Revisions to the Definition of Solid Waste, 14172-14218 [E7-5159]

Agencies

• ENVIRONMENTAL PROTECTION AGENCY

[Federal Register Volume 72, Number 57 (Monday, March 26, 2007)]
[Proposed Rules]
[Pages 14172-14218]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-5159]



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Part II





Environmental Protection Agency





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40 CFR Parts 260 and 261



Revisions to the Definition of Solid Waste; Proposed Rule

Federal Register / Vol. 72, No. 57 / Monday, March 26, 2007 / 
Proposed Rules

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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.

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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:
    https://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.
    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 
https://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 https://
www.regulations.gov or e-mail. The https://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 https://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 https://
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 https://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).

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. 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

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rule (with impact uncertainty factors), is presented in section XVI.A 
of this preamble and in the ``Economics Background Document'' available 
in the docket for this rulemaking.

B. What To Consider When Preparing Comments for EPA

    1. Submitting CBI. Do not submit this information to EPA through 
https://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.
     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. 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). The exclusion would apply to 
hazardous secondary material that is reclaimed under the control of the 
generator, if the materials are not speculatively accumulated. In 
addition, EPA is proposing to include in 40 CFR 260.42 a requirement 
that the generator would be required to submit a one-time notification 
to EPA or the authorized state. Hazardous secondary material would be 
considered ``under the control of the generator'' under the following 
circumstances:
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    \1\ In this context, the terms ``recycling'' and ``reclamation'' 
are not necessarily synonymous. ``Recycling typically involves a 
series of activities, including storage and other handling steps 
that culminate in the production of a valuable end product of some 
kind. Thus, if materials need to be reclaimed in order to produce a 
valuable end product, the reclamation activity can be thought of as 
one step in the overall recycling process. See proposed Sec.  
261.4(g). Further explanation of the term ``reclamation'' can be 
found in the preamble to the October 2003 proposal at 68 FR 61564.
    \2\ EPA has proposed to limit this exclusion to hazardous 
secondary materials reclaimed within the United States or its 
territories because it does not have sufficient information 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.
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    (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

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preamble. We note that the Agency is considering expanding its 
regulations for comparable fuels in a separate rulemaking.

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). 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).
    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. 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. 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.
    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.

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It also is consistent with one of the primary goals of the Congress in 
enacting the RCRA statute (as evidenced by its name), and with the 
Agency's vision of how the RCRA program could evolve over the longer 
term to promote sustainability and more efficient use of resources.\3\
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    \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 https://www.epa.gov/epaoswer/osw/
vision.htm.
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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. 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. 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. 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. 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.
    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

[[Page 14176]]

excluded from regulation under 40 CFR 261.4(a)(6). In some cases, these 
exclusions specify certain conditions that must be met in order to 
qualify for and maintain the excluded status of the recycled material. 
An example of such a ``conditional exclusion'' is the one provided in 
40 CFR 261.4(a)(9) for spent wood preserving solutions that are 
reclaimed and reused. EPA is proposing that hazardous secondary 
materials that are currently excluded with specific requirements or 
conditions should be required to continue to meet those requirements 
(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. (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).
     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. (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. 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

[[Page 14177]]

generally ``granted the petition for review.''
    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.
    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).
    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). 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.
    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. 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

[[Page 14178]]

noted that the identity principle was defensible because the 
differences in health and environmental risks between the two types of 
fertilizers are so slight as to be substantively meaningless.
    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)). 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.
    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.''). 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. 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. 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

[[Page 14179]]

state authorities. Some of the commenters further cited a number of 
examples of environmental damage that were attributed to hazardous 
material recycling, including a number of sites listed on the Superfund 
National Priorities List (NPL).
    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. 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. 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.
    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 https://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.
    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

[[Page 14180]]

materials market. The second category of responsible recycling 
practices consists of the control practices that ensure responsible 
management of any given shipment of hazardous secondary material, such 
as the contracts under which the transaction takes place and the 
tracking systems in place that can inform a generator that its 
hazardous secondary material has been properly managed.
    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.
    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 
facili