hazardous secondary material shipped under the exclusion. The records
would have to contain the name of the transporter, the date of the
shipment, and the type and quantity of the hazardous secondary material
shipped or received under the exclusion. This requirement could be
satisfied by routine business records (e.g., financial records, bills
of lading, copies of DOT shipping papers, or electronic confirmations).
Such a provision would facilitate enforcement of the same-company
exclusion and would allow tracking of all hazardous secondary materials
recycled under the exclusion to ensure that such materials were
properly accounted for. EPA agrees with the commenters who supported
this requirement and finds that adding this recordkeeping requirement
to the same-company exclusion is sufficient to address any risks
involved in off-site transport of hazardous secondary materials. We are
therefore finalizing the same company exclusion to include this
requirement (see 40 CFR 261.4(a)(23)(i)(B)).
    The Agency also agrees with the commenter who suggested that the
alternative certification for facilities under common control that was
included in the 2008 DSW final rule should be added to the exclusion.
The omission of this provision from the July 2011 DSW proposal was
inadvertent and the Agency will therefore simply retain the alternative
certification in the regulations (see 40 CFR 261.4(a)(23)(i)(B)).

D. Tolling Exclusion

    In its July 2011 DSW proposal, EPA proposed to add a recordkeeping
requirement to the exclusion for hazardous secondary materials
legitimately reclaimed under certain contractual tolling arrangements.
Specifically, we proposed to require the tolling contractor to maintain
at its facility for no less than three years records of all hazardous
secondary materials received pursuant to the

written contract with the tolling manufacturer. It would also require
the tolling manufacturer to maintain at its facility for no less than
three years records of materials shipped pursuant to its written
contract with the tolling contractor. In both cases, the records must
contain the name of the transporter, the date of the shipment, and the
type and quantity of the hazardous secondary material shipped or
received pursuant to the written contract. These requirements may be
satisfied by routine business records (e.g., financial records, bills
of lading, copies of DOT shipping papers, or electronic confirmations).
EPA solicited comment on whether the proposed requirement would make
the exclusion easier to enforce. We also solicited comment on whether
the tolling exclusion should be retained or eliminated. We noted that
no facilities appeared to be operating under the tolling exclusion as
of the date of the proposed rule, and that the definitions and
certifications involved in this exclusion were complicated. However, we
also noted that if the tolling exclusion were eliminated, the tolling
contractor conducting the reclamation might need to obtain a RCRA
storage permit. This necessity could discourage recycling under tolling
arrangements and prevent sustainable reclamation practices.
Comments: Tolling Exclusion
    Those commenters who addressed the proposed recordkeeping
requirement generally supported it, but many commenters believed that
the tolling exclusion should be eliminated and that tolling should be
regulated under EPA's proposed alternative Subtitle C regulatory
standards for hazardous recyclable materials. Another commenter argued
that if the Agency retained the tolling exclusion, we should require
use of the hazardous waste manifest, financial assurance, and other
Subtitle C requirements. Some of these commenters emphasized the
absence of utilization of the tolling exclusion and said that federal
regulations should address activities of national importance. One
commenter noted that the exclusion could result in an inefficient use
of enforcement resources as regulators would have to be trained and
familiar with a regulatory concept with which they are not familiar.
Another commenter argued that the assumption of liability for
mismanagement by the tolling contractor was unlikely and could result
in litigation. Other commenters emphasized environmental concerns with
the tolling exclusion. These commenters doubted that recycling under
tolling arrangements was actually under the ``control'' of the tolling
contractor, given that a different corporate entity at a different
physical location operates the production process. Some commenters
raised similar concerns with the risks involved in off-site
transportation of hazardous secondary materials that were raised in
connection with ``same-company'' recycling.
    Some commenters, on the other hand, urged EPA to retain the
exclusion for tolling contracts. These commenters argued that hazardous
secondary materials legitimately reclaimed under the tolling exclusion
are managed as valuable products and not discarded. They also said that
utilization of the exclusion could increase with time, particularly if
more states picked up EPA's revisions to the definition of solid waste
and if regulatory uncertainty were avoided. One commenter noted that
the economic incentives under tolling contracts are such that there is
no incentive for discard, since the tolling manufacturer is paid when
it returns the hazardous secondary material to the contractor. Some
commenters indicated that eliminating the tolling exclusion, by
requiring tolling contractors to obtain RCRA storage permits, would
operate as a severe disincentive to reclamation under tolling
arrangements.
EPA's Response: Tolling Exclusion
    EPA generally agrees with the commenters who supported retention of
the tolling exclusion. We find that hazardous secondary materials are
not discarded if they are legitimately reclaimed under the conditions
specified in our tolling exclusion, particularly since participants in
tolling contracts have strong incentives to handle such materials as
valuable commodities rather than mismanage them. We also have
determined that the conditions of the generator-controlled tolling
exclusion, including the recordkeeping requirement for hazardous
secondary materials sent and received under tolling contracts, are
sufficient to prevent discard, thus rendering unnecessary the use of
the hazardous waste manifest or other RCRA permit requirements for
reclaimers. We have also concluded that retention or elimination of
this exclusion should not depend on how frequently the exclusion is
currently utilized, because determining frequency of utilization in the
future is necessarily speculative. Additional states could pick up
EPA's revisions to the definition of solid waste, and tolling
arrangements could become more common due to increases in certain kinds
of manufacturing or other technological developments. Regulatory
authorities would then become more familiar with implementation of the
provision. We are also concerned that eliminating the tolling exclusion
could discourage the reclamation of valuable hazardous secondary
materials that might otherwise be destroyed by incineration. This
result would be inconsistent with our goal of encouraging the
sustainable management of hazardous secondary materials. For these
reasons, we are retaining the tolling exclusion in this final rule and
finalizing the proposed recordkeeping requirement for this exclusion
(see 40 CFR 261.4(a)(23)(i)(C)).

E. The Contained Standard

    In its July 2011 DSW proposal, EPA proposed a regulatory definition
of the contained standard. Under this proposed definition, a unit
storing hazardous secondary materials is ``contained'' if it is in good
condition, with no leaks or other continuing or intermittent
unpermitted releases of the hazardous secondary materials to the
environment, and is designed, as appropriate for the hazardous
secondary materials, to prevent releases of hazardous secondary
materials to the environment. Such releases may include, but are not
limited to, releases through surface transport by precipitation runoff,
releases to soil and groundwater, wind-blown dust, fugitive air
emissions, and catastrophic unit failures. The unit must also be
properly labeled or otherwise have a system (such as a log) to
immediately identify the hazardous secondary materials in the unit.
Finally, the unit must not hold incompatible materials and must address
any potential risks of fires or explosions. Hazardous secondary
materials stored in units that meet the applicable requirements of 40
CFR parts 264 or 265 are considered to be contained.
    In addition, the Agency also proposed placing the requirements for
land-based units and non-land-based units in one regulatory provision
(40 CFR 261.4(a)(23)), since the requirements for both types of units
are the same. To clarify the regulatory status of units from which
releases have occurred, the Agency also proposed a provision stating
that: (1) A hazardous secondary material released to the environment is
discarded and a solid waste unless it is immediately recovered for the
purpose of reclamation and (2) hazardous secondary material managed in
a unit with leaks or other continuing or intermittent releases of the
hazardous

secondary material to the environment is discarded and a solid waste.
Comments: Codification of the Contained Standard
    Many commenters (particularly states) supported the codification of
the contained standard. Under the 2008 DSW final rule, these commenters
argued the only definitive way to determine whether a material was
contained was an evaluation after a release had already occurred. They
believed that codifying a definition of ``contained'' would make it
easier for regulatory authorities and the regulated community to decide
whether a unit meets the standard. Some commenters, however, believed
that a regulatory definition of ``contained'' was not needed because
the concept of what is contained was self-evident: To the extent
clarification is needed, it could be provided in guidance.
EPA's Response: Codification of the Contained Standard
    EPA agrees with those commenters who argued that codification of
the contained standard is desirable. Based on comments and inquiries
received from regulatory authorities and the regulated community after
promulgation of the 2008 DSW final rule, we have determined that merely
requiring that a unit be ``contained'' (without providing a regulatory
definition) does not give regulatory certainty about how to comply with
the standard. The number of comments and inquiries to this effect would
seem to refute the idea that the concept of contained is self-evident.
It was never the Agency's intent that violation of the standard could
be addressed only after a significant release and subsequent
environmental damage had occurred. More detailed regulatory criteria,
such as those proposed in our July 2011 DSW proposal, will help all
affected parties determine whether a unit adequately controls the
movement of hazardous secondary materials. Such determinations will be
of great benefit to regulatory authorities and to facilities operating
under the generator-controlled exclusion. We are therefore retaining
the codification of contained in this final rule.
Comments: Land-Based Storage
    Some commenters believed that storage in land-based units should be
prohibited completely under the generator-controlled exclusion. Other
commenters supported allowing land-based units, but only if the Agency
required periodic inspections, groundwater monitoring, or other
measures. Other commenters emphasized that the Agency had no
jurisdiction over land-based production units, and requested that EPA
clarify in the preamble that we do not regulate such units.
EPA's Response: Land-Based Storage
    EPA does not agree that land-based units should be categorically
prohibited under the generator-controlled exclusion. We have determined
that hazardous secondary materials, if they are stored in land-based
units that meet the conditions specified in today's rule, have not been
discarded. That is, if they are legitimately reclaimed as specified in
today's rule, if they are contained and not speculatively accumulated,
and if they have submitted the required notification, they are being
managed as valuable commodities, rather than wastes. Indeed, the ABR
decision expressed criticism of EPA for prohibiting any land placement,
even ``for a few minutes''. 208 F.3rd at 1051. EPA interprets the
court's discussion as a warning to the Agency to examine all factors,
not just one (e.g., land placement), when deciding whether a material
is a waste. For the same reason, we do not find that it is necessary or
appropriate to require groundwater monitoring, inspections at specified
intervals, or other Subtitle C controls for hazardous secondary
materials that are legitimately reclaimed under the control of the
generator under these conditions, even for land-based units. These
hazardous secondary materials are being managed under the control of
the generator; by maintaining control over, and potential liability
for, the hazardous secondary materials and the reclamation process, the
generator ensures that such materials have not been discarded. We also
note that the definition of ``land-based unit'' in 40 CFR 260.10 means
an area where hazardous secondary materials are placed in or on the
land before recycling, but the definition explicitly excludes land-
based production units. Examples of land-based units include surface
impoundments and piles.
Comments: Requirements for Non-Land-Based Units
    Some commenters believed that the proposed standard was still too
imprecise, or not sufficiently protective. These commenters generally
suggested that EPA require storage units to meet the standards of 40
CFR 262.34(a)(1), or parts 264 or 265 for tanks, containers, or
containment buildings. Some of these commenters argued that since
hazardous secondary materials sent for reclamation were identical in
composition to analogous materials sent for disposal, the storage
standards should be the same for both disposal and recycling. Another
commenter noted that EPA was considering tank standards for solvents
under the proposed remanufacturing exclusion, and said that standards
at least as stringent should be considered for other hazardous
secondary materials sent for reclamation. Commenters also emphasized
the ease of enforceability and implementation of standards with which
the regulatory authorities and the regulated community are already
familiar.
EPA's Response: Requirements for Non-Land-Based Units
    In response to those commenters who suggested Subtitle C
requirements for non-land-based units (such as tanks, containers and
containment buildings) that store hazardous secondary materials under
the generator-controlled exclusion, the Agency also finds that imposing
these requirements is unnecessary for such materials meeting the
conditions of the exclusion promulgated today. EPA is aware that
implementation of program requirements would be simpler if units
storing hazardous waste and those storing hazardous secondary materials
were subject to the same requirements, and we are also aware that the
chemical composition of hazardous secondary materials sent for disposal
can be similar to that of hazardous secondary materials sent for
legitimate recycling. Nevertheless, hazardous secondary materials that
are legitimately reclaimed under the control of the generator have not
been discarded, and such materials have value that provides generators
with strong incentives to maintain safe management and handling.
Imposing the Subtitle C requirements on these hazardous secondary
materials could discourage legitimate reclamation, encourage disposal,
and would be inconsistent with EPA's goal of fostering sustainable
materials management. In response to the commenter who suggested that
such requirements should be imposed because the Agency was considering
them for the remanufacturing exclusion, we note that the generator-
controlled exclusion covers a wide variety of hazardous secondary
materials, rather than the solvents covered by the remanufacturing
exclusion, for which tanks or container standards are appropriate for
reasons described in section VII of this preamble.
Comments: Releases
    Some commenters believed that the proposed regulatory definition of

``contained'' constituted a ``no-leak'' standard (including storm water
runoff or fugitive air emissions) and that even a single release that
was immediately recovered could lead to the hazardous secondary
material remaining in the unit being considered discarded and a solid
waste. Other commenters, however, said that all units will suffer a
release at some point and that it would be unreasonable to
categorically classify any release of whatever nature as discard.
    In the preamble to the 2011 DSW proposal, EPA stated that certain
units may be subject to occasional precipitation runoff that consists
essentially of water, with trace amounts of hazardous constituents. The
Agency noted that as long as such runoff does not contain hazardous
secondary materials (e.g., it is essentially rainwater with trace
amounts of metals), it would not be considered a ``release of a
hazardous secondary material.'' On the other hand, if the hazardous
secondary material itself is swept away by the runoff (e.g., if the
hazardous secondary material consists of fine particulate matter, such
as electric arc furnace dust), this transport via precipitation runoff
could be considered a ``release of a hazardous secondary material'' and
that pile may not be considered contained. Some commenters argued that
even trace amounts of hazardous substances (such as through stormwater
runoff) should be considered illegal releases from storage units. One
of these commenters objected to our regulatory definition partly
because it would allow releases that were not ``continuing'' or
``intermittent.''
    Another commenter, however, argued that the existence of stormwater
runoff (regulated under the Clean Water Act) or fugitive air emissions
and dust (regulated under the Clean Air Act) does not mean that
materials are not being managed as a valuable commodity and so cannot
be used to justify a determination that a hazardous secondary material
is subject to the fully applicable Subtitle C RCRA requirements. This
interpretation would amount to an illegal expansion of RCRA authority,
according to the commenter. The commenter also noted that EPA's
distinction between runoff containing hazardous constituents and runoff
containing the waste itself was irrelevant and that EPA should return
to the ``significant release'' standard of the 2008 DSW final rule.
Another commenter suggested that the Agency specify what concentration
of hazardous secondary material would need to be detected to constitute
a release.
EPA's Response: Releases
    EPA does not agree with those commenters who argued that the
proposed definition of ``contained'' imposed a strict, categorical, and
impracticable ``no leaks'' standard, either for land-based units or
non-land-based units. We note that the language of the proposed
definition reads that the unit must be in good condition, ``with no
leaks or other continuing or intermittent unpermitted releases of
hazardous secondary materials to the environment. . .'' (emphasis
added). This language clearly does not mean that any single release of
whatever nature would automatically place the hazardous secondary
materials remaining in the unit under Subtitle C regulation. In fact,
we agree with those commenters who argue that most units will suffer a
release at some point and that it would be unreasonable to
categorically classify any release of whatever nature as discard.
    Nor does EPA agree with those commenters who appeared to believe
that any release should lead to loss of the generator-controlled
exclusion and full regulation under RCRA Subtitle C. A single release
that is quickly cleaned up would not generally affect the regulatory
status of the hazardous secondary materials still contained in the
unit. For example, sometimes a hazardous secondary material may escape
from primary containment and may be captured by secondary containment
or some other mechanism that would prevent the hazardous secondary
materials from being released to the environment or would allow
immediate recovery of the materials. In that case, the unit would not
be subject to the RCRA hazardous waste regulations and the hazardous
secondary materials in the unit would still be excluded from the
definition of solid waste, even though any such materials that had been
released and not immediately recovered would be considered discarded.
    With respect to precipitation runoff, the Agency does not agree
with those commenters who said that even trace amounts of hazardous
substances (such as through stormwater runoff) should be considered
illegal releases from storage units. Some units are inevitably subject
to occasional precipitation runoff that consists essentially of water,
with trace amounts of hazardous constituents. As long as the hazardous
secondary material itself is not swept away by the runoff, this
transport via precipitation runoff would not be a release of such a
material and the unit could be considered contained. A contrary
interpretation could place all such units under Subtitle C regulation
and eliminate their eligibility for the generator-controlled exclusion,
which is not the Agency's intent. EPA has determined that hazardous
secondary materials placed in such units that are destined for
legitimate recycling have not been discarded if they meet the
conditions of these exclusions. EPA also agrees with the commenter who
said that the existence of stormwater runoff (regulated under the Clean
Water Act) and fugitive air emissions and dust (regulated under the
Clean Air Act) does not automatically mean that materials are not being
managed as a valuable commodity.
    EPA also does not agree with the commenter who suggested that the
Agency should return to the ``significance'' criterion for determining
whether a release has occurred (in part to distinguish between runoff
containing hazardous constituents and runoff containing the hazardous
secondary material itself). The Agency does not agree that using this
criterion, without further definition, would clarify this distinction.
We also do not find that it is practicable to establish a concentration
of hazardous secondary materials that could be used to determine
whether a release has occurred, since such appropriate concentrations
would vary for different materials and a single concentration limit
would not be flexible enough to allow an accurate determination of
``contained'' for the wide variety of hazardous secondary materials.
Comments: Other ``Contained'' Issues
    A few commenters suggested that EPA establish a petition process or
a site-specific variance for facilities to demonstrate the
appropriateness of site-specific alternative storage standards for
their units (including land-based units). Some commenters believed that
our reference to 40 CFR parts 264 and 265 meant that units were
required to comply with those provisions. One of these commenters
suggested that we specify that units meeting the requirements of 40 CFR
parts 264 or 265 are ``presumptively'' contained. Other commenters said
that the proposed definition of ``contained'' seemed more appropriate
for hazardous secondary materials in flowable form, but not for solid
materials such as scrap metal, for which a container is not necessarily
needed. One of these commenters suggested that we clarify that a
``unit'' may include a designated location.
    A few commenters suggested editorial revisions to the definition of
contained. One commenter said that EPA should

clarify this provision to better indicate that the unit must not
contain materials that are incompatible with the other wastes or
materials placed in the unit or the materials of construction that
comprise the unit. Another commenter said the examples of release
should include soil contamination because contamination should not be
allowed to pass through the soil to the groundwater before it is
considered a release. Two commenters said the proposed text at 40 CFR
261.4(a)(23)(ii)(B) uses the word ``recycling'' in place of
``reclamation'' and omits the phrase ``or intermittent unpermitted,''
which does not comport with the preamble language.
EPA's Response: Other ``Contained'' Issues
    In response to those commenters who suggested a mechanism (such as
a petition process or variance) to provide alternative or site-specific
containment requirements for certain facilities, such a mechanism is
unnecessary because the definition of ``contained' in today's rule
establishes minimum requirements that all units storing hazardous
secondary materials should be able to meet. We have designed the
``contained'' criteria to be flexible enough to cover a wide range of
units.
    In response to comments that suggested the reference to 40 CFR
parts 264 and 265 means that units were required to comply with those
provisions, EPA did not intend to imply that meeting such standards was
required. In response to the commenter who suggested stating that units
meeting the applicable requirements of 40 CFR parts 264 or 265 are
``presumptively'' contained, EPA agrees that this language better
reflects EPA's intent than the proposed language and is changing the
proposed definition of ``contained'' accordingly. However, we do not
agree with the commenter who suggested adding that solid hazardous
secondary materials may be stored in ``designated locations.'' We have
determined that our definition of ``contained'' (which includes land-
based units) is sufficiently flexible to cover solid material, such as
scrap metal or furnace bricks which are not stored in tanks,
containers, or containment buildings. We have also made clear in the
preamble the circumstances under which such materials could be
considered ``contained.''
    For the reasons stated above, EPA is finalizing the definition of
``contained'' as proposed, but replacing the statement that ``hazardous
secondary materials meeting the applicable requirements of 40 CFR parts
264 or 265 are considered to be contained'' with ``hazardous secondary
materials that meet the applicable requirements of 40 CFR parts 264 or
265 are presumptively contained'' (see 40 CFR 260.10).
    EPA agrees with commenters who suggested editorial changes to the
definition of contained and has incorporated these changes into today's
rule.

F. Notification as a Condition

    In the July 2011 proposal, EPA proposed to make the notification
requirement in 40 CFR 260.42 a condition, rather than a requirement, of
the generator-controlled exclusion in 40 CFR 261.4(a)(23). At issue are
the consequences an entity would face for failing to notify. Thus,
notification as a requirement of the exclusion means that failure to
notify would constitute a violation of the notification regulations. On
the other hand, notification as a condition of the exclusion means
failure to notify could potentially result in the loss of the exclusion
for the hazardous secondary materials (i.e., the hazardous secondary
materials would become solid and hazardous wastes and subject to full
Subtitle C requirements). EPA also requested comment on whether
notification should be a condition of the remanufacturing exclusion and
of the pre-2008 recycling exclusions. (For EPA's response to comments
for notification as a condition of the pre-2008 recycling exclusions,
see section XIX.)
Comments: Notification as a Condition
    Commenters were split on this issue. Many commenters supported
EPA's proposed change to make notification a condition of the
exclusion. These commenters argued that notification as a condition
would decrease the incentives for a facility to evade enforcement by
not notifying. A few commenters agreed that states would use
enforcement discretion to distinguish between facilities that failed to
notify due to an inadvertent oversight or from a blatant disregard for
the requirement. One commenter urged EPA to clarify that a facility
submitting a notification does not need to wait for any response from
the implementing agency prior to using exclusion.
    On the other hand, many commenters did not support this proposed
change and argued that notification should remain a requirement of the
exclusion, as it is currently. These commenters argued that
notification, or the absence thereof, is not indicative of discard and
that the information of who is using the exclusion should not impact
the determination of whether a material is discarded. Some commenters
argued that enforcement discretion is not exercised in a consistent and
reasonable manner and that the proposed change would subject generators
who are legitimately recycling their hazardous secondary materials to
undue severe enforcement consequences. Other commenters argued that
there are innocent reasons why a facility would not notify, for
example, because of confusion surrounding the point when a virgin
material becomes a secondary material. Still other commenters believed
that it is highly unrealistic to believe that any facility operating
under the provisions would intentionally fail to notify EPA in an
attempt to evade enforcement. Other commenters argued that there is
already sufficient incentive to notify because facilities' would
already incur significant penalties under RCRA 3007 for failing to
notify. Additionally, one commenter noted that making notification a
condition of the exclusion differs from how other paperwork violations
are treated.
EPA's Response: Notification as a Condition
    EPA agrees with commenters who supported making notification a
condition of the exclusion. The notification provision is the only
formal indication of a facility's intent to reclaim a hazardous
secondary material under the conditional exclusion. For example, if
during an inspection of a large quantity generator of hazardous waste,
EPA were to discover a hazardous secondary material that had been
stored on-site for more than 90 days without a RCRA permit (an act that
would typically be a violation of the hazardous waste regulations), a
previously filed notification would be an indication that the facility
was planning to reclaim the hazardous secondary material under the
conditions of the exclusion. Absent such notification, it would be
difficult for the facility to justify its true intentions for the
hazardous secondary material. Failure to meet the notification
provision is a strong indication that the facility either did not
intend to comply with or was unaware of the provisions of the
exclusion. In both cases, the lack of notification could indicate that
the hazardous secondary material was being mismanaged.
    EPA agrees with commenters that making notification a condition of
the rule would further discourage facilities from trying to evade
enforcement by not notifying because, under the final rule, the costs
and consequences of not notifying are significantly higher than if
notification remains a requirement. Notification is essential to keep

regulators and the public informed about hazardous secondary materials
activity and to enable effective compliance monitoring. Making
notification a condition provides states and EPA the ability to
properly enforce those that intentionally fail to notify in order to
evade enforcement, while leaving the flexibility to tailor enforcement
appropriately in those cases involving an unintentional oversight.
Therefore, EPA is making the notification provision in 40 CFR 260.42 a
condition of the generator-controlled exclusion in 40 CFR 261.4(a)(23),
as well as a condition of the remanufacturing exclusion in 40 CFR
261.4(a)(27).
    In response to opposing comments, EPA does not agree that failing
to notify is not indicative of discard. As noted, notification serves
as a formal declaration that a facility is not managing a hazardous
waste but, rather, an excluded hazardous secondary material under the
conditions of the exclusion. Notification, thus, documents the
generator's decision to not discard its hazardous secondary materials,
which is the inherent first step in any exclusion from the definition
of solid waste.
    EPA also does not agree that the notification condition would be
inappropriately enforced. EPA notes that notification as a condition
subjects only those generators who failed to notify to enforcement
consequences; generators who submit notifications as required, and meet
the conditions of the final rule exclusions, would not face enforcement
consequences. EPA does not find this to be unduly burdensome to the
regulated community.
    EPA also finds that the commenter's example of an innocent reason
for failing to notify (because of confusion surrounding the point when
a virgin material becomes a secondary material) as further reason to
strengthen the notification provision. That is, in order to comply with
the final rule, a generator must know which hazardous secondary
materials are being managed according to the specific conditions of the
exclusion. In other words, a generator has to make a choice to manage
hazardous secondary materials under the conditions of the rule before
they are considered ``excluded.'' (Notification, in fact, clearly
documents this choice.) Therefore, EPA finds it difficult to believe
that a generator could innocently fail to notify under the final rule
because the generator is unclear about when a virgin material becomes a
hazardous secondary material that it must manage under the exclusion.
These ambiguities must be resolved prior to the facility availing
itself of the exclusion.
    EPA also disagrees with commenters that argued it is highly
unrealistic to believe that any facility operating under the provisions
would intentionally fail to notify EPA, as well as commenters that
argued that sufficient incentives to notify already exist. We note that
there is likely an economic incentive for some facilities to fail to
notify and simply consider the paperwork violation as a cost of doing
business. Where an economic incentive exists, EPA maintains that
regulation is appropriate in order to adequately discourage undesirable
behavior.
    Finally, although notification as a condition may differ from how
other paperwork requirements are applied in the hazardous waste
regulations, it does not differ from how other paperwork requirements
are applied in conditional exclusions from the definition of solid
waste. For example, notification is a condition of the zinc fertilizer
exclusion in 40 CFR 261.4(a)(20). Additionally, EPA confirms that the
conditional exclusions at 40 CFR 261.4(a)(23) and 40 CFR 261.4(a)(27)
are self-implementing and thus facilities do not need to wait for any
response from the implementing agency prior to using exclusion.

G. Recordkeeping for Speculative Accumulation

    In the July 2011 DSW proposal, EPA proposed to amend the generator-
controlled exclusion to require persons operating under the exclusion
to place a label on the storage unit indicating the first date that the
excluded hazardous secondary material began to be accumulated. In cases
where placing a label on the storage unit is not practicable (e.g., if
the hazardous secondary materials are stored in a surface impoundment),
we proposed as an alternative to require persons operating under the
generator-controlled exclusion to document in an inventory log the
first date that the excluded hazardous secondary material began to be
accumulated. EPA noted that enforcement personnel had suggested that
ease of enforcement would be greatly facilitated if persons subject to
the speculative accumulation requirement were required to post a start
date for the accumulation. In this way, inspectors and other regulatory
authorities could quickly ascertain how long a facility has been
storing an excluded hazardous secondary material, and, therefore,
whether that facility was in compliance with the applicable storage
time. The Agency also noted that placing labels on storage units or
entering accumulation start dates in inventory logs is likely to be
already part of normal business operations at many facilities. For this
reason, the proposed requirement would not be unduly burdensome and
would provide a greater degree of clarity both to the regulated
community and to regulatory authorities who need to determine whether
excluded hazardous secondary materials meet the speculative
accumulation limits.
    Since the same arguments for tracking accumulation start dates
could be made more broadly for all recycling subject to the speculative
accumulation limits, EPA also requested comment on whether to add this
recordkeeping requirement to the speculative accumulation provision in
40 CFR 261.1(c)(8) itself. The Agency did not propose or solicit
comment on changing the substantive requirements of the speculative
accumulation provision, such as the time allowed for storage or the
amount that is required to be recycled within a calendar year.
Comments: Recordkeeping for Speculative Accumulation
    Many commenters, particularly states, supported the proposed
recordkeeping requirement and also supported extending the requirement
to all persons currently subject to the speculative accumulation
requirements at 40 CFR 261.1(c)(8). These commenters generally believed
that posting accumulation start dates (or using some other mechanism,
such as an inventory log) provides assurance both to generators and
inspectors that the generator in question is in compliance with the
speculative accumulation provision, and that the proposed requirement
would not be burdensome to the regulated community. One commenter
supported requiring accumulation start dates to be posted in storage
areas within a specified number of feet from the storage unit, since
reference to logs distant from storage units could make enforcement
difficult. Facilities that prefer a centrally located log could
maintain such a ``master'' log in addition to the record maintained
near the actual storage unit, this commenter suggested.
    Some commenters, however, opposed the proposed recordkeeping
provision for speculative accumulation, either for the generator-
controlled exclusion or for other persons subject to 40 CFR
261.1(c)(8). Some of these commenters argued that 40 CFR 261.2(f)
already requires respondents in enforcement actions who are claiming
that a material is not a solid waste to demonstrate that they meet the
terms of an exclusion or

exemption, by, among other things, providing appropriate documentation.
Some commenters apparently believed that the proposed requirement would
mandate sending a notification to EPA, or posting the quantity of the
hazardous secondary material and the precise time it was generated, or
posting ``finish'' dates, as well as ``start'' dates for accumulation.
In addition, some commenters expressed concern about the potential
difficulty of posting accumulation start dates for hazardous secondary
materials that are recycled rapidly in continuous processes with little
or no prior storage.
EPA's Response: Recordkeeping for Speculative Accumulation
    After evaluating the comments received, EPA has concluded that the
proposed recordkeeping requirements for speculative accumulation
provide considerable benefits to both regulatory authorities and the
regulated community and that the burden on the regulated community will
be minimal. Posting accumulation start dates (or using another
mechanism, such as an inventory log) is a simple and effective way to
provide useful information about likely compliance with the speculative
accumulation provision, and that the cost to facilities does not
outweigh this benefit. We also find that all of the reasons for
adopting this requirement for the generator-controlled exclusion apply
equally to the question of whether to adopt it for all persons subject
to 40 CFR 261.1(c)(8). In response to the commenter who supported also
requiring the posting of accumulation start dates in storage areas
within a specified number of feet from the storage unit, EPA is not
convinced that such a requirement would be necessary for all
facilities, and the appropriate distance from the storage unit might
also vary for different facilities. We are therefore not adopting this
requirement.
    In response to those commenters who argued that the proposed
recordkeeping requirement is redundant with Sec.  261.2(f), we note
that that provision applies to respondents in enforcement actions and
does not provide specific guidance on how to determine compliance with
the speculative accumulation provisions in the case of routine
inspections. We therefore do not agree that the proposed recordkeeping
requirement is redundant with 40 CFR 261.2(f). Today's revision to the
speculative accumulation provision at 40 CFR 261.1(c)(8) does not
entail submitting notifications to EPA, posting the quantity of the
hazardous secondary material and the time it was generated, or posting
finish dates. The final definition of ``contained'' specifies that a
unit must be properly labeled or otherwise have a system (such as a
log) to immediately identify the hazardous secondary materials in the
unit. Neither such a label nor the posting of an accumulation start
date requires detailed information. In response to the commenters who
were concerned about hazardous secondary materials that were
continuously recycled without prior storage, we agree with those
commenters and are revising the proposed recordkeeping requirement to
allow ``other appropriate methods'' to be used to document the
accumulation period.
    For the reasons given above, EPA is amending 40 CFR 261.1(c)(8) to
require that all persons subject to that provision must place materials
in a storage unit with a label indicating the first date that the
excluded hazardous secondary material began to be accumulated. If
placing a label on the storage unit is not practicable, the
accumulation period must be documented through an inventory log or
other appropriate method.

XV. Major Comments on the Replacement of the Exclusion for Hazardous
Secondary Materials That Are Transferred for the Purpose of Reclamation

Summary of Comments: Replacement of the Transfer-Based Exclusion With
the Alternative Subtitle C Recycling Standards
    Environmental and community organizations, as well as many state
commenters, supported withdrawing the transfer-based exclusion because
this would remove the possibility of hazardous secondary materials
being sent to unpermitted reclaimers without a manifest. These
commenters agreed with EPA's rationale that transfers of most types of
hazardous secondary materials to other companies for reclamation
involve discard, and that the 2008 DSW transfer-based exclusion could
result in adverse impacts to human health and the environment from
discarded material. Commenters noted that, prior to reclamation
occurring, hazardous secondary materials have limited inherent value.
Some commenters in particular were concerned about how the transfer-
based exclusion made the generator responsible for verifying the safety
and legitimacy of the recycler's operations, when most generators would
not have the expertise to make such a determination. One commenter
examined the compliance history of the facilities currently operating
under the 2008 DSW exclusions and noted that a large percentage have
been the subject of enforcement actions in the past five years, and
many have been subject to clean-up authorities under either RCRA or
CERCLA for past contamination.
    Most states supported the alternative hazardous waste standards as
a replacement for the transfer-based exclusion as an approach that
would help encourage recycling, while maintaining protection of human
health and the environment. States generally supported the longer
accumulation period, but some state commenters suggested replacing it
with the speculative accumulation limits. Finally, while, as noted
above, environmental groups supported removing the transfer-based
exclusion because of the potential hazards from third-party recycling,
they did not support the alternative standards because they believed
that the longer accumulation times would not be as protective as full
Subtitle C regulation.
    In contrast, most industry commenters and a few states opposed
replacing the transfer-based exclusion with alternative hazardous waste
standards. These commenters argued that the withdrawal would
significantly hinder reclamation and therefore, the lifecycle
environmental benefits from recycling, contrary to the resource
conservation goals of RCRA. One commenter reported that retaining the
generator-controlled exclusion but not allowing off-site transfers
limits generator flexibility if, due to unforeseen circumstances (e.g.,
equipment malfunctions), the generator is not able to recycle on-site.
Several industry commenters opposed the alternative standards, saying
that the added compliance requirements (e.g., the reclamation plan) are
likely to outweigh any benefit provided by the relaxed accumulation
time limits. Two commenters suggested that EPA apply the alternative
standards to the reclamation facility, but reduce the requirements that
apply to the generator, given that the majority of the damage cases
occurred at the recycling facility.
    Commenters also argued that EPA's record does not support repealing
the transfer-based exclusion, stating that EPA did not present any new
data that the 2008 DSW transfer-based exclusion would cause
environmental harm and noting that the 2011 DSW proposal stated that
facilities currently operating under the exclusion do not appear to
have any problems from hazardous materials recycling. Comments included
discussions of the conditions of the 2008 DSW transfer-based exclusion
and

why such conditions would be adequate to protect human health and the
environment, and suggested if EPA was concerned about the conditions,
the solution would be to strengthen the conditions, not withdraw the
exclusion. In particular, the Pennsylvania Department of Environmental
Protection, which oversees 27 of the 65 facilities operating under the
transfer-based exclusion, commented strongly in favor of keeping the
transfer-based exclusion and suggested that EPA add a condition that
recyclers have a RCRA Subtitle C permit.
    EPA's Response: EPA agrees with those comments stating that the
2008 transfer-based exclusion could result in adverse impacts to human
health and the environment from discarded material, but disagrees that
all off-site transfers for reclamation requires Subtitle C hazardous
waste regulation, because imposing Subtitle C hazardous waste
regulation would result in regulating hazardous secondary material that
is currently being legitimately recycled and not discarded as hazardous
waste. Instead, EPA agrees with those commenters that support retaining
an exclusion from the definition of solid waste for off-site recycling
with additional conditions which will address the potential for discard
happening in the future.
    As discussed in more detail in Section VI of this preamble, EPA has
identified several regulatory gaps in the 2008 transfer-based exclusion
that could result in significant risk to human health and the
environment from discarded material. Specifically, the conditions for
the transfer-based exclusion for recyclers lack the ability to provide
oversight before management begins and do not allow public
participation in the environmental decision-making process, thereby
decreasing the likelihood of compliance and increasing the potential
for risk to human health and the environment from discarded hazardous
secondary material. The evidence of past damage cases at third-party
recycling facilities leading to significant risk to human health and
the environment from hazardous secondary materials originally intended
for recycling and the underlying perverse incentives of the recycling
market to over-accumulate such hazardous secondary materials intended
for recycling, resulting in discard of the material, demonstrates the
need for such additional oversight and public participation. In other
words, the transfer-based exclusion can exacerbate financial incentives
for small and/or inexperienced businesses to take in more hazardous
secondary materials than they actually can use, mishandle it, and even
go out of business, as shown by the fact that bankruptcies or other
types of business failures were associated with 66% of the recycling
damage cases, resulting in multi-million dollar cleanups.
    At the same time, as EPA noted in the 2011 DSW proposal and as was
echoed in the public comments, EPA has also carefully monitored the
implementation of the 2008 DSW final rule since it came into effect in
December 2008, and to date, no environmental problems have been
reported at facilities claiming the DSW exclusions. As of April 2014, a
total of 65 facilities are operating under the transfer-based
exclusion, 56 of which are generators transferring off-site and 7 which
are reclamation facilities.\44\ All seven reclamation facilities are
RCRA permitted. (There are no reclaimers without a Subtitle C permit
currently operating under the transfer-based exclusion). Of the 56
generators operating under the transfer-based exclusion, 32 generators
appear to have either started or substantially increased their
recycling as a result of the 2008 DSW exclusions. These include
generators that had previously reported in their 2007, 2009, or 2011
biennial report that they sent their solvents offsite for fuel
blending, and then notified that they are sending their spent solvents
for reclamation under the 2008 DSW final rule. In addition, in at least
five cases, facilities have switched from sending spent pickle liquor
to landfilling or deep well injection to recycling under the 2008 DSW
rule. In total, the 2008 DSW notifications document that over 57,000
tons of hazardous secondary material were reclaimed under the 2008 DSW
rule during 2011.\45\ In addition, the fact that the Pennsylvania
Department of Environmental Protection (PA DEP), which oversees 27 of
the 65 facilities operating under the transfer-based exclusion,
commented strongly in favor of keeping the transfer-based exclusion,
supports the idea that an exclusion for off-site reclamation can be
safely implemented. At the same time, given that the transfer-based
exclusion has been achieving its intended purpose of encourage safe,
legitimate recycling, withdrawing the transfer-based exclusion and
replacing it with RCRA Subtitle C hazardous waste requirements is
unnecessary and would result in hazardous secondary material that is
currently being legitimately recycled and not discarded being regulated
as hazardous waste. Because Subtitle C regulation would be more
stringent than the current exclusion, if EPA were to finalize the
alternative Subtitle C standards, Pennsylvania (and other states that
have adopted the 2008 DSW rule) would have to change their programs and
regulate this material as hazardous waste, despite the fact that it is
currently being legitimately recycled and not discarded.
---------------------------------------------------------------------------

    \44\ Some of these facilities are also managing hazardous
secondary materials under the generator-controlled exclusion.
    \45\ U.S. EPA, EPA's Evaluation of Data Collected from
Notifications Submitted under the 2008 Definition of Solid Waste
Exclusions, April 11, 2014.
---------------------------------------------------------------------------

    However, the fact that the comments from PA DEP went on to
recommend that the transfer-based exclusion be limited to RCRA-
permitted recycling facilities also supports EPA's determination that
the self-implementing measures of the transfer-based exclusion have the
potential to result in significant risk to human health and the
environment. Because all recycling under the transfer-based exclusion
has been (to date) performed at RCRA permitted facilities, EPA is
unable to extrapolate what would happen at facilities without a RCRA
Subtitle C permit if the transfer-based exclusion were fully
implemented. Given the evidence of past damage cases leading to
significant risk to human health and the environment from hazardous
secondary materials originally intended for recycling and the
underlying perverse incentives of the recycling market to over-
accumulate such hazardous secondary materials intended for recycling,
resulting in discard of the material, additional oversight of recycling
beyond the self-implementing measures of the transfer-based exclusion
are needed to ensure that the hazardous secondary material is
legitimately recycled and not discarded.
    EPA is therefore replacing the transfer-based exclusion currently
found in 40 CFR 261.4(a)(24) and (25) with the verified recycler
exclusion in 40 CFR 261.4(a)(24). This replacement strikes an
appropriate balance between encouraging the safe and legitimate
recycling of hazardous secondary materials and allowing the appropriate
oversight to ensure the exclusion works as intended. It also addresses
the issue of allowing a generator flexibility to recycle on site or off
site as circumstances require (as long as the generator notifies under
both the generator-controlled exclusion and the verified recycler
exclusion). As discussed in section VI. D of the preamble, the verified
recycler exclusion retains the conditions from the transfer-based
exclusion that were intended to help identify hazardous secondary
material that is legitimate

recycled and not discarded, and adds conditions that address the
regulatory gaps identified in the 2011 DSW proposal.

XVI. Major Comments on the Remanufacturing Exclusion

A. List of Eligible Solvents

    In the July 2011 DSW proposal, EPA requested comments on excluding
18 spent solvents when they are remanufactured back into higher value
commercial-grade solvents under the conditions of the exclusion. The
solvents were: Toluene, xylenes, ethylbenzene, 1,2,4-trimethylbenzene,
chlorobenzene, n-hexane, cyclohexane, methyl tert-butyl ether,
acetonitrile, chloroform, chloromethane, dichloromethane, methyl
isobutyl ketone, N,N-dimethylformamide, tetrahydrofuran, n-butyl
alcohol, ethanol, and methanol. EPA chose these 18 spent solvent
chemicals to limit the exclusion to higher-value materials and
processes that resemble manufacturing more than waste management. EPA
also requested comment on whether there are other solvents, chemicals
or other types of hazardous secondary materials that should be included
in the remanufacturing exclusion. In particular, EPA requested comments
on opportunities for remanufacturing other types of non-renewable
hazardous secondary materials, such as metal catalysts or other types
of metal-bearing hazardous secondary materials.
Comments: List of Eligible Solvents
    Many commenters supported the current list of spent solvents and
did not support expanding the list in any way. These commenters
cautioned against expanding the list of chemicals until EPA could
determine the effectiveness of this exclusion. Several other comments
did not focus on adding solvents or other hazardous secondary
materials, but focused on the toxicity or market structure of the 18
listed spent solvents. One commenter questioned the claim of ``higher-
value'' for chloroform, chloromethane, ethyl benzene, xylene, methanol
and MTBE. Another commenter stated they no longer use many of the 18
listed spent solvents because the solvents are defined as a toxic
substance and a hazardous air pollutant under other environmental
statutes. The commenter continued by saying that members of their
association now use more ``environmentally friendly'' solvents.
    The remaining commenters discussed adding solvents or other
hazardous secondary materials. Some commenters suggested expanding the
solvent list to include benzene, acetone, isopropyl alcohol, or all
solvents used in reactors, extractors, purifiers or blending equipment
in pharmaceutical, organic, chemical, or plastics and resins
manufacturing. Finally other commenters suggested adding additional
hazardous secondary materials that were not solvents. The hazardous
secondary materials suggested for addition were metal-bearing hazardous
secondary material, F006 and spent hydroprocessing catalysts.
EPA's Response: List of Eligible Solvents
    EPA agrees with those commenters who supported the remanufacturing
exclusion and limiting it to the list of 18 spent solvents, at least at
this point in time. EPA determined that these 18 spent solvents are
good candidates for remanufacturing because they are used in large
volumes as processing aids and because there are existing markets for
all these solvents to be remanufactured to serve similar purposes to
those of the original commercial-grade materials. EPA does not agree
with comments that suggested adding chemicals to the list, but did not
provide specific data or information that would lead the Agency to add
these chemicals to the list at this point in time. While EPA may expand
the list of eligible hazardous secondary materials for the
remanufacturing exclusion based on additional data (see section VII of
this preamble), the currently available information only supports the
inclusion of the proposed list of 18 spent solvents.
    EPA disagrees with those commenters who did not support including
many of the identified solvents on the list because of their toxicity.
In the 2011 DSW proposal, EPA acknowledged that the eligible solvents
have suspected or recognized hazardous health effects associated with
their manufacture, processing, and use.\46\ Although EPA and industry
have been working to find substitutes for the more hazardous of these
solvents, or find ways to use less of them, this has not yet been
widely achieved.47 48 With respect to the pharmaceutical
sector in particular, complex chemical processes already registered
with the Food and Drug Administration are involved, and EPA has found
this a very challenging area to address in terms of chemical
substitution and process changes. In addition, some of these solvents
are building blocks and primary intermediate chemicals, making them
difficult to replace. Until lower-risk substitutes for these solvents
are found, it is helpful from a health risk standpoint to minimize the
volume of solvents manufactured and to limit exposure to those already
manufactured. This is something that the remanufacturing exclusion can
achieve.
---------------------------------------------------------------------------

    \46\ Allen, D., Shonnard, D., Green Engineering: Environmentally
Conscious Design of Chemical Processes, Risk Concepts, chapter 2,
pgs 35-62, Austin, S., U.S. EPA Editor, Published by Prentice-Hall,
2001.
    \47\ For information on U.S. EPA's Green Chemistry Program, see
http://www.epa.gov/gcc/.
    \48\ Information on the American Chemical Society's Green
Chemistry Institute's Pharmaceutical Roundtable is available via the
ACS Web site http://portal.acs.org/portal/acs/corg/content.
---------------------------------------------------------------------------

B. List of Eligible Industry Sectors

    Under the 2011 DSW proposal, EPA identified the operations of four
manufacturing sectors as candidates for the remanufacturing exclusion.
The eligible sectors were pharmaceutical manufacturing (NAICS 325412),
basic organic chemical manufacturing (NAICS 325199), plastics and
resins manufacturing (NAICS 325211), and the paints and coatings
manufacturing sector (NAICS 325510). These four sectors were selected
because their primary business is manufacturing rather than waste
management. Furthermore, these sectors are closely associated with the
chemical functions identified in the remanufacturing exclusion and
currently use a high volume of the solvents identified for the
functional purposes included in this exclusion. EPA also asked for
comment on whether there were other industry sectors that should be
included in the remanufacturing exclusion.
Comments: List of Eligible Industry Sectors
    Several commenters suggested specific industries for EPA to add to
the remanufacturing exclusion. The suggested industries were K061
recyclers, the biofuels sector, recyclers with a part B permit like
Safety-Kleen, petroleum refineries (NAICS 324110), petrochemical
manufacturers (NAICS 325110), synthetic rubber manufacturers (NAICS
325212), fiber glass manufacturers, and electronic manufacturers. K061
recyclers and the biofuels sector were suggested due to their active
markets and potential impacts on the environment if hazardous secondary
materials were managed improperly. Companies, such as Safety-Kleen,
with a part B permit, were suggested because these recyclers encourage
sustainable materials management through remanufacturing. Petroleum
refineries (NAICS 324110), petrochemical manufacturers (NAICS 325110)
and synthetic rubber

manufacturers (NAICS 325212) were suggested due to their significant
generation of spent solvents. The commenter believed these industry
sectors' spent solvents should be eligible just like the solvents from
the proposed industry sectors. Another commenter suggested adding fiber
glass manufacturers because they operate refractory recycling programs
and refractories are higher-value hazardous secondary materials.
Finally, the electronics sector was recommended for its recycling of
precious metals.
EPA's Response: List of Eligible Industry Sectors
    EPA acknowledges that the industry sectors that were nominated for
inclusion in the remanufacturing exclusion participate in recycling
activities; however, these sectors' recycling activities do not include
the types of practices or functions that were within the scope of the
remanufacturing exclusion. Under the remanufacturing exclusion, a
manufacturer may send their hazardous secondary material to another
manufacturer, from one of the permissible industry sectors, provided
that the remanufacturer uses the hazardous secondary material in one of
the four permissible functions. The commenters all suggested industries
that send their hazardous secondary materials to a third party, who is
not necessarily a manufacturer, but a facility that would recover the
solvent or other hazardous secondary material and who would then sell
the recycled product to another person.
    As discussed in the market forces study, it is generally in the
best interest of commercial third party recyclers to maximize the
amount of hazardous secondary material they can accept to increase
profits. This market structure creates a perverse market incentive to
over-accumulate hazardous secondary materials, which can result in
discard, which the remanufacturing exclusion seeks to avoid. In
contrast, the market forces study shows that facilities engaged in
industrial intra-company recycling, where companies generate hazardous
secondary materials as by-products of their main production processes
and recycle the hazardous secondary materials used in production, have
more flexibility in waste management decisions than a commercial
recycler does. When a commercial recycler's primary or entire income is
from accepting hazardous secondary materials for recycling and selling
recycled products, there is no economic alternative if the market
crashes to stay in business unless the company can afford the cost of a
hazardous waste management permit and the cost of becoming a hazardous
waste disposal facility. Remanufacturers, on the other hand, as a type
of intra-industry recycler, profit primarily from the sale of their
product and can switch their inputs between raw materials and hazardous
secondary materials if market conditions shift.
    It is also not clear that the suggested industry sectors will know
what function their hazardous secondary materials will be used for
after remanufacturing. As discussed previously, the remanufacturing
exclusion encourages higher-value materials to be remanufactured and
then used in high-value processes again. Furthermore, this exclusion
focuses on the functions of aiding chemical manufacturing and
processing because the solvents performing these functions retain their
original physical and chemical properties. In these functions, the
solvents are not contaminated by substances, such as inks and greases,
which are difficult to separate, but only mixed with pure product
ingredients, from which they can be separated readily in a commercially
feasible manner. Unfortunately, the suggested industry sectors provided
by commenters do not appear to coincide with the intent of
remanufacturing hazardous secondary materials that retain their
original physical and chemical properties. Therefore, these additional
sectors will not be included in the remanufacturing exclusion.
    However, EPA notes that these sectors would be eligible to
participate in the verified recycler exclusion (40 CFR 261.4(a)(24)) if
they meet the conditions of that exclusion.

C. Regulatory Language

    In the July 2011 DSW proposal, EPA did not specifically include
regulatory language for the remanufacturing exclusion, but EPA did
include a streamlined version of the scope, applicability and
conditions of the exclusion followed by a very detailed explanation of
the exclusion that included the reasoning for each condition.
Comments: Regulatory Language
    Many commenters said they were unable to comment on the
remanufacturing exclusion because there was no regulatory language
included in the proposal. Almost all commenters supported the concept
of the remanufacturing exclusion, but requested that EPA re-propose the
remanufacturing exclusion in a separate rulemaking with regulatory
text, so commenters could accurately comment on the exclusion.
EPA's Response: Regulatory Language
    The preamble language discussing the remanufacturing exclusion
contained adequate detail and information to allow comment on the
proposed remanufacturing exclusion. In the July 2011 DSW proposal, the
remanufacturing exclusion was presented in a narrative form that
closely resembles the regulatory language being finalized today. The
proposed rule also included a large amount of detail on the scope,
applicability, and conditions of the remanufacturing exclusion. The
proposal laid out exactly what solvents, industry sectors, and chemical
functions were permissible in the remanufacturing exclusion. The
proposal then clearly stated what was required for the notification,
remanufacturing plan, records of shipments and confirmations of
receipts, tanks and container management standards and the speculative
accumulation requirement. EPA has determined that between the narrative
and detailed explanation of the remanufacturing exclusion, commenters
were provided more than enough information to comment on the
remanufacturing exclusion, and thus, we are finalizing it in today's
final rule.

XVII. Major Comments on Legitimacy

A. Codifying Legitimacy for All Recycling

Comments: Codification of Legitimacy
    Comments from industry across the board (including waste management
companies) vehemently opposed codifying the legitimacy provision at
Sec.  260.43 for the pre-2008 recycling exclusions and exemptions,
arguing that this action, combined with making factor 3 and factor 4
mandatory, is a drastic change in policy and likely will end much of
the current recycling that is occurring under RCRA. Industry commenters
argued that this would be a huge administrative burden with little
environmental benefit and that recycling has been taking place under
these exclusions largely without problems for many years. Some industry
commenters expressed their opinion that the codified legitimacy factors
are significantly different than EPA's existing legitimacy policy and
therefore, the legitimacy analysis that would have to be undertaken is
not substantively the same. Other commenters opined that applying the
codified legitimacy standard to the pre-2008 exclusions and exemptions
would function as a disincentive to recycling by adding

paperwork burden and increasing compliance difficulties, especially for
generators who would be exposed to potential RCRA enforcement due to
subsequent noncompliance by the recycler. One commenter stated that
inspectors could miss the more obvious cases of sham recycling because
Agency resources would be expended in reviewing the large amount of
required documentation and inspecting the more frequently used pre-
existing exclusions, such as the use/reuse exclusion in 261.2(e) and
the closed loop recycling exclusion in 261.4(a)(8) to the detriment of
investigating other potentially more problematic recycling.
    Many of the specific industry commenters on this issue were scrap
metal recyclers who argued that although they have been legitimately
recycling for decades, expecting them to prove that their recycling
operations were legitimate for the first time would be prohibitively
expensive, time-consuming and unworkable. The scrap metal recycling
industry had particular issues with factor 4 as drafted in the 2011 DSW
proposal and had many questions on how to do the comparable
demonstration.
    With respect to the states, a number of states were supportive of
codifying one legitimacy standard for all hazardous secondary material
recycling activities. They argued that codifying the legitimacy
provision would give industry and states a definitive standard to
evaluate recycling and that industries operating under the pre-2008
recycling exclusions and exemptions should not have any problems
documenting compliance with the legitimate recycling provision of Sec.
260.43, if their recycling is truly legitimate. On the other hand, a
number of states, the Association of State and Territorial Solid Waste
Management Officials (ASTSWMO), and the Northeast Waste Management
Officials' Association (NEWMOA) all expressed concerns over applying
the codified legitimacy standard to certain long-standing recycling
exclusions, including lead-acid batteries, circuit boards, scrap metal,
and closed loop recycling, with one state arguing that this additional
regulatory burden was not necessary for the 2008 pre-existing
exclusions and exemptions.
    Several environmental and community organizations supported
codification of the legitimate recycling provision for all hazardous
secondary materials recycling, but did not provide a detailed
explanation of their position. In addition, whereas one environmental
organization acknowledged that EPA did not solicit comment on the
elimination of these exclusions, this organization stated that they
believed a re-examination of all of the exclusions by the Agency,
including the pre-2008 exclusions and exemptions should be conducted as
soon as possible.
EPA's Response: Codification of Legitimacy
    In response to the many comments that were submitted, the Agency is
making a number of changes to the 2011 DSW proposal. Specifically, EPA
is codifying a general statement in Sec.  261.2(g) that makes it clear
that a hazardous secondary material found to be sham recycled is
discarded and thus, is a solid waste. However, we are not codifying a
reference to the legitimacy provisions at 40 CFR 260.43 in each of the
pre-2008 recycling exclusions/exemptions, as we proposed to do in the
2011 DSW proposal. On further reflection, we have determined that the
sham recycling prohibition in Sec.  261.2(g) more clearly defines the
Agency's view on legitimate recycling and the pre-2008 recycling
exclusions and exemptions. We also agree with those commenters who
pointed out that we generally looked at the legitimacy of the recycling
activity when we promulgated the material-specific or industry-specific
exclusions and, therefore, we are not requiring facilities to revisit
past legitimacy determinations. However, by codifying a prohibition on
sham recycling that applies to all hazardous secondary materials being
recycled, we are confirming that we expect anyone operating under a
recycling exclusion or exemption to do so legitimately. (As we discuss
later in this section and in section VIII, the Agency also has made a
number of other revisions to the legitimacy standard to address the
concerns raised in the comments.)
Comments: Effect on Existing Legitimacy Determinations
    Many industry commenters argued that EPA or the states have already
made legitimate recycling determinations for their specific recyclable
materials. Some commenters also noted that EPA considered legitimacy at
the time their material-specific exclusion was promulgated and had
already made legitimacy determinations for those recyclable materials
(e.g., the zinc fertilizer exclusion, precious metal exclusion, etc.).
These commenters also argued that as part of rulemaking for the
material-specific exclusions, the Agency had determined what conditions
were necessary to ensure legitimacy. Some argued that overlaying the
general legitimacy factors on the 2008 pre-existing conditional
exclusions and exemptions is unnecessary and duplicative and would
create significant disincentives to recycling.
EPA's Response: Effect on Current Legitimacy Determinations
    In response to the concerns expressed that the codified legitimacy
factors would lead to practices previously considered legitimate now
being considered sham operations, in general, the Agency is clarifying
that it does not intend for the current recycling legitimacy
determinations to change due to the codification of the legitimacy
factors. We consider the factors we are finalizing today to be
consistent with the criteria in the Lowrance Memo and previous preamble
statements on legitimate recycling. Therefore, we generally do not
anticipate that implementing agencies will revisit past legitimacy
determinations. If recycling was considered legitimate under the
Lowrance Memo, its status should not change as a result of today's
rule. To make its intent more clear, the Agency is codifying a
prohibition against sham recycling in Sec.  261.2(g) instead of adding
a provision in each of the pre-2008 exclusions and exemptions referring
to the legitimacy provision in Sec.  260.43. This codification will
give implementing agencies a clear regulatory statement that can be
used to enforce against sham recyclers, yet not require the vast
majority of recyclers that are performing legitimate recycling under
the pre-2008 exclusions and exemptions to revisit previously-made
legitimacy determinations.
    Any existing legitimate recycling determination should not change
due to the codification of the legitimacy factors. In addition,
examples that were provided in the public comments helped inform our
decision-making and led us to revise factor 4 significantly to address
this issue. The final regulatory text is consistent with the pre-
existing legitimacy guidance and the manner in which legitimacy
determinations have been made by the EPA Regions and authorized states.
Thus, we do not expect implementing agencies to revisit past legitimacy
determinations.
    Regarding the existing exclusions and exemptions in the
regulations, EPA acknowledges that, in establishing a specific
exclusion or exemption, we have already determined in the rulemaking
record that the specific recycling practice is excluded from the
definition of solid waste provided all the conditions of the rule are
met. However, the Agency has always enforced its rules on the basis
that any recycling must be legitimate (See U.S. v.

Self, 2 F.3d 1071, 1079 (10th Cir. 1993); U.S. v. Marine Shale
Processors, 81 F.3d 1361, 1366 (5th Cir. 1996); Marine Shale Processors
v. EPA, 81 F.3d 1371, 1381-83 (5th Cir. 1996)). This is meant to
prevent a company from claiming to be operating under an existing
exclusion or exemption and simply using that as a way to avoid full
RCRA Subtitle C regulation. Thus, since EPA is not modifying the
existing exclusions and exemptions, there is no change regarding
legitimacy determinations, except that the factors are now codified. A
company's ability to claim a recycling exclusion or exemption has
always depended on the recycling being legitimate.

B. Making All Four Legitimacy Factors Mandatory

Comments: Mandatory Factors
    For the most part, states commenting on this part of the proposal
supported all the legitimacy factors being mandatory (the exceptions
being Tennessee and Louisiana), although several states went on to say
that they either opposed the petition process or are concerned about it
for the following reasons: (1) The resources necessary for addressing
incoming petitions, (2) the possibility of using the petition process
as a potential backdoor out of legitimacy, and/or (3) the potential for
the petition process to lead to inconsistencies among states on
legitimacy determinations. Most states have supported making all four
factors mandatory in past proposals and continue to do so here, arguing
that codifying the legitimacy factors in the rule (instead of only in
rule preamble and in policy documents) will provide clearer instruction
to the regulated community and will strengthen the ability of state
programs to enforce the criteria in situations where recycling is not
legitimate. This, the states claim, will reduce the potential risk to
human health and the environment from mismanagement of hazardous
secondary materials and from elevated concentrations of contaminants in
recycled products. They also argue that making all four factors
mandatory will remove a serious flaw in the enforceability of
legitimacy. Other commenters noted that requiring all four legitimacy
factors to be met is critical to ensure reclamation is being conducted
at a qualified facility and to minimize the potential for creation of
future damage cases. Most states found it hard to conceive of a
legitimate recycler that would not be able to satisfy all four factors.
    Although some commenters representing the hazardous waste recycling
industry did support making all the factors mandatory, the majority of
industry commenters did not support this provision. Those commenters
who did support a requirement that all four factors be met argued that
this structure would be fairer and more enforceable. On the other hand,
many of the commenters that argued against making all factors mandatory
stated that this would discourage much of the current recycling and
would be too hard to meet. Commenters particularly singled out factor 4
(toxics along for the ride) as problematic for implementation.
Specifically, we got comments from multiple members of the mining and
mineral processing industry arguing that factor 4 is not applicable to
their industry and from scrap metal recyclers asking how factor 4 would
apply at their facilities.
    Many commenters also argued that the petition process was not an
adequate mechanism for those processes that do not meet all four
factors because there will be too many petitions for the states and EPA
to be able to process and because shutting down recycling operations
during the time spent waiting for petitions to be processed would be
very expensive and wasteful.
    Another important consideration is what the Agency has learned
since implementing the 2008 DSW final rule, which finalized the
legitimacy factors as a condition of the generator-controlled and
transfer-based exclusions, with two factors that are mandatory and two
factors that must be considered. Since that rule became effective, the
Agency has become aware of a misconception regarding the ``to be
considered'' factors. It has become clear that some industry
stakeholders believe those factors to be less important, stating that
they are optional or even can be ignored. This was not the Agency's
intention at all. The Agency tried to make it clear that they must be
considered and could, in fact, indicate sham recycling on their own.
However, through public comment and stakeholder meetings, we have
repeatedly heard that industry views these factors as optional.
    Another argument 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. Commenters argue that
making all four factors mandatory removes the flexibility necessary for
the broad universe of hazardous secondary materials being recycled.
EPA's Response: Mandatory Factors
    After much consideration and review of the public comments, the
Agency has decided to make all four legitimacy factors mandatory with
adjustments to the factors themselves to account for the variability
and diversity of legitimate hazardous secondary material recycling. As
explained above in sections VIII.B.5 and VIII.B.6, we have adjusted the
regulatory language of factor 4 to build in more flexibility for
meeting this factor,\49\ but are also making it clear in the regulatory
language that it is important that each factor be met, except as
otherwise noted.\50\ Since finalizing the legitimacy factors in the
2008 DSW final rule, our experience with implementation has made us
realize the importance of requiring all factors be met. Even though we
stressed the importance of considering each factor in the 2008 DSW
final rule, many of the stakeholders are under the misimpression that
the factors that were to be considered could actually be ignored. We
did not mean to give the impression that factor 3 and factor 4 were
optional and thus, have decided that the best way to give the proper
weight to these factors is to make them mandatory with additional
flexibility to address the various recycling scenarios.
---------------------------------------------------------------------------

    \49\ In addition, we are also finalizing in the regulatory
language the additional flexibility that was proposed in factor 3 to
the legitimacy provision.
    \50\ As we discuss in Section VIII.B.6.c, the Agency has
included a self-implementing process that would allow the person
performing the recycling to document, certify, and notify the
appropriate Regional Administrator that even though the hazardous
secondary material does not meet factor 4, the recycling is still
considered legitimate.
---------------------------------------------------------------------------

    In addition, instead of a petition process for those legitimate
recycling scenarios that don't meet factor 4, we are finalizing a
documentation, certification, and notification process. We continue to
find that legitimacy determinations are best made on a case-by-case
basis, which has always been the case, with the facts of a specific
recycling situation in hand. 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.

C. Documentation of Legitimate Recycling

    When the Agency codified the legitimacy standard in the 2008 DSW
final rule, we did not require specific documentation regarding the
legitimate recycling determination. In the 2011 DSW proposal, in
addition to proposing that the legitimacy standard apply to all

hazardous secondary material recycling and that all four legitimacy
factors must be met, EPA proposed a new documentation requirement for
persons performing the recycling. We proposed that the recyclers
include a narrative description of how their hazardous secondary
materials are legitimately recycled and that this documentation be
maintained on-site for the duration of the recycling operations and for
three years after the recycling operations cease. However, as explained
above in section VIII.C.2, we are only finalizing the requirement to
document a legitimate recycling determination for those recyclers
operating under the generator-controlled exclusion and for those
recyclers that are legitimately recycling, but do not meet factor 4--
that is, they must document why the recycling operation is legitimate
even if they do not meet factor 4.
Comments: Documentation
    ASTSWMO, NEWMOA, and most other states supported requiring
documentation of legitimate recycling for both the generator and
recycler (with exceptions noted in their comments about certain long-
standing recycling exclusions and exemptions, including lead-acid
batteries, circuit boards, scrap metal, and closed loop recycling).
Most state environmental agencies cited the ability to implement and
enforce the RCRA recycling program as the primary reason why
documentation is needed. However, a few states did not support
requiring documentation for any of the pre-2008 recycling exclusions
and exemptions. One state agreed that some documentation may be
necessary for inspections, but also stated that common business records
would likely suffice in most cases. An environmental organization
coalition suggested we provide a consistent format and require
documentation of both generators and recyclers. Industry generally
opposed the documentation requirement and felt that it would pose
significant practical challenges, especially for factor 4. Some
industry commenters felt that ``up-front'' documentation is not
necessary since EPA can rely on Sec.  261.2(f) for documentation. Other
commenters argued that for companies that rely heavily on the existing
exclusions and exemptions, it would be easy to inadvertently miss
documenting every instance (i.e., closed loop recycling) and the
consequences could be severe. In fact, one industry association argued
that documentation may actually cause more non-compliance due to the
huge administrative burden, especially for large facilities that
utilize many of the recycling exclusions and that the voluminous
paperwork could result in inspectors missing more obvious sham
recycling.
    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. They
argued that since EPA already believes most recycling is legitimate,
requiring documentation for all recycling is overly burdensome,
expensive, and not necessary. Some industry commenters argued that EPA
offered no evidence in the record that documenting the legitimacy of a
recycling practice would have any additional environmental benefit. A
few commenters asserted that requiring documentation for all recycling
might actually cause more non-compliance, especially for the more
frequently used recycling exclusions, such as the use/reuse and closed-
loop recycling exclusions.
    Finally, there was ample confusion in the comments on who would be
required to put together and provide the documentation. The Agency
proposed that the requirement would apply to the ``persons performing
the recycling.'' That is, if the generator sent his hazardous secondary
materials off-site to a recycler, then the recycler would be the one
responsible for maintaining the documentation. If, on the other hand,
the generator recycled his hazardous secondary materials on-site, then
the generator would be responsible for documenting that the recycling
activity was legitimate. However, some commenters still expressed
confusion over who would be responsible for the documentation.
EPA's Response: Documentation
    As discussed previously, the Agency has determined that, for
purposes of the existing pre-2008 recycling exclusions and exemptions,
documentation is not required, unless the facility has determined it is
legitimately recycling, but does not meet Factor 4. In the vast
majority of cases, recycling under the existing exclusions is
legitimate and documentation is not necessary. The Agency has
previously acknowledged the legitimacy of these recycling practices
when it first promulgated the material-specific and industry-specific
exclusions and exemptions, when at that time it took into consideration
the legitimacy of the recycling practices. After review of the public
comment, the Agency has determined that routine documentation of
legitimacy is an unnecessary burden for persons legitimately recycling
under the pre-2008 recycling exclusions and exemptions.
    However, the Agency is requiring documentation on legitimacy
determinations under two circumstances: (1) Persons operating under the
generator-controlled exclusion originally finalized in the 2008 DSW
final rule, and (2) persons legitimately recycling under any recycling
exclusion or exemption where the hazardous constituents in the recycled
products are not comparable or are unable to be compared to those in
analogous products (unless the recycled product meets widely recognized
commodity specifications or the hazardous secondary material is
returned to the production process). In these cases, the persons
recycling would be required to keep documentation of the legitimacy of
their recycling.
    Specifically, the Agency has determined that requiring
documentation under the generator-controlled exclusion is appropriate
because this exclusion is generic and can be used by a wide variety of
industries recycling any of a number of hazardous secondary materials.
In addition, as explained above in section VIII.B.6.c, the Agency has
also determined that documentation is necessary for those rare cases of
legitimate recycling that has significantly higher levels of hazardous
constituents in the recycled product than in an analogous product, or
has no analogous product, has no widely-recognized commodity
specifications for the recycled product, and is not returned to the
production process. In those cases, due to the self-implementing nature
of the legitimacy determinations, it is important that the recycler
perform the proper assessment and document how the recycling is still
legitimate.
    Finally we would note that 40 CFR 261.2(f) applies whenever a
person is claiming that a hazardous secondary material is not a solid
waste, which oftentimes is because the material is being recycled.
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 or
exemption and must provide appropriate documentation to show why they
are eligible. For the legitimacy requirement finalized today, under
Sec.  261.2(f), in the event of an enforcement action, persons claiming
that their recycling activity is legitimate would have the burden to
provide documentation showing how the

recycling meets all four factors, except as otherwise noted. That is,
they would need to show how the recyclable hazardous secondary
materials provide a useful contribution to the recycling process and
are stored as valuable commodities, and how the product of the
recycling activity is valuable and comparable to a legitimate product.

D. Factor 3: Language and Implementation

Comments: Factor 3
    Many commenters supported the regulatory language revisions to
factor 3, particularly the following additional italicized language:
``Where there is an analogous raw material, the hazardous secondary
material, must be managed, at a minimum, in a manner consistent with
the management of the raw material or in an equally protective
manner.'' Some commenters argued, however, that the real change to
factor 3 was the proposed revision to the contained standard because
the second part of factor 3 reads: ``Where there is no analogous raw
material, the hazardous secondary material must be contained.'' These
commenters expressed concern that by making factor 3 mandatory and by
revising the contained definition, the Agency was in effect making
factor 3 more stringent.
EPA's Response: Factor 3
    The Agency disagrees with the comments that the revised contained
standard is more stringent and thus, results in a more stringent factor
3. First, as noted by the commenters, the contained standard only
applies in cases where there is no analogous raw material to compare
the management of the hazardous secondary material to. More
importantly, however, as explained in more detail is section V, while
the revised contained standard is more clear and more definitive, it is
not more stringent, but is consistent with the contained standard
previously discussed and described in the preamble to the 2008 DSW
final rule. Thus, EPA finds that overall the revisions to factor 3 are
reasonable and consistent with the Agency's previous positions on
legitimacy. Therefore, the Agency is finalizing the regulatory language
for factor 3 as proposed and has determined the added flexibility will
allow existing legitimate recycling to continue without any negative
impact on environmental protection.

E. Factor 4: Language and Implementation

    In the 2011 DSW proposal, EPA proposed to change the wording within
the regulatory language for factor 4 from ``significant'' and
``significantly elevated'' to ``comparable to or lower than'' and
explained that this language more clearly reflects the intent of this
factor. In addition to this language change, other proposed changes to
the legitimacy provision impact the design and implementation of factor
4. The proposal to make all four legitimacy factors mandatory led many
commenters to discuss specific concerns they had about factor 4 and
what problems they would have meeting the factor as it was proposed. In
this section, EPA examines some of those comments, as well as provides
the Agency's responses and the changes that were made to the proposal
in this final rule to make factor 4 more workable.
    In concert with many of the comments about the difficulties of
meeting the proposed factor 4, EPA also received many comments about
its proposed petition process for when a recycling process does not
meet either factor 3 or factor 4. EPA is thus, also addressing those
comments in this section of the preamble because the documentation,
certification and notification process that will be replacing the
proposed petition process is found within factor 4 of the legitimacy
provision.
Comments: ``Comparable''
    EPA's proposal to change the language within factor 4 that
describes the comparison of levels of contaminants between products
made from recycling of hazardous secondary materials and products using
raw materials was supported by most of the states that commented on
factor 4 and opposed by many of the industry commenters. The states
that supported the change stated that the term ``comparable'' is better
because it is more specific, though several of these commenters also
asked for further guidance on the language.
    Industry commenters who opposed this change to factor 4 stated that
there was not a good reason in the preamble for the change in the
language and that they do not think that ``comparable'' means the same
thing as ``not significantly higher,'' arguing that if the terms mean
the same thing there was no reason for EPA to change them. Several
commenters argued that this change in language makes the factor more
stringent and/or less flexible.
EPA's Response: ``Comparable''
    EPA is finalizing the proposed language in this factor and using
the term ``comparable'' in discussing levels of hazardous constituents.
This term means any contaminants present in the product made from
hazardous secondary materials are present at levels comparable to or
lower than the levels in the analogous product, although levels can be
slightly higher than those found in the analogous product, but must be
within a small acceptable range. This change in language is not a
change from its long-standing policy and it is also consistent with the
legitimacy provisions in the Identification of Non-Hazardous Secondary
Materials that are Solid Wastes final rule (76 FR 15456, March 21,
2011).
    In response to comments requesting further guidance and those that
state that this language change is making factor 4 too stringent, first
we have repeated in section VIII of the preamble the examples that we
included in the 2008 DSW final rule which explains how the Agency
envisions this factor working. Moreover, the additional changes that it
made to factor 4 in this final rule, describing several situations
under which a product of a recycling process would be considered
comparable to a legitimate product or intermediate, address both these
concerns. As EPA determined in previous rulemakings, promulgating an
exact numerical cut-off for what would be considered ``comparable'' is
not practicable for the legitimacy provision because it applies to a
wide variety of recycling scenarios. EPA may provide future guidance on
the application of this provision if needed.
Comments: Uncertainty About Compliance
    Many of the comments that EPA received from industry regarding
factor 4 stated that facilities are concerned about this factor,
particularly if it were to become mandatory, because it would be
difficult to determine if a given recycling process is in compliance.
Many of these commenters stated the high cost of testing for 40 CFR
part 261 Appendix VIII constituents as one of their concerns.
EPA's Response: Uncertainty About Compliance
    First, we are reiterating in this final rule that testing of the
recycled product is generally not required under factor 4 of
legitimacy. A generator can use its knowledge of the materials it uses
and of the recycling process to make legitimacy determinations,
although they may choose to test if they are uncertain if the product
from their hazardous secondary materials contains elevated levels of
hazardous constituents when compared to non-recycled products. In
addition, factor 4

as finalized today presents no greater compliance issues than it would
under the 2008 DSW final rule, because under the 2008 legitimacy
definition, a facility still had to consider the hazardous constituents
in Appendix VIII of part 261 in determining whether factor 4 is met,
and be able to demonstrate why recycling was still legitimate even if
it was not met. Furthermore, as we have noted elsewhere, we have made
certain revisions to factor 4, in response to comments, for facilities
to determine that they are in compliance with this factor.
Specifically, the provisions in Sec.  260.43(a)(4) state that products
that meet widely recognized commodity standards and specifications
would be considered comparable and meet factor 4 and hazardous
secondary materials that are recycled back into the original generating
process would be considered comparable and also meet factor 4, which is
intended to make compliance with factor 4 simpler across many of the
industries in which much industrial recycling takes place.
Comments: No Analogous Product To Compare
    Many of the comments regarding factor 4, including many of the
examples that were sent in to describe the difficulties of complying
with factor 4, described recycling situations in which there is no
analogous product and argued that it would be very difficult to meet
the proposed factor 4 in a situation where there is no analogous
product.
EPA's Response: No Analogous Product To Compare
    After examining the comments submitted, including the examples
provided, EPA agrees with the commenters that the design of proposed
factor 4 did not adequately take into consideration recycling scenarios
that either always includes some form of recycled hazardous secondary
material or that would be considered closed loop recycling. As a result
of these comments, EPA modified the structure of factor 4 to include
provisions specifically for the situation where there are no analogous
products, (found in Sec.  260.43(a)(4)(ii)). The finalized provisions
state that when there is no analogous product, the product of the
recycling process is comparable to a legitimate product or intermediate
when the product is a commodity meeting widely recognized commodity
standards and specifications or when the hazardous secondary materials
being recycling are returned to the original process or processes from
which they were generated.
    This change to factor 4 provides the necessary flexibility to those
persons who recycle hazardous secondary materials for which there is
not an analogous product for comparison. However, EPA has also included
a documentation, certification, and notice provision for cases that do
not fit these two scenarios. Under this provision, the recycler can
perform an assessment of the hazardous secondary material and still
determine that its recycling is legitimate despite not meeting factor
4. This finding must be documented and certified by a responsible
facility official and a copy kept on-site for as long as the recycling
continues, and for 3 years after the recycling operations cease. Also,
a notice of this finding must be sent to the appropriate Regional
Administrator (or State Director, in an authorized state), using the
Site ID form.
Comments: Petition Process
    As stated above in this section, many commenters argued that the
petition process was not an adequate mechanism for relief for those
processes that do not meet all four factors and therefore, they opposed
the proposed petition process. They argued that there would be too many
petitions for the states and EPA to process efficiently, which could
result in shutting down recycling operations during the time spent
waiting for petitions to be processed, which would be very expensive
and wasteful. States were particularly concerned about the amount of
resources that would be needed to process the incoming petitions.
EPA's Response: Petition Process
    In response to the arguments presented by the commenters in
opposition to the petition process and the concerns with how
implementation of the petition process could impact recycling, EPA is
not finalizing the petition process in this final rule. Instead, EPA
has made two changes to its proposal to account for the situations that
the petition process was meant to cover. The first is the additional
provisions in factor 4 (already discussed above in this section) that
describe the specific situations in which EPA considers a product of a
recycling process to be comparable to an analogous product or
intermediate. The second is the documentation, certification, and
notice provision for products that have levels of hazardous
constituents that are not comparable to or lower than an analogous
product or intermediate or that are unable to be compared, but which
are not covered by the new provisions.
    Under the documentation, certification, and notice process, a
recycler must determine that its recycling is still legitimate despite
the levels of hazardous constituents in the recycled product not being
comparable to those in an analogous product or intermediate. This
determination can take into account exposure of toxics in the product,
bioavailability of toxics in the product or other relevant
considerations that show the recycled product does not contain levels
of hazardous constituents that pose a risk to human health or the
environment. The facility then must prepare documentation explaining
its assessment and include a certification that the recycling is
legitimate. In addition, the facility would need to notify the
appropriate Regional Administrator (or State Director, in an authorized
state) of this finding.
    This provision is a less burdensome process for both recyclers and
the states implementing the RCRA program because it maintains the self-
implementing nature of the legitimacy requirement. However, because
facilities will still have to provide notice to the regulatory agency,
it also allows implementing agencies to perform oversight and
inspections of recycling facilities if they are concerned about the
legitimacy of a specific recycling process.

XVIII. Major Comments on the Revisions to Solid Waste Variances and
Non-Waste Determinations

    In the July 2011 DSW proposed rule, EPA proposed several
modifications to the existing regulations for solid waste variances and
non-waste determinations in 40 CFR 260.31(c), 40 CFR 260.33 and 40 CFR
260.34 to ensure protection of human health and the environment and
foster greater consistency on the part of implementing agencies.

A. Requiring Facilities To Re-Apply for a Variance or Non-Waste
Determination

    In the July 2011 DSW proposal, EPA proposed to revise 40 CFR
260.33(c) to require facilities to re-apply for a variance in the event
of a change in circumstances that affects how a material meets the
criteria upon which a solid waste variance has been based, as is
currently required for non-waste determinations. Additionally, EPA
requested comment on whether to require variances and non-waste
determinations to be renewed periodically, and, if so, what time period
would be appropriate (e.g., two or five years as suggested in the
preamble to the 2011 July DSW proposal).

Comments: Re-Apply for a Variance in the Event of a Change
    The majority of commenters supported EPA's proposed change to
require facilities to re-apply for a variance in the event of change in
circumstances that affects how a hazardous secondary material meets the
criteria upon which a solid waste variance has been based. The
commenters believe the change promoted clarity and consistency in the
regulations and that it made sense to ensure the hazardous secondary
materials continued to meet the conditions of the exclusion over time.
Other commenters, however, while supporting such a provision, urged EPA
to require a re-certification rather than a full application process so
as to reduce the burden on states and the regulated community.
    A few commenters disagreed with this provision, as they argued that
administrative authorities already use discretion to review changes in
circumstances.
EPA's Response: Re-Apply for a Variance in the Event of a Change
    EPA agrees with the majority of commenters that finalizing a
requirement to require facilities to take action in the event of a
change in circumstances will ensure the hazardous secondary material
remains eligible for a variance and continues to meet the variance
criteria over time. EPA also agrees with those commenters that
suggested ways to reduce the administrative burden on states and the
regulated community. Therefore, in today's final rule, EPA is requiring
that, in the event of a change, the facility must send a description of
the change to the regulatory authority and the regulatory authority
will determine whether the facility must re-apply for a variance. This
change in procedure allows both the regulatory authority and regulated
community to avoid spending unnecessary resources where the change in
circumstances is found to be of no consequence to the original variance
that the regulatory authority has granted. EPA notes that re-applying
for a variance should be less burdensome than the initial application
because a facility would only have to update its original application.
    EPA disagrees with those commenters who opposed this change on the
basis that regulatory authorities already use discretion to review
changes in circumstances. First, the changes that EPA made to the final
rule would not automatically require a person to re-apply for the
variance, but make the regulatory authority aware of the change so that
an informed decision could be made as to whether the variance is still
appropriate. Moreover, relying on case-by-case discretion to require
notice in the event of a change could allow certain hazardous secondary
materials to remain excluded from regulation under Subtitle C of RCRA,
even though based on the changed circumstances, the variance is no
longer appropriate, and could present a risk to human health and the
environment. It would also contradict the Agency's goal to foster
greater consistency on the part of implementing agencies.
Comments: Periodic Renewal of Variances and Non-Waste Determinations
    A number of commenters did not support requiring periodic renewals
of variances and non-waste determinations. Commenters opposed this
change because of the additional burden on both the states and the
regulated community and the fact that this would not be needed if EPA
finalized its proposed change to require a renewal or recertification
in the event of a change. Additionally, some commenters argued that the
administrative authority already has discretion to set renewal
timeframes as a condition of the variance. One commenter argued that
facilities make significant business investments based on regulatory
certainty and, thus, if variances are subject to repeal, this may
prevent investment in recycling activities.
    A few commenters, however, supported a renewal requirement and
argued that reapplying in the event of a change is not the same as a
periodic renewal. This commenter argued that the requirement to re-
apply in the event of a change relies almost entirely on the facility
to self-report on a change in circumstances, of which the facility may
have an economic incentive not to do. Other commenters suggested that
generators ``re-certify,'' rather than re-apply, on an annual or
biennial basis that they continue to meet the conditions of a variance
or non-waste determination in order to reduce administrative burden.
EPA's Response: Periodic Renewal of Variances and Non-Waste
Determinations
    EPA agrees with the commenters that supported a renewal requirement
for solid waste variances and non-waste determinations. Variances and
non-waste determinations are granted based on case-specific
circumstances of a particular hazardous secondary material being
recycled. Many of the variance and non-waste determination criteria
specifically consider factors such as, the manner in which the
hazardous secondary material is recycled, the market factors of the
recycling process, the value of the hazardous secondary material, and
contractual arrangements. However, these factors are not static and,
instead, change and evolve over time. It is therefore prudent that
regulatory authorities periodically review these case-specific
situations to ensure that the hazardous secondary material continues to
meet the criteria of the variance or non-waste determination.
Therefore, EPA is adding a provision to 40 CFR 260.33(d) that solid
waste variances and non-waste determinations shall be effective for a
fixed term not to exceed 10 years, which is the same term limit for
RCRA hazardous waste permits under 40 CFR 270.50(a).
    EPA is establishing a time limit of 10 years (rather than two or
five years, as suggested in the July 2011 proposal) considering the
need to provide regulatory certainty to support business investment, as
well as the fact that 10 years is the same as the duration of RCRA
permits under 40 CFR 270.50(a). The 10-year time frame also ensures
that renewals occur regularly enough in order to evaluate significant
changes in recycling processes, technologies, and market factors that
may affect the terms of a variance or non-waste determination.
    EPA disagrees with those commenters who argued that periodic
renewals would not be needed if EPA finalized the proposed change to
require notice in the event of a change in circumstances that affect
how a hazardous secondary material meets the conditions of a variance
or, as currently required for a non-waste determination. As one
commenter noted, the requirement to provide notice in the event of a
change relies on a facility self-reporting that change and thus, this
requirement may not be consistently implemented. A periodic time limit,
in this case 10 years, however, triggers a re-review of the
circumstances without relying on self-reporting by the facility.
Furthermore, EPA disagrees with commenters who opposed this change on
the basis that regulatory authorities already use discretion to review
changes in circumstances. (See response to this comment in EPA's
Response to ``Re-Apply for a Variance in the Event of a Change.)
Regarding the commenter that argued that periodic renewals would
disrupt business investment, EPA finds that a time limit of ten years
(rather than two or five years, as suggested in the

July 2011 proposal) is a sufficient amount of time to provide
regulatory certainty to support business investment, given that ten
years is the same as the duration of RCRA permits.

B. Requiring Notification for Facilities Operating Under Variances and
Non-Waste Determinations

    In the July 2011 DSW proposal, EPA proposed to add a provision
under 40 CFR 260.33 stating that facilities receiving a variance or
non-waste determination must provide notification as required under 40
CFR 260.42. This would require facilities to send a notification prior
to operating under the regulatory provision and by March 1 of each
even-numbered year thereafter to the EPA or the State Director, if the
state was authorized, using EPA Form 8700-12.
Comments: Requiring Notification for Facilities Operating Under
Variances and Non-Waste Determinations
    Commenters were split on this issue. Many commenters supported
requiring facilities receiving a solid waste variance or non-waste
determination to submit notifications in compliance with 40 CFR 260.42.
These commenters believed that the notification would provide updated
information about a facility's activities and would enable better
compliance monitoring. These commenters also agreed that notification
would improve transparency, because the notifications could be
available online.
    However, many commenters opposed requiring facilities that receive
a variance from being a solid waste or non-waste determination to
submit notifications. These commenters argued that the act of applying
for and receiving a variance or non-waste determination constitutes
adequate notification for regulatory authorities. These commenters also
argued that notification would increase the burden on facilities and
was not necessary if EPA finalized its proposal to require facilities
to re-apply in the event of a change.
EPA's Response: Requiring Notification for Facilities Operating Under
Variances and Non-Waste Determinations
    Although EPA recognizes the arguments both for and against
notification, EPA agrees with those commenters who support notification
in order to enable better compliance monitoring and to improve
transparency. Therefore, EPA is finalizing a requirement in 40 CFR
260.33(e) that facilities receiving a variance or non-waste
determination must provide notification as required by 40 CFR 260.42.
    This requirement serves to meet EPA's goal to foster greater
consistency on the part of implementing agencies and to help ensure the
proper implementation of the solid waste variances and non-waste
determinations. The intent of the notification is to enable variances
and non-waste determinations to be tracked nationally and over time,
which facilitates state-to-state consistency in determinations.
Additionally, notification enables effective oversight of facilities
receiving solid waste variances and non-waste determinations because it
provides regulatory authorities with a mechanism for receiving
regularly updated information (such as information regarding quantities
of hazardous secondary materials managed under the determination).
Furthermore, this information can be used to identify facilities which
may have undergone changes to their reclamation process significant
enough to trigger a review of the determination under 40 CFR 260.33(c).
    EPA does not agree that the solid waste variance or non-waste
determination application itself constitutes adequate notification.
Currently, individual facility applications are not tracked nationally
and there exist no consolidated list of facilities operating under a
solid waste variance or non-waste determination. Notification, using
EPA Form 8700-12, ensures that standard information regarding
facilities receiving solid waste variances and non-waste determinations
can be collected, stored, and used to enable compliance monitoring and
to foster consistency in implementing the regulations.
    We also do not agree that the notification requirement is
duplicative of the requirement to send notice in the event of a change
because the two requirements serve different purposes and require
different information. In the event of a change, facilities must send a
description of the change in circumstances to EPA or the authorized
state, who then make an evaluation as to whether a facility should re-
apply for a solid waste variance or non-waste determination. Under 40
CFR 260.42, facilities submit information, such as type and quantity of
hazardous secondary material being managed, using EPA Form 8700-12,
which enables the information to be entered into EPA's database where
it can be accessed by both EPA and state regulatory authorities.
    Furthermore, EPA does not agree that notification using EPA Form
8700-12 poses an undue burden. The form is relatively simple to
complete and is currently being used for facilities excluded from the
definition of solid waste under 40 CFR 261.4(a)(23). Additionally, EPA
is currently developing an electronic submission process, which will
further reduce reporting burden.

C. Revisions to the Partial Reclamation Variance

    In the July 2011 DSW proposal, EPA proposed to revise the partial
reclamation variance provision of 40 CFR 260.31(c) to clarify when
partially-reclaimed materials are not solid waste because they are
commodity-like. Specifically, EPA proposed to: (1) Revise the
introductory text to clarify when the variance applies; (2) revise the
introductory text to require that all of the decision criteria must be
met; (3) revise the language of all of the decision criteria; and (4)
eliminate the sixth criterion, that is, ``other relevant factors.''
Comments: General Comments on Proposed Changes to Partial Reclamation
Variance
    Many commenters supported EPA's proposed changes to the partial
reclamation variance. In fact, two of these commenters argued that
existing variances that do not meet the new criteria should be
rescinded or revised.
    A few commenters, however, did not support the proposed changes.
These commenters argued that EPA does not have the record to support
its finding that states are inconsistently and incorrectly applying the
partial reclamation variance criteria and that variances granted by the
states are not protective of human health and the environment.
Additionally, one commenter argued that EPA provided no documentation
for public review to substantiate how EPA intended the variance
criteria to apply when it promulgated the variance in 1985. Another
commenter argued that the proposed changes will restrict recycling.
EPA's Response: General Comments on Proposed Changes to Partial
Reclamation Variance
    EPA agrees with commenters who supported the proposed changes. Not
finalizing the proposed revisions to the partial reclamation variance
would only result in a continuation of inconsistency among state
determinations, which in some cases, allow partially-reclaimed
materials to be excluded from the definition of solid waste when they
are

clearly not commodity-like, but rather hazardous wastes. EPA notes,
however, that the final changes to the partial reclamation variance
criteria only apply to facilities receiving variances after the
effective date of today's rule. The changes are not retroactive and
thus would not apply to facilities currently operating under existing
partial reclamation variances, unless and until the facility's variance
came up for renewal. Thus, the Agency does not agree with those
commenters who suggested that any variance that does not meet the
revised criteria should be rescinded or revised immediately.
    EPA estimates that the states have granted between 15 to 20 partial
reclamation variances, including variances granted in Indiana,
Louisiana, Ohio, Oregon, Pennsylvania, Texas and Washington. EPA itself
has also issued a partial reclamation variance to World Resource
Company (WRC) in Arizona. (See list of partial reclamation variances
issues by the states in today's docket.) Some of the partial
reclamation variances were granted as the Agency intended and have
required RCRA Part B storage and treatment permits for the incoming
hazardous waste material. Other states, however, have issued partial
reclamation variances which contradict the intention of the partial
reclamation variance. For example, EPA publicly expressed its
disagreement in a November 18, 2010, letter to Indiana's Department of
Environmental Management (IDEM) concerning the tentative approval of a
facility's request for a partial reclamation variance, a copy of which
is found in today's docket. In our letter, we made clear that we did
not believe IDEM should grant a partial reclamation variance to
incoming hazardous wastes that were not ``sufficiently commodity-like
to qualify for the variance.''
    EPA also disagrees with commenters who argued that EPA's record
does not provide adequate basis for how the Agency intended the partial
reclamation variance to operate. In the preamble to the 1985 DSW final
rule (January 4, 1985; 50 FR 655), the Agency made clear that incoming
materials to a partial reclamation facility were hazardous wastes and
that the facility processing these incoming materials must obtain
appropriate RCRA Part B storage and treatment permits. (Furthermore,
these facilities are also subject to biennial reporting under 40 CFR
264.75.) Additionally, the Agency points to the partial reclamation
variance it issued to WRC on August 13, 2002 (67 FR 52617) as a public
example of the how the Agency intended for the partial reclamation
variance to be implemented. In this case, the Agency's partial
reclamation variance to WRC for the partial reclamation of F006
electroplating sludges required WRC to obtain RCRA Part B storage and
treatment permits for the incoming hazardous waste.
    In addition, EPA disagrees that the final rule changes will
unnecessarily restrict recycling. Today's changes clarify how the
partial reclamation variance has always been intended to operate; thus,
any recycling that is consequentially restricted from the variance as a
result of the changes was never intended to be excluded from hazardous
waste requirements. EPA maintains that hazardous waste must be managed
under appropriate hazardous waste requirements in order to ensure
protection of human health and the environment.
Comments: Revisions to Introductory Text
    Most commenters supported the proposed changes to the introductory
text, including requiring that all criteria must be met and requiring
compliance with the legitimacy criteria in 40 CFR 260.43. One
commenter, while supporting the proposed changes said that EPA should
define vague words such as ``commodity-like,'' ``sufficient economic
value,'' and ``substantial.'' Another commenter said that commodity-
like partially-reclaimed material must be marketable to the general
public, that is, it must be a material that could be marketed to more
than one facility.
    Some commenters did not agree that all the criteria must be met.
One commenter argued that this conflicts with EPA's 1985 preamble in
which EPA said the Regional Administrator can weigh factors and may
rely on any or all of them to reach a decision. Additionally, the WRC
variance that EPA issued acknowledged that the partial reclamation
steps being performed were ``not elaborate.'' However, the partial
reclamation involved by WRC was sufficiently substantial to produce a
commodity-like material as verified by contracts, sales, and subsequent
management of the commodity-like material. Other commenters believed
EPA's proposed changes to the introductory text imposed prescriptive
conditions which conflict with the intent of the variance by
restricting the administrative authority's decision-making discretion.
EPA's Response: Revisions to Introductory Text
    EPA agrees with those commenters who supported the proposed changes
to the introductory text, including requiring that all criteria must be
met and requiring compliance with the legitimacy factors in 40 CFR
260.43. In response to the one commenter who believed that certain
terms are vague, it is EPA's intent with this final rule to clarify how
the partial reclamation variance should be applied. Although, specific
definitions would be difficult to promulgate given the broad
applicability of the terms, EPA notes that today's preamble discussion
along with today's regulatory revisions to the variance criteria serve
to better define how EPA is using these terms in the partial
reclamation variance, particularly when a material becomes commodity-
like. For example, EPA notes in its preamble that criteria 2-5 define
the fundamental characteristics that indicate whether a partially-
reclaimed material is ``commodity-like.''
    Regarding comments that argued against requiring all criteria to be
met, EPA has determined that in order to reduce the inconsistency in
state-to-state partial reclamation variances, the criteria must be made
more prescriptive. Balancing the factors, as was EPA's original
direction in 1985, has resulted in subjective interpretations that
differ across states and which, in some cases, do not align with the
original intent of the partial reclamation variance. EPA finds that
requiring all criteria to be met is a more effective framework for
determining when a partially-reclaimed material is commodity-like and
therefore not a solid waste.
Comments: General Comments on Revisions to Variance Criteria
    Many commenters supported the changes to the criteria of the
partial reclamation variance. However, a few commenters disagreed with
inserting the word ``whether'' at the beginning of each criterion
because it implied the criterion was more prescriptive. A few
commenters also argued that EPA's proposed insertion of the word