of the facility.

Hazardous secondary material generators, tolling contractors, toll
manufacturers, reclaimers and intermediate facilities managing hazardous
secondary materials must also submit an updated notification within
thirty (30) days of a change to (a)(1), (a)(4), (a)(5), (a)(7) (where
hazardous secondary materials are added to the list of materials to be
managed under the exclusion) or (a)(8)(i) of this section.

(c)	If a hazardous secondary material generator, tolling contractor,
toll manufacturer, reclaimer or intermediate facility has submitted a
notification, but then subsequently stops managing hazardous secondary
materials in accordance with the exclusion, the facility must notify the
Regional Administrator using EPA Form 8700-12. For purposes of this
section, a facility has stopped managing hazardous secondary materials
if at least one of the following occurs: the facility chooses to manage
the hazardous secondary materials as hazardous waste; the facility
undergoes closure and requests release from financial assurance per 40
CFR 261.143(h); or, the facility chooses to temporarily suspend
management of hazardous secondary materials and does not expect to
manage any amount of hazardous secondary materials for at least one
year.

  SEQ CHAPTER \h \r 1 PART 261–IDENTIFICATION AND LISTING OF HAZARDOUS
WASTE

7.  The authority citation for part 261 continues to read as follows:

	Authority: 42 U.S.C. 6905, 6912(a), 6921, 6922, 6924(y), and 6938.

Subpart A – [Amended]

8. Section 261.1 is amended by revising paragraph (c)(4) to read as
follows:

§261.1 Purpose and scope

* * * * *

(c) * * *

(4) A material is “reclaimed” if it is processed to recover a usable
product, or if it is regenerated.  Examples are recovery of lead values
from spent batteries and regeneration of spent solvents.  In addition,
for purposes of §§261.2(a)(2)(ii), 261.4(a)(23), and 261.4(a)(24)
smelting, melting and refining furnaces are considered to be solely
engaged in metals reclamation if the metal recovery from the hazardous
secondary materials meets the same requirements as those specified for
metals recovery from hazardous waste found in §266.100(d)(1)-(3), and
if the residuals meet the requirements specified in §266.112.

* * * * *

9.  Section 261.2 is amended by revising paragraph (a)(1), (a)(2),
(c)(3), Table 1 in paragraph (c)(4) and adding paragraph (g) to read as
follows:

*   *   *   *   *

(a)(1) A solid waste is any discarded material that is not excluded
under §261.4(a) or that is not excluded by a variance granted under
§§260.30 and 260.31 or that is not excluded by a non-waste
determination under §§260.30 and 260.34.

*  *  * * *

(2)(i) A discarded material  is any material which is:

(A) Abandoned, as explained in paragraph (b) of this section; or

(B) Recycled, as explained in paragraph (c) of this section; or

(C) Considered inherently waste-like, as explained in paragraph (d) of
this section; or

(D) A military munition identified as a solid waste in §266.20.

(ii)  A hazardous secondary material is not discarded if it is generated
and reclaimed under the control of the generator as defined in §260.10,
it is not speculatively accumulated as defined in §261.1(c)(8), it is
handled only in non-land-based units and is contained in such units, it
is generated and reclaimed within the United States and its territories,
it is not otherwise subject to specific management conditions under
§261.4(a) when reclaimed, it is not a spent lead acid battery (see
§266.80 and §273.2) and it does not meet the listing description for
K171 or K172 in §261.32. (See also the notification requirements of
§260.42)

*   *   *   *  *

(c)   *   *   *

(3) Reclaimed.    Materials noted with a “–“ in column 3 of Table
1 are not solid wastes when reclaimed.  Materials noted with an “*”
in column 3 of Table 1 are solid wastes when reclaimed unless they meet
the requirements of §§261.2(a)(2)(ii), or  261.4(a)(17), or
261.4(a)(23), or 261.4(a)(24) or 261.4(a)(25).

 *  *  *  * *

(4) * * *

Table 1

	Use constituting disposal (§261.2(c)(1))	Energy recovery/ fuel
(§261.2(c)(2))	Reclamation (261.2(c)(3)), except as provided in
§§261.2(a)(2)(ii), 261.4(a)(17), 261.4(a)(23), 261.4(a)(24), or
261.4(a)(25).  	Speculative accumulation (§261.2(c)(4))

	1	2	3	4

Spent Materials	(*)	(*)	(*)	(*)

Sludges (listed in 40 CFR Part 261.31 or 261.32	(*)	(*)	(*)	(*)

Sludges exhibiting a characteristic of hazardous waste	(*)	(*)	----	(*)

By-products (listed in 40 CFR 261.31 or 261.32)	(*)	(*)	(*)	(*)

By-products exhibiting a characteristic of hazardous waste	(*)	(*)	----
(*)

Commercial chemical products listed in 40 CFR 261.33	(*)	(*)	----	----

Scrap metal other than excluded scrap metal (see 261.1(c)(9))	(*)	(*)
(*)	(*)

Note: The terms “spent materials,” “sludges,” “by-products,”
and “scrap metal” and “processed scrap metal” are defined in
261.1.

*     *     *

(g) Legitimate Recycling.

(1) Hazardous secondary material that is not legitimately recycled is
discarded material and is a solid waste. Persons who recycle a hazardous
secondary material, as well as persons claiming to be excluded from
hazardous waste regulation under §260.30, §261.2 or §261.4 because
they are engaged in recycling, must be able to demonstrate that the
recycling is legitimate. Moreover, hazardous secondary material must be
legitimately recycled to qualify for the special management standards
under §261.6 and 40 CFR Part 266.  In determining if their recycling is
legitimate, persons must address the requirements of §261.2(g)(2) and
§261.2(g)(3) below.

(2) Legitimate recycling must involve a hazardous secondary material
that provides a useful contribution to the recycling process or to a
product or intermediate of the recycling process, and the recycling
process must produce a valuable product or intermediate.

(i) The hazardous secondary material provides a useful contribution if
it

(A) contributes valuable ingredients to a product or intermediate; or

(B) replaces a catalyst or carrier in the recycling process; or

(C) is the source of a valuable constituent recovered in the recycling
process; or

(D) is recovered or regenerated by the recycling process; or

(E) is used as an effective substitute for a commercial product.

(ii) The product or intermediate is valuable if it is

(A) sold to a third party; or

(B) used by the recycler or the generator as an effective substitute for
a commercial product or as an ingredient or intermediate in an
industrial process.

(3) The following factors must be considered in making a determination
as to the overall legitimacy of a specific recycling activity. If these
factors are not met, then this fact may be an indication that the
material is not legitimately recycled:

(i) The generator and the recycler should manage the hazardous secondary
material as a valuable commodity. Where there is an analogous raw
material, the hazardous secondary material should be managed, at a
minimum, in a manner consistent with the management of the raw material.
 Where there is no analogous raw material, hazardous secondary material
should be contained. Hazardous secondary materials that are released to
the environment and are not recovered immediately are discarded.

(ii) The product of the recycling process does not

(A) contain significant concentrations of any hazardous constituents
found in Appendix VIII of part 261 that are not found in analogous
products; or

(B) contain concentrations of any hazardous constituents found in
Appendix VIII of part 261 at levels that are significantly elevated from
those found in analogous products; or

(C) exhibit a hazardous characteristic (as defined in part 261 subpart
C) that analogous products do not exhibit.

10.  Section 261.4 is amended by adding new paragraphs (a)(23), (24),
and (25) to read as follows:

§ 261.4  Exclusions.

(a) * * *

(23) Hazardous secondary material generated and reclaimed within the
United States or its territories and managed in land-based units as
defined in §260.10 is not a solid waste provided that:

(i)  the material is contained; and

(ii)  the material is a hazardous secondary material generated and
reclaimed under the control of the generator, as defined in §260.10;

(iii) the material is not speculatively accumulated, as defined in
§261.1(c)(8); and

(iv) the material is not otherwise subject to the specific management
conditions under §261.4(a) when reclaimed, is not a spent lead acid
battery (see §266.80 and §273.2), and it does not meet the listing
description for K171 or K172 in §261.32.

(v)  In addition, persons claiming the exclusion under this paragraph
(a)(23) must provide notification as required by §260.42.

 (24) Hazardous secondary material that is generated and then
transferred to another person for the purpose of reclamation is not a
solid waste, provided that:

(i) The material is not speculatively accumulated, as defined in
§261.1(c)(8);

(ii)  the material is not handled by any person or facility other than
the hazardous secondary material generator, the transporter, an
intermediate facility or a reclaimer, and, while in transport, is not
stored for more than 10 days at a transfer facility, as defined in
§260.10, and is packaged according to applicable Department of
Transportation regulations at 49 CFR Parts 173, 178, and 179 while in
transport; and

(iii) it is not otherwise subject to the specific management conditions
under §261.4(a) when reclaimed, it is not a spent lead-acid battery
(see §266.80 and §273.2), and it does not meet the listing description
for K171 or K172 in §261.32; and

(iv) the hazardous secondary material generator satisfies all of the
following conditions:

(A)  The material must be contained.

(B)  Prior to arranging for transport of hazardous secondary materials
to a reclamation facility (or facilities) where the management of the
hazardous secondary materials is not addressed under a RCRA Part B
permit or interim status standards, the hazardous secondary material
generator must make reasonable efforts to ensure that each reclaimer
intends to properly and legitimately reclaim the hazardous secondary
material and not discard it, and that each reclaimer will manage the
hazardous secondary material in a manner that is protective of human
health and the environment.  If the hazardous secondary material will be
passing through an intermediate facility that is not addressed under a
RCRA Part B permit or interim status standards, the hazardous secondary
material generator must make contractual arrangements with the
intermediate facility to ensure that the hazardous secondary material is
sent to the reclamation facility identified by the hazardous secondary
material generator, and the hazardous secondary material generator must
perform reasonable efforts to ensure that the intermediate facility will
manage the hazardous secondary material in a manner that is protective
of human health and the environment.  Reasonable efforts must be
repeated at a minimum of every three years for the hazardous secondary
material generator to claim the exclusion and to send the hazardous
secondary materials to each reclaimer and any intermediate facility.  In
making these reasonable efforts, the generator may use any credible
evidence available, including information gathered by the hazardous
secondary material generator, provided by the reclaimer or intermediate
facility, and/or provided by a third party. The hazardous secondary
material generator must affirmatively answer all of the following
questions for each reclamation facility and any intermediate facility:

(1) Does the reclamation facility intend to reclaim the hazardous
secondary materials legitimately pursuant to §261.2(g)? (Note that by
responding to this question, the hazardous secondary material generator
has also satisfied the requirement in §261.2(g)(1) to be able to
demonstrate that the recycling is legitimate).

(2) Has the reclamation facility and any intermediate facility notified
the appropriate authorities of hazardous secondary materials reclamation
activities pursuant to §260.42 and have they notified the appropriate
authorities that the financial assurance condition is satisfied per
§261.4(a)(24)(v)(F)?

(3) Are there any unresolved significant violations of environmental
regulations at the reclamation facility or at any intermediate facility,
or any formal enforcement actions taken against the facilities in the
previous three years for violations of environmental regulations? If
yes, does the hazardous secondary material generator have credible
evidence that the facilities will manage the hazardous secondary
materials properly?

(4) Do the reclamation facility and any intermediate facility have the
equipment and trained personnel to properly manage the hazardous
secondary material, and does the reclamation facility have the equipment
and trained personal to properly reclaim the hazardous secondary
materials?

(5) If residuals are generated from the reclamation of the excluded