Revisions to the Definition of Solid Waste, 64668-64788 [E8-24399]

Agencies

• ENVIRONMENTAL PROTECTION AGENCY

[Federal Register Volume 73, Number 211 (Thursday, October 30, 2008)]
[Rules and Regulations]
[Pages 64668-64788]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-24399]



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Part II





Environmental Protection Agency





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40 CFR Parts 260, 261, and 270



Revisions to the Definition of Solid Waste; Final Rule

Federal Register / Vol. 73, No. 211 / Thursday, October 30, 2008 / 
Rules and Regulations

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 260, 261, and 270

[EPA-HQ-RCRA-2002-0031; FRL-8728-9]
RIN 2050-AG31


Revisions to the Definition of Solid Waste

AGENCY: Environmental Protection Agency.

ACTION: Final rule.

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SUMMARY: The Environmental Protection Agency (EPA) is publishing a 
final rule that revises the definition of solid waste to exclude 
certain hazardous secondary materials from regulation under Subtitle C 
of the Resource Conservation and Recovery Act (RCRA). The purpose of 
this final rule is to encourage safe, environmentally sound recycling 
and resource conservation and to respond to several court decisions 
concerning the definition of solid waste.

DATES: This final rule is effective on December 29, 2008.

ADDRESSES: EPA has established a docket for this action under Docket ID 
No. EPA-HQ-RCRA-2002-0031. All documents in the docket are listed on 
the https://www.regulations.gov Web site. Although listed in the index, 
some information is not publicly available, e.g., Confidential Business 
Information (CBI) or other information whose disclosure is restricted 
by statute. Certain other material, such as copyrighted material, is 
not placed on the Internet and will be publicly available only in hard 
copy form. Publicly available docket materials are available either 
electronically in https://www.regulations.gov or in hard copy at the 
OSWER Docket, EPA/DC, EPA West, Room 3334, 1301 Constitution Ave., NW., 
Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30 
p.m., Monday through Friday, excluding legal holidays. The telephone 
number for the Public Reading Room is (202) 566-1744, and the telephone 
number for the 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. Does This Action Apply to Me?

    Entities potentially affected by today's action include 
approximately 5,600 facilities in 280 industries in 21 economic sectors 
that generate or recycle hazardous secondary materials that are 
currently regulated as RCRA Subtitle C hazardous wastes (e.g., 
secondary materials, such as industrial co-products, by-products, 
residues, and unreacted feedstocks). Approximately 60% of these 
affected facilities are classified in NAICS code economic sectors 31, 
32, and 33 (manufacturing). The remaining economic sectors, which have 
more than ten affected industries each, are in NAICS codes 48 
(transportation), 42 (wholesale trade), and 56 (administrative support, 
waste management and remediation). About 1.5 million tons per year of 
hazardous secondary materials generated and 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 liquid hazardous 
secondary materials for recovery as solvents. Today's action is 
expected to result in regulatory and materials recovery cost savings to 
these industries of approximately $95 million per year. Taking into 
account impact estimation uncertainty factors, today's action could 
result in cost savings ranging from $19 million to $333 million per 
year to these industries in any future year. More detailed information 
on the potentially affected entities, industries, and industrial 
materials, as well as the economic impacts of this rule (with impact 
uncertainty factors), is presented in section XXI.A of this preamble 
and in the ``Regulatory Impact Analysis'' available in the docket for 
this final rule.

B. Why Is EPA Taking This Action?

    There are two primary purposes of this action. One purpose is to 
respond to a series of seven decisions by the U.S. Court of Appeals for 
the DC Circuit (1987 to 2000), which, taken together, have provided EPA 
with additional direction regarding the proper formulation of the RCRA 
regulatory definition of solid wastes for purposes of Subtitle C. A 
second purpose is to clarify the RCRA concept of ``legitimate 
recycling,'' which is a key component of EPA's approach to recycling 
hazardous secondary materials.
    This action is not intended to bring new wastes into the RCRA 
hazardous waste regulatory system and it does not do so. By removing 
unnecessary controls over certain hazardous secondary materials, and by 
providing more explicit and consistent factors for determining the 
legitimacy of recycling practices, EPA expects that today's action will 
encourage and expand the safe, beneficial recycling of additional 
hazardous secondary materials. Today's action is consistent with EPA's 
longstanding policy of encouraging the recovery, recycling, and reuse 
of valuable resources as an alternative to disposal (i.e., landfilling 
and incineration), while at the same time maintaining protection of 
human health and the environment. It also is consistent with the 
resource conservation goal of the Congress in enacting the RCRA statute 
(as evidenced by the statute's name), and with EPA's vision of how the 
RCRA program could evolve over the long term to promote economic 
sustainability and more efficient use of resources. EPA's long-term 
vision of the future of the RCRA waste management program is discussed 
in the document ``Beyond RCRA: Prospects for Waste and Materials 
Management in the Year 2020,'' which is available on EPA's Web site at: 
https://www.epa.gov/epaoswer/osw/vision.htm.

Preamble Outline

I. Statutory Authority
II. Which Revisions to the Regulations Is EPA Finalizing?
III. What Is the History of These Rules?
IV. How Do the Provisions in the Final Rule Compare to Those 
Proposed on March 26, 2007?
V. How Does the Concept of Discard Relate to the Final Rule?
VI. When Will the Final Rule Become Effective?
VII. Exclusion for Hazardous Secondary Materials That are 
Legitimately Reclaimed Under the Control of the Generator
VIII. Exclusion for Hazardous Secondary Materials That are 
Transferred for the Purpose of Legitimate Reclamation
IX. Legitimacy
X. Non-Waste Determination Process
XI. Effect on Other Exclusions
XII. Effect on Permitted and Interim Status Facilities
XIII. Effect on CERCLA
XIV. Effect on Imports and Exports
XV. General Comments on the Proposed Revisions to the Definition of 
Solid Waste
XVI. Major Comments on the Exclusion for Hazardous Secondary 
Materials Legitimately Reclaimed Under the Control of the Generator
XVII. Major Comments on the Exclusion for Hazardous Secondary 
Materials Transferred for the Purpose of Legitimate Reclamation

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XVIII. Major Comments on Legitimacy
XIX. Major Comments on the Non-Waste Determination Process
XX. How Will These Regulatory Changes Be Administered and Enforced 
in the States?
XXI. Administrative Requirements for This Rulemaking

I. Statutory Authority

    These regulations are promulgated under the authority of sections 
2002, 3001, 3002, 3003, 3004, 3007, 3010, and 3017 of the Solid Waste 
Disposal Act of 1970, as amended by the Resource Conservation and 
Recovery Act of 1976 (RCRA), as amended by the Hazardous and Solid 
Waste Amendments of 1984 (HSWA), 42 U.S.C. 6912, 6921, 6922, 6923, 
6924, 6927, 6930, and 6938. These statutes, combined, are commonly 
referred to as ``RCRA.''

II. Which Revisions to the Regulations Is EPA Finalizing?

    In today's rule, EPA is revising the definition of solid waste to 
exclude from regulation under Subtitle C of RCRA (42 U.S.C. 6921 
through 6939(e)) certain hazardous secondary materials which are being 
reclaimed. We have defined hazardous secondary materials as those which 
would be classified as hazardous wastes if discarded. We are also 
promulgating regulatory factors for determining when recycling is 
legitimate. The Agency first proposed changes reflecting the court 
decisions on the definition of solid waste rules on October 28, 2003 
(68 FR 61558). We then published a supplemental proposal on March 26, 
2007 (72 FR 14172).
    Today's preamble is organized as follows: This section of the 
preamble (Section II) describes the three principal regulatory 
revisions that are finalized in this rule: (1) An exclusion for certain 
hazardous secondary materials legitimately reclaimed under the control 
of the generator within the United States or its territories; (2) a 
conditional exclusion for hazardous secondary materials that are 
transferred for the purpose of legitimate reclamation; and (3) a case-
by-case non-waste determination procedure. Section II also discusses 
EPA's treatment of legitimacy in the final rule. Section III describes 
the history of these revisions, including relevant court cases and the 
original proposal (October 28, 2003, 68 FR 61558). Section III also 
describes the Agency's independent analyses of successful recycling 
practices, environmental problems associated with recycling of 
hazardous secondary materials, and potential effects of market forces 
on the management of such materials, and provides an overview of the 
March 26, 2007, supplemental proposal (72 FR 14172). Section IV 
explains the ways in which the March 2007 supplemental proposal differs 
from today's rule. Section V discusses how this rule is related to the 
concept of ``discard,'' and section VI indicates the effective date of 
the rule. Sections VII-X contain detailed descriptions of all 
regulatory provisions promulgated today. Sections XI-XIV describe the 
effect of this rule on other exclusions, permitted and interim status 
facilities, Superfund, and imports/exports. Sections XV-XIX contain a 
discussion of all major public comments received on the March 26, 2007, 
supplemental proposal, along with the Agency's responses to these 
comments. Section XX describes how this rule will be administered and 
enforced in the states, and section XXI describes the administrative 
requirements for this rulemaking.
    Below is a summary of the principal regulatory revisions 
promulgated today.

A. Exclusion for Hazardous Secondary Materials That Are Legitimately 
Reclaimed Under the Control of the Generator in Non-Land-Based Units

    This provision--40 CFR 261.2(a)(2)(ii)--would exclude certain 
hazardous secondary materials (i.e., listed sludges, listed by-
products, and spent materials) that are generated and legitimately 
reclaimed within the United States or its territories under the control 
of the generator, when such materials are handled only in non-land-
based units (e.g., tanks, containers, or containment buildings). This 
provision applies to hazardous secondary materials that are not spent 
lead-acid batteries or listed wastes K171 or K172, or otherwise subject 
to the specific management conditions under 40 CFR 261.4(a). Under this 
provision, the hazardous secondary materials must be contained in such 
units and are subject to the speculative accumulation requirements of 
40 CFR 261.1(c)(8), as well as the provisions for legitimate recycling 
at 40 CFR 260.43. In addition, under 40 CFR 260.42, the generator (and 
the reclaimer, if the generator and reclaimer are located at different 
facilities) must send a notification prior to operating under the 
exclusion and by March 1 of each even numbered year thereafter to the 
EPA Regional Administrator or, in an authorized state, to the state 
director.
    Hazardous secondary materials would be considered ``under the 
control of the generator'' under the following circumstances:
    (1) They are generated and then reclaimed at the generating 
facility; or
    (2) They are generated and reclaimed at different facilities, if 
the generator certifies that the hazardous secondary materials are sent 
either to a facility controlled by the generator or to a facility under 
common control with the generator, and that either the generator or the 
reclaimer has acknowledged responsibility for the safe management of 
the hazardous secondary materials; or
    (3) They are generated and reclaimed pursuant to a written 
agreement between a tolling contractor and toll manufacturer, if the 
tolling contractor certifies that it has entered into a tolling 
contract with a toll manufacturer and that the tolling contractor 
retains ownership of, and responsibility for, the hazardous secondary 
materials generated during the course of the manufacture, including any 
releases of hazardous secondary materials that occur during the 
manufacturing process.
    This exclusion does not include the recycling of hazardous 
secondary materials that are inherently waste-like under 40 CFR 
261.2(d), hazardous secondary 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)), or hazardous secondary 
materials burned to recover energy or used to produce a fuel or 
otherwise contained in fuels (40 CFR 261.2(c)(2)).

B. Exclusion for Hazardous Secondary Materials That Are Legitimately 
Reclaimed Under the Control of the Generator in Land-Based Units

    This provision--40 CFR 261.4(a)(23)--contains requirements that are 
identical to those that apply to hazardous secondary materials 
generated and legitimately reclaimed under the control of the generator 
within the United States or its territories and are handled in non-
land-based units in 40 CFR 261.2(a)(2)(ii), described above. Land-based 
units are defined in 40 CFR 260.10 as an area where hazardous secondary 
materials are placed in or on the land before recycling, but this 
definition does not include land-based production units. Examples of 
land-based units are surface impoundments and piles. This provision 
applies to hazardous secondary materials that are not spent lead-acid 
batteries or listed wastes K171 or K172, or otherwise subject to the 
specific management conditions under 40 CFR 261.4(a).

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

    This conditional exclusion--40 CFR 261.4(a)(24), hereinafter 
referred to as

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the ``transfer-based exclusion''--applies to hazardous secondary 
materials (i.e., spent materials, listed sludges, and listed by-
products) that are generated and subsequently transferred to a 
different person or company for the purpose of reclamation. As long as 
the conditions and restrictions to the exclusion are satisfied, the 
hazardous secondary materials would not be subject to Subtitle C 
regulation.
    Hazardous secondary material generators, reclaimers, and 
intermediate facilities (i.e., other facilities storing hazardous 
secondary materials for more than 10 days) must all submit a 
notification prior to operating under the exclusion and by March 1 of 
each even numbered year thereafter to the EPA Regional Administrator 
or, in an authorized state, to the state director (see 40 CFR 260.42). 
In addition, hazardous secondary materials managed at such facilities 
may not be speculatively accumulated as defined in Sec.  262.1(c)(8) 
(see 40 CFR 261.4(a)(24)(i)) and must be legitimately recycled as 
specified in Sec.  260.43 (see 40 CFR 261.4(a)(24)(iv)).
    Conditions applicable to generators of hazardous secondary 
materials are found at 40 CFR 261.4(a)(24)(v) and include containment 
of such materials, reasonable efforts to ensure that the intermediate 
facility or reclaimer intends to manage or recycle the hazardous 
secondary material properly and legitimately, and retention of records 
of off-site shipments for three years. Conditions applicable to 
intermediate facilities and reclaimers of hazardous secondary materials 
are found at 40 CFR 261.4(a)(24)(vi) and include containment of such 
materials, transmittal of confirmations of receipt to generators, 
maintenance of records for hazardous secondary materials received and 
sent off-site, financial assurance, and (for reclaimers) proper 
management of residuals. In addition, if any of the hazardous secondary 
materials excluded under 40 CFR 261.4(a)(24) are generated and then 
exported to another country for reclamation, the exporter must notify 
and obtain consent from the receiving country, and file an annual 
report. This requirement is codified in 40 CFR 261.4(a)(25).
    Like the previously discussed exclusion for hazardous secondary 
materials reclaimed under the control of the generator, this exclusion 
would not apply to hazardous secondary materials that are inherently 
waste-like under 40 CFR 261.2(d), hazardous secondary 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)), or 
hazardous secondary materials burned to recover energy or used to 
produce a fuel or are otherwise contained in fuels (40 CFR 
261.2(c)(2)).

D. Codification of Legitimacy

    Under the RCRA Subtitle C definition of solid waste, certain 
hazardous secondary materials, if recycled, are not solid wastes and, 
therefore, are not subject to RCRA's ``cradle to grave'' management 
system. The basic idea behind this principle is that recycling of these 
materials often closely resembles industrial manufacturing rather than 
waste management. However, due to economic incentives for managing 
hazardous secondary materials outside the RCRA regulatory system, there 
is a potential for some handlers to claim that they are recycling the 
hazardous secondary materials when, in fact, they are conducting waste 
treatment and/or disposal. To guard against this, EPA has long 
articulated the need to distinguish between ``legitimate'' (i.e., true) 
recycling and ``sham'' recycling, beginning with the preamble to the 
1985 regulations that discussed the definition of solid waste (50 FR 
638, January 4, 1985) and continuing through today's final rule.
    In the October 28, 2003, proposed rule (68 FR 61581-61588) on the 
definition of solid waste, we proposed codifying four criteria (called 
``factors'' in today's rule) to determine when recycling of hazardous 
secondary materials is legitimate. In the March 26, 2007, supplemental 
proposal in section XI of the preamble (72 FR 14197), we refined our 
original proposal in response to public comments. In today's final 
rule, we are codifying the factors to be used in determining whether 
recycling under the provisions finalized in this rule is legitimate, 
applying the structure basically as proposed in March 2007 (proposed at 
40 CFR 261.2(g)). The legitimacy provision is finalized in 40 CFR 
260.43.

E. Non-Waste Determinations

    Today's rule establishes a non-waste determination process that 
provides persons with an administrative process for receiving a formal 
determination that their hazardous secondary materials are not 
discarded and, therefore, not solid wastes when legitimately reclaimed. 
This process is voluntary and is available in addition to the two self-
implementing exclusions included in today's rule. There are two types 
of non-waste determinations: (1) A determination for hazardous 
secondary materials reclaimed in a continuous industrial process; and 
(2) a determination for hazardous secondary materials indistinguishable 
in all relevant aspects from a product or intermediate.
    For hazardous secondary materials reclaimed in a continuous 
industrial process, the non-waste determination will be based on the 
following four criteria: (1) The extent that the management of the 
hazardous secondary material is part of the continuous primary 
production process; (2) whether the capacity of the production process 
would use the hazardous secondary material in a reasonable time frame; 
(3) whether the hazardous constituents in the hazardous secondary 
material are reclaimed rather than discarded to the air, water, or land 
at significantly higher levels from either a statistical or from a 
health and environmental risk perspective than would otherwise be 
released by the production process; and (4) other relevant factors that 
demonstrate the hazardous secondary material is not discarded.
    For hazardous secondary materials which are indistinguishable in 
all relevant aspects from a product or intermediate, the non-waste 
determination will be based on the following five criteria: (1) Whether 
market participants treat the hazardous secondary material as a product 
or intermediate rather than a waste; (2) whether the chemical and 
physical identity of the hazardous secondary material is comparable to 
commercial products or intermediates; (3) whether the capacity of the 
market would use the hazardous secondary material in a reasonable time 
frame; (4) whether the hazardous constituents in the hazardous 
secondary material are reclaimed rather than discarded to the air, 
water, or land at significantly higher levels from either a statistical 
or from a health and environmental risk perspective than would 
otherwise be released by the production process; and (5) other relevant 
factors that demonstrate the hazardous secondary material is not 
discarded.
    The process for the non-waste determination is the same as that for 
the solid waste variances found in 40 CFR 260.30.

III. What Is the History of These Rules?

A. Background

    RCRA gives EPA the authority to regulate hazardous wastes (see, 
e.g., RCRA sections 3001-3004). The original statutory designation of 
the subtitle for the hazardous waste program was Subtitle C and the 
national hazardous waste program is referred to as the RCRA Subtitle C 
program. Subtitle C is codified at 42 U.S.C. 6921 through

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6939e. ``Subtitle C'' regulations are found at 40 CFR Parts 260 through 
279. ``Hazardous wastes'' are the subset of solid wastes that present 
threats to human health and the environment (see RCRA 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 not subject to regulation 
as hazardous wastes under RCRA Subtitle C. Thus, the definition of 
``solid waste'' plays a key role in defining the scope of EPA's 
authorities under Subtitle C of RCRA. The statute defines ``solid 
waste'' as ``* * * any garbage, refuse, sludge from a waste treatment 
plant, water supply treatment plant, or air pollution control facility 
and other discarded material * * * resulting from industrial, 
commercial, mining, and agricultural operations, and from community 
activities * * *'' (RCRA Section 1004 (27) (emphasis added)).
    Since 1980, EPA has interpreted ``solid waste'' under its Subtitle 
C regulations to encompass both materials that are destined for final, 
permanent treatment and placement in disposal units, as well as certain 
materials that are destined for recycling (45 FR 33090-95, May 19, 
1980; 50 FR 604-656, Jan. 4, 1985 (see in particular 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, hazardous secondary materials destined for recycling were 
involved in one-third of the first 60 filings under RCRA's imminent and 
substantial endangerment authority, and in 20 of the initial sites 
listed under the Comprehensive Environmental Response, Compensation and 
Liability Act (CERCLA) (48 FR 14474, April 4, 1983). Congress also 
cited some damage cases which involve recycling (H.R. Rep. 94-1491, 
94th Cong., 2d Sess., at 17, 18, 22). More recent data (i.e., 
information on damage incidents occurring after 1982) included in the 
rulemaking docket for today's final rule corroborate the fact that 
recycling operations can result in significant damage incidents.
     Excluding all hazardous secondary materials destined for 
recycling would allow materials to move in and out of the hazardous 
waste management system depending on what any person handling the 
hazardous secondary material intended to do with them. This seems 
inconsistent with the mandate to track hazardous wastes and control 
them from ``cradle to grave.''
    Hence, 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)). Also Connecticut Coastal Fishermen's Association v. 
Remington Arms Co., 989 F.2d 1305, 1315 (2d Cir. 1993) holds that EPA's 
use of a narrower and more specific definition of solid waste for 
Subtitle C purposes is a reasonable interpretation of the statute. See 
also Military Toxics Project v. EPA, 146 F.3d 948 (DC Cir. 1998).)
    EPA has always asserted that hazardous secondary 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 on the Definition of Solid 
Waste

    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)).
    The Court held that certain of the materials EPA was seeking to 
regulate were not ``discarded materials'' under RCRA section 1004(27). 
The Court also held that Congress used the term ``discarded'' in its 
ordinary sense, to mean ``disposed of'' or ``abandoned'' (824 F.2d at 
1188-89). The Court further held that the term ``discarded materials'' 
could not include materials ``* * * destined for beneficial reuse or 
recycling in a continuous process by the generating industry itself 
(because they) are not yet part of the waste disposal problem'' (824 
F.2d at 1190). The Court held that Congress had directly spoken to this 
issue, so that EPA's definition was not entitled to deference under 
Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984) (824 F.2d at 1183, 
1189-90, 1193).
    At the same time, the Court did not hold that recycled materials 
could not 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)). In addition, the Court held 
that it is reasonable for EPA to consider as discarded (and solid 
wastes) listed wastes managed in units that are in part wastewater 
treatment units, especially where it is not clear that the industry 
actually reuses the materials (AMC II, 907 F. 2d 1179 (DC Cir. 1990)).
    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

[[Page 64672]]

a reclaimer have been ``discarded once'' by the entity that sent the 
battery to the reclaimer)). In addition, the Fourth Circuit found that 
slag held on the ground untouched for six months before sale for use as 
road bed could be a solid waste (Owen Electric Steel Co. v. EPA, 37 
F.3d 146, 150 (4th Cir. 1994)).
    In 1998, EPA promulgated a rule in which EPA 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 
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 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 in ABR 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).
    Notably, 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 (``Safe Food''), 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, 
July 24, 2002). EPA determined that if these conditions are met, the 
hazardous secondary materials used to make the fertilizer 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 virgin raw materials. The Court held that this interpretation of 
``discard'' was reasonable and consistent with the statutory purpose. 
The Court noted that the identity principle was defensible because the 
differences in health and environmental risks between the two types of 
fertilizers are so slight as to be substantively meaningless.
    However, the Court specifically stated that it ``need not consider 
whether a material could be classified as a non-discard exclusively on 
the basis of the market-participation theory'' (350 F.3d at 1269). The 
Court only determined that the combination of market participants' 
treatment of the materials, EPA required management standards, and the 
``identity principle'' are a reasonable set of tools to establish that 
the recycled hazardous secondary materials and fertilizers are not 
discarded.

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

    Prompted by concerns articulated in various Court opinions decided 
up to that point, in October 2003, EPA proposed a rule that material 
generated and reclaimed in a continuous process within the same 
industry is not discarded for purposes of Subtitle C, provided the 
recycling process is legitimate (68 FR 61558, October 28, 2003). ``Same 
industry'' was defined as industries sharing the same 4-digit North 
American Industry Classification System (NAICS) code.
    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 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 that is intimately familiar with both the generation and 
reclamation of the hazardous secondary 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.
    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 contracts 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 first chemical manufacturer for 
reclamation.
    The third alternative would have provided a broader conditional 
exclusion from the RCRA hazardous waste regulations for essentially all 
hazardous secondary materials that are legitimately recycled by 
reclamation. The purpose of this broader exclusion

[[Page 64673]]

would have been to encourage reclamation by lowering costs of 
recycling, 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 
broader exclusion, compared to the same-industry exclusion that we 
proposed. Examples of such additional conditions could include 
recordkeeping and reporting requirements, along with safeguards on 
storage or handling.
    In response to the October 2003 proposal, a number of commenters 
criticized the Agency specifically for not having conducted a study of 
the potential impacts of the proposed regulatory changes. These 
commenters expressed the general concern that deregulating hazardous 
secondary materials that are reclaimed in the manner proposed could 
result in mismanagement of these materials and, thus, could create new 
cases of environmental damage that would require remedial action under 
federal or state authorities. Some of the commenters further cited a 
number of examples of environmental damage that were attributed to 
hazardous secondary material recycling, including a number of sites 
listed on the Superfund National Priorities List (NPL).
    However, other commenters to the October 2003 proposal expressed 
the view that the great majority of these cases of recycling-related 
environmental problems occurred before RCRA, CERCLA, or other 
environmental programs were established in the early 1980s. These 
commenters 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 hazardous secondary materials and recycling 
residuals. Several commenters further noted that, because of these 
developments, industrial recycling practices have changed substantially 
since the early 1980s and present day generators and recyclers are much 
better environmental stewards than in the pre-RCRA/CERCLA era. Thus, 
they argued, 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 
secondary materials recycling.

D. Recycling Studies

    In light of these comments on the October 2003 proposal, and in 
deliberating on how to proceed with this rulemaking effort, the Agency 
decided that additional information on hazardous secondary material 
recycling would benefit the regulatory decision-making process, and 
would provide stakeholders with a clearer picture of the hazardous 
secondary 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 have been available for comment 
in the docket for this rulemaking, under the following titles:
     An Assessment of Good Current Practices for Recycling of 
Hazardous Secondary Materials (EPA-HQ-RCRA-2002-0031-0354 ) 
(``successful recycling study'').
     An Assessment of Environmental Problems Associated With 
Recycling of Hazardous Secondary Materials (EPA-HQ-RCRA-2002-0031-0355) 
(``environmental problems study'').
     A Study of Potential Effects of Market Forces on the 
Management of Hazardous Secondary Materials Intended for Recycling 
(EPA-HQ-RCRA-2002-0031-0358) (``market forces study'').

The results of these three studies have informed and supported EPA's 
decision making in today's final rule.
    The successful recycling study has provided information to the 
Agency that has helped us determine what types of controls would be 
appropriate for hazardous secondary materials sent for reclamation to 
determine that they are handled as commodities rather than wastes. EPA 
found that responsible recycling practices used by generators and 
recyclers to manage hazardous secondary materials fall into two general 
categories. The first category includes the audit activities and 
inquiries performed by a generator of a hazardous secondary material to 
determine whether the entity to which it is sending such material is 
equipped to responsibly manage it 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 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.
    As discussed later in today's preamble, these findings helped 
inform EPA's decision to require that a hazardous secondary material 
generator conduct reasonable efforts to ensure its materials are 
properly and legitimately recycled, and to require certain 
recordkeeping requirements.
    The goal of the environmental problems study was to identify and 
characterize environmental problems that have been attributed to some 
types of hazardous secondary material recycling activity that are 
relevant for the purpose of this rulemaking effort. To address 
commenters' concerns that historic damages are irrelevant to current 
practices, EPA only included cases where damages occurred after 1982 
(post-RCRA and -CERCLA implementation). The study identifies 208 cases 
in which environmental damages of some kind occurred from some type of 
recycling activity and that otherwise fit the scope of the study. The 
Agency believes that the occurrence of certain types of environmental 
problems associated with current recycling practices shows that discard 
has occurred. In particular, instances where materials were abandoned 
(e.g., in warehouses) and which required removal overseen by a 
government agency and expenditure of public funds clearly demonstrate 
that the hazardous secondary material was discarded. Of the 208 damage 
cases, 69 cases (33%) involve abandoned materials. The relatively high 
incidence of abandoned materials likely reflects the fact that 
bankruptcies or other types of business failures were associated with 
138 (66%) of the cases.
    In addition, the pattern of environmental damages that resulted 
from the mismanagement of recyclable materials (including contamination 
of soils, groundwater, surface water and air) is a strong indication 
that the hazardous secondary materials were generally not managed as 
valuable commodities and were discarded. Of the 208 damage cases, 81 
cases (40%) primarily resulted from the

[[Page 64674]]

mismanagement of recyclable hazardous secondary materials. 
Mismanagement of recycling residuals was the primary cause in 71 cases 
(34%). Often, in the case of mismanagement of recycling residues, 
reclamation processes generated residuals in which the toxic components 
of the recycled materials were separated from the non-toxic components, 
and these portions of the hazardous secondary material were then 
mismanaged and discarded. Examples of this include a number of drum 
reconditioning facilities, where large numbers of used drums were 
cleaned out to remove small amounts of remaining product such as 
solvent, and these wastes were then improperly stored or disposed.
    As discussed later in today's preamble, these findings helped 
inform EPA's decision to require that the hazardous secondary material 
be contained in the unit and managed in a manner that is at least as 
protective as an analogous raw material (where there is an analogous 
material), that the recycling residuals be properly managed, and that 
the reclamation facility and any intermediate facilities have financial 
assurance. In addition, the relatively small proportion of cases of 
damages from on-site recycling (13 of the 208 cases (6%)) lends support 
for EPA's decision to include fewer limitations on the exclusion for 
hazardous secondary materials recycled under the control of the 
generator.
    The market forces study uses accepted economic theory to describe 
how various market incentives can influence a firm's decision-making 
process when the recycling of hazardous secondary materials is 
involved. This study helps explain some of the possible fundamental 
economic drivers of both the successful and unsuccessful recycling 
practices, which, in turn, helped the Agency to design the exclusions 
being finalized today.
    As pointed out by some commenters to the October 2003 proposed 
rule, the economic forces shaping the behavior of firms that recycle 
hazardous secondary materials are often different from those at play in 
manufacturing processes using virgin materials. The market forces study 
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 that are accepted 
for recycling from off-site industrial sources (which usually pay a 
fee); (2) industrial intra-company recycling, where firms generate 
hazardous secondary materials as by-products of their main production 
processes and recycle the hazardous secondary materials for sale or for 
their own reuse in production; and (3) industrial inter-company 
recycling, where firms whose primary business is not recycling, but 
either use or recycle hazardous secondary materials obtained from other 
firms, with the objective of reducing the cost of their production 
inputs. The report looks at how the outcome from each model is 
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.
    While 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 could be an over-simplification, when used in conjunction 
with other pieces of information, the economic theory can be quite 
illuminating. For example, according to the market forces study, the 
industrial intra- and inter-company recyclers have more flexibility in 
adjusting to unstable recycling markets (e.g., during price 
fluctuations, these companies can more easily switch from recycling to 
disposal or from recycled inputs to virgin inputs). Therefore, they 
would be expected to be less likely to have environmental problems from 
over-accumulated materials. On the other hand, 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 be more 
susceptible to environmental problems from the over-accumulation of 
hazardous secondary materials, especially when compared to recycling by 
a well-capitalized firm that yields a product with high value. In both 
cases, these predicted outcomes appear to be supported by the results 
of the environmental problems study, which show the majority of 
problems occur at off-site commercial recyclers.
    However, as shown by the successful recycling study, 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 that they are technically and financially capable of performing 
the recycling. In addition, we have seen that successful recyclers 
(both commercial and industrial) have often taken advantage of 
mechanisms, such as long-term contracts to help stabilize price 
fluctuations, allowing recyclers to plan their operations better.
    Further discussion of the recycling studies, including the 
methodology and limitations of the studies, can be found in the March 
2007 supplemental proposal (72 FR 14178-83), and the studies themselves 
can be found in the docket for today's rulemaking.

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

    To provide public notice on the recycling studies discussed above, 
in March 2007, EPA published a supplemental proposal (72 FR 14172, 
March 26, 2007). In addition, based on the comments received on the 
October 2003 proposal, EPA also decided to restructure our approach to 
revising the definition of solid waste to more directly consider 
whether particular materials are not considered ``discarded'' and thus 
are not solid and hazardous wastes subject to regulation under Subtitle 
C of RCRA. We agreed with the many commenters on the October 2003 
proposal 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 hazardous secondary 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)).
    Instead, in March 2007, EPA proposed two exclusions for hazardous 
secondary materials recycled under the control of the generator (one 
exclusion would apply to hazardous secondary materials managed in non-
land-based units, whereas the other exclusion would apply to hazardous 
secondary materials managed in land-based units) and an additional 
exclusion for hazardous secondary materials transferred to another 
party for reclamation.
    For the exclusions for hazardous secondary materials reclaimed 
under the control of the generator, EPA described three circumstances 
under which we believe that discard does not take place and where the 
potential for environmental releases is low to non-existent. The three 
situations involve legitimate recycling of hazardous secondary 
materials that are generated and reclaimed at the generating facility, 
at a different facility within the same

[[Page 64675]]

company, or through a tolling arrangement. Under all three 
circumstances, the hazardous secondary materials must be generated and 
reclaimed within the United States or its territories. Because the 
hazardous secondary material generator in these situations still finds 
value in the hazardous secondary materials, has retained control over 
them, and intends to use them, EPA proposed to exclude these materials 
from being a solid waste and, thus, from regulation under Subtitle C of 
RCRA if the recycling is legitimate and if the hazardous secondary 
materials are not speculatively accumulated.
    In those cases, however, where generators of hazardous secondary 
materials do not reclaim the materials themselves, it often may be a 
sound business decision to ship the hazardous secondary materials to a 
commercial facility or another manufacturer for reclamation in order to 
avoid the costs of disposing of the material. In such situations, the 
generator has relinquished control of the hazardous secondary materials 
and the entity receiving such materials may not have the same 
incentives to manage the hazardous secondary materials as a useful 
product, especially if they are paid a fee for managing the hazardous 
secondary materials.
    Accordingly, for the exclusion for hazardous secondary materials 
transferred to another party for reclamation, the Agency proposed 
conditions that, when met, would indicate that these hazardous 
secondary materials are not discarded. One of the conditions would 
require the generator to make reasonable efforts to determine that its 
hazardous secondary materials will be properly and legitimately 
recycled (thus demonstrating the hazardous secondary material is not 
being discarded). Another condition would require the reclamation 
facility to have adequate financial assurance (thus demonstrating that 
the hazardous secondary material will not be abandoned). In addition, 
EPA proposed that both the generator and reclaimer would need to 
maintain shipping records (to demonstrate that the hazardous secondary 
material was sent for reclamation and was received by the reclaimer), 
and the reclaimer would be subject to additional storage and residual 
management standards (to address the instances of discard observed at 
off-site reclamation facilities in the damage cases).
    In addition, in March 2007, EPA's supplemental proposal included a 
case-by-case petition process to allow applicants to demonstrate that 
their hazardous secondary materials are not discarded and therefore are 
not solid wastes.
    Finally, in EPA's March 2007 supplemental proposal, EPA proposed a 
definition of legitimate recycling that restructured the legitimacy 
factors originally proposed in October 2003. The proposed legitimacy 
factors would be used to determine whether the recycling of hazardous 
secondary materials is legitimate.

IV. How Do the Provisions in the Final Rule Compare to Those Proposed 
on March 26, 2007?

    EPA is finalizing the exclusions largely as proposed in March 2007, 
with some revisions and clarifications. The following is a brief 
overview of the revisions to the proposal, with references to 
additional preamble discussions for more detail.
    For the exclusion for hazardous secondary materials that are 
legitimately reclaimed under the control of the generator, we are 
clarifying the scope of the exclusion, including addressing issues with 
defining ``on-site,'' ``same company,'' and ``tolling arrangement.'' We 
have also added additional data elements to the notification 
requirement, clarified that the hazardous secondary materials must be 
contained when managed in non-land-based units, as well as in land-
based units, because hazardous secondary materials that are released to 
the environment and not immediately recovered are discarded, and added 
a reference to the new legitimacy provision in Sec.  260.43. We have 
also revised the definition of land-based unit to be ``an area where 
hazardous secondary materials are placed in or on the land before 
recycling,'' while also clarifying that the definition does not include 
production units. For further discussion of the generator-controlled 
exclusion, see section VII of this preamble.
    For the exclusion for hazardous secondary materials that are 
transferred for the purpose of reclamation, we are clarifying that 
hazardous secondary materials held at a transfer facility for less than 
10 days will be considered to be in transport. We are also allowing the 
use of intermediate facilities that store hazardous secondary materials 
for more than 10 days, provided the facilities comply with the same 
conditions applicable to reclamation facilities. In addition, the 
hazardous secondary material generator must select the reclamation 
facility (or facilities) that can be used and must perform reasonable 
efforts on both the intermediate facility and reclamation facility (or 
facilities), and the intermediate facility must send the hazardous 
secondary material to the reclamation facility that the generator 
selected. For the reasonable efforts condition, we have included 
specific questions in the regulatory language, and are requiring both 
documentation and certification. We are also clarifying how the 
financial assurance condition applies to reclamation and intermediate 
facilities excluded under the transfer-based exclusion, including 
tailored regulatory language for financial assurance specific to these 
types of facilities. We have also added a reference to the new 
legitimacy provision in Sec.  260.43. For further discussion, see 
section VIII of this preamble.
    Regarding legitimacy, we are adding legitimacy as a condition of 
the exclusions and the non-waste determinations in this rule, but are 
not finalizing the language proposed in Sec.  261.2(g) for all 
recycling. The new legitimacy provision can be found at Sec.  260.43. 
For further discussion, see section IX of this preamble.
    Finally, for the non-waste determination process, we have limited 
the categories for non-waste determinations to materials reclaimed in a 
continuous industrial process and materials indistinguishable from 
products and we have revised the criteria to make them more consistent 
across the two categories of non-waste determinations. Furthermore, we 
are not finalizing the non-waste determination for materials reclaimed 
under the control of the generator via a tolling arrangement or similar 
contractual arrangement. For further discussion, see sections X and XIX 
of this preamble.

V. How Does the Concept of Discard Relate to the Final Rule?

    In the March 2007 supplemental proposal, EPA explained how the 
concept of ``discard'' is the central organizing idea behind the 
revisions to the definition of solid waste being finalized today (72 FR 
14178). Basing the revisions on ``discard'' 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 
final rule, a key issue is the circumstances under which a hazardous 
secondary material that is recycled by reclamation is or is not 
discarded.

[[Page 64676]]

    The March 2007 supplemental proposal represented a shift from the 
approach taken in the October 2003 proposal, which proposed to exclude 
from the definition of solid waste any hazardous secondary 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 NAICS code. The 
basis for that proposed 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 in a continuous process by the 
generating industry are not discarded (68 FR 61563, 61564-61567).
    Commenters critical of the October 2003 proposal argued, among 
other things, that EPA failed to present a reasoned analysis of the 
indicia of discard (72 FR 14184-14185). In evaluating these comments, 
EPA determined that the effect of our October 2003 proposal would be 
that some hazardous secondary materials generated and reclaimed under 
the control of the generator would not be excluded, even though the 
generator had not abandoned the material and had every opportunity and 
incentive to maintain oversight of, and responsibility for, the 
hazardous secondary material being reclaimed. Under these 
circumstances, we determined in March 2007 that discard has generally 
not occurred (72 FR 14185). Therefore, in the March 2007 supplemental 
proposal, EPA decided to examine the concept of discard, which is the 
driving principle 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 (see 72 FR 14175).
    EPA continues to believe that the concept of discard is the most 
important organizing principle governing the determinations we have 
made in today's final rule. 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.'' 
Today's final rule is consistent with that definition. Below is a 
discussion of each provision of the final rule with an explanation of 
how it relates to discard. Further discussion of the concept of discard 
and its relationship to specific provisions and ways of implementing 
this rule is found in sections V.A through V.D, below.
    The Agency also incorporates in this preamble to the final rule all 
determinations in the March 2007 supplemental proposal, except to the 
extent they are inconsistent with the determinations in this preamble, 
regarding the conditions for the solid waste exclusions. In addition, 
EPA notes that it did not reopen the specific details of the 
speculative accumulation regulation regarding the time periods under 
which materials are to be recycled, since these periods have been part 
of the Agency's regulations for many years and are familiar to persons 
who are affected by the regulations.

A. Discard and the Generator-Controlled Exclusions

    In the March 2007 supplemental proposal, EPA determined that if the 
generator maintains control over the recycled hazardous secondary 
material, the material is legitimately recycled under the standards 
established in the proposal, and the material is not speculatively 
accumulated within the meaning of EPA's regulations, then the hazardous 
secondary material is not discarded. This is because the hazardous 
secondary material is being treated as a valuable commodity rather than 
as a waste. By maintaining control over, and potential liability for, 
the recycling process, the generator ensures that the hazardous 
secondary materials are not discarded (see ABR 208 F.3d 1051 (``Rather 
than throwing these materials [destined for recycling] away, the 
producer saves them; rather than abandoning them, the producer reuses 
them.'')) (72 FR 14178).
    EPA continues to believe that when a generator legitimately 
recycles hazardous secondary material under its control, the generator 
has not abandoned the material and has every opportunity and incentive 
to maintain oversight of, and responsibility for, the hazardous 
secondary material that is reclaimed.
    In determining when recycling occurs ``under the control'' of the 
generator, EPA looked at three scenarios: Recycling performed on-site, 
recycling performed within the same company, and recycling performed 
under certain specific tolling arrangem