Definition of Solid Waste

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 260 and 261

[EPA-HQ-RCRA-2010-0742; FRL-9728-5-OSWER]

RIN 2050-AG62

Definition of Solid Waste

AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Final rule.

SUMMARY:

The Environmental Protection Agency (EPA, or the Agency) is publishing a final rule that revises several recycling-related provisions associated with the definition of solid waste used to determine hazardous waste regulation under Subtitle C of the Resource Conservation and Recovery Act (RCRA). The purpose of these revisions is to ensure that the hazardous secondary materials recycling regulations, as implemented, encourage reclamation in a way that does not result in increased risk to human health and the environment from discarded hazardous secondary material.

DATES:

This final rule is effective on July 13, 2015.

ADDRESSES:

EPA has established a docket for this action under Docket ID No. EPA-HQ-RCRA-2010-0742. All documents in the docket are listed in the

www.regulations.gov

index. Although listed in the index, some information is not publicly available, such as Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the internet and will be publicly available only in hard copy form. Publicly available docket materials are available either electronically at

www.regulations.gov

or in hard copy at the RCRA Docket, EPA/DC, William Jefferson Clinton Building West, Room 3334, 1301 Constitution Ave. NW., Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m. Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566-1744 and the telephone number for the RCRA Docket is (202) 566-0276.

FOR FURTHER INFORMATION CONTACT:

Tracy Atagi, Office of Resource Conservation and Recovery, Materials Recovery and Waste Management Division, MC 5304P, Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460, at (703) 308-8672, (

atagi.tracy@epa.gov

) or Amanda Kohler, Office of Resource Conservation and Recovery, Materials Recovery and Waste Management Division, MC 5304P, Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460, at (703) 347-8975, (

kohler.amanda@epa.gov

).

SUPPLEMENTARY INFORMATION:

A. Does this action apply to me?

Entities potentially affected by today's action include over 5,000 industrial facilities in 634 industries (at the 6-digit North American Industry Classification System (NAICS) code level) that generate or recycle hazardous secondary materials (HSM). Most of these 634 industries have relatively few entities that are potentially affected. The top-5 economic sectors (at the 2-digit NAICS code level) with the largest number of potentially affected entities are as follows: (1) 41% in NAICS code 33—the manufacturing sector, which consists of metals, metal products, machinery, computer & electronics, electrical equipment, transportation equipment, furniture, and miscellaneous manufacturing subsectors, (2) 23% in NAICS code 32—the manufacturing sector, which consists of wood products, paper, printing, petroleum & coal products, chemicals plastics & rubber products, and nonmetallic mineral products manufacturing subsectors, (3) 3.0% in NAICS code 92—the public administration sector, (4) 2.9% in NAICS code 61—the educational services sector, and (5) 2.8% in NAICS code 54—the professional, scientific and technical services sector.

Information on the estimated future economic impacts of today's action is presented in section XXI of this notice, as well as in the RIA available in the docket for today's action.

Preamble Outline

I. Statutory Authority

II. Which revisions to the regulations is EPA finalizing?

III. History of the Definition of Solid Waste

IV. When will the final rule become effective?

V. Revisions to the Exclusion for Hazardous Secondary Materials That Are Legitimately Reclaimed Under the Control of the Generator

VI. Verified Recycler Exclusion Replacing the Exclusion for Hazardous Secondary Materials That Are Transferred for the Purpose of Reclamation

VII. Remanufacturing eXclusion

VIII. Revisions to the Definition of Legitimacy and Prohibition of Sham Recycling

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

X. Effect on Facilities Currently Operating Under Solid Waste Exclusions

XI. Effect on Spent Petroleum Catalysts

XII. Effect on CERCLA

XIII. General Comments on the 2011 Proposed Revisions to the Definition of Solid Waste

XIV. Major Comments on the Exclusion for Hazardous Secondary Materials Legitimately Reclaimed Under the Control of the Generator and Recordkeeping for Speculative Accumulation

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

XVI. Major Comments on the Remanufacturing Exclusion

XVII. Major Comments on Legitimacy

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

XIX. Major Comments on the Proposed Revisions to Pre-2008 Recycling Exclusions

XX. State Authorization

XXI. Statutory and Executive Order (E.O.) Reviews

I. Statutory Authority

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

II. Which revisions to the regulations is EPA finalizing?

In today's rule, EPA is revising a number of provisions related to the definition of solid waste as it applies to the regulation of hazardous waste under Subtitle C of RCRA (42 U.S.C. 6921 through 6939(e)). These revisions affect certain types of hazardous secondary materials that are currently conditionally excluded from the definition of solid waste when reclaimed. These exclusions were promulgated in October 2008 (73 FR 64688, October 30, 2008) and were intended to encourage the recovery and reuse of valuable resources as an alternative to land disposal or incineration, while at the same time maintaining protection of human health and the environment. In response to concerns raised by stakeholders about potential increases in risks to human health and the environment from hazardous secondary materials, today's rule revises the 2008 DSW final rule in order to ensure that the rule, as implemented, encourages reclamation in a way that protects human health and the environment from the

mismanagement of hazardous secondary materials.

The six major regulatory areas are summarized below.

1

The intent of this summary is to give a brief overview of the actions EPA is taking today. More detailed discussions, including the Agency's rationale for the changes, are found in later sections of this preamble.

1

Any provisions promulgated in the 2008 DSW rule that are not addressed in this final rule remain in effect.

A. Exclusion for Hazardous Secondary Materials That Are Legitimately Reclaimed Under the Control of the Generator

Under today's final rule, EPA is retaining the exclusion for hazardous secondary materials that are legitimately reclaimed under the control of the generator (“generator-controlled exclusion”), with certain revisions from the 2008 DSW final rule. These revisions include (1) adding a codified definition of “contained,” (2) adding recordkeeping requirements for same-company and toll manufacturing reclamation, (3) making notification a condition of the exclusion, (4) adding a requirement to document that recycling under the exclusion is legitimate, and (5) adding emergency preparedness and response conditions. In addition, we have amended the speculative accumulation provisions to add a recordkeeping requirement. This requirement applies to all persons subject to speculative accumulation.

The generator-controlled exclusion (40 CFR 261.4(a)(23)) excludes certain hazardous secondary materials (

i.e.,

listed sludges, listed by-products, and spent materials) from the definition of solid waste if they are generated and legitimately reclaimed within the United States or its territories under the control of the generator. Specifically, hazardous secondary materials are excluded if (1) the reclamation process meets the definition of legitimate recycling under 40 CFR 260.43; (2) the materials are not speculatively accumulated as defined in 40 CFR 261.1(c)(8) (including a new recordkeeping requirement, being finalized today); (3) they meet the notification condition under 40 CFR 260.42; (4) they are managed in a unit that meets the new definition of “contained” in 40 CFR 260.10, which specifies that storage units must be in good condition, properly labeled, do not hold incompatible materials, and address potential risks of fires or explosions; and (5) the generator satisfies certain emergency preparedness and response conditions. Further discussion of the generator-controlled exclusion can be found in section V of this preamble.

B. Verified Recycler Exclusion Replacing the Exclusion for Hazardous Secondary Materials That Are Transferred for the Purpose of Legitimate Reclamation

EPA is replacing the exclusions at 40 CFR 261.4(a)(24) and (25) for hazardous secondary materials that are transferred from the generator to other persons for the purpose of reclamation with an exclusion for hazardous secondary materials sent for reclamation to a verified recycler. By this change, EPA intends to promote safe and sustainable reclamation of these materials. Under this new exclusion, generators who want to recycle their hazardous secondary materials without having them become hazardous wastes must send their materials to either a RCRA-permitted reclamation facility or to a verified recycler of hazardous secondary materials who has obtained a solid waste variance from EPA or the authorized state. In order to obtain a variance from EPA or the authorized state, the recycler must (1) demonstrate their recycling is legitimate; (2) have financial assurance in place to properly manage the hazardous secondary material when the facility closes; (3) not be subject to a formal enforcement action in the previous three years and not be classified as a significant non-complier under RCRA Subtitle C, or must provide credible evidence that the facility will manage the hazardous secondary materials properly; (4) have the proper equipment and trained personnel, and meet emergency preparedness and response conditions to safely recycle the material; (5) manage the residuals from recycling properly; and (6) take steps to protect nearby communities and reduce risk of potential unpermitted releases of the hazardous secondary material to the environment (

i.e.

, releases that are not covered by a permit (such as a permit to discharge to water or air). Further discussion of the replacement of the transfer-based exclusion with the verified recycler exclusion can be found in section VI of this preamble.

C. Remanufacturing Exclusion

EPA is also finalizing an exclusion from the definition of solid waste for certain higher-value solvents transferred from one manufacturer to another for the purpose of extending the useful life of the solvent by remanufacturing the spent solvent back into the commercial grade solvent. This remanufacturing exclusion will help promote sustainable materials management by extending the productive use of these materials, which reduces the need for raw materials used and the environmental impacts associated with production of these materials. In addition, EPA is also making clear that a rulemaking petition pursuant to 40 CFR 260.20 can be submitted for adding other higher-value hazardous secondary materials that are destined to be remanufactured into similarly higher-value products. Further discussion of this exclusion can be found in section VII of this preamble.

D. Prohibition of Sham Recycling and Revisions to the Definition of Legitimacy

In this final rulemaking, EPA is codifying in its regulations at 40 CFR 261.2(g) the long-standing policy that hazardous secondary materials found to be sham recycled are discarded and solid wastes, thereby prohibiting materials that are sham recycled from being excluded from the definition of solid waste.

In addition, EPA has changed the definition of legitimate recycling in § 260.43 to make clear that all four factors identified in § 260.43 must be met, but also to provide some flexibility in determining legitimacy for certain types of recycling. In particular, in cases where there is no analogous product made from raw materials, EPA has clarified that the product of recycling is still a legitimate product when it meets widely recognized commodity standards (

e.g.

, commodity-grade scrap metal) or when the hazardous secondary material is recycled back into the production process from which it was generated (

e.g.

, closed-loop recycling). In addition, for cases in which the product of the recycling process has levels of hazardous constituents that are not comparable to analogous products, the revised legitimacy standard includes a process that allows the facility to document and certify that the recycling is still legitimate, keep such documentation at the facility, and send a notification to the regulatory authority to that effect. Further discussion of legitimacy can be found in section VIII of this preamble.

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

Today's rule finalizes revisions to the solid waste variances and non-waste determinations found in 40 CFR 260.30-260.34 in order to ensure protection of human health and the environment and foster greater consistency on the part of implementing agencies. Revisions include (1) requiring facilities to send a notice to the Administrator (or State Director, if the state is authorized) and

potentially re-apply for a variance in the event of a change in circumstances that affects how a hazardous secondary material meets the criteria upon which a solid waste variance has been based; (2) establishing a fixed term not to exceed ten years for variance and non-waste determinations, at the end of which facilities must re-apply for a variance or non-waste determination, (3) requiring facilities to re-notify every two years with updated information; (4) revising the criteria for the partial reclamation variance to clarify when the variance applies and to require, among other things, that all the criteria for this variance must be met; and (5) for the non-waste determinations in 40 CFR 260.34, requiring that petitioners demonstrate why the existing solid waste exclusions would not apply to their hazardous secondary materials. EPA is not finalizing the proposed change to designate the Regional Administrator as the EPA recipient of petitions for all variances and non-waste determinations. Further discussion of these revisions can be found in section IX of this preamble.

F. Deferral on Revisions to Pre-2008 Recycling Exclusions

EPA is not finalizing revisions to the pre-2008 recycling exclusions and exemptions to include the contained standard or to require notification.

2

EPA is instead deferring action until EPA can more adequately address commenters' concerns. For further discussion, see section X for more information.

2

EPA requested comment on adding these requirements to a list of 32 existing recycling exclusions in the 2011 proposed rule (76 FR 44139, July 22, 2011).

III. History of the Definition of Solid Waste

A. Background

RCRA gives EPA the authority to regulate hazardous wastes (see RCRA sections 3001-3004). The original statutory designation of the subtitle for the hazardous waste program was Subtitle C and the national hazardous waste program is referred to as the RCRA Subtitle C program. Subtitle C is codified at 42 U.S.C. 6921 through 6939f. Subtitle C regulations are found at 40 CFR parts 260 through 279. Hazardous wastes are those that, because of their quantity, concentration, physical, or chemical characteristics, may (1) cause, or significantly contribute to an increase in mortality or an increase in serious irreversible or incapacitating reversible illness or (2) pose a substantial present or potential hazard to human health or the environment when improperly treated, stored, transported, or disposed of, or otherwise managed (see RCRA section 1004(5)). Hazardous wastes are a subset of solid wastes.

Materials that are not solid wastes are not subject to regulation as hazardous wastes under RCRA Subtitle C. Thus, the definition of solid waste plays a key role in defining the scope of EPA's authorities under Subtitle C of RCRA. The statute defines “solid waste” as “. . . any garbage, refuse, sludge from a waste treatment plant, water supply treatment plant, or air pollution control facility and

other discarded material . . .

resulting from industrial, commercial, mining, and agricultural operations, and from community activities . . .” (RCRA section 1004 (27) (emphasis added)).

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

• The statute and the legislative history suggest that Congress expected EPA to regulate certain materials that are destined for recycling as solid and hazardous wastes (see 45 FR 33091, citing numerous sections of the statute and

U.S. Brewers' Association

v.

EPA

, 600 F. 2d 974 (D.C. Cir. 1979); 48 FR 14502-04, April 3, 1983; and 50 FR 616-618, January 4, 1985).

• Hazardous secondary materials stored or transported prior to recycling have the potential to present the same types of threats to human health and the environment as hazardous wastes stored or transported prior to disposal. In fact, EPA has found that recycling operations have accounted for a number of significant damage incidents. For example, hazardous secondary materials destined for recycling were involved in one-third of the first 60 filings under RCRA's imminent and substantial endangerment authority and in 20 of the initial 160 hazardous material sites listed for potential clean up under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) (48 FR 14474, April 4, 1983). Congress also cited some damage cases which involve recycling (H.R. Rep. 94-1491, 94th Cong., 2d Sess., at 17, 18, 22). Additional data (

i.e.

, information on damage incidents occurring after 1982) included in the rulemaking docket for today's rule corroborate the fact that recycling operations can and have resulted in significant damage incidents.

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

Hence, RCRA confers on EPA the authority to regulate discarded hazardous secondary materials even if they are destined for recycling and may be beneficially reused. The Agency has therefore developed in part 261 of 40 CFR a definition of “solid waste” for Subtitle C regulatory purposes. (Note: This definition is narrower than the definition of “solid waste” for RCRA endangerment and information-gathering authorities. (See 40 CFR 261.1(b)). Also

Connecticut Coastal Fishermen's Association

v.

Remington Arms Co.

, 989 F.2d 1305, 1315 (2d Cir. 1993) holds that EPA's use of a narrower and more specific definition of solid waste for Subtitle C purposes is a reasonable interpretation of the statute. (See also

Military Toxics Project

v.

EPA

, 146 F.3d 948 (D.C. Cir. 1998).))

EPA has consistently asserted that hazardous secondary materials are not excluded from regulation as solid wastes merely because of a claim that they will be recycled. EPA has consistently considered hazardous secondary materials intended for “sham recycling” (

i.e.

, disposal performed in the guise of recycling) to be discarded and, hence, to be solid wastes for Subtitle C purposes (see 45 FR 33093, May 19, 1980; 50 FR 638-639, January 4, 1985). The U.S. Court of Appeals for the D.C. Circuit has agreed that materials undergoing sham recycling are discarded and, consequently, are solid wastes under RCRA (see

American Petroleum Institute

v.

EPA

, 216 F.3d 50, 58-59 (D.C. Cir. 2000)).

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

Because the interpretation of what constitutes a solid waste is the foundation of the hazardous waste regulatory program, there has been quite a bit of litigation over the meaning of “solid waste” under Subtitle C of RCRA. Specifically, industries representing mining and oil refining interests challenged EPA's January 1985 regulatory definition of solid waste. In 1987, the D.C. Circuit held that EPA exceeded its authority “in seeking to bring materials that are not discarded or otherwise disposed of within the compass of `waste' ” (

American Mining Congress

v.

EPA

(“

AMC I

”), 824 F.2d 1177, 1178 (D.C. Cir. 1987)). The Court held that certain materials EPA was seeking to regulate were not “discarded materials” under RCRA section

1004(27). The Court also held that Congress used the term “discarded” in its ordinary sense, to mean “disposed of” or “abandoned” (824 F.2d at 1188-89). The Court further held that the term “discarded materials” could not include materials “destined for beneficial reuse or recycling in a continuous process by the generating industry itself (because they) are not yet part of the waste disposal problem” (824 F.2d at 1190). The Court held that Congress had directly spoken to this issue, so that EPA's definition was not entitled to deference under

Chevron U.S.A., Inc.

v.

NRDC

, 467 U.S. 837 (1984) (824 F.2d at 1183, 1189-90, 1193).

At the same time, the Court held that recycled materials could be regulated as discarded materials. The Court mentioned at least two examples of recycled materials that may be regulated as wastes, noting that used oil can be considered a solid waste (824 F.3d at 1187 (fn 14)). Also, the Court suggested that materials disposed of and recycled as part of a waste management program may be regulated as solid wastes (824 F. 2d at 1179).

Subsequent decisions by the D.C. Circuit also indicate that some materials destined for recycling may be considered “discarded.” In particular, the Court held that emission control dust from steelmaking operations listed as hazardous waste “K061” is a solid waste, even when sent to a metals reclamation facility, at least where that is the treatment method required under EPA's land disposal restrictions program (

American Petroleum Institute

v.

EPA

(“

API I

”), 906 F.2d 729 (D.C. Cir. 1990)). In addition, the Court held that it is reasonable for EPA to consider as discarded (and solid wastes) listed wastes managed in units that are in part wastewater treatment units, especially where it is not clear that the industry actually reuses the materials (

AMC II

, 907 F.2d 1179 (D.C. Cir. 1990)).

It also is worth noting that two other Circuits also have held that EPA may regulate as solid wastes under RCRA at least some materials destined for reclamation rather than final discard. The U.S. Court of Appeals for the Eleventh Circuit found that “[i]t is unnecessary to read into the term ‘discarded’ a congressional intent that the waste in question must finally and forever be discarded” (

U.S.

v.

ILCO

, 996 F.2d 1126, 1132 (Eleventh Cir. 1993) (finding that used lead batteries sent to a reclaimer have been “discarded once” by the entity that sent the battery to the reclaimer)). In addition, the Fourth Circuit found that slag held on the ground untouched for six months before sale for use as road bed could be a solid waste (

Owen Electric Steel Co.

v.

EPA

, 37 F.3d 146, 150 (4th Cir. 1994)).

In 1998, EPA promulgated a rule in which EPA regulated hazardous secondary materials recycled by reclamation within the mineral processing industry, the “LDR Phase IV rule” (63 FR 28556, May 26, 1998), under Subtitle C of RCRA. In that rule, EPA promulgated a conditional exclusion for all types of mineral processing hazardous secondary materials destined for reclamation. As a condition of the exclusion, EPA prohibited the land-based storage of these mineral processing secondary materials prior to reclamation because it considered hazardous secondary materials from the mineral processing industry that were stored on the land to be solid wastes (63 FR 28581, May 26, 1998). The conditional exclusion decreased regulation over spent materials stored prior to reclamation, but increased regulation over by-products and sludges that exhibit a hazardous characteristic and that are stored prior to reclamation. EPA noted that the statute does not authorize it to regulate “materials that are destined for immediate reuse in another phase of the industry's ongoing production process.” EPA, however, took the position that hazardous secondary materials that are removed from a production process for storage are not “immediately reused,” and therefore are “discarded” (63 FR 28580, May 26, 1998).

The mining industry challenged the rule, and the D.C. Circuit vacated the provisions that expanded EPA regulation over characteristic by-products and sludges destined for reclamation (

Association of Battery Recyclers

v.

EPA

(“

ABR

”), 208 F.3d 1047 (D.C. Cir. 2000)). The Court held that it had already resolved this issue in its opinion in

AMC I

, where it found that “Congress unambiguously expressed its intent that `solid waste' (and therefore EPA's regulatory authority) be limited to materials that are `discarded' by virtue of being disposed of, abandoned, or thrown away” (208 F.2d at 1051). The Court also did not find that storage before reclamation automatically makes materials discarded. Rather, it repeated that materials reused within an ongoing industrial process are neither disposed of nor abandoned (208 F.3d at 1051-52) and that “at least some of the secondary material EPA seeks to regulate as solid waste (in the mineral processing rule) is destined for reuse as part of a continuous industrial process and thus is not abandoned or thrown away” (208 F.3d at 1056). It explained that the intervening

API I

and

AMC II

decisions had not narrowed the holding in

AMC I

(208 F.3d at 1054-1056).

In its most recent opinion dealing with the definition of solid waste,

Safe Food and Fertilizer

v.

EPA

(“

Safe Food

”), 350 F.3d 1263 (D.C. Cir. 2003), the D.C. Circuit upheld an EPA rule that excludes from the definition of solid waste hazardous secondary materials used to make zinc fertilizers, and the fertilizers themselves, as long as the hazardous secondary materials meet certain handling, storage, and reporting conditions and the resulting fertilizers have concentration levels for lead, arsenic, mercury, cadmium, chromium, and dioxins that fall below specified thresholds (Final Rule, “Zinc Fertilizers Made From Recycled Hazardous Secondary Materials” (“Fertilizer Rule”), 67 FR 48393, July 24, 2002). EPA determined that if these conditions are met, the hazardous secondary materials used to make such fertilizer have not been discarded. The conditions also apply to a number of recycled materials not produced in the fertilizer production industry, including certain zinc-bearing hazardous secondary materials, such as brass foundry dusts.

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

In addition, the Court stated that it “need not consider whether a material could be classified as a non-discard exclusively on the basis of the market-participation theory” (350 F.3d at 1269). The Court only determined that the combination of market participants' treatment of the materials, EPA-required management standards, and the “identity principle” constitutes a reasonable set of tools to establish that

the recycled hazardous secondary materials and fertilizers are not discarded.

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

Prompted by concerns articulated in various Court opinions decided up to that point, in October 2003, EPA proposed a rule which defined those circumstances under which hazardous secondary materials would be excluded from RCRA's hazardous waste regulations because they are generated and reclaimed in a continuous process within the same industry. In addition, the Agency also clarified in a regulatory context the concept of “legitimate recycling,” which has been a key component of RCRA's regulatory program for hazardous material recycling, but which up to that point, had been implemented without specific regulatory criteria (68 FR 61558, October 28, 2003).

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

Other commenters to the 2003 DSW proposal expressed the view that the great majority of these cases of recycling-related environmental problems occurred before RCRA, CERCLA, or other environmental programs were established in the early 1980s. These commenters argued that these environmental programs—most notably, RCRA's hazardous waste regulations and the liability provisions of CERCLA—have created strong incentives for proper management of recyclable hazardous secondary materials and recycling residuals. Several commenters further noted that, because of these developments, industrial recycling practices have changed substantially since the early 1980s and present day generators and recyclers are much better environmental stewards than in the pre-RCRA/-CERCLA era. Thus, they argued that cases of “historical” recycling-related environmental damage are not particularly relevant when modifying the current RCRA hazardous waste regulations for hazardous secondary materials recycling.

D. Recycling Studies

In light of these comments on the 2003 DSW proposal, and in deliberating on how to proceed with the rulemaking effort, the Agency decided that additional information on hazardous secondary material recycling would benefit its regulatory decision-making and would provide stakeholders with a clearer picture of the hazardous secondary material recycling industry in this country. Accordingly, the Agency examined three issues that we believed were of particular importance to revising the definition of solid waste:

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

• To what extent have hazardous secondary material recycling practices resulted in environmental problems since enactment of major waste management statutes, and why?

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

Reports documenting these studies are available in the docket for the 2008 DSW final rule under the following titles:

•

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

(EPA-HQ-RCRA-2002-0031-0354) (“study of successful recycling”)

•

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

(EPA-HQ-RCRA-2002-0031-0355) (“environmental problems study”)

•

A Study of Potential Effects of Market Forces on the Management of Hazardous Secondary Materials Intended for Recycling

(EPA-HQ-RCRA-2002-0031-0358) (“market forces study”)

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

The goal of the environmental problems study was to identify and characterize environmental problems associated with some types of hazardous secondary material recycling that are relevant for the purpose of this rulemaking effort. To address commenters' concerns that historic damages are irrelevant to current practices because environmental programs (post-RCRA and -CERCLA implementation) have created strong incentives for proper management of recyclable hazardous secondary materials, EPA only included cases where damages occurred after 1982. The study identifies 208 cases in which environmental damages of some kind occurred from some type of recycling activity and that otherwise fit the scope of the study.

3

3

EPA initially identified over 800 potential damage cases, most of which were not included in the analysis because (1) the damages occurred before 1982, (2) the damages were not caused by recycling, or (3) there was not enough information to determine when the damages occurred or whether recycling contributed to the damages. The cases EPA considered, but did not include, were listed in an appendix to the report to allow the public to comment on whether additional cases should be included in the analysis. As a result of public comment to the 2011 DSW proposal, EPA has updated the damage case information using the same methodology, resulting in a total of 250 damage cases as of 2012. EPA has determined that the new damage case information is consistent with the damage cases previously cited in the study.

The Agency has determined that the occurrence of certain types of environmental problems associated with post-1982 recycling practices shows that discard has occurred. In particular, instances where hazardous secondary materials were abandoned (

e.g.,

in warehouses) and which required removal, oversight by a government agency and the expenditure of public funds clearly demonstrate that the hazardous secondary material was discarded. Of the 208 damage cases presented in the original damage case study, 69 cases (33%) involve abandoned materials. The relatively high incidence of abandoned materials likely reflects the fact that bankruptcies or other types of business failures were associated with 138 (66%) of the cases.

In addition, the pattern of environmental damages that resulted from the mismanagement of recyclable

materials (including contamination of soils, groundwater, surface water and air) is a strong indication that the hazardous secondary materials were generally not managed as valuable commodities and were discarded. Of the 208 damage cases presented in the original damage case study, 81 cases (40%) primarily resulted from the mismanagement of recyclable hazardous secondary materials, while mismanagement of recycling residuals was the primary cause in 71 cases (34%). Often, in the case of mismanagement of recycling residuals, reclamation processes generated residuals in which the toxic components of the recycled materials were separated from the non-toxic components, and these portions of the hazardous secondary material were then mismanaged and discarded. Examples of this include a number of drum reconditioning facilities, where large numbers of used drums were cleaned out to remove small amounts of remaining product, such as solvent, and these wastes were then improperly stored or disposed, while the drums were reused or recycled.

The market forces study used accepted economic theory to describe how various market incentives can influence a firm's decision-making process when recycling hazardous secondary materials. This study helps explain some of the possible fundamental economic drivers of both successful and unsuccessful recycling practices.

As pointed out by some commenters to the 2003 DSW proposed rule, the economic forces shaping the behavior of firms that recycle hazardous secondary materials are often different from those at play in manufacturing processes using virgin materials. The market forces study used economic theory to provide information on how certain characteristics can influence three different recycling models to encourage or discourage an optimal outcome. The three recycling models examined were (1) commercial recycling, where the primary business of the firm is the recycling of hazardous secondary materials that are accepted from off-site industrial sources (which usually pay a fee); (2) industrial intra-company recycling, where firms generate hazardous secondary materials as by-products of their main production processes and recycle the hazardous secondary materials for sale or for their own reuse in production; and (3) industrial inter-company recycling, where firms either use or recycle hazardous secondary materials obtained from other firms, with the objective of reducing the cost of their production inputs. The report also looked at how the outcome from each model is potentially affected by three market characteristics: (1) The value of the recycled product, (2) the price stability of recycling output or inputs, and (3) the net worth of the firm.

An individual firm's decision-making is based on many factors and extrapolating a firm's likely behavior from a few factors could be an over-simplification. However, when used in conjunction with other information, the economic theory can be quite illuminating. For example, according to the market forces study, industrial intra- and inter-company recyclers have more flexibility in adjusting to unstable recycling markets (

e.g.,

during price fluctuations, these companies can more easily switch from recycling to disposal or from recycled inputs to virgin inputs). Therefore, they would be expected to be less likely to have environmental problems from over-accumulated materials.

On the other hand, in certain types of commercial recycling, the product has low value, the prices are unstable, and/or the firm has a low net worth. Facilities in these situations can be more susceptible to environmental problems from the over-accumulation or mishandling of hazardous secondary materials, especially when compared to recycling by a well-capitalized firm that yields a product with high value. In short, commercial recyclers depend on revenue from two sources: (1) Accepting hazardous secondary materials for recycling, and (2) selling the recycled product. When recycled product prices fall, commercial recyclers rely on profits from accepting hazardous waste, which can result in over-accumulation, mismanagement, sham recycling, and abandonment of hazardous secondary materials. Further, because these facilities often have little capital at risk, they can go bankrupt leaving environmental damages behind. These predicted outcomes appear to be supported by the results of the environmental problems study, which showed the vast majority of environmental damages—approximately 94%—occur at off-site commercial recyclers.

However, as shown by the study of successful recycling, generators who could otherwise bear a large liability from poorly-managed recycling at other companies have addressed this issue by carefully examining the recyclers to which they send their hazardous secondary materials, such as through audits to ensure that they are technically and financially capable of performing the recycling. In addition, we have seen that successful recyclers (both commercial and industrial) have often taken advantage of mechanisms, such as long-term contracts to help stabilize price fluctuations, allowing recyclers to plan their operations more effectively.

Further discussion of the recycling studies, including the methodology and limitations of the studies, can be found in the March 2007 DSW supplemental proposal (72 FR 14178-83) and the October 2008 DSW final rule (73 FR 64673-74), and the studies themselves can be found in the docket for the 2008 DSW final rule (EPA-HQ-RCRA-2002-0031-0355).

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

In March 2007, EPA published a supplemental proposal that provided the public the opportunity to comment on these studies. The Agency also re-structured the proposed rule and proposed (1) two exclusions for hazardous secondary materials recycled under the control of the generator (one exclusion would apply to hazardous secondary materials managed in non-land-based units, and the other exclusion would apply to hazardous secondary materials managed in land-based units) and (2) an exclusion for hazardous secondary materials transferred to another party for reclamation. The Agency also proposed a non-waste determination petition process, and re-proposed the legitimacy criteria, with certain modifications (72 FR 14172, March 26, 2007).

For the exclusions of hazardous secondary materials reclaimed under the control of the generator, EPA described three circumstances under which we believed that discard does not take place and where the potential for environmental releases is low. The three situations involve hazardous secondary materials that are generated and legitimately reclaimed at the generating facility, legitimately reclaimed at a different facility within the same company, or legitimately reclaimed through a tolling arrangement. Under all three circumstances, the hazardous secondary materials must be generated and reclaimed within the United States or its territories. Because the hazardous secondary material generator in these situations still retains control of the hazardous secondary materials, finds value in them, and intends to use them, EPA proposed to exclude these materials from the definition of solid waste and, thus, from regulation under Subtitle C of RCRA, provided the reclamation is legitimate and the

hazardous secondary materials are contained and not speculatively accumulated. In addition, EPA proposed that facilities generating and reclaiming hazardous secondary materials under the control of the generator must submit notification to their regulatory authority.

For the exclusion of hazardous secondary materials transferred to another party for reclamation (referred to as the transfer-based exclusion), the Agency proposed conditions that, when met, would indicate that these hazardous secondary materials were not discarded. Specifically, the generator would need to make reasonable efforts, a form of due diligence, to determine that its hazardous secondary materials would be properly and legitimately recycled (and that the hazardous secondary material would not be discarded). Another condition would require the reclamation facility to have adequate financial assurance (thus demonstrating that the hazardous secondary material would not be abandoned). In addition, EPA proposed that both the generator and reclaimer would be required to maintain shipping records (to demonstrate that the hazardous secondary material was sent for reclamation and was received by the reclaimer). Furthermore, the reclaimer would be subject to additional storage and residual management standards (to address the instances of discard observed at off-site reclamation facilities in the damage cases). Finally, facilities operating under the transfer-based exclusion must also submit notification to their regulatory authority.

In addition, the 2007 DSW supplemental proposal included a case-by-case non-waste determination petition process that would allow applicants to receive a formal determination from EPA that their hazardous secondary materials were not discarded and therefore were not solid wastes. The case-by-case petition process would allow EPA or the authorized state to take into account the particular fact pattern of the recycling and to determine that the hazardous secondary materials in question were not solid wastes. The petition process for the non-waste determination was the same as that for the variances from the definition of solid waste found at 40 CFR 260.31.

Finally, EPA proposed a definition of legitimate recycling that restructured the legitimacy factors originally proposed in October 2003. The proposed legitimacy factors would be used to determine that the recycling of hazardous secondary materials is not a “sham” and thus, does not constitute discard.

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

In October 2008, EPA promulgated a final rule largely as proposed in March 2007, with some revisions and clarifications, including (1) clarifying that hazardous secondary materials held at a transfer facility for less than 10 days are considered to be in transport (and therefore such transfer facilities are not considered to be storing the hazardous secondary materials for the purpose of the DSW exclusion), (2) allowing the use of intermediate facilities that store hazardous secondary materials for more than 10 days under the transfer-based exclusion, provided the facilities comply with the same conditions applicable to reclamation facilities, (3) codifying financial assurance language in 40 CFR 261 subpart H for the transfer-based exclusion applicable to intermediate and reclamation facilities without RCRA permits, (4) requiring facilities operating under the generator-controlled and/or the transfer-based exclusion to notify their regulatory authority prior to operating under the exclusion and every other year thereafter, and (5) making legitimacy a condition of the exclusions and the non-waste determinations in that rule, but not finalizing the legitimacy language for all recycling activities.

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

On January 29, 2009, the Sierra Club submitted an administrative petition under RCRA section 7004(a), 42 U.S.C. 6974(a), to the Administrator of EPA requesting that the Agency repeal the October 2008 revisions to the definition of solid waste rule and stay the implementation of the rule.

The administrative petition was submitted at the same time that the American Petroleum Institute (API) and Sierra Club filed judicial Petitions for Review under RCRA section 7006(a), 42 U.S.C. 6976(a) challenging the rule in the United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit). These cases, designated as Docket Nos. 09-1038 and 1041, respectively, are currently before the D.C. Circuit.

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In its lawsuit, API claimed that EPA had improperly decided that certain petroleum catalysts, when recycled are hazardous wastes. See 73 FR 64714 for EPA's decision to defer a decision on the eligibility of those catalysts for the 2008 DSW final rule. API argued, among other things, that these catalysts should be treated the same as other materials that were receiving the transfer-based exclusion. API's challenge proceeded to briefing and argument before the Court of Appeals. By order of June 8, 2012, the Court reconsidered and decided to hold API's challenge in abeyance until EPA issued this rule in final form. Since EPA is removing the transfer-based exclusion and making spent petroleum catalysts eligible for the generator-controlled and verified recycler exclusions, API's challenge that the Agency failed to treat the catalysts as other excluded materials is now moot. See section XI below for further discussion on the effect of this rule on spent petroleum catalysts.

The Sierra Club petition argued that the revised regulations are unlawful and that they increase threats to public health and the environment without producing compensatory benefits and, therefore, should be repealed. Among other things, the petition singled out the lack of regulatory definitions for key conditions of the rule and disagreed with the Agency's findings that the rule would have no adverse environmental impacts, including the finding there would be no adverse impact to environmental justice communities or children's health.

On March 6, 2009, a coalition of industry associations (“industry coalition”) submitted a letter to the Administrator of EPA in response to the Sierra Club petition. This letter requested that EPA deny Sierra Club's petition on the grounds that the 2008 DSW final rule comports with court cases construing the scope of the definition of solid waste under RCRA, and that the 2008 DSW final rule achieves significant economic and conservation benefits, while imposing significant controls on the hazardous secondary material recycling industry that are fully protective of the environment. The letter also responds to each of the specific points raised by Sierra Club in its petition.

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

In response to Sierra Club's administrative petition and the industry coalition's letter to the Administrator of EPA, a May 27, 2009,

Federal Register

notice (74 FR 25200) was issued describing possible actions and optional paths forward, as well as announcing a public meeting on June 30, 2009, to allow the public and interested stakeholders the opportunity to provide input to the decision-making process.

In the May 27, 2009,

Federal Register

notice announcing the public meeting, EPA described the scope of possible actions, which is governed by the concept of “discard.” As stated in RCRA section 1004(27), “solid waste” is defined as “any garbage, refuse, sludge from a waste treatment plant, water supply treatment plant, or air pollution control facility and

other discarded material

. . . resulting from industrial, commercial, mining and agricultural

activities.” The May 2009 public meeting notice said that

[b]ecause the final revisions to the definition of solid waste are closely tied to EPA's interpretation of the concept of “discard,” EPA does not plan to repeal the rule in whole or stay its implementation. Such an action could result in hazardous secondary materials that are not discarded being regulated as hazardous waste. In particular, EPA does not expect to repeal either the exclusion for hazardous secondary materials reclaimed under the control of the generator or the non-waste determination petition process. However, EPA believes there may be other opportunities to revise or clarify the definition of solid waste rule, particularly with respect to the definition of legitimacy and the transfer-based exclusion, in ways that could improve implementation and enforcement of the provisions, thus increase environmental protection, while still appropriately defining when a hazardous secondary material being reclaimed is a solid waste and subject to hazardous waste regulation. (74 FR 25203).

Thirty-three people spoke at the public meeting and approximately 4,000 written comments were received, of which the majority were from private citizens who wrote in via a mass email campaign to repeal the rule. The remaining comments came from state and local governments (17), companies that generate hazardous secondary materials that are recycled (

i.e.,

the generating industry) (28), the waste management/recycling industry (15), environmental, public health and community organizations (12), and academics (2). Comments from the generating industry were uniformly in favor of denying the Sierra Club petition to repeal the rule, citing legal issues and the protectiveness of the rule's conditions. Environmental and community organizations, on the other hand, were uniformly in favor of repealing the rule, expressing concerns over the protectiveness, enforceability, and environmental justice and children's health impacts of the rule. Waste management/recycling industry comments were split, with hazardous waste recyclers generally advocating that EPA retain and improve the rule with more stringent standards. Other waste management industry comments, particularly those from companies representing landfills and incinerators, were in favor of repealing the rule. State comments expressed concerns about implementing the rule, particularly given the economic climate, and generally were in favor of repealing or significantly revising the transfer-based exclusion. A copy of the public meeting transcript and the comments submitted in response to the public meeting notice are available in the docket for the public meeting (Docket ID number EPA-HQ-RCRA-2009-0315).

Many of the commenters (including those at the public meeting and those who responded with written comments) expressed strong concerns that the Agency did not adequately address environmental justice in the rulemaking. In response to the concerns over the environmental justice analysis, EPA committed to perform a more rigorous and thorough analysis of the environmental justice impacts of the 2008 DSW final rule. On January 15, 2010, EPA released for public input a draft methodology for conducting the DSW Environmental Justice Analysis. The draft methodology was presented to the National Environmental Justice Advisory Committee (NEJAC) and discussed at three public roundtable meetings, and was used to develop the draft environmental justice analysis for the DSW rulemaking.

I. Settlement Agreement With the Sierra Club

1. Overview of Settlement Agreement

On September 7, 2010, EPA signed a settlement agreement with the Sierra Club under which the Sierra Club agreed to withdraw their administrative petition and EPA agreed to (1) prepare a notice of proposed rulemaking to be signed no later than June 30, 2011,

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which would address, at a minimum, the issues raised in the Sierra Club's administrative petition and (2) take final administrative action concerning the notice of proposed rulemaking to be signed no later than December 31, 2012. The settlement agreement did not specify the outcome of the final rule or what regulatory changes EPA would propose. The settlement agreement was approved by the court on January 11, 2011. Although EPA was unable to make the settlement agreement deadline for a final administrative action, today's rule does address all issues raised in Sierra Club's administrative petition, including the four issues discussed in the May 27, 2009, public meeting

Federal Register

notice (74 FR 25200). Specifically, the four issues in the settlement agreement are (1) the definition of “contained” (which includes the issue of defining “significant releases”) (addressed in section V of this preamble), (2) notification before operating under the exclusion (also addressed in section V of this preamble), (3) the definition of “legitimacy” (addressed in section VIII of this preamble) and (4) the transfer-based exclusion (addressed in section VI of this preamble). Other issues presented in the administrative petition are discussed below.

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The proposed rulemaking was signed by the Administrator of EPA on June 30, 2011.

2. Request to Immediately Stay the Implementation of and Revoke the 2008 DSW Rule

The Sierra Club's administrative petition included a request to immediately stay and revoke the 2008 DSW final rule. To support this request, the petition asserted that the damage case study demonstrates that hazardous waste recycling has caused substantial harm to health and the environment and that the 2008 DSW final rule increases the likelihood of greater future harm. The petition also asserted that the 2008 DSW final rule does not account for the possibility that unstable recycling markets or financial conditions increase the risk of hazardous waste abandonment. In addition, the petition asserted that the 2008 DSW final rule will not substantially increase recycling and that the economic benefits are few and will only accrue to deregulated industries. Furthermore, the petition claimed that there would be job losses in the hazardous waste treatment industry and increased worker health problems as a result of the rule.

EPA addressed Sierra Club's request to revoke the 2008 DSW final rule in whole and stay its implementation in the May 27, 2009, public meeting notice, which continues to reflect EPA's current thinking. In that notice, EPA stated at 74 FR 25202:

The scope of possible changes to the definition of solid waste is governed by the concept of “discard.” As discussed in the preamble to the DSW final rule, EPA used the concept of discard as the central organizing idea behind the October 2008 revisions to the definition of solid waste. As stated in RCRA section 1004(27), “solid waste” is defined as “. . . any garbage, refuse, sludge from a waste treatment plant, water supply treatment plant, or air pollution control facility and

other discarded material

. . . resulting from industrial, commercial, mining and agricultural activities” (emphasis added). Therefore, in the context of the DSW final rule, a key issue relates to the circumstances under which a hazardous secondary material that is recycled by reclamation is or is not discarded (73 FR 64675). In exercising its discretion in the DSW final rule to define what constitutes “discard” for hazardous secondary materials reclamation, EPA included an explanation of how each provision of the final rule relates to discard (73 FR 64676-64679).

For example, in the DSW final rule, EPA determined that if the generator maintains control over the recycled hazardous secondary material and if the material is legitimately recycled under the standards established in the final rule and not

speculatively accumulated within the meaning of EPA's regulations, then the hazardous secondary material is not discarded. This is because the hazardous secondary material is being treated as a valuable commodity rather than as a waste. By maintaining control over, and potential liability for, the reclamation process, the generator ensures that the hazardous secondary materials are not discarded. (See 73 FR 64676.)

Because the final revisions to the definition of solid waste are closely tied to EPA's interpretation of the concept of “discard,” EPA does not plan to repeal the rule in whole or stay its implementation. Such an action could result in hazardous secondary materials that are not discarded being regulated as hazardous wastes. In particular, EPA does not expect to repeal either the exclusion for hazardous secondary materials reclaimed under the control of the generator or the non-waste determination petition process.

Today's final rule includes several changes to the generator-controlled exclusion and to the non-waste determination petition process, but, for the reasons stated above, EPA did not stay the rule and is not withdrawing either provision.

3. Adequacy of EPA's Analyses

Finally, the Sierra Club's petition asserted that EPA's conclusion that the 2008 DSW final rule would have no adverse environmental impacts, and therefore would have no disproportional adverse impacts to minority and low-income communities, is unsupported by the administrative record. In response to these comments and similar comments by other stakeholders at the June 2009 public meeting, EPA committed to producing an expanded analysis of the potential disproportionate impacts of the 2008 DSW final rule. A draft methodology for the analysis was shared with the public in January 2010, and three public roundtable discussions were held to discuss the draft methodology and were addressed in the development of the draft DSW environmental justice analysis.

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U.S. EPA.

Draft Environmental Justice Methodology for the Definition of Solid Waste Rule,

January 2010,

http://www.epa.gov/epawaste/hazard/dsw/ej.htm

.

J. Draft DSW Environmental Justice Analysis

As part of the development of the 2011 DSW proposal, EPA conducted a revised environmental justice analysis, following the methodology discussed with stakeholders during the 2010 roundtable discussions. The purpose of the draft DSW environmental justice analysis was two-fold. First, the analysis represents a systematic examination of the potential for an increase in adverse impacts under the 2008 DSW final rule (considered independently from which communities might be impacted). Second, the analysis includes a demographic assessment, characterizing the extent any potential adverse impacts are likely to affect minority and/or low-income communities. The results of this analysis were intended to inform EPA's decision-making on which regulatory options to pursue, within the scope of the Agency's authority to regulate hazardous waste.

The results of the draft DSW environmental justice analysis demonstrate that hazardous secondary material recycling can pose significant potential hazards to human health and the environment, and that it is reasonable to conclude that the potential for hazards from hazardous secondary materials recycling adversely impacting human health and the environment could increase under the 2008 DSW final rule. Of particular concern are (1) the absence of required measures (

e.g.,

weekly inspections, training, contingency plans) at hazardous secondary materials reclaimers to prevent problems (

e.g.,

spills, fires, explosions), (2) the incentives to accumulate larger volumes of hazardous secondary materials due to longer storage time limits, and (3) the reduction in access to information and opportunity for public participation.

Moreover, the analysis demonstrates that some of the communities potentially impacted are minority and low-income communities, and in most cases, the populations potentially impacted are disproportionately minority and/or low income. In particular, the population-level analysis shows a statistically significant potential disproportionate impact to minority and low-income populations. In addition, underlying vulnerabilities traditionally associated with minority and low-income communities can pose the potential to exacerbate potential adverse impacts of the 2008 DSW final rule. The ability of communities to participate in the decision-making process and the potential for multiple and cumulative effects are of particular concern.

The analysis has undergone peer review, and the draft environmental justice analysis and peer review comments were presented for public comment as part of the supporting documentation for the 2011 DSW proposal.

K. July 2011 Proposal To Revise the Definition of Solid Waste

On July 22, 2011, EPA published a proposal to revise the definition of solid waste. Comments were requested, and the comment period was extended until October 20, 2011. In September 2011, EPA held two public meetings to accept public comment on the proposal in Philadelphia, PA and in Chicago, IL. The goal of the 2011 DSW proposal was to re-examine the 2008 DSW final rule to determine if any changes are needed to ensure that the rule, as implemented, protects human health and the environment from the mismanagement of hazardous secondary materials, while at the same time promote sustainability by encouraging the reclamation of such materials. The proposed rule consisted of six possible actions, which are summarized below.

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

In the 2011 DSW proposal, EPA proposed to retain the exclusion for hazardous secondary materials reclaimed under the control of the generator found at 40 CFR 261.4(a)(23), with certain revisions. Proposed revisions to the 2008 DSW rule generator-controlled exclusion include (1) adding a regulatory definition of “contained,” (2) making notification a condition of the exclusion, (3) adding a recordkeeping requirement for speculative accumulation, and (4) adding a recordkeeping requirement for reclamation under toll manufacturing agreements. In addition, EPA requested comment on other ways to strengthen the generator-controlled exclusion in order to protect human health and the environment.

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

EPA proposed to replace the exclusion for hazardous secondary materials that are transferred from the generator to other persons for the purpose of reclamation found at 40 CFR 261.4(a)(24) and(25) with an alternative Subtitle C regulatory scheme. EPA's analyses of potential hazards posed by the 2008 DSW rule indicate that, when implemented, the transfer-based exclusion may adversely impact human health and the environment from hazardous secondary materials that may become discarded, and that minority and low-income populations may be disproportionately affected by these impacts.

Under the proposed alternative Subtitle C requirements, the hazardous recyclable materials would be managed in accordance with the current RCRA Subtitle C requirements, including

manifesting and hazardous waste permits for storage. However, an exception to these proposed requirements would allow generators to accumulate hazardous recyclable materials for up to a year without a RCRA permit if they make advance arrangements for legitimate reclamation and document those arrangements in a reclamation plan.

EPA also requested comment on alternative approaches that would address the concerns regarding the potential risk under the transfer-based exclusion to human health and the environment from discarded hazardous secondary material, such as including additional conditions.

3. Remanufacturing Exclusion

In addition, EPA requested comment on an exclusion from the definition of solid waste for certain types of higher-value solvents sent for remanufacturing into similarly higher-value products. Further, the action requested comment on a petition process for adding other higher-value hazardous secondary materials that are destined to be remanufactured into similarly higher-value products.

4. Proposed Revisions to the Definition of Legitimacy

EPA also proposed revisions to the definition of legitimacy found at 40 CFR 260.43 for the purpose of distinguishing genuine recycling from “sham recycling.” Proposed revisions to the 2008 DSW final rule legitimacy definition include (1) applying the codified “legitimacy” definition to all hazardous secondary material recycling activities; (2) making all legitimacy factors mandatory, with a petition process for those instances that a factor is not met even when the recycling is legitimate; and (3) requiring documentation of legitimacy.

5. Proposed Revisions to Solid Waste Variances and Non-Waste Determinations

EPA also proposed revisions to the case-by-case solid waste variances and non-waste determinations found at 40 CFR 260.30-260.34 in order to ensure protection of human health and the environment and foster greater consistency among the implementing agencies. Proposed revisions affect both the non-waste determinations from the 2008 DSW final rule and pre-2008 existing variances. Specific proposed revisions include (1) requiring facilities which were granted a variance to re-apply for the variance in the event of a change in circumstances that affects how that hazardous secondary material meets the criteria for the variance; (2) requiring facilities to re-notify every two years with updated information; (3) revising the criteria for the partial reclamation variance to clarify when the variance applies and to require, among other things, that all the criteria for this variance must be met; (4) revising the criteria for the non-waste determination in 40 CFR 260.34 to require that petitioners demonstrate why the existing solid waste exclusions would not apply to their hazardous secondary materials; and (5) designating the Regional Administrator as the EPA recipient of petitions for variances and non-waste determinations.

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

Finally, EPA requested comment on revisions that would affect other (pre-2008) solid waste exclusions and hazardous waste exemptions for recyclable materials. These possible revisions include (1) recordkeeping for speculative accumulation as applicable; (2) requiring facilities to re-notify every two years with updated information on their operating status under the various exclusions and exemptions; and (3) containment standards for excluded hazardous secondary materials.

IV. When will the final rule become effective?

This final rule is effective on July 13, 2015.

V. Revisions to the Exclusion for Hazardous Secondary Materials That Are Legitimately Reclaimed Under the Control of the Generator

In today's final rule, EPA is retaining and revising the conditional exclusion from the definition of solid waste at 40 CFR 261.4(a)(23) for those hazardous secondary materials that are legitimately reclaimed within the United States or its territories under the control of the generator. Revisions to the generator-controlled exclusion include (1) adding a codified definition of “contained;” (2) adding recordkeeping requirements for same company and toll manufacturing reclamation; (3) making notification a condition of the exclusion; (4) adding a requirement to document that recycling under the exclusion is legitimate; and (5) adding emergency preparedness and response conditions. In addition, we have amended the speculative accumulation provisions to add a recordkeeping requirement. A discussion of the public comments on the July 2011 DSW proposal and the Agency's responses can be found in section XIV of this preamble and the full response to comment document in the docket for this rulemaking.

A. Scope of the Exclusion

The definition of “hazardous secondary material generated and reclaimed under the control of the generator” is found at 40 CFR 261.4(a)(23) for both land-based and non-land-based units, since the requirements for both types of units are the same. A land-based unit is defined in 40 CFR 260.10 as an area where hazardous secondary materials are placed in or on the land before recycling, but this definition does not include land-based production units. Examples of land-based units include surface impoundments and piles. Examples of non-land-based units include tanks, containers, and containment buildings.

Hazardous secondary materials are considered “under the control of the generator” under the following circumstances:

• They are generated and then reclaimed at the generating facility; or

• they are generated and reclaimed at different facilities, if the generator certifies that the hazardous secondary materials are sent either to a facility controlled by the generator or to a facility under common control with the generator, and that either the generator or the reclaimer has acknowledged responsibility for the safe management of the hazardous secondary materials. In addition, the generating and receiving facilities must maintain at their facilities for no less than three years records of hazardous secondary materials sent or received under this exclusion. 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. The requirements may be satisfied by routine business records (

e.g.,

financial records, bills of lading, copies of DOT shipping papers, or electronic confirmations); or

• they are generated and reclaimed pursuant to a written agreement between a tolling contractor and toll manufacturer, if the tolling contractor certifies that it has entered into a tolling contract with a toll manufacturer and that the tolling contractor retains ownership of, and responsibility for, the hazardous secondary materials generated during the course of the manufacture, including any releases of hazardous secondary materials that occur during the manufacturing process. The tolling contractor and the toll manufacturer must maintain at their facilities for no less than three years records of hazardous secondary materials sent or received under this exclusion. 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. The requirements may be satisfied by routine business records (

e.g.,

financial records, bills of lading, copies of DOT shipping papers, or electronic confirmations).

Materials subject to material-specific management conditions under the other exclusions of 40 CFR 261.4(a) when reclaimed and spent lead-acid batteries are not eligible for the generator-controlled exclusion at 40 CFR 261.4(a)(23).

In addition, materials managed under the generator-controlled exclusion at 40 CFR 261.4(a)(23) must be contained, may not be speculatively accumulated, and are subject to a notification provision and documentation of legitimacy determinations, which must be maintained on site. Furthermore, the generator must satisfy certain emergency preparedness and response conditions. These conditions and any changes from the 2008 DSW final rule are explained below.

B. EPA's Rationale for Retaining and Revising the Generator-Controlled Exclusion

In the 2008 DSW final rule, EPA determined that if the generator maintains control over the recycled hazardous secondary material, the material is legitimately recycled under the conditions of the exclusion, and the material is not speculatively accumulated within the meaning of EPA's regulations, then the hazardous secondary material is not discarded. Under these circumstances, the hazardous secondary material is being treated as a valuable commodity rather than as a waste. By maintaining control over, and potential liability for, the recycling process, the generator ensures that the hazardous secondary materials are not discarded (

see ABR

208 F.3d 1051 (“Rather than throwing these materials [destined for recycling] away, the producers saves them; rather than abandoning them, the producer reuses them.”)) (73 FR 64676-7).

In today's final rule, EPA reaffirms its determination that when a generator legitimately recycles hazardous secondary materials under its control under the conditions of the exclusion, the generator has not abandoned the material and has every opportunity and incentive to maintain oversight of, and responsibility for, the hazardous secondary material that is reclaimed.

EPA is however making several revisions to the generator-controlled exclusion, the rationale for each of which is explained below.

1. Contained Definition

Under the generator-controlled exclusion, hazardous secondary materials must be contained pursuant to the definition in 40 CFR 260.10, regardless of whether they are stored in land-based units or non-land-based units. Under that definition, a hazardous secondary material is contained if it is managed in a unit that meets the following criteria: (1) The unit 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 material, to prevent releases of the hazardous secondary materials to the environment. Unpermitted releases are releases that are not covered by a permit (such as a permit to discharge to water or air) and 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; (2) the unit is properly labeled or otherwise has a system (such as a log) to immediately identify the hazardous secondary materials in the unit; and (3) the unit holds hazardous secondary materials that are compatible with other hazardous secondary materials placed in the unit and is compatible with the materials used to construct the unit and addresses any potential risks of fires or explosions. Hazardous secondary materials in units that meet the applicable requirements of 40 CFR parts 264 or 265 are presumptively contained.

The codification of these regulatory criteria will help regulatory authorities and facilities operating under the exclusion to determine whether a unit adequately controls the movement of hazardous secondary materials. The contained standard is a key provision for determining that a hazardous secondary material is not discarded. Hazardous secondary materials that are not contained and are instead released to the environment are not destined for recycling and are clearly discarded.

In today's final rule, EPA is retaining the “contained” condition based on the rationale that hazardous secondary materials released to the environment are not destined for recycling and are clearly discarded, but is adding a regulatory definition of contained to make it easier for implementing agencies and the regulatory community to determine that a material is contained. In the preamble to the 2008 DSW final rule (73 FR 64681), the Agency stated that a hazardous secondary material is “contained” if it is placed in a unit that controls the movement of the hazardous secondary materials out of the unit and into the environment. However, EPA did not provide more specific guidance on how an implementing agency or the regulated community would determine if a unit did adequately control the movement of hazardous secondary materials and meet the contained standard.

As EPA noted in the 2011 DSW proposal and as reflected in many of the public comments, of particular concern is the lack of preventative measures in the contained standard in the 2008 DSW final rule. This is noted as a major regulatory gap in EPA's assessment of the potential for adverse impacts from the 2008 DSW final rule, including adverse impacts to minority and low income communities. Given that the contained standard is one of the major requirements for determining that hazardous secondary materials reclaimed under the generator-controlled exclusion are not discarded, this lack of specificity could undermine the exclusion. That is, if the primary or only way to determine that the hazardous secondary material is not contained is to wait until it is released to the environment, then the 2008 DSW final rule increases the likelihood of discard for these materials.

The Agency therefore is adding a regulatory definition of “contained” that resolves this uncertainty without sacrificing the flexibility that would allow the implementing authority to take into account a wide variety of case-specific circumstances when necessary. This definition specifies factors which, if met, demonstrate that the hazardous secondary materials in a unit are handled as valuable raw materials, intermediates, or products and thus are not being discarded. We note that the elements of the contained definition are all measures that are used to prevent releases and ensure operation and maintenance of the storage unit in the same manner as a production unit.

If these criteria were not met, the materials remaining in the unit would be considered solid and hazardous wastes and the unit would be subject to the appropriate hazardous waste regulations.

Also, to clarify the regulatory status of units from which releases have occurred, the Agency is also adding to 40 CFR 261.4(a)(23) the following language: (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 unpermitted releases of the hazardous secondary material to the environment is discarded and a solid waste.

2. Notification as a Condition

Under today's rule, generators, reclaimers, tolling contractors, and toll manufacturers operating under the generator-controlled exclusion at 40 CFR 261.4(a)(23) are required to submit a notification prior to operating under these exclusions and by March 1 of each even-numbered year thereafter to their regulatory authority. Facilities must also notify their regulatory authority within 30 days of stopping management of hazardous secondary materials under the rule. The notification provisions are found at 40 CFR 260.42.

The substance of the notification provisions is essentially the same as that under the 2008 DSW final rule. However, under today's rule, such notification is a condition of the exclusion rather than a requirement. At issue here are not the specifics of the notification in 40 CFR 260.42, but rather the consequences an entity would face for failing to notify. Thus, if notification is a requirement under the authority of RCRA section 3007 (as specified under the 2008 DSW final rule), it means that failure to notify would constitute a violation of the notification regulations. On the other hand, if notification is a condition of the exclusion, it means failure to notify would potentially result in the loss of the exclusion for the hazardous secondary materials (

i.e.,

the hazardous secondary materials may become solid and hazardous wastes and subject to full Subtitle C regulation).

EPA is finalizing the notification provision as a condition of the generator-controlled exclusion because it is the only formal indication of a facility's intent to reclaim a hazardous secondary material under the conditional exclusion rather than to discard it. 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 a notification, it would be difficult for the facility to justify its true intentions for the hazardous secondary material. Failure to meet the notification provision would be a strong indication that the facility either did not intend to comply with or was unaware of the provisions of the exclusion, since it failed to comply with the first step for claiming the exclusion. In both cases, the lack of notification shows that the hazardous secondary material may be discarded. Making notification a condition of the rule would further discourage facilities from trying to evade enforcement by not notifying because the costs of not notifying could be significantly higher than if notification remains a requirement. Finally, notification is important for informing regulators and the public about hazardous secondary materials activity and, without such notification, regulators are unable to effectively monitor compliance. This notification condition will keep regulators and the public informed about hazardous secondary materials activity and will enable effective compliance monitoring.

3. Recordkeeping for Speculative Accumulation

Under today's rule, all persons subject to the speculative accumulation requirements at 40 CFR 261.1(c)(8) (including, but not limited to, persons operating under the generator-controlled exclusion at § 261.4(a)(23)) must place materials subject to those requirements in a storage unit with a label indicating the first date that the 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. This provision will allow inspectors and other regulatory authorities to quickly ascertain how long a facility has been storing an excluded hazardous secondary material, and, therefore, whether that facility is in compliance with the accumulation time limits of § 261.1(c)(8).

EPA notes that the speculative accumulation provision only applies to persons who are accumulating hazardous secondary materials. Processes involving hazardous secondary materials being returned to the original process via pipes are not considered to accumulate hazardous secondary materials and thus the speculative accumulation provision (and recordkeeping therein) would not apply to these scenarios.

4. Other Recordkeeping

Today's exclusion for tolling and “same-company” recycling requires recordkeeping for shipments sent and received under the exclusion. The records must contain the name of the transporter, the date of the shipment, and the type and quantity of hazardous secondary material shipped or received. These records may consist of normal business records. Such recordkeeping will facilitate enforcement of the exclusion and will allow tracking of hazardous secondary materials to ensure that these materials remain under the control of the generator and are not discarded.

5. Documentation of Legitimacy Determinations

Persons performing the recycling of hazardous secondary materials under the generator-controlled exclusion of 40 CFR 261.4(a)(23) must maintain documentation of their legitimacy determination on-site. Documentation must be a written description of how the recycling meets all four factors in 40 CFR 260.43(a), except as otherwise noted in 40 CFR 260.43(d). Documentation must be maintained for three years after the recycling operation has ceased.

The Agency has determined that requiring documentation under the generator-controlled exclusion to demonstrate that the hazardous secondary materials are legitimately recycled and not discarded 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.

6. Emergency Preparedness and Response

Many of the environmental and human health damages identified by the environmental problems study were caused by fires and explosions and the lack of specific requirements to prevent and respond to such problems is a significant gap in the 2008 DSW exclusion.

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Fires and explosions at industrial recyclers can threaten the lives and health of both facility employees and the general public and can cause lasting damage to the local environment. Recent catastrophic chemical accidents in the United States, such as the 2013 fire and explosion in West, Texas, that killed 15 people, the 2010 explosion and fire at Tesoro Refinery in Anacortes, Washington, that killed seven employees, and the 2012 Chevron Refinery hydrocarbon fire in Richmond, California, that affected 15,000 people in the surrounding area, highlight the need for continued improvement in a number of areas related to chemical facility safety. To address these concerns, the President issued Executive Order 13650—Improving Chemical Facility Safety and

Security (EO) on August 1, 2013. The EO directed the Department of Homeland Security, EPA, the Department of Labor, the Department of Justice, the Department of Agriculture, and the Department of Transportation to identify ways to improve operational coordination with state, local, tribal, and territorial partners; enhance federal agency coordination and information sharing; modernize policies, regulations, and standards to enhance safety and security in chemical facilities; and work with stakeholders to identify best practices to reduce safety and security risks in the production and storage of potentially harmful chemicals.

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Taken together, leaks, spills, fires, explosions, or other accidents caused environmental damage at 19% of the 250 environmental damage sites. U.S. EPA “

An Assessment of Environmental Problems Associated with Recycling of Hazardous Secondary Materials

(Updated)” December 2014.

EPA finds that planning and preparing for an emergency demonstrates a generator's intent to not only protect human health and the environment but to reduce potential loss of valuable hazardous secondary materials. In the absence of such requirements, hazardous secondary materials pose a greater risk of being released and discarded to the environment.

Therefore, EPA is adding a condition to the generator-controlled exclusion that generators must follow certain emergency preparedness and response regulations, found in 40 CFR part 261 subpart M, which are dependent on the amount of hazardous secondary material the generator accumulates on site at any time. Under the final rule, generators that accumulate less than or equal to 6,000 kg of hazardous secondary material on site must meet regulations like the emergency preparedness and response regulations currently required for small quantity generators of hazardous waste. Generators that accumulate more than 6,000 kg of hazardous secondary material on site must meet regulations like the emergency preparedness regulations currently required for large quantity generators of hazardous waste. EPA chose to set the threshold at 6,000 kg based on the current hazardous waste generator regulations, which require generators that accumulate greater than 6,000 kg of hazardous waste on site to comply with large quantity generator regulations, including emergency preparedness and response regulations. EPA finds that generators that accumulate greater amounts of hazardous secondary material on site inherently pose greater risk to human health and the environment from a potential release caused by a fire or explosion and thus it is more appropriate for these generators to take additional steps to prepare for such events.

Specifically, EPA is requiring that generators that accumulate less than or equal to 6,000 kg of hazardous secondary material on site comply with the emergency preparedness and response requirements equivalent to those in part 265 subpart C, which discuss maintaining appropriate emergency equipment on site, having access to alarm systems, maintaining needed aisle space, and making arrangements with local emergency authorities. A generator must also have a designated emergency coordinator who must respond to emergencies and must post certain information next to the telephone in the event of an emergency.

For generators that accumulate more than 6,000 kg of hazardous secondary material on site, EPA is requiring that generators comply with requirements equivalent to those in part 265 subparts C and D, which includes all the requirements already discussed above for those accumulating less than or equal to 6,000 kg, as well as requiring a contingency plan and sharing the plan with local emergency responders. EPA recommends that the contingency plan be based on the National Response Team's Integrated Contingency Plan Guidance (One Plan), discussed in the

Federal Register

on June 5, 1996 (61 FR 28642). Under the One Plan Guidance, the generator can develop one contingency plan that meets all the regulatory standards for the various statutory and regulatory provisions for contingency planning, such as EPA's Oil Pollution Prevention Regulation or Risk Management Programs regulations, the U.S. Coast Guard's (USCG) Facility Response Plan regulations, OSHA's Hazardous Waste Operations and Emergency Response (HAZWOPER) regulations, and several others.

EPA has determined that adding these emergency preparedness and response conditions to the generator-controlled exclusion meets the goals of the Chemical Safety EO and also will ensure that those facilities managing hazardous secondary material under the exclusion will be doing so in a manner that allows them to safely recycle the hazardous secondary material and limit loss of materials that are supposed to be recycled into the environment. These provisions are the common-sense steps that a facility that manages hazardous materials should take to reduce risk to their workers and the public. Additionally, EPA has determined that structuring the emergency preparedness and response conditions of the generator-controlled exclusion after the existing hazardous waste requirements serves to reduce burden on generators, as generators are likely already familiar and complying with this regulations.

VI. Verified Recycler Exclusion Replacing the Exclusion for Hazardous Secondary Materials That Are Transferred for the Purpose of Reclamation

Based on comments received and further assessment, EPA has decided to replace the 2008 DSW exclusion for hazardous secondary materials that are transferred for the purpose of legitimate reclamation (

i.e.,

the transfer-based exclusion) with an exclusion for hazardous secondary materials sent for reclamation at a verified recycler (

i.e.,

the verified recycler exclusion). The verified recycler exclusion is being finalized instead of the proposed Subtitle C alternative recycling standards because EPA has determined that such an exclusion will address the regulatory gaps identified in the 2008 DSW rule in a way that appropriately identifies hazardous secondary materials that will be legitimately recycled and not discarded. Based on the evidence from states currently implementing the transfer-based exclusion, hazardous secondary materials transferred to another party for recycling can be legitimately recycled and not discarded, provided that there is a mechanism for adequate oversight at the recycling facility. Subtitle C regulation of this activity is unnecessary and would result in EPA regulating as hazardous waste some materials that have not been discarded. By adding the condition of requiring the recycler to obtain a solid waste variance or have a RCRA permit, EPA is addressing the potential for future discard while allowing the legitimate recycling activities that are already occurring to continue. (A discussion of the public comments on the July 2011 proposal and the Agency's responses can be found in section XV of this preamble and the full response to comment document is in the docket for this rulemaking.)

A. Summary of Transfer-Based Exclusion

The 2008 exclusion for hazardous secondary materials that are transferred for the purpose of legitimate reclamation, which EPA is withdrawing today and replacing with the verified recycler exclusion, applied to hazardous secondary materials (

i.e.,

spent materials, listed sludges, and listed by-products) that are generated and subsequently transferred to a different person or company for the purpose of

reclamation. This exclusion was found at 40 CFR 261.4(a)(24) and (25).

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

General conditions for hazardous secondary material generators, reclaimers, and intermediate facilities

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under this exclusion included the following:

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Intermediate facilities are those facilities that do not reclaim hazardous secondary materials, but store them for more than 10 days.

• Entities must submit a notification prior to operating under the exclusion and by March 1 of each even-numbered year thereafter reporting types and quantities of hazardous secondary materials being reclaimed, and

• hazardous secondary materials managed at such facilities must not be speculatively accumulated as defined in § 261.1(c)(8) and must be legitimately reclaimed as specified in § 260.43.

Conditions applicable to generators of hazardous secondary materials included the following:

• Containment of such hazardous secondary materials,

• reasonable efforts, a form of due diligence, to ensure that the intermediate facility or reclaimer intends to properly manage and legitimately recycle the hazardous secondary material, and

• retention of records of off-site shipments for three years.

Conditions applicable to intermediate facilities and reclaimers included the following:

• Containment of hazardous secondary materials,

• transmittal of confirmations of receipt to generators,

• retention of records for hazardous secondary materials received and sent off-site,

• financial assurance equivalent to that required of hazardous waste facilities, and

• (for reclaimers) proper management of any residuals generated from the reclamation activities.

In addition, for any hazardous secondary materials excluded under 40 CFR 261.4(a)(24) generated and then exported to another country for reclamation, the exporter must notify and obtain consent from the receiving country and file an annual report per 40 CFR 261.4(a)(25).

B. EPA's Rationale for Requiring Conditions for Transfers of Hazardous Secondary Materials Sent for Reclamation

In the 2008 DSW rule, EPA determined that, absent specific conditions, it is reasonable to conclude that transfers of hazardous secondary materials to third-party recyclers generally involve discard except for instances where EPA has evaluated and promulgated a case-specific exclusion that a hazardous secondary material is not a solid waste. Generators of hazardous secondary materials who do not reclaim these materials themselves often ship these materials to a commercial facility or another manufacturer for reclamation in order to avoid the costs of disposing of the material. Because of the low commercial value and the high potential liability associated with most types of hazardous secondary materials (

i.e.,

spent materials and listed hazardous waste by-products and sludges), generators will typically pay the reclamation facility to accept these hazardous secondary materials or receive a salvage fee that only partially offsets the cost of transporting and managing them. In such situations, the generator has relinquished control of the hazardous secondary materials and the entity receiving such materials may not have the same incentives to manage them as a useful product. (Note that this determination is unchanged from the 2008 DSW final rule; see 73 FR 64675.)

Evidence of hazardous secondary materials not being managed as a valuable product is shown in the results of the environmental problems study, found in the docket of the 2008 DSW final rule. Of the 208 damage cases discussed in the 2008 DSW final rule, 195 (or approximately 94%) were from reclamation activities of off-site third-party recyclers, with clear instances of discard resulting in risk to human health and the environment, including cases of large-scale soil and ground water contamination with remediation costs in some instances in the tens of millions of dollars (73 FR 64673).

In addition, the market forces study in the docket for the 2008 DSW final rule supports the conclusion that the pattern of discard at off-site third-party reclaimers is a result of inherent differences between commercial recycling and normal manufacturing. As opposed to manufacturing, where the cost of raw materials or intermediates (or inputs) is greater than zero and revenue is generated primarily from the sale of the output, hazardous secondary materials recycling can involve generating revenue primarily from the receipt of the hazardous secondary materials. Recyclers of hazardous secondary materials in this situation thus respond differently than traditional manufacturers to economic forces and incentives, accumulating more inputs (hazardous secondary materials) than can be processed (reclaimed). In addition, commercial recyclers have less flexibility than in-house recyclers in changing how they manage their hazardous secondary materials (

e.g.,

during price fluctuations, in-house recyclers can more easily switch from recycling to disposal or from recycled inputs to virgin inputs, while commercial recyclers cannot switch to disposal without obtaining a RCRA permit) (73 FR 64674). In other words, third-party recyclers have economic incentives to accumulate waste beyond their ability to deal with it.

C. Regulatory Gaps in the 2008 DSW Rule

The 2008 DSW final rule attempted to address this pattern of adverse impacts to human health and the environment from hazardous secondary materials transferred to a third party for recycling by setting conditions for the transfer-based exclusion. The intent of these conditions was to define when transfers to third-party recyclers would not result in discard. The link between each of the conditions and their ability to prevent discard is discussed in detail in the 2008 DSW final rule preamble at 73 FR 64675-79.

However, EPA failed to take into account how the conditions of the 2008 transfer-based exclusion would work when actually implemented. EPA's analysis of the 2008 DSW final rule was based on the assumption that DSW conditions would be implemented to the same degree as Subtitle C hazardous waste regulations, without taking into consideration whether the 2008 DSW rule would provide EPA and the authorized states the ability for the same level of oversight as the fully applicable Subtitle C hazardous waste regulations, which leads to the second part of EPA's rationale for its 2011 proposal to replace the transfer-based exclusion with an alternative Subtitle C regulatory scheme.

Before excluding hazardous secondary materials that have already been determined to be hazardous wastes when discarded, the Agency needs adequate assurance that the conditional exclusion will not result in discarded hazardous materials posing significant risks to human health and the environment (

e.g.,

fires/explosion, soil and water contamination, air emissions, and abandoned hazardous secondary materials). Because EPA has already evaluated these hazardous secondary materials (for example, during a hazardous waste listing determination) and determined them to be solid and hazardous wastes when discarded, the Agency must be able to reasonably expect that hazardous secondary materials managed under a conditional exclusion will not be discarded.

Over the years, EPA has developed many such conditional exclusions (found in 40 CFR 261.4(a)). In each of these cases, EPA did so by examining the specific hazardous secondary material or the specific recycling practice, or both, before making a determination that the hazardous secondary material is not solid waste. However, unlike these types of specific transfer-based exclusions from the definition of solid waste, the 2008 transfer-based exclusion in 40 CFR 261.4(a)(24) and (25) did not focus on the chemical or physical properties of any particular type of hazardous secondary material or on how it is typically managed. Instead, the transfer-based exclusion is broadly applicable to a wide range of hazardous spent materials and listed by-products and sludges. Thus, while other solid waste exclusions were developed based on EPA's knowledge of the specific hazardous secondary materials, the industries generating them, or the current recycling management practice for those hazardous secondary materials, the 2008 DSW transfer-based exclusion relied entirely on the conditions that were developed by EPA operating as the Agency anticipates they should. The conditions themselves were developed in a reasoned manner,

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but without evidence that they would work as intended (

i.e.,

would not result in significant risk to human health and the environment from discarded materials).

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See Chapter 11,

Regulatory Impact Analysis: EPA's 2008 Final Rule Amendments to the Industrial Recycling Exclusions of the RCRA Definition of Solid Waste,

EPA-HQ-RCRA-2002-0031-0602.

However, the conditions for the transfer-based exclusion in the 2008 DSW final rule lack several important implementation provisions that the Subtitle C requirements for treatment, storage, and disposal facilities provide. These provisions ensure a greater level of oversight, which ensures that EPA or the state has reviewed a facility's planned operations before management begins and which allows public participation in the environmental decision-making process, thereby increasing the likelihood of compliance and decreasing the potential for risk to human health and the environment from discarded hazardous secondary material. EPA has performed a detailed regulatory comparison of the 2008 DSW final rule with the fully applicable Subtitle C hazardous waste regulations, identifying significant differences that could lead to the potential for an increased likelihood of environmental and public health hazards, including fires/explosion, soil and water contamination, air emissions, and abandoned hazardous secondary materials.

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See Chapter 2 and Appendix A of

Potential Adverse Impacts Under the Definition of Solid Waste Exclusions (Including Potential Disproportionate Adverse Impacts to Minority and Low-Income Populations): Volume 1—Hazard Characterization,

available in the docket for today's rule.

D. Rationale for the Verified Recycler Exclusion

Based on this reconsideration of the DSW transfer-based exclusion conditions, EPA has determined that hazardous secondary materials transferred off-site to third party reclaimers for the purpose of legitimate reclamation are most appropriately covered under a system that allows for oversight and public participation prior to the start of operations to help ensure that (1) the hazardous secondary material will be legitimately reclaimed and not discarded and (2) the potential risk of releases from the facility impacting the surrounding community will be minimized. The need for such additional oversight and public participation is demonstrated by (1) evidence of past damage cases leading to significant risk to human health and the environment from hazardous secondary materials originally intended for recycling and (2) the underlying perverse incentives of the recycling market to over-accumulate such hazardous secondary materials intended for recycling, resulting in discard of the material. 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 by states related to 2008 transfer-based exclusion. 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.

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All seven reclamation facilities are RCRA permitted. 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 off site 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.

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Some of these facilities are also managing hazardous secondary materials under the generator-controlled exclusion.

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U.S. EPA,

EPA's Evaluation of Data Collected From Notifications Submitted Under the 2008 Definition of Solid Waste Exclusions,

April 11, 2014.

In addition, it should be noted that the Department of Environmental Protection for the State of Pennsylvania (PA DEP), where 27 of the 65 facilities operating under the transfer-based exclusion are located, commented strongly in favor of keeping the transfer-based exclusion: “PA DEP has experienced no compliance problems or issues of any nature with those generators or reclamation facilities operating under this conditional exclusion, known as the transfer-based exclusion. In addition, under the transfer-based exclusion, large quantities of hazardous solvents have been diverted to reclamation and reuse rather than being burned for energy recovery, resulting in greater resource conservation.”

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Comment to the docket from Vincent J. Brisini, Acting Deputy Secretary for Waste, Air, Radiation and Remediation, Pennsylvania Department of Environmental Protection, October 20, 2011 (EPA-HQ-RCRA-2010-0742-0271).

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 that 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 regulate this material as hazardous waste, despite the

fact that according to the state it is currently being legitimately recycled and not discarded.

However, it is important to note that the comments from PA DEP went on to recommend that the transfer-based exclusion be limited to RCRA-permitted facilities. 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 RCRA Subtitle C permits 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 is needed to ensure that the hazardous secondary material is legitimately recycled and not discarded.

To address this issue, EPA is requiring as a condition of the new verified recycler exclusion that generators must send their hazardous secondary materials to a RCRA-permitted recycler or intermediate facility

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or to a verified hazardous secondary materials recycler or intermediate facility who has obtained a solid waste variance from EPA or the authorized state using the procedures found in 40 CFR 260.33. The verified recycler exclusion uses the solid waste variance procedure to determine if a facility will properly manage the hazardous secondary materials as commodities and legitimately recycle rather than discard them. The variance addresses the same criteria currently required for the reasonable efforts environmental audit under the 2008 transfer-based exclusion (see discussion below). However, the variance process would allow EPA or the authorized state to evaluate the facility before it begins recycling hazardous secondary materials and would also give the affected community the opportunity to provide input prior to a decision as to whether the variance should be granted, thus addressing a major regulatory gap in the transfer-based exclusion that could result in significant risk to human health and the environment from discarded hazardous secondary material.

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Intermediate facilities are those facilities that do not reclaim hazardous secondary materials, but store them for more than 10 days.

In addition, as described below, the verified recycler exclusion retains those conditions from the 2008 transfer-based exclusion that EPA determined are necessary to properly identify hazardous secondary material that is legitimately recycled and not discarded, and also includes the new conditions that apply to the generator-controlled exclusion being finalized today.

EPA expects that all facilities that are currently recycling hazardous secondary materials under the 2008 transfer-based exclusion will be able to continue to recycle these materials under the verified recycler exclusion, because all recycling under the transfer-based exclusion is being done at RCRA-permitted facilities, which also qualify for the verified recycler exclusion. Moreover, the additional conditions of the verified recycler exclusion address the regulatory gaps EPA identified in the 2011 DSW proposal that could have resulted in significant risk to human health and the environment from discarded material, if the 2008 DSW had been fully implemented to include facilities without RCRA permits or other regulatory oversight prior to beginning recycling.

Finally, EPA notes that facilities managing excluded hazardous secondary materials under the verified recycling exclusion are still potentially subject to RCRA enforcement actions if they fail to meet the conditions of the exclusion. Persons that handle these hazardous secondary materials are responsible for maintaining the exclusion by ensuring that the conditions are met. If the hazardous secondary materials are not managed pursuant to these restrictions, they are not excluded. They would then be considered solid and hazardous wastes if they were listed or they exhibited a hazardous waste characteristic for RCRA Subtitle C purposes.

E. Conditions of the Verified Recycler Exclusion

The conditions discussed below describe EPA's evaluation of each of the conditions under the 2008 transfer-based exclusion that EPA is retaining in the verified recycler exclusion, as well as the additional conditions EPA has determined are necessary to address the regulatory gaps identified in the transfer-based exclusion in order to ensure that the verified recycler exclusion identifies hazardous secondary materials that are legitimately recycled and not discarded. By including these conditions, EPA is identifying those hazardous secondary materials that will be legitimately recycled and not discarded.

1. Provisions Applicable to the Hazardous Secondary Materials Generator, the Reclamation Facility, and any Intermediate Facility

Prohibition on speculative accumulation.

As a condition of the verified recycler exclusion, hazardous secondary materials cannot be speculatively accumulated (40 CFR 261.1(c)(8)) at the hazardous secondary material generator, reclamation facility, or intermediate facility. Restrictions on speculative accumulation have been an important element of the RCRA hazardous waste recycling regulations since they were promulgated on January 4, 1985. According to this regulatory provision, hazardous secondary materials are accumulated speculatively if the person accumulating them cannot show that the material is potentially recyclable. Further, the person accumulating the hazardous secondary material must show that during a calendar year (beginning January 1) the amount of such material that is recycled or transferred to a different site for recycling is at least 75% by weight or volume of the amount of the hazardous secondary material present at the beginning of the period. It is also the same prohibition that is being promulgated today for the generator-controlled exclusions.

Furthermore, under today's rule, all persons subject to the speculative accumulation requirements at 40 CFR 261.1(c)(8) (including, but not limited to, persons operating under the verified recycler exclusion at § 261.4(a)(24)) must place materials subject to those requirements in a storage unit with a label indicating the first date that the 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.

This provision will allow inspectors and other regulatory authorities to quickly ascertain how long a facility has been storing an excluded hazardous secondary material, and, therefore, whether that facility is in compliance with the accumulation time limits of § 261.1(c)(8).This provision is being retained in the verified recycler exclusion to ensure that the hazardous secondary materials will be recycled rather than discarded through speculative accumulation and abandonment.

Notification.

Under today's verified recycler exclusion, as a condition of the exclusion, hazardous secondary

material generators, reclaimers, and intermediate facilities must send a notification prior to operating under this exclusion and by March 1 of each even-numbered year thereafter to the EPA Regional Administrator using EPA form 8700-12. In states authorized by EPA to administer the RCRA Subtitle C hazardous waste program, notifications may be sent to the State Director. The notice must include the following:

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

• The name and telephone number of a contact person;

• The NAICS code of the facility;

• The exclusion under which the hazardous secondary materials will be managed;

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

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

• For each hazardous secondary material, whether the material, or any portion thereof, will be managed in a land-based unit;

• The quantity of each hazardous secondary material to be managed annually; and

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

If a facility has submitted a notification, but then subsequently stops managing hazardous secondary materials in accordance with the exclusion, the facility must re-notify the Regional Administrator within 30 days using the same EPA Form 8700-12. We consider a facility to have `stopped' managing hazardous secondary materials when a facility no longer generates, manages and/or reclaims hazardous secondary materials under the exclusion and does not expect to manage any amount of hazardous secondary material under the exclusion for at least one year. Of course, a facility could certainly choose to begin managing hazardous secondary materials again and would simply have to submit a notification in compliance with 40 CFR 260.42.

This notification condition is the same as the notification condition for the generator-controlled exclusion and is an indication that the facility is planning to legitimately recycle the hazardous secondary materials and not discard them. As with the generator-controlled exclusion, EPA is finalizing the notification provision as a condition of the transfer-based exclusion because it is the only formal indication of a facility's intent to reclaim a hazardous secondary material under the conditional exclusion rather than to discard it. For further discussion on the notification, including examples of when a facility must re-notify that it has stopped managing hazardous secondary materials, see section V.B.2 of today's preamble.

Hazardous secondary materials must be contained.

Another condition of the verified recycler exclusion applicable to hazardous secondary material generators, reclamation facilities, and intermediate facilities is that the hazardous secondary materials must be contained in their management units. This provision is the same as the restriction that is being promulgated for the generator-controlled exclusion and helps ensure that the hazardous secondary material remains in the management unit until it is ready to be recycled and is not discarded. Hazardous secondary materials released to the environment from any unit are discarded and would be subject to the hazardous waste regulations, unless they are immediately cleaned up. Hazardous secondary materials remaining in a unit that experiences a release may also be considered discarded in certain cases. For further discussion on the containment provisions, see section V.B.1 of today's preamble.

Emergency preparedness and response.

As discussed above under the generator-controlled exclusion, one important cause of environmental and human health damages identified by the environmental problems study is fires, explosions, and accidents, with 19% of the environmental damage cases being associated with leaks, spills, fires, explosions, or other accidents, and the lack of conditions to address these problems is a significant regulatory gap in the 2008 DSW exclusions. In addition, the President recently released an Executive Order to address these types of concerns (EO 13650—Improving Chemical Facility Safety and Security). EPA finds that planning and preparing for an emergency demonstrates a generator's intent to not only protect human health and the environment, but also to reduce potential loss of valuable hazardous secondary materials. In the absence of such requirements, hazardous secondary materials pose a greater risk of being released and discarded to the environment.

Therefore, EPA is requiring that generators must follow certain emergency preparedness and response regulations under the verified recycler exclusion. These regulations are found in 40 CFR part 261 subpart M and are dependent on the amount of hazardous secondary material the generator accumulates on site at any time.

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Under the final rule, generators that accumulate less than or equal to 6,000 kg of hazardous secondary material on site must meet regulations like the emergency preparedness and response regulations currently required for small quantity generators of hazardous waste. Generators that accumulate more than 6,000 kg of hazardous secondary material on site must meet regulations like the emergency preparedness and response regulations currently required for large quantity generators of hazardous waste. EPA chose to set the threshold at 6,000 kg based on the current hazardous waste generator regulations, which require generators that accumulate greater than 6,000 kg of hazardous waste on site to comply with large quantity generator regulations, including emergency preparedness and response regulations. EPA finds that generators that accumulate greater amounts of hazardous secondary material on site inherently pose greater risk to human health and the environment from a potential release caused by a fire or explosion and thus it is more appropriate for these generators to take additional steps to prepare for such events.

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Intermediate facilities and reclamation facilities must also follow emergency prepared and response regulations, either through the requirement of their RCRA permit or through the criteria that must be met to obtain a verified recycler variance under 40 CFR 260.31(d).

Specifically, EPA is requiring that generators that accumulate less than or equal to 6,000 kg of hazardous secondary material on site comply with the emergency preparedness and response requirements equivalent to those in part 265 subpart C, which discuss maintaining appropriate emergency equipment on site, having access to alarm systems, maintaining needed aisle space, and making arrangements with local emergency authorities. A generator must also have a designated emergency coordinator who must respond to emergencies and must post certain information next to the telephone in the event of an emergency.

For generators that accumulate more than 6,000 kg of hazardous secondary material on site, EPA is requiring that they comply with requirements equivalent to those in part 265 subparts C and D, which includes all the requirements already discussed above for those accumulating less than or equal to 6,000 kg, as well as requiring a contingency plan and sharing the plan with local emergency responders. EPA

recommends that the contingency plan be based on the National Response Team's Integrated Contingency Plan Guidance (One Plan), discussed in the

Federal Register

on June 5, 1996 (61 FR 28642). Under the One Plan Guidance, the generator can develop one contingency plan that meets all the regulatory standards for the various statutory and regulatory provisions for contingency planning, such as EPA's Oil Pollution Prevention Regulation or Risk Management Programs regulations, the U.S. Coast Guard's (USCG) Facility Response Plan regulations, OSHA's Hazardous Waste Operations and Emergency Response (HAZWOPER) regulations, and several others.

EPA has determined that adding these emergency preparedness and response conditions meets the goals of the Chemical Safety EO and also will ensure that those facilities managing hazardous secondary material under the exclusion will be doing so in a manner that allows them to safely recycle the hazardous secondary material and limit loss into the environment of materials that are supposed to be recycled. These provisions are the common-sense steps that a facility that manages hazardous materials should take to reduce risk to their workers and the public. Additionally, structuring the emergency preparedness and response conditions of the verified recycler exclusion after the existing hazardous waste requirements serves to reduce burden on generators, as generators are already familiar and complying with this regulations.

Exclusion is limited to recycling performed within the United States.

Because the verified recycler exclusion requires that hazardous secondary materials are sent to a verified reclamation facility (or facilities) that has been granted either a RCRA permit or interim status that addresses the hazardous secondary material or has received a variance from EPA or the authorized state, this exclusion is limited to recycling performed within the United States or its territories. Because hazardous secondary materials that are exported for recycling passes out of the regulatory control of the federal government, it is not possible to verify whether the foreign reclaimer will safely and legitimately recycle the hazardous secondary material and not discard it.

2. Provisions Applicable to the Hazardous Secondary Material Generator

Transport to a Verified Recycler.

The hazardous secondary material generator must transport hazardous secondary materials to a verified reclamation facility (or facilities) within the United States or its territories. A verified reclamation facility is a facility that has been granted a variance by EPA or an authorized state under § 260.31(d) or a reclamation facility where the management of the hazardous secondary materials is addressed under a RCRA Part B permit or interim status standards. If the hazardous secondary material will be passing through an intermediate facility, the intermediate facility must have been granted a variance under § 260.31(d) or the management of the hazardous secondary materials at that facility must be addressed under a RCRA Part B permit or interim status standards. The hazardous secondary material generator must also make contractual arrangements with the intermediate facility to ensure that the intermediate facility sends the hazardous secondary material to the verified reclamation facility identified by the hazardous secondary material generator.

Note that in the case of a permitted facility the management of the hazardous secondary materials must be addressed under the RCRA part B permit or interim status standards. In other words, if the permit standards do not extend to the hazardous secondary materials being reclaimed, then the reclamation or intermediate facility is required to either modify the permit to cover those materials or obtain a solid waste variance from EPA or the authorized state before operating under the exclusion.

This condition addresses the major regulatory gap in the transfer-based exclusion of lack of oversight and public participation for hazardous secondary material recycling facilities that do not have RCRA permits. 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.

This condition replaces the self-implementing “reasonable efforts” environmental audits of the recycling facility required under the 2008 transfer-based exclusion. EPA has determined that it more appropriate for the state or EPA to make the determination that a facility can safely and legitimately recycle hazardous secondary material. While EPA has found that many large companies do conduct environmental audits of recycling facilities, many smaller generators would not have the technical expertise or resources to conduct such an effort.

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In addition, it is more efficient for the EPA or the authorized state to perform one evaluation of a recycler via the permit or variance process rather than have multiple evaluations of a recycler conducted by each generator using that recycler.

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

(EPA-HQ-RCRA-2002-0031-0354).

Recordkeeping.

EPA is requiring hazardous secondary material generators to maintain at the generating facility certain records that document off-site shipments of hazardous secondary materials for a period of three years. Specifically, for each shipment of hazardous secondary material, the generator must maintain documentation of when the shipment occurred, who the transporter was, the name and address of the reclaimer(s) and, if applicable, each intermediate facility, and the type and quantity of the hazardous secondary materials in the shipment. This recordkeeping requirement may be fulfilled by ordinary business records, such as bills of lading.

In addition, hazardous secondary material generators are required to maintain confirmations of receipt from each reclaimer and intermediate facility for all off-site shipments of hazardous secondary materials in order to verify that the hazardous secondary materials reached their intended destination and were not discarded. These receipts must be maintained at the generating facility for a period of three years. Specifically, the hazardous secondary material generator must maintain documentation of receipt that includes the name and address of the reclaimer or intermediate facility, the type and quantity of hazardous secondary materials received, and the date which the hazardous secondary materials were received. The Agency is not requiring a specific template or format for confirmations of receipt and anticipates that routine business records (

e.g.,

financial records, bills of lading, copies of Department of Transportation (DOT) shipping papers, electronic confirmations of receipt) could contain the appropriate information sufficient for meeting this requirement.

We recognize that, in some cases, reclamation of a hazardous secondary material may involve more than one

reclamation step. In these cases, the recordkeeping condition under the terms of the exclusion applies for each reclaimer and intermediate facility, regardless of how many reclamation steps were involved. For example, if a hazardous secondary material generator shipped hazardous secondary materials to one reclaimer for partial reclamation and then arranged for the partially-reclaimed material to be subsequently sent to another reclaimer for “final” reclamation, the generator must maintain confirmations of receipt from each reclaimer involved in the reclamation process.

The recordkeeping requirements are the same as those in the 2008 transfer-based exclusion and Agency continues to believe that the recordkeeping requirements in today's rule comprise the minimum information needed to enable effective oversight to ensure the hazardous secondary materials were sent for reclamation and were not discarded.

3. Provisions Applicable to the Transportation of Hazardous Secondary Materials

Hazardous secondary materials may be stored for up to 10 days at a transfer facility and still be considered in transit. However, if the facility stores the hazardous secondary materials for more than 10 days, then it would be considered an intermediate facility and subject to the conditions in 40 CFR 261.4(a)(24)(vi). While at the transfer facility, the hazardous secondary materials must continue to meet all applicable DOT standards. Hazardous secondary materials may be consolidated for shipping, but cannot be intermingled in a way that would constitute waste management. This provision is unchanged from the 2008 transfer-based exclusion and describes the intersection of the RCRA and DOT requirements for these shipments.

4. Provisions Applicable to the Reclamation Facility and any Intermediate Facilities

Recordkeeping.

Reclaimers and intermediate facilities who operate under the verified recycler exclusion must maintain certain records, similar to the records we are requiring for hazardous secondary material generators. Specifically, reclaimers and intermediate facilities must maintain at their facilities for a period of three years records of all shipments of hazardous secondary materials that were received at the facility and, if applicable, records of all shipments of hazardous secondary materials sent off-site from the facility. For hazardous secondary materials received at the reclamation and intermediate facility, such records must document the name and address of the hazardous secondary material generator, the type and quantity of hazardous secondary materials received at the facility, any intermediate facilities that managed the hazardous secondary materials, the name of the transporter that brought the hazardous secondary materials to the facility, and the date such materials were received at the facility.

For hazardous secondary materials that, after being received by the reclaimer or intermediate facility, are subsequently sent off-site for further reclamation, reclaimers and intermediate facilities must document the name and address of the hazardous secondary material generator, when the shipment occurred, who the transporter was, the name and address of the subsequent reclaimer and, if applicable, each subsequent intermediate facility, and the type and quantity of hazardous secondary materials in the shipment. This recordkeeping requirement may be fulfilled by ordinary business records, such as bills of lading.

Reclaimers and intermediate facilities must also send confirmations of receipt to the hazardous secondary material generator for all off-site shipments of hazardous secondary materials received at the facility in order to verify for the hazardous secondary material generator that their materials reached the intended destination and were not discarded. Specifically, the reclaimer (or each reclaimer, when more than one reclamation step is required) and, if applicable, each intermediate facility, must send documentation of receipt to the hazardous secondary material generator that includes the name and address of the reclaimer or intermediate facility, the type and quantity of the hazardous secondary materials received and the date which the hazardous secondary materials were received. The Agency is not requiring a specific template or format for confirmations of receipt and anticipates that routine business records (

e.g.

, financial records, bills of lading, copies of DOT shipping papers, electronic confirmations of receipt) could contain the appropriate information sufficient for meeting this requirement.

In addition, reclaimers and intermediate facilities must also meet the recordkeeping requirements under financial assurance discussed below in this section.

Storage of Hazardous Secondary Materials.

In addition to the condition that the hazardous secondary materials must be contained (40 CFR 261.4(a)(24)(v)(A)), reclamation facilities and intermediate facilities must also manage the hazardous secondary materials in a manner that is at least as protective as that employed for the analogous raw material, where there is an analogous raw material. Where there is no analogous raw material, the hazardous secondary material must be contained.

An “analogous raw material” is a material for which a hazardous secondary material substitutes and which serves the same function and has similar physical and chemical properties as the hazardous secondary material. A raw material that has significantly different physical or chemical properties would not be considered analogous even if it serves the same function. For example, a metal-bearing ore might serve the same function as a metal-bearing air pollution control dust, but because the physical properties of the dust would make it more susceptible to wind dispersal, the two would not be considered analogous. Similarly, hazardous secondary materials with high levels of toxic volatile chemicals would not be considered analogous to a raw material that does not have these volatile chemicals or that has only minimal levels of volatile chemicals. Storage conditions for reclamation facilities and intermediate facilities that operate under today's exclusion demonstrate that the materials are not discarded, but instead are treated valuable commodities which would be used and not lost to the environment.

This condition is the same as the parallel condition in the 2008 transfer-based exclusion and is based on the fact that the great majority of damage cases documented in the environmental problems study occurred at commercial reclamation and intermediate storage facilities, and mismanagement of hazardous secondary materials was found to be a cause of environmental problems in approximately 40% of the incidents. Accordingly, EPA has determined that this condition for storage is necessary and appropriate for reclamation facilities and intermediate facilities that take advantage of this exclusion to show that storage of these materials is not just another way of disposing of them. In addition, it will establish an expectation for the owner/operators of such facilities that they must manage hazardous secondary materials in a manner at least as protective as they would an analogous raw material and in such a way that materials would not be released into the environment.

Management of recycling residuals.

Another condition of the verified recycler exclusion is that any residuals that are generated from the reclamation processes must be managed in a manner that is protective of human health and the environment. If any residuals exhibit a hazardous characteristic according to subpart C of 40 CFR part 261, or themselves are listed hazardous wastes, they are hazardous wastes (if discarded) and must be managed according to the applicable requirements of 40 CFR parts 260 through 273.

This condition is the same as the parallel condition in the 2008 transfer-based exclusion and the purpose of this condition is to clarify the regulatory status of these waste materials and to emphasize in explicit terms that residuals that are generated from the reclamation of hazardous secondary materials must be managed properly so that the reclamation operation does not become another way of avoiding waste management and simply becomes another way of discarding unwanted material. The study of recent (

i.e.

, post-CERCLA and post-RCRA) recycling-related environmental problems revealed that mismanagement of residuals was the cause of such problems in one-third of the incidents that were documented. Some common examples of these mismanaged residuals were acids and casings from the processing of lead-acid batteries, solvents and other liquids generated from cleaning drums at drum reconditioning facilities, and PCBs and other oils generated from disassembled transformers. In many of these damage incidents, the residuals were simply disposed of on-site with little regard for the environmental consequences of such mismanagement or possible CERCLA liabilities associated with cleanup of these releases. By making proper management of the recycling residuals a condition of the exclusion, EPA ensures that the reclamation operation is not just another way of discarding hazardous constituents. This has the added benefit of ensuring that the reclamation operation does not pose a significant risk to human health and the environment.

Financial Assurance.

The financial assurance condition is another condition that is the same as the parallel condition in the transfer-based exclusion. By obtaining financial assurance, the reclamation or intermediate facility is making a direct demonstration that it will not abandon the hazardous secondary materials, it will properly decontaminate equipment, and it will clean up any unacceptable releases, even if events beyond its control make its operations uneconomical. Moreover, financial assurance also addresses the correlation of the financial health of a reclamation or intermediate facility with the absence of discard. In essence, financial assurance will help demonstrate that the reclamation facility or intermediate facility owner/operators who would operate under the terms of this exclusion are financially sound and will not discard the hazardous secondary materials, or if the facility faces financial difficulties, that funds would have been set aside to address any issues and, therefore, these costs will not be imposed on the U.S. taxpayer.

The financial assurance requirement has been retained in 40 CFR part 261 subpart H because the substance of the requirement is unchanged from the financial assurance requirement for the 2008 DSW transfer-based exclusion. However, the financial assurance condition is now one of the criteria that is evaluated under the verified recycler solid waste variance, allowing the state or EPA to verify that the financial assurance obtained by the reclamation facility or intermediate facility is sufficient and accessible (in contrast, the financial assurance condition in the 2008 DSW transfer-based exclusion was self-implementing and not subject to review by EPA or the authorized state prior to the facility beginning operation).

A detailed discussion of the 40 CFR part 261 subpart H financial assurance provisions can be found in the 2008 DSW final rule at 73 FR 64692-8, October 30, 2008.

Verification of the Recycler.

As discussed earlier, the condition requiring verification of the recycler is the one of the major differences between the transfer-based exclusion and the verified recycler exclusion and addresses the major regulatory gap in the transfer-based exclusion of lack of oversight and public participation for hazardous secondary material recycling facilities that do not have RCRA permits. The reclaimer and intermediate facility must have been granted a solid waste variance by EPA or an authorized state under § 260.31(d) or must have a RCRA Part B permit or interim status standards that address the management of the hazardous secondary materials. An intermediate or reclamation facility may apply for a solid waste variance to accept hazardous secondary materials by addressing the substantive criteria of the “reasonable efforts” condition that had previously applied to the hazardous secondary material generator under 40 CFR 261.4(a)(24)(B). In addition, the variance must address the potential for risk to proximate populations from unpermitted releases of the hazardous secondary material to the environment.

Specifically, to qualify for the solid waste variance, the facility must address the following criteria:

(1) The intermediate or reclamation facility must demonstrate that the reclamation process for the hazardous secondary materials is legitimate pursuant to § 260.43;

(2) The intermediate or reclamation facility must satisfy the financial assurance condition in § 261.4(a)(24)(vi)(F);

(3) The intermediate or reclamation facility must not be subject to a formal enforcement action in the previous three years and must not be classified as a significant non-complier under RCRA Subtitle C, or must provide credible evidence that the facility will manage the hazardous secondary materials properly. Credible evidence may include a demonstration that the facility has taken remedial steps to address the violations and prevent future violations, or that the violations are not relevant to the proper management of the hazardous secondary materials;

(4) The intermediate or reclamation facility must have the equipment and trained personnel to safely manage the hazardous secondary material and must meet emergency preparedness and response requirements;

(5) If residuals are generated from the reclamation of the excluded hazardous secondary materials, the reclamation facility must have the permits required (if any) to manage the residuals, have a contract with an appropriately permitted facility to dispose of the residuals, or present credible evidence that the residuals will be managed in a manner that is protective of human health and the environment; and

(6) The intermediate or reclamation facility must address the potential for risk to proximate populations from unpermitted releases of the hazardous secondary material to the environment (including releases that are not covered by a permit, such as a permit to discharge to water or air, and may include, but are not limited to, potential releases through surface transport by precipitation runoff, releases to soil and groundwater, wind-blown dust, fugitive air emissions, and catastrophic unit failures), and must include consideration of potential cumulative risks from other nearby potential stressors.

The rationale for each of these criteria is discussed below.

Criterion (1) is based on the first reasonable efforts question in the 2008

transfer-based exclusion and focuses on whether the reclamation facility receiving hazardous secondary materials from a generator legitimately recycles such materials. Determining whether a recycling operation is legitimate is a fundamental basis for establishing that a generator's hazardous secondary materials will not be discarded. For further discussion of legitimate recycling, see section VIII.

Criterion (2) is based on the second reasonable efforts question in the 2008 transfer-based exclusion and addresses whether the facility has the necessary financial assurance to cover the costs of managing any hazardous secondary materials that remain if the facility closes. If a facility was found to have failed to meet the condition to have financial assurance, then it also would have failed to show a good faith effort towards demonstrating that it intends to recycle the hazardous secondary materials (or, in the case of the intermediate facility, properly store the hazardous secondary material) and not discard them. Note that the second reasonable efforts question also required the generator to verify that the regulatory authority had been notified by the recycler under the 2008 transfer-based exclusion, but under the verified recycler exclusion, the state or EPA can verify that directly, thus, it is not included here.

Criterion (3) is based on the third reasonable efforts question in the transfer-based exclusion and focuses on the compliance history of the recycler or the intermediate facility (to the extent that the hazardous secondary material generator uses an intermediate facility). The language of this requirement has been simplified from the corresponding reasonable efforts question because the information is submitted to the regulatory agency who already has access to the pertinent enforcement information, rather than obtained by the generator who would need to rely on publicly-available data. This criterion requires that the facility must either not be subject to a formal enforcement action in the previous three years and not be classified as a significant non-complier under RCRA Subtitle C, or must provide credible evidence that the facility will manage the hazardous secondary materials properly.

“Formal enforcement” is a written document that mandates compliance and/or initiates a criminal, civil or administrative process, with or without appeal rights before a trial of fact that results in an enforceable agreement or order and an appropriate sanction. For EPA, formal enforcement action is a referral to the U.S. Department of Justice for the commencement of a criminal or civil action in the appropriate U.S. District Court, or the filing of an administrative complaint, or the issuance of an order, requiring compliance and a sanction. For states, formal enforcement action is a referral to the state's Attorney General for the commencement of a criminal, civil or administrative action in the appropriate forum, or the filing of an administrative complaint, or the issuance of an order, requiring compliance and a sanction. “Significant non-complier” is a defined term in EPA's Hazardous Waste Civil Enforcement Response Policy and means the violators have caused actual exposure or a substantial likelihood of exposure to hazardous waste or hazardous waste constituents; are chronic or recalcitrant violators; or deviate substantially from the terms of a permit, order, agreement, or from the RCRA statutory or regulatory requirements. In evaluating whether there has been actual or likely exposure to hazardous waste or hazardous waste constituents, EPA and the states consider both the environmental and human health concerns, including the potential exposure of workers to hazardous waste or hazardous waste constituents. For both terms, see EPA's Hazardous Waste Civil Enforcement Response Policy (Dec. 2003) at

http://www.epa.gov/compliance/resources/policies/civil/rcra/finalerp1203.pdf

.

While a facility being designated as a significant non-complier and/or the subject of a formal enforcement action does not automatically mean that the facility would not reclaim the hazardous secondary materials properly, it does raise questions that we believe the facility requesting the variance should address. That is, if any formal enforcement actions were taken against the facility in the previous three years for such non-compliance and the facility was alleged to be a significant non-complier, the facility must adequately explain how it has resolved any issues or how the reclamation facility will properly manage the hazardous secondary materials to avoid future violations and/or enforcement actions.

Criterion (4) is based on the fourth reasonable efforts question from the 2008 transfer-based exclusion and addresses the technical capability of the recycler or intermediate facility, the most basic requirement for ensuring proper and legitimate recycling of hazardous secondary materials. If a reclamation or intermediate facility was found to have no equipment or inadequate equipment for storing the hazardous secondary material or was found to have personnel who have not been trained for reclaiming the hazardous secondary materials, it raises serious questions as to whether the facility would properly manage such materials and avoid discarding them to the environment. This criterion also includes the addition of verifying that the facility meets the new emergency preparedness and response condition discussed earlier.

Criterion (5) is based on the fifth reasonable efforts question in the 2008 transfer-based exclusion and addresses another major cause of environmental problems from recycling hazardous secondary materials: the management of residuals. This criterion relates to discard through the concept that a generator or reclaimer may actually be discarding hazardous secondary materials through the release of residuals from the recycling process. While the product made from recycling may be a legitimate product, the whole recycling process could be considered discard if hazardous constituents from the recycled hazardous secondary materials are released to the environment. Roughly one-third of the damage cases documented in EPA's environmental problems study were caused by mismanagement of the residuals from recycling. To address criterion (5), the petitioner would need to demonstrate that the reclamation facility has practices in place to ensure that residuals are managed in a manner that is protective of human health and the environment and according to applicable federal or state standards.

Criterion (6) is a new standard not included in the 2008 transfer-based exclusion and is a case-specific performance-based criterion that addresses the risk to proximate populations from unpermitted releases of the hazardous secondary material to the environment (including releases that are not covered by a permit, such as a permit to discharge to water or air, and may include, but are not limited to, potential releases through surface transport by precipitation runoff, releases to soil and groundwater, wind-blown dust, fugitive air emissions, and catastrophic unit failures), and must include consideration of potential cumulative risks from other nearby potential stressors. The purpose of this criterion is to specifically address the differences in the preventative measures between a RCRA-permitted facility as compared to a facility managing excluded hazardous secondary material, including the lack of prescriptive standards for storage and containment (including air emissions standards). In addition, this criterion would address the finding that many of the populations

likely to be proximate to hazardous secondary materials recycling facilities are subject to multiple environmental stressors, including other industrial facilities, landfills, transportation-related air emissions, poor housing conditions (

e.g.

, lead-based paint), leaking underground tanks, pesticides, and incompatible land uses.

The steps the petitioner would take to address this criterion would depend on case-specific circumstances. For example, a facility that is recycling a hazardous secondary material that is not particularly mobile in the environment (

e.g.

, a non-liquid material that does not pose a risk of wind-blown dust) and is not located near population centers would simply need to document these facts in order to meet this criterion. On the other hand, a facility recycling a hazardous secondary material that is volatile, ignitable, or otherwise has a high potential to adversely impact nearby populations in case of a release would need to document the specific steps taken to prevent releases. EPA recommends that the petitioner engage the potentially affected community in developing this document to ensure that they have addressed the concerns expressed by the community.

E. Procedure for Obtaining a Verified Recycler Solid Waste Variance

The process for obtaining a verified recycler solid waste variance is the same as that for the other solid waste variances found in 40 CFR 260.30. In order to obtain a variance, a facility that manages hazardous secondary materials that would otherwise be regulated under 40 CFR part 261 as either a solid waste or a hazardous waste must apply to the Administrator or the authorized state per the procedures described in 40 CFR 260.33, which EPA is amending today to apply to verified recyclers and intermediate facilities. The application must address the relevant criteria discussed in detail above. The Administrator or authorized state will evaluate the submission and issue a draft notice tentatively granting or denying the application. Notification of this tentative decision will be provided by newspaper advertisement or radio broadcast in the locality where the facility is located. The Administrator or authorized state will accept comment on the tentative decision for 30 days and may also hold a public hearing. The Administrator or authorized state will issue a final decision after receipt of comments and after the hearing (if held). If the application is denied, the facility may still pursue a solid waste variance or exclusion (for example, one of the solid waste variances under 40 CFR 260.30 or solid waste exclusions under 40 CFR 261.4). (Note that today's rule includes several modifications to the variances procedure in 40 CFR 260.33, which would also apply in this case. For further discussion see Section IX of tod

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