# 72 FR 14172: Revisions to the Definition of Solid Waste

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URL: https://www.frixlaw.com/law-library/statutes/FR_PRORULE_E7-5159

## Section

- **Citation:** 72 FR 14172
- **Heading:** Revisions to the Definition of Solid Waste
- **Jurisdiction:** Federal
- **Kind:** Regulations
- **Status:** In force
- **Text as of:** August 14, 2026
- **Source:** Compiled text
- **Location:** Federal Register / Vol. 72 / 72 FR 14172

## Text

ENVIRONMENTAL PROTECTION AGENCY 40 CFR Parts 260 and 261 [EPA-HQ-RCRA-2002-0031-FRL-8289-9] RIN 2050-AG31 Revisions to the Definition of Solid Waste AGENCY:
Environmental Protection Agency.

ACTION:
Supplemental Proposed Rule.

SUMMARY:
The Environmental Protection Agency (EPA) is today publishing a supplemental proposal which would revise the definition of solid waste to exclude certain hazardous secondary materials from regulation under Subtitle C of the Resource Conservation and Recovery Act (RCRA). We are also soliciting comments on regulatory factors to be used to determine whether recycling of hazardous secondary materials is legitimate. The Agency first proposed changes to the definition of solid waste on October 28, 2003 (68 FR 61558). The purpose of this proposal is to encourage safe, environmentally sound recycling and resource conservation and to respond to several court decisions concerning the definition of solid waste.

DATES:
Comments must be received on or before May 25, 2007. Under the Paperwork Reduction Act, comments on the information collection provisions must be received by OMB on or before April 25, 2007.

ADDRESSES:
Submit your comments, identified by Docket ID No. EPA-HQ -RCRA 2002-0031 by one of the following methods:
http://www.regulations.gov: Follow the on-line instructions for submitting comments.
E-mail: Comments may be sent by electronic mail (e-mail) to RCRA-docket@epa.gov , Attention Docket ID No. EPA-HQ-RCRA-2002-0031.
Fax: Fax comments to: 202-566-0270, Attention Docket ID No. EPA-HQ-RCRA 2002-0031.
Mail: Send comments to: OSWER Docket, EPA Docket Center, Mail Code 5305T, Environmental Protection Agency, 1200 Pennsylvania Avenue, NW., Washington, DC 20460, Attention Docket ID No. EPA-HQ-RCRA-2002-0031. In addition, please mail a copy of your comments on the information collection provisions to the Office of Information and Regulatory Affairs, Office of Management and Budget (OMB), Attn: Desk Officer for EPA, 725 17th St., Washington, DC 20503
nter, Mail Code 5305T, Environmental Protection Agency, 1200 Pennsylvania Avenue, NW., Washington, DC 20460, Attention Docket ID No. EPA-HQ-RCRA-2002-0031. In addition, please mail a copy of your comments on the information collection provisions to the Office of Information and Regulatory Affairs, Office of Management and Budget (OMB), Attn: Desk Officer for EPA, 725 17th St., Washington, DC 20503.
Hand delivery: Deliver comments to: Environmental Protection Agency, EPA Docket Center, Room B102, 1301 Constitution Avenue, NW., Washington, DC, Attention Docket ID No. EPA-HQ-RCRA-2002-0031. Such deliveries are only accepted during the docket's normal hours of operation, and special arrangements should be made for deliveries of boxed information.
Instructions: Direct your comments to Docket ID Number EPA-HQ-RCRA-2002-0031. EPA's policy is that all comments received will be included in the public docket without change and may be made available online at http://www.regulations.gov , including any personal information provided, unless the comment includes information claimed to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Do not submit information that you consider to be CBI or otherwise protected through http://www.regulations.gov or e-mail. The http://www.regulations.gov Web site is an “anonymous access” system, which means EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an e-mail comment directly to EPA without going through http://www.regulations.gov your e-mail address will be automatically captured and included as part of the comment that is placed in the public docket and made available on the Internet. If you submit an electronic comment, EPA recommends that you include your name and other contact information in the body of your comment and with any disk or CD-ROM you submit
directly to EPA without going through http://www.regulations.gov your e-mail address will be automatically captured and included as part of the comment that is placed in the public docket and made available on the Internet. If you submit an electronic comment, EPA recommends that you include your name and other contact information in the body of your comment and with any disk or CD-ROM you submit. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment. Electronic files should avoid the use of special characters, any form of encryption, and be free of any defects or viruses.
Docket: All documents in the docket are listed in the http://www.regulations.gov index. Although listed in the index, some information is not publicly available, such as CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, will be publicly available only in hard copy. Publicly available docket materials are available either electronically in http://www.regulations.gov or in hard copy at the OSWER Docket, EPA/DC, EPA West, Room B102, 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 OSWER Docket is 202-566-0270.
FOR FURTHER INFORMATION CONTACT:
For more detailed information on specific aspects of this rulemaking, contact Marilyn Goode, Office of Solid Waste, Hazardous Waste Identification Division, MC 5304P, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460 (703) 308-8800, ( goode.marilyn@epa.gov ) or Tracy Atagi, Office of Solid Waste, Hazardous Waste Identification Division, MC 5304P, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460, at (703) 308-8672 ( atagi.tracy@epa.gov )
d Waste, Hazardous Waste Identification Division, MC 5304P, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460 (703) 308-8800, ( goode.marilyn@epa.gov ) or Tracy Atagi, Office of Solid Waste, Hazardous Waste Identification Division, MC 5304P, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460, at (703) 308-8672 ( atagi.tracy@epa.gov ).

SUPPLEMENTARY INFORMATION:
A. Regulated Entities
Entities potentially affected by this action include about 4600 facilities in 530 industries in 17 economic sectors that generate or recycle hazardous secondary materials which are currently regulated as RCRA Subtitle C hazardous wastes (e.g., industrial co-products, by-products, residues, unreacted feedstocks). About 80 percent of these affected facilities are classified in NAICS code economic sectors 31, 32, and 33 (manufacturing), and the remainder are in NAICS code economic sectors 21 (mining), 22 (utilities), 23 (construction), 42 (wholesale trade), 44 and 45 (retail trade), 48 and 49 (transportation), 51 (information), 54 (professional, scientific and technical services), 56 (administrative support, waste management and remediation), 61 (educational services), 62 (health care and social assistance, and 81 (other services). About 0.65 million tons per year of recyclable industrial materials handled by these entities may be affected, of which the most common types are metal-bearing hazardous secondary materials (e.g., sludges and spent catalysts) for commodity metals recovery, and organic chemical liquids for recycling as solvents. This proposed rule, if promulgated, is expected to result in regulatory and materials recovery cost savings to these industries of approximately $107 million per year
these entities may be affected, of which the most common types are metal-bearing hazardous secondary materials (e.g., sludges and spent catalysts) for commodity metals recovery, and organic chemical liquids for recycling as solvents. This proposed rule, if promulgated, is expected to result in regulatory and materials recovery cost savings to these industries of approximately $107 million per year. Taking into account impact estimation uncertainty factors, this rule, if promulgated, could affect between 0.3 to 1.7 million tons per year of industrial hazardous secondary materials handled by 3600 to 5400 entities in 460 to 570 industries, resulting in $93 million to $205 million per year of net cost savings. More detailed information on the potentially affected entities, industries, and industrial materials, as well as the economic impacts of this
B. What To Consider When Preparing Comments for EPA
1. Submitting CBI. Do not submit this information to EPA through http://www.regulations.gov or e-mail. Clearly mark part of all information that you claim to be CBI. For CBI information in a disk or CD-ROM that you mail to EPA, mark the outside of the disk or CD-ROM as CBI and then identify electronically within the disk or CD-ROM the specific information that is claimed as CBI. In addition to one complete version of the comment that includes information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket. Information so marked will not be disclosed, except in accordance with procedures set forth in 40 CFR Part 2.
2. Tips for Preparing Your Comments. When submitting comments, remember to:
• Identify the rulemaking by docket number and other identifying information (subject heading, Federal Register date and page number).
• Follow directions. The Agency may ask for commenters to respond to specific questions or organize comments by referencing a Code of Federal Regulations (CFR) part or Section number
2. Tips for Preparing Your Comments. When submitting comments, remember to:
• Identify the rulemaking by docket number and other identifying information (subject heading, Federal Register date and page number).
• Follow directions. The Agency may ask for commenters to respond to specific questions or organize comments by referencing a Code of Federal Regulations (CFR) part or Section number.
• Explain why you agree or disagree; suggest alternatives and substitute language for your requested changes.
• Describe any assumptions and provide any technical information and/or data that you used.
• If estimating burden or costs, explain methods used to arrive at the estimate in sufficient detail to allow for it to be reproduced.
• Provide specific examples to illustrate any concerns and suggest alternatives.
• Make sure to submit comments by the comment period deadline identified above.
Preamble Outline
I. Statutory Authority. II. What Is the Scope of This Supplemental Proposal? III. What Is the Intent of This Supplemental Proposal? IV. How Does This Supplemental Proposal Relate to the October 2003 Proposal? V. How Is Hazardous Waste Recycling Currently Regulated? VI. What Is the History of Recent Court Decisions on the Definition of Solid Waste? VII. How Does the Concept of Discard Relate to These Proposed Exclusions? VIII. Recycling Studies. IX. Exclusion for Hazardous Secondary Materials That Are Legitimately Reclaimed Under the Control of the Generator: Proposed 40 CFR 260.10, 261.2(a)(1), 261.2(a)(2), 261.2(c)(3), 261.4(a)(23). X. Conditional Exclusion for Hazardous Secondary Materials That Are Transferred for the Purpose of Reclamation: Proposed 40 CFR 261.2(c)(3), 261.4(a)(24), 261.4(a)(25). XI. Legitimacy: Proposed 40 CFR 261.2(g). XII. Petitions for Non-waste Classification: Proposed 40 CFR 260.30(d), 260.30(e), 260.30(f), 260.34. XIII. Effect of This Proposal on Other Programs. XIV. Measurement of the Performance Outcomes of This Supplemental Proposal. XV
econdary Materials That Are Transferred for the Purpose of Reclamation: Proposed 40 CFR 261.2(c)(3), 261.4(a)(24), 261.4(a)(25). XI. Legitimacy: Proposed 40 CFR 261.2(g). XII. Petitions for Non-waste Classification: Proposed 40 CFR 260.30(d), 260.30(e), 260.30(f), 260.34. XIII. Effect of This Proposal on Other Programs. XIV. Measurement of the Performance Outcomes of This Supplemental Proposal. XV. How Would These Proposed Regulatory Changes Be Administered and Enforced in the States? XVI. How Has EPA Fulfilled the Administrative Requirements for This Rulemaking? I. Statutory Authority
These regulations are proposed under the authority of sections 2002, 3001, 3002, 3003, 3004, 3007, 3010, and 3017 of the Solid Waste Disposal Act of 1970, as amended by the Resource Conservation and Recovery Act of 1976 (RCRA), as amended by the Hazardous and Solid Waste Amendments of 1984 (HSWA), 42 U.S.C. 6921, 6922, 6923, and 6924.
II. What Is the Scope of This Supplemental Proposal?
In today's notice, EPA is proposing to revise the definition of solid waste in order to exclude from regulation under Subtitle C of RCRA certain hazardous secondary materials sent for recycling. We are also seeking comment on certain changes to the proposed regulatory factors for determining whether recycling is legitimate. The Agency first proposed changes to the definition of solid waste, as well as regulatory criteria for legitimacy, on October 28, 2003 (68 FR 61581-61588).
The scope of the regulatory changes proposed today are as follows:
A. Exclusion for Materials That Are Legitimately Reclaimed Under the Control of the Generator in Non-Land-Based Units
This provision, with regulatory language proposed in 40 CFR 261.2(a)(2)(ii), would exclude certain hazardous secondary materials (i.e., spent materials, listed sludges, and listed byproducts) that are generated and legitimately reclaimed 1 within the United States or its territories 2 and are only handled in non-land-based units (e.g., tanks, containers, containment buildings)
related to recycling activities outside of the United States or its territories to make the same general finding that it has made for materials legitimately recycled under the control of the generator. However, as noted below, EPA requests comment on whether the Agency should promulgate a conditional exclusion for exported hazardous secondary material otherwise meeting the criteria for this rule.
(1) It is generated and then reclaimed at the generating facility; or
(2) It is generated and reclaimed by the same company, if the generator certifies that it is under the same ownership as the reclaimer and that the owner company has acknowledged responsibility for safe management of the hazardous secondary materials; or
(3) It is generated and reclaimed pursuant to a written agreement between a tolling contractor and batch manufacturer, if the tolling contractor retains ownership of, and responsibility for, the hazardous secondary materials that are generated during the course of the manufacture.
This proposed exclusion would not include recycling practices that involve discard of materials. These practices include recycling of inherently waste-like materials (40 CFR 261.2(d)), recycling of materials that are used in a manner constituting disposal or used to produce products that are applied to or placed on the land (40 CFR 261.2(c)(1)), and burning of materials for energy recovery or used to produce a fuel or otherwise contained in fuels (40 CFR 261.2(c)(2)). This proposed exclusion is further described in section IX of this
B. Exclusion for Materials That Are Legitimately Reclaimed Under the Control of the Generator in Land-Based Units
This provision, with regulatory language proposed in 40 CFR 261.4(a)(23), would exclude certain hazardous secondary materials that are generated and legitimately reclaimed within the United States or its territories and handled in land-based units ( e.g. , surface impoundments, waste piles)
usion for Materials That Are Legitimately Reclaimed Under the Control of the Generator in Land-Based Units
This provision, with regulatory language proposed in 40 CFR 261.4(a)(23), would exclude certain hazardous secondary materials that are generated and legitimately reclaimed within the United States or its territories and handled in land-based units ( e.g. , surface impoundments, waste piles). This provision requires that hazardous secondary materials managed in land-based units must be contained in such units.
C. Conditional Exclusion for Materials That Are Transferred for the Purpose of Reclamation
This conditional exclusion, with regulatory language proposed in 40 CFR 261.4(a)(24), (hereinafter referred to as the “transfer-based exclusion”) would apply to hazardous secondary materials (i.e., spent materials, listed sludges, and listed byproducts) that are generated and subsequently transferred to a different person or company for the purpose of reclamation. As long as the conditions to the exclusion are satisfied, the hazardous secondary materials would not be subject to Subtitle C regulation. The conditions are intended to ensure that such materials are handled as commodities rather than wastes. They will also help guarantee that protection of human health and the environment will not be compromised in the absence of hazardous waste regulatory requirements for these materials. It is important to note that when hazardous secondary materials are generated and reclaimed within the United States pursuant to a written agreement between a tolling contractor and a batch manufacturer as defined in proposed 40 CFR 260.10, these materials would be subject to the requirements of proposed 40 CFR 261.2(a)(ii) or 261.4(a)(23) rather than the more extensive requirements of proposed 40 CFR 261.4(a)(24)
o note that when hazardous secondary materials are generated and reclaimed within the United States pursuant to a written agreement between a tolling contractor and a batch manufacturer as defined in proposed 40 CFR 260.10, these materials would be subject to the requirements of proposed 40 CFR 261.2(a)(ii) or 261.4(a)(23) rather than the more extensive requirements of proposed 40 CFR 261.4(a)(24).
If any of the hazardous secondary materials under proposed 40 CFR 261.4(a)(24) are generated and then exported to another country for reclamation, we are also proposing that the exporter notify the receiving country of the export through EPA and obtain consent from that country before shipment of the material. This requirement is proposed to be codified in 40 CFR 261.4(a)(25). Like the previously discussed exclusion for hazardous secondary materials recycled under the control of the generator, this exclusion would not cover recycling of inherently waste-like materials, recycling of materials that are used in a manner constituting disposal, and burning of materials for energy recovery. The proposed exclusion is described in more detail in section X of this preamble.
D. Petition Process for Non-Waste Determinations
In addition to the exclusions discussed above, the Agency also is proposing a petition process, with regulatory language found in proposed 40 CFR 260.30(d), 260.30(e), 260.30(f), and 260.34, for obtaining a case-specific non-waste determination for certain hazardous secondary materials that are recycled. This process would allow a petitioner to receive a formal determination from the Agency that its hazardous secondary material is clearly not “discarded” and therefore is not a solid waste. The procedure 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 material in question is not a solid waste without imposing additional requirements
to receive a formal determination from the Agency that its hazardous secondary material is clearly not “discarded” and therefore is not a solid waste. The procedure 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 material in question is not a solid waste without imposing additional requirements. The determination would be available to petitioners who could demonstrate that their hazardous secondary materials were recycled in a continuous industrial process, or that the materials were indistinguishable in all relevant aspects from a product or intermediate, or that the materials were under the control of the generator via a tolling arrangement or similar contractual arrangement. The petition process for the non-waste determinations would be the same as that for the variances from the definition of solid waste found in 40 CFR 261.31. This process and the criteria for making these determinations, are described in section XII of this preamble.
E. Legitimacy
On October 28, 2003 (68 FR 61581-61588), EPA extensively discussed our position on the relevance of legitimacy to hazardous waste recycling in general and to the redefinition of solid waste specifically. We proposed to codify in the RCRA regulations four general criteria to be used in determining whether recycling of hazardous secondary materials is legitimate. In today's action, we are proposing changes to the proposed legitimacy criteria and asking for public comment on these revisions. The changes consist of a restructuring of the proposed criteria, called factors in this proposal, by making two of these factors mandatory and two non-mandatory considerations, and providing further guidance and clarification on how the economics of recycling should be considered in making legitimacy determinations. The changes are described in section XI of this preamble.
III
n these revisions. The changes consist of a restructuring of the proposed criteria, called factors in this proposal, by making two of these factors mandatory and two non-mandatory considerations, and providing further guidance and clarification on how the economics of recycling should be considered in making legitimacy determinations. The changes are described in section XI of this preamble.
III. What Is the Intent of This Supplemental Proposal?
Today's supplemental proposal would revise and clarify the RCRA definition of solid waste as it pertains to certain types of hazardous secondary materials that would not be considered wastes subject to regulation under RCRA Subtitle C. This notice builds on our October 28, 2003 proposal (68 FR 61558) which was initiated partially in response to decisions by the United States Court of Appeals for the DC Circuit, which, taken together, have provided the Agency with additional direction in this area.
This proposal represents an important restructuring of the RCRA regulations that distinguish wastes from non-waste materials for RCRA purposes, and that ensure environmental protections over hazardous secondary materials recycling practices. As such, it also is an opportunity for the Agency to clarify in a regulatory context the concept of “legitimate recycling,” which has been and is a key component of RCRA's regulatory program for recycling, but which to date has been implemented without regulatory criteria. Today's supplemental proposal thus includes specific regulatory provisions for determining when hazardous secondary materials are recycled legitimately.
Today's supplemental proposal is de-regulatory in nature because certain recyclable materials that have heretofore been subject to the hazardous waste regulations would no longer be regulated as hazardous waste. The factors to consider for legitimate recycling codify existing principles without increasing regulation. This proposal is not intended to bring new wastes into the RCRA regulatory system
Today's supplemental proposal is de-regulatory in nature because certain recyclable materials that have heretofore been subject to the hazardous waste regulations would no longer be regulated as hazardous waste. The factors to consider for legitimate recycling codify existing principles without increasing regulation. This proposal is not intended to bring new wastes into the RCRA regulatory system.
By removing unnecessary hazardous waste regulatory controls over certain recycling practices, and by providing more explicit criteria for determining the legitimacy of recycling practices in general, EPA expects that this proposal will encourage the safe, beneficial recycling of hazardous secondary materials. This regulatory initiative is thus consistent with the Agency's longstanding policy of encouraging the recovery and reuse of valuable resources as an alternative to land disposal, while at the same time maintaining protection of human health and the environment. 3
3 The Agency's long-term “vision” of the future of the RCRA program is discussed in the document “Beyond RCRA: Prospects for Waste and Materials Management in the Year 2020,” which is available on the Agency's Web site http://www.epa.gov/epaoswer/osw/vision.htm.
IV. How Does This Supplemental Proposal Relate to the October 2003 Proposal?
On October 28, 2003 (68 FR 61558), the Agency proposed to exclude from the definition of solid waste any material generated and reclaimed in a continuous process within the same industry, provided the reclamation was legitimate. “Same industry” was defined as industries sharing the same 4-digit North American Industry Classification System (NAICS) code. The basis for that exclusion was the holding in American Mining Congress v. EPA (“AMC I”), 824 F.2d 1177 (DC Cir. 1987)) that materials destined for beneficial reuse of recycling in a continuous process by the generating industry are not discarded
clamation was legitimate. “Same industry” was defined as industries sharing the same 4-digit North American Industry Classification System (NAICS) code. The basis for that exclusion was the holding in American Mining Congress v. EPA (“AMC I”), 824 F.2d 1177 (DC Cir. 1987)) that materials destined for beneficial reuse of recycling in a continuous process by the generating industry are not discarded. In order to be eligible for the exclusion, the hazardous secondary material could not be speculatively accumulated under 261.1(c)(8). In addition, the generator of such materials would be required to submit a one-time notification to EPA or the authorized State with contact information, the type of material that would be excluded, and the industry that generated the material. In the October 2003 proposal, the Agency also proposed to codify in the RCRA regulations four criteria to be used in determining whether recycling of hazardous secondary material was legitimate. We also solicited comment on a broader conditional exclusion from RCRA regulation for essentially all hazardous secondary materials that are legitimately recycled. For a discussion of public comments received on our proposed exclusion, see section IX of this preamble.
After evaluating comments received on the October 2003 proposal and conducting an independent analysis, EPA decided to restructure its approach. Following the decision of the DC Circuit Court in Association of Battery Recyclers v. EPA (“ABR”)( 208 F.3d 1047 (DC Cir. 2000), EPA has decided to examine the principles behind the court's holdings on the definition of solid waste, rather than trying to fit materials into specific fact patterns addressed by the court
and conducting an independent analysis, EPA decided to restructure its approach. Following the decision of the DC Circuit Court in Association of Battery Recyclers v. EPA (“ABR”)( 208 F.3d 1047 (DC Cir. 2000), EPA has decided to examine the principles behind the court's holdings on the definition of solid waste, rather than trying to fit materials into specific fact patterns addressed by the court. EPA is therefore proposing (1) an exclusion for hazardous secondary materials that are generated and then reclaimed under the control of the generator; (2) a conditional exclusion for hazardous secondary materials that are generated and then transferred to another person for the purpose of reclamation; and (3) a petition process for obtaining a case-specific non-waste determination for certain hazardous secondary materials that are recycled. Today's notice also proposes a restructuring of the previously proposed legitimacy criteria and further clarification and guidance on how the economics of the recycling transaction should be considered in making legitimacy determinations. A detailed description of today's proposed regulatory changes and the reasons for not finalizing the October 2003 proposal are discussed in sections IX, X, XI, and XII of this preamble.
V. How Is Hazardous Waste Recycling Currently Regulated?
The basic regulatory provisions for defining “solid wastes” and “hazardous wastes” under RCRA are found in part 261 of Title 40 of the Code of Federal Regulations (CFR). To be subject to RCRA's hazardous waste regulatory program, a material must be a solid waste that is also a hazardous waste. A solid waste is a hazardous waste if it is explicitly listed as such (in subpart D of part 261), or if it exhibits one or more of the hazardous characteristics (as specified in subpart C of part 261).
In general, hazardous wastes are subject to RCRA's full “cradle to grave” regulatory system from the time they are generated to the time that they are ultimately disposed
s also a hazardous waste. A solid waste is a hazardous waste if it is explicitly listed as such (in subpart D of part 261), or if it exhibits one or more of the hazardous characteristics (as specified in subpart C of part 261).
In general, hazardous wastes are subject to RCRA's full “cradle to grave” regulatory system from the time they are generated to the time that they are ultimately disposed. However, hazardous secondary materials often can be recycled instead of being disposed, which can change how those wastes are regulated. The “definition of solid waste” regulations in part 261 in effect separate recyclable hazardous secondary materials into two broad categories—those that are classified as solid wastes when recycled, and are therefore subject to regulation under Subtitle C of RCRA if they are listed or characteristic hazardous wastes, and those that are not considered solid wastes when they are recycled, and thus are not regulated. It should be understood that the term “hazardous secondary material” as it is used in today's rule and preamble therefore refers to both categories of recyclable materials; that is, materials that are regulated as hazardous wastes when recycled, and materials that are not considered wastes when recycled.
Hazardous secondary materials that are currently not regulated as wastes when they are recycled include, for example, those which are used or reused directly as effective substitutes for commercial products, and those which can be used as ingredients in an industrial process, provided the materials are not being reclaimed. See 40 CFR 261.2(e). In essence, EPA considers these types of recycling practices to be more akin to normal industrial production rather than waste management.
In contrast, in some recycling practices, the hazardous secondary material cannot be used as is and must be significantly processed before it can be reused in a manner similar to products in commerce
the materials are not being reclaimed. See 40 CFR 261.2(e). In essence, EPA considers these types of recycling practices to be more akin to normal industrial production rather than waste management.
In contrast, in some recycling practices, the hazardous secondary material cannot be used as is and must be significantly processed before it can be reused in a manner similar to products in commerce. In these cases, EPA has found that the material may be more “waste-like” and the hazardous secondary materials therefore have been regulated as hazardous wastes. One type of recycling that falls within this category and that is especially relevant to this rule is reclamation of certain types of hazardous secondary materials. Reclamation involves the processing of hazardous secondary materials in some way in order so that they can be used or reused. See 40 CFR 261.1(c)(4) and 40 CFR 261.2(c)(3). An example of reclamation is processing of a spent solvent to restore its solvent properties before it is suitable for reuse as a solvent. As explained elsewhere in today's preamble, this supplemental proposal would reexamine the regulatory status of these hazardous secondary materials and de-regulate a specific subset of these materials that are recycled by being reclaimed.
In the existing Part 261 regulations, EPA identified other types of recycling practices that are fully regulated because, we concluded, they involve discard of materials. These practices include recycling of “inherently waste-like” materials (40 CFR 261.2(d)), recycling of materials that are “used in a manner constituting disposal,” or “used to produce products that are applied to or placed on the land,”(40 CFR 261.2(c)(1)) and “burning of materials for energy recovery” or “used to produce a fuel or otherwise contained in fuels” (40 CFR 261.2(c)(2)). Today's supplemental proposal is not intended to affect how these recycling practices are regulated
d)), recycling of materials that are “used in a manner constituting disposal,” or “used to produce products that are applied to or placed on the land,”(40 CFR 261.2(c)(1)) and “burning of materials for energy recovery” or “used to produce a fuel or otherwise contained in fuels” (40 CFR 261.2(c)(2)). Today's supplemental proposal is not intended to affect how these recycling practices are regulated.
The current regulations also provide certain specific exemptions and exclusions from the definition of solid waste for particular recycling practices. For example, pulping liquors from paper manufacturing that are reclaimed in a pulping liquor recovery furnace and then reused in the pulping process are e.g. , the drip pad requirements for the wood preserving exclusion). In addition, recycling of such materials at new facilities, or at existing facilities that are not currently operating under the terms of an existing exclusion, would also be subject to the existing applicable regulatory exclusion, rather than today's proposed exclusions. For a fuller discussion of this issue, see section XIII of this preamble. In that section, we solicit comment on allowing regulated entities to choose which exclusion they would be subject to in cases where more than one exclusion could apply.
VI. What Is the History of Recent Court Decisions on the Definition of Solid Waste?
A. Background
RCRA gives EPA the authority to regulate the disposal of “solid wastes” under its non-hazardous waste program. See, e.g. , RCRA sections 1008(a), 4001 and 4004(a). RCRA also gives EPA authority to regulate hazardous wastes. See, e.g. , RCRA sections 3001-3004. “Hazardous wastes” are the subset of solid wastes that present threats to human health and the environment. See section 1004(5). EPA also may address solid and hazardous wastes under its endangerment authorities in section 7003
zardous waste program. See, e.g. , RCRA sections 1008(a), 4001 and 4004(a). RCRA also gives EPA authority to regulate hazardous wastes. See, e.g. , RCRA sections 3001-3004. “Hazardous wastes” are the subset of solid wastes that present threats to human health and the environment. See section 1004(5). EPA also may address solid and hazardous wastes under its endangerment authorities in section 7003. (Similar authorities are available for citizen suits under section 7002.) Materials that are not solid wastes are generally not subject to regulation under RCRA Subtitle C. Thus, the definition of “solid waste” plays a key role in defining the scope of EPA's authorities under 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)). In its RCRA hazardous waste regulations, EPA has historically defined certain hazardous secondary materials destined for recycling as “waste,” while excluding others.
Since 1980, EPA has interpreted “solid waste” under its Subtitle C regulations to encompass both materials that are destined for final, permanent placement in disposal units, as well as some materials that are destined for recycling. 45 FR 33090-95 (May 19, 1980); 50 FR 604-656 (Jan. 4, 1985) (see especially pages 616-618). EPA has offered three arguments in support of this approach:
• The statute and the legislative history suggest that Congress expected EPA to regulate as solid and hazardous wastes certain materials that are destined for recycling (see 45 FR 33091, citing numerous sections of the statute and U.S. Brewers' Association v. EPA, 600 F.2d 974 (DC Cir. 1979); 48 FR 14502-04 (April 3, 1983); and 50 FR 616-618)
offered three arguments in support of this approach:
• The statute and the legislative history suggest that Congress expected EPA to regulate as solid and hazardous wastes certain materials that are destined for recycling (see 45 FR 33091, citing numerous sections of the statute and U.S. Brewers' Association v. EPA, 600 F.2d 974 (DC Cir. 1979); 48 FR 14502-04 (April 3, 1983); and 50 FR 616-618).
• 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 found that recycling operations have accounted for a number of significant damage incidents. For example, materials destined for recycling were involved in one-third of the first 60 filings under RCRA's imminent and substantial endangerment authority, and 20 of the initial sites listed under CERCLA. (48 FR 14474, April 4, 1983.) Congress also cited some damage cases which can be interpreted to involve recycling. (H.R. Rep. 94-1491, 94th Cong., 2d Sess., at 17, 18, 22). More recent data (i.e., information on damages occurring after 1982) included in the rulemaking docket for today's supplemental proposal corroborate the fact that recycling operations can result in significant damage incidents. (See section IV.B.2 of today's preamble.)
• 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 material intended to do with it. This seems inconsistent with the mandate to track hazardous wastes and control them from “cradle to grave.”
EPA has interpreted the statute to confer jurisdiction over at least certain hazardous secondary materials destined for recycling. The Agency has therefore developed in Part 261 of 40 CFR a definition of “solid waste” for Subtitle C regulatory purposes
the material intended to do with it. This seems inconsistent with the mandate to track hazardous wastes and control them from “cradle to grave.”
EPA has interpreted the statute to confer jurisdiction over at least certain hazardous secondary materials destined for recycling. 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) and Connecticut Coastal Fishermen's Association v. Remington Arms Co., 989 F.2d 1305, 1315 (2d Cir. 1993), holding that EPA's use of a narrower and more specific definition of solid waste for Subtitle C purposes is a reasonable interpretation of the statute. See also Military Toxics Project v. EPA, 146 F.3d 948 (DC Cir. 1998).)
Under its current Subtitle C regulations, EPA classifies as solid wastes some—but not all—hazardous secondary materials that are recycled by “reclamation.” The regulations define “spent materials” as being “discarded” if they are destined for reclamation. However, “commercial chemical products” are not defined as “discarded” when reclaimed. In addition, byproducts and sludges are defined as “discarded” when reclaimed on a case-by-case basis. That is, EPA considers these materials to be “discarded” when they are specifically listed as a hazardous waste at 40 CFR 261 Subpart D. See Table 1 to 40 CFR 261.2. EPA has also promulgated three exceptions from the Subtitle C definition for materials destined for reclamation. See 260.31(b) and (c); 40 CFR 261.4(a)(8).
Finally, EPA has always asserted that materials are not excluded from its jurisdiction simply because someone claims that they will be recycled. EPA has consistently considered hazardous secondary materials destined for “sham recycling” to be discarded and, hence, to be solid wastes for Subtitle C purposes. See 45 FR 33093 (May 19, 1980), 50 FR 638-39 (Jan. 4, 1985). The U.S
40 CFR 261.4(a)(8).
Finally, EPA has always asserted that materials are not excluded from its jurisdiction simply because someone claims that they will be recycled. EPA has consistently considered hazardous secondary materials destined for “sham recycling” to be discarded and, hence, to be solid wastes for Subtitle C purposes. See 45 FR 33093 (May 19, 1980), 50 FR 638-39 (Jan. 4, 1985). The U.S. Court of Appeals for the DC Circuit has agreed that materials undergoing sham recycling are discarded and, consequently, are solid wastes under RCRA. See American Petroleum Institute v. EPA, 216 F.3d 50, 58-59 (DC Cir. 2000).
B. A Series of DC Circuit Court Decisions
Trade associations representing mining and oil refining interests challenged EPA's 1985 regulatory definition of solid waste. In 1987, the DC Circuit held that EPA exceeded its authority “in seeking to bring materials that are not discarded or otherwise disposed of within the compass of ‘waste.’ ” American Mining Congress v. EPA (“ AMC I ”), 824 F.2d 1177, 1178 (DC Cir. 1987). Although the Court clearly articulated this concept, it did not specify which portions of the rules exceeded EPA's authority. It more
The Court held that certain of the materials EPA was seeking to regulate were not “discarded materials” under section 1004(27). After reviewing numerous statutory provisions and portions of the legislative history, the Court 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 use of a conflicting 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
or 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 use of a conflicting 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 did not hold that no recycled materials could be discarded. The Court mentioned at least two examples of recycled materials that EPA properly considered within its statutory jurisdiction, 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 are within EPA's jurisdiction. 824 F.2d at 1179. Subsequent decisions by the DC Circuit also indicate that some materials destined for recycling are “discarded” and therefore within EPA's jurisdiction. In particular, the Court held that emission control dust from steelmaking operations listed as hazardous waste “K061” is a solid waste, even when sent to a metals reclamation facility, at least where that is the treatment method required under EPA's land disposal restrictions program. American Petroleum Institute v. EPA (“ API I ”), 906 F.2d 729 (DC Cir. 1990). The Court held that it is reasonable for EPA to consider as discarded (and solid wastes) listed wastes managed in units that are part of wastewater treatment units, especially where it is not clear that the industry actually reuses the materials. (“ AMC II ”), 907 F.2d 1179 (DC Cir. 1990). Also, the Court found that EPA potentially had jurisdiction over oil-bearing wastewaters recycled at petroleum refineries, although in the rule under review EPA failed to provide a rational basis for asserting jurisdiction. American Petroleum Institute v. EPA (“ API II ”), 216 F.3d 50, 57-58 (DC Cir. 2000)
that the industry actually reuses the materials. (“ AMC II ”), 907 F.2d 1179 (DC Cir. 1990). Also, the Court found that EPA potentially had jurisdiction over oil-bearing wastewaters recycled at petroleum refineries, although in the rule under review EPA failed to provide a rational basis for asserting jurisdiction. American Petroleum Institute v. EPA (“ API II ”), 216 F.3d 50, 57-58 (DC Cir. 2000).
It also is worth noting that two other Circuits also have held that EPA has authority over at least some materials destined for reclamation rather than final discard. The U.S. Court of Appeals for the 11th 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 (11th 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). 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).
Considering all of these decisions (except the API case decided in 2000), in 1998, EPA promulgated a rule in which EPA claimed Subtitle C jurisdiction over hazardous secondary materials recycled by reclamation within the mineral processing industry (the “LDR Phase IV rule”) (63 FR 28556 (May 26, 1998)). In that rule, EPA promulgated a conditional exclusion for all types of mineral processing hazardous secondary materials destined for reclamation. EPA imposed a condition prohibiting land-based storage prior to reclamation because it considered hazardous secondary materials from the mineral processing industry that were stored on the land to be part of the waste disposal problem (63 FR at 28581)
). In that rule, EPA promulgated a conditional exclusion for all types of mineral processing hazardous secondary materials destined for reclamation. EPA imposed a condition prohibiting land-based storage prior to reclamation because it considered hazardous secondary materials from the mineral processing industry that were stored on the land to be part of the waste disposal problem (63 FR at 28581). 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 materials that are removed from a production process for storage are not “immediately reused,” and therefore are “discarded” (63 FR at 28580).
The mining industry challenged the rule, and the DC Circuit vacated the provisions that expanded jurisdiction over characteristic by-products and sludges destined for reclamation. Association of Battery Recyclers v. EPA (“ ABR ”), 208 F.3d 1047 (DC Cir. 2000). The Court held that it had already resolved the issue presented here in its opinion in AMC I, where it found that “* * * Congress unambiguously expressed its intent that ‘solid waste’ (and therefore EPA's regulatory authority) be limited to materials that are ‘discarded’ by virtue of being disposed of, abandoned, or thrown away.” 208 F.2d at 1051. It repeated that materials reused within an ongoing industrial process are neither disposed of nor abandoned. 208 F.3d at 1051-52. It explained that the intervening API I and AMC II decisions had not narrowed the holding in AMC I. 208 F.3d at 1054-1056
's regulatory authority) be limited to materials that are ‘discarded’ by virtue of being disposed of, abandoned, or thrown away.” 208 F.2d at 1051. It repeated that materials reused within an ongoing industrial process are neither disposed of nor abandoned. 208 F.3d at 1051-52. It explained that the intervening API I and AMC II decisions had not narrowed the holding in AMC I. 208 F.3d at 1054-1056.
At the same time, the Court did not hold that storage before reclamation automatically makes materials “discarded.” Rather, it held that “* * * at least some of the secondary material EPA seeks to regulate as solid waste (in the mineral processing rule) is destined for reuse as part of a continuous industrial process and thus is not abandoned or thrown away.” 208 F.3d at 1056.
In its most recent opinion dealing with the definition of solid waste, Safe Food and Fertilizer v. EPA, 350 F.3d 1263 (DC Cir. 2003), the Court upheld an EPA rule that excludes from the definition of solid waste hazardous secondary materials used to make zinc fertilizers, and the fertilizers themselves, so long as the recycled materials meet certain handling, storage and reporting conditions and the resulting fertilizers have concentration levels for lead, arsenic, mercury, cadmium, chromium, and dioxins that fall below specified thresholds. Final Rule, “Zinc Fertilizers Made From Recycled Hazardous Secondary Materials” (“Fertilizer Rule”), (67 FR 48393 (2002)). EPA determined that if these conditions are met, the recycled materials have not been discarded. The conditions apply to a number of recycled materials not produced in the fertilizer production industry, including certain zinc-bearing hazardous secondary materials such as brass foundry dusts.
EPA's reasoning was that market participants, consistent with the EPA-required conditions in the rule, would treat the exempted materials more like valuable products than like negatively-valued wastes and, thus, would manage them in ways inconsistent with discard
duced in the fertilizer production industry, including certain zinc-bearing hazardous secondary materials such as brass foundry dusts.
EPA's reasoning was that market participants, consistent with the EPA-required conditions in the rule, would treat the exempted materials more like valuable products than like negatively-valued wastes and, thus, would manage them in ways inconsistent with discard. In addition, the fertilizers derived from these recycled feedstocks are chemically indistinguishable from analogous commercial products made from raw materials. 350 F.3d at 1269. The court upheld the rule based on EPA's explanation that market participants manage materials in ways inconsistent with discard, and the fact that the levels of contaminants in the recycled fertilizers were “identical” to the fertilizers made with raw materials. The court held that this interpretation of “discard” was reasonable and consistent with the statutory purpose. The court
However, the Court specifically stated that it “need not consider whether a material could be classified as a non-discarded 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” are a reasonable set of tools to establish that the recycled secondary materials and fertilizers are not discarded.
C. 2003 Proposed Revisions to the Definition of Solid Waste
As a result of the court decision in ABR to vacate the provisions in the May 1998 final rule that increased regulation of characteristic by-products and sludges from mineral processing, EPA promulgated a final rule removing from the Code of Federal Regulations the byproduct and sludge provisions (67 FR 11251 (Mar. 13, 2002))
iscarded.
C. 2003 Proposed Revisions to the Definition of Solid Waste
As a result of the court decision in ABR to vacate the provisions in the May 1998 final rule that increased regulation of characteristic by-products and sludges from mineral processing, EPA promulgated a final rule removing from the Code of Federal Regulations the byproduct and sludge provisions (67 FR 11251 (Mar. 13, 2002)). Later, prompted by concerns articulated in the various Court opinions up to the ABR decision, EPA issued the October 2003 notice, which proposed that material generated and reclaimed in a continuous process within the same industry is not discarded for purposes of Subtitle C, provided that the recycling process is legitimate. However, for the reasons described elsewhere in today's notice, we are proposing different types of exclusions from the definition of solid waste in this supplemental proposal that we believe more directly consider whether particular materials are not considered “discarded”, and are not solid and hazardous wastes subject to regulation under Subtitle C of RCRA. The October 2003 proposal and how it relates to today's supplemental proposal is further discussed elsewhere in today's preamble.
VII. How Does the Concept of Discard Relate to These Proposed Exclusions?
The concept of “discard” is the central organizing idea behind today's supplemental proposal, which reflects the fundamental logic of the RCRA statute. As stated in RCRA Section 1004(27), “solid waste” is defined as “* * * any garbage, refuse, sludge from a waste treatment plant, or air pollution control facility and other discarded material * * * resulting from industrial, commercial, mining and agricultural activities* * *” Therefore, in the context of this supplemental proposal, a key issue is the circumstances under which a material that is recycled by reclamation is or is not discarded
ste” is defined as “* * * any garbage, refuse, sludge from a waste treatment plant, or air pollution control facility and other discarded material * * * resulting from industrial, commercial, mining and agricultural activities* * *” Therefore, in the context of this supplemental proposal, a key issue is the circumstances under which a material that is recycled by reclamation is or is not discarded.
In the series of decisions discussed above relating to the RCRA definition of solid waste, the Court of Appeals for the DC Circuit has consistently cited a plain language definition of discard, as meaning “disposing, abandoning or throwing away.” EPA believes that this is a workable and logical definition of the term, and the underlying logic of today's proposed exclusions is consistent with this definition.
The basic rationale that EPA is applying in this case differentiates between recycled hazardous secondary materials over which the generator maintains control and recycled hazardous secondary materials over which the generator relinquishes control. If the generator maintains control over the recycled hazardous secondary material and it is legitimately recycled under the standards established in this proposal and the material is not speculatively accumulated within the meaning of EPA's regulations, the hazardous secondary material is not discarded. This is because the 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 materials are not discarded. See ABR 208 F.3d at 1051 (“Rather than throwing these materials [destined for recycling] away, the producers saves them; rather than abandoning them, the producer reuses them.”)
use the 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 materials are not discarded. See ABR 208 F.3d at 1051 (“Rather than throwing these materials [destined for recycling] away, the producers saves them; rather than abandoning them, the producer reuses them.”). However, when the hazardous secondary materials are managed in land-based units (e.g., waste piles, surface impoundments, etc), the hazardous secondary materials must be contained, or they may be considered discarded, even if they remain under the control of the generator. While placement on the land would not in itself constitute discard, when hazardous secondary materials are not being managed as a valuable product and, as a result, a significant release occurs, such materials would be considered discarded. Further discussion of these concepts appears in section IX of this preamble.
In those cases, however, where generators of hazardous secondary materials do not re-use or recycle the materials themselves, it often may be a sound business decision to ship the material to be recycled to a commercial facility or another manufacturer in order to avoid the costs of disposing of the material. In such situations, the generator has relinquished control of the hazardous secondary material and the entity receiving such materials may not have the same incentives to manage the hazardous secondary material as a useful product. Accordingly, the Agency believes that conditions are needed for the Agency to determine that this material is not discarded. However, if the recycler legitimately recycles the hazardous secondary material, it is not regulated as a solid waste, provided certain additional conditions are met. Further discussion of the Agency's rationale for this concept appears in section X.A. of this preamble.
This is the general logic we have used in developing the exclusions in today's supplemental proposal
material is not discarded. However, if the recycler legitimately recycles the hazardous secondary material, it is not regulated as a solid waste, provided certain additional conditions are met. Further discussion of the Agency's rationale for this concept appears in section X.A. of this preamble.
This is the general logic we have used in developing the exclusions in today's supplemental proposal. The proposed exclusion for hazardous secondary materials that are recycled under the control of the generator is based on the notion that as long as the generator has control over the recycling process, has chosen to legitimately reclaim it within the United States or its territories, retains liability in the event that the hazardous secondary materials (be they the materials that were generated, residuals from a reclamation process, or both) are somehow released into the environment, these materials are not discarded. In addition, if the materials are managed in a land-based unit, the generator must ensure that the materials are contained. Of course, if such hazardous secondary materials are released into the environment and are not recovered in a timely manner, these materials have been discarded and the generator is subject to all applicable federal and state regulations, and applicable cleanup authorities. The “broader” exclusion for materials that are transferred by the generator to another person or company for reclamation is based on the idea subsequent activities are more likely to involve discard, given that the generator has relinquished control of the hazardous secondary material, and additional conditions are needed for the Agency to determine that these materials are not discarded.
VIII. Recycling Studies
A. Purpose of Studies
In response to the October, 2003 proposal, a number of commenters criticized the Agency specifically for not having conducted a thorough study of the potential impact of the proposed regulatory changes
trol of the hazardous secondary material, and additional conditions are needed for the Agency to determine that these materials are not discarded.
VIII. Recycling Studies
A. Purpose of Studies
In response to the October, 2003 proposal, a number of commenters criticized the Agency specifically for not having conducted a thorough study of the potential impact 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 mismanagement of these materials, and thus could create new cases of environmental damage that would require remedial action under federal or
However, a number of other commenters 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 further 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 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, cases of “historical” recycling-related environmental damage are not particularly relevant or instructive with regard to modifying the current RCRA hazardous waste regulations for hazardous material recycling.
In light of these comments and in deliberating on how to proceed with this rulemaking effort, the Agency decided that additional information on hazardous material recycling would benefit the regulatory decision-making process, and would provide stakeholders with a clearer picture of the hazardous material recycling industry in this country
dous waste regulations for hazardous material recycling.
In light of these comments and in deliberating on how to proceed with this rulemaking effort, the Agency decided that additional information on hazardous material recycling would benefit the regulatory decision-making process, and would provide stakeholders with a clearer picture of the hazardous material recycling industry in this country. Accordingly, the Agency examined three basic issues that we believed were of particular importance to informing this rulemaking effort:
• 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 in recent years, 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 in the administrative record for this rulemaking, under the following titles:
• “An Assessment of Current Good Practices for Recycling of Hazardous Secondary Materials”
• “An Assessment of Environmental Problems Associated With Recycling of Hazardous Secondary Materials”
• “Potential Effects of Market Forces on the Management of Hazardous Recyclable Materials”
The findings of these background studies have informed many of the Agency's policy decisions in developing this regulatory proposal. However, it should be understood that these three reports are not definitive, peer-reviewed documents of a technical nature. We fully acknowledge that in some respects they may not paint a complete picture, or capture every detail of the subject matter that was examined. However, we believe that the information in the studies provides an important perspective on current recycling practices, and that it supports our policy direction in developing today's supplemental proposal
eer-reviewed documents of a technical nature. We fully acknowledge that in some respects they may not paint a complete picture, or capture every detail of the subject matter that was examined. However, we believe that the information in the studies provides an important perspective on current recycling practices, and that it supports our policy direction in developing today's supplemental proposal. EPA solicits comment on the policy and regulatory implications of the information in these studies.
B. Results
1. Successful Recycling Practices
One of the studies that EPA has completed is an examination of what practices many generators and recyclers currently use to ensure that their hazardous secondary materials are recycled safely and responsibly. One purpose of this study was to provide the Agency and the rulemaking record with another angle from which to view the hazardous secondary material recycling industry. In addition, the results of this study suggest what kinds of regulatory controls might be appropriate for these hazardous secondary materials to determine that they are handled as commodities rather than wastes. The practices have helped the Agency develop elements of the supplemental proposal presented today.
The Agency has long heard from various representatives of industry and other stakeholders that management of hazardous secondary materials has changed and improved since the inception of the RCRA hazardous waste regulations in the early 1980s and that these hazardous secondary materials are being managed much more carefully than they were historically. The successful recycling study examines which improved practices are used by many companies in the industry and the reasons the practices are implemented
hazardous secondary materials has changed and improved since the inception of the RCRA hazardous waste regulations in the early 1980s and that these hazardous secondary materials are being managed much more carefully than they were historically. The successful recycling study examines which improved practices are used by many companies in the industry and the reasons the practices are implemented.
To complete this study, EPA spoke with representatives from multiple organizations that regularly manage hazardous secondary materials, both for recycling and for treatment followed by disposal, and examined literature and publicly available information on the Internet focused on the subject of recycling of hazardous secondary materials. The study uses these sources to assemble an overall picture of the good practices that are currently in use by a number of companies. The full study can be found in the docket for today's supplemental proposal, available at http://www.regulations.gov .
The successful recycling study found two main drivers behind companies adopting responsible recycling practices in the management of their hazardous secondary materials. The first is concern of liability under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), also known as Superfund. Under CERCLA, a company can be held liable as an arranger for disposal for contamination caused by its materials sent for recycling at another facility's site. Therefore, it is in that company's best interest to ensure that the facility to which it sends its waste is not likely to become a Superfund site or to fall under CERCLA in the future either because of financial failure or because of bad materials management practices. The threat of Superfund liability was cited by many of the sources for the responsible recycling study as the main reason for the development of their audit programs in this area
to ensure that the facility to which it sends its waste is not likely to become a Superfund site or to fall under CERCLA in the future either because of financial failure or because of bad materials management practices. The threat of Superfund liability was cited by many of the sources for the responsible recycling study as the main reason for the development of their audit programs in this area.
The other reason for adoption of responsible recycling practices cited falls into a broad category of concerns about corporate responsibility and public relations. Many companies now have very public environmental policies and have implemented environmental management systems that are part of their programs for corporate responsibility. Although the real effects of these corporate policies are hard to gauge, EPA observed during this study that audit programs that were developed in response to CERCLA, now are maintained as part of a philosophy of corporate responsibility, which is part of the image a corporation sells to its customers.
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 material to determine whether the entity to which it is sending the hazardous secondary material is equipped to responsibly manage those materials without the risk of releases or other environmental damage. These recycling and waste audits of other companies' facilities form a backbone of many of the transactions in the hazardous secondary
In this study, EPA found that certain generators of hazardous secondary materials perform facility audits—a kind of environmental due diligence—on the facilities to which they send their materials. These audits can take many forms and can be of varying degrees of complexity, depending on the secondary material or, in some cases, on the size and sophistication of the generator
hazardous secondary
In this study, EPA found that certain generators of hazardous secondary materials perform facility audits—a kind of environmental due diligence—on the facilities to which they send their materials. These audits can take many forms and can be of varying degrees of complexity, depending on the secondary material or, in some cases, on the size and sophistication of the generator. Although large companies are more likely to perform in-depth facility audits, possibly because they more frequently have environmental health and safety divisions coordinating audits or because they may have greater amounts of hazardous secondary materials they are sending off-site, some smaller companies are also performing some kind of audit on the recycling facility receiving the hazardous secondary material.
The exact nature of each generator's audit process will vary, but there are some common elements. Often the audit has two parts: (1) A remote screening audit during which the auditor examines the recycler's compliance history and financial records and the recycler may fill out a questionnaire about its operations and facility and (2) a visit to the recycler's facility, which can take anywhere from several hours to several days. Some common elements examined in both phases of an audit include: (1) Site history; (2) history of compliance with environmental requirements and permits; (3) general appearance and housekeeping at the facility; (4) description of process design and capability; (5) residuals management; (6) financial soundness of the recycler; and (7) possession of adequate pollution liability and general insurance.
In addition to generators auditing recycling facilities, another example of a practice that EPA believes helps to ensure responsible management is the design of hazardous secondary materials recycling contracts and tracking systems to manage information about the location of a particular container and to document its eventual recycling
ssion of adequate pollution liability and general insurance.
In addition to generators auditing recycling facilities, another example of a practice that EPA believes helps to ensure responsible management is the design of hazardous secondary materials recycling contracts and tracking systems to manage information about the location of a particular container and to document its eventual recycling.
Recycling contracts are normal business practice and minimize the potential for recyclers to receive shipments of hazardous secondary materials that they are not equipped to recycle. In these contracts, the two parties can lay out specifications for the make-up of materials being shipped to the recycler and describe the protocol for actions taken if a material not meeting these specifications arrives at the recycling facility. In some cases, the recycler can still handle the material, but may charge the generator an additional fee for having to alter the material to meet specifications. In other cases, the recycler may not be able to accept the material at all. Through the contract mechanism, both parties then agree on whether that hazardous secondary material should be returned to the generator or sent to a different recycler or waste disposal facility.
EPA also found that knowing whether materials conform to the contract specifications necessitated sampling of the hazardous secondary material arriving at a recycler. Several recyclers told EPA that they sample each rail car, truck, and drum arriving at their facilities before accepting them. Legitimate recycling practices operate as a manufacturing process might and there is tight control over the nature of the materials being recycled. Recyclers who are seeking to make a salable product will make sure that the inputs meet specifications.
Due to time and resource limitations, EPA's examination of successful recycling practices was not exhaustive, as we were able to gather information from a limited number of sources
rate as a manufacturing process might and there is tight control over the nature of the materials being recycled. Recyclers who are seeking to make a salable product will make sure that the inputs meet specifications.
Due to time and resource limitations, EPA's examination of successful recycling practices was not exhaustive, as we were able to gather information from a limited number of sources. We believe that the practices and situations outlined in the study are representative of industry practices performed by many companies, but ask today for comments on the results of the study and for relevant information not represented therein.
2. Environmental Problems Associated With Recycling of Hazardous Secondary Materials
a. Scope and objectives of the study. The general goal of this study was to identify and characterize environmental problems that have been attributed to some type of hazardous secondary material recycling activity, and that are relevant for the purpose of this rulemaking effort. The Agency believes that discarding is more likely to occur if environmental problems exist. Specifically, we sought to identify the following types of cases:
• Cases where environmental damage clearly can be attributed to some type of recycling activity. In conducting this study, we limited our search to those environmental problems in which environmental damages were clearly caused by some type of recycling-related activity
ding is more likely to occur if environmental problems exist. Specifically, we sought to identify the following types of cases:
• Cases where environmental damage clearly can be attributed to some type of recycling activity. In conducting this study, we limited our search to those environmental problems in which environmental damages were clearly caused by some type of recycling-related activity. In this context, “recycling-related activities” included—
• accumulation or storage of hazardous secondary materials by the generator, the recycler or an intermediary;
• illegal disposal or abandonment of recyclable hazardous secondary materials or recycling residuals;
• transportation of recyclable hazardous secondary materials;
• “sham” recycling operations (i.e., illegal disposal or treatment disguised as recycling);
• production and/or use of contaminated products from recycled hazardous secondary materials, reclamation and/or production processes;
• management of residuals from reclamation or production processes, or
• other activities associated with the management of recyclable hazardous secondary materials, recycling residuals, or the products of recycling processes.
The study identified a number of cleanup sites at which a recycling process had operated, but where other sources of contamination made it extremely difficult to determine with any certainty that the recycling activity contributed to the environmental problems at the site. These cases were not included in this study.
• Relatively recent cases. Many of the environmental problems that were examined in the course of this study occurred before RCRA, CERCLA or other environmental programs were established in the early 1980s
tion made it extremely difficult to determine with any certainty that the recycling activity contributed to the environmental problems at the site. These cases were not included in this study.
• Relatively recent cases. Many of the environmental problems that were examined in the course of this study occurred before RCRA, CERCLA or other environmental programs were established in the early 1980s. The Agency believes that, for the purpose of this rulemaking effort, these “historical” recycling-related damage cases are much less relevant and instructive than cases which have occurred within the current regulatory and liability “landscape.” This belief is based in large part on the findings of our companion study of current good hazardous secondary material recycling practices, which indicate that in today's era (though there are exceptions), most generators and recyclers are aware of their environmental responsibilities, and generally make considerable efforts to ensure that materials are recycled and otherwise managed responsibly. Therefore, all the cases included in the data for this study occurred after 1982.
• Cases involving recycling of regulated hazardous secondary materials that are specifically excluded from RCRA regulation. The study was intended to identify environmental problems associated with recycling of regulated hazardous secondary materials, as well as those involving the recycling of hazardous secondary materials that are not regulated because
b. Methodology. The initial task of this study was to identify as many recycling-related environmental problems that were relevant to the scope and purpose of the study as possible (the preceding section of this preamble describes the types of cases that were considered relevant to the study)
as well as those involving the recycling of hazardous secondary materials that are not regulated because
b. Methodology. The initial task of this study was to identify as many recycling-related environmental problems that were relevant to the scope and purpose of the study as possible (the preceding section of this preamble describes the types of cases that were considered relevant to the study). Potential cases were identified from a variety of sources, including:
• Comments on the October 28, 2003, proposed rule
• The Superfund National Priorities List
• National EPA data bases maintained for the CERCLA, RCRA, and enforcement programs
• Contacts with staff in state environmental agencies
• Contacts with staff in EPA Regional Offices
• State agency data bases maintained for state Superfund programs and other environmental programs
• Internet searches
• News media reports
For those environmental problems found at recycling facilities or resulting in the mismanagement of hazardous secondary materials to be recycled that were relevant to the study, we gathered available information to identify certain key facts relating to when the problem occurred, the type of recycling practice involved, the types of materials recycled, how and why the environmental damage occurred, and other key data (these data are summarized in tabular form in Appendix 1 of the report entitled The Assessment of Environmental Problems Associated With Recycling of Hazardous Secondary Materials). A written description of each case was then prepared—these are in Appendix 2 of the same report.
Many of the cases that were investigated, including many of the Superfund sites, were well-documented, and we were able to assemble relatively complete profiles for those cases. For many other cases, however, much less complete information was available, while at some of the sites, we were able to collect only very basic information
e was then prepared—these are in Appendix 2 of the same report.
Many of the cases that were investigated, including many of the Superfund sites, were well-documented, and we were able to assemble relatively complete profiles for those cases. For many other cases, however, much less complete information was available, while at some of the sites, we were able to collect only very basic information.
In addition, because of time and resource limitations, the search for potentially relevant cases was not exhaustive. For example, we did not systematically survey all state environmental agencies for relevant cases, nor did we search paper files in EPA Regional Offices. Because of this relatively limited scope, we believe that the cases we have identified and described in this report in effect represent those that were relatively easy to find, and that there are likely to be additional cases that we did not identify. However, we have no reason to think that additional cases would substantially change the overall picture. Nevertheless, the Agency requests information on relevant cases of environmental problems that we did not identify, as well as comments or supplemental information on those that were characterized in the report. If you provide data on additional cases of environmental problems from recycling, Appendix 2 of the study is a good resource for the types of information most useful to the Agency, particularly when the problem occurred; the type of recycling practice involved; whether recycling occurred at an on-site or off-site recycling facility; the types of hazardous secondary materials being recycled; and how and why the problem occurred.
c. Summary of findings. The study identified 208 cases in which environmental damages of some kind occurred from some type of recycling activity and that fit the scope of the study. Such damages included leaks, spills, dumps, or other types of releases that were serious enough to require some type of cleanup action
zardous secondary materials being recycled; and how and why the problem occurred.
c. Summary of findings. The study identified 208 cases in which environmental damages of some kind occurred from some type of recycling activity and that fit the scope of the study. Such damages included leaks, spills, dumps, or other types of releases that were serious enough to require some type of cleanup action. They also included instances where materials were abandoned (e.g., in warehouses) and which required removal overseen by a government agency and expenditure of public funds. However, the study did not include situations in which environmental regulatory violations occurred, but did not result in actual damage to the environment or human health.
With regard to the types of materials associated with the cases that were documented in the study, most common were scrap metals, solvents, used oil, non-ferrous metals, lead-acid batteries, and used drums sent for cleaning and reconditioning. Less common were cases involving mercury, precious metals, and hazardous foundry sands.
The types of environmental damage that occurred varied widely; many were relatively small incidents involving contaminated soils and/or residuals, such as battery casings, while a number were much more substantial and expensive, with large-scale soil and ground water contamination, and remediation costs in the tens of millions of dollars. A surprising number of cases (sixty-nine) involved materials that were abandoned in one way or another.
The study also tried to identify the cause of the environmental problems for each case that was investigated. In large part, we were able to identify, or at least infer, how the problems occurred, although for four percent of the cases examined, we were unable to determine the primary cause of damage. However, in only a few cases were we able to identify with any certainty why they occurred
her.
The study also tried to identify the cause of the environmental problems for each case that was investigated. In large part, we were able to identify, or at least infer, how the problems occurred, although for four percent of the cases examined, we were unable to determine the primary cause of damage. However, in only a few cases were we able to identify with any certainty why they occurred. For example, in approximately one-third of the cases, we were able to conclude that mismanagement of recycling residuals was at least partly the cause of contamination problems. We were unable, however, to identify why the residuals were managed improperly.
Mismanagement of the hazardous secondary materials prior to their reclamation or reuse caused contamination at forty percent of sites, whereas mismanagement of recycling residuals was the primary cause at thirty-four percent of the sites. Often, at the latter category of sites, reclamation processes generated residuals in which the toxic components of the recycled materials became concentrated, and these wastes were then mismanaged. 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 of.
As already noted, sixty-nine of the cases examined in the study involved abandonment of recyclable hazardous secondary materials as the primary cause of damage. In most of these cases, business failure appears to have been the main reason the hazardous secondary materials were abandoned. Seven of the cases that were examined appear to have been outright “sham” recyclers. In most of these cases, companies advertised themselves to local generators as recyclers and accumulated considerable quantities of waste materials, but did not actually recycle them. These sites were also then abandoned
failure appears to have been the main reason the hazardous secondary materials were abandoned. Seven of the cases that were examined appear to have been outright “sham” recyclers. In most of these cases, companies advertised themselves to local generators as recyclers and accumulated considerable quantities of waste materials, but did not actually recycle them. These sites were also then abandoned.
Since a considerable number of commenters to the October 2003 proposal supported the idea of a regulatory exclusion for on-site recycling (i.e., at the generating facility), the study also distinguished between environmental problems from recycling
The study also addressed whether or not instances of environmental damage occurred at hazardous waste recycling facilities with RCRA permits ( Note: RCRA does not require Part B permits for the recycling processes themselves; typically, permits are issued to such facilities when hazardous secondary materials are stored prior to recycling.) RCRA permitted hazardous waste management facilities are subject to relatively stringent, facility-specific requirements, and in general are given more oversight by regulatory agencies than facilities without permits. For these reasons, these cases are of particular interest to the Agency with regard to this rulemaking.
Twenty-four of the cases identified were, at one time or another, operating under RCRA hazardous waste permits. However, only nine clearly appear to have been operating under RCRA permits at the time the damage occurred. Two of these cases involved fires and/or explosions.
The study also looked at some of the financial circumstances regarding clean up of environmental problems. At thirteen of the twenty-four hazardous waste permitted facilities, all or part of the funds used to clean up environmental damages were contributed by the owner/operator of the facility, either voluntarily or under some form of consent agreement
ese cases involved fires and/or explosions.
The study also looked at some of the financial circumstances regarding clean up of environmental problems. At thirteen of the twenty-four hazardous waste permitted facilities, all or part of the funds used to clean up environmental damages were contributed by the owner/operator of the facility, either voluntarily or under some form of consent agreement. In at least two of these cases, it appears that cleanup funds became available by means of a RCRA-required financial assurance mechanism, such as a surety bond. Thirteen of the facilities appear to have been cited for serious permit violations, either before or as a result of the damage incident. In four cases, the facility permits were revoked because of compliance issues. Eleven of the twenty-four facilities were found to be no longer in business, because of bankruptcy or for other reasons.
Of the 208 cases that were documented in the study, fifty-one were or are listed on the CERCLA National Priorities List (NPL). Fifty-five additional cases were addressed under CERCLA authorities, but the sites were not listed on the NPL. State cleanup authorities were used to address sixty-five of the cases, while thirty were addressed using RCRA corrective action authorities. For nineteen of the cases, we were unable to identify what remedial program, if any, was used to clean up the sites. (In some cases, there was more than one type of cleanup action at a site).
For eighty-nine of the cases, we were able to identify the costs, or at least cost estimates, associated with addressing the environmental problems caused by recycling activities. Thirty-seven of these cases required less than one million dollars to clean up; forty-four cost between one and ten million dollars; and eight cost more than ten million dollars to remediate.
It is possible that these cost data are incomplete and are not an accurate representation of actual cleanup costs for the entire sample of 208 cases
he environmental problems caused by recycling activities. Thirty-seven of these cases required less than one million dollars to clean up; forty-four cost between one and ten million dollars; and eight cost more than ten million dollars to remediate.
It is possible that these cost data are incomplete and are not an accurate representation of actual cleanup costs for the entire sample of 208 cases. For one thing, cost data were much easier to find for CERCLA-lead cleanups than cleanups done under other programs. Another uncertainty with regard to these cost data is that in some cases, it was not possible to distinguish between cleanup costs that were incurred specifically to address recycling-related contamination, and costs for other cleanup activities at the site. The Agency solicits additional information from commenters regarding cleanup costs (actual or estimated) incurred in remediating these recycling-related environmental problems.
C. Potential Effects of Market Forces on the Management of Recyclable Hazardous Secondary Materials
EPA also has completed a study of how market forces can affect the management of recyclable hazardous secondary materials. This study uses economic theory to describe how various market incentives can influence a firm's decision making process when the recycling of hazardous secondary material is involved. Because the study is largely theoretical, the results should be interpreted with caution, but it does provide insights that can explain some of the possible fundamental economic drivers of both the successful and unsuccessful recycling practices, which in turn help us to design the exclusions that we are proposing today.
The October 2003 proposal was based in part on the premise that some types of recycling are more akin to manufacturing than waste management and therefore are not appropriate for regulation as waste management
n some of the possible fundamental economic drivers of both the successful and unsuccessful recycling practices, which in turn help us to design the exclusions that we are proposing today.
The October 2003 proposal was based in part on the premise that some types of recycling are more akin to manufacturing than waste management and therefore are not appropriate for regulation as waste management. [“In EPA's view, a recycler will value secondary materials that provide an important contribution to his process or product and will manage them in a manner consistent with a valuable feedstock material (i.e., will manage them to minimize their loss)”; 68 FR 61583].
However, as pointed out by some commenters to the proposed rule, the economic forces shaping the behavior of firms that recycle hazardous secondary materials can be different from those at play in manufacturing processes using virgin materials. For example, the inherent value of hazardous secondary materials can be much lower than virgin materials used in manufacturing, resulting in a different set of economic incentives. Additionally, different economic incentives between the recycling of hazardous secondary materials and manufacturing may arise due to differences in these two business models. 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, some models of hazardous materials recycling involve generating revenue primarily from receipt of the hazardous secondary materials. Recyclers of hazardous secondary materials in this situation may thus respond differently from traditional manufacturers to economic forces and incentives.
An increased understanding of these aspects of hazardous secondary material recycling can help to craft a rule that takes advantage of the positive economic forces, and compensates for the negative ones, in order to produce an optimal amount of recycling
hazardous secondary materials in this situation may thus respond differently from traditional manufacturers to economic forces and incentives.
An increased understanding of these aspects of hazardous secondary material recycling can help to craft a rule that takes advantage of the positive economic forces, and compensates for the negative ones, in order to produce an optimal amount of recycling. An optimal amount of recycling is one that maximizes the net benefits (private and social benefits minus private and social costs). One sub-optimal outcome of not providing a proper balance could be too little recycling, resulting in inefficiencies. In this case, increasing the rate of recycling (for example, via today's proposed changes) would realize additional net benefits. However, sub-
The market incentive study uses 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 are: (1) Commercial recycling, where the primary business of the firms is recycling hazardous secondary materials, which are accepted for recycling from offsite industrial sources (which usually pay a fee); (2) industrial intra-company recycling, where firms generate hazardous secondary materials as byproducts 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 whose primary business is not recycling, but use or recycle hazardous secondary materials obtained from other firms with the objective of reducing the cost of their production inputs.
For each of these recycling models, the report looks at how they are potentially affected by three market characteristics: (1) Value of the recycled product; (2) price stability of recycling output or inputs; and (3) net worth of the firm
s not recycling, but use or recycle hazardous secondary materials obtained from other firms with the objective of reducing the cost of their production inputs.
For each of these recycling models, the report looks at how they are potentially affected by three market characteristics: (1) Value of the recycled product; (2) price stability of recycling output or inputs; and (3) net worth of the firm.
For all three models of hazardous secondary material recycling, a recycled product with a high value appears to contribute to an optimal outcome for hazardous secondary material recycling. For commercial and industrial inter-company firms, the value of the product can serve as a strong incentive for the firm to recycle the product with care and bring it to the market. Recycling by these firms would thus be driven primarily by the potential revenues from the recycled product, and not by other factors such as an acceptance fee. For industrial intra-company recyclers, the value of the recycled product would contribute to optimal recycling behavior even if the firm is reusing the product in its own production process instead of selling it to outside firms. Conversely, for all three models of hazardous secondary material recycling, a recycled product with a low value could be a potential indicator of sub-optimal recycling outcomes. For commercial firms in particular, the acceptance fee is likely to be a much more prevalent factor in the firm's revenue structure when the recycled product has a low value. If the value of the recycled product is low, the firm may have more of an incentive to focus on accepting hazardous secondary material than properly recycling it and selling a low-value recycled product.
Price stability is another potential indicator of hazardous secondary material recycling markets that produce optimal outcomes, particularly for commercial recyclers. When prices are stable, firms can more easily adjust their production in response to the price signals they receive from the market
g hazardous secondary material than properly recycling it and selling a low-value recycled product.
Price stability is another potential indicator of hazardous secondary material recycling markets that produce optimal outcomes, particularly for commercial recyclers. When prices are stable, firms can more easily adjust their production in response to the price signals they receive from the market. They are thus less subject to sudden upsets to their revenue streams or costs which could force them to operate at a short or long-term loss. Unstable markets can contribute to sub-optimal outcomes, due to an unexpected fall in revenues or rise in costs, such that the firm is no longer able to cover the costs incurred to make the product. This could encourage the stockpiling of hazardous secondary material by the firm in order to continue collecting the acceptance fee. A commercial firm's choice to shut down can also contribute to sub-optimal recycling outcomes if this involves the abandonment of hazardous secondary material that the firm was stockpiling on-site. Since industrial intra- and inter-company recyclers are also recycling to produce a marketable product, they are subject to similar forces as commercial firms. They are less constrained in their responses to these forces, however, since recycling is not their primary business operation, and are able to switch from recycling to disposal, or from using recycled materials to raw materials, if market conditions shift.
For all three recycling models, firms that have a higher net worth have more to lose from liability issues and thus have a greater incentive to invest in safe hazardous secondary material management and recycling practices. These firms would have more incentive to practice recycling in an environmentally safe manner and also to insure against possible liability risks that would jeopardize their investments
hree recycling models, firms that have a higher net worth have more to lose from liability issues and thus have a greater incentive to invest in safe hazardous secondary material management and recycling practices. These firms would have more incentive to practice recycling in an environmentally safe manner and also to insure against possible liability risks that would jeopardize their investments. Firms that have a relatively low worth and do not have an established history in the market could be potentially more likely to face incentives that could cause them to engage in recycling practices that impose few controls or cut corners in order to boost revenues. While we recognize that it should not be assumed that all low-value firms would engage in such practices, this can be viewed as one potential indicator of risky behavior.
As mentioned earlier, using economic theory to interpret recycling behavior should be done with extreme caution. An individual firm's decision-making process is based on many factors, and attempting to extrapolate a firm's likely behavior from a few factors, particularly based on theoretical considerations, could lead to erroneous conclusions. However, when used in conjunction with other pieces of information, the economic theory can be quite illuminating. For example, because the industrial intra- and inter-company recyclers have more flexibility (e.g., during price fluctuations, these companies can more easily switch from recycling to disposal or from recycled inputs to virgin inputs), they would be less likely to have environmental problems from over-accumulated materials. This outcome appears to be supported by the results of the assessment of environmental problems study (see section VIII.B.2 of today's supplemental proposal)
exibility (e.g., during price fluctuations, these companies can more easily switch from recycling to disposal or from recycled inputs to virgin inputs), they would be less likely to have environmental problems from over-accumulated materials. This outcome appears to be supported by the results of the assessment of environmental problems study (see section VIII.B.2 of today's supplemental proposal).
On the other hand, certain specific types of commercial recycling, where the product has low value, the prices are unstable, and/or the firm has a low net worth, could indicate that it is more likely for environmental problems to occur from over-accumulation of recycled materials, compared to recycling by a well-capitalized firm that yields a product with high value. Again, this outcome appears to be supported by the results of the assessment of environmental problems study (see section VIII.B.2 of today's supplemental proposal).
However, as shown by the study of successful recycling practices, generators who might otherwise bear a large liability from poorly managed recycling at other companies have addressed this issue by carefully examining the recyclers to which they send their hazardous secondary materials to ensure the recyclers are technically and financially capable of performing the recycling (see section VIII.B.1 of today's supplemental proposal). In addition, we have seen that successful recyclers (both commercial and industrial) have often taken advantage of mechanisms such as tolling contracts to help stabilize price fluctuations, allowing recyclers to plan their operations better.
For further discussion of this study, please see A Study of Potential Effects of Market Forces on the Management of Hazardous Secondary Materials in the docket for today's supplemental proposal.
IX. Exclusion for Hazardous Secondary Materials That Are Legitimately Reclaimed Under the Control of the Generator: Proposed 40 CFR 260.0, 261.2(a)(1), 261.2(a)(2), 261.2(c)(3), 261.4(a)(23)
A
etter.
For further discussion of this study, please see A Study of Potential Effects of Market Forces on the Management of Hazardous Secondary Materials in the docket for today's supplemental proposal.
IX. Exclusion for Hazardous Secondary Materials That Are Legitimately Reclaimed Under the Control of the Generator: Proposed 40 CFR 260.0, 261.2(a)(1), 261.2(a)(2), 261.2(c)(3), 261.4(a)(23)
A. Purpose of the Exclusion
In the October 2003 proposal, EPA proposed to exclude from the definition of solid waste hazardous secondary materials generated and reclaimed in a continuous industrial process within the same industry. “Same industry” was defined as industries sharing the same four-digit North American Industry Classification System (NAICS) code. We also co-proposed a second option, under which such materials would not be eligible for the exclusion if the reclamation took place at a facility that also recycled regulated hazardous wastes generated in a different industry. EPA chose the NAICS system as a way to define “same industry” because the system is already widely used to classify different industries. We recognized that the system was developed for statistical rather than regulatory purposes. However, the NAICS scheme employs a production-oriented concept, grouping together industries that have similar or identical production processes. In addition, the regulated community is generally familiar with the NAICS system. For these reasons, the Agency proposed this system to define “same industry”.
EPA chose the four-digit NAICS level (rather than the three or five-digit level) because that level appeared to be an appropriate compromise between being too broad or too restrictive. The Agency evaluated the potential recycling opportunities available through defining “same industry” at the three, four, and five-digit levels. We performed the analysis for the chemical manufacturing sector, which contains many RCRA hazardous waste generators and served as a surrogate for other manufacturing sectors
ared to be an appropriate compromise between being too broad or too restrictive. The Agency evaluated the potential recycling opportunities available through defining “same industry” at the three, four, and five-digit levels. We performed the analysis for the chemical manufacturing sector, which contains many RCRA hazardous waste generators and served as a surrogate for other manufacturing sectors. In general, we found that classification at the three-digit level led to grouping facilities that did not have similar production processes. Classification at the five-digit level, on the other hand, led to grouping similar processes, but greatly reduced opportunities for recycling.
In the same notice, EPA also solicited comment on several different alternatives to the proposed exclusion. The first alternative was whether to exclude from the definition of solid waste those hazardous secondary materials that are generated and reclaimed in a continuous process on-site (as defined in 40 CFR 260.10), even if different industries were involved. This option would also have required the same notification and speculative accumulation provisions proposed for the proposed option. This exclusion would be based on the premise that materials recycled on-site in a continuous process are unlikely to be discarded because they would be closely managed and monitored by a single entity who is intimately familiar with both the generation and reclamation of the material. In addition, no off-site transport of the hazardous secondary material (with its attendant risks) would occur, and there would be few questions about potential liability in the event of mismanagement or mishap. An example of such recycling given in the proposal was a facility that produces petrochemicals, as well as pharmaceuticals. Under the four-digit NAICS-based proposal, such reclamation would not have been excluded even if both establishments were located at the same site and operated by the same company
there would be few questions about potential liability in the event of mismanagement or mishap. An example of such recycling given in the proposal was a facility that produces petrochemicals, as well as pharmaceuticals. Under the four-digit NAICS-based proposal, such reclamation would not have been excluded even if both establishments were located at the same site and operated by the same company. Another example might be a situation where a generator contracts with a different company to reclaim material at the generator's facility, possibly through a mobile treatment unit.
The second alternative was an exclusion for certain situations within the chemical manufacturing industry that might present unique recycling situations. Specifically, within the chemical manufacturing industry, the first manufacturer will contract out production of certain chemicals to another manufacturer (referred to as batch or tolling operations). The second manufacturer may generate hazardous secondary materials that could be returned to the larger chemical manufacturer for reclamation. In the proposal, we inquired whether some recycling could be precluded as a result of uncertain application of the NAICS classification approach due to frequently changing product slates, or different products being produced from the same equipment at different times.
The third alternative would have provided a broader conditional regulatory exclusion from RCRA regulation for essentially all hazardous secondary materials that are legitimately recycled by reclamation. The purpose of this broader exclusion would be to encourage recycling and lower costs, while still protecting human health and the environment. The Agency suggested that additional requirements or conditions might be appropriate to protect human health and the environment for this exclusion, compared to the same-industry exclusion that we proposed
als that are legitimately recycled by reclamation. The purpose of this broader exclusion would be to encourage recycling and lower costs, while still protecting human health and the environment. The Agency suggested that additional requirements or conditions might be appropriate to protect human health and the environment for this exclusion, compared to the same-industry exclusion that we proposed. Examples of such additional conditions could include record-keeping and reporting requirements, along with safeguards on storage or handling. Although the Agency solicited comment on additional conditions, the discussion in the preamble of this approach was brief and may not have provided sufficient information to commenters. Like the other exclusions discussed in the October 28, 2003 proposal, hazardous secondary materials used in a manner constituting disposal, burned for energy recovery, or materials that were inherently waste-like would not be eligible. The Agency solicited comment on the increased recycling and reuse that would result from broadening the rule in this way, as well as comment on the potential effects to human health and the environment.
EPA received many comments on the NAICS “same industry” scheme from various stakeholders. Many commenters did not agree that NAICS was an appropriate way to define “same industry”; more importantly, most commenters did not agree that excluding recycling within the same industry was justified on legal or pragmatic grounds. These commenters generally stated that EPA's proposed exclusion did not accurately reflect Congressional intent or court mandates concerning EPA's authority over legitimate recycling. They reiterated that EPA's RCRA authority extends only to materials that are truly discarded (i.e., disposed of, thrown away, or abandoned) and that have not yet become part of the waste disposal problem
tic grounds. These commenters generally stated that EPA's proposed exclusion did not accurately reflect Congressional intent or court mandates concerning EPA's authority over legitimate recycling. They reiterated that EPA's RCRA authority extends only to materials that are truly discarded (i.e., disposed of, thrown away, or abandoned) and that have not yet become part of the waste disposal problem. Many of these commenters interpreted the relevant court decisions to mean that any legitimately reclaimed material (whether recycled within the same industry or between industries) is not “discarded” and thus cannot be regulated as a solid waste. Some of these commenters cited the “ Safe Foods ” decision ( Safe Food and Fertilizer, et al., v. EPA , 350 F.3d 1263, DC Cir. 2003) as support for their contention that materials recycled in different industries were not discarded.
Other commenters said that they would not benefit from the proposed exclusion because so many recycling opportunities occur among different industries. These commenters included companies in the metals recycling industry, mining and mineral processors, specialty batch chemical manufacturers, some solvent recyclers, the paint and coatings industry, spent pickle liquor generators, and small businesses.
Still other commenters argued that the Agency had read the court decisions too broadly rather than too narrowly, but some of these commenters also said that
Many commenters, on the other hand, responded positively to the Agency's solicitation of comment about excluding on-site recycling from the definition of solid waste. These commenters agreed with EPA's suggestion that generators who recycle materials on-site (even if the reclamation takes place in a different NAICS code) are likely to be familiar with the material and more likely to maintain responsibility for the materials
er hand, responded positively to the Agency's solicitation of comment about excluding on-site recycling from the definition of solid waste. These commenters agreed with EPA's suggestion that generators who recycle materials on-site (even if the reclamation takes place in a different NAICS code) are likely to be familiar with the material and more likely to maintain responsibility for the materials. Some commenters wanted any exclusion confined to on-site recycling, but other commenters suggested that EPA expand any on-site exclusion to include recycling (including off-site recycling) conducted within the same company. These commenters believed that the principal reasoning applied to on-site recycling would also apply to same-company recycling—i.e., that the same entity would be familiar with the material and would remain responsible for it.
Concerning our solicitation of comments on tolling arrangements, some stakeholders commented that the specialty batch chemical industry, in particular, might present unique situations regarding appropriate exclusions, principally due to the varying nature of production and hence of potential hazardous secondary materials available for recycling. Because of these circumstances, stakeholders believed that exclusions targeted to the types of tolling arrangements common in this industry would be easier to implement.
After evaluating the comments, the Agency has concluded that its proposed approach to “same industry recycling” does not accurately delineate EPA's RCRA jurisdiction over hazardous secondary materials. We agree with the many commenters who said that whether materials are recycled within the same NAICS code is not an appropriate indication of whether they are discarded
uld be easier to implement.
After evaluating the comments, the Agency has concluded that its proposed approach to “same industry recycling” does not accurately delineate EPA's RCRA jurisdiction over hazardous secondary materials. We agree with the many commenters who said that whether materials are recycled within the same NAICS code is not an appropriate indication of whether they are discarded. NAICS designations are designed to be consistent only with product lines, so that the effect of our October 2003 proposal would be that materials generated and reclaimed under the control of the generator would not be excluded, even though the generator has not abandoned the material and has every opportunity and incentive to maintain oversight of, and responsibility for, the material that is reclaimed (see ABR , 208 F.2d at 1051 (noting that discard has not taken place where the producer saves and reuses secondary materials)). Under these circumstances, we believe that discard has generally not occurred. For example, of the 208 recycling cases that caused environmental damage, only thirteen (approximately six percent) occurred as a result of on-site recycling. We also agree with those commenters who said that most of this rationale would apply just as reasonably to reclamation taking place within the same company. In the case of same-company recycling, both the generating facility and the reclamation facility (if they are different) would be familiar with the hazardous secondary materials and the parent company would be ultimately liable for any mismanagement of the hazardous secondary materials. Under these circumstances, the incentive to avoid such mismanagement would be so strong that mismanagement also would be very unlikely.
Concerning tolling arrangements, we also believe that the type of tolling contract common in the specialty batch chemical industry does not constitute discard as long as the recycling is legitimate and the hazardous secondary material is not speculatively accumulated
these circumstances, the incentive to avoid such mismanagement would be so strong that mismanagement also would be very unlikely.
Concerning tolling arrangements, we also believe that the type of tolling contract common in the specialty batch chemical industry does not constitute discard as long as the recycling is legitimate and the hazardous secondary material is not speculatively accumulated. Under a typical type of arrangement, one company (the tolling contractor) contracts with a second (often smaller) company (the batch manufacturer) to produce a specialty chemical (sometimes because of a temporary lack of capacity, or because the batch manufacturer has specialized equipment or expertise). The batch manufacturer produces the chemical and the production process generates a hazardous secondary material (such as a solvent) which is routinely reclaimed at the tolling contractor's facility through an exempt closed-loop recycling process when it has the capacity to manufacture the chemical in question at its own facility. However, if the batch manufacturer transports the hazardous secondary material back to the tolling contractor for reclamation, the tolling contractor would be deemed under existing regulations to be reclaiming a spent material, and an RCRA storage permit would generally be required. The typical contract in the specialty batch chemical industry contains detailed specifications about the product to be manufactured, including management of any hazardous secondary materials that are produced and returned to the tolling contractor for reclamation. Under this scenario, the hazardous secondary material continues to be managed as a valuable product, so discard has not occurred
uired. The typical contract in the specialty batch chemical industry contains detailed specifications about the product to be manufactured, including management of any hazardous secondary materials that are produced and returned to the tolling contractor for reclamation. Under this scenario, the hazardous secondary material continues to be managed as a valuable product, so discard has not occurred. Moreover, if hazardous secondary materials are generated and reclaimed pursuant to a written contract between a tolling contractor and a batch manufacturer, and if the contract specifies that the tolling contractor retains ownership of, and responsibility for, the hazardous secondary materials, there is a strong incentive to avoid any mismanagement or release.
In today's supplemental notice, EPA has described three general situations where we believe that discard has not taken place and where the potential for environmental

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- [72 FR 96 Atlantic Highly Migratory Species (HMS); U.S. Atlantic Swordfish Fishery Management Measures](https://www.frixlaw.com/law-library/statutes/FR_PRORULE_E6-22512.md)
- [72 FR 485 Airworthiness Directives; Przedsiebiorstwo Doswiadczalno-Produkcyjne Szybownictwa “PZL-Bielsko” Model SZD-50-3 “Puchacz” Gliders](https://www.frixlaw.com/law-library/statutes/FR_PRORULE_06-9988.md)
- [72 FR 662 Airworthiness Directives; Bombardier Model DHC-8-102, -103, and -106 Airplanes and Model DHC-8-200 and DHC-8-300 Series Airplanes](https://www.frixlaw.com/law-library/statutes/FR_PRORULE_E6-22534.md)
- [72 FR 676 Airworthiness Directives; Alpha Aviation Design Limited (Type Certificate No. A48EU Previously Held by Apex Aircraft and Avions Pierre Robin) Model R2160 Airplanes](https://www.frixlaw.com/law-library/statutes/FR_PRORULE_E7-49.md)
- [72 FR 711 Redesignation of Jefferson County, Ohio To Attainment of the 8-Hour Ozone Standard](https://www.frixlaw.com/law-library/statutes/FR_PRORULE_E6-22617.md)
- [72 FR 724 Standards of Performance for Equipment Leaks of VOC in the Synthetic Organic Chemicals Manufacturing Industry; Standards of Performance for Equipment Leaks of VOC in Petroleum Refineries](https://www.frixlaw.com/law-library/statutes/FR_PRORULE_E7-20.md)
- [72 FR 1190 Heir Property](https://www.frixlaw.com/law-library/statutes/FR_PRORULE_E6-22102.md)
- [72 FR 1200 Radio Broadcasting Services; Port Chester, NY, and Stamford, CT](https://www.frixlaw.com/law-library/statutes/FR_PRORULE_E7-185.md)
- [72 FR 1384 Termination of a Foreign Private Issuer's Registration of a Class of Securities Under Section 12(g) and Duty To File Reports Under Section 13(a) or 15(d) of the Securities Exchange Act of 1934](https://www.frixlaw.com/law-library/statutes/FR_PRORULE_E6-22405.md)
- [72 FR 1473 Phase 2 of the Final Rule To Implement the 8-Hour Ozone National Ambient Air Quality Standard-Notice of Reconsideration-Extension of Public Comment Period](https://www.frixlaw.com/law-library/statutes/FR_PRORULE_E7-355.md)
- [72 FR 1685 Irish Potatoes Grown in Washington; Modification of Administrative Rules Governing Committee Representation](https://www.frixlaw.com/law-library/statutes/FR_PRORULE_E7-425.md)
- [72 FR 1946 Airworthiness Directives; General Electric Company CF34-10E Series Turbofan Engines](https://www.frixlaw.com/law-library/statutes/FR_PRORULE_E7-499.md)
- [72 FR 1949 Airworthiness Directives; General Electric Company CF34-10E Series Turbofan Engines](https://www.frixlaw.com/law-library/statutes/FR_PRORULE_E7-498.md)

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Source: Frix Law Library, https://www.frixlaw.com/law-library/statutes/FR_PRORULE_E7-5159. Check the current official text before relying on it. Not legal advice.