  SEQ CHAPTER \h \r 1 ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 260 and 261 					

EPA-HQ- RCRA-2002-0031; FRL-

RIN 2050-AG31							

Revisions to the Definition of Solid Waste

AGENCY: Environmental Protection Agency.

ACTION: Final Rule.							

SUMMARY: The Environmental Protection Agency (EPA) is today 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 [Insert date 180 days after
publication in the Federal Register.

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 www.regulations.gov web site. Although listed in the index, some
information is not publicly available, e.g., 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   HYPERLINK
"http://www.regulations.gov"  www.regulations.gov  or in hard copy at
the OSWER Docket, EPA/DC, EPA West, Room 3334, 1301 Constitution Ave.,
N.W., 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. N.W., Washington
DC 20460, (703) 308-8800, (  HYPERLINK mailto:(goode.marilyn@epa.gov)
goode.marilyn@epa.gov)  or Tracy Atagi, Office of Solid Waste, Hazardous
Waste Identification Division, MC 5304P, Environmental Protection
Agency, 1200 Pennsylvania Ave. N.W., Washington DC 20460, at (703)
308-8672 (  HYPERLINK mailto:(atagi.tracy@epa.gov) 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 $41
million to $138 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 today's action. One purpose is to
respond to a series of seven decisions by the U.S. Court of Appeals for
the D.C. 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 codify the RCRA concept of "legitimate recycling,"
which is a key component of EPA’s approach to recycling hazardous
secondary materials. 

	Today's 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 criteria for determining the
legitimacy of recycling practices in general, 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
website at:   HYPERLINK "http://www.epa.gov/epaoswer/osw/vision.htm" 
http://www.epa.gov/epaoswer/osw/vision.htm . 

Preamble Outline

BACKGROUND

Statutory Authority

Which Revisions to the Regulations is EPA Finalizing Today?

What is the History of these Rules? 

How do the Final Rules Compare to Those Proposed on March 26, 2007?

How Does the Concept of Discard Relate to The Final Rule?

When will the Final Rules Become Effective?

DETAILED DESCRIPTION OF TODAY’S FINAL RULE

Exclusion for Hazardous Secondary Materials that are Legitimately
Reclaimed Under the Control of the Generator

Exclusion for Hazardous Secondary Materials that are Transferred for the
Purpose of Legitimate Reclamation

Legitimacy

Non-Waste Determination Process

EFFECT ON OTHER PROGRAMS

Effect on Other Exclusions

Effect on Permitted and Interim Status Facilities

Effect on Superfund

Effect on Imports and Exports

MAJOR COMMENTS

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

XVIII. Major Comments on Legitimacy

XIX. Major Comments on the Non-Waste Determination Process

STATE AUTHORIZATION

XX. How Will Today’s Regulatory Changes be Administered and Enforced
in the States?

ADMINISTRATIVE REQUIREMENTS

XXI. Administrative Requirements for this Rulemaking

BACKGROUND

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 Today?

	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 court decisions
on the definition of solid waste, as well as regulatory criteria for
legitimacy, 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 four 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; (3) a case-by-case non-waste determination
procedure; and (4) codification of factors for determining when
recycling is legitimate. 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 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
specific management conditions under 40 CFR 261.4(a). Under this
provision, the hazardous secondary materials must be contained in such
units and they are subject to the speculative accumulation requirements
of 40 CFR 261.1(c)(8). 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 at least every two years
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. 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 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 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 at least every two
years 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 §262.1(c)(8) (see 40 CFR 261.4(a)(24)(i)). 

Conditions applicable to generators of hazardous secondary materials are
found at 40 CFR 261.4(a)(24)(iv) 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)(v) 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 finalizing the factors to be used in
determining whether recycling is legitimate with the structure basically
as proposed in 2007 (40 CFR 261.2(g)).

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 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 USC 6921 through 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 (D.C. 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 (D.C. 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
D.C. Circuit has agreed that materials undergoing sham recycling are
discarded and, consequently, are solid wastes under RCRA (see American
Petroleum Institute v. EPA, 216 F.3d 50, 58–59 (D.C.Cir. 2000)).

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

	Trade associations representing mining and oil refining interests
challenged EPA’s 1985 regulatory definition of solid waste. In 1987,
the D.C. Circuit held that EPA exceeded its authority “in seeking to
bring materials that are not discarded or otherwise disposed of within
the compass of ‘waste’” (American Mining Congress v. EPA (“AMC
I”), 824 F.2d 1177, 1178 (D.C. Cir. 1987)).

	The Court held that certain 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 D.C. 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 (D.C. Cir. 1990)). In addition, the
Court held that it is reasonable for EPA to consider as discarded (and
solid wastes) listed wastes managed in units that are in part wastewater
treatment units, especially where it is not clear that the industry
actually reuses the materials (AMC II, 907 F. 2d 1179 (D.C. Cir. 1990)).


	It also is worth noting that two other Circuits also have held that EPA
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)). 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 D.C. 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 (D.C. 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 (D.C.
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
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. 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 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 (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 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 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 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 study of successful recycling practices,
generators who might otherwise bear a large liability from poorly
managed recycling at other companies have addressed this issue by
carefully examining the recyclers to which they send their hazardous
secondary materials to ensure 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 2007 supplemental
proposal (72 FR 14178-83), and the studies themselves can be found in
the docket for today’s rulemaking.

E. 2007 Supplemental Proposal to Revise the Definition of Solid Waste

To provide public notice on the recycling studies discussed above, in
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 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 legitimately recycling of hazardous secondary materials that are
generated and reclaimed at the generating facility, at a different
facility within the same 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 (see 40 CFR
261.2(g)), 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 recycling 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 material 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 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 2007, 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 regulations largely as proposed in 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, and have 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
material that are released to the environment and not immediately
recovered are discarded.. 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.”  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 ten 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. For further discussion, see section VIII of this
preamble.

	For the codification of legitimacy, we are finalizing the regulatory
language basically as proposed in 2007, with some clarifications. 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 section 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.

	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 (D.C. Cir. 1987) that materials
destined for beneficial reuse of recycling 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 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 D.C. 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 producers 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 arrangements.

	In the March 2007 supplemental proposal, EPA noted that, of the 208
recycling cases that caused environmental damage, only 13 (approximately
6%) occurred as a result of on-site recycling. We also agreed with
commenters on the October 2003 proposal who asserted that “generators
who recycle materials on-site (even if the reclamation takes place in a
different NAICS code) are likely to be familiar with the material and
more likely to maintain responsibility for the materials” (72 FR
14185). 

	EPA also determined that this rationale applies to reclamation taking
place within the same company. In the case of same-company recycling,
both the generating facility and the reclamation facility (if they are
different) would be familiar with the hazardous secondary materials and
the company would be ultimately liable for any mismanagement of the
hazardous secondary materials. Under these circumstances, the incentive
to avoid such mismanagement would be so strong that mismanagement also
would be unlikely. 

	In the case of certain tolling operations, EPA determined in the March
2007 supplemental proposal that a certain specific type of tolling
arrangement provides equivalent assurance that recycling is performed
“under the control of the generator” and does not constitute
discard. Under this type of arrangement, one company (the tolling
contractor) contracts with a second company (the toll manufacturer) to
produce a specialty chemical from specified virgin materials identified
in the tolling contract. The toll manufacturer produces the chemical and
the production process generates a hazardous secondary material (such as
a spent solvent) which is routinely reclaimed at the tolling
contractor’s facility. The typical toll manufacturing contract
contains detailed specifications about the product to be manufactured,
including management of any hazardous secondary materials that are
produced and returned to the tolling contractor for reclamation. Under
this scenario, the hazardous secondary material continues to be managed
as a valuable product, so discard has not occurred. Moreover, because
the contract specifies that the tolling contractor retains ownership of,
and responsibility for, the hazardous secondary materials, there is a
strong incentive to avoid any mismanagement or release. In essence, the
tolling contractor has outsourced a step in its manufacturing process,
but continues to take responsibility and maintain control of the process
as a whole, including both the virgin materials going into the process
and the product and hazardous secondary materials resulting from the
process.

	For all three of these generator-controlled exclusions —reclamation
performed on-site, within the same company, and via certain tolling
arrangements—EPA continues to find that the facility owner still finds
value in the hazardous secondary materials, has retained control over
them, and intends to reclaim them. Therefore, EPA is finalizing an
exclusion for these materials, with certain restrictions discussed
below.

	In the March 2007 supplemental proposal, EPA also noted that management
in a land-based unit does not automatically indicate a hazardous
secondary material is being discarded. As long as the hazardous
secondary material is contained and is destined for recycling under the
control of the generator, it would still meet the terms of the
exclusion. However, if the hazardous secondary material is not managed
as a valuable product and, as a result, a significant release from the
unit occurs, the hazardous secondary material in the land-based unit
would be considered discarded (72 FR 14186). Thus, EPA proposed that the
hazardous secondary material must be contained in the land-based unit in
order for the exclusion to be applicable. 

	However, in making this finding that hazardous secondary materials
managed in a land-based unit must be contained in order to retain the
exclusion, EPA did not intend to imply that hazardous secondary
materials managed in non-land-based units do not need to be contained.
Hazardous secondary materials released to the environment are not
destined for recycling and are clearly discarded whether they originated
from a land-based unit or not. Because non-land-based units do not
involve direct contact with the land, in the March 2007 supplemental
proposal, EPA did not include an explicit “contained” restriction
for these units. However, as commenters noted, it is still possible for
non-land-based units to leak or otherwise release significant amounts of
hazardous secondary materials to the environment, even if they are not
in direct contact with the land, resulting in those materials being
discarded. Thus, for today’s final rule, EPA is requiring that
hazardous secondary materials must be contained (whether it is managed
in land-based units or non-land-based units) in order to identify the
hazardous secondary materials that are not being discarded and,
therefore, are not solid wastes.

Another restriction on the generator-controlled exclusions is the
prohibition against speculative accumulation. As noted in the March 2007
supplemental proposal, restrictions on speculative accumulation (40 CFR
261.1(c)(8)) have been an important element of the RCRA hazardous waste
recycling regulations since they were promulgated on January 4, 1985.
Historically, hazardous secondary materials excluded from the definition
of solid waste generally become wastes when they are speculatively
accumulated, because, at that point, they are considered to be unlikely
to be recycled and therefore discarded. According to this regulatory
provision, a hazardous secondary material is accumulated speculatively
if the person accumulating it cannot show that the material is
potentially recyclable; further, the person accumulating the hazardous
secondary material must show that during a calendar year (beginning
January 1) the amount of such material that is recycled, or transferred
to a different site for recycling, must equal at least 75% by weight or
volume of the amount of that material at the beginning of the period. As
noted in the March 2007 supplemental proposal, this provision already
applies to hazardous secondary materials that are not otherwise
considered to be wastes when recycled, such as materials used as
ingredients or commercial product substitutes, materials that are
recycled in a closed-loop production process, or unlisted sludges and
by-products being reclaimed (72 FR 14188). Given that a significant
portion of the damage cases stemmed from over-accumulation of hazardous
secondary materials, EPA continues to believe that a restriction on
speculative accumulation is needed to determine that the hazardous
secondary material is being recycled and is not discarded. 

In addition, as with all recycling exclusions under RCRA, the excluded
hazardous secondary materials must be recycled legitimately. As
discussed in section IX of this preamble, 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 established the definition of solid waste (50 FR 638, January 4,
1985) and continuing with the October 2003 proposed codification of
criteria for identifying legitimate recycling. Because there can be a
significant economic incentive to manage hazardous secondary materials
outside the RCRA regulatory system, there is a potential for some
handlers to claim that they are recycling, when, in fact, they are
conducting waste treatment and/or disposal in the guise of recycling.
While the legitimacy construct applies to both excluded recycling and
the recycling of regulated hazardous wastes, hazardous secondary
materials that are not legitimately recycled (i.e., that are being
treated and/or disposed in the guise of recycling) are discarded
materials and, therefore, are solid wastes. 

A final restriction on the generator-controlled exclusion from the
definition of solid waste is that the hazardous secondary material must
be generated and recycled within the United States. Because hazardous
secondary materials that are exported for recycling passes out of the
regulatory control of the federal government, making it difficult to
determine if these activities are “under the control of the
generator” and because, as noted in the March 2007 supplemental
proposal, we do not have sufficient information about most recycling
activities outside of the United States to decide whether discard is
likely or unlikely (72 FR 14187), EPA continues to find that this
restriction is needed to properly define when the hazardous secondary
material is not being discarded.

B. Discard and the Transfer-Based Exclusion

	As EPA noted in the March 2007 supplemental proposal, in cases 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 be reclaimed to a commercial facility
or another manufacturer in order to avoid the costs of disposing of the
material. 

In such situations, EPA determined that the generator has relinquished
control of the hazardous secondary materials and the entity receiving
such materials may not have the same incentives to manage them as a
useful product (72 FR 14178). This is evidenced by the results of the
study of recycling-related environmental problems, found in the docket
of today’s final rule. Of the 208 damage cases EPA identified for the
March 2007 supplemental proposal, 195 (about 94%) were from off-site
third-party recyclers, with clear instances of discard resulting in risk
to human health and the environment, including cases of large-scale soil
and ground water contamination with remediation costs in some instances
in the tens of millions of dollars. 

In addition, the market forces study in the docket for today’s
rulemaking supports the conclusion that the pattern of discard at
off-site, third party reclaimers is a result of inherent differences
between commercial recycling and normal manufacturing. As opposed to
manufacturing, where the cost of raw materials or intermediates (or
inputs) is greater than zero and revenue is generated primarily from the
sale of the output, hazardous secondary materials recycling can involve
generating revenue primarily from receipt of the hazardous secondary
materials (72 FR 14182). Recyclers of hazardous secondary materials in
this situation may thus respond differently from traditional
manufacturers to economic forces and incentives, accumulating more
inputs (hazardous secondary materials) than can be processed
(reclaimed). In addition, commercial recyclers appear to have less
flexibility than in-house recyclers (e.g., during price fluctuations,
in-house recyclers can more easily switch from recycling to disposal or
from recycled inputs to virgin inputs, which commercial recyclers
cannot) (72 FR 14183).

After reviewing public comments on the recycling studies (see section
XV.D. of today’s preamble), EPA continues to believe that conditions
are needed under the transfer-based exclusion for the Agency to
determine that these hazardous secondary materials are not discarded. 

	One key condition that reflects the basic premise underlying the
exclusion is the condition that the hazardous secondary material
generator perform and document reasonable efforts to ensure that its
hazardous secondary material will be properly and legitimately recycled.
As EPA explained in the March 2007 supplemental proposal, in order to
demonstrate that hazardous secondary materials will not be discarded,
generators who transfer their hazardous secondary materials to a third
party must have a reasonable understanding of who will be reclaiming the
materials and how they will be managed and reclaimed and a reasonable
assurance that the recycling practice is safe and legitimate (72 FR
14194). In order for a generator to determine whether its hazardous
secondary materials are not solid wastes because they are not discarded,
the generator must make a reasonable effort to ensure that the reclaimer
intends to legitimately recycle the material pursuant to 40 CFR 261.2(g)
and not discard it, and that the reclaimer (and any intermediate
facility) will properly manage the material. 

	EPA continues to find that the reasonable efforts condition is critical
in determining when hazardous secondary materials sent to another party
for reclamation are not discarded. According to the study of successful
recycling practices found in the docket for today’s rulemaking,
generators of hazardous secondary materials frequently perform audit
activities and inquiries to determine whether the entity to which they
are sending hazardous secondary materials is equipped to responsibly and
legitimately reclaim and 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 materials markets. As noted in
the March 2007 supplemental proposal, EPA’s study of good practices
for recycling quotes one large recycling and disposal vendor as stating
that of its new customers, 60% of the large customers and 30%–50% of
the smaller customers now perform audits on them (72 FR 14191). Thus,
although these practices are not universal, they do indicate that there
are currently many generators who recognize the risk of third-party
recyclers discarding their hazardous secondary materials and who take
responsibility to ensure that this discard does not occur. By codifying
the reasonable efforts condition of the transfer-based exclusion, EPA
believes that hazardous secondary materials generated by companies who
take this type of responsibility are not being discarded.

EPA has developed a reasonable efforts condition that is objective and
is based on the types of information that are typically gathered in
environmental audits currently performed by generators. However, one
piece of information that is not included under the reasonable efforts
provision being finalized today is the financial health of the
reclamation facility. While EPA agrees with comments received that state
that evaluating the financial health of a company can be a useful
exercise, and encourages companies to do so, it is not an activity that
lends itself to an objective standard that would be workable in a solid
waste identification regulation.

However, the financial health of a reclamation facility can still be a
crucial consideration in determining whether discard is taking place.
According to the successful recycling study, an examination of a
company’s finances is an important part of many environmental audits.
In addition, the environmental problems study showed that bankruptcies
or other types of business failures were associated with 138 (66%) of
the damage cases, and the market forces study identified a low net worth
of a firm as a strong indication of a sub-optimal outcome of recycling.

To address the issue of the correlation of financial health with the
absence of discard, EPA proposed in the March 2007 supplemental proposal
to require that reclamation facilities obtain financial assurance. The
financial assurance requirements are designed to help EPA determine that
the hazardous secondary material generator is not discarding the
hazardous secondary material by sending it to a reclamation facility
that is financially unsound. 

In addition, by obtaining financial assurance, the owner/operator of the
reclamation facility (or intermediate facility) is making a direct
demonstration that it will not abandon the hazardous secondary material.
Discard through abandonment was a major cause of damages identified in
the environmental problems study. Of the 208 damage cases, 69 (33%)
involved abandoned materials. By obtaining financial assurance, a
reclaimer (or intermediate facility) is demonstrating that even if
events beyond its control make its operations uneconomical, the
hazardous secondary material will not be abandoned.

Another major cause of damages identified in the environmental problems
study was mismanagement of recyclable materials, constituting the
primary cause of damage in 81 (40%) of the 208 cases. Accordingly, in
the March 2007 supplemental proposal, EPA proposed a condition for
reclaimers that they must manage the hazardous secondary materials in at
least as protective a manner as they would an analogous raw material,
and in such a way that the hazardous secondary materials would not be
released into the environment (72 FR 14195). After reviewing the
comments, EPA continues to find that such a condition is needed for the
Agency to determine that the hazardous secondary materials are not
discarded.

The third major source of damages identified in the environmental
problems study was mismanagement of residuals generated from the
reclamation activity, constituting the primary cause of damage in 71
(34%) of the 208 cases. As discussed in the March 2007 supplemental
proposal, EPA found that in many cases, the residuals were comprised of
the most hazardous components of the hazardous secondary materials
(e.g., polychlorinated biphenyls (PCBs) from transformers) and were
simply disposed of in on-site landfills or piles, with little regard for
the environmental consequences of such mismanagement or possible CERCLA
liabilities associated with cleanup of these releases. Therefore, EPA
proposed that “any residuals that are generated from reclamation
processes will be properly managed. If any residuals exhibit a hazardous
characteristic according to subpart C of 40 CFR part 261, or themselves
are listed hazardous wastes, they are hazardous wastes (if discarded)
and must be managed according to the applicable requirements of 40 CFR
parts 260 through 272’’ (72 FR 17195). EPA continues to find that
this condition is important to clarify the regulatory status of these
waste materials, and to emphasize in explicit terms that the residuals
generated from reclamation operations must be managed properly (i.e.,
consistent with federal and state requirements). 

Finally, other provisions of the transfer-based exclusion help ensure
that the hazardous secondary material is properly transferred to the
reclamation facility for recycling. Only the hazardous secondary
material generator, transporter, intermediate facility and reclaimer can
handle the material. (Note that, as with hazardous waste, a hazardous
secondary material can be held up to 10 days at a transfer facility and
still be considered as being transported). The hazardous secondary
material generators, intermediate, and reclamation facilities claiming
the exclusion must keep records of the hazardous secondary material
shipments, and reclamation and intermediate facilities must send
confirmations of receipt back to the hazardous secondary material
generator. Thus, all parties responsible for the excluded hazardous
secondary materials will be able to demonstrate that the materials were
in fact sent for recycling and arrived at the intended facility and were
not discarded in transit. For hazardous secondary material generators
who are exporting to other countries for recycling, notice and consent
must be obtained, thus facilitating oversight of the hazardous secondary
material when sent beyond the borders of the United States, helping to
ensure that it is recycled rather than discarded.

C. Discard and Non-Waste Determinations

	In addition to the exclusions discussed above, the Agency is also
finalizing a process for obtaining a case-specific non-waste
determination for certain hazardous secondary materials that are
recycled. This process allows a petitioner to receive a formal
determination from EPA (or the state, if the state is authorized for
this provision) that its hazardous secondary material is not discarded
and therefore is not a solid waste. The procedure allows EPA or the
authorized state to take into account the particular fact pattern of the
reclamation operation to determine that the hazardous secondary material
in question is not a solid waste. 

	The determination is available to applicants who demonstrate (1) that
their hazardous secondary materials are reclaimed in a continuous
industrial process, or (2) that the materials are indistinguishable in
all relevant aspects from a product or intermediate. 

	As discussed earlier, court decisions have made it clear that hazardous
secondary materials reclaimed in a continuous industrial process are not
discarded and, therefore, are not solid waste. As discussed in the March
2007 supplemental proposal, EPA believes that the generator-controlled
exclusion also excludes from the definition of solid waste hazardous
secondary materials recycled in a continuous industrial process (72 FR
14202). In effect, hazardous secondary materials reclaimed in a
continuous process are a subset of the hazardous secondary materials
reclaimed under the control of the generator that are excluded under
today’s rule. 

However, EPA also recognized in the March 2007 supplemental proposal
that production processes can vary widely from industry to industry.
Thus, in some cases, EPA may need to evaluate case-specific fact
patterns to determine whether an individual hazardous secondary material
is reclaimed in a continuous industrial process, and therefore not a
solid waste. EPA continues to believe that this is best done through a
case-by-case procedure and is, therefore, finalizing the non-waste
determination process today.

	In addition to ruling that hazardous secondary materials recycled
within a continuous industrial process are not discarded and therefore
not solid waste, the courts have also said that hazardous secondary
materials destined for recycling in another industry are not
automatically discarded. In the Safe Food decision, the Court stated,
“[n]obody questions that virgin . . . feedstocks are products rather
than wastes. Once one accepts that premise, it seems eminently
reasonable to treat [recycled] materials that are indistinguishable in
the relevant respects as products as well” (350 F.3d at 1269). In Safe
Food, the court accepted EPA’s determination that the “relevant
respects” were that “  SEQ CHAPTER \h \r 1 market participants treat
the…materials more like valuable products rather than like
negatively-valued wastes managing them in ways inconsistent with
discard, and that the fertilizers derived from these recycled feedstocks
are chemically indistinguishable from analogous commercial products made
from virgin materials.” Id. As a result, EPA recognized in the March
2007 supplemental proposal, and continues to believe today, that there
may be some instances that would benefit from a non-waste determination
(72 FR 14203). Thus, we are also finalizing the non-waste determination
process for hazardous secondary materials indistinguishable in all
relevant aspects from a product or intermediate.

VI. When will the Final Rules Become Effective?

	This final rule is effective on [insert date 180 days after publication
in the Federal Register. 

DETAILED DESCRIPTION OF TODAY’S FINAL RULE

VII. Exclusion for Hazardous Secondary Materials that are Legitimately
Reclaimed Under the Control of the Generator 

A. What Is the Purpose of This Exclusion?

	Sections 261.2(a)(2)(ii) and 261.4(a)(23), being finalized today,
exclude from the definition of solid waste those hazardous secondary
materials which remain under the control of the generator when
reclaimed. By maintaining control over, and potential liability for, the
hazardous secondary materials and the reclamation process, the generator
ensures that such materials have not been discarded. When reclaimed
under the control of the generator, the hazardous secondary materials
are being treated as a valuable commodity rather than a waste. However,
if such hazardous secondary materials are released into the environment
and are not recovered immediately, they have been discarded and the
generator is subject to all applicable federal and state regulations, as
well as applicable cleanup authorities. 

B. Scope and Applicability

	EPA is today excluding from the definition of solid waste those
hazardous secondary materials that are legitimately reclaimed under the
control of the generator, provided they are not speculatively
accumulated and they are reclaimed within the United States or its
territories. In addition, the generator must submit a notification of
the exclusion to EPA or the authorized state and the hazardous secondary
material must be contained in the units in which it is stored. The
provision excluding hazardous secondary materials that are under the
control of the generator and that are managed in land-based units is
found at 40 CFR 261.4(a)(23), while the provision excluding such
materials that are managed in non-land-based units is found at 40 CFR
261.2(a)(2)(ii).  A land-based unit is defined in 40 CFR 260.10 as an
area where hazardous secondary materials are placed in or on the land
before recycling.  Examples of land-based units include surface
impoundments and piles.

	The definition of “hazardous secondary material generated and
reclaimed under the control of the generator” is finalized in 40 CFR
260.10 and consists of three parts. The first part applies to hazardous
secondary materials generated and legitimately reclaimed at the
generating facility. For purposes of this exclusion, “generating
facility” means all contiguous property owned, leased, or otherwise
controlled by the hazardous secondary material generator, and
“hazardous secondary material generator” means any person whose act
or process produces hazardous secondary materials at the generating
facility. A facility that collects hazardous secondary materials that
have been discarded by other persons (for example, when
mercury-containing equipment is collected through a special collection
program) is not the hazardous secondary material generator of those
materials.

Under this definition, if a generator contracts with a different company
to reclaim hazardous secondary materials at the generator’s facility,
either temporarily or permanently, the materials would be considered
under the control of the generator. However, generators sometimes
contract with a second company to collect hazardous secondary materials
at the generating facility and the materials are subsequently reclaimed
at the facility of the second company. In that situation, the hazardous
secondary materials would no longer be considered “under the control
of the generator” and would instead be managed under the exclusion for
materials transferred for reclamation. 

	The second part of the definition applies to hazardous secondary
materials generated and legitimately reclaimed at different facilities
if the reclaiming facility is controlled by the generator or if a person
as defined in §260.10 controls both the generator and the reclaimer.
For purposes of this exclusion, “control” means the power to direct
the policies of the facility, whether by the ownership of stock, voting
rights, or otherwise, except that contractors who operate facilities on
behalf of a different person as defined in §260.10 shall not be deemed
to “control” such facilities. Thus, when a contractor operates two
facilities, each of which is owned by a different company, hazardous
secondary materials generated at the first facility and reclaimed at the
second facility are not considered “under the control of the
generator” and must use the exclusion for such materials that are
transferred for reclamation. 

Under the definition promulgated in today’s final rule, the generating
facility must provide one of two certifications: (1) that the generating
facility will send the indicated hazardous secondary materials to the
reclaiming facility, which is controlled by the generating facility, and
that either the generating facility or the reclaiming facility has
acknowledged full responsibility for the safe management of such
hazardous secondary materials; or (2) that the generating facility will
send the hazardous secondary materials to the reclaiming facility, that
both facilities are under common control, and that either the generating
facility or the reclaiming facility has acknowledged full responsibility
for the safe management of such hazardous secondary materials. 

	The third part of the definition applies to hazardous secondary
materials that are generated pursuant to a written contract between a
tolling contractor and a toll manufacturer and legitimately reclaimed by
the tolling contractor. For purposes of this exclusion, a tolling
contractor is a person who arranges for the production of a product or
intermediate made from specified virgin materials through a written
contract with a toll manufacturer. The toll manufacturer is the person
who produces a product or intermediate made from specified virgin
materials pursuant to a written contract with a tolling contractor.
Under today’s final rule, the tolling contractor must certify that it
has a written contract with the toll manufacturer to manufacture a
product or intermediate made from specified virgin materials, and that
the tolling contractor will reclaim the hazardous secondary materials
generated during the manufacture of the product or intermediate. The
tolling contractor must also certify that it retains ownership of, and
liability for, the hazardous secondary materials that are generated
during the course of the manufacture, including any releases of
hazardous secondary materials that occur during the manufacturing
process at the toll manufacturer’s facility.

C. Restrictions and Requirements

Hazardous secondary materials must be contained. The regulations at 40
CFR 261.2(a)(ii) and 40 CFR 261.4(a)(23) apply to hazardous secondary
materials that are generated and legitimately reclaimed under the
control of the generator in the United States or its territories. Under
these provisions, the hazardous secondary materials must be contained,
whether they are stored in land-based units or non-land-based units.
Generally, such material is “contained” if it is placed in a unit
that controls the movement of the hazardous secondary material out of
the unit. These restrictions support EPA’s determination that
materials managed in this manner are not discarded. 

In the event of a release from a unit, the hazardous secondary materials
that remain in the unit may or may not meet the terms of the exclusion.
They would be considered solid wastes if they are not managed as a
valuable raw material, intermediate, or product, and as a result, a
“significant” release from the unit were to take place. If such a
significant release were to occur, the hazardous secondary materials
remaining in the unit would be considered solid and hazardous wastes and
the unit would be subject to the appropriate hazardous waste
regulations. For example, an acidic hazardous secondary material
undergoing reclamation could be stored in a tank that experienced a
failure. A facility might fail to monitor the structural integrity of
the tank, as most product tanks are monitored, or the tank might not be
constructed to contain acidic hazardous secondary materials, causing a
significant release of such materials into the environment. The unit
itself would consequently be considered a hazardous waste management
unit because the hazardous secondary materials were not being managed as
a valuable raw material, intermediate, or product, as evidenced by the
failure to monitor it for structural integrity, resulting in the
release. Thus, the unit and any remaining waste would be subject to
Subtitle C controls because the hazardous secondary materials in the
unit have been discarded and were not contained. In addition, any of the
released materials that were not immediately recovered would also be
considered discarded and, if hazardous, subject to appropriate federal
or state regulations and applicable authorities. Thus, to be excluded
from the definition of solid waste, the facility has an obligation to
manage the material as it would any raw material, intermediate or
product because of its value. This includes, for example, operating and
maintaining storage units in the same manner as product units. In the
above example, whether by mismanagement of the hazardous secondary
materials or by storing acidic materials in a tank not constructed to
handle them or because of the failure to monitor the structural
integrity of the unit, the result is that the unit would come under
Subtitle C regulation. 

Conversely, a tank or a surface impoundment in good condition may
experience small releases resulting from normal operations of the
facility.  Sometimes a material may escape from primary containment and
may be captured by secondary containment or some other mechanism that
would prevent the material from being released to the environment. In
that case, the unit would retain its exclusion from RCRA hazardous waste
regulation and the hazardous secondary materials in the unit would still
be excluded from the definition of solid waste, even though any such
materials that had been released would be considered discarded if not
immediately recovered and would be subject to appropriate regulation.
One specific example of “contained” hazardous secondary materials
would be furnace bricks collected from production units and stored on
the ground in walled bins before being used as feedstocks in the metals
production process. If there were very small releases from the walled
bins due to precipitation runoff, such releases would not cause the
storage bins to be subject to Subtitle C controls. 

It should be noted that a “significant” release is not necessarily
large in volume. Such a release could include an unaddressed small
release from a unit that, if allowed to continue over time, would cause
significant damage. Any one release may not be significant in terms of
volume. However, if the cause of such a release remains unaddressed and
hazardous secondary materials are managed in such a way that the release
is likely to continue, the materials in the unit would not be contained.
For example, a rusting tank or containers that are deteriorating may
have a slow leak that, if unaddressed, would cause a significant
environmental impact. Similarly, a surface impoundment with a slow,
unaddressed leak to groundwater would result in significant damage.
Another example would be a large pile of lead-contaminated finely ground
dust without any provisions to prevent wind dispersal of the dust. Such
releases, if unaddressed, would mean that the hazardous secondary
materials remaining in the unit were not being managed as a valuable raw
material, intermediate, or product and that the materials had been
discarded. As a result, the hazardous secondary materials in the unit
would be hazardous wastes and these units would be subject to the RCRA
hazardous waste regulations.

Speculative accumulation. In addition to the containment provision,
hazardous secondary materials that are generated and legitimately
reclaimed under the control of the generator are subject to the
speculative accumulation provisions of 40 CFR 261.1(c)(8). If these
materials are speculatively accumulated, they are considered discarded.
EPA did not propose changes to the speculative accumulation provisions
in its March 26, 2007 proposal. 

Notification. Under today’s rule, hazardous secondary material
generators, tolling contractors, toll manufacturers, and reclaimers
(where the generator and reclaimer are part of the same company, but
located at different facilities) managing hazardous secondary materials
reclaimed under the control of the generator are required to submit a
notification prior to operating under this exclusion and at a minimum of
every two years thereafter to the EPA Regional Administrator using EPA
Form 8700-12. The notice must include: 

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


•	The name and telephone number of a contact person; 

•	The NAICS code of the facility;

•	The exclusion under which the hazardous secondary materials will be
managed (e.g., 40 CFR 261.2(a)(2(ii) and/or 40 CFR 261.4 (a)(23) for
hazardous secondary materials managed in a land-based unit);

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

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

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

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

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

	Generators and reclaimers are required to notify on a per facility
basis. In other words, facilities managing hazardous secondary materials
will need to submit a notification form in accordance with the
exclusion. One notification cannot cover two or more facilities.
Furthermore, each facility need only use one notification form to list
all of the hazardous secondary materials to be managed under the
exclusion (i.e., facilities need not file separate notifications for
each hazardous secondary material). The notification requirement is not
calendar-based and thus a facility can notify (and re-notify) at any
time of the year. Facilities may also choose to re-notify more
frequently and according to their own calendar-based schedule (as long
as the schedule meets the requirement of re-notifying a minimum of every
two years).

Hazardous secondary material generators, tolling contractors, toll
manufacturers, and reclaimers (where the generator and reclaimer are
part of the same company, but located at different facilities) must also
re-notify within 30 days of a change to the name, address, or EPA ID
number of the facility; the type of exclusion that applies; if
additional hazardous secondary materials will be managed under the
exclusion; or whether the hazardous secondary material will be managed
in a land-based unit. For example, a facility must re-notify if it
previously notified it is operating under the generator-controlled
exclusion and then subsequently chooses to manage hazardous secondary
material under the transfer-based exclusion. Additionally, a facility
must re-notify if it chooses to manage additional hazardous secondary
materials that were not included on the initial (or previous)
notification; however, a facility does not need to re-notify if it
chooses to stop managing a specific type of hazardous secondary material
that was included in a previous notification, and could just update its
list of hazardous secondary materials during the regular re-notification
submitted every two years. Another example of when a facility must
re-notify following a change is when a facility has previously notified
it is not managing hazardous secondary materials in a land-based unit,
but then subsequently chooses to use a land-based unit. Since generators
and reclaimers must notify ‘a minimum’ of every two years, if a
facility happens to notify in the event of a change, it can just
re-notify two years from the date of the notification submitting the
change.

We are also requiring facilities that stop managing hazardous secondary
materials in accordance with the exclusion, to notify the Regional
Administrator using the same EPA Form 8700-12. Notification in this
instance serves two objectives: (1) it allows states to follow up with
the facility to verify that the hazardous secondary material has not
been discarded; and (2) it maintains the usability of the database to
enable states to monitor compliance and, for today’s transfer-based
exclusion, to assist generators with performing reasonable efforts on
potential reclaimers. We consider a facility to have ‘stopped’
managing hazardous secondary materials when at least one of the
following occurs: the facility chooses to manage the hazardous secondary
materials as hazardous waste or the facility chooses to temporarily
suspend management of hazardous secondary materials and does not expect
to manage any amount of hazardous secondary materials for at least one
year. For example, a facility that has previously notified it is
managing hazardous secondary materials under the exclusion, but then
subsequently chooses to stop managing all hazardous secondary materials
for a period of at least one year, must notify the Regional
Administrator. However, if this same facility only stopped managing one
type of hazardous secondary material (but continued to manage another
type of hazardous secondary material under the exclusion) it would not
need to notify, and could just update its list of hazardous secondary
materials during the next periodic re-notification submitted every two
years. Additionally, if a facility requests release of financial
assurance under 40 CFR 261.143(h), it is clear the facility has
‘stopped’ managing hazardous secondary materials, and, therefore,
must notify the Regional Administrator (for additional clarification,
notification does not ‘trigger’ the process for releasing financial
assurance; instead, a facility wishing to be released from financial
assurance obligations must notify it has ‘stopped’ managing
hazardous secondary materials). Of course, a facility could certainly
choose to begin managing hazardous secondary materials again and would
simply have to submit a notification in compliance with 40 CFR 260.42.

We note that the requirement to provide this notification is not a
condition of the exclusion. Thus, failure to comply with the requirement
constitutes a violation of RCRA, but does not affect the excluded status
of the hazardous secondary materials. 

We believe our authority to request such information is inherent in our
authority to determine whether a material is discarded, and we consider
this to be the minimum information needed to enable credible evaluation
of the status of hazardous secondary materials under section 3007 of
RCRA and to ensure that the terms of the exclusions are being met by
generators and reclaimers. EPA further believes that RCRA section 3007
allows us to gather information about any material when we have reason
to believe that it may be a solid waste and possibly a hazardous waste
within the meaning of RCRA section 1004(5). Section 2002 also gives EPA
authority to issue regulations necessary to carry out the purposes of
RCRA. 

We also note that after EPA promulgates regulations listing a material
as a hazardous waste or identifying it by its characteristics, section
3010 of RCRA requires generators of such materials to submit a
notification to EPA within 90 days. Since the changes finalized today
could substantially affect the universe of facilities in the Subtitle C
system, we believe the notifications are appropriate. 

The intent of this notification requirement is to provide basic
information to regulatory agencies about who will be managing hazardous
secondary materials under the exclusion. The specific information
included in today’s notification requirement will enable regulatory
agencies to monitor compliance adequately and to ensure hazardous
secondary materials are managed according to the exclusion and not
discarded. For example, in the notification, EPA requires facilities to
include the quantity of hazardous secondary materials that will be
managed according to the exclusion and whether certain types of
hazardous secondary materials will be managed in land-based units. This
information can be used to assist RCRA inspectors in determining which
facilities may warrant greater oversight and provides a basis for
setting enforcement priorities. Furthermore, requiring facilities to
notify when they have stopped managing hazardous secondary materials
allows states to follow-up and ensure that hazardous secondary materials
were not discarded. 

This notification requirement is the same as the notification
requirement for today’s transfer-based exclusion found in section
VIII.C. of today’s preamble.

Sending to an intermediate facility. We note that under this exclusion,
hazardous secondary materials may not be sent to an intermediate
facility as defined in 40 CFR 260.10 (i.e., a facility, other than a
generator or reclaimer, that stores hazardous secondary materials for
more than 10 days). If hazardous secondary materials are sent to
intermediate facilities, they would not meet the definition of hazardous
secondary materials reclaimed under the control of the generator, and
they are subject to the conditions of the transfer-based exclusion,
discussed below.

D. Terminating the Exclusion 

Units managing excluded hazardous secondary materials are not subject to
the closure regulations in 40 CFR parts 264 and 265 subpart G. However,
when the use of these units is ultimately discontinued, all owners and
operators must manage any remaining hazardous secondary materials that
are not reclaimed and remove or decontaminate all hazardous residues and
contaminated containment system components, equipment structures, and
soils. These hazardous secondary materials and residues, if no longer
intended for reclamation, would also no longer be eligible for the
exclusion (which only applies to materials that will be reclaimed).
Failure to remove these materials within a reasonable time frame after
operations cease could cause the facility to become subject to full
Subtitle C requirements if the Agency determines that recycling is no
longer feasible. While this final rule does not set a specific time
frame for these activities, the Agency believes that they typically
should be completed within the time frames established for analogous
activities. For example, the requirements for product tanks under 40 CFR
261.4(c) allow 90 days for removal of hazardous material after the unit
ceases to be operated for manufacturing. This time frame should serve as
a guideline for regulators in determining on a case-by-case basis
whether owners and operators have completed these activities within in a
reasonable time frame. In any event, these hazardous secondary materials
remain subject to the speculative accumulation restrictions in 40 CFR
261.1(a)(8), which includes both a time limitation and a requirement
that the facility be able to show there is a feasible means of recycling
the hazardous secondary material.

E. Enforcement

Under today’s rule, hazardous secondary materials generated and
legitimately reclaimed within the United States under the control of the
generator are excluded from RCRA Subtitle C regulation, but are subject
to certain restrictions, principally speculative accumulation and
containment. Persons that handle these hazardous secondary materials are
responsible for maintaining the exclusion by ensuring that these
restrictions are met. If the hazardous secondary materials are not
managed pursuant to these restrictions, they are not excluded. They
would then be considered solid and hazardous wastes if they were listed
or they exhibited a hazardous waste characteristic for Subtitle C
purposes from their point of generation. Persons operating under the
exclusion are also required to notify EPA or the authorized state. 

Persons taking advantage of today’s exclusion that fail to meet the
requirements may be subject to an enforcement action. EPA could choose
to bring an enforcement action under RCRA section 3008(a) for violations
of the hazardous waste requirements occurring from the time the
hazardous secondary materials are generated through the time they are
ultimately disposed of or reclaimed. The Agency believes that this
approach provides hazardous secondary material generators with an
incentive to handle or (in the case of tolling) to ensure that their
contractors handle the hazardous secondary materials pursuant to the
requirements. It also encourages each hazardous secondary material
generator to take appropriate steps to ensure that such materials are
properly handled and legitimately recycled by others in the management
chain. If there is a release of the hazardous secondary materials into
the environment, they are considered discarded and subject to all
applicable hazardous waste regulations and cleanup authorities. 

VIII. Exclusion for Hazardous Secondary Materials that are Transferred
for the Purpose of Legitimate Reclamation

	Today, EPA is also finalizing an exclusion from the definition of solid
waste for hazardous secondary materials that are generated and
subsequently transferred to another company or person for the purpose of
reclamation (i.e., “transfer-based exclusion”), provided that
certain conditions are met. Reclamation that conforms to these
conditions would not involve discard, and therefore the hazardous
secondary materials would not be regulated as solid waste. As with all
recycling-related exclusions and exemptions, such excluded hazardous
secondary materials would also need to be recycled legitimately, as
determined according to the provisions of 40 CFR 261.2(g). For further
discussion on how the transfer-based exclusion relates to the concept of
discard, see section V.B. of this preamble.

The conditions that must be met for this exclusion are based on our
analysis of how successful third-party recycling currently operates
(and, conversely, how unsuccessful third-party recycling practices can
result in recyclable hazardous secondary materials being discarded), and
are supported by the information contained in the rulemaking record,
including the recycling studies found in the public docket for today’s
rulemaking and discussed previously in section III.D. of today’s
preamble and in the preamble to the March 2007 supplemental proposal at
72 FR 14178–14183. For example, the study of good current recycling
practices indicates that many responsible generators examine the
recycler's technical capabilities, business viability, environmental
track record, and other relevant questions before sending hazardous
secondary materials for recycling. Currently, these recycler audits,
which can be thought of as a form of environmental “due diligence,”
are in essence a precaution to minimize the prospect of incurring CERCLA
liability in the event that the recycling, or lack thereof, results in
release of the material to the environment. The fact that these
companies are willing to incur the expense of auditing recyclers as a
business practice is of itself a marketplace affirmation that sending
hazardous secondary materials to other companies for recycling involves
some degree of risk. Although these risks may be small when the recycler
is a well established, successful enterprise with a good record of
environmental stewardship, it also is apparent that not all recyclers
fit this profile, as evidenced in the study of environmental problems
associated with hazardous secondary materials recycling. Thus, we
believe that there is sufficient basis for the Agency to place certain
conditions on this exclusion for the generator to determine that the
hazardous secondary material is not discarded, particularly since we
expect that this rulemaking could encourage some companies that are
currently not involved with hazardous secondary materials recycling to
enter the business. 

A. What is the Purpose of this Exclusion?

	In finalizing this conditional exclusion, EPA's objectives are to
encourage the recycling of hazardous secondary materials and reduce
unnecessary regulatory compliance costs to industry, while still
maintaining protection of human health and the environment. After
considering the entire rulemaking record, including comments submitted
by the public, we continue to believe that this exclusion is a workable,
common-sense approach to meeting these objectives; is well supported by
the record for this rulemaking, including the recycling studies that EPA
has conducted; and, in important ways, reflects current good industry
practices that are used by responsible generators for recycling
hazardous secondary materials.

B. Scope and Applicability

	The conditional exclusion for the transfer-based approach applies to
hazardous secondary materials that are currently regulated as hazardous
wastes because their recycling involves reclamation—specifically,
spent materials, listed sludges, and listed by-products. It would not be
available for hazardous secondary materials that are regulated as
hazardous wastes for other reasons, such as “inherently waste-like
materials,” materials that are “used in a manner constituting
disposal,” or “materials burned for energy recovery.” The
conditional exclusion also does not apply to materials that are
currently excluded from the definition of solid waste according to
other, existing provisions of 40 CFR part 261. For example, the
exclusion for broken cathode ray tubes requires them to be transported
in closed containers per 40 CFR 261.4(a)(22). Today's exclusion does not
supersede or otherwise affect these other exclusions, and such hazardous
secondary materials will need to be managed in accordance with those
existing exclusions. For a discussion of how this exclusion relates to
particular existing exclusions and additional details involving these
exclusions, see section XI of today’s preamble.

This exclusion is available to hazardous secondary material generators,
transporters, intermediate facilities, or reclaimers. In the March 2007
supplemental proposal, EPA proposed that the hazardous secondary
material must be transferred directly from the generator to the
reclaimer and not be handled by anyone else other than a transporter.
Thus, as proposed, a generator that wished to maintain the excluded
status of its hazardous secondary materials would not be able to ship
those materials to a middleman, such as a broker. We said that we
believed that a generator who ships materials to a middleman, such as a
broker typically does not know who will ultimately manage and reclaim
them, or how they will be reclaimed (72 FR 14189). However, we requested
comment on allowing middlemen to participate in the exclusion.

Comments on the proposal disputed the assumption that the generator does
not know the final destination when shipping to an intermediate
facility, saying that in certain cases the generator works with an
intermediate facility to choose the reclamation facility and the final
destination is arranged by contract before the hazardous secondary
materials are shipped. Commenters also asserted that such arrangements
allow for consolidation of shipments, making recycling economical for
small businesses who generate hazardous secondary materials. 

EPA agrees with the comments that some types of intermediate facilities
could participate in the exclusion, while still allowing the hazardous
secondary material generator to perform reasonable efforts to ensure
that the hazardous secondary material is properly and legitimately
recycled. Thus, in the final rule, EPA has determined that intermediate
facilities will be allowed under the transfer-based exclusion. However,
to limit the exclusion to those intermediate facilities where discard
will not occur, if the hazardous secondary material will be passing
through an intermediate facility, the hazardous secondary material
generator must make contractual arrangements with the intermediate
facility to ensure that the hazardous secondary material is sent on to
the reclamation facility or facilities identified by the generator and
must perform reasonable efforts on the intermediate facility, as well as
on the reclamation facility. Also, the intermediate facility must send
the hazardous secondary material to the reclaimer designated by the
generator.

In addition, the intermediate facility must meet the same conditions as
the reclamation facility for the same reasons the reclamation facility
must meet them. Section VIII.C.4. below discusses additional details as
to why these conditions need to apply to the reclamation facilities and
this reasoning applies equally to intermediate facilities involved in
the process. Of the 208 damage cases in the environmental problems
study, 45 (22%) were from intermediate facilities. Therefore, EPA
believes the record for requiring the conditions for the reclamation
facility also supports promulgation of the same conditions for
intermediate facilities.

	In addition, in the March 2007 supplemental proposal, the Agency
recognized that, in some cases, recycling of an excluded hazardous
secondary material may involve more than one reclamation step. For
example, a recyclable hazardous secondary material, such as an
electroplating secondary material, might have a relatively high moisture
content and a somewhat variable chemical composition. Such materials
might need to be dried and blended to a suitable, consistent
specification before they are amenable to a “final” reclamation
process (e.g., metals smelting). In this example, the two different
reclamation processes might be conducted by different companies and/or
at different facilities. The Agency continues to see no reason to
discourage this kind of recycling. The transfer-based exclusion
finalized today is available for hazardous secondary materials that are
recycled by means of one or more reclamation processes, including when
they occur at more than one reclamation facility. 

The conditions for generators and reclaimers under the terms of this
exclusion would apply in the same way, regardless of how many
reclamation steps were involved with recycling of an excluded material.
For example, if the excluded hazardous secondary material were reclaimed
by more than one facility or company, the generator of such material
would need to make reasonable efforts to examine each facility or
company involved in the reclamation process to ensure that the hazardous
secondary materials would be properly and legitimately recycled. We
believe that this is a consistent application of the idea of requiring
“reasonable efforts” as a condition of this exclusion. Where
recycling of a hazardous secondary material involves more than one
reclamation step at more than one facility, generators should
nevertheless be well informed as to how the materials will be reclaimed,
and by whom, throughout the recycling process. Additionally, each
reclaimer (including ‘partial reclaimers’) managing hazardous
secondary materials must meet all the reclaimer conditions listed under
40 CFR 261.4(a)(24), as well as the recordkeeping requirements.

C. Conditions and Requirements

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

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

Notification. Under today’s transfer-based exclusion, hazardous
secondary material generators, reclaimers, and intermediate facilities
are required to send a notification prior to operating under this
exclusion and at a minimum of every two years thereafter to the EPA
Regional Administrator using EPA Form 8700-12. The notice must include: 

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

The name and telephone number of a contact person; 

The NAICS code of the facility;

The exclusion under which the hazardous secondary materials will be
managed (e.g., whether the hazardous secondary materials are managed
under the transfer-based exclusion in 40 CFR 261.4(a)(24) and/or under
the exclusion for hazardous secondary materials exported for reclamation
in 40 CFR 261.4 (a)(25)); 

For reclaimers and intermediate facilities managing hazardous secondary
materials, whether the reclaimer or intermediate facility has financial
assurance for the management of such hazardous secondary materials (not
applicable for hazardous secondary material generators);

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

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

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

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

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

Hazardous secondary material generators, reclaimers and intermediate
facilities must also re-notify within 30 days of a change to the name,
address, or EPA ID number (if applicable) of the generator, reclaimer,
or intermediate facility; the type of exclusion that applies; whether
the reclaimer or intermediate facility has financial assurance; if
additional hazardous secondary materials are managed under the
exclusion; or whether the hazardous secondary materials will be managed
in a land-based unit. Since generators, reclaimers and intermediate
facilities must notify ‘at a minimum’ of every two years, if a
facility happens to notify in the event of a change, it can just
re-notify two years from the date of the notification submitting the
change.

If a facility has submitted a notification, but then subsequently stops
managing hazardous secondary materials in accordance with the exclusion,
the facility must re-notify the Regional Administrator using the same
EPA Form 8700-12. We consider a facility to have ‘stopped’ managing
hazardous secondary materials when one of the following occurs: the
facility chooses to manage the hazardous secondary materials as
hazardous waste; the facility requests release from financial assurance
per 40 CFR 261.143(h); or the facility chooses to temporarily suspend
management of hazardous secondary materials and does not expect to
manage any amount of hazardous secondary materials for at least one
year. Of course, a facility could certainly choose to begin managing
hazardous secondary materials again and would simply have to submit a
notification in compliance with 40 CFR 260.42.

The requirement to provide this notification is not a condition of the
exclusion. Thus, failure to comply with the requirement constitutes a
violation of RCRA, but does not affect the excluded status of the
hazardous secondary materials. 

This notification requirement is the same as the notification
requirement for the generator-controlled exclusion. For further
discussion on the notification, including examples of when a facility
must re-notify in the event of a change, see section VII.C. of today’s
preamble. 

Hazardous secondary materials must be contained. Another condition of
the transfer-based exclusion applicable to hazardous secondary material
generators, reclamation facilities, and intermediate facilities is that
the hazardous secondary materials must be contained in their management
units. Hazardous secondary materials released from any unit are
discarded and would be subject to the hazardous waste regulations,
unless they are immediately cleaned up. Hazardous secondary materials
remaining in a unit that experiences a release may also be considered
discarded in certain cases. This is the same as the restriction that is
being promulgated for the generator-controlled exclusions. For further
discussion on the containment provisions, including examples of how they
might be applied in case-specific situations, see section VII.C. of
today’s preamble. 

2. Provisions Applicable to the Hazardous Secondary Material Generator

Reasonable efforts. Today's final rule requires generators to make
reasonable efforts to ensure that their hazardous secondary materials
are properly and legitimately recycled before shipping or otherwise
transferring them to a reclamation facility or any intermediate
facility. As discussed previously, this condition effectively requires
that generators perform a type of environmental “due diligence” on a
reclaimer or any intermediate facility to ensure that those facilities
intend to properly manage the hazardous secondary materials as
commodities and legitimately recycle rather than discard them. We
believe that this condition reflects the existing best practices of many
responsible generators who audit and assess recyclers to maintain their
commitment to sound environmental stewardship, minimize their potential
regulatory and liability exposures, and make decisions about with whom
they should do business. 

Our study of good recycling practices quotes one large recycling and
disposal vendor as stating that with respect to its new customers, 60%
of the large customers and 30%–50% of the smaller customers now
perform audits on them. Under current practices, such audits can involve
a site visit to the recycling facility and an examination of the
company's finances, technical capability, environmental compliance
record, and housekeeping practices. (Note: audits that are currently
conducted may or may not cover all of these areas.) Through the
codification of this condition, we want to reinforce this best practice
among all generators who use the transfer-based exclusion to send
hazardous secondary materials to reclamation and intermediate
facilities. We believe that this condition is critical for generators
who currently may not evaluate reclaimers and intermediate facilities
because this condition provides these generators with a framework for
making reasonable efforts to ensure their hazardous secondary materials
are properly managed and recycled, and not discarded.

Currently, under 40 CFR part 262, a generator must make a hazardous
waste determination and, thus, already has an obligation to determine
whether the waste is subject to regulation as a hazardous waste. EPA
believes that to make a parallel determination under 40 CFR 261.4(a)(24)
that hazardous secondary materials are not solid wastes because they are
destined for reclamation and are not discarded, the generator must meet
the reasonable efforts condition. A reasonable efforts inquiry by the
hazardous secondary material generator ensures that the reclaimer
intends to recycle the hazardous secondary material legitimately
pursuant to 40 CFR 261.2(g) and not discard it, and that the reclaimer
or any intermediate facility will manage the hazardous secondary
materials in compliance with 40 CFR 261.4(a)(24)(v).

The reasonable efforts condition for generators applies when hazardous
secondary materials are transferred to intermediate facilities (as
defined in 40 CFR 260.10) and reclamation facilities operating without a
RCRA Part B permit or under interim status standards that extend to
management of the hazardous secondary materials in question. If the
permit or interim status addresses the units being used to manage the
hazardous secondary materials, we do not require generators to conduct
reasonable efforts because we believe that a Part B permit or the
interim status standards provide some assurance to generators that the
facility has a measure of financially stability and that the hazardous
secondary materials will be well managed. RCRA permitted or interim
status facilities where the permit or interim status standards extend to
the management of hazardous secondary materials are already subject to
stringent design and operating standards, must demonstrate financial
assurance, and are subject to corrective action requirements in the
event of environmental problems.   Not requiring reasonable efforts for
generators that transfer hazardous secondary materials to these RCRA
permitted or interim status recycling or intermediate facilities would
likely be of particular benefit to relatively smaller volume generators
who may not have the resources required to satisfy this condition. 

Of course, if a permitted facility later modifies its permit terms in a
way that the permit no longer extends to the management of the hazardous
secondary materials, the generator would need to perform reasonable
efforts in accordance with this exclusion. EPA recommends that any
hazardous secondary material generator transferring hazardous secondary
materials to a permitted facility request that it get placed on the
facility mailing list, so they can then receive notice of changes to the
permit status of the reclaimer or intermediate facility (see 40 CFR
270.42 and 40 CFR 124.10).

In contrast, if the permit or interim status standards do not extend to
hazardous secondary materials, the same level of assurance is not
guaranteed. Therefore, if a reclamation or intermediate facility only
has a RCRA permit or complies with interim status standards for another
on-site operation unrelated to the hazardous secondary materials of
interest to the generator, then the hazardous secondary material
generator is required to make a reasonable efforts inquiry of the
facility as if it were a non-permitted facility. 

EPA believes that a generator should be allowed to use any credible
evidence available in making reasonable efforts, including information
gathered by the generator, provided by the reclaimer or intermediate
facility, and/or provided by a third party, in lieu of personally
performing an assessment. For example, the hazardous secondary material
generator might hire an independent auditor to review the operations,
produce audit reports as a consortium of generators, or rely on an
assessment of a recycler or intermediate facility by a parent
corporation or trade association that is used by several generating
facilities. In fact, EPA believes that many reputable third-party
auditors, parent companies, and trade associations already assemble the
types of information based on credible evidence that would be needed for
a generator to satisfy the reasonable efforts condition. EPA would
encourage this type of pooling of information to reduce the burden on
generators and to take advantage of specialized technical expertise.

EPA is also finalizing in the regulatory text a series of questions,
which together represent a minimum standard for reasonable efforts, to
provide generators and overseeing agencies with regulatory certainty
regarding fulfillment of the condition. We believe that these questions
are objective and must be answered affirmatively. Hazardous secondary
material generators wishing to take advantage of the exclusion must be
able to answer all questions affirmatively to determine that their
hazardous secondary materials are or will be properly and legitimately
recycled and will not be discarded. These questions can be found at 40
CFR 261.4(a)(24)(iv)(B) and are discussed below.

Of course, a generator could choose to seek additional information or
ask additional questions to determine that its hazardous secondary
materials will not be discarded due to concerns about CERCLA liability.
One example of additional information that many responsible generators
currently seek from recyclers, but that EPA is not including in
today’s final rule, is information about a reclamation facility’s
financial health. Based on EPA’s study of good recycling practices and
comments on the proposed rule, we know that responsible generators often
inquire about a reclamation facility’s financial health. These
inquiries can include reviews of liability insurance coverage, company
annual reports, bankruptcy filings, investments in capital improvements,
markets for recycled products, and business reports, such as Dun &
Bradstreet reports. EPA believes that evaluating the financial health of
a company can benefit a generator’s reasonable efforts inquiry of a
reclamation or intermediate facility and encourages generators to do so,
although we acknowledge that it is not an activity that lends itself to
an objective standard that would be appropriate for regulation. Instead,
EPA is requiring that, under the transfer-based exclusion and reasonable
efforts condition, reclamation and intermediate facilities have
financial assurance and generators affirm that facilities have notified
the appropriate authorities that the financial assurance condition is
satisfied. 

EPA intends that if a hazardous secondary material generator has met the
reasonable efforts condition prior to transferring hazardous secondary
materials to the reclamation or intermediate facility, then the
reclaimer or intermediate facility, not the generator, would be liable
under RCRA if the materials were discarded (i.e., not properly and
legitimately recycled). However, if the generator does not meet the
reasonable efforts condition, then the generator is ineligible for the
transfer-based exclusion and would be potentially liable in the event
its hazardous secondary materials were discarded by a reclamation or
intermediate facility. (See section VIII.E. for more information.) EPA
acknowledges that meeting this condition will not affect CERCLA
liability. (See section XIII for more information on CERCLA liability.)

The following five questions represent a minimum standard for satisfying
reasonable efforts:

(1) Does the reclamation facility intend to reclaim the hazardous
secondary materials legitimately pursuant to 40 CFR 261.2(g)?

(2) Has the reclamation facility and any intermediate facility notified
the appropriate authorities of hazardous secondary materials reclamation
activities pursuant to 40 CFR 260.42 and have they notified the
appropriate authorities that the financial assurance condition is
satisfied per 40 CFR 261.4(a)(24)(v)(F)?

(3) Are there any unresolved significant violations of environmental
regulations at the reclamation facility or at any intermediate facility,
or any formal enforcement actions taken against the facilities in the
previous three years for violations of environmental regulations? If
yes, does the hazardous secondary material generator have credible
evidence that the facilities will manage the hazardous secondary
materials properly?

(4) Do the reclamation facility and any intermediate facility have the
equipment and trained personnel to properly manage the hazardous
secondary materials and does the reclamation facility have the equipment
and trained personnel to properly reclaim the hazardous secondary
materials?

(5) If residuals are generated from the reclamation of the excluded
hazardous secondary materials, does the reclamation facility have the
permits required (if any) to manage the residuals? If not, does the
reclamation facility have a contract with an appropriately permitted
facility to dispose of the residuals? If not, does the hazardous
secondary material generator have credible evidence that the residuals
will be managed in a manner that is protective of human health and the
environment?

Question (1) focuses on whether the reclamation facility receiving
hazardous secondary materials from a generator legitimately recycles
such materials. EPA believes that any generator “claiming to be
excluded from hazardous waste regulation under [40 CFR 261.4] because
they are engaged in recycling, must be able to demonstrate that the
recycling is legitimate” (40 CFR 261.2(g)). Determining whether a
recycling operation is legitimate is a fundamental basis for
establishing that a generator’s hazardous secondary materials will not
be discarded after being transferred to a reclamation facility. Since
reclaimers must also be able to demonstrate that the recycling is
legitimate under 40 CFR 261.2(g), EPA believes that generators should be
able to work with reclaimers to answer question (1) for the purposes of
satisfying the condition. (See section IX of today’s rulemaking for a
discussion of determining legitimacy.)

Question (2) concentrates on whether the recycler or intermediate
facility has met the following obligations under the exclusion before
accepting hazardous secondary materials: notification of the appropriate
regulatory authorities that it plans to reclaim (or, in the case of the
intermediate facility, properly store the hazardous secondary material)
excluded hazardous secondary materials, and notification of the
appropriate regulatory authorities that the facility has financial
assurance to cover the costs of managing any hazardous secondary
material that remain if the facility closes. If a facility was found to
have failed to meet the notification requirement and condition to have
financial assurance, then it also would have failed to show a good faith
effort towards demonstrating that it intends to recycle the hazardous
secondary materials (or, in the case of the intermediate facility,
properly store the hazardous secondary material) and not discard them. 

Question (3) focuses on the compliance history of the recycler or the
intermediate facility. Although compliance data represent an imperfect
tool for determining whether a recycler would properly manage the
hazardous secondary materials, we believe that compliance data are a
reasonable starting point. Facility-specific enforcement data on
unresolved alleged significant violations, ongoing enforcement actions
(by both EPA and states), and specific case information for formal
enforcement actions are readily available on EPA's public web site at
http://www.epa.gov/echo/. While the presence of a violation does not
automatically mean that the facility would not reclaim the hazardous
secondary materials properly, it would raise questions and would likely
require additional information from the facility. If the generator
obtains reasonable information that the enforcement data are unrelated
to the facility's commitment to manage the hazardous secondary materials
properly or that the violation has been corrected and the facility is
back in compliance, then that would satisfy this aspect of the
reasonable efforts determination.

Question (4) concentrates on the technical capability of the recycler or
intermediate facility, the most basic requirement for ensuring proper
and legitimate recycling of hazardous secondary materials. If a
reclamation or intermediate facility was found to have inadequate
equipment for storing the hazardous secondary material or untrained
personnel for managing the hazardous secondary materials, it raises
serious questions as to whether the facility would properly manage such
materials and avoid discarding them to the environment. A generator may
answer this question using audit reports, information provided by
industry or waste management associations related to the reclamation or
intermediate facility, documents provided by the reclaimer or
intermediate facility, and other relevant information, which, as noted
in the successful recycling study, could include an evaluation by a
qualified engineer. A generator may also ask for explanations of the
kind of equipment used for recycling; reviews of equipment
specifications; and demonstrations of OSHA training standards, the
facility training program, and training records. Specific questions
and/or a site visit may be appropriate for certain hazardous secondary
materials. Generators can find additional guidance about facility safety
requirements in the “Memorandum: Requirements that other Regulatory
Programs would place on Generators, Reclaimers and Transporters of
Hazardous Secondary Materials,” found in the docket along with
today’s final rulemaking. This memorandum has been prepared by an EPA
contractor and may be useful for generators performing a reasonable
efforts inquiry. It is meant solely for use as guidance and is not a
definitive or exhaustive list of other requirements. A hazardous
secondary material generator would be expected to consult its own
sources for any kind of definitive analysis of safety requirements.
Consulting this memorandum alone would not be dispositive regarding this
aspect of the reasonable efforts inquiry. 

Question (5) focuses on another major cause of environmental problems
from recycling hazardous secondary materials: the management of the
residuals. This question relates to discard through the concept that a
generator or reclaimer may actually be discarding hazardous secondary
materials through the release of residuals from the recycling process.
While the product made from recycling may be a legitimate product, the
whole recycling process would be considered a discard activity if
residuals from the recycled hazardous secondary materials are discarded.
Roughly one-third of the damage cases documented in EPA’s study of
environmental problems were caused by mismanagement of the residuals
from recycling. Because the residuals from recycling can contain the
hazardous constituents that originated with the hazardous secondary
materials, it is important that the hazardous secondary material
generator understands how a reclamation facility will manage any
residuals generated. These residuals may or may not be regulated
hazardous wastes, but, in either case, the generator should determine
that the reclamation facility has practices in place to ensure that
residuals are managed in a manner that is protective of human health and
the environment and according to applicable federal or state standards.
A generator may answer the series of questions by asking a reclamation
facility about required permits or contracts with permitted disposal
facilities, or if applicable, by observing that a reclamation facility
has a system in place for deciding where to send any residuals
generated. Any inquiry into a reclamation facility’s system for
analyzing options for residuals management should acknowledge that
various options do exist and that price fluctuations may be a
determining factor for selecting an option.

In today’s final rule, EPA is requiring that hazardous secondary
material generators make reasonable efforts every three years, at a
minimum, in order to ensure that the generators adequately manage their
risk and are attune to changes at reclamation and intermediate
facilities with which they are partners. We believe that this schedule
reflects an average time frame for re-evaluating facilities, based on
public comments, although we acknowledge that shorter time frames could
be appropriate for certain industries, as suggested by some commenters.
By specifying periodic updates for reasonable efforts every three years
at a minimum, EPA in no way intends to limit a generator to conducting
evaluations only every three years. In fact, EPA expects that any
generator who has concerns about a reclamation or intermediate facility,
or who gains new knowledge of significant changes or extraordinary
situations at such facilities, would conduct reasonable efforts
regardless of the required schedule. For example, if a hazardous
secondary material generator conducted reasonable efforts in the first
year it took advantage of the exclusion, prior to transferring materials
to an intermediate facility, and then again conducted reasonable efforts
in the second year upon learning about a significant change at the
intermediate facility (such as bankruptcy), the hazardous secondary
material generator would be required to update reasonable efforts three
years later during the generator’s fifth year of taking advantage of
the exclusion. 

EPA is requiring that generators maintain documentation showing that
they satisfied the reasonable efforts condition under 40 CFR
261.4(a)(24)(iv)(B) prior to transferring the hazardous secondary
materials to the intermediate facility or the reclamation facility. Such
records could include copies of audit reports and/or other relevant
information that was used as the basis for affirmatively responding to
inquiries about a reclamation or intermediate facility. Specifying that
hazardous secondary material generators document these questions helps
EPA and authorized states determine whether the generator made
reasonable efforts to ensure that the hazardous secondary materials were
not discarded. Documenting reasonable efforts is also beneficial for
generators because EPA intends that if a generator has met the
reasonable efforts condition prior to transferring the hazardous
secondary materials to the reclamation or intermediate facility, then
the reclaimer or intermediate facility, not the generator, would be
liable under RCRA if the materials were discarded (see section VIII.E.
for more information).

Generators are also required to certify for each reclamation and
intermediate facility that reasonable efforts were made to ensure that
hazardous secondary materials will be properly and legitimately
recycled, and not discarded. This certification should be signed and
dated by an authorized representative of the generating company prior to
transferring the excluded hazardous secondary materials to a reclamation
or intermediate facility under 40 CFR 261.4(a)(24). The certification
should also incorporate the certification language in 40 CFR
261.4(a)(24)(v)(C)(2). EPA believes that requiring a certification
creates a necessary level of oversight from an authorized
representative, who can be any appointed company representative, and who
must affirm that the condition is met and that hazardous secondary
materials will not be discarded.

Documentation of reasonable efforts and the certification statement must
be maintained by the generator for a minimum of three years and it must
be made available upon request by a regulatory authority within 72
hours, or within a longer period of time as specified by the regulatory
authority. Requiring documentation will help EPA and authorized states
to determine that hazardous secondary material generators have made
reasonable efforts to ensure that hazardous secondary materials were
recycled and not discarded. We understand that many generators may
maintain this kind of documentation and certification at their company
headquarters or at another off-site facility; therefore, we are not
requiring that they be maintained on-site. However, we do believe that
generators, having satisfied the reasonable efforts condition and
certified reasonable efforts prior to transferring the hazardous
secondary materials, should be able to produce the documentation and
certification readily. Moreover, we understand that since generators
today conduct business in an age of near-instantaneous communication,
retrieving documentation from company headquarters or another off-site
facility should be relatively easy. EPA also notes that time frames for
producing documentation are generally determined by regulatory
authorities on a case-by-case basis and time frames are clearly outlined
by authorities within RCRA section 3007 information request letters. 

Recordkeeping. In addition to documentation and certification of
reasonable efforts (discussed above in section VIII.C.2.), EPA is
requiring hazardous secondary material generators to maintain at the
generating facility certain records that document off-site shipments
(i.e., transfers) of hazardous secondary materials for a period of three
years. Specifically, for each shipment of hazardous secondary material,
the generator must maintain documentation of when the shipment occurred,
who the transporter was, the name and address of the reclaimer(s) and,
if applicable, each intermediate facility, and the type and quantity of
the hazardous secondary materials in the shipment. This recordkeeping
requirement may be fulfilled by ordinary business records, such as bills
of lading.	

In addition, hazardous secondary material generators are required to
maintain confirmations of receipt from each reclaimer and intermediate
facility for all off-site shipments of hazardous secondary materials in
order to verify that the hazardous secondary materials reached their
intended destination and were not discarded. These receipts must be
maintained at the generating facility for a period of three years.
Specifically, the hazardous secondary material generator must maintain
documentation of receipt that includes the name and address of the
reclaimer or intermediate facility, the type and quantity of hazardous
secondary materials received, and the date which the hazardous secondary
materials were received. The Agency is not requiring a specific template
or format for confirmations of receipt and anticipates that routine
business records (e.g., financial records, bills of lading, copies of
Department of Transportation (DOT) shipping papers, electronic
confirmations of receipt) would contain the appropriate information
sufficient for meeting this requirement.

We recognize that, in some cases, reclamation of a hazardous secondary
material may involve more than one reclamation step. In these cases, the
recordkeeping conditions for generators and reclaimers under the terms
of the exclusion applies for each reclaimer and intermediate facility,
regardless of how many reclamation steps were involved. For example, if
a hazardous secondary material generator transferred hazardous secondary
materials to one reclaimer for partial reclamation and then arranged for
the partially-reclaimed material to be subsequently transferred to
another reclaimer for ‘final’ reclamation, the generator must
maintain confirmations of receipt from each reclaimer involved in the
reclamation process. 

The Agency believes that the recordkeeping requirements in today’s
rule comprise the minimum information needed to enable effective
oversight to ensure the hazardous secondary materials were transferred
for reclamation and were not discarded.

3. Provisions Applicable to the Transportation of Hazardous Secondary
Materials

	Hazardous secondary materials may be stored for up to 10 days at a
transfer facility and still be considered in transit. The 10-day storage
standard for defining transfer facilities is the same as that used for
hazardous waste transportation, and EPA has revised the definition of
“transfer facility” at 40 CFR 260.10 to clarify that such facilities
may store hazardous secondary materials, as well as hazardous waste.
However, if the facility stores the hazardous secondary materials for
more than 10 days, then it would be considered an intermediate facility
and subject to the conditions in 40 CFR 261.4(a)(24)(v). While at the
transfer facility, the hazardous secondary materials must continue to
meet all applicable Department of Transportation (DOT) standards.
Hazardous secondary materials may be consolidated for shipping, but
cannot be intermingled in a way that would constitute waste management.

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

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

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

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

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

Storage of Recyclable Hazardous Secondary Materials. In addition to the
condition that the hazardous secondary materials must be contained (40
CFR 261.4(a)(24)(iv)(A)), reclamation facilities and intermediate
facilities must also manage the hazardous secondary materials in a
manner that is at least as protective as that employed for the analogous
raw material, where there is an analogous raw material. An "analogous
raw material" is a material for which a hazardous secondary material
substitutes and which serves the same function and has similar physical
and chemical properties as the hazardous secondary material. A raw
material that has significantly different physical or chemical
properties would not be considered analogous even if it serves the same
function. For example, a metal-bearing ore might serve the same function
as a metal-bearing air pollution control dust, but because the physical
properties of the dust would make it more susceptible to wind dispersal,
the two would not be considered analogous. Similarly, hazardous
secondary materials with high levels of toxic volatile chemicals would
not be considered analogous to a raw material that does not have these
volatile chemicals or that has only minimal levels of volatile
chemicals. 

Storage conditions for reclamation facilities and intermediate
facilities that operate under today's exclusion will show that the
materials are not discarded, but instead are treated as commodities
which the handler considers valuable and would be used and not be lost
to the environment. The great majority of damages documented in the
study of environmental problems occurred at commercial reclamation and
intermediate storage facilities, and mismanagement of hazardous
secondary materials was found to be a cause of environmental problems in
40% of the incidents. Accordingly, EPA believes that this condition for
storage is necessary and appropriate for reclamation facilities and
intermediate facilities that take advantage of this exclusion to show
that storage of these materials is not just another way of disposing of
them. In addition, it will establish an expectation for the
owner/operators of such facilities that they must manage hazardous
secondary materials in at least as protective a manner as they would an
analogous raw material, and in such a way that materials would not be
released into the environment. 

Management of recycling residuals. Another condition of the
transfer-based exclusion is that any residuals that are generated from
reclamation processes must be managed in a manner that is protective of
human health and the environment. If any residuals exhibit a hazardous
characteristic according to subpart C of 40 CFR part 261, or themselves
are listed hazardous wastes, they are hazardous wastes (if discarded)
and must be managed according to the applicable requirements of 40 CFR
parts 260 through 272.

The purpose of this condition is to clarify the regulatory status of
these waste materials and to emphasize in explicit terms that residuals
that are generated from the reclamation of hazardous secondary materials
must be managed properly so that the reclamation operation does not
become another way of avoiding waste management and simply becomes
another way of discarding unwanted material. The study of recent (i.e.,
post-CERCLA and post-RCRA) recycling-related environmental problems
revealed that mismanagement of residuals was the cause of such problems
in one-third of the incidents that were documented. Some common examples
of these mismanaged residuals were acids and casings from the processing
of lead-acid batteries, solvents and other liquids generated from
cleaning drums at drum reconditioning facilities, and PCBs and other
oils generated from disassembled transformers. In many of these damage
incidents, the residuals were simply disposed of on-site with little
regard for the environmental consequences of such mismanagement or
possible CERCLA liabilities associated with cleanup of these releases.
By making proper management of the recycling residuals a condition of
the exclusion, EPA ensures that the reclamation operation is not just
another way of discarding hazardous constituents. This has the added
benefit of ensuring that the reclamation operation does not pose a
significant risk to human health and the environment.

Financial Assurance. 

For the transfer-based exclusion, EPA proposed in its March 2007
supplemental proposal that reclamation facilities comply with the 40 CFR
part 265 subpart H financial assurance requirements as a condition of
the exclusion. As discussed in more detail in section V.B of this
preamble, by obtaining financial assurance, the reclamation or
intermediate facility is making a direct demonstration that it will not
abandon the hazardous secondary materials, it will properly
decontaminate equipment, and it will clean up any unacceptable releases,
even if events beyond its control make its operations uneconomical.
Moreover, financial assurance also addresses the issue of the
correlation of the financial health of a reclamation or intermediate
facility with the absence of discard. In essence, financial assurance
will help demonstrate that the reclamation or intermediate facility
owner/operators who would operate under the terms of this exclusion are
financially sound and will not discard the hazardous secondary
materials. 

An implementation issue for the financial assurance condition stems from
the fact that the 40 CFR part 265 subpart H financial assurance
requirements directly reference and rely on the provisions of the 40 CFR
part 265, subpart G closure requirements. For example, in 40 CFR part
265 subpart H, a facility owner uses the “closure plan” in 40 CFR
265, subpart G to calculate closure cost estimates, which then set the
amount of financial assurance required under subpart H. Similarly, the
financial assurance requirements remain in place until EPA has reviewed
the closure plan, and the facility has closed according to the plan. At
that point, EPA releases the financial assurance instruments. Commenters
expressed some confusion on this issue and requested that EPA clarify
that the provisions of subpart G which are required to implement
financial assurance be made explicit.

Thus, in today’s final rule, for the convenience of the regulated
community, EPA has detailed the applicable requirements in a separate
regulation, subpart H of 40 CFR part 261, using terminology appropriate
for excluded facilities, that specifically identifies the processes by
which a facility determines the amount of financial assurance required
and by which it secures release of financial assurance when it no longer
wishes to operate under the transfer-based exclusion. The financial
assurance requirements detailed in 40 CFR part 261, subpart H
incorporate those aspects of the hazardous waste closure and financial
assurance regulations as they apply to the financial assurance condition
for excluded hazardous secondary material reclamation and intermediate
facilities. However, since these facilities are not regulated hazardous
waste facilities, new subpart H does not include a stand-alone closure
requirement, although some aspects of the closure process (described
below) are included as being necessary for the implementation of the
financial assurance condition.

 Substantively, these requirements generally mirror the interim status
standards in 40 CFR part 265 for hazardous waste treatment, storage and
disposal facilities (TSDFs), but have been tailored for hazardous
secondary material reclamation and intermediate facilities. The
provision in the new subpart H in 40 CFR part 261 are linked to
equivalent provisions under 40 CFR part 265, which, as we noted in the
March 2007 supplemental proposal, “outline how owners and operators
should determine cost estimates, explain the acceptable mechanisms for
providing financial assurance, and set the minimum amounts of liability
coverage required" (see 72 FR 14196).

In addition to the closure requirements, 40 CFR part 265 subpart H
includes requirements for post-closure care. Post-closure care (e.g.,
groundwater monitoring, maintenance of waste containment systems) only
applies to land disposal units, where hazardous waste remains in the
unit or other contamination is present after Subtitle C closure.
However, the conditional exclusion being promulgated today only applies
to hazardous secondary materials intended for reclamation. In no cases
should the storage of these materials be designed or managed with the
intent of leaving these hazardous secondary materials in place. Unlike
the need for closure, which could occur at a reclamation or intermediate
facility which meets all the conditions of the exclusion, but then
becomes subject to forces beyond its control (such as a sudden downturn
in the market for its recycled product), the need for post-closure care
would only apply to a facility that does not meet the condition that the
hazardous secondary materials are contained in the unit. Thus, the
Agency has determined that the issue of post-closure care is most
appropriately dealt with by enforcement of the condition that the
hazardous secondary materials must be contained. If, during the life of
the unit, there is a significant release that indicates that the
hazardous secondary materials are discarded, and thus are wastes, then
such waste is subject to the RCRA Subtitle C requirements, including the
post-closure care requirements. See discussion of the condition that the
hazardous secondary materials must be “contained” found in section
VII.C.      

Cost Estimate

Under subpart H of 40 CFR part 261, as it is under subpart H of 40 CFR
part 265 for hazardous waste treatment storage and disposal facilities,
the first step in obtaining financial assurance is to develop a detailed
written estimate on the amount of financial assurance required. The cost
estimate determines the amount of financial assurance that will be
available to the state or EPA for a third party to close a facility if
the owner or operator fails to do so. The requirements for a cost
estimate in 40 CFR 261.142 generally tracks the procedures in 265.142
with changes to accommodate the absence of a closure plan. Because
hazardous secondary materials that lose the exclusion may have to be
disposed of as a hazardous waste and the facility may have to be closed
as a hazardous waste facility in accordance with the requirements of 40
CFR part 265, the owner or operator must have a detailed written
estimate in current dollars of performing this work. The detailed cost
estimate should include all necessary information which will allow the
state or EPA to assess whether the assumptions underlying the estimate
are consistent with what could be required to close the facility. For
example, do the estimates for disposal, including transportation
charges, reflect the distance to available disposal facilities? What
level of personal protective equipment is needed to protect workers? Is
there sufficient sampling of equipment to determine that it has been
decontaminated? Where there is uncertainty about the scope of the work,
is there a reasonable contingency factor included? While not required by
this rule for developing a cost estimate, some owners or operators may
find that developing a plan similar to the requirements in 40 CFR
265.112 would be beneficial for assessing the potential costs of closing
the facility.  (Note, however, that the cost estimate must reflect the
costs of closure under the Subtitle C hazardous waste requirements, and
any remaining hazardous secondary material must be managed as a
hazardous waste, and therefore the procedures used as the basis of the
cost estimate may differ from the actual procedures a compliant facility
will carry out when it completes operations and exits from the
exclusion.) The owner or operator can be required to provide the
documentation of the cost estimate upon request.

The cost estimating requirements in 40 CFR 265.142 and 40 CFR 261.142
are designed so that if a state or EPA must close a facility because of
an owner or operator’s failure, there will be adequate funds to do so.
The requirements for the cost estimate are therefore based upon the
point when the extent and manner of the facility’s operation would
make these activities the most expensive.   

The cost estimate must, at minimum, be based on the costs of hiring a
third party or parties to conduct these activities. The cost estimate
may not include any salvage value for the hazardous secondary materials
as hazardous waste or non-hazardous waste and the owner or operator may
not incorporate a zero cost for such materials that might have economic
value.

The financial assurance provisions are intended, in part, to demonstrate
that the owner and operator is not discarding the hazardous secondary
materials. As noted earlier, 69 of the 208 incidents of environmental
damage identified in EPA’s study of environmental problems associated
with recycling involve abandonment of the hazardous secondary materials
as the primary cause of damage. These cost estimate provisions, found in
40 CFR 261.142(a) are equivalent to those required to estimate financial
assurance under 40 CFR 265.142(a).

In addition, the financial assurance cost estimate must be revised and
additional financial assurance must be obtained to adjust for inflation
or in the event that changes in the reclaimer’s or intermediate
facility’s operations or unexpected events result in an increase in
the cost of managing any hazardous secondary materials that are not
reclaimed and the cost of removing or decontaminating all hazardous
residues. These cost estimate provisions, found in 40 CFR 261.142(b) and
40 CFR 261.142(c) are equivalent to those required under 40 CFR
265.142(b) and 40 CFR 265.142(c), and incorporates language from 40 CFR
265.112(c)(2) requiring the owner or operator to amend the estimates at
least 60 days prior to a planned change in facility design or operation
or no later than 60 days after an unexpected event has occurred that
affects cost estimates. The financial assurance cost estimate must be
documented and this documentation maintained at the facility. This
information must be furnished upon request, and made available at all
reasonable times for inspection. The requirement in 40 CFR 261.142(d) to
maintain documentation at the facility is from the requirement in 40 CFR
265.142(d) and 40 CFR 265.73(b)(7), and the responsibility to make it
available upon request, which will allow Agency representatives to
review the cost estimate, is from 40 CFR 265.74(a) which covers
information required in 40 CFR 265.73.   

Interaction of the Cost Estimate and the Financial Assurance Instruments

As with the interim status regulations in 40 CFR part 265 subpart H, the
interaction of the cost estimating requirements in 40 CFR 261.142 and
the instrument requirements in 40 CFR 261.143 result in adjustments in
the amount of financial assurance as facility operations change. If
changes in the reclaimer’s or intermediate facility’s operations
result in a reduction in the cost estimate, the owner or operator may
submit a new cost estimate. If the new cost estimate is less than the
amount of financial assurance provided, the amount of the financial
assurance instrument may be reduced to the amount of the new estimate
following written approval by the Regional Administrator (see, for
example, 40 CFR 261.143(b)(7)). For example, a facility with three units
managing hazardous secondary materials that use a single surety bond
could close one unit according to the plan in 40 CFR 261.143(h).  With a
new cost estimate submitted by the facility that reflects the lower
costs for the two remaining units, the Regional Administrator can
approve a reduction in the value of the surety bond. On the other hand,
a change in the facility’s operating plan or design that increases the
cost of closing necessitates a new cost estimate (40 CFR 261.142(c)) and
an increase in the amount of financial assurance (see, for example, 40
CFR 261.143(b)(7)). 

Establishment of the Instrument, Plan for Removal of All Hazardous
Secondary Material Residues, and Release from Financial Assurance

Under 40 CFR 261.4(a)(24)(v)(F), an owner or operator of a reclamation
or intermediate facility must establish financial assurance as a
condition of the exclusions under 40 CFR 261.4(a)(24) and 261.4(a)(25).
The same general types of instruments that are available for interim
status facilities under 40 CFR part 265 subpart H are also available to
owners or operators of reclamation or intermediate facilities. Owners or
operators may use trust funds, payment surety bonds, letters of credit,
insurance, or a financial test and corporate guarantee to demonstrate
financial assurance.   

	The regulations governing the financial assurance that an owner or
operator must provide in order to qualify for the exclusions have been
modified to reflect that they apply to hazardous secondary materials and
not hazardous wastes. The financial assurance instruments for the trust,
surety bond, letter of credit, and corporate guarantee have been revised
so that EPA can direct the financial assurance funds at the point the
hazardous secondary material reclamation or intermediate facility no
longer meets the exclusion and, therefore, is managing a hazardous
waste. As long as a facility is operating under the transfer-based
exclusion so that the hazardous secondary material is not being
discarded, there would be no need to invoke the financial assurance
instruments.  

	The regulations allow the same flexibility as in 40 CFR part 265
subpart H for using a combination of trust funds, surety bonds, letters
of credit and insurance at a single facility (see 40 CFR 261.143(f)),
and allow the use of a single mechanism for multiple facilities (see 40
CFR 261.143(g)).   

The provisions for releasing the reclamation or intermediate facility
from the financial assurance requirements, found in 40 CFR 261.143(h),
are functionally equivalent to those under 40 CFR 265.143(h). “Within
60 days after receiving certifications from the owner or operator and a
qualified Professional Engineer that all hazardous secondary materials
have been removed from the unit and the unit has been decontaminated in
accordance with the approved plan per paragraph (i), the Regional
Administrator will notify the owner or operator in writing that he is no
longer required under §261.4(a)(24)(v)(F) to maintain financial
assurance for that unit, unless the Regional Administrator has reason to
believe that that all hazardous secondary materials have not been
removed from the unit or that the unit has not been decontaminated in
accordance with the approved plan.”  	

Under 40 CFR part 265 subpart H, the provisions for releasing financial
assurance rely on receiving a certification that the unit was closed per
the approved closure plan in 40 CFR 265.112.  However, as noted earlier,
under today’s exclusion, units managing hazardous secondary materials
are not subject to closure. Thus, the provision for releasing financial
assurance for these units adapts language from the closure plan
requirement found in 40 CFR 265.112 and from the certification
requirement found in 40 CFR 265.115.  Instead of a hazardous waste
“closure plan,” the 40 CFR 261.143(i) provisions for releasing
financial assurance require submission of a plan for removing hazardous
secondary materials and decontaminating the unit at least 180 days prior
to the date that owner or operator expects to cease operating under the
exclusion. The contents of the plan are detailed in 40 CFR 261.153(i)(2)
and have been tailored to reflect the fact that, although the hazardous
secondary material management units are not subject to closure, when
recycling operations cease, the hazardous secondary materials must be
removed or the unit would become subject to the Subtitle C hazardous
waste requirements (see section VIII.D). Briefly, the plan must include,
at least, (a) a description of how all excluded hazardous secondary
materials will be reclaimed or sent for reclamation and how all
residues, contaminated containment systems (liners, etc), contaminated
soils, subsoils, structures, and equipment will be removed or
decontaminated as necessary to protect human health and the environment
(for guidance, see the March 16, 1998, memorandum entitled “Risk-Based
Clean Closure,” from Elizabeth Cotsworth, Acting Director, Office of
Solid Waste, to RCRA Senior Policy Advisors. Available at
http://www.epa.gov/correctiveaction/resource/guidance/risk/cclosfnl.pdf)
;

(b) a description of the steps necessary to remove or decontaminate all
hazardous secondary material residues and contaminated containment
system components, equipment, structures, and soils including, but not
limited to, procedures for cleaning equipment and removing contaminated
soils, methods for sampling and testing surrounding soils, and criteria
for determining the extent of decontamination necessary to protect human
health and the environment; (c) a description of any other activities
necessary to protect human health and the environment during this time
frame, including, but not limited to, leachate collection, run-on and
run-off control, etc; and (d) a schedule for conducting the activities. 

This plan, which is essentially the subset of information required in a
40 CFR part 265 closure plan that would apply to excluded hazardous
secondary material units, would still need to be reviewed by the
Regional Administrator (or State Director, in authorized states) because
that would ensure that EPA would agree that the hazardous secondary
materials, or equipment contaminated with hazardous secondary materials,
will not remain unregulated at the facility after it is no longer
operating under an exclusion and no longer maintains financial
assurance. As with the financial assurance release provision of 40 CFR
part 264, the Regional Administrator will provide notice to the owner or
operator and the public and an opportunity to submit written comments on
the plan and request modifications to the plan. The Regional
Administrator will approve, modify, or disapprove the plan within 90
days of its receipt.

 	Once residuals (and any hazardous secondary materials) have been
removed and the unit has been decontaminated according to the plan, the
facility would send a certification to that effect from the owner or
operator and a qualified professional engineer to the regulatory agency,
and that agency would then authorize the release of the financial
assurance for those specific units, unless there is reason to believe
that the hazardous secondary materials and residues were not removed (in
which case the regulatory authority would send a written explanation of
this fact). Again, this process is similar to that required under 40 CFR
265.115, as referenced in 40 CFR part 265 subpart H.

Operation of the Instruments if the Exclusion Is No Longer Applicable 

As noted above, as long as a facility is operating under the
transfer-based exclusion and the hazardous secondary material is not
being discarded, there would be no need to invoke the financial
assurance instruments. However, if the exclusion is no longer
applicable, then the hazardous secondary material is a hazardous waste
subject to the Subtitle C requirements and the Regional Administrator
can invoke the instruments consistent with RCRA 3004(t) and related
laws.  Similarly, as in 40 CFR part 265, if an owner or operator fails
to obtain an approved replacement instrument within 90 days after a
notice of cancellation from a surety, issuer of a letter of credit,
insurer, or guarantor, the Regional Administrator can invoke the
instrument. The following descriptions of the instruments contain
additional information on how the instruments operate under this rule.  

Trust Funds

If facilities choose to use a trust fund, they must fully fund the trust
before they can rely on it for financial assurance. This is consistent
with the proposal, which was based on the pay-in provisions under 40 CFR
part 265. In part 265, the pay-in period for trust funds is limited to
the remaining operating life of a facility or 20 years from the
effective date of the 40 CFR part 265 regulations, which became
effective in 1982. Thus, under the exclusion, the pay-in period, which
would allow a trust to build over time, is not available. This means
that facilities that are not financially strong enough to qualify for
the financial test and that cannot obtain a guarantee, such as a surety
bond or a letter of credit from a third party (potentially because the
surety or bank is not confident that it will be repaid if the instrument
is called upon) will need to fully fund the trust before qualifying for
the exclusion. 

While the hazardous secondary materials retain the exclusion, EPA has no
access to these funds. The trustee must meet the qualifications in 40
CFR 261.143(a)(1) and the wording of the trust agreement must be
identical to the wording specified in §261.151(a)(1). The trust
agreement must include a Schedule A that lists each facility, including
the units with hazardous secondary materials, and the amounts of the
current cost estimates, or portions thereof, for which financial
assurance is demonstrated by the trust. Schedule A of the trust
agreement must be updated within 60 days after a change in the amount of
the current cost estimate covered by the agreement.

Whenever the current cost estimate changes, the owner or operator must
compare the new estimate with the trustee's most recent annual valuation
of the trust fund. If the value of the fund is less than the amount of
the new estimate, the owner or operator, within 60 days after the change
in the cost estimate, must either (1) deposit an amount into the fund so
that its value after this deposit at least equals the amount of the
current cost estimate, or (2) obtain other financial assurance, such as
a letter of credit, to cover the difference.

There are also circumstances when the owner or operator may request a
release of funds from the trust. If the value of the trust fund is
greater than the total amount of the current cost estimate, the owner or
operator may submit a written request to the Regional Administrator for
release of the amount in excess of the current cost estimate. This could
occur as a result of the closing of a unit at the facility and the
submission of a revised cost estimate. Alternatively, the earning of the
trust could exceed the increase in the cost estimate due to inflation.
Further, if an owner or operator substitutes other financial assurance
as specified in the regulations for all or part of the trust fund, he
may submit a written request to the Regional Administrator for release
of the amount in excess of the current cost estimate covered by the
trust fund.

Within 60 days after receiving a request from the owner or operator for
release of funds, the Regional Administrator will instruct the trustee
to release to the owner or operator such funds that exceed the amount of
the current cost estimate, as the Regional Administrator deems
appropriate and specifies in writing. Alternatively, in the event that
the owner or operator begins final closure of the unit under subpart G
of 40 CFR part 264 or 265, an owner or operator may request
reimbursements for partial or final closure expenditures by submitting
itemized bills to the Regional Administrator.

The Regional Administrator will agree to termination of the trust when
the owner or operator substitutes alternate financial assurance, such as
receiving approval for an insurance policy to replace the trust, or if
the owner or operator demonstrates that he meets the requirements of the
financial test. It should be noted that both surety bonds and letters of
credit require a standby trust, as discussed below. The Regional
Administrator will also agree to the termination of the trust when he
releases the owner or operator from the requirements of this section in
accordance with 40 CFR 261.143(i).

The preceding discussion explained the operation of the regulations
during the exclusion. The regulations also address the situation where
the hazardous secondary materials lose their exclusion. The requirements
in 40 CFR 261.151(a) for the trust fund provide that if the hazardous
secondary materials lose their exclusion, EPA becomes the beneficiary of
the trust, consistent with RCRA section 3004(t) and federal law.  The
trust also receives the proceeds of a payment surety bond or letter of
credit if the hazardous secondary materials lose the exclusion. The
trustee shall make payments from the Fund as the EPA shall order or
direct, in writing, to provide for the payment of the costs of the
performance of closure activities required under subpart G of 40 CFR
parts 264 or 265 for the facilities covered by the trust agreement. This
provision allows funds from the trust to be used to close facilities as
hazardous waste facilities.  

An owner or operator whose hazardous secondary materials have lost their
exclusion, but subsequently meets the requirements for the exclusion,
including establishing financial assurance in accordance with the
provisions of 40 CFR 261.143, may request a reduction in the amount of
the trust and the Regional Administrator may instruct the trustee to
return funds to the owner or operator under Section 4 of the trust
agreement in 40 CFR 261.151(a).  For example, hazardous secondary
materials could lose their exclusion and the Regional Administrator
could draw upon a letter of credit being used to establish financial
assurance and have it deposited into the trust. If the hazardous
secondary materials regained their exclusion and the owner or operator
substituted a new approved letter of credit, the Regional Administrator
may direct the trustee to refund funds to the owner or operator.   

Surety Bonds

The surety bond operates similarly to the payment surety bond in 40 CFR
part 265, with some modifications to reflect the differences between a
conditionally exempt hazardous material and a hazardous waste. The
surety bond must conform to the requirements of 40 CFR 261.143(b) and
the owner or operator must submit the bond to the Regional
Administrator. The surety company issuing the bond must, at a minimum,
be among those listed as acceptable sureties on federal bonds in
Circular 570 of the U.S. Department of the Treasury. The wording of the
surety bond must be identical to the wording specified in 40 CFR
261.151(b).  

The owner or operator who uses a surety bond must also establish a
standby trust fund and submit an originally signed duplicate of the
trust agreement with the surety bond. Under the terms of the bond, all
payments made thereunder will be deposited by the surety directly into
the standby trust fund in accordance with instructions from the Regional
Administrator. This standby trust fund must meet the requirements
specified in §261.143(a), except that until the standby trust fund is
funded pursuant to the requirements of this section, the following are
not required by these regulations:

(A) Payments into the trust fund as specified in §261.143(a);

(B) Updating of Schedule A of the trust agreement (see §261.151(a)) to
show current cost estimates;

(C) Annual valuations as required by the trust agreement; and

(D) Notices of nonpayment as required by the trust agreement.

The penal sum of the bond must be in an amount at least equal to the
current cost estimate, except as provided in 40 CFR 261.143(f).  The
regulations at 40 CFR 261.143(f) allow the use of certain combinations
of instruments so long as their sum is at least equal to the total cost
estimates.

Whenever the current cost estimate increases to an amount greater than
the penal sum, the owner or operator, within 60 days after the increase,
must either cause the penal sum to be increased to an amount at least
equal to the current cost estimate and submit evidence of such increase
to the Regional Administrator or obtain other financial assurance as
specified in the regulations in 40 CFR 261.143 to cover the increase. 
Whenever the current cost estimate decreases, the penal sum may be
reduced to the amount of the current cost estimate following written
approval by the Regional Administrator. So long as the owner or operator
meets the exclusion, the Regional Administrator will not access the
bond.  

The Regional Administrator will agree to termination of the surety bond
when the owner or operator substitutes alternate financial assurance,
such as an approved insurance policy to replace the surety bond, or if
the owner or operator demonstrates that he meets the requirements of the
financial test. The Regional Administrator will also agree to the
termination of the surety bond when he releases the owner or operator
from the requirements of this section in accordance with 40 CFR
261.143(i). Under 40 CFR 261.151(b), the Principal may terminate this
bond by sending written notice to the Surety(ies), provided, however,
that no such notice shall become effective until the Surety(ies)
receive(s) written authorization for termination of the bond by the EPA
Regional Administrator(s) of the EPA Region(s) in which the bonded
facility(ies) is (are) located.

Under 40 CFR part 261, the surety becomes liable for funding the trust
if the owner or operator has failed to fund the trust before the loss of
the exclusion. The cancellation provisions for the surety bond in 40 CFR
part 261 operate similarly to the provisions in 40 CFR part 265. If the
surety has issued a notice of cancellation, and the owner or operator
has not funded the trust or obtained approval by the Regional
Administrator of a replacement instrument within 90 days, the surety
becomes liable for payment into the trust. Under the hazardous waste
rules, if the surety issues a notice of cancellation and the owner or
operator does not fund the trust or obtain approved alternative
financial assurance within 90 days, the Regional Administrator may
access the funds.   

Reclamation and intermediate facilities, as under 40 CFR part 265, may
not use a performance surety bond because there is no closure plan that
has undergone review under the permitting process. The performance
surety bond, which is allowed under the permitting standards in 40 CFR
part 264, subpart H, requires the surety, in the event of a failure by
the owner or operator to comply with the requirements of the closure
requirements of 40 CFR part 264, to perform closure in accordance with
the closure plan and permitting requirements or to deposit the penal sum
of the bond into the standby trust. Closure plans for permitted
facilities undergo detailed review as part of the permitting process, so
it is appropriate to allow a surety to perform closure in this
circumstance. However, like interim status facilities, reclamation and
intermediate facilities do not have closure plans that undergo this type
of review. “During interim status, the closure and post-closure plans
for a facility are generally not reviewed by the Regional Administrator
until shortly before the time of closure. Upon such review, the Regional
Administrator may find that major changes are needed in the plans. The
Agency believes a performance bond is not appropriate when the actual
required performance for the particular facility may not be specified in
any detail during most of the term of the bond” (47 FR 15040).   

Letters of Credit

The letter of credit requirements generally operate similarly to the
requirements in 40 CFR part 265, except that they reflect the status of
conditionally exempt hazardous secondary materials. An owner or operator
may satisfy the requirements of 40 CFR 261.143 by obtaining an
irrevocable standby letter of credit which conforms to the requirements
of 40 CFR 261.143(c) and submitting the letter to the Regional
Administrator. The issuing institution must be an entity which has the
authority to issue letters of credit and whose letter-of-credit
operations are regulated and examined by a federal or state agency.

The wording of the letter of credit must be identical to the wording
specified in §261.151(c). As with the surety bond, an owner or operator
who uses a letter of credit must also establish a standby trust fund and
submit to the Regional Administrator an originally signed duplicate of
the trust agreement with the letter of credit. Under the terms of the
letter of credit, all amounts paid pursuant to a draft by the Regional
Administrator will be deposited by the issuing institution directly into
the standby trust fund in accordance with instructions from the Regional
Administrator. This standby trust fund must meet the requirements
specified in §261.143(a), except that until the standby trust fund is
funded pursuant to the requirements of this section, the requirements,
as noted above, that are not necessary for a surety bond are also not
required for a letter of credit

 The letter of credit must be issued in an amount at least equal to the
current cost estimate, except as provided in 40 CFR 261.143(f).  The
regulations in 40 CFR 261.143(f) allow the use of certain combinations
of instruments so long as their sum is at least equal to the total cost
estimates. 

Whenever the current cost estimate increases to an amount greater than
the amount of the credit, the owner or operator, within 60 days after
the increase, must either cause the amount of the credit to be increased
so that it at least equals the current cost estimate and submit evidence
of such increase to the Regional Administrator or obtain other financial
assurance as specified in the regulations in 40 CFR 261.143 to cover the
increase. Whenever the current cost estimate decreases, the amount of
the credit may be reduced to the amount of the current cost estimate
following written approval by the Regional Administrator.

The Regional Administrator will return the letter of credit to the
issuing institution for termination when an owner or operator
substitutes alternate financial assurance as specified in 40 CFR
261.143, or when the Regional Administrator releases the owner or
operator from the requirements of this section in accordance with
§261.143(i).

So long as the owner or operator meets the exclusion and maintains
financial assurance, the Regional Administrator will not access the
letter of credit. Access to the letter of credit only occurs upon the
loss of the exclusion. For the letter of credit, in the event that the
hazardous secondary materials at the covered reclamation or intermediary
facilities no longer meet the conditions of the exclusion, EPA may draw
upon the letter of credit. If the owner or operator does not establish
alternate financial assurance and obtain written approval of such
alternate assurance from the Regional Administrator within 90 days after
a notice from the issuing institution that it has decided not to extend
the letter of credit beyond the current expiration date, the Regional
Administrator will draw on the letter of credit. When the Regional
Administrator draws on the letter of credit, the proceeds are deposited
into the standby trust, and the funds in the trust becomes available for
the payment of the costs of closure in compliance with subpart G of 40
CFR parts 264 or 265.  

Insurance

Insurance operates similarly to the insurance in 40 CFR part 265, with
some modifications to reflect differences between conditionally excluded
hazardous secondary materials and hazardous wastes. An owner or operator
may satisfy the requirements of 40 CFR 261.143 by obtaining insurance
that conforms to the requirements of 40 CFR 261.143(d) and submitting a
certificate of such insurance to the Regional Administrator   At a
minimum, the insurer must be licensed to transact the business of
insurance or be eligible to provide insurance as an excess or surplus
lines insurer, in one or more states.

The wording of the certificate of insurance must be identical to the
wording specified in §261.151(d). As part of the certificate, the
insurer warrants that the policy conforms in all respects with the
requirements of 40 CFR 261.143(d), as applicable, and agrees that any
provision of the policy inconsistent with 40 CFR 261.143(d) is hereby
amended to eliminate such inconsistency. The insurer also agrees to
furnish to the EPA Regional Administrator(s) a duplicate original of the
policy listed above, including all its endorsements, whenever requested
by the Regional Administrator.  

The insurance policy must be issued for a face amount at least equal to
the current cost estimate, except as provided in §261.143(f), which
allows the use of certain combinations of instruments so long as their
sum is at least equal to the total cost estimates. 

Whenever the current cost estimate increases to an amount greater than
the face amount of the policy, the owner or operator, within 60 days
after the increase, must either cause the face amount to be increased to
an amount at least equal to the current cost estimate and submit
evidence of such increase to the Regional Administrator or obtain other
financial assurance as specified in 40 CFR 261.143 to cover the
increase.  Whenever the current cost estimate decreases, the face amount
may be reduced to the amount of the current cost estimate following
written approval by the Regional Administrator.

In 40 CFR 261.143(d)(4), the insurance policy must guarantee that funds
will be available to pay the cost of removal of all hazardous secondary
materials from the unit, to pay the cost of decontamination of the unit,
and to pay the costs of the performance of any activities required under
subpart G of 40 CFR parts 264 or 265 for the facilities covered by this
policy, if they become necessary. This provision, as that in 40 CFR part
265, allows the owner or operator to recover the costs of removing
hazardous secondary materials and is similar to the provisions in
§265.143(d) that allow the owner or operator of a facility to be
reimbursed for the costs of closure. This provision also allows the
Regional Administrator to allow reimbursement for the same activities
that are allowed under the trust fund. The insurance provisions that
allow reimbursement for the cost of removal of hazardous secondary
materials are broader than the provisions in 40 CFR 261.151(a) for
payment from the trust fund. This difference is due to the fact that the
monies in the trust fund are returned to the owner or operator once the
facility exits the exclusion, but there is no such provision for
insurance; in order to make the insurance provisions functionally
equivalent to their counterparts in 40 CFR part 265, the insurance
provisions must cover the cost of removing the hazardous secondary
materials when the unit exits the exclusion. However, the owner or
operator may request reimbursements only if the remaining value of the
policy is sufficient to cover the maximum costs for the facility.  

The Regional Administrator will give written consent to the owner or
operator that he may terminate the insurance policy when the owner or
operator substitutes alternate financial assurance as specified in
261.143, or the Regional Administrator releases the owner or operator
from the requirements of this section in accordance with §261.143(i).

Under 40 CFR 261.143(d)(8), cancellation, termination, or failure to
renew may not occur and the policy will remain in full force and effect
in the event that on or before the date of expiration, the conditional
exclusion terminates or is revoked. This is analogous to the provisions
for surety bonds and letters of credit that ensure that payments under
those instruments will occur if the conditionally excluded hazardous
secondary materials lose the exclusion.

Under the insurance provisions of §265.143, failure of the owner or
operator to pay the premiums of a policy without the substitution of an
alternative mechanism constitutes a significant violation of the
regulations. EPA was faced with a decision of how to implement that
provision here. Since the exclusion relies upon compliance with the
conditions, failure to pay the premium is significant and may result in
loss of the exclusion. Similarly, loss of the exclusion will preclude
the cancellation or termination of the policy. Under the circumstances,
EPA recognizes that insurers may carefully screen applicants to ensure
that they will meet the requirements of the exclusion and establish
premiums, possibly with a substantial portion up front or
collateralized, that reduce the insurer’s risk of non-payment.  

In 40 CFR 265.143(d)(1), there is a provision allowing an owner or
operator of a treatment, storage, and disposal facility an additional 90
days from the effective date of the regulations to provide a certificate
of insurance. The effective date of the interim status regulations was
in 1982, and therefore this provision is no longer applicable and
today’s rule does not allow this additional 90 days. In keeping with
the proposal to use requirements in subpart H of 40 CFR part 265, the
additional 90-day period has been deleted from these regulations.  

Financial Test

EPA had solicited comment on whether to use the financial assurance
provisions in the standardized permit rule rather than those in 40 CFR
part 265, but commenters generally did not support the standardized
permit rule alternative. Therefore, certain provisions that are
available under the standardized permit rule will not be available to
reclamation and intermediate facilities, with one exception. The
financial test provision referenced by subpart H of 40 part CFR 265
includes an obsolete requirement that the Certified Public
Accountant’s report state that “[i]n connection with that procedure,
no matters came to his attention which caused him to believe that the
specified data should be adjusted.” This is referred to by the
auditing profession as a “negative assurance.” However, the American
Institute of Certified Public Accountants, Inc.'s (AICPA's) Statement on
Auditing Standards no longer permits independent auditors to express
negative assurance. Thus, to ensure that today’s final rule conforms
with current professional auditing standards, EPA is using the language
from the standardized permit rule for this aspect of the financial test.
 

	As noted in the March 2007 supplemental proposal, the Agency currently
has underway a review of the subpart H financial assurance regulations,
which will address this issue among others in the broader context of 40
CFR parts 264 and 265. As part of any rulemaking that addresses the
results of that review, EPA will include any necessary changes to the
financial assurance condition being finalized today.

In today’s regulation, the letter from the chief financial officer
(see §261.151(e) or (f)) contains a requirement to account for
obligations assured through a financial test or corporate guarantee for
facilities handling conditionally excluded hazardous secondary
materials. This addition is necessary because the chief financial
officer’s letter required in the 40 CFR part 265 regulations does not
anticipate these obligations.  

The financial test and the letter from the chief financial officer use
accounting terms, such as current assets, current liabilities, and
liabilities. Under 40 CFR 261.141, which defines the terms used in this
subpart, these and other accounting terms follow their definition in 40
CFR 265.141(f).  As noted in 40 CFR 265.141(f), “The definitions are
intended to assist in the understanding of these regulations and are not
intended to limit the meanings of terms in a way that conflicts with
generally accepted accounting practices.”  This is an important
provision of the financial assurance regulations because it allows the
terms used in the test to reflect evolving definitions. For example, if
the accounting standards covering retiree obligations change, this
provision ensures that the accounting in the financial test submission
to EPA reflects the new standards. Companies may not use an obsolete
definition of these terms.  

Like the 40 CFR part 265 regulations, this regulation includes a
provision allowing an owner or operator to obtain a corporate guarantee
as a method of complying with the financial assurance requirements. The
provisions governing who may extend a guarantee are the same as those in
40 CFR part 265. Since there is no requirement for an up-front closure
plan, the text of the guarantee in 40 CFR part 261 differs somewhat from
the language in 40 CFR part 265. In §261.151(g)(1), the guarantor
“guarantees that in the event of a determination by the Regional
Administrator that the hazardous secondary materials at the owner or
operator’s facility covered by this guarantee do not meet the
conditions of the exclusion under §261.4(a)(24), the guarantor will
manage any hazardous secondary material in accordance with applicable
regulations and close the facility in accordance with closure
requirements found in parts 264 and 265 of this chapter or establish a
trust fund as specified in §261.143(a) in the name of the owner or
operator in the amount of the current cost estimate.”    

Liability Requirements

The liability coverage requirements for sudden and nonsudden accidental
occurrences in subpart H of 40 CFR part 261 are essentially the same as
those for TSDFs in 40 CFR 265.147, with revised terminology so that the
regulatory language applies to hazardous secondary material reclamation
and intermediate facilities.  Sudden accidental coverage for bodily
injury and property damage to third parties is required for all units,
and nonsudden accidental coverage is required for land-based units.  
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 and
are functionally equivalent to the units required to have nonsudden
accidental coverage under 40 CFR 265.147(b) (e.g., surface
impoundments). In addition, the provisions for requesting a variance or
adjusting the coverage are the same as 40 CFR 265.147(c) and (d)
respectively, except the reference that ties these procedures to the
Subtitle C permit modification procedures under 40 CFR 270.41(a)(5) and
40 CFR 124.5 has been removed, because these provisions would not apply
to excluded hazardous secondary material.

Other Financial Assurance Provisions

Finally, the provisions for incapacity of owners or operators,
guarantors, or financial institutions (40 CFR 261.148), use of
state-required mechanisms (40 CFR 261.149), and state assumption of
responsibility (40 CFR 261.150) are essentially the same as their
counterparts in 40 CFR part 265, with one exception. The state-required
mechanism provisions have been expanded to indicate that states may
allow facilities to use their existing Subtitle C financial assurance
policies to address the financial assurance condition of 40 CFR
261.4(a)(24)(v)(F), provided they can ensure that the instruments
actually cover the financial assurance cost estimate.

5. Provisions Applicable to Hazardous Secondary Materials that are
Exported and Imported

Under today’s final rule, generators who export hazardous secondary
materials are required to notify the receiving country through EPA and
obtain consent from that country before shipment of the hazardous
secondary materials takes place (see 40 CFR 261.4(a)(25)). These notice
and consent requirements provide notification to the receiving country
so that it can ensure that the hazardous secondary materials are
reclaimed rather than disposed of or abandoned. As an additional
benefit, these requirements allow the receiving country the opportunity
to consent or not based on its analysis of whether the recycling
facility can properly recycle the hazardous secondary materials and
manage the process residuals in an environmentally sound manner within
its borders. EPA believes that sections 2002, 3002, 3007, and 3017 of
RCRA provide authority to impose this condition because such notice and
consent help determine that the materials are not discarded. 

Specifically, hazardous secondary materials that are exported from the
United States and its territories and recycled at a reclamation facility
located in a foreign country are not solid wastes, provided the
hazardous secondary material generator complies with the requirements of
40 CFR 261.4(a)(25), including notifying EPA of the proposed export and
obtaining subsequent consent from the receiving country. 

Included by reference in 40 CFR 261.4(a)(25), the generator must comply
with the requirements of 40 CFR 261.4(a)(24)(i)–(iv), which comprise
the hazardous secondary material generator requirements under the
transfer-based exclusion, such as speculative accumulation and
reasonable efforts. However, hazardous secondary material generators who
export hazardous secondary materials for reclamation are not required to
comply with 40 CFR 261.4(a)(24)(iv)(B)(2) for foreign reclaimers and
intermediate facilities because, as part of satisfying reasonable
efforts, this question requires the generator to affirmatively answer if
the reclaimer or intermediate facility has notified the appropriate
authorities pursuant to §260.42 and if the reclaimer or intermediate
facility has financial assurance as required under §261.4(a)(24)(v)(F).
Since foreign reclaimers and foreign intermediate facilities are not
subject to U.S. regulations, they cannot comply with the notification
and financial assurance requirements under today’s rule (however,
hazardous secondary material generators must affirmatively answer this
question for domestic intermediate facilities).

The provisions that we are finalizing today in 40 CFR 261.4(a)(25)
require hazardous secondary material generators to notify EPA of an
intended export 60 days before the initial shipment is intended to be
shipped off-site. The notification may cover export activities extending
over a 12-month or shorter period. The notification must include contact
information for the hazardous secondary material generator, as well as
for the reclaimer and intermediate facility, including any alternate
reclaimer or alternate intermediate facilities. The notification must
also include a description of the type(s) of hazardous secondary
materials and the manner in which the hazardous secondary materials will
be reclaimed, the frequency and rate at which they will be exported, the
period of time over which they will be exported, the means of transport,
the estimated total quantity of hazardous secondary materials to be
exported, and information about transit countries through which such
hazardous secondary materials will pass.

Notifications must be sent to EPA’s Office of Enforcement and
Compliance Assurance, which will then notify the receiving country and
any transit countries. When the receiving country consents (or objects)
to the receipt of the hazardous secondary materials, EPA will inform the
hazardous secondary material generator, through an Acknowledgement of
Consent, of the receiving country’s response, as well as any response
from any transit countries. 

For exports to Organization for Economic Cooperation and Development
(OECD) Member countries, the receiving country may choose to respond to
the notification with tacit, rather than written, consent. With respect
to exports to such OECD Member countries, if no objection has been
lodged by the receiving country or transit countries to a notification
within 30 days after the date of issuance of the acknowledgement of
receipt of notification by the competent authority of the receiving
country, the U.S. understands that an export may commence at that time.
In such cases, EPA will send an Acknowledgment of Consent to inform the
hazardous secondary material generator that the receiving country and
any relevant transit countries have not objected to the shipment, and
are thus presumed to have consented tacitly. Tacit consent expires one
calendar year after the close of the 30-day period; re-notification and
renewal of all consents is required for exports after that date. This
tacit consent procedure for exports of hazardous secondary materials to
OECD Member countries in this rule is similar to the tacit consent
procedure for hazardous waste exports to OECD Member countries under 40
CFR part 262 subpart H. We note that Canada and Mexico, though they are
OECD Member countries, typically require written consent for exports to
their countries.

The hazardous secondary material generator may proceed with the shipment
of the hazardous secondary materials only after it has received an
Acknowledgment of Consent from EPA indicating the receiving country’s
consent (actual or tacit). If the receiving country does not consent to
the receipt of the hazardous secondary materials or withdraws a prior
consent, EPA will notify the hazardous secondary material generator in
writing. EPA also will notify the hazardous secondary material generator
of any responses from transit countries. Hazardous secondary material
generators must keep copies of any notifications and consents for a
period of three years following receipt of the consent. 

Hazardous secondary material generators must also file with the
Administrator, no later than March 1 of each year, a report containing
its name, mailing and site address, and EPA ID number (if applicable);
the calendar year covered by the report; the name and site address of
each reclaimer and intermediate facility; and, for each hazardous
secondary material exported, a description of the hazardous secondary
material, the type of hazardous secondary material (reported as the EPA
hazardous waste numbers that would apply if the hazardous secondary
materials were managed as hazardous wastes), the DOT hazard class, the
name and US EPA ID number (where applicable) for each transporter used,
the total amount of hazardous secondary material shipped and the number
of shipments pursuant to each notification. Hazardous secondary material
generators must also sign a certification statement (found under 40 CFR
261.4(a)(25)(xi)(E)). These procedures are similar to those required for
exports of hazardous waste under 40 CFR part 262 subpart E, except for
the use of the hazardous waste manifest which is not required under
today’s exclusions.

	Imports of hazardous secondary materials are eligible for today’s
transfer-based exclusion, provided that the person who imports the
hazardous secondary material fulfills all requirements and conditions
(e.g., notification, reasonable efforts, recordkeeping) for a hazardous
secondary material generator under 40 CFR 261.4(a)(24) of today’s
rule. Persons who import hazardous secondary materials are not eligible
for today’s generator-controlled exclusion since EPA would not be able
to ensure the close management and monitoring of the hazardous secondary
materials by a single entity in a foreign country. 

D. Termination of the Exclusion

As with the generator-controlled exclusion, units managing hazardous
secondary materials excluded under the transfer-based exclusion are not
subject to the closure regulations in 40 CFR parts 264 and 265, subpart
G. However, when the use of these units is ultimately discontinued, all
owners and operators must manage any remaining hazardous secondary
materials that are not reclaimed and remove or decontaminate all
hazardous residues and contaminated containment system components,
equipment structures, and soils. These hazardous secondary materials and
residues, if no longer intended for reclamation, would also no longer be
eligible for the exclusion (which only applies to hazardous secondary
materials that will be reclaimed). Failure to remove these materials
within a reasonable time frame after operations cease could cause the
facility to become subject to full Subtitle C requirements if the Agency
determines that recycling is no longer feasible. While this final rule
does not set a specific time frame for these activities, the Agency
believes that they typically should be completed within the time frames
established for analogous activities. For example, the requirements for
product tanks under 40 CFR 261.4(c) allow 90 days for removal of
hazardous material after the unit ceases to be operated for
manufacturing. This timeframe should serve as a guideline for regulators
in determining, on a case-by-case basis, whether owners and operators
have completed these activities within in a reasonable time frame. In
any event, these hazardous secondary materials remain subject to the
speculative accumulation restrictions in 40 CFR 261.1(a)(8), which
includes both a time limitation of recycling 75% of the hazardous
secondary material within a year and a requirement that the facility be
able to show there is a feasible means of recycling the hazardous
secondary material.

In addition, as described in section XIII.C. above, in order to be
released from the financial assurance condition, intermediate and
reclamation facilities will need to submit for approval a plan for
removing the hazardous secondary material and decontaminating the unit,
and then, when the work is completed, submit a certification from a
qualified Professional Engineer that all hazardous secondary materials
have been removed from the unit and the unit has been decontaminated.

E. Enforcement

Hazardous secondary materials transferred to a third party for the
purpose of reclamation are excluded from RCRA Subtitle C regulation
under certain conditions and restrictions. If a hazardous secondary
material generator fails to meet any of the above-described conditions
that are applicable to the generator, then the hazardous secondary
materials would be considered discarded by the generator and would be
subject to the RCRA Subtitle C requirements from the point at which such
material was generated. In addition, if a reclaimer or an intermediate
facility failed to meet any of the above-described conditions, then the
hazardous secondary materials would be considered discarded by the
reclaimer or intermediate facility and would be subject to RCRA Subtitle
C requirements from the point at which the reclaimer or intermediate
facility failed to meet a condition or restriction, thereby discarding
the material.  

It should be noted that the failure of the reclaimer or intermediate
facility to meet the conditions of the exclusion does not mean that the
hazardous secondary material was considered waste when handled by the
generator, as long as the generator can adequately demonstrate that it
has met its obligations, including the obligation under 40 CFR
261.4(a)(24)(iv)(A) to make reasonable efforts to ensure that the
hazardous secondary material will be recycled legitimately and properly
managed. A hazardous secondary material generator that met its
reasonable efforts obligations could, in good faith, ship its excluded
materials to a reclamation facility or intermediate facility where, due
to circumstances beyond its control, they were released and caused
environmental problems at that facility. In such situations, and where
the generator’s decision to ship to that reclaimer or intermediate
facility is based on an objectively reasonable belief that the hazardous
secondary materials would be reclaimed legitimately and otherwise
managed in a manner consistent with this regulation, the generator would
not have violated the terms of the exclusion. 

IX. Legitimacy

A. Background of Legitimacy

	As noted in the March 26, 2007, supplemental proposal, under the RCRA
Subtitle C definition of solid waste, many existing hazardous secondary
materials are not solid wastes and, thus, not subject to RCRA's "cradle
to grave" management system if they are recycled. The basic idea behind
this construct is that recycling of such materials often closely
resembles normal industrial manufacturing rather than waste management.
However, since there can be significant economic incentive to manage
hazardous secondary materials outside the RCRA regulatory system, there
is a potential for some handlers to claim that they are recycling, when,
in fact, they are conducting waste treatment and/or disposal in the
guise of recycling. 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 established the definition of solid waste (50 FR 638, January 4,
1985) and continuing with the 2003 proposed codification of criteria for
identifying legitimate recycling. 

	In the October 28, 2003, proposal at 68 FR 61581–61588, EPA
extensively discussed its position on the relevance of legitimacy to
hazardous secondary materials recycling in general and to the
redefinition of solid waste specifically. We proposed to codify in the
RCRA hazardous waste regulations four general criteria to be used in
determining whether recycling of hazardous secondary materials is
legitimate. In the supplemental proposal of March 26, 2007, at 72 FR
14197–14201, we proposed two changes to the 2003 proposed legitimacy
criteria and asked for public comment on those changes. The changes were
(1) a restructuring of the proposed criteria, called “factors” in
this proposal, to make two of them mandatory, while leaving the other
two as factors to be considered, and (2) additional guidance on how the
economics of the recycling activity should be considered in a legitimate
recycling determination.

The concept of legitimacy being finalized in today’s rule is not
substantively different from the Agency’s longstanding policy that has
been expressed in the earlier preamble discussions and guidance
statements. The October 28, 2003, definition of solid waste proposal
discussed the history of the guidance EPA has provided to the regulated
community on the question of what it means to legitimately recycle. To
summarize that discussion, the January 4, 1985, preamble to the final
rule that promulgated the original definition of solid waste regulations
established EPA’s concept of legitimacy and described several
indicators of sham recycling. A similar discussion that addressed
legitimacy as it pertains to burning hazardous secondary materials for
energy recovery was presented in the preamble to the January 8, 1988,
proposed amendments to the definition of solid waste (53 FR 522). 

On April 26, 1989, the Office of Solid Waste (OSW) issued a memorandum
that consolidated preamble statements concerning legitimate recycling
that had been articulated previously into a list of criteria to be
considered in evaluating legitimacy [OSWER directive 9441.1989(19)].
This memorandum, known to many as the “Lowrance Memo,” has been a
primary source of guidance for the regulated community and for
implementing agencies in distinguishing between legitimate and sham
recycling for many years. Today’s final rule effectively replaces that
memorandum with final regulations that both the regulated community and
implementing agencies can look to for determining whether recycling is
legitimate, although the Lowrance Memo will continue to have relevance
as an historical document and provides insight into how EPA views
legitimacy. 

The following discussion sets forth EPA’s reasoning for the final
version of the legitimacy criteria based on the October 2003 proposal
and March 2007 supplemental proposal and all relevant information
available to EPA as contained in the rulemaking record. The basis for
the decision includes the reasoning in the October 2003 and March 2007
preambles to the proposal and supplemental proposal, respectively and
consideration of all significant public comments as discussed in section
XVIII of this preamble, as well as in the response to comment document.
To the extent there is any discussion in this preamble that may be
inconsistent with statements made in the October 2003 or March 2007
preambles, the statements in this preamble represent the position of the
Agency. In addition, EPA notes that we do not expect the regulated
community or implementing regulatory agencies to revisit previous
legitimacy determinations and expect that any existing written
determinations from these agencies will be unchanged under the new
structure. 

B. How to Determine When Recycling is Legitimate

1. What is the Purpose of Legitimacy?

As discussed in the October 2003 proposal and the March 2007
supplemental proposal to this rulemaking, the Agency has a long-standing
policy that all recycling of hazardous secondary materials must be
legitimate, including both excluded recycling and the recycling of
regulated hazardous wastes. The legitimacy construct and factors
discussed in those proposals and being finalized today are designed to
distinguish between real recycling activities—legitimate
recycling—and “sham” recycling, an activity undertaken by an
entity to avoid the requirements of managing a hazardous secondary
material as a hazardous waste. Because of the economic advantages in
managing hazardous secondary materials as recycled materials rather than
as wastes, there is an incentive for some handlers to claim they are
recycling when, in fact, they are conducting waste treatment and/or
disposal. 

	By putting legitimacy into the regulations, EPA is ensuring that this
important requirement is more readily available to the public, including
the regulated community, in the Federal Register and in the Code of
Federal Regulations and not just in Agency guidance. The Agency expects
that this action will prevent or minimize fraudulent or sham recycling
and will make the legitimacy criteria a more enforceable standard for
states and other entities implementing the RCRA hazardous waste
regulations. 

2. Scope and Applicability 

	The definition of legitimacy is intended to apply generally to these
types of hazardous secondary materials:

•	Recyclable hazardous secondary materials that are excluded from
Subtitle C regulation as wastes under today’s final rule for materials
that are either generated and reclaimed under the control of the
generator per 40 CFR 261.2(a)(2)(ii) or 40 CFR 261.4(a)(23); generated
and transferred to another person for the purpose of reclamation per 40
CFR 261.4(a)(24); or formally determined to be a non-waste under the
procedures per 40 CFR 260.34.

•	Hazardous secondary materials that, because they are recycled, are
excluded or exempted from Subtitle C regulation under other regulatory
provisions (e.g., see the other exclusions from the definition of solid
waste in 40 CFR 261.4).

•	Recyclable hazardous wastes that are regulated under Subtitle C
prior to recycling.

	Apart from the definition of solid waste implications, the concept of
legitimate recycling is also used to determine if a recycling unit is
exempt from RCRA Subtitle C permitting (except for certain air emission
standards) or if a regulated waste treatment or disposal unit is subject
to full RCRA Subtitle C permitting.

	In addition, we also noted in the October 2003 proposal that EPA has
examined in depth a number of waste-specific and industry-specific
recycling activities, and has promulgated specific regulatory exclusions
or provisions that address the legitimacy of these practices in much
more specific terms than the general factors being promulgated today.
Thus, there will be situations where today’s broadly-applicable
factors could overlap with these more specific legitimacy provisions.
One example would be the regulation for zinc fertilizers made from
recycled hazardous secondary materials. In the zinc fertilizer
regulation, among the requirements established by EPA are specific
numerical limits on five heavy metal contaminants and dioxins in the
zinc fertilizer product exclusion at 40 CFR 261.4(a)(21). Other examples
of more specific legitimacy provisions are found in the regulations for
comparable fuels at 40 CFR 261.38, the “use constituting disposal”
provisions in 40 CFR part 266, subpart C, and the “burning for energy
recovery” provisions in 40 CFR part 266, subpart H. These more
specific provisions remain applicable and today’s legitimacy factors
do not replace them. Affected parties should look to those regulatory
provisions, in addition to the definition of legitimate recycling, to
ensure compliance.

	It is the Agency’s position that the definition of legitimate
recycling applies to all hazardous secondary materials recycling and
hazardous waste recycling, whether such recycling remains under
hazardous waste regulation or is excluded from the definition of solid
waste. This has been our long-standing policy and it is well understood
throughout the regulated community and the implementing state regulatory
agencies. We also firmly believe that the legitimacy factors being
codified in today’s rulemaking are a simplification and clarification
of our existing policy and, as such, existing legitimacy determinations
should not change or be revisited. Furthermore, we do think it is
important to reiterate that the legitimacy factors apply to the existing
exclusions. We recognize that under some of the existing exclusions,
certain conditions may fulfill certain legitimacy factors or
considerations, but this is not universally the case for all of the
recycling exclusions. Even under the existing exclusions, there remains
the possibility of someone claiming an existing recycling exclusion as a
means of discarding their hazardous waste; thus, 40 CFR 261.2(g) would
apply to the existing recycling exclusions.

3. Legitimacy Requirements

	EPA is finalizing the legitimacy factors in this action. The final
regulatory language is found at 40 CFR 261.2(g). The design of
legitimacy in the final rule has two parts. The first is a requirement
that hazardous secondary materials being recycled provide a useful
contribution to the recycling process or to the product of the recycling
process and a requirement that the product of the recycling process is
valuable. These two legitimacy factors make up the core of legitimacy
and, therefore, a process that does not conform to them cannot be a
legitimate recycling process, but would be considered sham recycling. 

	The second part of legitimacy is two factors that must be considered
when a recycler is making a legitimacy determination. EPA believes that
these two factors are important in determining legitimacy, but has not
made them factors that must be met because the Agency knows that there
will be some situations in which a legitimate recycling process does not
conform to one of these two factors, yet the reclamation activity would
still be considered legitimate. EPA does not believe that this will be a
common occurrence, but in recognition that legitimate recycling may
occur in these situations, EPA has made management of the hazardous
secondary materials and the presence of hazardous constituents in the
recycled product factors that must be considered in the overall
legitimacy determination, but not factors that must always be met. 

Scope of legitimacy. The legitimacy factors finalized today are relevant
to all recycling of hazardous secondary materials. Under the first
paragraph of 40 CFR 261.2(g), hazardous secondary materials that are not
legitimately recycled are discarded materials and, therefore, are solid
wastes. This paragraph also states that anyone recycling hazardous
wastes who claims an exclusion under §261.2 or §261.4 or who claims to
qualify for special management standards under §261.6 or 40 CFR part
266 must be able to demonstrate that their recycling activity is
legitimate. The Agency has added the following language: “An
evaluation of legitimacy must consider the requirements of §261.2(g)(2)
and §261.2(g)(3)” to make it clear that all four factors must be
considered and evaluated in determining whether the recycling activity
is legitimate. Although there is no specific recordkeeping requirement
that goes with the ability to demonstrate legitimacy, EPA expects that
in the event of an inspection or an enforcement action by an
implementing agency, the recycler would be able to show how it made the
overall legitimacy determination per §261.2(f). In the event that the
process does not conform to one of the two factors under §261.2(g)(3),
the facility should be able to show that it considered that factor and
why it is not appropriate or necessary for that particular factor to be
met. 

Factor 1—Useful Contribution. “Legitimate recycling must involve a
hazardous secondary material that provides a useful contribution to the
recycling process or to a product of the recycling process…The
hazardous secondary material provides a useful contribution if it (A)
contributes valuable ingredients to a product or intermediate; or (B)
replaces a catalyst or carrier in the recycling process; or (C) is the
source of a valuable constituent recovered in the recycling process; or
(D) is recovered or regenerated by the recycling process; or (E) is used
as an effective substitute for a commercial product” (40 CFR
261.2(g)(2)(i)).

	This factor, one of the two core legitimacy factors, expresses the
principle that hazardous secondary materials should contribute value to
the recycling process. This factor is an essential element to legitimate
recycling because real recycling is not occurring if the hazardous
secondary materials being added or recovered do not add anything to the
process. This factor is intended to prevent the practice of adding to or
recovering hazardous secondary materials from a manufacturing operation
simply as a means of disposing of them, or recovering only small amounts
of a constituent, which EPA would consider sham recycling. 

	In response to comments received on this factor asking for more
clarification on what useful contribution means, the regulatory text
includes an explanation of how useful contribution might be achieved in
(A) through (E) of §261.2(g)(2)(i). EPA stresses that the ways in which
hazardous secondary materials can add value and be useful in a recycling
process are (A) contributing valuable ingredients to a product or
intermediate; (B) replacing a catalyst or carrier in the recycling
process; (C) providing a valuable constituent to be recovered; (D) being
regenerated; or (E) being used as an effective substitute for a
commercial product. The preamble to the October 2003 proposed rule gave
full descriptions of these five situations (68 FR 61585), but the Agency
has also included them in the regulatory text to clarify this factor for
the regulated community. 

	The Agency also wants to restate for clarification that for hazardous
secondary materials to meet the useful contribution factor, not every
constituent or component of the hazardous secondary material has to make
a contribution to the recycling activity. For example, a legitimate
recycling operation involving precious metals might not recover all of
the components of the hazardous secondary material, but would recover
precious metals with sufficient value to consider the recycling process
legitimate. In addition, the recycling activity does not have to involve
the hazardous component of the hazardous secondary materials if the
value of the contribution of the non-hazardous component justifies the
recycling activity. One example is where hazardous secondary materials
containing large amounts of zinc, a nonhazardous component, are recycled
into zinc micronutrient fertilizers. In cases where the hazardous
component is not being used or recycled, the Agency stresses that the
recycler is responsible for the management of any hazardous residuals of
the recycling process. 

	In a situation where more than one hazardous secondary material is used
in a single recycling process and the hazardous secondary materials are
mixed or blended as a part of the process, each hazardous secondary
material would need to satisfy the useful contribution factor. This
requirement prevents situations where a worthless hazardous secondary
material could be mixed with valuable and useful hazardous secondary
materials in an attempt to disguise and dispose of it. In addition, a
situation in which hazardous secondary materials that can be useful to a
process are added to that process in much greater amounts than are
needed to make the end-product or to otherwise provide its useful
contribution would also be sham recycling. 

	Another way the usefulness of the hazardous secondary material’s
contribution could be demonstrated is by looking at the efficiency of
the material’s use in the recycling process—that is, how much of the
constituent in a hazardous secondary material is actually being used. As
an example, if there is a constituent in the hazardous secondary
material that could add value to the recycling process, but, due to
process design, most of it is not being recovered but is being disposed
of in the residuals, this would be a possible indicator of sham
recycling. However, there are certainly recycling scenarios where a low
recovery rate could still be legitimate. For example, if the
concentration in a metal-bearing sludge is low (2%–4%) and a recycling
process was able to recover a large percentage of the target metal, this
factor could be met and the recycling may be legitimate (depending on
the outcome of the analysis of the other legitimacy factors).

	One way to use the efficiency of the recycling process to evaluate
legitimacy is to compare the process to typical industry recovery rates
from raw materials to determine if the recycling process is reasonably
efficient. This method should involve an examination of the overall
process, not just a single step of the process. For example, if one step
in the process recovers 10% of the constituent, but the overall process
recovers 90%, the Agency would consider this reasonably efficient and
one way to demonstrate that the hazardous secondary materials are
providing a useful contribution. 

	There are various ways in which hazardous secondary materials can be
useful to a recycling process and various ways are laid out in this
discussion of how a facility might demonstrate conformity with this
factor. Overall, the Agency considers this factor to be a critical
element in determining legitimacy and any recycling process that does
not meet this factor cannot be considered legitimate recycling. 

Factor 2—Valuable Product or Intermediate. “The recycling process
must produce a valuable product or intermediate…The product or
intermediate is valuable if it is (A) sold to a third party; or (B) used
by the recycler or the generator as an effective substitute for a
commercial product or as an ingredient or intermediate in an industrial
process” (40 CFR 261.2(g)(2)(ii)).

	This factor, one of the two core legitimacy factors, expresses the
principle that the product or intermediate of the recycling process
should be a material of value, either to a third party who buys it from
the recycler, or to the generator or recycler itself, who can use it as
a substitute for another material that it would otherwise have to buy
for its industrial process. This factor is also an essential element of
the concept of legitimate recycling because recycling can not be
occurring if the product or intermediate of the recycling process is not
of use to anyone and, therefore, is not a real product. This factor is
intended to prevent the practice of running a hazardous secondary
material through an industrial process to make something just for the
purpose of avoiding the costs of hazardous waste management, rather than
for the purpose of using the product or intermediate of the recycling
activity. Such a practice would be sham recycling. 

	Most commenters on the proposed rule for this factor stated that this
is a useful way of gauging whether recycling is actually taking place,
but requested that the Agency clarify the meaning of the term valuable,
as it is used in the regulatory text. EPA is repeating and clarifying
today that for the purpose of this factor, a recyclable product may be
considered “valuable” if it can be shown to have either economic
value or a more intrinsic value to the end user. Evaluations of
“valuable” for the purpose of this factor should be done on a
case-by-case basis, but one way to demonstrate that the recycling
process yields a valuable product would be the documented sale of a
recycled product to a third party. Such documentation could be in the
form of receipts or contracts and agreements that establish the terms of
the sale or transaction. This transaction could include money changing
hands or, in other circumstances, may involve trade or barter. A
recycler that has not yet arranged for the sale of its product to a
third party could establish value by demonstrating that it can replace
another product or intermediate that is available in the marketplace. A
recycled product may be sold at a loss, either because of normal market
fluctuations or as a “loss leader,” but the recycler will have to
show how selling the product at a loss is economically beneficial to the
seller and that the product is valuable to the purchaser. 

	However, many recycling processes produce outputs that are not sold to
another party, but are instead used by the generator or recycler. A
recycled product may be used as a feedstock in a manufacturing process,
but have no established monetary value in the marketplace. Such recycled
products or intermediates would be considered to have intrinsic value,
though demonstrating intrinsic value may be less straightforward than
demonstrating value for products that are sold in the marketplace.
Demonstrations of intrinsic value could involve showing that the
recycled product or intermediate replaces an alternative product that
would otherwise have to be purchased or could involve a showing that the
recycled product or intermediate meets specific product specifications
or specific industry standards. Another approach could be to compare the
product’s or intermediate’s physical and chemical properties or
efficacy for certain uses with those of comparable products or
intermediates made from raw materials. 

	Some recycling processes may consist of multiple steps that may occur
at separate facilities. In some cases, each processing step will yield a
valuable product or intermediate, such as when a metal-bearing sludge is
processed to reclaim a precious metal and is then put through another
process to reclaim a different mineral. When each step in the process
yields a valuable product or intermediate that is salable or usable in
that form, the recycling activity would conform to this factor. If,
however, a particular step in a recycling process does not yield a
separate salable or ready-for-use product or intermediate, that process
step would typically need to add value to the product or intermediate in
some way in order to satisfy this factor. For example, if the first step
in reclaiming a metal-bearing hazardous secondary material results in a
fused or agglomerated material, a second step consisting of particle
size reduction may be necessary to facilitate the reclamation step.
Although reducing the particle size in this case would not by itself
produce a valuable product or intermediate, it would add value to the
recycling process and is consistent with the intent of this factor. 	

	Like the other factors, this factor should be examined and evaluated on
a case-by-case basis looking at the specific facts of a recycling
activity. If, for instance, a recycling activity produces a product or
intermediate that is used by the recycler itself, but does not serve any
purpose and is just being used so that the product or intermediate
appears valuable, that would be an indicator of sham recycling. An
example of this is where a recycler “uses” a hazardous secondary
material as indiscriminate fill around its property for no real purpose.


Factor 3—Managed as a Valuable Commodity. “The generator and the
recycler should manage the hazardous secondary material as a valuable
commodity. Where there is an analogous raw material, the hazardous
secondary material should be managed, at a minimum, in a manner
consistent with the management of the raw material. Where there is no
analogous raw material, the hazardous secondary material should be
contained. Hazardous secondary materials that are released to the
environment and are not recovered immediately are discarded” (40 CFR
261.2(g)(3)(i)). 

The first of the additional factors that must be considered expresses
the principle that hazardous secondary materials being recycled should
be managed in the same manner as other valuable materials. This factor
requires those making a legitimacy determination to look at how the
hazardous secondary material is managed before it enters the recycling
process. In EPA’s view, a recycler will value hazardous secondary
materials that provide an important contribution to its process or
product and, therefore, will manage those hazardous secondary materials
in a manner consistent with how it manages a valuable feedstock. If, on
the other hand, the recycler does not manage the hazardous secondary
materials as it would a valuable feedstock, that behavior may indicate
that the hazardous secondary materials may not be recycled, but rather
released into the environment and discarded. 

This factor may be particularly appropriate in the case where a recycler
has been paid by a generator to take its materials as a result of the
economic incentives in the hazardous secondary materials market. By
looking at the management of the hazardous secondary material before it
enters the recycler’s process, the entity making the legitimacy
determination can tell that a material being managed like an analogous
raw material is, in fact, valued by the recycler. If the hazardous
secondary material is not being managed like a valuable raw material
because it is uncontrolled or is being released, that indicates that the
fee the recycler obtains for taking the hazardous secondary material may
be its only value to that recycler. If the fee received were the only
value to the recycler, it would mean that discard was taking place. 

 	This factor addresses the management of hazardous secondary materials
in two distinct situations. The first situation is when a hazardous
secondary material is analogous to a raw material which it is replacing
in the process. In this case, the hazardous secondary material should be
managed prior to recycling similarly to the way the analogous raw
materials are managed in the course of normal manufacturing. EPA expects
that all parties handling hazardous secondary materials destined for
recycling—generators, transporters, intermediate facilities and
reclamation facilities—will handle them in generally the same manner
in which they would handle the valuable raw materials they might
otherwise be using in their process. “Analogous raw material,” as
defined elsewhere in this preamble, is a raw material for which the
hazardous secondary material substitutes and which serves the same
function and has similar physical and chemical properties as the
hazardous secondary material. 

The second situation the factor addresses is the case where there is no
analogous raw material that the hazardous secondary material is
replacing. This could be either because the process is designed around a
particular hazardous secondary material—that is, the hazardous
secondary material is not replacing anything—or it could be because of
physical or chemical differences between the hazardous secondary
material and the raw material that are too significant for them to be
called “analogous.” 

Hazardous secondary materials that have significantly different physical
or chemical properties when compared to the raw material would not be
considered analogous even if they serve the same function because it may
not be appropriate to manage them in the same way. In this situation,
the hazardous secondary material would have to be contained for this
factor to be met. A hazardous secondary material is “contained” if
it is placed in a unit that controls the movement of that material out
of the unit. This requirement is consistent with the idea that normal
manufacturing processes are designed to use valuable material inputs
efficiently rather to than allow them to be released into the
environment. 

For example, if a manufacturer has an ingredient that is a dry raw
material managed in supersacks, the Agency would expect that a hazardous
secondary material that is a similar dry material also would be managed
in supersacks or in a manner that would provide equivalent protection.
If, on the other hand, the hazardous secondary material was instead
managed in an outdoor pile without appropriate controls in place to
address releases to the environment, it may indicate that it was not
being handled as a valuable commodity. If, however, the manufacturer
decided to replace the dry raw material in its process with a liquid
having the same constituents, it would not be sufficient, nor would it
make sense, for the liquid to be managed in supersacks. Instead, the
liquid would have to be “contained.” 

An important part of this factor is the statement in the regulatory text
clarifying that hazardous secondary materials that are released to the
environment and not recovered immediately are discarded. Valuable
products should not be allowed to escape into the environment through
poor management and this factor clarifies that those hazardous secondary
materials that do escape (and are not immediately recovered) are clearly
discarded. Either a large release or ongoing releases of smaller amounts
could indicate that, in general, the hazardous secondary material is not
being managed as a valuable product, which could potentially lead to the
recycling process being found not to be legitimate. Hazardous secondary
materials that are immediately recovered before they disperse into the
environment—air, soil, or water—and are reintroduced in the
recycling process are not discarded. This determination must be made on
a case-by-case basis, however. 

EPA has determined that it is appropriate that this factor is one of the
two that must be considered rather than a factor that must be met
because there are situations in which this factor is not met, but
recycling appears to be legitimate. An example of this kind of situation
is described in the March 2007 supplemental proposal (72 FR 14199). In
the example, a hazardous secondary material that is a solid powder-like
material is shipped in a woven super sack and stored in an indoor
containment area, whereas the analogous raw material is shipped and
stored in drums. A strict reading of this factor may determine that the
hazardous secondary material is not being managed in a manner consistent
with the raw material even if the differences in management are not
actually impacting the likelihood of a release. By designing the
legitimacy factors so that this one has to be considered, but not
necessarily met, the individual facts of situations like the one
described here can be evaluated on a case-by-case basis to determine if
they affect the legitimacy of the recycling activity. 

In summary, given the nature of the legitimacy factors and their need to
apply to practices across the recycling industry, in general, it is not
appropriate or practicable for EPA to develop a specific management
standard. In the absence of such a management standard, EPA is using
this factor: materials must be managed as analogous raw materials or, if
there are no analogous raw materials, the materials must be contained.
EPA’s intent with this factor is that hazardous secondary materials
are managed in the same manner as materials that have been purchased or
obtained at some cost, just as raw materials are. Just as it is good
business practice to ensure that raw materials enter the manufacturing
process rather than being spilled or released, we would expect hazardous
secondary materials to be managed effectively and efficiently in order
that their full value to the manufacturing process would be realized.

Factor 4—Comparison of Toxics in the Product. “The product of the
recycling process does not (A) contain significant concentrations of any
hazardous constituents found in Appendix VIII of part 261 that are not
found in analogous products; or (B) contain concentrations of any
hazardous constituents found in Appendix VIII of part 261 at levels that
are significantly elevated from those found in analogous products; or
(C) exhibit a hazardous characteristic (as defined in part 261 subpart
C) that analogous products do not exhibit” (40 CFR 261.2(g)(3)(ii)). 

The second of the additional factors that must be considered requires
those making a legitimacy determination to look at the concentrations of
the hazardous constituents found in the product made from hazardous
secondary materials and compare them to the concentrations of hazardous
constituents in analogous products. Any of the following three
situations could be an indicator of sham recycling: a product that
contains significant levels of hazardous constituents that are not found
in the analogous products; a product with hazardous constituents that
were in the analogous products, but contains them at significantly
higher concentrations; or a product that exhibits a hazardous
characteristic that analogous products do not exhibit. Any of these
situations could indicate that sham recycling is occurring because in
lieu of proper hazardous waste disposal, the recycler could have
incorporated hazardous constituents into the final product when they are
not needed to make that product effective in its purpose. This factor,
therefore, is designed to determine when toxics that are “along for
the ride” are discarded in a final product and therefore the hazardous
secondary material is not being legitimately recycled. 

	To evaluate this factor, a recycler will ordinarily compare the
recycled product to an analogous product made of raw materials. For
example, if a recycling process produced paint, the levels of hazardous
constituents in the paint will be compared with the levels of the same
constituents found in similar paint made from virgin raw materials. 

	A recycler is also allowed to perform this evaluation by comparing the
hazardous constituents in the hazardous secondary material feedstock
with those in an analogous raw material feedstock. If the hazardous
secondary material feedstock does not contain significantly higher
concentrations of hazardous constituents than the raw material
feedstock, then the end product of the recycling process would not
contain excess hazardous constituents “along for the ride” either.
EPA is clarifying here that this method of showing that the product does
not have “toxics along for the ride” is acceptable. There may be
cases in which it is easier to compare feedstocks than it is to compare
products because the recycler knows that the hazardous secondary
material is very similar in profile to the raw material. A comparison of
feedstocks may also be easier in cases where the recycler creates an
intermediate which is later processed again and may end up in two or
more products, when there is no analogous product, or when production of
the recycled product has not yet begun. 

	This factor identifies three ways to evaluate whether or not
unacceptable amounts of hazardous constituents are passed through to
recycled products. (As explained above, these methods also could be used
to compare the hazardous secondary material feedstock to a raw material
feedstock, if the recycler prefers.) The first method specifies that
when analogous products made from raw materials do not contain hazardous
constituents, the recycled product should not contain significant
amounts of hazardous constituents. For example, if paint made from
reclaimed solvent contains significant amounts of cadmium, but the same
type of paint made from virgin raw materials does not contain cadmium,
it could indicate that the cadmium serves no useful purpose and is being
passed though the recycling process and discarded in the product. 

	The second method addresses analogous products that do contain
hazardous constituents and asks whether the concentrations of those
hazardous constituents are significantly higher in the recycled product
than in the product made from raw materials. Concentrations of hazardous
constituents in the recycled product that are significantly higher than
in the product made from virgin raw materials could again be an
indicator of sham recycling. For example, if a lead-bearing hazardous
sludge was used as an ingredient in making ceramic tiles and the amount
of lead in the tiles was significantly higher than the amount of lead
found in similar tiles made from virgin raw materials, this would likely
be an indication that the factor is not met.

	The third method under this factor is whether the recycled product
exhibits a hazardous characteristic that analogous products do not
exhibit. Requiring an evaluation of hazardous characteristics ensures
that recycled products do not exhibit the characteristics of toxicity,
ignitability, corrosivity, or reactivity when the analogous products do
not. The Agency believes that most issues associated with “toxics
along for the ride” will involve the presence of toxic constituents,
which are addressed under the first two parts of the factor. That is, we
believe that it is likely that there are few instances where hazardous
secondary materials are used in the process and hazardous constituents
are not present at significantly higher levels, but the product made
from the hazardous secondary material nevertheless exhibits the
hazardous characteristic of toxicity when the analogous product does
not. It is possible, though, that the use of hazardous secondary
materials as an ingredient could cause a product to exhibit a hazardous
characteristic, such as corrosivity, that is not exhibited by analogous
products. 

The Agency has determined that it is appropriate for this factor to be
considered in all legitimacy determinations, but thinks that there may
be situations in which the factor is not met but the recycling would
still be considered legitimate. An example of this kind of situation
would be in the use and reuse of foundry sands for mold making in a
facility’s sand loop. Because of repeated exposure to metals in a
foundry’s process, the sands used to make the molds may have
significantly higher concentrations of hazardous constituents than
virgin sand. However, because the sand is part of an industrial process
where there is little chance of the hazardous constituents being
released into the environment or causing damage to human health and the
environment when it is kept inside, this would be an example of a
situation where this factor is not met, but it does not affect the
legitimacy of the recycling process. If the used foundry sand were being
recycled into a different product, such as a material used on the ground
or in children’s play sand, the legitimacy determination would be very
different and significant levels of metals would likely render the
recycling illegitimate. 

Another example of recycling that may be legitimate although this factor
has not been met could be in the mining and mineral processing industry.
In many mineral processing operations, the very nature of an operation
results in hazardous constituents concentrating in the product as it
proceeds through the various steps of the process. In many cases, there
is not an analogous product to compare the products of these processes
with so this factor may not be relevant because of the nature of the
operations. As with the above example, if a facility considers a factor
and decides that it is not applicable to its process, the Agency
suggests that the facility evaluate the presence of hazardous
constituents in its product and be prepared to demonstrate both that it
considered this factor and the reasons it believes the factor is not
relevant. 

As discussed in more detail in the comments section of this preamble
(section XVIII) and in the response to comments document in the docket,
commenters on this factor requested clarification concerning what EPA
meant by the terms used in this factor. In response to some of these
comments, EPA has made two clarifications in the regulatory text by (1)
specifying that the hazardous constituents referred to in the regulation
are those that are found in Appendix VIII to 40 CFR part 261 and (2)
clarifying that the hazardous characteristics to which EPA is referring
to are those in 40 CFR part 261 subpart C. 

	The Agency also received much comment on the term “significant” and
what the Agency intended by this term. EPA has decided to keep the term
in the final rule. The alternative to using “significant” or a
similarly flexible term to determine when there may be hazardous
constituents in the product made from recycled hazardous secondary
materials that are not in the analogous products made from raw materials
would be to set an absolute standard. In its October 2003 proposed rule,
EPA discussed possible “bright line” or risk-based approaches as a
way to set absolute lines to define “significant” based on either a
numerical limit or a risk level (68 FR 61587–61588). EPA recognizes
that the “bright line” or the risk-based approach may provide
greater clarity and predictability to the regulated community, but that
in both cases the Agency would have to establish a line for what is
acceptable and the line may either be somewhat arbitrary or it may
exclude recycling practices that, if carefully considered, should be
considered legitimate. Based on the comments received on those
approaches, we are convinced that they would not be workable.

On the other hand, a case-by-case analysis of a recycling process can
take into consideration the relevant principles and facts for that
activity, leading to a determination of significance based on the facts
of the activity. Because this factor must apply to many different
recycling activities, we believe the case-by-case approach is most
appropriate. 

	EPA, therefore, is finalizing its proposed option of using the term
“significant” in 40 CFR 261.2(g)(3)(ii)(A) and (B). Evaluating the
significance of levels of hazardous constituents in recycled products
may involve taking into consideration several variables, such as the
type of product, how it is used and by whom, whether or not the elevated
levels of hazardous constituents compromise the efficacy of the product,
the availability of the hazardous constituents to the environment, and
others. For example, if a recycled product that will be used by children
contains hazardous constituents that are not in analogous products, that
product will likely need to be closely scrutinized. On the other hand,
low levels of a hazardous constituent in a recycled product that is used
as an ingredient in an industrial process or for another industrial
application may not be significant and must be evaluated in the context
of the product’s use. 

	EPA provided several additional examples in implementing this factor in
the October 2003 proposed rule which will be repeated here. If zinc
galvanizing metal made from recycled hazardous secondary materials
contains 500 parts per million (ppm) of lead, while the same zinc
product made from raw materials typically contains 475 ppm, this
difference in concentration would likely not be considered
“significant” in the evaluation of this factor. If, on the other
hand, the lead levels in the recycled zinc product made from hazardous
secondary materials were 1,000 ppm, it may indicate that the product was
being used to illegally dispose of lead and that the activity is sham
recycling, unless other factors would demonstrate otherwise. 

	In another example, if a “virgin” solvent contains no detectable
amounts of barium, while spent solvent that has been reclaimed contains
a minimal amount of barium (e.g., 1 ppm), this difference might not be
considered significant. If, however, the barium in the reclaimed solvent
were at much higher levels (such as 50 ppm), it may indicate discard of
the barium and sham recycling. 

	Unfortunately, because of the wide variety of possible recycling
scenarios, we cannot provide examples for how this factor might work for
all possible recycling situations. The Agency stresses that the
determination of legitimacy for this factor should consider both the use
and the users of the product in addition to the concentration of the
hazardous constituents or the presence of a hazardous characteristic, as
well as other relevant information. In addition, in some cases, the
implementing agency may accept a risk argument from a recycler to show
that the recycling activity meets this factor. If the recycler can show
that despite elevated concentrations of hazardous constituents, such
constituents pose little or no risk to human health or the environment,
the implementing agency may consider that as evidence that the elevated
concentrations are not significant.

How consideration of economics applies to legitimacy. Consideration of
economics has long been a part of the Agency's concept of legitimacy, as
is evident in the Lowrance Memo and earlier preamble text (50 FR 638,
January 4, 1985 and 53 FR 522, January 8, 1988; see also American
Petroleum Institute v. EPA (“API II”), 216 F.3d 50, 57-58 (DC Cir.
2000)). Today’s final rule does not codify specific regulatory
language on economics, but EPA offers further guidance and clarification
on how economics may be considered in making legitimacy determinations,
which is similar to the preamble discussion in the March 2007
supplemental proposal. The Agency believes that clarifying how economics
has traditionally been implemented via the Lowrance Memo guidance will
not impact existing legitimacy determinations. 

Specifically, EPA believes that consideration of the economics of a
recycling activity can be used to inform and help determine whether the
recycling operation is legitimate. Positive economic factors would be a
strong indication of legitimate recycling, whereas negative economic
factors would be an indication that further evaluation of the recycling
operation may be warranted in assessing the legitimacy factors. 

Considering the economics of a recycling activity can also inform
whether the hazardous secondary material inputs provide a useful
contribution and whether the product of recycling is of value. Economic
information that may be useful could include (1) the amount paid or
revenue generated by the recycler for recycling hazardous secondary
materials; (2) the revenue generated from the sale of recycled products;
(3) the future cost of processing existing inventories of hazardous
secondary materials; and (4) other costs and revenues associated with
the recycling operation. The economics of the recycling transaction may
be more of an issue when hazardous secondary materials are sent to a
third-party recycler, but even when the hazardous secondary materials
are recycled under the control of the generator, the generator must
still show that the hazardous secondary materials are, at a minimum,
providing a useful contribution and producing a valuable product.

Useful economic information:

(1) The amount paid or revenue generated by the recycler for recycling
hazardous secondary materials is one example of how economic information
can help support a legitimacy determination. We have three primary
illustrations to exemplify this. First, the basic economic flows can
suggest whether the recycling operation will process inputs, including
hazardous secondary materials, and produce products over a reasonable
period of time, recognizing that there will be lean and slow times. A
general accounting of the major costs, revenues, and economic flows for
a recycling operation over a reasonable period of time can provide
information for considering whether recycling is likely to continue at a
reasonable rate, compared to the rate at which inputs are received, or
whether it is likely that significant amounts of hazardous secondary
materials would be accumulated and then abandoned when the facility
closes. Any bona fide sources of revenues would be included in this
consideration, such as payments by generators to recyclers for accepting
hazardous secondary materials and subsidies supporting recycling.
However, in order to have some level of confidence that beneficial
products are or will be produced over a reasonable time frame, we
believe that at least some portion of the revenues should be from
product sales (or savings due to avoided purchases of products if the
hazardous secondary materials are used directly by the recycler). This
is consistent with the factor requiring that the hazardous secondary
material must be recycled to make a valuable product or intermediate.

Two scenarios illustrate this first example: a recycling operation that
generates revenues from the sale of recycled products that greatly
exceed the costs of the operation is an indication of a process that
turns the hazardous secondary materials into useful products, and is
unlikely to over accumulate them. A very different example is an
operation that has, relative to its revenues, large inventories of
unsold product and large future liabilities in terms of stocks of
unprocessed hazardous secondary materials. This operation could
potentially fail the “useful contribution” and “produces a
valuable product or intermediate” legitimacy factors, and would draw
closer attention to determine whether it is engaged in treatment and/or
abandonment in the guise of recycling.

 	Second, when the economics of a recycling operation that uses
hazardous secondary materials to produce and sell final products are
similar to a manufacturing operation using raw materials to produce and
sell final products, we believe that such an operation is likely to be
legitimate. For instance, if the recycler pays for hazardous secondary
materials as a manufacturer would pay for raw materials, the recycler
sells products from the recycling process as a manufacturer would sell
products from manufacturing, and the revenues generated equal or exceed
costs, then the hazardous secondary materials appear to be valuable
(i.e., the recycler is willing to pay for them) and appear to make a
useful contribution to a valuable recycled product.

However, we also recognize that the economics of many legitimate
recycling operations that utilize hazardous secondary materials differ
from the economics of more traditional manufacturing operations. For
example, many recyclers are paid by generators to accept hazardous
secondary materials. Generators may be willing to pay recyclers because
generators can save money if the recycling is less expensive than
disposing of the hazardous secondary materials in landfills or
incinerators. Also, some recyclers receive subsidies that may be
designed to develop recycling infrastructure and markets or to achieve
other benefits of recycling. For instance, the recycling of electronic
materials can be legitimate even when the recycler is subsidized for
processing the material. 

 	Third, any analysis of the economics of a recycling operation should
recognize that a recycler may be able to charge generators and still be
a legitimate recycling operation. Because these hazardous secondary
materials are hazardous wastes if disposed of, typically the generators'
other alternative management option already carries a cost that is based
on the existing market for hazardous waste transportation, treatment,
and disposal. Hence, unless there is strong competition in recycling
markets or the hazardous secondary materials are extremely valuable, a
recycler may be able to charge generators simply because alternative
disposal options cost more. 

Recognizing that such a dynamic exists can assist those making
legitimacy determinations in evaluating recycling operations. For
example, if a recycler is charging generators fees (or receiving
subsidies from elsewhere) for taking hazardous secondary materials and
receives a far greater proportion of its revenue from acceptance of the
fees than from the sale of its products, both the useful contribution
and the valuable product factors may warrant further review, unless
other information would indicate that such recycling is legitimate. Fees
and subsidies may indicate that the economic situation allows the
recycler to charge high fees, regardless of the contribution provided by
the inputs, including hazardous secondary materials. In this situation,
recyclers may also have an increased economic incentive to
over-accumulate or overuse hazardous secondary materials or to manage
them less carefully than one might manage more valuable inputs.
Additionally, if there is little competition in the recycling market,
and/or if acceptance fees seem to be set largely to compete with the
relative costs of alternative disposal options rather than to reflect
the quality or usefulness of the input to the recycling operation, this
may also suggest a closer look at the useful contribution factor.

(2) A comparison of revenue from sales of recycled products to payments
by generators is another example of how economic information can help
support an evaluation of “valuable product.” It is possible that
product sales revenues could be dwarfed by the acceptance of fees
because markets for particular products are highly competitive or
because high alternative disposal costs allow for high acceptance fees.
However, relatively low sales revenues could also require a review to
see whether product sales prices are lower than other comparable
products, products are being stockpiled rather than sold, or very little
product is being produced relative to the amount of inputs to the
recycling operation. These indicators may suggest that the recycled
product is not valuable and, thus, sham recycling may be occurring. 

(3) A consideration of the future cost of processing or alternatively
managing existing inventories of hazardous secondary material inputs is
another example of how economic information can inform a legitimacy
determination. When hazardous secondary materials make a significant
useful contribution to the recycling process, a recycler will have an
economic incentive to process the input materials relatively quickly and
efficiently, rather than to maintain large inventories. While recyclers
often need to acquire sufficient amounts of hazardous secondary
materials to make it economically feasible to recycle them, there should
be little economic incentive to over-accumulate such materials that make
a useful contribution. Overly large accumulations of input materials may
indicate that the hazardous secondary materials are not providing a
useful contribution or that the recycler is increasing its future costs
of either processing or disposing of the material, and may be faced with
an unsound recycling operation in the future. However, it is important
to keep in mind that possible explanations for this may exist. For
example, the recycler may have acquired a large stock of hazardous
secondary materials because the price was unusually low or perhaps the
hazardous secondary materials are generated episodically and the
recycler has few opportunities to acquire them. 

 	(4) An analysis of costs and revenues specific to on-site recycling is
an additional, albeit specific, example of economic information to
consider. When recycling is conducted under the control of the
generator, the recycler may not account formally for some of the costs
and savings of the operation. Still, when deciding whether to undertake
or continue the recycling operation or to utilize alternative outside
recycling or disposal options, the on-site recycler (under the control
of the generator) will evaluate the basic economic factors as a part of
doing business. One such factor could be an accounting of the costs of
virgin materials avoided by using hazardous secondary materials.
Similarly, sales of recycled products under the control of the generator
that are sold to an external market may support the valuable product
criterion.

4. Enforcement

	The Agency will continue to treat the implementation of the legitimacy
factors as a self-implementing mechanism, which is the same way the
former guidance had been used. That is, we expect the regulated
community to continue to evaluate their recycling operations using the
codified definition, and to reach their own conclusions without prior
approval by an overseeing agency. Such conclusions would remain subject
to review by EPA or the authorized state should the need arise. In
addition, we note that we do not expect the regulated community or
implementing regulatory agencies to revisit previous legitimacy
determinations and expect that any existing written determinations from
these agencies will not change under the codified definition of
legitimacy.

	If EPA or an authorized state agency determines that a process is not
legitimate recycling, the activity would be considered waste treatment
or disposal and would thus be subject to the RCRA Subtitle C hazardous
waste requirements, provided the hazardous secondary material was a RCRA
hazardous waste. As stated previously, the legitimacy factors apply to
all hazardous secondary materials recycling. If the person conducting
the recycling claims it is legitimate, but the appropriate regulatory
agency determines that the process is sham recycling, the recycler
and/or the generator(s) of the recycled hazardous secondary material may
be subject to an enforcement action. The provision in 40 CFR 261.2(f)
states explicitly that the burden of proof is on the persons claiming
that their hazardous secondary materials are not a solid waste or are
conditionally exempt from regulation. 

The Agency affirms in this preamble that §261.2(f) applies to claims
that hazardous secondary materials are not solid waste because they are
being legitimately recycled. Respondents in enforcement cases should be
prepared to demonstrate that they meet the terms of the exclusion or
exemption, which includes demonstrating that the recycling is legitimate
in cases where the exclusion or exemption is dependent upon the material
being recycled. Appropriate documentation must be provided to the
enforcing agency to demonstrate that the material is not a solid waste
or is exempt from regulation (for example, in the case of a hazardous
secondary material being used as an ingredient in a production process
at another company, contracts could be produced). In addition, the
recycler of the hazardous secondary material should be prepared to show
they have the necessary equipment to perform the recycling operation.
Furthermore, any release of the hazardous secondary materials to the
environment that is not immediately cleaned up would be considered
discarded and, thus, the hazardous secondary material that was released
would be a solid waste and potentially subject to the RCRA hazardous
waste regulations.

X. Non-Waste Determination Process

A. What is the Purpose of this Provision?

The purpose of the non-waste determination process is to provide persons
with an administrative procedure for receiving a formal determination
that their hazardous secondary materials are not discarded and,
therefore, are not solid wastes when recycled. This process is available
in addition to the solid waste exclusions in today’s rule. Once a
non-waste determination has been granted, the hazardous secondary
material is not subject to the limitations and conditions discussed
elsewhere in today’s rule (e.g., prohibition on speculative
accumulation, storage standard, or, for the transfer-based exclusion,
recordkeeping, reasonable efforts, financial assurance, and export
notice and consent); however, the regulatory authority may specify that
a hazardous secondary material meet certain conditions and limitations
as part of the non-waste determination. 

The non-waste determination process is voluntary. Facilities may choose
to continue to use the self-implementing portions of any applicable
waste exclusions and, for the vast majority of cases, where the
regulatory status of the hazardous secondary material is evident,
self-implementation will still be the most appropriate approach. In
addition, facilities may continue to contact EPA or the authorized state
to ask for informal assistance in making these types of non-waste
determinations. However, for cases where there is ambiguity about
whether a hazardous secondary material is a solid waste, today’s
formal process can provide regulatory certainty for both the facility
and the implementing agency.

EPA is finalizing 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. The process for applying for a non-waste
determination is found at 40 CFR 260.34.

The Agency confirms today’s process for non-waste determinations is
not intended to affect any existing exclusion under 40 CFR 261.4. The
process is also not intended to affect any variance already granted
under 40 CFR 260.30 or other EPA or authorized state determination. In
other words, generators or reclaimers operating under an existing
exclusion, variance, or other EPA, or authorized state, determination do
not need to apply for a formal non-waste determination under today’s
rule. This process also does not affect the authority of EPA or an
authorized state to revisit past determinations according to appropriate
procedures, if they so choose. 

B. Scope and Applicability

As with any solid and hazardous waste that is recycled, hazardous
secondary materials presented for a non-waste determination must be
legitimately recycled and, therefore, must meet the legitimacy criteria
under 40 CFR 261.2(g) of today’s rule. For further discussion of
legitimacy and the factors to be considered, see section IX of today’s
preamble.

In addition, today’s rule limits non-waste determinations to
reclamation activities and does not apply to 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)); or for “burning of materials for energy recovery” or
materials “used to produce a fuel or otherwise contained in fuels”
(40 CFR 261.2(c)(2)). Today’s rule does not affect how these recycling
practices are regulated. 

C. Types of Non-Waste Determinations

1. Non-Waste Determination for Hazardous Secondary Materials Reclaimed
in a Continuous Industrial Process 

As discussed earlier in today’s preamble, previous court decisions
have indicated that hazardous secondary materials that are reclaimed in
a continuous industrial process are not discarded and, therefore, not a
solid waste. EPA believes, in most instances, hazardous secondary
materials reclaimed in a continuous process would be excluded under
today’s self-implementing exclusions. However, production processes
can vary widely from industry to industry and it is possible that the
regulatory status of certain materials may be unclear under a
self-implementing exclusion (including those exclusions finalized
today). Thus, to determine whether individual hazardous secondary
materials are reclaimed in a continuous industrial process, and,
therefore, not a solid waste, EPA has developed the non-waste
determination process to evaluate case-specific fact patterns. 

EPA is finalizing four criteria for making the non-waste determination
for hazardous secondary materials reclaimed in a continuous industrial
process. The first is the extent that the management of the hazardous
secondary material is part of the continuous production process and is
not waste treatment. At one end of the spectrum, if the hazardous
secondary material is handled in a manner identical to virgin feedstock,
then it would appear to be fully integrated into the production process.
At the other end of the spectrum, hazardous secondary materials
indisputably discarded prior to being reclaimed are not a part of the
continuous primary production process, (“AMC II”), 907 F. 2d 1179
(D.C. Cir. 1990) (listed wastes managed in units that are part of
wastewater treatment units are discarded materials (and solid wastes),
especially where it is not clear that the industry actually reuses the
materials). For cases that lie within the spectrum, persons applying for
a non-waste determination need to provide sufficient information about
the production process to demonstrate that the management of the
hazardous secondary material is an integral part of the production
process and is not waste treatment. It is important to note that this
non-waste determination is not necessarily limited to cases under the
control of the generator. For example, hazardous secondary materials
that are hard piped from one facility to another facility that is under
separate control would appear to be fully integrated into the production
process and may therefore be eligible for this non-waste determination,
provided the other criteria are met.

The second criterion examined under this non-waste determination is the
capacity of the production process to use the hazardous secondary
material in a reasonable time frame and ensure that it will not be
abandoned. This criterion can be satisfied by a consideration of past
practices, market factors, the nature of the hazardous secondary
material, or any contractual arrangements. Abandonment of stockpiled
hazardous secondary materials is one way that discard can occur at
recycling operations and is one of the major causes of environmental
problems. As indicated in the recycling studies, 69 of the 208 incidents
of environmental damage involve abandonment of the hazardous secondary
materials as the primary cause of damage. For today’s
self-implementing exclusions for hazardous secondary materials, EPA is
using speculative accumulation (as defined in 40 CFR 261.1(c)(8)) as the
method for determining when a hazardous secondary material is discarded
by abandonment. For the non-waste determination, a person does not need
to demonstrate that the hazardous secondary material meets the
speculative accumulation limits per 40 CFR 261.1(c)(8), but he must
provide sufficient information about the hazardous secondary material
and the process to demonstrate that the hazardous secondary material
will in fact be reclaimed in a reasonable time frame and will not be
abandoned. EPA is not explicitly defining “reasonable time frame”
because such time frames could vary according to the hazardous secondary
material and industry involved and, therefore, determining this time
frame should be made on a case-specific basis. However, a person may
still choose to use the speculative accumulation time frame as a
default.

The third criterion for this non-waste determination is whether the
hazardous constituents in the hazardous secondary material are reclaimed
rather than released to the air, land, or water at significantly higher
concentrations from either a statistical or from a health and
environmental risk perspective than would otherwise be released by the
primary production process. To the extent that the hazardous
constituents are an extension of the original hazardous secondary
material, their release to the environment is an indicator of discard.
The Agency recognizes that normal production processes may also result
in a certain level of releases and, in evaluating this criteria, would
not deny a non-waste determination if the increase in releases is not
significantly different from either a statistical or risk perspective.
However, when unacceptably high levels of the hazardous constituents in
the hazardous secondary material are released to the environment rather
than reclaimed, then that material (or at least the portion of the
material that is of most concern) is not in fact being “reclaimed in a
continuous industrial process.”

The fourth and final criterion for this non-waste determination includes
any other relevant factors that demonstrate the hazardous secondary
material is not discarded. This catch-all criterion is intended to allow
the person to provide any case-specific information deemed important and
relevant in making the case that the hazardous secondary material is not
discarded and, therefore, not a solid waste.

2. Non-Waste Determination for Hazardous Secondary Materials
Indistinguishable in All Relevant Aspects from a Product or
Intermediate.

Although the courts have indicated that hazardous secondary materials
recycled within a continuous industrial process are not discarded and,
therefore, are not solid wastes, they have also said that hazardous
secondary materials destined for recycling in another industry are not
automatically discarded. However, there may be some situations where the
regulatory status of a certain material is unclear under a
self-implementing exclusion and thus may benefit from a non-waste
determination that evaluates case-specific fact patterns. EPA is
finalizing five criteria for making a non-waste determination for
hazardous secondary materials indistinguishable in all relevant aspects
from a product or intermediate.

The first criterion for this non-waste determination is consideration of
likely markets for the hazardous secondary material (e.g., based on the
current positive value of the hazardous secondary material, stability of
demand, and any contractual arrangements). This evaluation of market
participation is a key element for determining whether companies view
these hazardous secondary materials like products rather than
negatively-valued wastes. EPA’s market forces study on how market
incentives affect the management of hazardous secondary materials
indicates that both high value and stable markets are strong incentives
to refrain from over-accumulating hazardous secondary materials, thus
maximizing the likelihood that the hazardous secondary materials will be
reclaimed and not abandoned. 

The second criterion for this non-waste determination is the chemical
and physical identity of the hazardous secondary material and whether it
is comparable to commercial products or intermediates. This “identity
principle” is a second key factor that the Court in Safe Foods found
useful in determining whether a material is indistinguishable from a
product. It is important to note that the identity of a material can be
comparable to a product without being identical. However, to qualify for
a non-waste determination, any differences between the hazardous
secondary material in question and commercial products or intermediates
should not be significant from either a statistical or from a health and
environmental risk perspective.

The third criterion for making this non-waste determination is the
capacity of the market to use the hazardous secondary material in a
reasonable time frame and ensure that it will not be abandoned.
Abandonment of stockpiled hazardous secondary materials is one way that
discard can occur at recycling operations and is one of the major causes
of environmental problems (a key finding from the recycling studies
discussed earlier). For today’s self-implementing exclusions for
hazardous secondary materials, EPA is using speculative accumulation (as
defined in 40 CFR 261.1(c)(8)) as the method for determining when a
hazardous secondary material is discarded by abandonment. For the
non-waste determination, a person does not need to demonstrate that the
hazardous secondary material meets the speculative accumulation limits
per 40 CFR 261.1(c)(8), but he must provide sufficient information about
the hazardous secondary material and the market demand for it to
demonstrate that the hazardous secondary material will in fact be
reclaimed in a reasonable time frame and will not be abandoned. EPA is
not explicitly defining “reasonable time frame” because such time
frames could vary according to the hazardous secondary material and
industry involved, and therefore determining this time frame should be
made on a case-specific basis. However, a person may still choose to use
the speculative accumulation time frame as a default.

The fourth criterion for this non-waste determination is whether the
hazardous constituents in the hazardous secondary materials are
reclaimed rather than released to the air, land, or water at
significantly higher concentrations from either a statistical or from a
health and environmental risk perspective than would otherwise be
released by the production process. The Agency believes that to the
extent that the hazardous constituents are an extension of the original
hazardous secondary material, their release to the environment is a
possible indicator of discard. The Agency recognizes that normal
production processes also result in a certain level of releases and, in
evaluating this criteria, may not deny a non-waste determination if the
increase in releases is not significant from either a statistical or a
health and environmental risk perspective. However, when unacceptably
high levels of the hazardous constituents in the hazardous secondary
material are released to the environment rather than reclaimed, then
that material (or at least the portion of the hazardous secondary
material that is of most concern) is not being handled as a commercial
product or intermediate.

As with the non-waste determination for hazardous secondary materials
reclaimed in a continuous industrial process, the fifth and final
criterion for this non-waste determination includes any other relevant
factors that demonstrate the hazardous secondary material is not
discarded. This catch-all criterion is intended to allow the person to
provide any case-specific information it deems important and relevant in
making the case that its hazardous secondary material is not discarded.

D. Non-Waste Determination Process

The process for the non-waste determination is the same as that for the
solid waste variances found in 40 CFR 260.30. In order to obtain a
non-waste determination, a facility that manages hazardous secondary
materials that would otherwise be regulated under 40 CFR part 261 as
either a solid waste or a conditionally excluded waste must apply to the
Administrator or the authorized state per the procedures described in 40
CFR 260.33, which EPA is amending today to apply to non-waste
determinations. The application must address the relevant criteria
discussed in detail above. The Administrator will evaluate the
submission and issue a draft notice tentatively granting or denying the
application. Notification of this tentative decision will be provided by
newspaper advertisement or radio broadcast in the locality where the
facility is located. The Administrator will accept comment on the
tentative decision for 30 days, and may also hold a public hearing. The
Administrator will issue a final decision after receipt of comments and
after the hearing (if held). If the application is denied, the facility
may still pursue a solid waste variance or exclusion (for example, one
of the solid waste variances under 40 CFR 260.30 or solid waste
exclusions under 40 CFR 261.4). 

After a formal non-waste determination has been granted, if a change
occurs that affects how a hazardous secondary material meets the
relevant criteria contained in 40 CFR 260.34, persons must re-apply to
the Administrator for a formal determination that the hazardous
secondary material continues to meet the relevant criteria and is not
discarded and not a solid waste. 

As discussed in more detail in section XX of today’s preamble, under
section 3006 of RCRA, EPA would authorize states to administer the
non-waste determinations as part of their base RCRA program. Because
states are not required to implement federal requirements that are less
stringent or narrower in scope than the current requirements, authorized
states are not required to adopt the non-waste determination process.
Ordinarily this provision could not go into effect in an authorized
state until the state chooses to adopt it. However, because the
non-waste determination process is a formalization of determinations
that states may already perform, states that have not formally adopted
this non-waste determination process may participate if the following
conditions are met: (1) the state determines that the hazardous
secondary material meets the criteria in either paragraph (b) or (c) of
40 CFR 260.34; (2) the state requests EPA to review its determination;
and (3) EPA approves the state determination. In addition, of course,
states may continue to make regulatory determinations under their
authorized state regulations, as they do now.

E. Enforcement

If a regulatory authority determines that a hazardous secondary material
is not a solid waste through the non-waste determination process, the
hazardous secondary material is not subject to the RCRA Subtitle C
hazardous waste requirements. However, as part of this process, the
applicant has an obligation to submit, to the best of his ability,
complete and accurate information. If the information in the application
is found to be incomplete or inaccurate and, as a result, the hazardous
secondary material does not meet the criteria for a non-waste
determination, then the material may be subject to the RCRA Subtitle C
requirements and EPA or the authorized state could choose to bring an
enforcement action under RCRA section 3008(a). Moreover, if the person
submitting the non-waste determination is found to have knowingly
submitted false information, then he also may be subject to criminal
penalties under RCRA section 3008(d).

Once a non-waste determination has been granted, the applicant is
obligated to ensure the hazardous secondary material continues to meet
the criteria of the non-waste determination, including any conditions
specified therein by the regulatory authority. If a change occurs that
affects how a hazardous secondary material meets the relevant criteria
and (if applicable) any conditions as specified by the regulatory
authority and the applicant fails to re-apply to the Administrator for a
formal determination, the hazardous secondary material may be determined
to be a solid and hazardous waste and subject to the RCRA Subtitle C
hazardous waste requirements. 

EFFECT ON OTHER PROGRAMS

XI. Effect on Other Exclusions

In the October 2003 proposal, EPA proposed a number of specific
"conforming changes" to existing exclusions (68 FR 61578–61580). The
purpose of these conforming changes was to simplify and clarify the
regulations. EPA did not intend to make any substantive changes as to
how currently excluded materials would need to be managed or regulated.
However, comments to the proposed changes were overwhelming in favor of
retaining the existing exclusions. These existing exclusions are
familiar to both the states and the regulated community, and making
wholesale adjustments, it appears, would have had unintended
consequences in many cases.

Thus, in the March 2007 supplemental proposal, we proposed to retain the
existing exclusions exactly as written (72 FR 14205). In addition,
recycling of such hazardous secondary 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 exclusions, rather than the proposed exclusions.

We did request comment, however, on the option of allowing a regulated
entity to choose which exclusion it is subject to in those cases where
more than one exclusion could apply and, if so, whether that entity
should be required to document the choice made. One state supported
allowing a regulated entity to choose if that entity documents its
choice and the few comments that were submitted by industry on this
matter, generally, preferred to have the option to choose which
exclusion they would be subject to. EPA has determined, however, that
the conditions that were developed for those exclusions were found to be
necessary under case-specific rulemakings that determined when the
hazardous secondary material in question is not a solid waste. For
example, broken cathode ray tubes must be transported in closed
containers (40 CFR 261.4(a)(22)) and shredded circuit boards need to be
free of mercury switches and relays (40 CFR 261.4(a)(14)). 

Therefore, the final rule requires that hazardous secondary materials
specifically subject to these exclusions must continue to meet the
existing conditions or requirements in order to be excluded from the
definition of solid waste. Moreover, industry and the states are
familiar with these requirements and EPA believes that changing them
would only lead to confusion in the regulated community. In addition,
the current exclusions would apply to facilities not currently operating
under terms of an existing exclusion. They would also be subject to the
conditions for that exclusion if they decide to recycle the particular
excluded wastes in the future.

In the March 2007 supplemental proposal, we also requested comment on
whether any specific regulatory exclusion would need revision in order
to avoid confusion or contradictions. With a few exceptions, public
comments did not discuss this issue in depth. Only three states
commented on this issue. One supported the requirement that
currently-excluded facilities must stay under their specific exclusions
and two requested clarifications on how such a requirement would be
implemented. Industry, in a few cases, had specific comments on the
provisions already in place. 

One commenter asked that EPA clarify that wood preserving waste be
allowed to be reclaimed off-site under the new exclusion. This would be
an expansion of the existing exclusion, which is limited to on-site
reuse. Another comment was in regards to whether hazardous secondary
materials currently regulated under the closed-loop exclusion would be
eligible for the new exclusions that do not require closed-loop
operations. The third comment, from both reclaimers of spent lead-acid
batteries and spent lead-acid battery manufacturers requested that EPA
clarify that spent lead-acid battery recycling continue to be regulated
under 40 CFR 266.80 or as a universal waste at 40 CFR part 273. The
mining industry requested that EPA clarify that the proposed exclusions
would have “no impact” on 40 CFR 266.70 (precious metals exclusion)
and 40 CFR 266.100(d) and (g) (conditional exclusions from boiler and
industrial furnace (BIF) regulations for “smelting, melting, and
refining furnaces” and precious metals recovery furnaces).  

A. Solid waste exclusions found in 40 CFR 261.4(a)

EPA agrees that the current solid waste exclusion for wood preserving
hazardous secondary materials in 40 CFR 261.4(a)(9) is limited to
on-site recycling. Thus, if managed on-site, these materials would need
to comply with the existing conditions to be eligible for an exclusion
from the definition of solid waste. However, since the current exclusion
does not apply to hazardous secondary materials sent off-site, and the
substance of the exclusion (i.e., drip pad requirements) applies to a
management method not applicable to off-site transfers, the new
exclusion in today’s rule would apply to hazardous secondary materials
that are sent off-site for reclamation. Thus, if sent off-site for
legitimate reclamation, these materials could be eligible for today’s
exclusion if the restrictions and/or the conditions are met. 

EPA also agrees that hazardous secondary materials recycled via the
closed-loop exclusion at 40 CFR 261.4(a)(8) could be recycled under a
different process and still be eligible for today’s exclusions. The
closed-loop exclusion is based on the premise that hazardous secondary
materials reclaimed in a continuous process within an industry are not
discarded and, therefore, are not solid wastes subject to EPA’s RCRA
jurisdiction (See AMC I.) In fact, closed loop recycling is a subset of
materials reclaimed in a continuous industrial process, since materials
may be reclaimed in a continuous process outside of a closed loop
system. EPA did not make a finding that any particular hazardous
secondary material must be reclaimed in a continuous process. The Agency
only determined that closed-loop recycling, in general, should be
excluded. Today’s exclusions, however, allow any hazardous secondary
materials to be excluded if reclamation meets the restrictions and/or
conditions set forth in the rules. Thus, a facility currently engaged in
closed-loop recycling could change their processes and still be
excluded, as long as all applicable restrictions and/or conditions are
met. 

In addition to the solid waste exclusions currently in 40 CFR 261.4(a),
EPA is planning to propose—in a separate rulemaking from today’s
final rule—to amend its hazardous waste regulations to conditionally
exclude from the definition of solid waste spent hydrotreating and
hydrorefining catalysts generated in the petroleum refining industry
when these hazardous secondary materials are reclaimed (see entry in the
Introduction to the Fall 2007 Regulatory Plan, 72 FR 69940, December 10,
2007). Spent hydrotreating and hydrorefining catalysts generated in the
petroleum refining industry are routinely recycled by regenerating the
catalyst so that it may be used again as a catalyst. When regeneration
is no longer possible, these spent catalysts are either treated and
disposed of as listed hazardous wastes or sent to RCRA-permitted
reclamation facilities, where metals, such as vanadium, molybdenum,
cobalt, and nickel are reclaimed from the spent catalysts.

EPA originally added spent hydrotreating and hydrorefining catalysts
(waste codes K171 and K172) to the list of RCRA hazardous wastes found
in 40 CFR 261.31 on the basis of toxicity (i.e., these materials were
shown to pose unacceptable risk to human health and the environment when
mismanaged) (63 FR 42110, August 6, 1998). In addition, EPA based its
decision to list these materials as hazardous due to the fact that these
spent catalysts can at times exhibit pyrophoric or self-heating
properties. 	

It is largely because of these pyrophoric properties that EPA is
considering a separate proposal to conditionally exempt these catalysts
from hazardous waste regulation. This future proposal will allow the
agency to consider and seek comment on specific conditions to address
the pyrophoric properties of these hazardous secondary materials,
particularly during transportation and storage prior to reclamation, in
order for the Agency to determine that they are not being discarded. As
a result of this separate effort, these spent catalysts will not be
eligible for today’s exclusions. Once EPA has proposed a conditional
exclusion specifically for these spent catalysts, and after
consideration of public comments, EPA will either finalize a conditional
exclusion specific to these spent catalysts or may decide that the
conditions being promulgated in today’s final rule are fully adequate
for the management of these spent catalysts when recycled, and therefore
would remove the restriction preventing these spent catalysts from being
eligible for today’s exclusions.

B. Spent Lead-Acid Battery Recycling and Precious Metals Reclamation 

EPA also agrees that spent lead-acid battery recycling should continue
to be regulated under 40 CFR 266.80 or 40 CFR part 273. This is because
these regulations are actually hazardous waste regulations and are not
solid waste exclusions. Continuing the regulation of spent lead-acid
battery (SLAB) recycling as hazardous waste is necessary due to the
unique nature of these batteries. Also, as noted by the commenters, the
current battery recycling regulations are working well. More than 95% of
SLABs are currently recycled and generators of SLABs are exempt from
Superfund liability under the Superfund Recycling Equity Act (SREA),
provided that they meet the requirements of the exemption, including the
requirement to take "reasonable care" to determine that the accepting
facility is in compliance with the substantive environmental
regulations. 

Because SREA was based on the current SLAB hazardous waste regulations
under RCRA, changing the regulation of SLABs could have unintended
consequences. For example, the current regulations prohibit
battery-breaking without a permit because such battery-breaking
operations have been high-risk activities. In addition, as noted in our
recycling study, 12% of our damage cases were from battery-breaking
operations. Moreover, the high value of the lead plates and low entry
cost for a battery-breaking facility provides a strong market incentive
for facilities to recycle without investing in adequate management
systems for the discarded battery acid and casings. 

In addition, because the RCRA-regulated “generator” of a SLAB is
often the garage or junkyard that removed the battery from the
automobile (rather than the original owner who discarded the battery),
the generator-controlled exclusion could be read to apply to these
operations. Therefore, the reasonable efforts and financial assurance
conditions that are a part of the transfer-based exclusion would not
apply, despite the fact that their activities would resemble waste
management rather than production. Because, in these cases, the SLABs
have effectively already been discarded by the original owners before
they enter the RCRA hazardous waste regulatory system, EPA will continue
to regulate SLABs as solid and hazardous waste under 40 CFR 266.80 or 40
CFR part 273.

EPA also agrees with comments that the exclusions should have no impact
on 40 CFR 266.70 (precious metals exclusion) and 40 CFR 266.100(d) and
(g) (conditional exclusions from the boiler and industrial furnace (BIF)
regulations for “smelting, melting, and refining furnaces” and
precious metals recovery furnaces). Because these exclusions are
exclusions from certain hazardous waste regulations, not solid waste
exclusions, as a general matter, EPA believes that facilities should
have a choice of whether they manage their materials as hazardous waste
under these exclusions or seek an exclusion from the definition of solid
waste through today’s final rule.

	However, part of what 40 CFR 266.100(d) accomplishes is to define when
an operation involving burning is solely a metals recovery operation
rather than a burning for energy recovery or destruction operation,
neither of which is eligible for today’s exclusions. This distinction
is an important one to make, and EPA did not intend to revise how such
material recovery operations were identified, nor did EPA ask for
comment on such a revision. 

Thus, for the purpose of defining the type of burning for metals
recovery to be allowed under these exclusions, EPA will reference the
requirements in 40 CFR part 266, subpart H that defines when a
“smelting, melting, and refining” furnace is solely engaged in
metals recovery, but will not require the other conditions that are not
related to distinguishing legitimate materials recovery from burning.
Therefore, under today’s final rule, hazardous secondary materials
burned for metals recovery would still be required to meet the minimum
metals and maximum toxic organic metals content specified in 40 CFR part
266 (as part of the definition of this activity), and would continue to
be exempt from BIF permits, but they would not be subject to hazardous
waste manifests and storage permits, as long as the conditions of the
exclusions promulgated in today’s rule are met.

C. Other Recycling Exclusions 

For other hazardous secondary materials currently eligible for
management under other exclusions or alternative regulatory structures
that do not include an exclusion from the definition of solid waste
(such as the universal waste regulations in 40 CFR part 273), the
facility would have the choice of either continuing to manage the
hazardous secondary material as a hazardous waste under the existing
regulations or under today’s exclusions from the definition of solid
waste.

In addition, it should be noted that, for the purposes of
§261.2(a)(2)(ii) and §261.4(a)(2)(23), when a facility collects
hazardous secondary materials that have been discarded by other persons
(for example, when mercury-containing equipment is collected through a
special collection program), it is not the hazardous secondary material
generator. Therefore, a universal waste handler who collects hazardous
secondary materials that have been discarded by other persons would not
be eligible for the generator-controlled exclusion, even if it would be
considered a “generator” for purposes of the Universal Waste
regulations. 

XII. Permitted and Interim Status Facilities

A. Permitted Facilities

Facilities that currently have RCRA permits or interim status and manage
hazardous wastes that are excluded under today’s final rule will be
affected in a number of ways, depending on the situation at the
facility. At some facilities, some of the hazardous waste management
units will be converted solely to manage excluded hazardous secondary
materials, and others may continue to manage hazardous wastes. At other
facilities, all of the hazardous waste management units will be
converted to manage wastes excluded under today’s final rule. In still
other cases, individual units may manage both excluded materials and
hazardous wastes. In all cases, the owner or operator of the facility
must comply with the applicable conditions and limitations of the
exclusion (including the containment of the hazardous secondary material
in units operating under the exclusion and the prohibition against
speculative accumulation of excluded hazardous secondary materials) to
maintain the exclusion.

	Permitted facilities that continue to manage hazardous wastes in
addition to managing hazardous secondary materials excluded under this
final rule must continue to maintain their Part B permits. Individual
units may be converted solely to manage excluded hazardous secondary
materials; however, the permit requirements applicable to the newly
excluded units will remain in effect until they are removed from the
permit. Owners and operators that seek to remove permit conditions
applicable to units that are no longer hazardous waste management units
must submit a permit modification request to the implementing agency. In
the March 26, 2007, supplemental proposed rule, the Agency requested
comment on requiring owners and operators seeking to modify their
permits to remove units that are no longer regulated to follow the
procedures of 40 CFR 270.42(a) for Class 1 permit modifications, with
prior Agency approval. The Agency received few comments on this issue,
and is proceeding in this final rule with the proposed approach. Thus,
this final rule modifies 40 CFR 270.42 by adding an entry to Appendix 1
that classifies permit modifications to remove units that are no longer
regulated as a result of this rule as Class 1 with prior Agency
approval. 

	As was discussed in the preamble of the March 26, 2007, supplemental
proposal, under the Class 1 with prior Agency approval approach, the
owner or operator must submit notification of the permit modification to
the implementing agency, along with documentation demonstrating that the
operations at the unit meet the conditions of the exclusion and that the
unit is used solely to manage excluded hazardous secondary materials. In
addition, the owner or operator must comply with the requirements of 40
CFR 270.42(a)(ii) for public notification. Under §270.42(a)(ii), the
permit modification will not become effective until the owner or
operator receives written approval by the implementing agency. The
implementing agency will approve the permit modification so long as the
owner or operator has complied with the procedural requirements of
§270.42(a) and has demonstrated that the operations meet the conditions
of the exclusion, and that the unit does not manage non-excluded
hazardous wastes. 

	One commenter disagreed with the Agency’s approach, and believed that
the Class 2 permit modification procedures were necessary to provide the
public an opportunity to comment on the removal of the unit from the
permit. The Agency disagrees with this commenter. The regulations that
govern permit modification classify modifications to the permit term, to
allow for earlier permit termination, as Class 1 with prior Agency
approval. The Agency believes that removing permit conditions for units
that are no longer regulated is, in effect, allowing earlier permit
termination at those units. Thus, the Agency believes that Class 1 with
prior Agency approval is the appropriate designation for these permit
modifications.

In the preamble of the March 26, 2007, supplemental proposal, the Agency
discussed the issue of whether closure requirements at formerly
regulated units would be triggered when this rule becomes effective and
the hazardous secondary materials they are receiving is no longer
hazardous waste. This issue was also discussed in the October 2003
proposal, in which EPA expressed the view that requiring closure of
units in these situations would serve little environmental purpose,
since after closure the unit would be immediately reopened and used to
store the same (now excluded) hazardous secondary material (68 FR
61580–61581). 

	In today’s final rule, a permitted unit that is converted solely to
manage excluded hazardous secondary materials will not be subject to the
40 CFR part 264 closure requirements, since, typically, it will be
managing the same material, with the only difference being that the
material is now excluded from regulation as a hazardous waste. However,
we expect that any funds in closure or post-closure financial assurance
mechanisms will be converted to provide financial assurance under
today’s exclusion, assuming the facility is operating under the
transfer-based exclusion. In addition, as described in sections VII.D.
and VIII.D of this preamble, at the end of the operating life of these
units, all owners and operators (i.e., of units operating under either
exclusion promulgated in this final rule) must manage any hazardous
secondary materials that are not recycled, and remove or decontaminate
all hazardous residues and contaminated containment system components,
equipment structures, and soils. 

	A permitted facility that converts to manage only hazardous secondary
materials excluded under this final rule, and is, therefore, no longer a
hazardous waste management facility, will no longer be required to
maintain a hazardous waste operating permit (although, as discussed
below, may still be subject to corrective action). However, permits
issued to these facilities remain in effect until they are terminated. 

	In the March 2007 supplemental proposal, the Agency also requested
comment on requiring owners and operators seeking to terminate their
operating permits (as opposed to just removing units from their permit)
by modifying the permit term to follow the procedures of 40 CFR
270.42(a) for Class 1 permit modifications, with prior Agency approval.
The Agency received few comments on this issue, and is proceeding in
this final rule with the proposed approach. Thus, this final rule
modifies §270.42 by adding an entry to Appendix 1 that classifies
permit modifications to terminate operating permits by modifying the
permit term, at facilities at which all units are excluded as a result
of this final rule, as Class 1 with prior Agency approval. Under this
approach, owners and operators seeking to terminate their operating
permits must submit a permit modification request to the overseeing
agency following the procedures of §270.42(a) for Class 1 modifications
with prior Agency approval, as described above. 

	To support a request for permit termination by modifying the permit
term, the owner or operator must demonstrate that the operations meet
the conditions of the exclusion, and that the facility does not manage
non-excluded hazardous wastes.

	In addition, as was explained in the October 28, 2003, proposal (see 68
FR 61580) and again in the March 26, 2007, supplemental proposal (72 FR
14206), the obligation of 40 CFR 264.101 to address facility-wide
corrective action at permitted facilities, which attaches at permit
issuance, is not affected by this final rule, and remains in effect
until corrective action at the facility is completed. Therefore, an
owner or operator of a facility that manages only hazardous secondary
materials excluded under this final rule, who seeks to terminate the
facility’s permit by modifying the permit term, must demonstrate as
part of the permit modification request that the corrective action
obligations at the facility have been addressed. If facility-wide
corrective action has not been addressed, the permit generally should
not be terminated, but, rather, modified to include only corrective
action requirements. The Agency’s corrective action authority at such
facilities is not affected by this rulemaking and the Agency thus
retains its authority to address corrective action at such facilities
using all authorities applicable prior to this rulemaking.

In some cases, however, it may be appropriate for the overseeing agency
to use an alternative federal or state enforcement mechanism, or other
federal or state cleanup authority, to address the facility's corrective
action obligations, rather than continue to pursue corrective action
under a permit. In these cases, if the alternate authority or mechanism
is enforceable and adequate to ensure that facility-wide corrective
action will be completed, maintenance of the permit may no longer be
necessary.

B. Interim Status Facilities

A facility that is operating under interim status will be affected by
this final rule in much the same way as is a permitted facility and the
issue of corrective action will be addressed in a similar manner. At an
interim status facility that converts to managing only hazardous
secondary materials that become excluded under this final rule, the part
265 interim status standards that applied to the hazardous waste
management units at the facility, as well as the general facility
standards in part 265, will no longer apply. At the same time, the
Agency’s authority to address corrective action at the facility is not
affected by this final rule, and the owner or operator retains
responsibility for unaddressed corrective action obligations at the
facility.

C. Releases from Excluded Units at Interim Status or Permitted
Facilities

	Commenters on the October 28, 2003, proposal stated that one of the
main purposes of the RCRA Subtitle C closure requirements is to identify
and remediate any releases originating from the units. In response, the
Agency noted in the March 26, 2007, supplemental proposal that releases
from these units are discarded solid and, therefore, potentially
hazardous wastes, and agreed with commenter's concern that such releases
should be addressed. The Agency suggested in that preamble that the
specific Subtitle C closure requirements may not be the most appropriate
means of addressing cleanup of releases from these units, if any have
occurred. Rather, the Agency suggested that a better approach to address
historical releases from these units, as well as any future releases,
would be as part of corrective action for all releases at the
facility—an approach that the Agency believed would achieve the same
environmental results and would provide the owner or operator the option
of integrating the cleanup more closely into the broader facility
response.

	Some commenters on the March 26, 2007, supplemental proposal objected
to this approach of addressing releases from units that previously
managed hazardous wastes and, as a result of today’s rule, would
subsequently only receive hazardous secondary materials excluded from
Subtitle C control. These commenters requested that EPA expressly
recognize that units storing or managing hazardous secondary materials
excluded as a result of this rule would no longer be regulated as solid
waste management units and are not subject to RCRA’s corrective action
requirements. EPA disagrees with this approach, as we have discussed
previously in this section and as discussed below, and continues to
believe that the best approach to addressing releases from conditionally
excluded units is, generally, to address them as part of corrective
action for all releases at the facility.

	The Agency discussed the issue of its corrective action authority to
address non-SWMU-related releases at RCRA treatment, storage, or
disposal facilities in the May 1, 1996, Advance Notice of Proposed
rulemaking (see 61 FR 19442–3). There, the Agency stated, “[g]iven
the legislative history of RCRA section 3004(u), which emphasizes that
RCRA facilities should be adequately cleaned up, in part, to prevent the
creation of new Superfund sites, EPA believes that corrective action
authorities can be used to address all unacceptable risks to human
health and the environment from RCRA facilities. In the permitting
context, remediation of non-SWMU related releases may be required under
the “omnibus” authority…In other contexts, orders under RCRA
sections 3008(h) or 7003 may require remedial action to address releases
regardless of whether a SWMU is present.”  

	The Agency envisions three scenarios that might apply to units from
which releases have occurred. The first will arise in situations where
an owner or operator fails to comply with the applicable conditions and
limitations of the exclusion, and the unit consequently loses its
exemption. In these situations, the unit itself will once again become a
hazardous waste management unit, and the unit, as well as materials in
the unit, will become subject to all requirements that were applicable
prior to this final rule. Not only will corrective action authority be
available at such a unit, but the closure requirements of 40 CFR part
264 or 265 will once again apply at the unit as well, and releases from
that unit may be addressed through either the corrective action or the
closure process.

	The second scenario will arise in situations where releases occur at an
excluded unit but, based on the site-specific factors, the Agency does
not consider the release to be significant and, therefore, the release
does not cause the unit to lose its exclusion. Failure on the part of
the owner or operator to respond to such releases could be considered an
act of illegal disposal. The Agency generally would address these
situations by issuing an enforcement action under RCRA section 3008(a),
or other applicable authorities, to compel cleanup actions and/or impose
penalties. It should be noted that this approach is consistent with the
approach taken by the Agency in a 2002 final rule, in which the Agency
excluded hazardous secondary materials used to make zinc fertilizers
from the definition of solid waste (see “Zinc Fertilizers Made from
Recycled Hazardous Secondary Materials,” 67 FR 48400, July 24, 2002). 

	The third scenario will arise in situations where releases from the
unit, of either the now excluded hazardous secondary material and/or
other hazardous or solid wastes previously managed in the unit, were not
addressed prior to the unit obtaining its exclusion. At permitted and
interim status facilities, the status of those releases is unaffected by
this rulemaking, and the Agency retains its authority to address them
under all authorities applicable to them prior to this final rule,
including sections 3004(u) and (v), and section 3008(h).

D. Financial Assurance Obtained for Closure at Newly-Excluded Units

	The requirements in 40 CFR parts 264 and 265 subpart H, which applied
at these units prior to their exclusion under this final rule, provide
for the release of financial assurance upon certification by the
facility owner or operator that closure has been completed in accordance
with the approved closure plan, and after the Agency has verified that
certification (see 40 CFR 264.143(i) and 265.143(h)).

	Under the approach discussed in section VII.D. and VIII.D. of this
preamble, hazardous waste management units that convert to managing only
hazardous secondary materials that are excluded under this final rule
will no longer be subject to the 40 CFR part 264 or part 265 closure
requirements. Further, while reclaimers who receive hazardous secondary
materials that have been excluded under the new 40 CFR 261.4(a)(24) are
required to meet certain financial assurance requirements, persons who
recycle hazardous secondary materials under the exclusions for materials
recycled under the control of the generator (§261.2(a)(2)(ii) and
§261.4(a)(23)) are not required to meet the financial assurance
requirements.

	Under the requirements of 40 CFR parts 264 and 265 subpart G, owners
and operators of units now eligible for the exclusion of
§261.2(a)(2)(ii) and §261.4(a)(23) would have been required to remove
and decontaminate all contaminated structures, equipment, and soils (see
§264.114 and §265.114). The financial assurance provided under 40 CFR
parts 264 and part 265 subpart H was designed to assure that funds would
be available for these activities. In the case of generator controlled
units, where financial assurance is no longer required, previous
releases from the unit, which would have been addressed during closure
and for which financial assurance was obtained will, as a result of this
rule, now be addressed through corrective action authority. The question
raised by the Agency in the March 26, 2007, supplemental proposal was
whether funds obtained for closure should, therefore, be directed to
corrective action activities at the unit. 

	Commenters on the March 26, 2007, supplemental proposal generally
agreed that funds obtained for closure at units excluded under
§261.2(a)(2)(ii) and §261.4(a)(23) (under the control of the
generator) should be directed to address releases from the unit. The
Agency agrees with these commenters, and encourages regulators to work
with owners and operators that seek to modify their permits to remove
conditions applicable to these units that will operate under the
exclusion of §261.2(a)(2)(ii) and §261.4(a)(23), to verify that there
are no unaddressed releases from the unit. In situations where
corrective action is necessary at the unit, the Agency encourages
regulators to work with owners and operators to assure that the releases
from the unit are addressed promptly.

XIII. Effect on CERCLA 

	A primary purpose of today’s final rule is to encourage the safe,
beneficial recycling of hazardous secondary materials. In 1999, Congress
enacted the Superfund Recycling Equity Act (SREA), explicitly defining
those hazardous substance recycling activities that may be exempted from
liability under the Comprehensive Environmental Response, Compensation
and Liability Act (CERCLA) (CERCLA section 127). Today’s final rule
does not change the universe of recycling activities that could be
exempted from CERCLA liability pursuant to CERCLA section 127. Today’s
final rule only changes the definition of solid waste for purposes of
RCRA Subtitle C requirements. The final rule also does not limit or
otherwise affect EPA’s ability to pursue potentially responsible
persons under section 107 of CERCLA for releases or threatened releases
of hazardous substances.

XIV. Effect on Imports and Exports 

	The exclusion for hazardous secondary materials generated and reclaimed
under the control of the generator is limited to recycling performed in
the United States or its territories. However, the exclusion for
hazardous secondary materials exported for reclamation and the non-waste
determinations included in today’s final rule do not place any
geographic restrictions on movements of such hazardous secondary
materials, provided they meet the conditions of the exclusion or, if
stipulated, conditions of the non-waste determination. It is therefore
possible that in some cases excluded hazardous secondary materials could
be generated in the United States or its territories and subsequently
exported for reclamation to a facility in a foreign country. It is also
possible that hazardous secondary materials could be generated in a
foreign country and imported for reclamation in the United States. Under
today’s exclusion for hazardous secondary materials exported for
reclamation, hazardous secondary materials are only excluded from the
definition of solid waste in the U.S. and, thus, may be considered solid
and hazardous wastes in the foreign country under that country’s laws
and regulations. If this is the case, the U.S. facility that exports or
imports hazardous secondary materials will also need to comply with any
applicable laws and regulatory requirements of the foreign country. For
further discussion, see section VIII.C.5. of today’s preamble
regarding specific export and import conditions for hazardous secondary
materials excluded under today’s rule.

MAJOR COMMENTS

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

EPA received hundreds of sets of comments on the October 2003 proposal
and the March 2007 supplemental proposal, most of which were quite
detailed and raised multiple issues. Below is an overview of some of the
major comments on general aspects of the proposals and a summary of
EPA’s responses to those comments. For a complete discussion of all
the comments and EPA’s responses to those comments, please see
Response to Comment Document: Revisions to the Definition of Solid Waste
found in the docket to today’s rulemaking.

A. EPA’s Legal Authority to Determine Whether a Material is a Solid
Waste 

Comments: legal authority

EPA received many comments from environmental groups and the waste
treatment and recycling industry regarding EPA’s authority to define
when recyclable hazardous secondary materials are solid wastes, and how
EPA used this authority in the proposed rulemaking. Some commenters
argued that EPA has no authority under the RCRA statute to broadly
exclude hazardous secondary materials from the definition of solid
waste. These commenters asserted that Congress intended for hazardous
secondary materials to be classified as solid wastes even when they are
recycled. The commenters argued that the proposed exclusions are
contrary to the plain statutory language of RCRA and that EPA may not
lawfully exclude pollution control sludges and materials resulting from
industrial, commercial, mining, and agricultural operations, according
to accepted principles of statutory interpretation. Although the
commenters acknowledged that EPA has promulgated such exclusions in the
past, and that one such exclusion was recently upheld in court in Safe
Food and Fertilizer v. EPA, they stated that they believed that the D.C.
Circuit erred in Safe Food. The commenters argue that, in the fertilizer
rule upheld in Safe Food, EPA considered impermissible factors (e.g.,
market participation, management practices, and chemical identity) in
defining which materials are not discarded under RCRA, and that the
Agency has done so again in the current rulemaking effort. 

EPA’s response: legal authority

	EPA disagrees with comments that state that we have exceeded our
authority by the exclusions being finalized today. While EPA clearly has
the authority to regulate hazardous secondary materials that are
reclaimed under Subtitle C of RCRA when discard is involved, the Agency
also believes (and the courts have generally confirmed) that when
hazardous secondary materials are reclaimed and such recycling
operations do not involve discard, the hazardous secondary materials
involved are not solid wastes under RCRA. EPA also has the authority to
determine which types of recycling do not involve discard and,
therefore, which types of hazardous secondary materials are not solid
wastes. As EPA noted in the March 2007 supplemental proposal, “[u]nder
the RCRA Subtitle C definition of solid waste, many existing hazardous
secondary materials are not solid wastes and, thus, not subject to
RCRA’s ‘cradle-to-grave’ management system if they are recycled.
The basic idea behind this construct is that recycling of such materials
often closely resembles normal industrial manufacturing, rather than
waste management” (72 FR 14197). Existing exclusions, found in 40 CFR
261.4(a), provide a long historical precedent for EPA’s authority to
exclude reclaimed materials from the definition of solid waste. EPA
refers these commenters to the discussion of case law, above, and
asserts that this rule follows valid precedent in the D.C. Circuit,
including the court’s opinion in Safe Food. 

B. Adequacy of Conditions and Restrictions Used to Determine Whether a
Material is a Solid Waste 

Comments: adequacy of conditions

Other commenters did not dispute EPA’s authority to exclude hazardous
secondary materials from the definition of solid waste, but instead
argued that before EPA can lawfully claim that excluded materials are
not discarded, the Agency would need to strengthen the conditions to
protect human health and the environment. For example, one commenter
believed that all legitimacy criteria should be mandatory, that
performance standards such as secondary containment are needed for
materials stored in tanks and containers, and that EPA should require
engineered liner systems and monitoring for materials stored in
land-based units.

EPA’s response: adequacy of conditions

	EPA disagrees that the restrictions to the under the control of the
generator exclusions or the conditions we are requiring for the
transfer-based exclusion are inadequate. Each of the restrictions and/or
conditions is specifically linked to defining when the hazardous
secondary materials are not discarded and to ensuring that the
regulatory authority has the information needed to oversee the
exclusion. Specifically, for hazardous secondary materials reclaimed
under the control of the generator, the fact that the generator
maintains control and liability for the hazardous secondary materials,
either by managing them on-site, within the same company, or under a
specific tolling contract, is itself an indication that the materials
are not discarded. The prohibition on speculative accumulation (as
defined in 261.1(c)(8)), addresses both the situation in which a large
percentage of the hazardous secondary material is accumulated over the
year without being recycled and the situation where there is no feasible
means of recycling the hazardous secondary material, regardless of
volume. Finally, the requirement that the hazardous secondary materials
must be contained in the unit recognizes the reality that hazardous
secondary materials that are released to the environment are discarded.

For hazardous secondary materials transferred to another party for
reclamation, the fact that the generator is required to make reasonable
efforts to ensure that its hazardous secondary materials are properly
and legitimately reclaimed demonstrates that the generator is not simply
disposing of the material, but instead is taking responsibility that the
hazardous secondary materials will be recycled. In addition, by
maintaining a record of each shipment and a confirmation of receipt, the
generator demonstrates that it continues to take responsibility for
knowing the ultimate disposition of its hazardous secondary materials.
Furthermore, by obtaining financial assurance, the reclamation facility
demonstrates that it has also taken on the responsibility to ensure that
the hazardous secondary materials will not be abandoned in the event
that circumstances make it impossible for the facility to reclaim the
hazardous secondary materials. For further discussion of how these and
other restrictions and/or conditions of the exclusions are linked to
defining when hazardous secondary materials are not discarded, see
section V of this preamble, as well as sections VII–IX and sections
XVI–XVIII. Support for the Agency’s determination regarding which
materials are not discarded is also found throughout the rulemaking
record in this proceeding. 

EPA also disagrees that specifying further engineering conditions, such
as secondary containment, liners, and leak detection systems, is needed
to determine which hazardous secondary materials are not being
discarded. The restrictions EPA has established and the conditions that
EPA is finalizing today address a variety of hazardous secondary
materials and reclamation operations that are linked to defining the act
of discard, rather than specifying a particular technology that may not
be appropriate in some cases. 

Furthermore, hazardous secondary materials excluded under today’s rule
may remain subject (or become subject) to requirements under other
statutory programs. For example, hazardous secondary material
generators, transporters, intermediate facilities and reclaimers may be
subject to regulations developed under:

The Occupational Safety and Health Act of 1970, which requires hazard
communication programs, labeling, material safety data sheets (MSDS) and
employee information and training (29 CFR part 1910). The Occupational
Safety and Health Administration (OSHA) regulations also require
emergency response planning and training under their Emergency Response
Program to Hazardous Substance Releases (29 CFR 1910.120); 

The Hazardous Materials Transportation Act of 1975 and the subsequent
Hazardous Materials Transportation Uniform Safety Act of 1990, which
requires hazardous secondary materials meeting the Department of
Transportation’s defining criteria for hazard classes and divisions to
comply with hazard identification, shipping papers, labeling and
placarding, incident reporting and security plans (49 CFR part 107 and
parts 171–180); 

The Comprehensive Environmental Response, Compensation and Liability Act
(CERCLA), Emergency Planning and Community Right-to-Know Act (EPCRA) and
the Superfund Amendments and Reauthorization Act (SARA) of 1986 which,
combined, require notification of hazardous substance releases above a
reportable quantity, emergency planning and, if applicable, MSDS and
inventory reporting (40 CFR 302.6, 40 CFR parts 355 and 370). Hazardous
secondary material generators and reclaimers meeting defined criteria
are also subject to toxic chemical release reporting (i.e., Toxics
Release Inventory (TRI) under EPCRA (40 CFR part 372). 

While not exhaustive, this list provides examples of regulatory programs
designed to protect human heath and the environment developed under
other statutory authorities alongside of RCRA. For more useful
information on these regulatory programs, please see “Memorandum:
Requirements that other Regulatory Programs would place on Generators,
Reclaimers and Transporters of Hazardous Secondary Materials” located
in the docket for this rulemaking.

C. EPA’s Authority to Regulate Recycling

Comments: EPA’s authority

EPA also received comments from the hazardous waste generating industry
disputing EPA’s authority to promulgate today’s rule. Unlike the
environmental groups’ and waste treatment and recycling industry’s
comments, which argued that EPA has no authority to deregulate hazardous
secondary materials recycling, many of the generator industry comments
asserted that EPA has no authority to regulate such recycling, even to
prohibit speculative accumulation or require that the hazardous
secondary materials be contained. 

While most such commenters applauded EPA’s decision in the March 2007
supplemental proposal to explicitly link the proposed exclusions to the
concept of defining when hazardous secondary materials are not
discarded, many of these comments argued that EPA has over-reached its
statutory authority by imposing restrictions or conditions that the
commenters argued have no relationship to discard.

Some commenters asserted that limiting the exclusions for hazardous
secondary materials recycled under the control of the generator and
imposing conditions on the exclusion for hazardous secondary materials
transferred to a third party for recycling, EPA has misread the intent
of Congress. These comments cite previous court cases, noting the
“analysis of the statute reveals clear Congressional intent to extend
EPA’s authority only to materials that are truly discarded, disposed
of, thrown away, or abandoned” (AMC I, 824 F2d. at 1190). They go on
to argue that materials being recycled do not fall into one of these
enumerated activities.

Specifically, many of the comments cite the ABR decision (which in turn
cites earlier court decisions), where the court noted that EPA’s
authority is “limited to materials that are ‘discarded’ by virtue
of being disposed of, abandoned, or thrown away” and that
“[s]econdary materials destined for recycling are obviously not of
that sort. Rather than throwing them away, the producer saves them,
rather than abandoning them, the producer reuses them” (ABR 208 F.3d
at 1051). “To say that when something is saved it is thrown away is an
extraordinary distortion of the English language” (Id. at 1053). The
commenters assert that, by limiting the exclusion to hazardous secondary
materials intended for recycling that are “contained” in the unit,
EPA is illegally imposing conditions on a material that has not been
discarded. 

Other comments take issue with EPA’s decision to impose conditions for
the transfer-based exclusion, These comments criticize EPA's rationale
that, in part, bases the conditions on the fact that “subsequent
activities are more likely to involve discard, given that the generator
has relinquished control of the hazardous secondary material” (72 FR
14178).  One commenter specifically challenged the proposed financial
assurance requirement, claiming that the condition does not define the
absence of discard and would effectively impose a waste management
requirement upon a non-waste.

EPA’s response: EPA’s authority

EPA disagrees with the comments that Congress did not intend to give EPA
the authority to regulate hazardous waste recycling. As EPA noted in
both the October 2003 proposal and the March 2007 supplemental proposal,
the RCRA 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 (D.C. Cir. 1979); 48 FR 14502–04, April 3, 1983; and 50 FR
616–618). Moreover, the case law discussed above clearly shows
instances where EPA properly regulated the recycling of solid and
hazardous wastes. 

EPA also disagrees that requiring the hazardous secondary materials to
be “contained” contradicts the court’s finding in ABR that EPA
does not have the authority to define when hazardous secondary materials
are not discarded. By limiting the exclusion to hazardous secondary
materials that are contained, EPA is defining “discard” for this
material. While it is true that the court has said that materials
recycled in a continuous process by the generating industry are not
solid wastes, commenters have failed to demonstrate how hazardous
secondary materials that are not contained meet that description. It is
a self-evident fact that hazardous secondary materials released to the
environment (e.g., causing soil and groundwater contamination) are not
“destined for recycling” or “recycled in a continuous process”;
thus, they are part of the waste management problem. Moreover, as
discussed above in section VII.C, to the extent that significant
releases to the environment from a unit remain unaddressed, it is
reasonable to conclude that the material remaining in the unit is also
actively being discarded. It is important to note that the hazardous
secondary materials that remain in the unit are not solid wastes, unless
the releases from the storage unit indicate that these materials are not
being managed as valuable commodities and are, in fact, discarded. For
examples of releases from a hazardous secondary materials storage unit
that indicate that the hazardous secondary material in the unit is
discarded and examples of releases that do not indicate discard, see
section VII.C. of this preamble.

EPA also disagrees with comments that, under the transfer-based
exclusion, EPA cannot consider the fact that the generator has
relinquished control of the hazardous secondary material (along with
other factors that indicate discard) in determining what conditions are
needed for this exclusion. EPA’s authority to regulate such transfers
is clear: as the Court noted in Safe Food, “materials destined for
future recycling by another industry may be considered ‘discarded’;
the statutory definition does not preclude application of RCRA to such
materials if they can reasonably be considered part of the waste
disposal problem” (350 F.3d at 1268). 

EPA’s record for today’s rulemaking demonstrates that third-party
recycling of hazardous secondary materials has been and continues to be
part of the waste disposal problem, and, without the conditions being
finalized today, these hazardous secondary materials would be solid
wastes. Of the 208 damage cases in EPA’s study of environmental
problems associated with post-RCRA, post CERCLA hazardous secondary
materials recycling, 94% appeared to take place at commercial off-site
facilities. Moreover, EPA’s study of how market forces impact
recycling demonstrates that these damages are consistent with our
understanding of how the business model for commercial recycling can
lead to sub-optimal results. As opposed to manufacturing, where the cost
of inputs, either raw materials or intermediates, is greater than zero
and revenue is from the sale of the output, recycling conducted by
commercial hazardous secondary materials recyclers involves generating
revenue from receipt of the hazardous secondary materials, as well as
from the sale of output. Recyclers of hazardous secondary materials in
this situation can have a short-term incentive to accept more hazardous
secondary materials than they can economically or safely recycle,
resulting in the hazardous secondary materials eventually being
discarded.

The financial assurance condition for the transfer-based exclusion being
finalized today is directly linked to this situation. By obtaining
financial assurance, the owner or operator of the reclamation facility
is making a direct demonstration that it will not abandon the hazardous
secondary material. Of the 208 damage cases, 69 (or 33%) were primarily
caused by abandonment of the hazardous secondary material by the
recycler. None of 69 facilities whose damages were primarily caused by
abandonment had financial assurance. 

Under the transfer-based exclusion, financial assurance is the means by
which the recycler demonstrates an investment in the future of the
recycled materials; even if the market changes in such a way that the
recycler can no longer process the hazardous secondary materials, by
obtaining financial assurance, it has made certain that the hazardous
secondary materials will not be abandoned and therefore not discarded.
EPA therefore disagrees with the comment that the financial assurance
condition is not related to discard of the material.

Moreover, financial assurance also addresses the correlation of
financial health of a reclamation facility with the absence of discard
of hazardous secondary materials. According to the successful recycling
study, an examination of a company’s finances is an important part of
many of the environmental audits generators currently use to determine
that their hazardous secondary materials will not be discarded. In
addition, the environmental problems study showed that bankruptcies or
other types of business failures were associated with 138 (66%) of the
damage cases, and the market forces study identified a low net worth of
a firm as a strong indication of a sub-optimal outcome of recycling
(i.e., over-accumulation of hazardous secondary materials, resulting in
releases to the environment and abandonment of hazardous secondary
materials).

In the March 2007 supplemental proposal, EPA proposed to require that
reclamation facilities obtain financial assurance to ensure that the
reclamation facility owner/operators who would operate under the terms
of this exclusion are financially sound (72 FR 14191), and many
commenters supported this condition and EPA’s rationale. EPA continues
to believe that the findings in the recycling studies indicate a
correlation between financial health of a reclaimer and the likelihood
he will not discard the hazardous secondary materials.

D. Comments on Recycling Studies

1. Environmental Problems Study. 

EPA completed An Assessment of Environmental Problems Associated with
Recycling of Hazardous Secondary Materials in order to identify and
characterize environmental problems attributed to hazardous secondary
materials recycling activities and to provide the stakeholders with a
clearer picture of the recycling industry in the United States. 

The environmental problems study (or study) was conducted in response to
public comments received on the October 2003 proposal and to guide
EPA’s deliberations on how to proceed with the March 2007 supplemental
proposal. In the public comments to the October 2003 proposal, a number
of commenters expressed concern that deregulating hazardous secondary
materials that are reclaimed in the manner described in that proposal
could result in mismanagement of the hazardous secondary materials, and
thus could create new cases of environmental damage requiring remedial
action under federal or state authorities. Some of these commenters
illustrated their concern by citing specific examples of environmental
damage related to hazardous secondary materials recycling. A number of
other commenters expressed the view that the great majority of the
damage cases cited by commenters had occurred before RCRA, CERCLA, or
other environmental regulatory programs were established in the early
1980s and, therefore, that the cases represent “historical”
recycling-related environmental damage and are not particularly relevant
or instructive for revising the RCRA Subtitle C definition of solid
waste. These commenters further argued that the environmental
programs—most notably RCRA’s hazardous waste regulations, and the
liability provisions of CERCLA—have created strong incentives for the
proper management of recyclable hazardous secondary materials and
recycling residuals. 

In response to the March 2007 supplemental proposal and to the study,
made public in the rulemaking docket in conjunction with that proposal,
EPA received comments on the study from a variety of commenters. In
general, the comments pertain to the scope and methodology of the study
and how the study reflects on today’s exclusions and restrictions
and/or conditions of the exclusions. 

Comments: scope and methodology

 With respect to the scope and methodology of the study, a few
commenters agreed with excluding historical damage cases from the study
and stated that recycling operations have in fact improved since RCRA
was enacted. A few states provided several types of recycling-related
environmental problems familiar to state agencies and a few commenters
suggested the review of several additional damage cases. A few
commenters argued that inclusion of their facility in the study, or the
inclusion of their industry representatives’ facilities, was unfounded
due to one or more of the following reasons: hazardous secondary
materials were exempt from RCRA when environmental problems occurred;
environmental problems stem from historical or pre-RCRA activities;
numerous facilities in the study shut down during the 1980s in response
to the creation of regulatory disincentives; environmental problems were
addressed pursuant to CERCLA; and problematic activities were clearly a
result of non-compliance. Also, a commenter suggested that one damage
case profiled in the study “is not a good example of a contaminated
site caused by recycling.” In support of their comment, the commenter
cited a Record of Decision (ROD) which stated that the site’s former
foundry operations, which existed pre-RCRA, caused soil and groundwater
contamination.

One commenter suggested EPA overlooked potential sources of information
for the study, including television commentary, media reports, books,
and other reports (specifically one state report), and one commenter
suggested that EPA “may have missed reviewing relevant files” by not
analyzing state and regional paper files. Another commenter expressed
concern that the study was not peer reviewed. 

EPA’s response: scope and methodology

EPA acknowledged in the preamble to the March 2007 supplemental proposal
that we did not search every possible information source for damage
cases for the study of environmental problems. For example, we did not
systematically survey all state environmental agencies for relevant
cases, nor did we search paper files in EPA Regional offices. We did
solicit damage cases from regional representatives and we solicited
additional cases through the public comment process. We recognize that
there are likely to be additional cases that we did not identify.
However, we have no reason to think that additional cases would
substantially change the overall picture. In fact, information submitted
to EPA does not indicate that EPA has failed to find a representative
sample of environmental damage caused by recycling activities.

EPA maintains that historical recycling-related damage cases are much
less relevant and instructive than cases which have occurred within the
current regulatory and liability landscape, and several commenters
shared our belief. We value state commenters’ general discussion of
environmental problems encountered at recycling operations and note that
any facility taking advantage of today’s exclusion will need to comply
with all applicable protective restrictions and conditions. We also
appreciate the suggestion of additional damage cases to review for the
study. Based on our analysis of these cases, we have added four new
damage case sites to the study; updated two existing damage case
profiles with more information about environmental problems; determined
that two damage cases were previously included in the study and
additional information was not revealed to supplement the profiles; and
determined one damage case was previously reviewed and the damage was
deemed unrelated to recycling, and no additional information was exposed
to change the prior conclusion (see Addendum I of the Environmental
Problems Study in the rulemaking docket to review new and updated
damages cases). We concluded that the new damage cases and the
supplemental information added to existing cases are consistent with the
damage cases previously cited in the study; therefore, the additional
facts do not substantially change our understanding of hazardous
secondary materials recycling damage cases.

EPA maintains that the damage cases captured in the study of
environmental problems fall within the study’s scope and, as such, are
relevant for guiding the development of today’s rulemaking. As we
discussed in the study, we are interested in whether damage may be more
or less prevalent for hazardous secondary materials that are explicitly
exempted or excluded from RCRA regulatory controls and we are less
interested in historical or pre-RCRA cases (defined in the study as
before 1982). We also indicated in the study that we are interested in
“whether or not the recycler… went out of business” and which
“government program is responsible for overseeing the cleanup of the
site,” and clearly we are interested in acts of non-compliance that
resulted in environmental damage. These points of interest, among others
cited on pages 4–5 of the study, are informative for the purpose of
this rulemaking and are within the scope of the study. Consequently, we
disagree with industry and association commenters who argued that
certain damage cases did not warrant inclusion in the Environmental
Problems Study.

We acknowledge that the particular damage case referenced by a commenter
as “not a good example” for the study does in fact exhibit
environmental damage which can be partially attributed to foundry
operations pre-1982. However, as indicated in the damage case profile in
Appendix II of the study, the damage case was included in the study due
to the following factors, which do not include damage associated with
pre-1982 operations: abandonment of drums of spent catalyst, bankruptcy,
and business closure. As a result, we maintain that this damage case is
within the scope of the study.

While we acknowledge that we did not review all possible sources of
information for our study and generally relied on readily available
material, we did in fact rely on media reports for information and we
collaborated with regional representatives who are very knowledgeable
about the damage cases and who assisted us in fact checking and
suggesting damage cases. With respect to a commenter’s suggestion that
we review the “Final Report of the Waste and Hazardous Materials
Division, Fire & Explosions Task Force,” produced by Michigan DEQ, we
regret that the state has not yet made the report publicly available.
However, we note that the scope of the draft Michigan study was not
limited to hazardous secondary materials recycling operations, and shows
that accidents can and do occur in all types of manufacturing
facilities. 

Despite the fact that we did not conduct an exhaustive review of all
possible sources of damage case information, we believe that the
restrictions and conditions of today’s exclusions are sufficient to
ensure safe recycling activities. For facilities operating under the
transfer-based exclusion, sudden accidental liability coverage for
bodily injury and property damage to third parties is required for all
units, and non-sudden accidental liability coverage is required for
land-based units (see section VIII.C.4. for a more detailed discussion
of liability coverage). We also note that facilities may be subject to
other regulations that ensure facility safety, such as OSHA requirements
and state and local requirements (see “Memorandum: Requirements that
other Regulatory Programs Would Place on Generators, Reclaimers and
Transporters of Hazardous Secondary Materials” made available in the
docket for today’s final rulemaking). While EPA has not done a
definitive study of other regulatory requirements, we are reasonably
comfortable with the fact that oversight by other regulatory agencies
would significantly mitigate potential damage from the non-discarded
materials. 

With respect to the comment regarding peer review, we believe that while
the study was not peer reviewed, the scope and methodology are sound, as
evidenced by the small number of comments received on this issue.
Additionally, peer review was not warranted by EPA peer-review standards
because the study is not a scientific and/or technical work product.
Rather, the study is an analysis of existing and publicly available
information compiled to provide a representative view of hazardous
secondary materials recycling. 

Comments: study’s relation to today’s actions

EPA received a number of comments alleging that the study does not
support today’s exclusions. Several commenters strongly believe that
the study reflected that recycling hazardous secondary materials is a
high risk activity and thus should remain fully regulated. A few
commenters wrote that the study does not support the transfer-based
exclusion and these commenters collectively predicted that the exclusion
will create future damage cases. To bolster their feedback, one
commenter stressed that the majority of all damage cases cited in the
study are located off-site from the facilities that generated the
hazardous secondary materials. Commenters also used the study’s
findings (namely damage type, damage cause, cost of cleanup) to support
their opposition to the transfer-based exclusion. In particular,
commenters stressed the financial impact to states and communities if
additional environmental clean-ups were to result from facilities taking
advantage of the exclusions.

On the other hand, EPA also received responses from several commenters
stating that the study of environmental problems supports the proposed
conditions of the transfer-based exclusion for reclaimers and
generators. While several of these commenters opposed codification of
the transfer-based exclusion, other commenters supported it as long as
there were requirements to ensure protection of public health and the
environment. For example, commenters responded that mismanagement of
hazardous secondary materials, residuals, and recycled products or
intermediaries in the damage cases clearly represented a need to have
requirements for protective management and storage, as well as a
requirement for safe residuals management. Additionally, commenters
believed in the importance of a financial assurance requirement to
protect against the damage noted in the study related to bankruptcy and
abandonment of hazardous secondary materials and residuals. A commenter
also responded that generators should assess whether the above
protections exist at reclamation facilities in order to minimize their
future liability. Additionally, in response to the study, EPA received
one comment suggesting that each of the following safeguards be added to
the exclusions: tracking materials, restriction on land-based storage,
and 90-day storage provisions in 40 CFR part 262 for all generators,
including those who recycle on-site.

EPA’s response: study’s relation to today’s actions

While EPA agrees that the study reflects the risk and problems involved
with recycling hazardous secondary materials, we disagree with those
commenters who stated that the study does not support today’s
exclusions because of the perceived risk posed by the exclusions.
Instead, we agree that the environmental problems highlighted in the
study demonstrate the need to promulgate restrictions and conditions for
the exclusions (e.g., requirements for financial assurance, reasonable
efforts, shipping documentation, hazardous secondary materials
management, and speculative accumulation). EPA maintains that the
restrictions and conditions finalized with today’s exclusions, and
discussed more in depth in sections VII.C. and VIII.C., will address the
problems identified in the study and will limit the exclusions to
materials that EPA has determined are not discarded. We also agree with
those commenters who suggest that generators should assess whether
reclamation facilities adequately manage hazardous secondary materials
in order to mitigate the risk of future environmental problems.
Consequently, we are finalizing the reasonable efforts condition for the
transfer-based exclusion.

Comments: restrictions on mining and mineral processing

A few commenters responded that the study does not support controls on
land-based storage of hazardous secondary materials at mining and
mineral processing facilities. They cited that only 1 of the 208 damage
cases is associated with a primary mineral processing facility. Thus,
the commenters argued that the small number of environmental problems
stemming from recycling at mining and mineral processing facilities does
not warrant the proposed regulatory oversight of the industry.

EPA’s response: restrictions on mining and mineral processing

EPA acknowledges that the environmental problems study included one
damage case from primary mineral processing and two damage cases from
secondary mineral processing. We note that whether an industry has a
single damage case represented in the study or numerous damage cases,
all industries are treated equally within the final rulemaking for
hazardous secondary materials generated, reclaimed, and managed in
land-based units (40 CFR 261.4(a)(23)). 

Moreover, further review of publicly available data revealed nine
additional damage case profiles from primary and secondary mineral
processing facilities, which corroborates EPA's view that the findings
from the environmental problems study apply across industries, including
the mining and mineral processing industries (see Addendum I to the
environmental problems study to review new damage case profiles). Of the
nine additional damage cases, eight are primary mineral processing
facilities and one is a secondary mineral processing facility. Improper
disposal of residuals is the most frequently observed primary damage
cause at such facilities, followed by improper management of recyclables
and apparent sham recycling. Accidents and fire are the least frequently
observed, and no case had damage from abandoned materials as the primary
cause of damage. The most common primary environmental damage types
resulting from the above activities are soil contamination (present in
eight cases) and surface water contamination; air emissions and wildlife
exposure are the least common types of damage in the new profiles. 

We have concluded that the additional damage cases do not substantially
change the overall picture of environmental problems caused by hazardous
secondary materials recycling activities at facilities, including mining
and mineral processing facilities. We also disagree with the
commenters’ assertion that restrictions on land-based storage units
are not supported by the study of environmental problems. Cumulative
damage causes from the study support the restrictions imposed by 40 CFR
261.4(a)(23) and the identification of additional mining and mineral
processing damage cases corroborates EPA's finding that no industry
should be exempt from restrictions and/or conditions due to the limited
number of damage case profiles exhibited in the environmental problems
study.

2. Good Recycling Practices Study

EPA completed An Assessment of Good Current Practices for Recycling of
Hazardous Secondary Materials to provide a more complete picture of the
hazardous secondary materials recycling industry in the United States.
The study examines what practices responsible generators and recyclers
currently use to ensure that their hazardous secondary materials are
recycled responsibly. 

One purpose of the study was to provide the Agency with another angle
from which to view the hazardous secondary materials recycling industry.
EPA has long heard from representatives of that industry that management
of hazardous secondary materials has changed and improved since RCRA was
implemented in the early 1980s. In addition, by indicating what controls
responsible recyclers are using, the study was intended to help EPA
determine which kinds of regulatory requirements would be appropriate
and effective as conditions of the exclusions. 

Some of the comments on the study of responsible practices supported the
conclusions in the study. Particularly, these commenters stated that
audits are typical, that they usually cover the subjects described in
the study, and that RCRA and CERCLA liability are drivers of responsible
recycling behavior. Several other commenters suggested that other
incentives affecting the behavior of recyclers include economic
concerns, the RCRA hazardous waste regulations, and environmental and
safety regulations under other statutes. 

Comments: scope of the good recycling practices study

EPA received several critical comments in response to the study on
responsible recycling behaviors. One comment that appeared more than
once was that EPA’s study focused too much on large companies and that
many of the practices a large company undertakes with a full
environmental staff would not be possible for a smaller company and,
therefore, that the practices are not widespread among smaller
companies. 

EPA’s response: scope of the good recycling practices study

EPA agrees that the focus on larger companies is a feature of the study
and discusses it in the methodology section of the report’s
introduction. Because many of the contacts for interviews for the report
came out of the public comments on the October 2003 proposed rule, much
of the information in the report came from companies large enough to
have staff responsible for submitting public comments to federal
proposed rulemakings. However, where possible and appropriate, the study
does examine the options for small businesses, as well as what small
businesses are doing that approximates the audit programs and other
practices of larger companies. The Agency did find that many small
companies are concerned with questions of liability in their hazardous
secondary materials recycling and often either belong to auditing
consortiums or already do smaller audits by mail and telephone if they
cannot afford to set up visits to the recycling facilities to examine
them in person. 

Comments: purpose of the good recycling practices study

Another comment made by several commenters expressed a concern that
circular logic was in place in the March 2007 supplemental proposal. The
commenters stated that it was regulation under RCRA that led to the
growth of the good practices being described and stated that EPA was
using these practices as justification for taking away the very
regulations that led to them. 

EPA’s response: purpose of the good recycling practices study

The Agency believes that those making this comment misunderstood the
relationship between the study of good recycling practices and the March
2007 supplemental proposal. The proposal did not state that this
background material was a justification for why the Agency proposed the
conditional exclusion for hazardous secondary materials not under the
control of the generator. Rather, the Agency looked to the study to
determine what the current responsible practices are and to use that
information to inform decisions on what restrictions and/or conditions
would be appropriate for the transfer-based exclusion. By promulgating
restrictions and/or conditions that will lead to responsible management
of hazardous secondary materials, the Agency intends to encourage
hazardous secondary materials recycling, while protecting human health
and the environment.

3. Market Forces Study

EPA received very few comments on Potential Effects of Market Forces on
the Management of Hazardous Secondary Materials Intended for Recycling.
The purpose of this study is to use 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.
Different economic incentives between the recycling of hazardous
secondary materials and manufacturing can arise due to differences in
these two business models. As opposed to manufacturing, where the cost
of inputs of either raw materials or intermediates is greater than zero
and revenue is generated primarily from the sale of the output, some
models of hazardous secondary materials recycling involve generating
revenue primarily from receipt of the hazardous secondary materials.
Recyclers of hazardous secondary materials in this situation may thus
respond differently to economic forces and incentives from traditional
manufacturers. 

Comments and EPA’s response: market forces study

Most of the commenters agreed with the underlying premise of the study
that market forces affect commercial recycling differently from how they
affect manufacturing from virgin materials, thus creating a potential
incentive for over-accumulation of hazardous secondary materials in some
circumstances. Thus, the study supports both the proposed conditions for
the transfer-based exclusion and the “useful contribution” factor
for the legitimacy criteria. EPA agrees with these comments.

One commenter stated that as a result of the market forces study, EPA
should also include a requirement that the generator evaluate the
financial health of the recycler before shipping a hazardous secondary
material to the recycler. While EPA agrees that evaluating the financial
health of a company can be useful and informative, and encourages
companies to do so, it is not an activity that lends itself to an
objective standard that would be appropriate for regulation. Instead,
EPA is requiring recyclers under the transfer-based exclusion to have
financial assurance in order to determine that negative economic factors
will not result in the hazardous secondary materials being abandoned.

One commenter disagreed with the study’s conclusion that intra- and
inter-company recyclers have more flexibility in their waste management
decisions than commercial recyclers do. The commenter noted that company
politics and internal goals can make it difficult to switch from
recycling to disposal, even if the market forces make it more
economical, and that it may take two or more months to find a disposal
contractor. 

While EPA generally agrees that there are more factors at work than
those described in the study, we continue to believe that intra- and
inter-company recycling have more flexibility in waste management
decisions than a commercial recycler does. When a commercial
recycler’s entire income is from accepting hazardous secondary
materials for recycling and selling recycled products, there is no
economic alternative for it to stop recycling and continue to stay in
business unless it can afford the cost of a hazardous waste management
permit and the cost of becoming a hazardous waste disposal facility.
This finding is supported by the results of the damage cases, the
overwhelming majority of which were at commercial recycling facilities.

E. Use Constituting Disposal (UCD) and Burning for Energy (BFE) 

Comments: UCD and BFE

EPA received extensive comments on both the October 2003 proposal and
the March 2007 supplemental proposal requesting that the scope of the
proposed rules be expanded to include hazardous secondary materials used
in a manner constituting disposal and hazardous secondary materials
burned for energy recovery. Commenters argued that these operations do
not involve discard, and that they can have many environmental benefits,
including resource conservation and reduction in greenhouse gas
emissions. In particular, commenters argued that hazardous waste that is
indistinguishable from a commercial fuel should be not a solid waste.
Other commenters supported keeping the exclusion focused on reclamation
and not including use constituting disposal and burning for energy
recovery. Commenters noted that these types of activities, in some
cases, are akin to discard, that precedents exist for regulation of
these hazardous secondary materials, and that recycling and reclamation
are higher on the waste management hierarchy and more likely to conserve
resources than burning for energy recovery.

EPA’s response: BFE and UCD

	EPA continues to maintain that comments on UCD and BFE are outside the
scope of the solid waste exclusions in today’s final rule, which are
focused on reclamation. EPA agrees that hazardous secondary materials
that are comparable to commercial fuels should not be solid wastes, and
the Agency has already promulgated an exclusion for certain of these
materials (40 CFR 261.4(a)(16)). However, as stated earlier, such
materials are outside the scope of today’s final exclusions and are
best addressed under separate rulemaking efforts.

XVI. Major Comments on the Exclusion for Hazardous Secondary Materials
Legitimately Reclaimed Under the Control of the Generator 

A. Scope of the Exclusion

1. Exclusion for Materials Recycled On-Site 

Comments: on-site exclusion

In our March 2007 supplemental proposal, EPA proposed to exclude from
the definition of solid waste hazardous secondary materials that are
generated and legitimately reclaimed at the generating facility. EPA
proposed to define “generating facility” in 40 CFR 260.10 as “all
contiguous property owned by the generator” (72 FR 14214). We noted
that our proposed definition would include situations where a generator
contracted with another company to reclaim hazardous secondary materials
at the generator’s facility, either temporarily or permanently. The
Agency solicited comment on whether facilities under separate ownership,
but located at the same site (e.g., industrial parks), should be
included within this proposed exclusion. We also solicited comment on
other definitions which might be compatible with the concept of
generator control. 

Commenters who addressed this issue generally supported the proposed
on-site exclusion. They agreed with EPA that hazardous secondary
materials reclaimed by a generator at its facility are unlikely to be
discarded because the materials will be managed and monitored by a
single entity who is familiar with both the generation and recycling of
the hazardous secondary materials. Several commenters also agreed with
EPA that environmental risks were lessened if the hazardous secondary
materials were not transported off-site, and that fewer liability
questions would arise in the case of accidents or mismanagement.

With respect to companies under separate ownership, but located at the
same site, commenter reaction was more mixed. Some commenters said that
this situation is not compatible with generator control. They argued
that unrelated companies would not be as likely to have knowledge of
each other’s operations and hazardous secondary materials, and that
additional controls were necessary, such as financial assurance for the
reclaimer and reasonable efforts on the part of the generator
(conditions that EPA had proposed for the transfer-based exclusion).

Other commenters supported an exclusion for facilities under separate
ownership, but located at the same site, (i.e., co-located facilities).
These commenters said that such an exclusion would encourage recycling.
These commenters mentioned a variety of scenarios which they argued
should be eligible for the exclusion. Some commenters described
integrated chemical manufacturing operations with co-located facilities
that are owned by different entities because of corporate mergers and
acquisitions. Another commenter noted that at some steel plants, spent
pickle liquor is reclaimed on-site by a company that is different from
the company operating the steel plant. Other commenters noted that coke
and tar plants at iron and steel facilities are sometimes owned by
electric utilities. A few commenters argued that facilities at airports
should be eligible for the exclusion, and other commenters mentioned
various cooperative recycling ventures within the automotive industry.
Some operations mentioned by commenters appeared to be prospective
rather than actual. 

EPA’s response: on-site exclusion

After evaluating these comments, EPA has decided to finalize this
provision as proposed and to limit the exclusion to hazardous secondary
materials that are generated and legitimately reclaimed by the hazardous
secondary material generator at that generator’s facility. We agree
with commenters that at least some of the situations they described are
not necessarily incompatible with generator control. One of the
situations—spent pickle liquor recycled on-site at a steel mill—is
eligible for the generator-controlled exclusion if the generator has
contracted with the company to reclaim the material at the generator’s
facility. However, the Agency does not have sufficient legal or factual
information about other situations mentioned by the commenters to
determine if there is a single entity who remains in control of the
hazardous secondary material throughout the reclamation process. 

For this reason, EPA believes that such situations are more
appropriately addressed under the exclusion for hazardous secondary
materials transferred for reclamation (40 CFR 261.4(a)(24)) or under the
case-by-case non-waste determination procedures finalized today in
§260.30. 

For the sake of clarity and in response to comments, we are also adding
a definition of “hazardous secondary material” and “hazardous
secondary material generator” to §260.10. “Hazardous secondary
material” means a secondary material that, when discarded, would be
identified as hazardous waste under part 261 of 40 CFR. “Hazardous
secondary material generator” means any person whose act or process
produces hazardous secondary material at the generating facility. A
facility that collects hazardous secondary materials that has been
discarded by other persons is not the hazardous secondary material
generator. These definitions would apply to all of the exclusions
promulgated today. We note that generators sometimes contract with a
second company to collect hazardous secondary materials at the
generating facility, after which the hazardous secondary materials are
subsequently reclaimed at the facility of the second company. In that
situation, the hazardous secondary materials would no longer be
considered “under the control of the generator” because the
materials are not reclaimed at the generating facility. The materials
should instead be managed under the exclusion for materials transferred
for reclamation. 

EPA agrees with certain comments that a facility that generates
hazardous secondary materials may lease the property where it conducts
operations, rather than own the property and that our proposed
definition of “generating facility” would not cover such
arrangements. EPA has therefore changed the definition of “generating
facility” in 40 CFR 260.10 to read “all contiguous property owned,
leased, or otherwise controlled by the hazardous secondary material
generator.” We have also amended the existing definition of
“facility” in §260.10 to include a reference to management of
hazardous secondary materials. Therefore, any references to
“facilities” or “units” of a facility in today’s rule also
refers to facilities or units managing hazardous secondary materials
excluded under this rule. 

2. Exclusion for Materials Recycled by the “Same Company” 

In its March 2007 supplemental proposal, EPA proposed to exclude from
the definition of solid waste hazardous secondary materials that were
generated and reclaimed by the same “person” as defined in 40 CFR
260.10, if the generator certified the following: “on behalf of
[insert company name], I certify that the indicated hazardous recyclable
material will be sent to [insert company name], that the two companies
are under the same ownership, and that the owner corporation [insert
company name] has acknowledged full responsibility for the safe
management of the hazardous secondary material” (72 FR 14214).
“Person,” as defined in §260.10, means an individual, trust, firm,
joint stock company, Federal Agency, corporation (including a government
corporation), partnership, association, State, municipality, commission,
political subdivision of a State, or any interstate body. EPA proposed
the certification requirement because of existing complexities in
corporate ownership and liability. The certification would clarify the
responsibilities of the generator and reclaimer and would help
regulatory authorities determine whether a facility was eligible for
this exclusion. The Agency solicited comment on any other certification
language that might accomplish the same end, and on other definitions of
“same-company” (72 FR 14186). 

Comments: same-company exclusion

Many commenters supported this exclusion and stated that hazardous
secondary materials sent from one company’s facility to another
remained essentially under the control of the generating company.
According to these commenters, if a generator sends materials to a
reclaimer that is part of the same corporate structure, the generator is
likely to be familiar with the recycling and materials management
processes employed by the reclaimer. In addition, questions regarding
liability and responsibility for such hazardous secondary materials are
likely to be clearer than is the case with facilities from unrelated
companies. 

Other commenters stated that when hazardous secondary materials are
generated and transported off-site for reclamation, additional controls
were needed to avoid discard and protect human health and the
environment even in the case of intra-company recycling. Some of these
commenters preferred such reclamation to be regulated under the proposed
conditional exclusion for hazardous secondary materials transferred for
the purpose of reclamation. This measure would ensure that generators
would have to perform reasonable efforts and that reclaimers would have
to obtain financial assurance. Other commenters suggested additional
notification and recordkeeping requirements for any hazardous secondary
materials transported off-site. 

EPA’s response: same-company exclusion

After evaluating these comments, the Agency has decided to retain
“same-company” recycling under the exclusion for hazardous secondary
materials legitimately reclaimed under the control of the generator. We
do not believe that facilities exchanging hazardous secondary materials
within the same corporate structure should be subject to the
requirements for our exclusion at §261.4(a)(24), as long as appropriate
control of the recycling process is maintained. In particular, it is
unnecessary for the generator to perform reasonable efforts on the
reclaimer, because the generator is likely to be knowledgeable about the
reclaimer’s ability to recycle the hazardous secondary materials
properly and legitimately. Similarly, if the generator and reclaimer are
part of the same corporate structure and if common control is maintained
over the policies of both facilities, there are strong incentives to
ensure that the hazardous secondary materials are properly and
legitimately reclaimed, thus making a financial assurance requirement
for the reclaimer unnecessary. 

In response to commenters who suggested additional notification and
recordkeeping requirements, we note that the Agency is revising our
proposed requirements for notification and recordkeeping for all
exclusions promulgated today. These revisions are discussed in sections
VII.C. and VIII.C. of this preamble. 

Comments: certification of same company

Some commenters argued that no certification should be necessary when
hazardous secondary materials are sent between the same or related
companies because generator knowledge of the materials and the potential
CERCLA liability should suffice to ensure safe and legitimate recycling.
Other commenters supported a certification provision, but suggested
alternative language that they stated would be more compatible with
generator control. Still other commenters disagreed with our proposed
requirement for certifying that the generator and reclaimer of hazardous
secondary materials were under the same ownership and that the owner
corporation must acknowledge responsibility for the safe management of
the hazardous secondary materials. 

According to these commenters, under existing corporate law, parent
companies do not (and sometimes cannot) assume legal liability for their
subsidiaries. EPA’s proposed certification requirement regarding the
owner company would therefore have little legal effect and could
actually discourage same-company recycling. Some of these commenters
suggested that either the generator or the reclaimer should acknowledge
responsibility for properly managing the hazardous secondary material,
not a third-party owner corporation. 

Other commenters said that the proposed requirement that the hazardous
secondary materials be generated and reclaimed by the same “person”
under 40 CFR 260.10 was not appropriate because a corporation and its
affiliates or subsidiaries are legally distinct and not the same
“person.” Therefore, one commenter suggested that we refer to
related “facilities” rather than “companies.” Some other
commenters suggested that we focus on the concept of “control”
rather than “ownership.”

EPA’s response: certification of same company

After evaluating these comments, EPA does not agree with the commenters
who argued that a certification requirement is not needed. We note that
the purpose of the certification is not to directly ensure proper and
legitimate recycling, but to clarify responsibility for the hazardous
secondary materials and to demonstrate to regulatory officials that the
hazardous secondary materials are not discarded and are within the terms
of the generator-controlled exclusion. We are therefore retaining a
certification requirement for this exclusion. 

	However, the Agency has also decided that its proposed certification
language should be revised to avoid confusion and to ensure more
effective generator control. We have therefore revised our proposed
regulatory definition for this exclusion to refer to “facilities”
rather than companies. Under the definition finalized today at 40 CFR
260.10, the reclaiming facility must be “controlled” by the
generating facility or by a person (under §260.10) who controls both
the generating facility and the reclaiming facility. “Control,” for
purposes of this exclusion, means “the power to direct the policies of
the facility, whether by the ownership of stock, voting rights, or
otherwise, except that contractors who operate facilities on behalf of a
different person shall not be deemed to “control” such facilities
(see §260.10). Our final certification language requires the generating
facility to certify that it controls the reclaiming facility, or that
the generating facility and the reclaiming facility are under common
control. In addition, the generator must certify that either the
generating facility or the reclaiming facility acknowledges full
responsibility for the proper management of the hazardous secondary
materials. To avoid confusion, we have also amended the definition of
“facility” at 40 CFR 260.10 to include facilities which manage
hazardous secondary materials. Therefore, any reference to
“facilities” in this rule also includes facilities which manage
materials excluded under the regulations promulgated today. 

	EPA believes that this revised language more appropriately reflects the
concept of “generator control” that underlies the exclusions at 40
CFR 261.2(a)(ii) and 261.4(a)(23). Requiring that a generating facility
control the reclaiming facility, or that both be under common control,
ensures that there is an ongoing relationship between the generator and
reclaimer and that the two facilities are more likely to be familiar
with each others’ waste management practices, thereby minimizing the
possibility of discard. If there is no such relationship, the two
facilities should not be eligible for this exclusion and the use of the
transfer-based exclusion would be more appropriate. In addition,
requiring the hazardous secondary material generator to certify that
either the generating facility or the reclaiming facility acknowledges
responsibility for the safe management of hazardous secondary materials
ensures that the responsibility rests with the party most capable of
assuming such responsibility. 

Comments and EPA’s response: application to government agencies and
universities

Some commenters requested that EPA clarify whether two government
agencies (such as the Department of Defense and the Department of
Energy) would be considered the same “person” under 40 CFR 260.10 if
hazardous secondary materials are generated by one agency and reclaimed
by another. In response, we note that for purposes of RCRA, the federal
government is not a single “person”; rather, each agency or
department would be considered a separate “person.” We also note
that under today’s final rule, a federal agency that is a generating
facility does not normally have the power to direct the policies of
another federal agency that is a reclaiming facility, nor is there a
“person” under §260.10 who directs the routine policies of both
facilities. In certain situations, the parties involved may wish to
apply for a case-by-case non-waste determination under 40 CFR 260.30, as
appropriate, or use the transfer-based exclusion. 

	Other commenters requested that EPA clarify whether the same-company
exclusion extends to hazardous secondary materials that are generated
and reclaimed at different facilities, when both facilities are owned by
the same government agency or university, but operated by a contractor.
In some of these situations, the same contractor operates both the
generating facility and the recycling facility, but, in other
situations, the generating facility and the reclaiming facility are
operated by different contractors. In those situations where the
generating facility and the reclaiming facility are both owned by the
same government agency or university, the two facilities would be under
common control because the agency or university in question has the
power to direct the policies of both the generating facility and the
reclaiming facility. Under this scenario, both facilities would
therefore be eligible for the same-company exclusion, even if operated
by different contractors. However, if the generating facility and the
reclaiming facility were each owned by a separate government agency or
university, they would not be eligible for this exclusion even if both
facilities were operated by the same contractor, because the element of
common control would be lacking. We have revised the certification
language of 40 CFR 260.10 to reflect this approach. The parties involved
may apply for a case-by-case non-waste determination under 40 CFR
260.30, as appropriate, or use the transfer-based exclusion. 

3. Types of Tolling Arrangements Eligible 

In its March 2007 supplemental proposal, the Agency proposed to exclude
from the definition of solid waste certain hazardous secondary materials
that are generated pursuant to a written contract between a tolling
contractor and a toll manufacturer. Through the contract, the tolling
contractor would arrange for the manufacture by the toll manufacturer of
a product made from virgin materials specified by the tolling
contractor. To be eligible for the exclusion, the tolling contractor
would have to retain ownership of and responsibility for the hazardous
secondary materials that were generated during the course of the
production of the product. EPA solicited comment on other types of
contractual arrangements under which discard is unlikely to happen and
which could appropriately be covered by the exclusion for
generator-controlled hazardous secondary materials. For example, one
company could enter into a contractual arrangement for a second company
to reclaim and reuse (or return for reuse) the first company’s
hazardous secondary materials. The first company could create a
contractual instrument that exhibits the same degree of control over how
the second company manages the hazardous secondary materials as is found
in a tolling arrangement (72 FR 14186).

Comments: tolling arrangements

Some commenters stated that tolling arrangements are incompatible with
“generator control” and are best regulated under the proposed
exclusion for materials that were transferred for legitimate
reclamation. They argued that requirements such as reasonable efforts
(by generators) and financial assurance (for reclaimers) were necessary
to avoid discard in the case of off-site reclamation. Some of the
commenters argued that the physical generator of the hazardous secondary
material (in this case, the toll manufacturer) retains legal liability
for the material. They stated that contracts which reallocated resources
to address financial responsibility for mismanagement or mishap could
contain loopholes that would allow tolling contractors to dispose of
hazardous secondary materials or send them to a third party for
reclamation. 

Other commenters, on the other hand, urged EPA to expand the tolling
exclusion to other types of contractual arrangements. A few commenters
said that the exclusion should be allowed for any contract between a
generator and a reclaimer where the generator was willing to retain
ownership of and/or responsibility for the hazardous secondary
materials. Other commenters mentioned specific contractual situations in
which they argued the hazardous secondary materials in question were
clearly handled as a commodity and discard was therefore highly
unlikely. One example given was a facility that reclaims metals from
electric arc furnace dust and then sends the metals back to steel mills
to be reused. Another example was a facility that takes spent copper
etchant from manufacturers of printed wiring boards and uses the
material to make new copper compounds. Still another example was a
facility that collects used paint purge solvent from auto body paint
operations, reclaims it, and sells regenerated solvent back to the auto
body facility. 

EPA’s response: tolling arrangements

After considering these comments, the Agency has decided to retain the
tolling exclusion, but not to broaden its scope. The exclusion will
therefore be limited to situations where a tolling contractor contracts
with a toll manufacturer to make a product from specified virgin
materials. We do not agree with those commenters who said that tolling
contracts are not compatible with “generator control.” The typical
tolling contract contains detailed specifications about the product to
be manufactured, including the management of any hazardous secondary
materials that are generated and returned to the tolling contractor for
reclamation. In addition, the tolling contractor will enter into a
tolling contract with such requirements only if it has decided that the
economic benefit from such recycling is justified. For these reasons, we
do not believe that tolling arrangements should be subject to the
conditions applicable to the transfer-based exclusion.  

On the other hand, the Agency also does not agree with those commenters
who urged that we should allow the generator-controlled exclusion for
any hazardous secondary materials generated under a contract between a
generator and a reclaimer. We believe that the exclusion should be
limited to the types of tolling arrangements specified in 40 CFR 260.10.
When hazardous secondary materials are transferred off-site for
reclamation, there is, in general, less likelihood of generator control,
and, hence, more likelihood of discard, in the absence of conditions
that ensure the hazardous secondary materials will be handled as
valuable products. In these situations, additional requirements are
needed for the Agency to determine that no discard has occurred.
Conversely, in the specific situations included in the
generator-controlled exclusion (on-site, same-company, and tolling
reclamation), we believe that the generator is much more likely to be
familiar with the reclaimer and to have powerful incentives to see that
the hazardous secondary materials are reclaimed properly and
legitimately. In these cases, the requirements that we have finalized
today (notification, compliance with speculative accumulation limits,
and containment) are sufficient for the Agency to determine that such
hazardous secondary materials are not discarded. These requirements may
not be sufficient in the case of unrelated generators and reclaimers who
have a non-tolling type of contract. 

To clarify the requirements for tolling contracts under today’s rule,
and to assist regulatory authorities in determining whether a facility
is eligible for an exclusion under a tolling contract, EPA has also
added a certification requirement to the definition of hazardous
secondary material generated and reclaimed under the control of the
generator in §260.10 of the final rule. This provision would require
the tolling contractor to certify that it has a written contract with
the toll manufacturer to manufacture a product or intermediate which is
made from virgin materials specified by the tolling contractor, and that
the tolling contractor will reclaim the hazardous secondary materials
generated during the course of this manufacture. The tolling contractor
must also certify that it retains ownership of, and responsibility for,
the hazardous secondary materials that are generated during the course
of the manufacture, including any releases of hazardous secondary
materials that occur during the manufacturing process. 

In response to those commenters who described specific types of
contractual arrangements that should be eligible for the
generator-controlled exclusion, we note that facilities operating under
such arrangements may apply for a non-waste determination under
§260.30, as appropriate. In some cases, commenters did not include
enough detail about the contracts to enable the Agency to draft
appropriate regulatory language. In other cases, the arrangement
suggested was industry-specific and the conditions or requirements
suggested by the commenters were not appropriate for an exclusion
covering many different types of facilities. We believe that such
arrangements are best evaluated on a case-by-case basis by the
regulatory authority, possibly under 40 CFR 260.30, to determine their
eligibility for exclusion. 

Comments: terms used in tolling exclusion

	One commenter suggested that we replace the term “batch
manufacturer” with “toll manufacturer.” This commenter stated that
“batch manufacturer” was too broad and generally referred to a
facility which engages in a distinct, short production campaign, not
necessarily tied to a two-party contractual agreement. “Toll
manufacturer,” this commenter stated, is a subset of batch
manufacturers and generally refers to a party which undertakes
manufacturing pursuant to a contract with a tolling contractor, such as
the arrangement we proposed. This commenter also requested that EPA
clarify that the “product” required to be produced under a tolling
contract can include intermediates, as well as final products, and that
materials used in toll manufacturing were sometimes specialty chemicals
or intermediates that could not be described as “raw materials,” as
would be required under our proposal. They suggested that we use the
term “specified materials” instead. 

EPA’s response: terms used in tolling exclusion 

The Agency agrees that the suggested term “toll manufacturer” is
more accurate and has revised the definition in §260.10 accordingly.
EPA also agrees that a product produced under a tolling contract can be
an intermediate or a final product and has revised the definition in
§260.10 to refer to “production of a product or intermediate.”
Finally, the Agency agrees that the term “raw materials” may not be
accurate, but prefers to use the term “virgin materials” instead of
“specified materials,” because we believe that term encompasses
specialty chemicals and intermediates without also including spent or
secondary materials, which are not included in our definition of toll
manufacturing.

B. Restrictions on Exclusions for Hazardous Secondary Materials Managed
Under the Control of the Generator in Land-Based Units and
Non-Land-Based Units 

In its March 2007 supplemental proposal, the Agency proposed in 40 CFR
261.4(a)(23)(i) that hazardous secondary materials generated and
legitimately reclaimed under the control of the generator must be
contained if they were stored in land-based units (72 FR14216). EPA
proposed to use the existing definition of land based units and defined
a land-based unit in 40 CFR 260.10 as a landfill, surface impoundment,
waste pile, injection well, land treatment facility, salt dome
formation, salt bed formation, or underground mine or cave. EPA did not
propose a containment limitation for such materials if they were stored
in non-land-based units. 

EPA did not propose a regulatory definition of “contained,” nor did
we propose specific performance or storage standards. We stated that
whether hazardous secondary materials are contained would be decided on
a case-by-case basis, and that such materials are generally contained if
they are placed in a unit that controls the movement of the hazardous
secondary materials out of the unit. We solicited comment on whether
additional requirements might be necessary to demonstrate absence of
discard when hazardous secondary materials were recycled under the
control of the generator. In particular, we asked whether additional
requirements for storage would be appropriate, such as performance-based
standards designed to address releases to the environment. We also
indicated that if commenters believed such requirements were
appropriate, they should specify the technical rationale for each
requirement suggested and why the requirement is necessary if the
hazardous secondary material remains under the control of the generator.


Comments and EPA’s response: definition of “land-based unit”

EPA received several comments expressing confusion over our proposed
definition of “land-based unit.” We proposed land-based unit to mean
“a landfill, surface impoundment, waste pile, injection well, land
treatment facility, salt dome formation, salt bed formation, or
underground mine or cave.” Commenters noted that including
“landfills” and “injection wells” was not necessary for the
proposed exclusion, since these management units are clearly
inappropriate for hazardous secondary materials intended for recycling.
Furthermore, commenters also noted that Subtitle C defines these terms
waste-centrically (i.e., as a unit that handles "waste" in one way or
another). This could create confusion because a hazardous secondary
material would not, by definition, be "managed" (or "stored") in one of
these “waste” units. EPA agrees with these comments, and in the
final rule has defined “land-based unit” as an area where hazardous
secondary materials are placed in or on the land before recycling.

Comments and EPA’s response: mineral processing industry

Some commenters asserted that the Agency has no jurisdiction over
land-based production units in the mineral processing industry.
Therefore, according to these commenters, EPA cannot legally require
containment for these units. These comments are addressed in section
XV.C. of this preamble, and also in the response to comments document in
the record for this rulemaking. 

Comments: standards for units (both land-based and non-land-based)

Other commenters, however, were opposed to allowing any land-based
storage, at least without a RCRA Part B permit or strict requirements,
such as secondary containment, leak detection measures, regular
inspections, monitoring, or financial assurance. Most of these
commenters did not appear to distinguish between land-based units under
the generator-controlled exclusion and those under the exclusion for
hazardous secondary materials transferred for reclamation; presumably,
they wanted the same conditions for both. 

Regarding non-land-based units such as tanks, containers, or containment
buildings, some commenters agreed with EPA’s approach, but other
commenters preferred minimum storage standards for these units. Some
commenters wanted Subtitle C standards to apply. Other commenters
believed that the RCRA hazardous waste requirements were not necessary,
but suggested other standards, such as requiring tanks to be in good
condition, to be compatible with the stored material, to have secondary
containment, or to be subject to routine inspections. 

EPA’s response: standards for units (land-based and non-land-based)

After evaluating these comments, the Agency has decided not to add
performance standards or other requirements for managing hazardous
secondary materials excluded under any of the exclusions promulgated
today (§§261.2(a)(ii), 261.4(a)(23), or 261.4(a)(24)). Such detailed
measures are unnecessary for hazardous secondary materials that are
handled as valuable products that are destined for recycling. Under
today’s rule, regulatory authorities can determine whether such
materials in a unit are contained by considering all such site-specific
circumstances. For example, local conditions can greatly affect whether
hazardous secondary materials managed in a surface impoundment are
likely to leak and cause damage, and, therefore, whether the unit could
be considered contained. Similarly, facilities may employ such measures
as liners, leak detection measures, inventory control and tracking,
control of releases, or monitoring and inspections. Any or all of these
practices may be used to determine whether the hazardous secondary
materials are contained in the unit.

EPA also believes that detailed standards are not necessary to determine
that valuable materials destined for recycling are not discarded when
managed in non-land-based units. As with land-based units, the
regulatory authorities can identify hazardous secondary materials that
have been released from the unit and determine that the released
material is discarded. To clarify this approach and to facilitate its
implementation, however, EPA has revised its regulatory language to
require that hazardous secondary materials that are generated and
reclaimed under the control of the generator and managed in
non-land-based units must also be contained (§261.4(a)(23)(i)). 

Comments and EPA’s response: state regulatory program-compliant units

A few commenters indicated that hazardous secondary materials managed in
units complying with state regulatory programs to address releases
should be considered contained. Because of the variety of such programs,
and because the Agency has not conducted an in-depth evaluation of such
state requirements, we are not adding a definition of “contained”
that would incorporate this suggested element. However, regulatory
authorities may consider compliance with such requirements as one of the
factors in determining whether the hazardous secondary materials are
contained in the units. 

Comments: releases

In the March 2007 supplemental proposal, the Agency stated that
hazardous secondary materials that remain contained in these units would
still meet the terms of the exclusion even if a release occurred, unless
the hazardous secondary materials are not managed as a valuable product,
and, as a result, a significant release from the unit takes place. If
such a significant release occurred, the hazardous secondary material
remaining in the unit may be considered a solid and hazardous waste.
Some commenters noted that a series of small releases from a unit could
occur over time, causing cumulative environmental harm even though no
single release was significant in terms of volume. These commenters said
that such a series of releases should generally lead to the conclusion
that the hazardous secondary material remaining in the unit was a waste.


EPA’s response: releases

EPA agrees with the comment concerning small releases from a unit over
time. Thus, a “significant” release is not necessarily large in
volume, but would include an unaddressed small release from a unit that,
if allowed to continue over time, would cause significant damage. Any
one release may not be significant in terms of volume. However, if the
cause of such a release remains unaddressed and hazardous secondary
materials are managed in such a way that the release is likely to
continue, the hazardous secondary materials in the unit would not be
contained. For example, a rusting tank or containers that are
deteriorating may have a slow leak that, if unaddressed, would cause a
significant environmental impact. Similarly, a surface impoundment with
a slow, unaddressed leak to groundwater could result in significant
damage. Another example would be a large pile of lead-contaminated
finely ground material without any provisions to prevent wind dispersal
of the particles. Such releases, if unaddressed, would mean that the
hazardous secondary materials remaining in the unit were not being
managed as a valuable raw material, intermediate, or product and that
the materials had been discarded. As a result, the hazardous secondary
materials in the unit would be hazardous wastes and these units would be
subject to the RCRA hazardous waste regulations.

XVII. Major Comments on the Exclusion for Hazardous Secondary Materials
Transferred for Legitimate Reclamation

A. Status of Facilities Other than the Generator or Reclaimer
(“Intermediate Facilities”)

Comments: intermediate facilities

In its March 2007 supplemental proposal, EPA requested comment on its
proposal that under the proposed exclusion for hazardous secondary
materials transferred for reclamation, such materials would have to be
transferred directly from the generator to the reclaimer and not be
handled by anyone other than a transporter.

EPA received many comments on this provision. Some commenters supported
the provision as proposed because they were concerned that if hazardous
secondary materials were transferred to a “middleman,” the generator
would not have a reasonable understanding of who would reclaim the
hazardous secondary materials and how they would be managed and
reclaimed. If the generator was unable to ascertain whether the
hazardous secondary materials in question could be properly and
legitimately recycled, the materials should be considered discarded. 

Other commenters objected to this proposed limitation. They argued that
many persons who generate smaller quantities of hazardous secondary
materials need help in consolidating shipments to make reclamation
economically feasible. Some of these commenters also argued that
intermediate facilities provided valuable assistance to generators by
helping them properly transport, package, and store material, and by
helping them find responsible reclaimers. These commenters believed that
EPA’s proposed limitation could discourage reclamation by persons who
generate smaller quantities of such hazardous secondary materials. 

Most of the commenters who suggested that intermediate facilities be
eligible for the exclusion also suggested conditions for these
facilities. These conditions included requiring the generator to select
the reclaimer, requiring the generator to perform reasonable efforts on
the intermediate facility, as well as the reclaimer, and requirements
for notification and recordkeeping. A few commenters argued that
intermediate facilities should be required to have a RCRA Part B permit
or interim status. 

EPA’s response: intermediate facilities

After evaluating these comments, the Agency has decided that
intermediate facilities storing hazardous secondary materials should be
eligible for the exclusion at 40 CFR 261.4(a)(24) under certain
conditions. We believe that such facilities make it easier for
generators that generate smaller quantities of hazardous secondary
materials to send these materials for reclamation and that storage at
such facilities under conditions designed to address discard is
completely consistent with handling the hazardous secondary materials as
valuable commodities. To this end, we have added a new definition of
“intermediate facility” to 40 CFR 260.10. We note that this rule
does not address “brokers” because that term is commonly understood
to mean a person who helps arrange for the transfer of hazardous waste
or hazardous secondary material, but does not take possession of the
material or manage it in any way. Brokers that never take possession of
hazardous secondary materials would not have been affected under the
supplemental proposal, nor are they affected by today’s rule. 

Under today’s rule, an intermediate facility is a facility that stores
hazardous secondary materials for more than 10 days, other than a
generator or reclaimer of such materials. If an intermediate facility
treats the hazardous secondary materials or commingles it with other
hazardous secondary materials or with hazardous waste, it would not be
eligible as an “intermediate facility” as defined in §260.10 under
today’s regulation. Under 40 CFR 260.42, intermediate facilities must
submit the same notification required of generators and reclaimers of
hazardous secondary materials transferred for reclamation. In addition,
under §261.4(a)(24)(iv) of today’s rule, generators must also perform
appropriate reasonable efforts on the intermediate facility, as well as
the reclamation facility, and generators are responsible for the
ultimate selection of the reclamation facility. These requirements will
ensure that the intermediate facility is handling the hazardous
secondary materials as a commodity.  

Today’s rule also requires intermediate facilities to comply with the
applicable requirements for reclaimers of hazardous secondary materials
under 40 CFR 261.4(a)(24)(v), including recordkeeping, storage of
excluded materials, financial assurance, and speculative accumulation.
The Agency believes that these conditions are fully sufficient to ensure
that hazardous secondary materials stored at intermediate facilities are
handled as valuable products and not discarded. Therefore, we do not
agree with those commenters who suggested that intermediate facilities
should be required to operate under Part B permits or interim status.

The Agency notes that in some cases, the intermediate facility performs
the physical measures associated with generator reasonable efforts to
ensure that the reclaimer will properly and legitimately recycle the
hazardous secondary materials. These measures may include facility
inspections and preparation of audits. In those cases, the generator
must carefully review such measures to ensure that any information
provided is credible. 

 Under today’s rule (see 40 CFR 261.4(a)(24)(ii)), if hazardous
secondary materials are stored for 10 days or less at a transfer
facility, the transit is not subject to the requirements applicable to
intermediate facilities under the transfer-based exclusion. Instead, it
must only be packaged in accordance with applicable DOT requirements.
The Agency considers hazardous secondary materials stored by transfer
facilities for short periods of time to be in transit, similar to
hazardous waste stored by similar facilities for the same time period.
They are therefore not discarded. We have revised the existing
definition of “transfer facility” at 40 CFR 260.10 to clarify that
such facilities may store hazardous secondary materials as well as
hazardous waste. The generator need not perform reasonable efforts on
such facilities, nor must such facilities comply with the requirements
applicable to reclaimers of hazardous secondary materials under 40 CFR
261.4(a)(24)(v). In addition, hazardous secondary materials at transfer
facilities may be repackaged from one container to another (e.g., the
materials may be consolidated from smaller to larger containers) or
transferred to different vehicles for shipment (see 45 FR 86966,
December 31, 1980). However, different hazardous secondary materials may
not be mixed together. In addition, if there is a release of the
hazardous secondary materials at the transfer facility that is not
cleaned up immediately, such materials become solid waste, and, if they
exhibit a hazardous characteristic or are specifically listed by EPA, a
hazardous waste as well. Depending on the nature of the release, the
hazardous secondary materials remaining in the unit could also become a
solid and hazardous waste subject to Subtitle C regulation (for a
discussion of when such units are considered “contained,” see
section XVI of this preamble). 

B. Reasonable Efforts Condition 

EPA received many comments on the condition proposed in the March 2007
supplemental proposal that generators “make reasonable efforts to
ensure that the reclaimer intends to legitimately recycle the material
and not discard it… and that the reclaimer will manage the material in
a manner that is protective of human health and the environment.” This
condition was proposed to be fulfilled by hazardous secondary material
generators sending hazardous secondary materials to any reclamation
facility not operating under a RCRA Part B permit or interim status
standards, and the condition would have to be satisfied prior to
transferring the hazardous secondary materials to the reclamation
facility (72 FR 14190–14194). Below is a summary of six major issues
raised in the comments and EPA's responses. For more detailed comment
responses, please see Revisions to the Definition of Solid Waste
Response to Comments Document.

Comments: an objective standard for reasonable efforts

As proposed, the codified reasonable efforts provision for generators
was a general standard, rather than a more specific standard with
clearly stated requirements. EPA requested comment on establishing a
more objective standard for making reasonable efforts, such as requiring
generators to answer the questions discussed in the preamble. EPA
acknowledged that creating an objective standard could provide
generators and overseeing agencies with more regulatory certainty and
requested comment on codifying the six questions outlined in the
preamble.

EPA received many comments in support of an objective standard for
satisfying the reasonable efforts condition. Commenters suggested that a
minimum standard was needed to determine whether a generator fulfilled
the condition and as a way of determining what is “reasonable.” Many
of these commenters also believed that a standard that generators must
meet was necessary to delineate liability for hazardous secondary
materials that are transferred from a generator to a reclamation
facility. In contrast, several commenters suggested that formalizing a
minimum standard which all generators must meet is inappropriate since
recycling is inherently case-specific.

On the issue of whether to codify a reasonable efforts standard, which
several commenters addressed separately from the development of a
standard, EPA received many comments both in support of and against
codification. A large number of commenters addressed this issue by
commenting on the six questions EPA discussed within the preamble. Those
in favor of codification believed that establishing a minimum, objective
standard was important in order to provide regulatory certainty for
generators regarding what is “reasonable” and for overseeing
agencies needing to make consistent determinations that the condition is
satisfied. Industry commenters responding in support of codification
believed the six questions resemble existing audit questions, and would
therefore be straightforward to answer and satisfy. Recyclers and waste
management commenters believed that small quantity generators would
benefit from having a clear standard and also that the standard would
make additional clarifying guidance unnecessary in the future. Some
commenters conditionally supported codification contingent upon
severance of RCRA liability for generators that meet the minimum
condition. These commenters supported EPA’s proposal to create what
they termed as a “safe harbor” for generators that, having met the
reasonable efforts condition, would be shielded from any future RCRA
liability caused by environmental damage at a reclamation facility. 

On the other hand, several commenters (mostly from the generating
industry) opposed codifying a standard. They believed a standard would
be unnecessary since generators that already audit recyclers have
existing criteria for making reasonable efforts. Some of these
commenters also stressed a need to maintain flexibility in their
activities and to avoid additional burdensome requirements. One state
commenter requested that EPA allow generators to establish their own
standard for reasonable efforts so that generators will weigh their own
level of risk and ultimately be responsible for their decisions. This
commenter also believed that one standard is impractical for both “a
large industrial generator of a highly toxic hazardous secondary
material” and “a small generator of a barely ignitable hazardous
secondary material.” 

Of the commenters that responded to the March 2007 supplemental proposal
to codify a standard for reasonable efforts, many also provided comments
on the six questions in the preamble. In general, commenters were
divided between supporting and opposing codification of all six
questions, but responses were generally favorable when commenters
discussed the value of individual questions within a reasonable efforts
inquiry. One exception to this is with respect to proposed question B
(“Does the reclamation facility have the equipment and trained
personnel to properly recycle the hazardous secondary material?”),
which several commenters believed to be difficult for a hazardous
secondary material generator to answer with existing knowledge. A few
commenters also noted that questions D and E, the two proposed questions
pertaining to legitimacy within the preamble discussion of reasonable
efforts, did not represent the legitimacy “factors to be considered”
that were proposed at 40 CFR 261.2(g). These commenters suggested that a
reasonable efforts inquiry should include all criteria and factors in
the proposed legitimate recycling requirement. A few commenters also
suggested including an additional question about the financial health of
a reclaimer.

EPA’s response: an objective standard for reasonable efforts

After evaluating these comments, EPA agrees that an objective minimum
standard is appropriate and necessary for hazardous secondary material
generators to determine that they have fulfilled the reasonable efforts
condition. We believe that without such a standard, both generators and
the regulatory agencies would experience difficulty in determining
whether the condition is met. However, in defining the standard, it
would in no way limit a generator’s ability to tailor and enhance its
reasonable efforts inquiry to evaluate a particular industry or
recycler. 

We also agree with the commenters who stated that the six questions from
the preamble to the March 2007 supplemental proposal, with two
modifications noted below, serve as a minimum objective standard.
Therefore, we are codifying them, with certain modifications. We
strongly believe that any generator who takes advantage of today’s
transfer-based exclusion must be able to answer all reasonable efforts
questions affirmatively for each reclamation facility (and intermediate
facility, if such hazardous secondary materials are sent to such a
facility) in order to demonstrate that its hazardous secondary materials
will be properly and legitimately recycled and not discarded. In EPA’s
view, a generator who is unable to satisfy the reasonable efforts
condition has not demonstrated that its hazardous secondary materials
are not discarded when recycled. The hazardous secondary materials would
thus be ineligible for today’s transfer-based exclusion.

With respect to question B (“Does the reclamation facility have the
equipment and trained personnel to properly recycle the hazardous
secondary material?”), we believe that its inclusion within reasonable
efforts is appropriate and necessary since the question informs a
generator’s inquiry as to whether its hazardous secondary materials
will be properly and legitimately recycled. If a reclamation facility
were found to have inadequate equipment or untrained personnel, it would
raise serious questions as to whether the facility would be engaged in
proper recycling or discard. Without exploring this question, we believe
that a generator cannot ascertain that a reclamation facility will
properly and legitimately recycle its hazardous secondary materials. We
also discuss in more detail how a generator can answer this question in
section VIII.C.2. of this preamble.

As noted previously, we are codifying the questions with two
modifications. The first modification to the questions is language that
accommodates the inclusion of intermediate facilities within the
transfer-based exclusion. As discussed in section VIII.C. of this
preamble, if a generator sends hazardous secondary materials to an
intermediate facility where they are stored for longer than 10 days
prior to being transferred to a reclamation facility, the generator will
need to perform reasonable efforts for both the intermediate facility
and reclamation facility. 

The second modification is to the questions pertaining to legitimate
recycling activities. EPA acknowledges that one source of confusion for
commenters regarding the relationship between the reasonable efforts
condition and the legitimate recycling requirement may have been the two
questions pertaining to legitimacy (questions D and E) within the
reasonable efforts preamble discussion and the proposed legitimacy
requirement at 40 CFR 261.2(g). Questions D and E and the proposed
regulatory language for legitimacy did not share the exact same wording,
although both concepts were intended to be consistent. Furthermore, we
understand the concern commenters raised that questions D and E did not
represent the legitimacy “factors to be considered” that were
proposed within 40 CFR 261.2(g). As a result, we have restructured the
reasonable efforts questions pertaining to legitimacy to read as a
single question that ensures that a reclamation facility receiving
hazardous secondary materials intends to legitimately recycle the
hazardous secondary materials pursuant to 40 CFR 261.2(g). 

Comments: liability related to reasonable efforts

EPA proposed the reasonable efforts condition as a way for hazardous
secondary material generators to demonstrate that they met their
regulatory obligation to ensure that their hazardous secondary
materials, when transferred to a reclamation facility, would not be
discarded. Based on our assessment of good recycling practices and
comments received, we believe that the reasonable efforts condition
reflects current industry best practices of auditing or assessing
reclamation facilities prior to entering into business relations; this
is done to minimize potential regulatory and liability exposures and to
demonstrate a commitment to environmental stewardship. 

We received many comments related to liability and the reasonable
efforts condition. Many commenters stated that making reasonable efforts
to evaluate a reclaimer is a good method for limiting future liability
and that many generators already employ some form of the practice. These
commenters largely supported the provision. Other commenters expressed
concern that the reasonable efforts condition is an unnecessary
requirement since existing mechanisms, such as economic motivations and
CERCLA liability, would cause a generator to perform evaluations of
reclaimers without being mandated as a condition of the exclusion.

Additionally, EPA received comments about whether satisfying the
reasonable efforts condition would sever a generator’s regulatory
liability if, after being sent to a reclamation facility, its hazardous
secondary materials were discarded or involved in environmental damage.
Several commenters (namely from industry) asked that EPA clarify that
upon conducting a reasonable efforts evaluation of a reclamation
facility, a generator would not be liable for a reclaimer’s subsequent
environmental violations or if a reclaimer’s actions caused or
contributed to some environmental harm or damage. Many of these
commenters supported the codification of a reasonable efforts standard,
provided that liability would be severed upon meeting the condition.
Conversely, several commenters stated that generator liability should be
maintained into the future regardless of satisfying the condition. In
general, these commenters were concerned that hazardous secondary
material generators could subvert RCRA liability by conducting
incomplete and superficial evaluations of reclaimers, and that future
environmental damage would result at reclamation facilities. A few of
these commenters suggested that EPA clarify that a hazardous secondary
material generator would be held liable for violating the condition of
the exclusion into the future if it was shown that the generator did not
conduct a thorough assessment of the reclaimer. 

EPA’s response: liability related to reasonable efforts

EPA disagrees that the reasonable efforts condition is unnecessary in
light of economic forces or CERCLA liability, which may also motivate
some generators to evaluate recyclers. We proposed the reasonable
efforts condition as a way for hazardous secondary material generators
to demonstrate that they are not discarding the hazardous secondary
materials when sending them to a third party for reclamation. The
language of the condition is intended to capture within the regulatory
text how many responsible generators currently inquire and make
decisions about recycling of hazardous secondary materials and how
generators manage potential liability and regulatory non-compliance
risks. Several commenters suggested that not all generators currently
audit or evaluate reclamation facilities despite having economic
interests and existing liability concerns. Analysis of the study of
environmental damage also suggests that CERCLA liability alone is not
enough to prevent damage and that increased generator inquiry of
reclamation facilities may help avoid future cases of abandonment or
discard, residuals mismanagement, sham recycling, and improper
management of hazardous secondary materials and recycled products. 

By proposing the reasonable efforts condition, EPA intended to maintain
RCRA liability for any hazardous secondary materials that are discarded.
The condition clearly holds a generator accountable for determining that
its hazardous secondary materials will not be discarded at a reclamation
facility or any intermediate facility prior to transferring such
materials to the facility. If a generator does not meet the condition,
then the generator’s hazardous secondary materials would not be
eligible for the transfer-based exclusion and would be considered by EPA
to be hazardous waste subject to RCRA Subtitle C controls from the point
of generation. 

EPA did intend, however, that if the hazardous secondary materials
generator had satisfied the reasonable efforts condition and discard
subsequently occurred while hazardous secondary materials were under the
control of the reclamation or intermediate facility, then the
reclamation or intermediate facility, not the generator, would be liable
under RCRA. EPA acknowledges that meeting this condition will not affect
CERCLA liability. (See section XIII for more information on CERCLA
liability.)

We recognize commenters’ concern that in order to satisfy the
reasonable efforts condition and be released from RCRA liability,
hazardous secondary material generators could be tempted into making
incomplete evaluations of reclamation and intermediate facilities. EPA
believes that codifying an objective reasonable efforts standard that
all generators must meet in order to satisfy the condition will
alleviate this concern. (see section VIII.C. of today’s rulemaking for
more discussion) We also believe that specifying a standard that
hazardous secondary material generators must satisfy will assist both
regulatory agencies and the regulated community in determining whether
the condition of the exclusion has been met or violated.

Comments: relationship between the reasonable efforts condition and the
legitimate recycling requirement

EPA received a variety of comments on the relationship between the
condition that hazardous secondary material generators must make a
reasonable efforts inquiry of reclamation facilities and the requirement
that hazardous secondary materials must be legitimately recycled.
Several commenters stated that evaluating whether a reclaimer meets the
legitimacy criteria should be part of a reasonable efforts inquiry to
ensure that a generator’s hazardous secondary materials are
legitimately recycled. One commenter stated that while a hazardous
secondary material generator would need to ensure that a recycling
activity being considered is legitimate in order to protect its own
liability interests, a legitimacy determination should be entirely
separate from the reasonable efforts condition. Another commenter also
stressed that, as a matter of good practice, many responsible generators
already ensure that they send hazardous secondary materials to
facilities engaged in legitimate recycling; therefore, a legitimacy
evaluation within reasonable efforts is unnecessary. Furthermore,
several commenters (mostly from industry) stated that a reasonable
efforts condition is redundant since the proposed legitimate recycling
requirement in 40 CFR 261.2(g) ensures that hazardous secondary
materials transferred off-site are safely recycled.

EPA’s response: relationship between the reasonable efforts condition
and the legitimate recycling requirement

EPA agrees with the commenters who stated that determining whether a
recycling activity is legitimate is a sound practice that many
responsible generators already employ as a way to manage their potential
liability. The reasonable efforts condition is intended to assist
generators in determining that their chosen reclamation facilities will
properly and legitimately recycle the generators’ hazardous secondary
materials. Consequently, EPA strongly believes that the reasonable
efforts condition must contain a provision that explicitly refers
generators to their obligation to ensure that their hazardous secondary
materials are legitimately reclaimed. Including legitimacy as part of
the reasonable efforts condition means that if the generator made
reasonable efforts to ensure that its hazardous secondary materials are
legitimately recycled in a way that satisfies this condition and,
subsequently, the reclamation facility fails to recycle the materials
legitimately, the reclamation facility, not the generator, becomes
liable for violating RCRA (see section VIII.E. for more information).

Comments: periodic updates to reasonable efforts

EPA requested comment on a requirement for making periodic updates to
reasonable efforts, but did not propose an explicit time period. Some
commenters favored requiring a specific time limit for updating the
reasonable efforts provision, while others (a slightly smaller number)
favored a flexible time frame for updating reasonable efforts, to be
determined by the hazardous secondary material generator. The commenters
who supported a specific time frame for updating the reasonable efforts
condition included states, several representatives of the recycling
industry, one industry generator, and one environmental organization.
Several of these commenters stated that the hazardous material generator
needed to evaluate changes over time to the recycling facility (e.g.,
compliance status, financial assurance, permit renewals, impact of
changes in recycling markets) to ensure that their hazardous secondary
materials continue to be recycled properly and legitimately. Commenters
also suggested that generators re-evaluate recyclers whenever the
generator becomes aware of new, “material” information about or
changes to a reclamation facility. These commenters asked EPA to set a
minimum schedule for updating reasonable efforts. The suggested
schedules ranged from annually to every five years.

Several industry generators and associations, as well as one waste
management association, submitted comments in opposition to requiring
specific periodic updates of the reasonable efforts provision.
Commenters expressed concern that an arbitrary time frame would
unnecessarily change generators’ current schedules for auditing or
making inquiries of recycling facilities. Several commenters suggested
that schedules for evaluating reclaimers should vary from facility to
facility and by industry and that a generator should be allowed to
decide when to update reasonable efforts given a facility’s history
and the generator’s familiarity with the facility. One commenting
organization cited its use of an internal risk-based audit schedule to
determine when to review a reclamation facility. The stated criteria for
judging the level of risk included facilities with lower financial
health and an addition of “new processing capabilities and when
ownership changes.” Another generator requested EPA to “suggest, and
not require, the frequency of periodic updates.”

EPA’s response: periodic updates to reasonable efforts

EPA agrees with the comments stating that requiring generators to
conduct specific periodic updates of the reasonable efforts provision is
critical for ensuring that reclamation facilities continue to properly
and legitimately recycle the hazardous secondary materials into the
future. We believe that if a hazardous secondary material generator
evaluated a reclamation facility (or an intermediate facility if
hazardous secondary material is sent to such a facility) only once
before the initial transfer of hazardous secondary materials for
recycling, it would not provide adequate assurance to regulators that
hazardous secondary material generators have met the reasonable efforts
condition to ensure discard will not occur 5, 10, or 20 years into the
future. We understand that generators often evaluate recyclers or
intermediate facilities on a recurring schedule determined by the
generator’s particular interests, concerns, and experience. However,
EPA believes that hazardous secondary material generators are also
interested in having regulatory certainty regarding the time frame for
which reasonable efforts must be conducted, rather than a completely
discretionary “generator decides” approach, which will present many
disagreements and challenges as to what a “reasonable” schedule is.
We are also aware that many generators do not currently conduct
reasonable efforts, let alone re-evaluate such facilities over time. For
these reasons, we are requiring that generators update their reasonable
efforts evaluation at least every three years, at a minimum. Based on
public comments, this appears to represent general industry practice and
to be within the average time frame for those generators who currently
conduct environmental audits of facilities to which they send their
hazardous secondary materials. 

By specifying a time frame for periodic updates, EPA in no way intends
to limit a generator to conducting evaluations only every three years.
In fact, we acknowledge that shorter time frames could be appropriate
for certain industries. Additionally, we would expect that any hazardous
secondary material generator who has concerns about a reclamation or
intermediate facility, or who gains new knowledge of significant changes
or extraordinary situations at such facilities, would conduct reasonable
efforts regardless of the minimum required update schedule.

Comments: requiring generators to certify reasonable efforts

EPA solicited comment on requiring hazardous secondary material
generators to certify that they made reasonable efforts prior to
arranging for transport of hazardous secondary materials to be recycled.
As discussed in the preamble to the March 2007 supplemental proposal,
the certification statement would be a form of documentation necessary
for each reclamation facility and would be signed and dated by an
authorized representative of the generator company. We also provided
certification language as an example. 

Several commenters including recyclers, all responding states, and a few
generators, commented in favor of requiring hazardous secondary material
generators to certify that they had met the reasonable efforts
condition. All commenters that responded regarding the example
certification statement supported the language. A few commenters
reiterated that generators must certify reasonable efforts for each
reclamation facility and that certification should not be necessary for
RCRA Part B permitted facilities. One commenter requested that the
certification must be made “prior to implementing exempt
operations.” Another commenter believed that a certification statement
would improve the enforceability of the reasonable efforts condition. A
generator that currently audits its waste facilities stated that “a
letter signed and dated by the department manager is mailed to the
audited facility stating the results of the audit,” and that the
letter should act as a certification. Another commenter suggested that
given the large number of facilities for which reasonable efforts is
required, having a company representative, as opposed to an
“authorized representative,” sign and date a certification should be
sufficient and would be less burdensome. One recycler requested that the
generator certification and signature be built into the one-time
notification that EPA is requiring for the exclusion. 

A smaller number of comments from generators opposed the certification
requirement. A few generators found the certification statement to be
overly burdensome and stated that it would stifle the use of third-party
reclaimers. One generator, who currently audits reclamation facilities,
stated it could not certify the accuracy of information prepared by
third parties, nor could it certify responses by reclamation facilities
to questions B through E, which EPA discussed in the preamble. Another
generator responded that without further clarification as to the minimum
requirements for satisfying reasonable efforts, the generator could not
certify that the condition was met. A commenter also suggested that
requiring certification of reasonable efforts for reclamation facilities
that recycle hazardous secondary materials was unnecessary if
certification is not required for the storage, treatment, and disposal
of hazardous waste.

EPA’s response: requiring generators to certify reasonable efforts

After evaluating the comments, EPA has concluded that that certifying
the reasonable efforts provision is a necessary and minimally burdensome
requirement for ensuring that the reasonable efforts condition is met
prior to transferring the hazardous secondary materials to a reclamation
facility. We also strongly believe that requiring the signature of an
authorized representative of the generator company, who can be any
appointed company representative, is critical for ensuring
accountability for satisfying the condition. In the event of an
enforcement action, we believe that the certification will lend support
to hazardous secondary material generators needing to prove that the
reasonable efforts condition was met. Therefore, in today’s final
rulemaking, we are finalizing a requirement that hazardous secondary
material generators must certify that reasonable efforts were made for
each reclamation and intermediate facility prior to transferring
hazardous secondary materials to such facilities.

With respect to those commenters who opposed certification and
specifically argued that requiring such certification would stifle the
use of third-party auditors, it is our understanding that third-party
auditors do not generally draw any conclusions based on their audits,
but simply report the results. In addition, the reasonable efforts
condition requires that the hazardous secondary material generator
decide whether a reclaimer is acceptable. Therefore, we disagree with
those commenters who stated that requiring a certification would
constitute a significant new burden. Rather, EPA believes that requiring
a hazardous secondary material generator to certify the reasonable
efforts condition would provide them the flexibility to use audits or
other information necessary in certifying that the condition of the
exclusion was met. We find that the commenter example of an existing
practice of sending a letter with audit results to an audited facility
would need to include the certification language in 40 CFR
261.4(a)(24)(v)(C)(2) in order to meet the reasonable efforts condition.


Comments: documenting of reasonable efforts

While EPA proposed that generators conduct reasonable efforts before
sending hazardous secondary materials to the reclamation facility, we
did not propose that documentation records must be kept of such
demonstrations. However, EPA requested comment on whether to require
hazardous secondary material generators to maintain documentation at the
generating facility demonstrating that the reasonable efforts condition
was satisfied prior to transferring the hazardous secondary materials to
a reclamation facility. No form of documentation or format was
specified, although EPA did cite audits as one type of documentation
that could be relevant. Additionally, EPA requested comment on whether
hazardous secondary material generators should be required to maintain
certification statements that reasonable efforts were conducted for each
reclamation facility to which the generator transferred the hazardous
secondary materials to be reclaimed.

A majority of commenters supported a requirement that generators
maintain documentation of reasonable efforts. A few commenters asked
that documentation be kept on-site, while a few commenters asked that
the documentation could be kept at a headquarters or other off-site
location. Other commenters specifically requested that EPA not specify a
location for the documentation. Commenters in favor of this requirement
stated that documentation would be necessary for showing the basis for
the reasonable efforts determination, as well as for improving the
enforceability of the condition. A few commenters suggested that
documentation be maintained for three years and one industry commenter
asked that EPA set a time requirement specifying how long such
documentation must be kept.

On the other hand, a few commenters were opposed to a documentation
requirement. These commenters cited the confidential and proprietary
nature of the audits and reports used by generators for making
reasonable efforts and stated they did not believe they should share
this information with regulators. A few commenters, including one state,
also argued that a certification statement of having made reasonable
efforts, signed by an authorized representative of the generator
company, would provide adequate documentation that reasonable efforts
were made. One state commenter also suggested that it would be difficult
for states to enforce the requirement of documentation, presumably
because EPA proposed that “any credible evidence available” could be
used to demonstrate that the condition is met.

EPA’s response: documenting reasonable efforts

After evaluating the comments, EPA has concluded that it is important
for hazardous secondary material generators to produce documentation to
demonstrate that the reasonable efforts condition has been met prior to
transferring hazardous secondary materials to a reclamation and/or
intermediate facility. We believe this requirement helps generators
support their position that hazardous secondary materials have not been
discarded and helps regulators determine whether a generator has
satisfied this condition. Since updates of reasonable efforts are
required at a minimum of every three years, EPA believes that such
generators should maintain documentation for a minimum of three years to
show that the requirement to update reasonable efforts has been
satisfied. 

We understand that audits and evaluations of reclamation facilities are
not always kept on-site and may be maintained at a generator’s
headquarters or at another off-site location. For this reason, EPA is
requiring that documentation must be made available upon request by a
regulatory authority within 72 hours, or within a longer period of time
as specified by the regulatory authority. We understand that in the age
of near-instantaneous communication, a hazardous secondary material
generator that performed reasonable efforts prior to transferring
hazardous secondary materials should be able to retrieve documentation
with relative ease. We also note that time frames for producing
documentation are generally determined by regulatory authorities on a
case-by-case basis and time frames are clearly outlined by authorities
within RCRA Section 3007 information request letters.

C. Financial assurance requirement

In EPA’s March 2007 supplemental proposal, EPA proposed that
reclamation facilities receiving and recycling hazardous secondary
materials under the transfer-based exclusion be required to demonstrate
financial assurance in accordance with the requirements of subpart H of
40 CFR part 265. As part of this proposal, EPA sought comment on whether
the existing subpart H requirements should be modified in some way
specifically for reclamation facilities affected by the proposed
exclusion. EPA also requested comment on whether EPA should tailor the
costing requirements associated with the subpart H financial assurance
requirements. Because of these comments, EPA has made some revisions to
the financial assurance condition, as explained below.

Comments: financial assurance

Many commenters supported EPA’s proposal that reclamation facilities
receiving and recycling hazardous secondary materials under the
transfer-based approach be required to demonstrate financial assurance
in accordance with the current requirements of subpart H of 40 CFR part
265 in order to demonstrate that the hazardous secondary materials are
not being discarded. Commenters argued that without a codified financial
assurance requirement, recyclers that mismanage hazardous secondary
materials could simply close their doors (as has happened previously)
and abandon their hazardous secondary materials, leaving an
environmental problem for the public to address and imposing the
financial burden of cleaning up recycling facilities on states and local
authorities, which may not have the resources to do so. Commenters also
noted that EPA’s environmental problems study shows that the primary
cause of damage incidents has been the business failure of recycling
facilities. Without financial assurance, the commenters argue that
states and taxpayers have been left with the bill for cleaning up these
abandoned sites. Finally, these commenters stated that a recycling
facility that does not meet the financial test, cannot obtain an
insurance policy or other financial instrument, and does not have the
resources to establish a trust fund or other mechanism, should not be
handling hazardous secondary materials under the conditional exclusion. 

Other commenters supported EPA’s proposal on financial assurance, but
also made suggestions for modifications. One commenter recommended that
a financial assurance program be developed specifically for reclaimers.
A few commenters recommended that reclamation facilities taking
advantage of the exclusion maintain a closure plan that would be
available for review, upon request, that substantiates and verifies the
amount of financial assurance required.

Still other commenters stated that reclamation facilities that receive
hazardous secondary materials from off-site generators under the
transfer-based approach should not be held to the same financial
assurance standards as facilities with permits to manage hazardous
waste. Instead, the financial assurance requirements for recycling
facilities should reflect the relatively lower risks associated with the
manufacturing/recycling activities. Commenters claimed that reclamation
facilities are essentially processing raw materials for beneficial use
as opposed to RCRA-permitted facilities that are treating, storing, and
disposing hazardous waste.  

Finally, some commenters disagreed completely with EPA’s approach to
financial assurance. Commenters stated that EPA lacks the authority to
subject facilities to the requirements or conditions when using
hazardous secondary materials in production operations in which these
materials are never discarded. Commenters stated that proposed
conditions for the exclusion do not define the absence of discard and
would effectively impose a waste management requirement upon a
non-waste. 

EPA’s response: financial assurance

	EPA finds those comments that support the financial assurance condition
persuasive and agrees with their conclusions. Requiring financial
assurance for reclamation facilities (and intermediate facilities, which
are included in the final rule) operating under the transfer-based
exclusion is appropriate and reasonable for the Agency to determine that
the hazardous secondary materials managed at these facilities are not
discarded and is supported by the findings of the recycling studies we
conducted as part of this rulemaking effort. Financial assurance as a
condition will ensure that the reclamation and intermediate facilities
either have the financial wherewithal themselves, as demonstrated by
qualifying for self insurance under the financial test, or that funds
from a third party will be available to ensure that the hazardous
secondary materials will not be abandoned. An owner or operator who must
fully fund a trust to cover the retirement cost estimate will be careful
not to discard the hazardous secondary materials so that he may recover
the funds from the trust. Sureties, banks providing letters of credit
and insurers will screen applicants to ensure that they are only
providing assurance for good risks who are unlikely to abandon or
discard such materials, thus demonstrating that the hazardous secondary
material is not being discarded. As noted by the commenters, at least
138 of the 208 damage cases were firms that had gone out of business and
abandoned the “hazardous secondary material,” a material that they
presumably believed could be reclaimed. 

In addition, the market forces study indicates that recyclers of
hazardous secondary materials can behave differently from traditional
manufacturers due to differences in the economic forces and incentives
involved in recycling. Unlike manufacturing, where the cost of raw
materials or intermediates (or inputs) is greater than zero and revenue
is generated primarily from the sale of the output, some models of
hazardous secondary materials recycling involve generating revenue
primarily from receipt of the hazardous secondary materials. This
situation can lead to over-accumulation and abandonment of hazardous
secondary materials, particularly in cases where the product of the
recycling process has low value, the prices are unstable, and/or the
firm has a low net worth.  

By requiring financial assurance, the public and federal, state and
local governments can have confidence that the recycler’s business
model takes these market factors into consideration and that it will
therefore not abandon the hazardous secondary materials, even if
unforeseen market changes occur. The study of current good recycling
practices indicated that one of the main reasons that generators audit
recyclers is to evaluate their financial health and resources to respond
to accidents or other problems that could cause adverse environmental or
human health consequences. This is primarily because of the
joint-and-several liability provisions of CERCLA, under which a
generator becomes a "responsible party" obligated to pay (in part or in
whole) for remediation expenses if (in this example) a recycler to whom
he sent recyclable hazardous secondary materials were to create
contamination problems, but lacked the resources to pay for the cleanup.


Because American manufacturers have considerable experience with these
types of CERCLA liability issues, evaluating the financial health of the
reclamation facility before shipping recyclable hazardous secondary
materials to them has become a standard business precaution for
responsible generators. The condition for financial assurance thus can
be seen as a way of addressing the same concern, thus ensuring that the
reclamation and intermediate facility owner/operators who operate under
the terms of this exclusion are financially sound and will not abandon
or otherwise discard their hazardous secondary materials.

Thus, EPA disagrees with the commenters who argued that recycling
hazardous secondary materials is, as a general matter, the same as
processing raw materials for beneficial use. Because of the nature of
these materials (i.e., hazardous spent materials and listed by-products
and listed sludges), they are frequently more difficult to process than
most raw materials, and the nature of the economics of the transfer of
these materials can create an incentive for discard. Requiring financial
assurance is essential for helping to define those situations where the
hazardous secondary material is not being discarded.

	However, EPA agrees that some adjustments to the existing 40 CFR part
265 financial assurance requirements would help better tailor them to
hazardous secondary material reclamation and intermediate facilities.
The current hazardous waste financial assurance regulations include
provisions (such as post-closure) not appropriate to hazardous secondary
material units, and the terminology is directed towards permitted TSDFs.
EPA also agrees that the regulations need to be more explicit as to the
documentation requirements for the financial assurance cost estimate.
The financial assurance requirements in 40 CFR part 265 subpart H in
turn reference and rely on certain requirements in the 40 CFR part 265,
subpart G closure regulations. Although the hazardous secondary material
units are not required to undergo Subtitle C closure, some of the
provisions of 40 CFR part 265, subpart G are important to implementing
40 CFR part 265 subpart H and need to be clarified. As a convenience to
the regulated community, EPA has placed the financial assurance
requirements applicable to hazardous secondary materials in a
stand-alone regulation (see 40 CFR part 261 subpart H). Substantively,
these regulations generally mirror and include the same requirements as
the 40 CFR part 265 financial assurance regulations, but they have been
condensed and reframed to refer to reclamation and intermediate
facilities rather than TSDFs and to directly incorporate (rather than
just referencing) those aspects of 40 CFR part 265, subpart G that are
necessary for implementing the financial assurance condition. 

For further discussion of how the financial assurance condition operates
and how the provisions map to the requirements in 40 CFR part 265, see
section VIII.C of today’s preamble.

D. Ability of Excluded Reclamation Facility to Accept Manifested
Hazardous Waste 

In the March 2007 supplemental proposal, EPA proposed that reclaimers
receiving hazardous secondary materials from generators that continue to
manage such materials under the current hazardous waste regulatory
system would still be able to claim the exclusion for those hazardous
secondary materials. In essence, this would allow manifested hazardous
waste to be sent to an unpermitted facility, as long as that facility
met the conditions of the exclusion. 

Comments and EPA’s response: excluded reclamation facilities accepting
manifested waste

Most of the commenters on this issue raised serious concerns about this
provision, among other things arguing the fact that it would be
unworkable. Commenters also raised concerns about the generator’s
liability under such a situation, particularly if the reclaimer failed
to inform the generator that its hazardous waste would be managed under
the exclusion. Commenters also noted that the lack of a requirement for
“reasonable efforts” on the part of the generator is contrary to the
basic premise of the exclusion, which is that generators will be
responsible and ensure reclaimers properly manage and recycle the
hazardous materials.

Thus, in today’s final rule, EPA is not allowing reclaimers to manage
manifested federal hazardous waste under the exclusion. Although this
provision may have increased recycling opportunities, the fact that the
hazardous secondary material generator manages the hazardous secondary
materials as manifested hazardous wastes would have decoupled the
exclusion from the underlying rationale that the materials are not
discarded.

E. Imports and Exports

	In the March 2007 supplemental proposal, the Agency proposed to exclude
hazardous secondary materials that are exported from the United States
for reclamation at a facility located in a foreign country, provided the
hazardous secondary material generator complies with the generator
requirements under the transfer-based exclusion (e.g., notification,
reasonable efforts, etc.), as well as notice and consent regarding
planned exports of such hazardous secondary materials. We also requested
comment on whether the Agency should allow exports under the
generator-controlled exclusion.

Comments: scope of exports

Overall, commenters expressed few concerns with the specifics of the
proposed export regulations, although a few disagreed with allowing
exports of hazardous secondary materials under the proposed rule
altogether. These commenters believed that allowing exports of such
materials would run contrary to international agreements (such as
agreements established by the Organization for Economic and Cooperation
and Development (OECD) and the Basel Convention regarding transport of
hazardous waste) and may also increase the risk of environmental damage
in other countries. At least two commenters suggested limiting exports
to our bilateral partners only (i.e., Canada and Mexico). On the other
hand, some industry commenters argued that many companies have worldwide
operations and would therefore benefit from broader provisions allowing
exports of hazardous secondary materials to be managed under the control
of the generator because it would improve the companies’ ability to
recycle hazardous secondary materials.

EPA’s response: scope of exports

After considering these comments, the Agency is largely maintaining the
export provisions as proposed, with some minor modifications described
below. We believe that hazardous secondary materials exported for
reclamation in accordance with today’s final rule are not discarded
and, thus, not solid wastes and, therefore, we have no basis for
prohibiting exports when a hazardous secondary material generator
complies with the regulatory requirements. 

We also disagree with commenters who believe today’s rule runs
contrary to international agreements controlling the movement of
hazardous waste. We note the U.S. is an OECD Member and is, therefore,
legally bound to comply with the OECD’s “Decision of the Council
C(2001)107/FINAL, Concerning the Control of Transboundary Movements of
Wastes Destined for Recovery Operations, as amended by C(2004)20,”
which provides a framework for OECD Member countries to control
transboundary movements of recoverable waste in an environmentally sound
manner. This Amended 2001 Decision recognizes that Member countries may
develop their own regulations to determine whether or not materials are
controlled as hazardous wastes. Under today’s rule, hazardous
secondary materials meeting certain conditions and exported for
reclamation are not solid wastes under U.S. regulation. The Agency
notes, however, that once hazardous secondary materials reach the border
of the receiving country, the hazardous secondary material is regulated
in accordance with the receiving country’s laws and regulations. In
other words, such materials that are not solid and hazardous wastes
under U.S. hazardous waste regulations may be solid and hazardous wastes
under the receiving country’s regulations and, therefore, facilities
should be aware of the requirements that competent authorities of
receiving countries may impose 

Additionally, some commenters asserted that today’s rule was
inconsistent with the Basel Convention, a separate multilateral
international agreement governing the transboundary movements of
hazardous wastes. The U.S., however, is not a party to the Basel
Convention and thus is not held to the Convention’s agreements
(although, because the Convention prohibits exports between a Basel
party and a non-Basel party, the U.S. may not export hazardous waste to
any Basel party, absent a bilateral or multilateral agreement with that
party). Beyond this point, EPA, in any case, considers today’s rule to
be consistent with Basel for the same reason that it is consistent with
the OECD agreement described above.

 In response to comments on allowing exports under the
generator-controlled exclusion, we note this exclusion is subject to few
restrictions and is largely based on the assumption that hazardous
secondary materials are unlikely to be discarded because they would be
closely managed and monitored by a single entity. However, this same
assumption does not pertain to exports of hazardous secondary materials
because EPA would not be able to ensure the close management and
monitoring by a single entity of hazardous secondary materials in a
foreign country. Accordingly, we believe that hazardous secondary
materials exported for reclamation is excluded only if the receiving
country has consented and is provided an opportunity to determine and
ensure that hazardous secondary materials exported to its reclamation
facilities are not discarded. 

Additionally, we note that in today’s rule we have replaced the term
“exporter,” which was used in the March 2007 supplemental proposal,
with the term “hazardous secondary material generator.” This is
because, under the exclusion for hazardous secondary materials exported
for reclamation (today’s 40 CFR 261.4(a)(25)), the “exporter” is
required to comply with the generator responsibilities listed under the
transfer-based exclusion (such as reasonable efforts), as well as notice
and consent and annual reports. By replacing the term “exporter”
with “hazardous secondary material generator,” we are clarifying
that for hazardous secondary materials exported for reclamation, the
hazardous secondary material generator is responsible for notice and
consent and for submitting annual reports. We would also like to clarify
that intermediate facilities can still be used for exports (as with the
transfer-based exclusion), but the generator, not the intermediate
facility, must comply with the notice and consent and annual report
requirements. This is because the intermediate facility cannot perform
the generator responsibilities under the transfer-based exclusions and,
therefore, cannot perform the duties of the 'exporter' under this rule.

Comments: annual reports

In the proposed rule, we solicited comment on whether facilities
managing hazardous secondary materials under the exclusions should be
required to submit periodic (e.g., annual) reports detailing their
recycling activities, such as information on the types or volumes of
hazardous secondary materials recycled or other relevant information. 

With respect to exports, a few commenters suggested that we add to 40
CFR 261.4(a)(25) a requirement that hazardous secondary material
generators submit annual reports regarding the exports of their
hazardous secondary materials. This requirement would be similar to the
requirement currently in 40 CFR part 262 subpart E, in which primary
exporters must submit annual reports regarding exports of hazardous
waste. Conversely, a few commenters urged EPA to finalize the export
requirements, as proposed with at least one commenter explicitly
agreeing with EPA’s proposal not to require annual reports for
hazardous secondary material generators. 

EPA’s response: annual reports

The Agency agrees with those commenters who supported a requirement for
hazardous secondary material generators to submit to EPA annual reports
regarding the exports of their hazardous secondary materials. We believe
that such a requirement will help determine that hazardous secondary
materials exported for reclamation are handled  as commodities and not
discarded. We have, therefore, added a provision to 40 CFR 261.4(a)(25)
requiring hazardous secondary material generators who export hazardous
secondary materials to file a report with the Office of Enforcement and
Compliance Assurance that summarizes the types, quantities, frequency,
and ultimate destination of all hazardous secondary materials exported
during the previous calendar year. Such reports would document the total
amount of hazardous secondary materials exported during the calendar
year, which is often not the same as the amount specified in an export
notice. Such a report would also enable EPA to compare actual shipments
in the annual report against proposed shipments in the export notice to
ensure that the shipments occurred under the terms approved by the
receiving country. Finally, such a report would enable EPA to provide
summary information, if requested by a receiving country, that could
assist the receiving country in determining what amount of hazardous
secondary materials was received in that country. 

Comments and EPA’s response: tacit consent

In the March 2007 supplemental proposal, we specified that the hazardous
secondary material generator must receive consent (through EPA) in
writing from the receiving country before the hazardous secondary
materials could be exported. Some commenters pointed out that under the
existing export regulations for hazardous wastes exported to OECD Member
countries, the receiving country may use tacit consent to respond to the
notification (40 CFR part 262 subpart H). Commenters expressed concern
that this was a point of confusion, as fully regulated hazardous wastes
are eligible for tacit consent, whereas excluded hazardous secondary
materials would require consent in writing. To eliminate this confusion,
EPA has added a provision to the regulations that allows tacit consent
for hazardous secondary materials exported to OECD Member countries
similar to that allowed for hazardous wastes under 40 CFR part 262,
subpart H. We note that Canada and Mexico, though OECD Member countries,
typically require written consent for exports to their countries.

For a detailed description of today’s exclusion for hazardous
secondary materials exported for reclamation, see section VIII.C.5. of
today’s preamble.

F. Notification and other Recordkeeping and Reporting Requirements

EPA proposed a total of three recordkeeping and reporting requirements
in the March 2007 supplemental proposal: (1) a one-time notification to
be submitted by hazardous secondary material generators and reclaimers
(required for both the generator-controlled and the transfer-based
exclusions); (2) for the transfer-based exclusion, a requirement for
both the hazardous secondary material generator and reclaimer to
maintain for three years records of all off-site shipments of excluded
hazardous secondary materials (either sent by the generator or received
by the reclaimer); and (3) notice and consent for hazardous secondary
materials exported for reclamation in foreign countries.

Comments: general recordkeeping and reporting requirements

Many commenters supported increasing the recordkeeping and reporting
requirements in order to monitor compliance with the exclusions
adequately and to measure increases in safe hazardous waste recycling.
Alternatively, some commenters urged EPA to finalize the requirements as
proposed, cautioning that onerous reporting and recordkeeping
requirements would discourage facilities from taking advantage of the
exclusions. A few commenters questioned EPA’s authority for including
recordkeeping and reporting requirements altogether; these commenters
argued that, since hazardous secondary materials are not solid wastes
and thus not subject to regulation, recordkeeping and reporting
requirements should not apply. 

EPA’s response: general recordkeeping and reporting requirements

EPA agrees with the majority of commenters and believes that additional
recordkeeping and reporting requirements are necessary to enable
effective and credible oversight. We therefore consider the
recordkeeping and reporting requirements in today’s rule to be the
minimum information necessary to determine that hazardous secondary
materials are reclaimed and not discarded. Some of the recordkeeping
requirements that we are finalizing today are discussed in detail within
other relevant sections of today’s preamble (see section XVII for our
response to comments on documentation and certification of reasonable
efforts and section VII.C. for a detailed description of financial
assurance). This section focuses on our response to comments regarding
the notification requirement and the requirement that the generator
maintain confirmations of receipt of hazardous secondary materials from
the reclamation facility and intermediate facility (applicable for the
transfer-based exclusion only).

Comments: notification as a condition of the exclusion

In the March 2007 proposal, EPA noted that the one-time notification
requirement under the authority of RCRA section 3007 would not be a
condition of the exclusions, and that failure to notify, while
constituting a violation of the notification regulations, would not
affect the excluded status of the hazardous secondary materials.

A number of commenters disagreed with this rationale and argued instead
that the notification requirement should be made a condition of the
exclusions. These commenters stated that, as proposed, the notification
requirement would create an unintended incentive for hazardous secondary
material generators and reclaimers not to notify, because those who
choose not to notify would likely evade oversight for many years and, if
caught, could simply regard the “paperwork violation,” and possible
penalty for that violation, as a cost of doing business. These
commenters maintained that the failure of a hazardous secondary material
generator or recycler to provide notification is a strong indication
that these entities are either unaware of or trying to circumvent the
regulatory requirements, in both cases possibly increasing the
likelihood for environmental damage. Therefore, these commenters argued
that failure to notify should be regarded as more serious than a
reporting violation and should, therefore, remove the excluded status of
the hazardous secondary materials. 

Conversely, some commenters supported EPA’s proposed approach,
agreeing that if an entity fails to notify, it does not necessarily
indicate that hazardous secondary materials were discarded and,
therefore, should not automatically affect the excluded status of the
materials. 

EPA’s response: notification as a condition of the exclusion

At issue here is not the requirement to submit a notification, but
rather the consequences an entity would face for failing to notify.
Notification as a requirement under the authority of RCRA section 3007
of the exclusion means failure to notify would constitute a violation of
the notification regulations. On the other hand, notification as a
condition of the exclusion means failure to notify would potentially
result in the loss of the exclusion for the hazardous secondary
materials (i.e., the hazardous secondary materials would become solid
and hazardous wastes and subject to full Subtitle C regulation). In
context with this issue, EPA considered the intent of the notification,
which is to provide basic information to regulatory agencies about who
will be managing hazardous secondary materials under the exclusions.
This basic information enables regulatory agencies to administer
oversight and set enforcement priorities, but does not allow regulatory
agencies to directly determine that hazardous secondary materials were
discarded. In other words, a generator or reclaimer could fail to notify
yet still be legitimately recycling their hazardous secondary materials
according to the conditions of the exclusion. Therefore, EPA is
retaining notification as a requirement under the authority of RCRA
section 3007, and, thus, notification is not a condition of today’s
exclusions. 

Comments: format of notification

In the March 2007 supplemental proposal, EPA requested comment on
whether the notification should be submitted in a particular format and
discussed the option of using the Subtitle C Site Identification Form
(EPA Form 8700-12) to collect the information. By far, the majority of
commenters were in favor of using this Site ID form, pointing out that
EPA would effectively minimize burden by leveraging this form because it
is already familiar to the regulated community. Of the very few
commenters opposed to using the Site ID form, some argued that the form
was not appropriate for collecting information on hazardous secondary
materials because it is primarily used to collect information regarding
hazardous wastes. However, other commenters thought the Site ID form was
appropriate because it is currently used to collect information on other
types of recycling activities not subject to full Subtitle C regulation,
such as used oil and universal waste activities. Finally, some
commenters supported use of the Site ID form because it would result in
standardized and consistent data that users could electronically access
through EPA’s databases. 

EPA’s response: format of notification

EPA agrees with the majority of commenters and is requiring hazardous
secondary material generators, tolling contractors, toll manufacturers,
reclaimers and intermediate facilities managing hazardous secondary
materials to use the Site ID form (EPA Form 8700-12) when notifying in
accordance with today’s rule. We believe that the Site ID form will
provide standardized data, while minimizing the collection burden
because many facilities notifying under today’s rule are already
familiar with the form and will not need to invest resources in learning
a new form and process. EPA also agrees with commenters who stated that
the form is appropriate for today’s rule, since it already collects
information on other types of recycling activities. EPA will modify the
current Site ID form in order to accommodate the notification
requirement for today’s rule.

Comments: types of information in notification

In the March 2007 supplemental proposal, EPA proposed that generators
and reclaimers of hazardous secondary materials include in the
notification the name, address, and EPA ID number (if applicable) of the
generator or reclaimer; the name and number of a contact person; the
type of hazardous secondary materials that would be managed according to
the exclusion; and when the hazardous secondary materials would begin to
be managed in accordance with the exclusion. Many commenters,
particularly states, argued that this information was insufficient to
monitor hazardous secondary material generators and reclaimers of
hazardous secondary materials adequately and, instead, suggested
additional types of information to include in the notification, such as
quantity of the hazardous secondary materials managed under the
exclusion, the name and EPA ID number of the reclaimer receiving the
hazardous secondary materials and a description of the recycling
process. Commenters argued that additional information was important to
monitor compliance of the facilities with the exclusions and to measure
increases in safe hazardous secondary materials recycling. 

On the other hand, some commenters urged EPA to retain the basic
information in the notification as proposed. These commenters questioned
how additional information would assist with defining discard and also
noted that EPA, historically, has not required notification for the
existing self-implementing exclusions from the definition of solid waste
located in 40 CFR 261.4. 

EPA’s response: types of information in notification

After carefully considering these comments, we agree with those
commenters who support requiring additional information in the
notification in order to monitor compliance with the exclusions
adequately. We believe today’s notification requirement reflects the
minimum amount of information needed to identify which facilities will
be managing hazardous secondary materials under today’s rule in order
to enable regulatory agencies to administer oversight to ensure that
hazardous secondary materials are reclaimed and not discarded. We,
however, did not include suggested data elements that might be difficult
or complex to collect, such as a description of the recycling process,
and did not include information that is more appropriately documented
and maintained at the facility. For example, some commenters suggested
adding a requirement that generators indicate the identity of the
reclaimer receiving their hazardous secondary materials for reclamation;
however, under today’s transfer-based exclusion, this information is
already documented as part of the requirement for hazardous secondary
material generators to keep records of all off-site shipments. 

We consider the information we are requiring in the notification under
today’s rule to reflect what responsible companies would routinely
collect as part of their normal business operations. For example,
responsible companies track quantities of valuable commodities that are
managed on-site or shipped off-site and, thus, we believe reporting
quantities of hazardous secondary materials managed in the notification
will not present an undue burden. 

Furthermore, we note that EPA currently requires notification under some
261.4 exclusions, such as for spent materials generated and recovered
within the primary mineral processing industry (40 CFR 261.4(a)(17)) and
for hazardous secondary materials used to make zinc micronutrient
fertilizers (40 CFR 261.4(a)(20)) and, thus, we do not agree with
commenters who believe that the notification requirement is inconsistent
with the existing solid waste exclusion requirements.

For a detailed discussion on the notification requirement that EPA is
finalizing today, see sections VII.C. and VIII.C.

Comments: periodic reporting

In the March 2007 supplemental proposal, EPA proposed that hazardous
secondary material generators and reclaimers submit a one-time
notification, but asked for comment on whether facilities using the
exclusion should be required to submit periodic (e.g., annual) reports
detailing their recycling activities. 

Several commenters supported requiring periodic reports (or periodic
notification). These commenters argued that data collected in a one-time
notification would become obsolete very quickly and would likely require
substantial investment in order to ‘clean up’ the information before
it could be used, a resource burden that would likely fall on the
states. For example, over time, some facilities that originally
submitted a one-time notification would cease managing hazardous
secondary materials according to the exclusion. Some commenters argued
that, by using a one-time notification approach, it would be a challenge
to identify these facilities and, subsequently, a challenge to compile a
list of facilities who are currently managing hazardous secondary
materials according to the exclusions, thereby inhibiting the states’
ability to monitor compliance at these facilities. 

Furthermore, as one state commenter said, some generators managing
hazardous secondary materials will go out of business and without a
steady feed of updated information, states have no way of knowing which
generating facilities have closed and, thus, are unable to ensure that
their hazardous secondary materials were reclaimed and not discarded.
This leaves states acutely vulnerable to costs incurred from potential
environmental damage caused by abandonment of hazardous secondary
materials. 

Other commenters noted that periodic notifications would allow public
agencies to compile credible information regarding hazardous secondary
materials recycling that can be used to demonstrate success, target
additional recycling opportunities, and improve the public’s
understanding and acceptance of recycling practices. One commenter also
supported a clear requirement to file periodically in order to reduce
confusion regarding when to re-notify and also to ensure information was
kept accurate and current. 

On the other hand, some commenters urged EPA to finalize the
notification requirements as proposed and stressed that numerous
recordkeeping and reporting requirements may inhibit facilities from
taking advantage of the exclusions, thereby discouraging further
increases in recycling. 

EPA’s response: periodic reporting

In considering these comments, EPA reflected on the intent of the
notification requirement, which is to provide basic information to
regulatory agencies about who is managing hazardous secondary materials
under the exclusions in order to monitor compliance with the exclusions.
As commenters noted, with a one-time notification approach, there is no
assurance that the information collected in EPA’s databases over time
will accurately reflect facilities that are managing hazardous secondary
materials according to the exclusion. Therefore, the Agency can imagine
instances where precious resources are required to be spent on
‘cleaning up’ the data before regulatory authorities can use it to
identify facilities who are currently managing hazardous secondary
materials under the exclusions. With a one-time notification, we can
also foresee problems where regulatory agencies spend time and resources
monitoring compliance at facilities that have since stopped managing
hazardous secondary materials at some point in the past. This
inefficient use of resources would serve to lower the effectiveness of
regulators to monitor compliance overall and could potentially increase
the risk of environmental damage from abuse of today’s exclusions. 

EPA further believes that responsibility for submitting and maintaining
updated information lies with the hazardous secondary material
generators, reclaimers, and intermediate facilities that use today’s
exclusions. We understand arguments made by commenters that, as
originally proposed, the one-time notification would in effect reverse
this responsibility, placing an unreasonable burden on the states and
EPA to ‘clean up’ the data every time a regulating agency sought to
use the information. Instead, the incremental burden to facilities who
must submit periodic notifications is minimal compared to the
considerable public expense that states and EPA would likely incur over
time in order to use information submitted in a one-time notification.
Once an initial notification is submitted, to re-notify, a facility need
only review the previous notification and either make changes if
necessary or confirm that the information remains accurate. EPA has
chosen to use the Site ID form for this notification because it is
standardized, electronically-accessible, and familiar to the regulated
community and, therefore, will assist facilities by reducing the overall
time and effort required to report the information. Currently, large
quantity generators on average spend $364 a year on biennial reporting
under full Subtitle C regulation, whereas under today’s rule, an
initial notification is estimated to be only a third of that cost, with
subsequent notifications likely costing even less. EPA has designed the
notification requirement in today’s rule to strike an appropriate
balance between providing essential information to regulators, while
keeping additional burden at a minimum.

We are convinced of the validity of the above arguments raised by
commenters in support of periodic reporting and agree that the
limitations of a one-time notification approach would undermine the
purpose of the notification. Therefore, EPA is requiring hazardous
secondary material generators, tolling contractors, toll manufacturers,
reclaimers, and intermediate facilities managing hazardous secondary
materials to notify the Regional Administrator prior to operating under
the exclusions and at a minimum of every two years thereafter. We chose
the two-year time frame to reflect both commenters’ suggestions (of
those who supported periodic reporting, most suggested annual or
biennial reporting) and to best fit with the biennial reporting process
for hazardous wastes. Since many facilities are accustomed to the
biennial reporting process and likely have structured their processes
around the biennial report schedule, we chose to mimic the same two-year
time frame for the notification requirement in order to allow
facilities, if they so choose, to leverage their existing processes and
submit the notification at the same time their biennial report is due.
This option is, of course, up to the discretion of the facility, since
hazardous secondary material generators, tolling contractors, toll
manufacturers, reclaimers and intermediate facilities can submit
notifications at any time of the year and are not required to submit the
notification as part of the biennial reporting process (or any other
specific calendar date). 

Comments: confirmation of receipt

In the March 2007 supplemental proposal, EPA requested comment on
whether hazardous secondary material generators should be required to
maintain confirmations of receipt of the hazardous secondary materials
by the reclaimer. Many commenters expressed support for this
requirement, citing that responsible commercial recyclers routinely
issue receipt confirmations or “recycling certificates” to assure
the generator that its hazardous secondary materials reached the
intended destination and were not discarded. Of those who supported the
requirement, many argued that EPA should not specify a specific form of
documentation so that facilities could leverage existing business
practices already in place to track valuable commodities. A few
commenters continued to urge EPA to be conscious of the imposition of
additional recordkeeping and reporting requirements lest the Agency
discourage recycling of hazardous secondary materials. 

EPA’s response: confirmation of receipt

We agree with commenters who support requiring confirmation of receipts
and are, therefore, adding to 40 CFR 261.4(a)(24) a requirement that
generators maintain confirmation of receipts from reclaimers and
intermediate facilities for all off-site shipments of excluded hazardous
secondary materials for a period of three years. Under today’s rule,
hazardous secondary materials may be transferred to intermediate
facilities for storage or, where reclamation consists of multiple steps
occurring at separate facilities, may be transferred to more than one
reclaimer. This requirement would confirm that the hazardous secondary
materials did in fact reach the reclaimer (or each reclaimer, if
reclamation occurs at separate facilities) and any intermediate facility
as originally intended and were not discarded. EPA also agrees with
commenters that responsible companies would produce and maintain
receipts as part of their normal business operations and, thus, the
Agency believes this requirement will not pose an undue burden. The
Agency is not specifying a certain form or format for this
documentation, but instead provides examples of routine business records
that would contain the appropriate information in section VIII.C.4. of
today’s preamble.

XVIII. Major Comments on Legitimacy

A. Need for Codification of Legitimacy Factors

EPA’s proposal to codify the legitimacy criteria was in response to
the many comments that have been made over the years by both industry
and states that the existing legitimacy guidance is useful, but somewhat
hard for members of the regulated community to know about because it
could only be found in preamble discussions and guidance. The March 2007
supplemental proposal made some adjustments to the October 2003
proposal, including a change from the term “criteria” to
“factors,” but left intact the general intention to codify those
legitimacy factors. As expected, the Agency received public comments
from both state environmental agencies and from industry on our
approach.

Comments: codification of legitimacy

State commenters were unanimously in favor of codifying the legitimacy
factors in the regulations. In response to the October 2003 proposal,
twenty-three states expressed their support for codification. In
comments to the March 2007 supplemental proposal, two additional states
supported codification of the proposed factors. All twelve states that
commented on legitimacy in both proposals expressed their strong support
for codification in both their 2003 and 2007 comments.

The unanimous support in the state comments for the codification of the
legitimacy factors indicates to EPA that this is a much-needed change.
As co-regulators of the RCRA hazardous waste regulations and, in almost
all cases, the implementing agencies for the hazardous waste regulations
related to the definition of solid waste, states have long advocated for
establishing regulations that specifically address the legitimacy of
recycling. In response to EPA’s proposals, many states commented that
they are currently relying on the concept of legitimacy as laid out in
definition of solid waste preambles and in the 1989 “Lowrance memo”
guidance because they are the best sources of information that can be
used in evaluating a recycling operation. Codification is a priority to
the states because, as a regulation, the requirement for recycling to be
legitimate would be better known and understood by the regulated
community and it would be easier for states to monitor compliance. One
state commenter summed it up by writing that it makes more sense to
implement a regulation than a collection of statements found in
guidance. 

Industry commenters, on the other hand, were split on the issue of
codification. Including comments from both the October 2003 proposal and
the March 2007 supplemental proposal, about one-third of the forty-two
industry commenters on the issue of whether or not to codify backed the
codification of the legitimacy factors. Many of these commenters
represented segments of the waste management industry, but a number of
representatives of generating industries also made this comment. The
industry commenters that supported codification stated that they did so
because it would provide clarity, consistency, and predictability by
making it more apparent which hazardous secondary materials and
processes are covered by recycling exclusions. One commenter noted the
value in the legitimacy factors going through the notice and comment
process since they are being used by the states in implementation of the
regulations and another expressed an expectation that codified
requirements would lead to more uniformity in interpretation between
implementing agencies. Several of these commenters stated that they also
valued the flexibility of the structure of the Lowrance memo and they
stressed the importance of the codified legitimacy factors retaining
that flexibility. 

In addition to these supporters, several more industry commenters stated
that they saw the value in codifying the legitimacy factors and could
support its codification under certain conditions. The suggested
conditions included the codification of only the two proposed mandatory
factors, codification of the factors in conjunction with finalizing what
we called the “broader exclusion” option in the October 2003
proposal, and codification of legitimacy factors to be used only with
the definition of solid waste exclusions that were included within the
supplemental proposal in March 2007. 

Just over half of the industry commenters opposed codification of the
legitimacy factors, though they tended to express support in their
comments for the purpose and the goals of the legitimacy factors and to
agree with the goal of identifying which processes are true recycling
and which are sham recycling. Several industry commenters stated that
the guidance is working well already and many of those opposed to
codification expressed concern that if the legitimacy factors were
codified, they would lose the flexibility in the guidance that allows
the factors to apply to many varied industrial sectors and processes,
automatically becoming more stringent. Another concern expressed by the
commenters regarding codification of the legitimacy factors was that, in
their view, the terms used in the regulatory text are too ambiguous and
should be clarified before they can be part of a regulation. These
commenters argue that codification of the factors without addressing
these concerns would automatically be more stringent than having
guidance, thereby inappropriately inhibiting legitimate recycling. 

EPA’s response: codification of legitimacy

In today’s final rule, EPA is codifying the legitimacy factors. EPA is
aware of the comments that each of the terms in the legitimacy
regulations should be more clearly defined and the suggestions for
specific tests for each of the factors. We are, however, seeking a
balance between having a set of specific tests and having the
flexibility needed for a requirement that applies to a wide range of
recycling practices in various industries in different industrial or
commercial settings. 

Therefore, in response to comments, the discussion of legitimacy in
today’s preamble describes more clearly what EPA means by the terms we
use in the regulatory text for this element of the final rule. The
Agency also is providing more examples of both legitimate and sham
recycling than were included in the discussions of the individual
factors in the preambles for the October 2003 proposal and March 2007
supplemental proposal to illustrate the meaning of the legitimacy
factors. The Agency also is stressing the importance of case-by-case
determinations that are based on the facts of a specific situation. 

In response to the concern that the codified legitimacy factors lead to
practices previously considered legitimate now being considered sham
operations, the Agency is clarifying that it does not intend for the
current recycling legitimacy determinations to change due to the
codification of the legitimacy factors. We consider the factors we are
finalizing today to be consistent with the criteria in the Lowrance Memo
and, therefore, do not anticipate that implementing agencies will
revisit past legitimacy determinations. If recycling was considered
legitimate under the Lowrance Memo, its status would not change as a
result of today’s rule. 

The public comments on this part of the proposal have helped EPA
determine that codifying the legitimacy factors will benefit the states
and EPA in our roles as regulating entities and will benefit the
regulated community by making information on what constitutes legitimate
recycling better known and more easily available. These benefits are
significant and, therefore, we are finalizing the legitimacy factors as
part of today’s action. 

B. Effect on Current Determinations of Legitimate Recycling Activities

In the March 2007 supplemental proposal, EPA stated its opinion that the
concept of legitimate recycling originally proposed in October 2003 is
not substantively different from our longstanding policy, as articulated
in the 1989 Lowrance Memo and subsequent preambles. We stated that we
were simply reorganizing, streamlining, and clarifying the existing
legitimacy principles. Thus, we stated in the March 2007 supplemental
proposal that we believe that the regulatory definition of legitimate
recycling, when applied to specific recycling scenarios, would result in
determinations that were consistent with EPA’s earlier policy. We went
on to say that we did not believe the regulated community or
implementing agencies would need to revisit previous legitimacy
determinations. However, we did request examples of determinations which
could be impacted by the codification.

Comments: effect on current determinations

Commenters expressed concern that, in spite of EPA’s intentions, the
codification could prompt implementing agencies to revisit past
legitimacy determinations. In addition, comments on the October 2003
proposed rule suggested that implementing agencies could interpret the
proposed regulatory text as meaning that a recycling activity must
satisfy all four of the factors to be considered legitimate. Several
commenters on the March 2007 supplemental proposal stated that
legitimacy should not apply to the existing recycling exclusions in the
current regulations and others were concerned that codification may lead
implementing agencies to consider only the four factors and not consider
other key information about the recycling activity.

EPA’s response: effect on current determinations

The existing legitimate recycling determinations should not change due
to the codification of the legitimacy factors. We stated this point in
the March 2007 supplemental proposal and are reiterating it again today.
Review of the public comments showed that no commenters gave convincing
examples of an existing determination that would change. The final
regulatory text is consistent with the pre-existing legitimacy language
and the manner in which legitimacy determinations have been made by the
EPA Regions and authorized states. Thus, we do not expect implementing
agencies to revisit past legitimacy determinations. 

Regarding the existing exclusions in the regulations, EPA acknowledges
that, in establishing a specific exclusion, we have already determined
in the rulemaking record that the specific recycling practice is
excluded from the definition of solid waste provided all the conditions
of the rule are met. However, the Agency has always enforced its rules
on the basis that any recycling must be legitimate (See U.S. v. Self, 2
F. 3d 1071, 1079 (10th Cir. 1993); U.S. v Marine Shale Processors, 81 F.
3d 1361, 1366 (5th Cir. 1996): Marine Shale Processors v. EPA, 81 F. 3d
1371, 1381-83 (5th Cir. 1996)) . This is meant to prevent a company from
claiming to be operating under an existing exclusion and simply using
that as a way to avoid full RCRA Subtitle C regulation. Thus, while EPA
is not modifying existing exclusions, there is no essential change
regarding legitimacy determinations, except that the factors are now
codified. A company’s ability to claim a recycling exclusion has
always depended on the recycling being legitimate. 

The regulatory language does not preclude other considerations when
looking at the codified factors for making legitimacy determinations. We
recognize that additional information about the recycling activity could
be helpful and could be used when assessing the four legitimacy factors
and in making a determination about whether a specific recycling
activity is legitimate. In fact, we encourage the regulated community
and implementing agencies to use any and all information about the
recycling process to come to an informed decision on the legitimacy of a
hazardous secondary material recycling operation. However, given the
public comment on the October 2003 proposed rule and the March 2007
supplemental proposal, no other factors have been identified and we
believe that the four factors codified in today’s rule include the
relevant principles of legitimate recycling. 

C. Revised Structure for the Definition of Legitimate Recycling

In the March 2007 supplemental proposal, we proposed a new structure for
the definition of legitimate recycling. The first part consisted of
those factors that must be met, which included a requirement that the
hazardous secondary materials being recycled provide a useful
contribution to the recycling process or to the product of the recycling
process and a requirement that the product of the recycling process be
valuable. EPA considers these two factors to be fundamental to
legitimate recycling and if a recycling process does not meet them, it
is sham recycling (i.e., treatment or disposal of a hazardous waste
under the guise of recycling). 

The second part of the proposed structure included two additional
factors that must be taken into account when a legitimacy determination
is being made. We explained that while these two additional factors are
important in determining whether a particular process is legitimate,
there may be circumstances under which a legitimate recycling process
might not conform to one or both of these factors. The two additional
factors are whether the hazardous secondary materials are managed as a
valuable commodity and whether the product of the recycling process
contains significant concentrations of hazardous constituents. We note,
however, that in cases where a recycling practice does not meet one or
both of these factors, the hazardous secondary material generator and/or
recycler should be able to demonstrate why the recycling is in fact
still legitimate.

Comments: revised structure

The public comments on the individual factors in the March 2007
supplemental proposal showed that, as in the comments to the October
2003 proposal, there continues to be general agreement from industry and
state commenters on two factors (useful contribution and valuable
product/intermediate). Commenters were virtually unanimous in their
agreement that these two factors are crucial indicators of legitimacy
and should be included in the concept of legitimacy. In other words,
there was agreement that recycling cannot be legitimate if the material
being recycled does not provide a useful contribution to the process or
to the product and if the recycling process does not yield a product or
intermediate that is valuable to someone. Certain commenters requested
that EPA provide additional information on how it defines these terms
and, while there was some disagreement with the specifics laid out in
the preamble, there was little disagreement with the basic overarching
concepts. 

Although there was support for the structure for legitimacy that was
proposed in the March 2007 supplemental proposal, most states, the
environmental community, and the waste management industry argued that
all four of the factors should be mandatory requirements—that is, they
must all be met for the recycling activity to be considered legitimate
recycling. Industry had a more mixed response to this issue with some
supporting the proposed structure and others preferring that the factors
be finalized as balancing factors. Several commenters expressed their
preference for keeping the legitimacy factors as guidance, but stated
that if the Agency decided to codify the legitimacy factors, they
preferred the structure as proposed in the March 2007 supplemental
proposal. Others expressed their opinion that while they preferred
non-mandatory criteria, the proposed approach was reasonable. 

EPA’s response: revised structure

EPA agrees with the commenters on the importance of the two factors
(useful contribution and valuable product/intermediate) that were
proposed to be mandatory in evaluating legitimate recycling and, for
this final rule, we have decided that these two concepts are, in fact,
at the very core of what it means to recycle legitimately. Therefore,
the final regulatory language states in 40 CFR 261.2(g)(2) that
“[l]egitimate recycling must involve a hazardous secondary material
that provides a useful contribution to the recycling process or to a
product of the recycling process, and the recycling process must produce
a valuable product or intermediate.” This statement is followed by
clauses (i) and (ii) that give more details on how the Agency defines
these concepts.

EPA has determined that the other factors are still important in making
legitimacy determinations, but do not necessarily have to be met for the
recycling activity to be considered legitimate. Instead, the regulations
state that a person making a legitimacy determination must consider
these two factors, which are found in §261.2(g)(3) of the final
language. In stating that the factors must be considered, EPA expects
that those making legitimacy determinations will evaluate how the
hazardous secondary materials in question are managed as compared to
analogous raw materials and how levels of hazardous constituents in
their products compare with the levels of hazardous constituents in
analogous products. If the generator or recycler determines that one or
both of these factors are not met, that person should be prepared to
explain why their recycling activity is nevertheless still legitimate.
We would note that the facility may be requested to demonstrate the
legitimacy of their recycling process and explain why one or both of
these factors do not apply in their specific situation. 

Comments: mandatory factors 

As part of the October 2003 proposal to codify the definition of
legitimacy, the Agency solicited comment on whether the factors should
continue to be used in the same way as the previous guidance had been
used, as factors to be balanced or considered in making an overall
determination, or whether the factors should be structured differently
in the final rule, such as in the form of mandatory requirements that
must all be met. Based on comments received on that proposed rulemaking,
we proposed a new structure in the March 2007 supplemental proposal with
two mandatory factors and two factors that must be taken into account,
but not necessarily met in every situation (72 FR 14198). 

Many state implementing agencies argued that all the factors should be
written as mandatory requirements that must be met. Most industry
commenters (but not all) did not. The main argument in favor of making
the factors mandatory requirements is that commenters argued that this
approach would result in legitimacy determinations that are more
objective and more enforceable. The main arguments against making all
the factors mandatory requirements is that the overall determination is
made on a case-by-case basis, which is often facility-specific, and not
all legitimate recycling can fit into such a rigid system.

EPA’s response: mandatory factors

The Agency can see both state and industry viewpoints and, in the end,
as described above, has decided upon a course of action that results in
a compromise between the two approaches. In section IX of this preamble,
we explain in detail the final design of the legitimacy factors, which
includes two factors that must be met (useful contribution and valuable
product/intermediate) and two factors that must be taken into account in
making an overall legitimacy determination. We believe this approach and
the attendant regulatory language is clearer than the existing guidance,
yet retains enough flexibility to account for the variety of legitimate
hazardous secondary materials recycling practices that exist today.

D. Comments on the Specific Factors

In developing the legitimacy factors, the Agency sought a balance
between having a set of specific tests and having the flexibility that
is necessary to allow the four legitimacy factors to apply to hazardous
secondary material recycling practices in the many industrial or
commercial settings to which the factors would be applied. As a result,
each of the legitimacy factors included a term or terms that drew public
comments arguing that the factors were not clearly enough defined. The
underlined terms in the following excerpts from the regulatory text
demonstrate what these terms are: 

Factor 1: “Legitimate recycling must involve a hazardous secondary
material that provides a useful contribution to the recycling process or
to a product of the recycling process.”

Factor 2: “The recycling process must produce a valuable product or
intermediate.”

Factor 3: “The generator and recycler should manage the material as a
valuable commodity… Where there is no analogous raw material, the
hazardous secondary material should be contained.”

Factor 4: “The product of the recycling process does not contain
significant concentrations of hazardous constituents [or] contain
concentrations. . .at levels that are significantly elevated from those
found in analogous products.”

The October 2003 proposal gave some narrative descriptions of these
terms to explain what they mean in the context of legitimate recycling,
but that proposal did not provide any concrete tests for how those
specific terms are to be used when judging whether a process and/or
hazardous secondary materials meet these factors.

Comments: defining legitimacy terms

For each of the four factors, the Agency received public comments that
focused specifically on the meaning of and the difficulties in
implementing these factors when the terms are not accompanied by a test
for the hazardous secondary material generators and recyclers to use
when making determinations of legitimacy. For the first factor, the
Agency received several comments on the definition of “useful
contribution” from the October 2003 proposal. For the second factor,
over twenty commenters submitted comments on the definition of
“valuable” in response to the October 2003 proposal. In addition,
the Agency received several comments on the definition of “valuable”
and on the definition of “contained” related to the third factor and
over twenty comments on the definition of “significant” in the
fourth factor. We also received some additional comments on the March
2007 supplemental proposal relating to the same definitional terms in
each factor.

The comments on these terms will be described in more depth in the
discussion below for each of the applicable factors, but, in general,
the comments showed a wide range of opinions: some commenters found the
discussion in the preamble to define the terms was adequate and
appropriate, other commenters objected to the terms as not being clearly
defined, while still other comments found that the terms to be too
subjective to be a useful tool. We also received comments that suggested
alternative ways to define the terms to be clearer or to better meet the
Agency’s objectives. 

EPA’s response: defining legitimacy terms 

The Agency has incorporated the ideas generated by the comment process
into the final rule, as appropriate. The final language and decisions
regarding the legitimacy factors are laid out below in this section and
in section IX of this preamble, where the final legitimacy language is
discussed more fully. However, after considering the comments, we have
decided that we would not develop specific definitions or precise tests
that hazardous secondary material generators and recyclers must use when
making legitimacy determinations. Instead, the Agency has bolstered our
preamble discussion on the meaning of these terms and has included more
examples than we had in the preambles to the October 2003 proposal and
the March 2007 supplemental proposal. 

EPA’s decision not to include specific bright-line tests for the final
legitimacy factors reflects the fact that legitimacy determinations do
not lend themselves to the application of absolute distinctions,
especially given the breadth of recycling practices and recycled
hazardous secondary materials that exist in industry. The main argument
we received for developing specific tests was that, without specific
tests, those making legitimacy determinations may be uncertain about
whether their regulatory agency would agree with that interpretation of
the recycling scenario. This may lead to reduced recycling rates if
companies choose not to recycle rather than risk interpreting their
activities differently than the regulator does. We reiterate the
Agency’s position that codifying the legitimacy factors is not
changing the basic tenets of legitimacy that have been in place since
1985 and believe that the preamble to this final rule provides more
guidance than was previously available.

Although we understand the concerns behind this argument, we are
addressing them by including more discussion and explanations of the
final factors in the preamble to the final rule. The complexities of
defining “valuable commodity/product,” “useful contribution,”
“contained,” and “significant” so that they can be determined
through a bright-line test and are still appropriate for all industries,
all recycling processes, and all recycled hazardous secondary materials
are too great for the Agency to be able to design a simple and
straightforward system of tests to be used in making such
determinations. The complex regulatory system of tests for different
types of industries or different processes that would be necessary would
not be efficient or accessible to most generators, especially small
businesses.

In addition, we believe that legitimacy determinations are best made on
a case-by-case basis, which has always been the case, with the facts of
a specific situation in hand. In a case-by-case determination, a series
of specific tests may not be as useful and as accurate in determining
legitimacy as careful consideration of the hazardous secondary material,
the recycling process, and the specifics of the situation would be. If a
person has any questions as to the legitimacy of a particular recycling
activity, he can always approach the appropriate regulatory agency for
assistance in making a legitimacy determination.

Comments: Factor 1—the hazardous secondary material provides a useful
contribution

	Factor 1 expresses the fundamental principle that hazardous secondary
materials must actually be useful (i.e., contribute positively) to the
recycling process and is intended to prevent the practice of
incorporating hazardous secondary materials within manufacturing
operations simply as a means of disposing of them. The Agency firmly
believes that this concept is crucial to the definition of legitimacy
and is finalizing it as part of the core definition. This factor, along
with the second factor described below, must be met for any recycling
activity to be considered legitimate recycling. The regulatory text for
this factor is found in 40 CFR 261.2(g)(2)(i).

In general, we received much support for and agreement with the
underlying principle of this factor—that the hazardous secondary
materials must provide some useful contribution to either the recycling
process or the recycled product. Commenters asked for clarification on a
number of issues related to this factor, specifically in regard to the
October 2003 proposal and how the economics of recycling is connected to
this factor and how the economics of recycling should be evaluated. In
the March 2007 supplemental proposal, we described how the economics of
recycling relates not only to the useful contribution factor but, in
fact, to all of the factors of legitimacy and explained our thinking
about how evaluating the economics of recycling transactions should be
undertaken. 

EPA’s response: Factor 1—the hazardous secondary material provides a
useful contribution

The Agency is today finalizing this factor as part of the core
definition of legitimate recycling and as a factor that must be met for
the recycling to be considered legitimate. We also revised the October
2003 proposal discussion regarding the consideration of economics
related to this criterion, and we expanded its consideration beyond just
the useful contribution criterion. Today we are offering further
guidance, similar to the March 2007 supplemental proposal, which
explains how economics may be considered in making legitimacy
determinations and how it may apply to the mandatory factors and the
factors that must be taken into account. 

 Comments and EPA’s response: Factor 1—contribution to the process

EPA also received comments on our statements in the October 2003
proposal that indicated that not every component of a hazardous
secondary material does or must contribute to the recycling process or
recycled product in order for there to be an overall contribution. In
particular, one state agency favored allowing the non-hazardous
component of hazardous secondary materials to provide the useful
contribution and one industry commenter agreed that not all of the
hazardous secondary material would have to contribute for this factor to
be met. Another state agency asked us to clarify that the statement
“not every component of a hazardous secondary material would
necessarily have to contribute to the product or the process to meet
this criterion” was applicable only in the context of this factor.

It has been the Agency’s longstanding policy that not every
constituent or component in a hazardous secondary material would have to
contribute to a recycled product or intermediate or to the recycling
process in order for there to be an overall contribution. For example,
the use of hazardous secondary materials in zinc fertilizer is
considered legitimate recycling when the zinc, a non-hazardous
constituent, is the main contribution to the fertilizer. Another example
is the use of CRT glass used in copper smelters as a fluxing agent. In
this case, the glass provides a useful contribution by facilitating the
manufacturing process. Thus, we agree with commenters who raised
questions about this issue and are restating our position here. 

Comments and EPA’s response: Factor 1—efficiency of the process

Another issue that was discussed in the October 2003 proposal arising in
the context of useful contribution was the efficiency of a recycling
process in recovering or regenerating the useful component of the
hazardous secondary material. One example we used was the recovery of
copper from a hazardous secondary material. We stated that where the
process was reasonably efficient and recovered all but a small
percentage of the copper, it looked like legitimate recycling. However,
where a small percentage of copper in the hazardous secondary material
is recovered, sham recycling may be indicated. However, we did not opine
on recovery rates in the middle range (e.g., 50% of copper recovered
from a particular recycling process) and some commenters asked for
clarification, including how the factor applies to hazardous secondary
materials that are contributing to the recycling process either as a
carrier or a catalyst. 

The Agency is clarifying in today’s preamble and regulatory text that
the useful contribution of a hazardous secondary material to the
recycling process or product can be demonstrated in a number of ways. We
provided a number of different ways such a material could contribute to
the process in the preamble to the October 2003 proposed rule (68 FR
61584–61585) and did not mean to imply that the hazardous secondary
material would have to meet all of the examples to provide a useful
contribution. For example, hazardous secondary materials could provide a
useful contribution to a process by serving as a carrier or catalyst and
the process efficiency would not factor into the demonstration of this
factor in this example.

In general, the regulated community should look to typical industry
recovery rates to determine if the recycling recovery rates are
reasonably efficient in terms of making a useful contribution to the
recycling process or product. In addition, it should be noted that EPA
would generally look at the quantity or the rate of recovery of the
overall process, not the recovery rate of a single step in the process,
when analyzing this factor for legitimacy. For example, if one step in
the process recovers 10% of the constituent, but the overall process
recovers 90%, the Agency would see this as reasonably efficient and one
way to demonstrate that the hazardous secondary materials are providing
a useful contribution. This assumes that there is enough of the target
constituent present in the hazardous secondary materials to contribute
meaningfully to the recycling activity.

Comments and EPA’s response: Factor 1—residuals

In the discussion of useful contribution in the October 2003 proposal,
in the context of process efficiency, we stated that a “pattern of
mismanagement of the residues” may be an indicator of sham recycling
(68 FR 61584). We received several comments asking us to explain the
connection between useful contribution of the hazardous secondary
materials and management of residues. Several commenters questioned this
statement and disagreed that how a facility managed its residues had any
bearing on whether the hazardous secondary materials going into a
recycling process were being legitimately recycled. 

We agree with the commenters who suggested that the management of
residuals from the recycling process is not an indicator of whether the
hazardous secondary materials provide a useful contribution and thus is
not a factor in determining whether legitimate recycling is occurring.
For these reasons, we are making it clear that the management of
recycling residuals is not a consideration in making legitimacy
determinations. Instead, as part of today’s final rule, we are
requiring that any residuals that are generated from the recycling
process be managed in a manner that is protective of human health and
the environment. Specifically, there is a requirement for hazardous
secondary material generators to make reasonable efforts to ensure that
the hazardous secondary materials are legitimately recycled and, among
other things, that the reclaimer manages the hazardous secondary
materials in a manner that is protective of human health and the
environment, including how any recycling residuals are managed. Finally,
we note that the generation of residuals that are solid wastes are
subject to the waste characterization and identification requirements in
40 CFR Part 261 as a newly generated waste.

Comments: Factor 2—the recycling process yields a valuable
product/intermediate

This factor is intended to capture the fundamental concept that
legitimate recycling must produce something of value. For the purposes
of evaluating this factor, a recycled product or intermediate would be
considered valuable if it can be shown to have either economic value or
value that is more intrinsic (i.e., it is useful to the end user, even
though it may not be salable as a product or commodity in the open
marketplace). The regulatory text for this factor can be found in 40 CFR
261.2(g)(2)(ii).

In general, most commenters agreed with the concept that the recycling
process must produce something of value. Many commenters also stressed
the importance of keeping the concept of “intrinsic” value—that
is, a product does not have to be sold to have value. Instead, it can be
used as an effective substitute for a commercial product or as a useful
ingredient in an industrial process. However, other commenters
disagreed, contending that intrinsic value is too subjective to use to
determine compliance. One commenter also thought this factor was
redundant with the factor that hazardous secondary materials must
provide a useful contribution and should be deleted. 

Another common concern in the comments was how to evaluate whether the
product or intermediate is valuable. Some commenters stressed the
importance of evaluating this factor over time, given that markets and
prices fluctuate, and others felt that it must be done on a case-by-case
basis. 

EPA’s response: Factor 2—the recycling process yields a valuable
product

In general, the Agency agrees with the commenters who stated that a
product’s value can be either monetary or intrinsic. Clearly, not all
valuable products are sold. For example, many legitimate recycling
situations exist where the intermediate or recycled product has value
and is used on-site, sent off-site to another facility owned by the same
company, or even traded between companies. There are a number of already
established networks where hazardous secondary materials are exchanged
among and across industries. We do not intend to interfere with those
ongoing exchanges where such materials are being legitimately recycled.
One example of such a program is the U.S. Business Council for
Sustainable Development’s by-product synergy program which has
conducted a number of regional pilots in which diverse industries are
brought together to facilitate feedstock and by-product exchanges.
Typically, no money is exchanged in these types of programs. 

We are also clarifying in the regulatory text that the product of the
recycling process can be either a commercial product or intermediate, as
long as it has value to the end user. In addition, we are further
clarifying that the regulated community does not need to evaluate each
step in the recycling process to determine if the final products or
intermediates are valuable. Rather, an individual recycler or generator
would look at its final product or intermediate and must be able to
demonstrate why it has value. 

We understand the concerns of some commenters that intrinsic value is
harder to demonstrate than the value of a recycled product that is sold
in the open marketplace. While this demonstration is not as
straightforward, there are a number of ways the end user can demonstrate
the intrinsic value of the recycled intermediate or product. Some
examples include showing that the recycled product replaces an
alternative product or material that would otherwise have to be
purchased or by demonstrating that a recycled product or intermediate
meets specific product specifications or established industry standards.
Another approach to demonstrating the value of a recycled product or
intermediate would be to compare its characteristics (e.g., its
physical/chemical properties or its usefulness for certain applications)
with comparable products or intermediates made from raw materials. 

Finally, we disagree with the commenter who stated that this factor is
equivalent to the hazardous secondary material making a useful
contribution to a product or intermediate. It is certainly possible for
a recycling process to result in the production of a valuable product or
intermediate without the hazardous secondary materials added to the
process making any contribution whatsoever. For example, this would be
the case when hazardous secondary materials are added to the process and
all of the hazardous secondary materials, including the hazardous
constituents, end up in the residuals, which are discarded, and the
materials added to the process provide no benefit whatsoever. This is
the essence of sham recycling. A vast majority of the commenters saw the
need for both factors and after exploring the concept of legitimate
recycling further, we were unable to find any examples of legitimate
recycling that did not meet both of the core factors (i.e., the
hazardous secondary material provides a useful contribution and the
recycling process produces a product of value), nor did any commenters
provide us with such examples. Thus, we are retaining both concepts as
factors that must be met in order for a process to be considered
legitimate recycling.

Comments: Factor 3—how the hazardous secondary material to be recycled
is managed 

	This factor on the management of hazardous secondary materials was
designed to illustrate that hazardous secondary materials that are bound
for recycling should be managed to prevent releases into the environment
in the same way that valuable commodities would reasonably be expected
to be managed. Hazardous secondary materials that are recycled are
valuable production inputs. As such, we believe that such materials
should be managed in a way that retains their value and prevents
significant losses to the environment. Hazardous secondary materials
that are mismanaged to the extent that they are released into the
environment are not recycled.

	This factor is one of the two legitimacy factors that EPA believes need
to be considered. However, in some cases, it may not be clear that the
factor is met or it may not be met, yet the recycling activity can still
be legitimate. The regulatory text for the factor can be found in 40 CFR
261.2(g)(3)(i) and it states that the handler should manage the
hazardous secondary material “as a valuable commodity.” If an
analogous raw material exists, the hazardous secondary material should
be managed, “at a minimum, in a manner consistent with the management
of the raw material.” If there is no analogous raw material, the
proposal states that the hazardous secondary material should be
“contained.” 

The response from commenters on this factor was mixed in response to
both the October 2003 proposal and the March 2007 supplemental proposal.
Many states and environmental organizations commented that the factor
should be mandatory and some argued that it should include a strict
test. Many commenters from generating industries and the waste
management industry stated that they support this factor and believe
that it is a fair and reasonable indicator of legitimacy. Some industry
commenters thought that this factor should be mandatory, whereas others
commented that the factor should neither be codified nor mandatory. At
least one commenter stated that the factor was not necessary because of
other existing disincentives for mismanagement. Representatives from
extractive industries were most strongly opposed to this factor, stating
that EPA cannot include legitimacy requirements on secondary materials
that are going to be recycled because they are not in EPA’s
jurisdiction. 

EPA’s response: Factor 3—how the hazardous secondary material to be
recycled is managed

Today we are finalizing this factor as one of the two factors that must
be considered during a legitimacy determination, but not necessarily
met. We modified the language of this factor since the October 2003
proposal and are finalizing it basically as proposed in the March 2007
supplemental proposal. 

EPA has decided that it is most appropriate to finalize this factor as
one of the factors that must be considered rather than as a mandatory
factor. Although we believe that this factor is an important part of a
legitimacy determination because hazardous secondary materials that are
not being managed carefully may be materials that the recycler does not
value for its process, the factor is not part of what the Agency
considers the core of legitimacy. In addition, as discussed in section
IX of this preamble, EPA and commenters were able to identify situations
in which this factor is not met, but the recycling appears to be
legitimate because the hazardous secondary materials are still being
managed in a responsible manner. EPA does not want to restrict
legitimate recycling and, therefore, in these cases, the facility could
make a determination of legitimacy without meeting this factor, but
should be prepared to explain why its recycling is legitimate.

EPA also believes that this factor can be critical when considering
whether hazardous secondary materials are legitimately recycled and EPA
disagrees with commenters who argued that evaluating “materials
management” is outside the scope of RCRA because hazardous secondary
materials are not solid wastes due to being excluded. EPA believes that
the commenters’ argument is circular. The hazardous secondary
materials are excluded only if the recycling is legitimate. How
materials are managed is part of determining legitimate recycling. EPA
has the authority to define legitimate recycling and, therefore, has the
authority to require this evaluation. 

Comments: definition of terms in Factor 3

Commenters stated that compliance with this factor is dependent on the
regulated community and regulators understanding what EPA means by it.
In the October 2003 proposal, we proposed that the factor read,
“[w]here there is no analogous raw material, the secondary material
should be managed to minimize the potential for releases to the
environment.” Many commenters stated that the term “minimize” in
this context was particularly unclear. State commenters argued that the
term “minimize” did not provide enough guidance or could be
interpreted to allow unclear amounts of hazardous secondary materials to
be released, leaving room for potential mismanagement of that material,
whereas some industry commenters asked if this standard meant they would
have to meet or exceed controls required for regulated hazardous wastes
in their recycling operations. Several commenters also asked about the
term “valuable commodity” and how “valuable” is defined.

EPA’s response: definition of terms in Factor 3

EPA agrees that terms for this factor should be more clear to facilitate
compliance. Although we have not developed a specific test or codified
definitions to explain this factor, we have adjusted some of the
language in the factor to address this concern and are providing further
explanation of what we intend by this factor in today’s preamble so
that it is better understood and can be consistently applied.

In the March 2007 supplemental proposal, we modified the language for
this factor to state instead that “[w]here there is no analogous raw
material, the hazardous secondary material should be contained.” This
change addressed the ambiguity of the word “minimize,” as well as
state comments that the storage requirements in this factor needed to be
better defined. The Agency believes that facilities that value hazardous
secondary materials as part of their manufacturing process will contain
those materials to prevent their release. The term “contained” is
also being used today as part of the exclusions being finalized. EPA is
using the term in this legitimacy factor in the same way as in the
exclusion: a recyclable material is “contained” if it is placed in a
unit that controls the movement of that material out of the unit. We
also believe that the standard for contained is more clear for states
and industry than the standard to minimize potential releases to the
environment was in the October 2003 proposal. 

We also want to clarify the use of several other terms on which we
received comments. These terms are discussed briefly here and in more
depth in section IX of this preamble, where the legitimacy factors are
fully described. “Analogous raw material,” also defined in today’s
preamble as part of the exclusions, is a raw material for which a
hazardous secondary material is a substitute and which serves the same
function and has similar physical and chemical properties as the
hazardous secondary material. Materials generally would not be
considered analogous if their chemical makeup were very different from
one another—particularly if the hazardous secondary materials contain
hazardous constituents that necessitate management processes that the
raw material does not—or if their physical properties are different. 

Regarding the term “valuable commodity,” EPA believes that hazardous
secondary materials should be managed in the same or similar manner as
raw materials that have been purchased or obtained at some cost. The
legitimacy criteria are designed to determine whether a process is like
manufacturing rather than like waste management. We believe that the
standard for management of the hazardous secondary materials is
reasonable for helping assess whether disposal in the guise of normal
manufacturing is occurring. 

Comments: Factor 4—comparisons of toxics in the product 

This factor was designed to prevent hazardous constituents from being
“discarded” by being incorporated into a product made from hazardous
secondary materials. The factor identifies this situation as being
hazardous constituents that are in a product made from hazardous
secondary materials when they are not in analogous products, or when
hazardous constituents are at significantly higher levels in products
made from hazardous secondary materials than in analogous products that
contains such hazardous constituents, or when the product exhibits one
or more of the hazardous characteristics and the analogous product does
not. An analogous product can either be the final product of
manufacturing or, in some cases, an intermediate in a process. These
hazardous constituents are often called “toxics along for the ride”
(TARs) and, if present, could be an indicator of discard. 

This factor is the second of the two legitimacy factors that EPA
believes need to be considered but, in some cases, does not need to be
met for the recycling activity to be considered legitimate. We modified
the language of this factor since the October 2003 proposal and are
finalizing it basically as proposed in the March 2007 supplemental
proposal. The regulatory text for the factor can be found in 40 CFR
261.2(g)(3)(ii) and it states that the person making the determination
should look at the product of the recycling process and compare it to
analogous products that are made without hazardous secondary materials.
The person making the determination should examine the concentrations of
hazardous constituents to learn whether the product of the recycling
process contains significant concentrations of hazardous constituents
when the analogous product contains none, whether it contains
significantly elevated levels of hazardous constituents when compared to
the analogous product that contain such hazardous constituents, or
whether it exhibits a hazardous characteristic when the analogous
product does not. 

	The Agency received many comments on the fourth factor in response to
both the October 2003 proposal and the March 2007 supplemental proposal.
The comments the Agency received on Factor 4 were very mixed, ranging
from commenters who argued that this factor should be one of the factors
that must be met to those who stated that the factor is irrelevant and
should not be considered as part of a legitimacy determination. 

EPA’s response: Factor 4—comparisons of toxics in the product

Today, we are finalizing this factor as one of the two factors that must
be considered during a legitimacy determination, but not necessarily
met. EPA maintains that this factor is an important way of determining
whether a recycling process is, in fact, true recycling rather than a
“sham.” 

If hazardous secondary materials with a toxic constituent or toxic
constituents in amounts or concentrations greater than analogous raw
materials are simply being run through a manufacturing process, it is an
indication that those materials may be being discarded in the guise of
recycling. Toxics that are illegally disposed of in this manner can
become exposure risks and could harm human health and the environment.
EPA has jurisdiction over materials being discarded and, therefore, is
requiring that this factor be considered in legitimacy determinations.
The factor is not one of the mandatory factors because the Agency has
identified situations where higher levels of toxic constituents may not
be relevant or applicable and, thus, would not be an indicator of
“sham” recycling if this factor is not met, as discussed in section
IX of this preamble. In these cases, the facility could make a
determination of legitimacy without meeting this factor, but should be
prepared to explain why its recycling is legitimate. 

Comments: Factor 4—the term “significant” and alternative
approaches

	Many of these comments sought further guidance on the meaning of the
term “significant” in the proposed regulatory text, stating that the
definition in the proposal was unclear or subjective, which may lead to
a wide range of possible interpretations of the term. Commenters also
expressed concern that a definition that is too vague may discourage
recycling. In a related topic, commenters also responded to EPA’s
request for comments on two alternate approaches in the October 2003
proposal: (1) an approach that would establish a “bright line” for
complying with the factor by specifically defining the terms
“significant amounts” and “significantly elevated” in the
regulatory text and (2) an approach that would require the use of risk
analysis tools to determine if a product with elevated levels of a
hazardous constituent due to use of hazardous secondary materials in its
manufacture posed a greater risk to human health or the environment than
the analogous product made from raw materials.

On the whole, commenters were not enthusiastic about the two alternative
approaches that EPA suggested. Most commenters stated that a specific
test of either nature would not be appropriate because of the wide
variety of recycling situations to which it would have to apply. 

EPA’s response: Factor 4—the term “significant” and alternative
approaches

The Agency believes that designing a specific test, such as those
described in the preamble to the October 2003 proposal, that is
applicable to the many different recycling scenarios possible across all
industries would be difficult, if not impossible. Thus, we agree with
those commenters who argued against adopting such a specific test.
Therefore, the Agency has more clearly described in this preamble to the
final rule what it means by “significant” so that members of the
regulated community can be confident in their evaluations of whether
their products made from hazardous secondary materials contain “toxics
along for the ride.” Therefore, members of the regulated community
will neither be discouraged from recycling nor be forced to seek an
opinion from a regulatory agency in every case. Details on
implementation of this factor are in section IX of today’s preamble. 

Comments: Factor 4—comparing the products instead of hazardous
secondary materials

Most commenters responded positively to a change the Agency made in its
October 2003 proposal to compare the product of the recycling process to
the analogous product made from raw materials rather than comparing the
hazardous secondary materials to the analogous raw materials, as was
laid out in the 1989 Lowrance Memo. EPA discussed this shift in its
October 2003 proposal at 68 FR 61586–61587. 

However, several commenters argued that the change is an attempt by the
Agency to regulate products or stated that certain unique elements of
their production processes made it so that this factor should not apply
to their industry or their particular process. In addition, some
commenters were concerned that under this factor, in some cases, the
generator would have to know what was being done with its material
several steps downstream in the recycling process when it was
incorporated into a final product. 

EPA’s response: Factor 4—comparing the products instead of hazardous
secondary materials

The Agency believes that for an entity to ensure that hazardous
secondary materials are being legitimately recycled and not discarded,
it needs to know what happens to the hazardous secondary materials once
they leave the generator’s control. However, in response to these
comments, we are clarifying in today’s preamble that the final
legitimacy factor allows the entity conducting the legitimacy
determination to make the comparison on “toxics” either between the
final products or between the hazardous secondary material and the
analogous raw material it replaces. If the comparison of materials going
into the process shows no significant difference in levels of toxics,
the product of the recycling process will not significantly differ from
analogous products in those levels either. In cases where the generator
finds it too complex to compare the product from its recycling process
to the analogous product made from the virgin raw material, it can,
instead, compare the chemistry of the materials going into the process
to evaluate this factor. 

Comments and EPA’s response: relevance of Factor 4 to a particular
process

Regarding the implementation of this factor, several commenters raised
the concern that many products that are made from hazardous secondary
materials do not have analogous products made from raw materials because
they are always or have always been made from a combination of primary
and in-process materials and that these are cases where this factor is
not relevant to that particular recycling process. The commenters state
that this is especially true in the mineral extraction industries, but
also may be the case in other industries as well. 

The Agency is aware that there are situations where there may not be
analogous products made from raw materials. In that case, the facility
can opt to compare the toxic constituents in the hazardous secondary
material it is using against those in an analogous raw material instead.
We also note that while this factor needs to be considered, it is not
mandatory because EPA recognizes that in some situations, it will not be
relevant to a particular industrial process. In the case where the
facility considers this factor and decides that it is not applicable to
its process, the Agency suggests that the facility evaluate the presence
of hazardous constituents in its product and document both that it
considered this factor and the reasons it believes the factor is not
relevant. 

E. Consideration of Economics in Legitimacy

Comments: economics considerations	

EPA received several comments in response to the preamble discussion
about how to consider economics in the context of making legitimacy
determinations in the March 2007 supplemental proposal. EPA did not
propose that economic consideration be codified within the regulatory
definition of legitimate recycling and instead offered guidance on how
economic consideration is relevant to determining the legitimacy of a
recycling operation.

All of the commenters that addressed the “economic considerations of
recycling,” except one, were in support of the preamble discussion.
Specifically, EPA agrees with commenters who supported our position on
the following: the economics of recycling are relevant to making
legitimacy determinations, the economics of recycling are in fact
different from traditional manufacturing, a recycling activity can be
legitimate if a recycler charges a fee to accept hazardous secondary
materials, economic considerations need to take into account the
fluctuations in market prices of raw materials, and negative economic
factors can contribute to environmental problems, such as speculative
accumulation, abandonment, and sham recycling. Only one commenter
suggested that any discussion of economics and recycling was
inappropriate and outside of the scope of environmental regulations. 

	However, EPA received many comments from both industry and recycling
associations that opposed codifying economics consideration as a
separate “factor to be considered” under 40 CFR 261.2(g)(3). These
commenters generally argued that consideration of economics was inherent
within the four legitimacy factors (e.g., both of the mandatory factors,
as well as the two factors which must be considered) and, therefore, a
separate factor was not warranted. On the other hand, a few commenters
(primarily states) requested that EPA codify a separate economics factor
to be considered and they supported the inclusion of an enforceable
factor for legitimacy determinations. 

EPA’s response: economics considerations

EPA agrees with those commenters who argued that economic considerations
are inherent within the legitimacy factors. We believe that one specific
factor cannot encompass all economic scenarios for the entire universe
of hazardous secondary materials recycling. Furthermore, we do not
believe that codifying a separate enforceable factor strengthens the
definition of legitimate recycling, but we do believe that articulating
how economic considerations can influence the legitimacy factors adds
real value to the legitimacy determinations made by state regulators and
the regulated community. 

Based on the comments we received and historical consideration of
economics via the Lowrance Memo, the Agency is not codifying specific
regulatory language on economic considerations. Instead, today’s
preamble offers guidance and clarification on how economics may be
considered in making legitimacy determinations, similar to the preamble
discussion in the March 2007 supplemental proposal. For more detailed
information on economic considerations, please refer to “How
consideration of economics applies to legitimacy” in section IX of
today’s rulemaking.

Comments and EPA’s response: specific test for economics

EPA received some comments on the need for a specific test for
consideration of economics. Commenters that supported a specific test
believed it could include an accounting of economic flows over a period
of time to determine longevity; an annual regulatory review of markets
and a facility’s economics; a “rebuttable presumption that the
recycling is legitimate where the recycler pays for the secondary
materials,” similar to manufacturing operations; and a requirement
that payment for recycled products and intermediates be more than
nominal if considered to be a sign of positive economics. One comment
was also submitted which expressly opposed a specific test, citing that
markets fluctuate too much to analyze the flows of revenues. 

EPA believes that none of the examples suggested by the commenters are
applicable to the entire universe of recycling activities. We also
acknowledge that fluctuations in markets for hazardous secondary
materials and recycled products, and subsequent impacts in revenue
flows, create another challenging aspect of developing  a test for the
consideration of economics. Therefore, we believe that it is not
possible to craft an economic test for legitimacy that can accommodate
all legitimate recycling activities. As stated in section IX of
today’s rulemaking, we believe that this preamble discussion provides
sufficient guidance on how to consider economics in legitimacy
determinations.

F. Documentation of Legitimacy 

Comments and EPA’s response: documentation of legitimacy	

Several of the public comments stated that it is important that the
hazardous secondary material generator or recycler of a recycled
material maintain documentation that substantiates how the recycling
activity complies with the legitimacy requirements. The comments stated
that these records would show how the recycling activity meets the
factors or, if a factor is not applicable, the records would document
why it is not necessary for it to meet that factor. In this way, the
hazardous secondary material generator or recycler could show that it
considered all the factors. Other commenters objected to any
recordkeeping requirements documenting that a recycling activity is
legitimate, arguing the policy is not new so, therefore, no new
documentation should be required. 

	The Agency has determined that for the purpose of the legitimacy
factors in the final rule, 40 CFR 261.2(f) applies. Section 261.2(f)
states that, in the context of an enforcement action to implement
Subtitle C of RCRA, a person claiming that a material is not a solid
waste or is conditionally exempt from regulation is responsible for
showing that they meet the terms of the exclusion and must provide
appropriate documentation to show why they are eligible. For the
legitimacy requirements finalized today, this provision would require
that persons claiming that their recycling activity is legitimate would
have the burden to provide documentation showing how the hazardous
secondary materials provide a useful contribution to the recycling
process and how the product of the recycling activity—whether it is a
consumer product or a process intermediate—is valuable. In addition,
the documentation would have to show that the hazardous secondary
material generator or recycler considered the other two factors and
determined for each of them that either the activity meets the factor or
that the factor does not apply to this recycling activity and why it is
not relevant or appropriate to consider.

	In addition, as part of today’s transfer-based exclusion, the
hazardous secondary material generator has to undertake reasonable
efforts to ensure its hazardous secondary materials will be legitimately
recycled pursuant to §261.2(g). As part of the reasonable efforts
requirements, generators must document their reasonable efforts per
§261.4(a)(24)(iv)(C).

XIX. Major Comments on Non-Waste Determination Process 

In the March 2007 supplemental proposal, EPA proposed a non-waste
determination process that would provide persons with an administrative
process for receiving a formal determination that their hazardous
secondary materials are not discarded and, therefore, not solid waste.
The process would be voluntary and available in addition to the two
self-implementing exclusions. EPA proposed three types of non-waste
determinations: (1) for hazardous secondary materials reclaimed in a
continuous industrial process; (2) for hazardous secondary materials
indistinguishable in all relevant aspects from a product or
intermediate; and (3) for hazardous secondary materials reclaimed under
the control of the generator, such as through contracts similar to
tolling arrangements. For each type of non-waste determination, EPA
proposed a set of criteria which the hazardous secondary materials would
have to meet in order to receive a formal non-waste determination from
the regulatory authority. For a detailed description of the non-waste
determination process that EPA is finalizing today, see section X of
today’s preamble.

Comments: finalizing the non-waste determination process

Overall, many commenters supported the non-waste determination process
because it provides persons with regulatory certainty and offers a
flexible alternative to the self-implementing exclusions included in
today’s rule. On the other hand, some commenters argued that the
non-waste determination process would be resource-intensive, placing a
significant burden on the states that would have to perform a
case-by-case review of each application. One commenter said that,
historically, many hazardous waste facilities have sought formal
approval of their recycling practices from regulators and that EPA may
be underestimating the number of applications that states would receive
from the regulated community. Additionally, one state commenter
mentioned that the non-waste determination process would increase
regulatory inconsistency between states and at least two state
commenters saw no reason to establish a formal non-waste determination
process since they viewed the current variance procedure under 40 CFR
260.33 and their own state determination processes as an effective means
to the same end. Finally, a few commenters did not support the non-waste
determination process because of its lack of explicit conditions, such
as those conditions required for the two self-implementing exclusions in
today’s rule. 

EPA’s response: finalizing the non-waste determination process

EPA agrees with the majority of commenters who support the non-waste
determination process as an alternative way for hazardous secondary
material generators to seek regulatory certainty in circumstances
involving reclamation of hazardous secondary materials which do not
clearly fit under today’s self-implementing exclusions. EPA, however,
does not agree with commenters who believe the non-waste determination
would cause significant burden to states. Instead, we anticipate that
the vast majority of persons will choose to use the self-implementing
exclusions because this would be less resource intensive for the
facility. In fact, the Agency does not envision any person submitting
such an application if they are considered “under the control of the
generator” because there are relatively few restrictions for this
exclusion, and, indeed, it would probably require less effort than
seeking a non-waste determination. Thus, the Agency only expects a
limited number of persons to submit applications where the regulatory
status is unclear under today’s exclusions and a formal non-waste
determination may be appropriate. EPA further believes that, by modeling
the non-waste determination process after the current variance
procedures, it has kept the additional burden to the states at a minimum
because states can leverage their existing processes. 

EPA believes that requiring explicit conditions, such as those required
for today’s self-implementing exclusions, is not warranted for
hazardous secondary materials receiving non-waste determinations because
persons are, instead, required to make specific demonstrations as to how
the hazardous secondary materials meet the eligibility criteria.
Furthermore, regulatory authorities, if they so choose, may stipulate
conditions within the non-waste determination as appropriate and
relevant on a case-by-case basis. One purpose of the non-waste
determination is to provide a measure of flexibility not provided by the
self-implementing solid waste exclusions and specifying the conditions
to be imposed would defeat this purpose. 

With respect to the comment regarding inconsistency among state
non-waste determinations, EPA notes that, by allowing states to become
authorized to conduct their own RCRA hazardous waste programs, the RCRA
statute provides states flexibility to regulate hazardous waste more
stringently than required under the federal regulations. Additionally,
states sometimes take different interpretations of the same or similar
regulations. This situation ultimately leads to variations between state
regulations and interpretations, which EPA views as inherent to the RCRA
structure and, thus, not a quality unique to the non-waste determination
process. 

We also want to clarify that, although today’s non-waste determination
process is similar to the current variance procedures, non-waste
determinations are technically not variances in which EPA regulations
otherwise classify materials as solid wastes and facilities may apply
for an exception. Instead, the new procedure would apply to hazardous
secondary materials for which facilities may have doubts as to whether
they fall within the self-implementing exclusions of this regulation and
wish to obtain some measure of certainty. 

A. Eligibility for Non-Waste Determination Process

Comments: scope of non-waste determinations

In the March 2007 supplemental proposal, EPA indicated that non-waste
determinations would be limited to reclamation activities and would not
apply to recycling of “inherently waste-like” materials, as defined
at 40 CFR 261.2(d), recycling of materials that are “used in a manner
constituting disposal,” or “used to produce products that are placed
on the land,” (40 CFR 261.2(c)(1)), or “burning materials for energy
recovery” or “used to produce a fuel or otherwise contained in
fuels” (40 CFR 261.2(c)(2)). 

EPA received a number of comments urging the Agency to broaden the
non-waste determinations to include all recycling scenarios in which
hazardous secondary materials are not discarded. Some commenters
supported expanding the scope to allow recycling for “burning for
energy recovery” and “use constituting disposal.” These commenters
argued that EPA could achieve further increases in recycling if the
Agency broadened the scope of hazardous secondary materials eligible to
apply for a non-waste determination. On the other hand, some commenters
agreed with EPA’s proposed scope and supported limiting eligibility to
only hazardous secondary materials being reclaimed. Alternatively, a few
commenters supported limiting eligibility only to those circumstances
where the recycling of hazardous secondary materials would not meet
either a condition of the self-implementing exclusions or one of the
legitimacy criteria, but still would not be considered discard. These
commenters also argued that narrowing the eligibility would effectively
limit the number of applications submitted and thus reduce the overall
burden on the states. 

EPA’s response: scope of non-waste determinations

EPA agrees with those commenters who supported limiting non-waste
determinations to reclamation activities. With respect to “burning for
energy recovery” and “use constituting disposal,” EPA confirms
that these types of recycling are ineligible for today’s non-waste
determination process. EPA believes that these types of recycling
activities would best be left to other rulemaking proceedings.
Furthermore, we disagree with those commenters who suggest further
limiting the eligibility to only those cases where reclamation of the
hazardous secondary materials would specifically violate a condition of
today’s self-implementing exclusions. We believe that by modeling the
non-waste determination procedure after the existing variance procedure,
we have ensured that any additional burden to the states will be kept at
a minimum and thus further limits on eligibility are not necessary. 

Comments: whether the hazardous constituents in the hazardous secondary
materials are reclaimed rather than released to the air, water, or land 

Overall, we received only a few comments that discussed the specific
criteria that EPA proposed for the non-waste determinations. For the
criterion regarding whether the hazardous constituents in the hazardous
secondary materials are reclaimed rather than released to the air,
water, or land at significantly higher concentrations, some commenters
argued that this criterion was inappropriate for determining discard
because these types of releases are inevitable when reclaiming hazardous
secondary materials. At least two commenters suggested that EPA should
establish a “bright line” to clearly define “significantly higher
concentrations” in order to provide persons with greater regulatory
certainty. Other commenters expressed concern that this criterion (as
well as the other criteria within 40 CFR 260.34) would be construed to
apply to other types of recycling, including those eligible for
today’s self-implementing exclusions. 

EPA’s response: whether the hazardous constituents in the hazardous
secondary materials are reclaimed rather than released to the air,
water, or land

EPA disagrees with commenters who believe this criterion is not relevant
for determining if hazardous secondary materials are being discarded. By
indicating that such releases must not be at “significantly higher
concentrations” than would otherwise be released during the production
process, we believe we have set a reasonable and meaningful bar that
applicants must meet in order to demonstrate that their hazardous
secondary materials are reclaimed and not discarded. Hazardous secondary
materials that fail to meet this criterion may exhibit an indication
that they are discarded and that such handling may present a greater
risk of adverse impacts to human health and the environment. Regarding
those commenters who support a “bright line” in order to define
“significantly higher concentrations,” EPA believes that, given the
wide variety of production processes and recycling practices,
establishing a “one size fits all” objective standard is not
practical and would invite inefficiency. 

EPA also confirms that this criterion, and the other criteria in 40 CFR
260.34, are specific to the relevant non-waste determinations, and thus
are not required for the self-implementing exclusions or those
exclusions found in 40 CFR 261.4, unless they are specifically included
under state regulations as a criteria to consider. 

Comments and EPA’s response: whether the capacity of the production
process would allow for use of the hazardous secondary material in a
reasonable time frame

For the criterion regarding whether the capacity of the production
process would allow for use of the hazardous secondary material in a
reasonable time frame (proposed explicitly for the non-waste
determination for hazardous secondary materials reclaimed in a
continuous industrial process), some commenters regarded this criterion
as consistent with judicial direction and, thus, supported adding this
criterion to the other non-waste determinations. Since EPA would
consider hazardous secondary materials that were eternally ‘stored’
for future recycling to be akin to discard, EPA agrees with these
commenters that all non-waste determinations should take into account
whether the hazardous secondary materials will be reclaimed within a
“reasonable time frame.” Therefore, in this final rule, EPA has
added this criterion (with appropriate modifications to the language) to
the non-waste determination for hazardous secondary materials
indistinguishable in all relevant aspects from a product or
intermediate. As with the non-waste determination for hazardous
secondary materials reclaimed in a continuous industrial process, a
person does not need to demonstrate that the hazardous secondary
material meets the speculative accumulation limits per 40 CFR
261.1(c)(8), but he must provide sufficient information about the
hazardous secondary material and the process to demonstrate that the
material will in fact be reclaimed in a reasonable time frame and will
not be abandoned. However, a person may still choose to use the
speculative accumulation time frame as a default if he so chooses.

Comments: non-waste determination for hazardous secondary materials
reclaimed under the control of the generator

A few commenters disagreed with the non-waste determination for
hazardous secondary materials reclaimed under the control of the
generator via a tolling arrangement or similar contractual arrangement.
These commenters believed that the generator would be unable to maintain
control over its hazardous secondary materials and residuals once at the
reclamation facility and, thus, could not reliably meet the criteria for
this non-waste determination. One state foresaw major enforcement
problems with situations involving a commercial facility that handles
hazardous secondary materials from multiple customers in a single
process and then mismanages the residuals from that unit. As the
residuals would be linked back to multiple generators, the liability for
the mismanaged residuals would be difficult to detangle. On the other
hand, some commenters felt that all tolling arrangements, including
those eligible for the self-implementing exclusion, would best be
evaluated through the non-waste determination process. These commenters
argued that the regulatory authority should be required to review all
tolling arrangements and their respective liability provisions in order
to ensure that the hazardous secondary materials will not be discarded. 

EPA’s response: non-waste determination for hazardous secondary
materials reclaimed under the control of the generator

We did not intend for such circumstances where a hazardous secondary
material generator was unable to maintain control and responsibility
over his hazardous secondary materials to be eligible for a non-waste
determination for hazardous secondary materials reclaimed under the
control of the generator. Where an applicant’s hazardous secondary
materials are intermingled with materials from other hazardous secondary
material generators in a way that renders the applicant unable to
maintain control and liability over his specific materials, the
applicant would have been effectively precluded from obtaining this
formal non-waste determination since he would ultimately fail the first
criterion. 

EPA, however, has decided not to finalize the non-waste determination
for materials reclaimed under the control of the generator because EPA
could not identify any comments which described in detail other specific
situations involving tolling or contractual arrangements that would not
already be covered under today’s self-implementing
generator-controlled exclusion. We, therefore, remain unclear as to what
other arrangements exist where the generator would retain control over
its hazardous secondary materials to ensure they are reclaimed and not
discarded. Without this clear picture, EPA believes we cannot finalize
this non-waste determination and thus we are not including it in
today’s final rule. 

B. Process for Non-Waste Determinations

In the March 2007 supplemental proposal, EPA proposed that the non-waste
determination process would be the same as that for the solid waste
variances found in 40 CFR 260.33. In order to obtain a non-waste
determination, a facility must apply to the Administrator or the
authorized state. The Administrator or authorized state evaluates the
application and issues a draft notice and opportunity for comment in the
locality where the facility is located. The Administrator or authorized
state would then issue a final decision based on the evaluation of the
comments received. 

Comments and EPA’s response: requirement to renew applications

A few commenters argued that non-waste determinations should be renewed,
either periodically or in the event of certain changes to the recycling
process, so that regulators can ensure that the hazardous secondary
materials continue to be reclaimed and not discarded. 

EPA agrees with those commenters who believe that certain changes in the
recycling process should logically trigger a re-review of the
circumstances. Therefore, in the event of a change that affects how
hazardous secondary materials meet one or more of the criteria upon
which a non-waste determination has been based, EPA is requiring persons
to re-apply to the Administrator or the authorized state for a formal
determination that the hazardous secondary material continues to meet
the relevant criteria and is not discarded and, therefore, not a solid
waste.

Comments and EPA’s response: timelines for regulators	

Some commenters expressed concerns about the length of time an applicant
would need to wait before receiving a formal determination from their
regulatory authority, explaining that particularly lengthy delays would
adversely affect business operations. Although we understand this
concern, requiring non-waste determinations to be made within a specific
time frame would be difficult, as each case varies in complexity with
some requiring more time to review than others. Furthermore, EPA would
be challenged to prescribe one time frame that would accommodate
numerous state regulatory agencies that vary in staffing and workloads.
Therefore, we are not requiring regulators to issue determinations
within a certain period of time.

Comments and EPA’s response: public comment process

At least two commenters suggested updating the format for public notice.
For example, instead of requiring notice through a “newspaper
advertisement or radio broadcast” (as EPA proposed), public notice
should be allowed to include electronic formats, such as posting on a
website or distribution through email, in order to reduce costs. Other
commenters supported requiring public notice for a broader audience, not
necessarily limited to the “locality where the recycler is located.”
These commenters argued that non-waste determinations may have national
implications and would be more appropriately published in the Federal
Register or made available through the EPA Docket Center.

	In response to these comments, EPA notes the non-waste determination
process was purposely structured to follow the same procedures as
outlined for solid waste variances in 40 CFR 260.33 in order to leverage
the existing structure and keep additional burden on the states to a
minimum. EPA, furthermore, believes that any changes to the type of
format required for public notice would be more appropriately handled as
part of a separate, wholesale effort to update all public notice
requirements in the federal hazardous waste regulations. Therefore, for
today’s rule, EPA is retaining the same public notice provisions as
proposed and required in 40 CFR 260.33. 

STATE AUTHORIZATION

XX.	How will Today’s Regulatory Changes be Administered and Enforced
in the States?

A. Applicability of Rules in Authorized States

	Under section 3006 of RCRA, EPA may authorize qualified states to
administer the RCRA Subtitle C hazardous waste program within the state.
Following authorization, EPA retains Subtitle C enforcement authority,
although authorized states have primary enforcement responsibility. EPA
retains authority under sections 3007, 3008, 3013, 3017 and 7003. The
standards and requirements for state authorization are found at 40 CFR
part 271.

	Prior to enactment of the Hazardous and Solid Waste Amendments of 1984
(HSWA), a state with final RCRA authorization administered its hazardous
waste program entirely in lieu of EPA administering the federal program
in that state. The federal requirements no longer applied in the
authorized state and EPA could not issue permits for any facilities in
that state, since only the state was authorized to issue RCRA permits.
When new, more stringent federal requirements were promulgated, the
state was obligated to enact equivalent authorities within specified
time frames. However, the new federal requirements did not take effect
in an authorized state until the state adopted the federal requirements
as state law.

In contrast, under RCRA section 3006(g) (42 U.S.C. 6926(g)), which was
added by HSWA, new requirements and prohibitions imposed under HSWA
authority take effect in authorized states at the same time that they
take effect in unauthorized states. EPA is directed by the statute to
implement these requirements and prohibitions in authorized states,
including the issuance of permits, until the state is granted
authorization to do so. While states must still adopt HSWA related
provisions as state law to retain final authorization, EPA implements
the HSWA provisions in authorized states until the states do so.

	Authorized states are required to modify their programs only when EPA
enacts federal requirements that are more stringent or broader in scope
than existing federal requirements. RCRA section 3009 allows the states
to impose standards more stringent than those in the federal program
(see 40 CFR 271.1). Therefore, authorized states may, but are not
required to, adopt federal regulations, both HSWA and non-HSWA, that are
considered less stringent than previous federal regulations. 

B. Effect on State Authorization

Today’s rule eliminates specific requirements that apply to materials
currently managed as hazardous waste. EPA believes that today’s final
rule describes the appropriate scope of the federal program under RCRA.
These exclusions will encourage recycling and are consistent with
RCRA’s statutory objective of conserving valuable material and energy
resources.

EPA strongly encourages states to adopt the regulations being finalized
today. When EPA authorizes a state to implement the RCRA hazardous waste
program, EPA determines whether the state program is consistent with the
federal program and whether it is no less stringent. This process,
codified in 40 CFR part 271, ensures national consistency and minimum
standards, while providing flexibility to the states in implementing the
rules. In making this determination, EPA evaluates the state
requirements to ensure they are no less stringent than the federal
requirements. Because today’s rule eliminates specific requirements
for hazardous secondary materials that are currently managed as
hazardous waste, state programs would no longer need to include those
specific requirements in order to be consistent with EPA’s
regulations.

However, if a state were, through implementation of state waiver
authorities or other state laws, to allow compliance with the provisions
of today's notice in advance of adoption or authorization, EPA would not
generally consider such implementation a concern for purposes of
enforcement or state authorization. Of course, the state could not
implement the requirements in a way that was less stringent than the
federal requirements in today's rule. 

In the case of the case-by-case non-waste determinations found in 40 CFR
260.34, a non-waste determination may be granted by the state if the
state is either authorized for this provision or if the following
conditions are met: (1) the state determines the hazardous secondary
material meets the applicable criteria for the non-waste determination;
(2) the state requests that EPA review its determination; and (3) EPA
approves the state determination. 

It should be noted that, under RCRA section 3009, a state may adopt
standards that are more stringent than the federal program. Thus, a
state is not required to adopt today’s final rule or a state may
choose to adopt only parts of today’s final rule. Some states
incorporate the federal regulations by reference or have specific state
statutory requirements that their state program can be no more stringent
than the federal regulations. In those cases, EPA anticipates that the
exclusions in today’s final rule will be adopted by these states,
consistent with state laws and state administrative procedures, unless
they take explicit action as specified by their respective state laws to
decline the revisions. We note that if states choose not to adopt the
provisions of today’s final rule concerning exports, then any
hazardous secondary materials that are exported would be subject to the
hazardous waste export requirements in 40 CFR part 262, subparts E or H,
or analogous export requirements that are part of a state’s RCRA
authorized program. 

ADMINISTRATIVE REQUIREMENTS

XXI. Administrative Requirements for this Rulemaking?

A. Executive Order 12866: Regulatory Planning and Review

	Under section 3(f)(1) of Executive Order (EO) 12866 (58 FR 51735,
October 4, 1993), this action is a "significant regulatory action''
because today's action contains novel policy issues (EO 12866 Section
3(f)(4)). However, based on the results of our economic analysis for
this action described below, we do not expect that its potential impact
on the economy will be greater than the $100 million or more annual
effect, the “economically significant” threshold of EO 12866 Section
3(f)(1). Because this rule meets one of the E012866 “significant”
criteria, EPA submitted this action to the Office of Management and
Budget (OMB) for review under EO 12866 and any changes made in response
to OMB’s recommendations have been documented in the docket for this
action. EPA also prepared an analysis of the potential economic costs
and benefits associated with this proposed action. The analysis is
contained in our “Regulatory Impact Analysis” (RIA) which is
available from the docket (http://www.regulations.gov) and is briefly
summarized below.

Assuming full adoption of this final rule by all RCRA-authorized states,
EPA expects this action may result in a net annual effect of $95 million
in average annual net cost savings to about 5,600 facilities in 280
industries in 21 economic sectors. This action is expected to remove
from RCRA regulation 1.5 million tons per year of hazardous secondary
materials currently managed as RCRA hazardous waste. These affected
hazardous secondary materials consist of about 98% that are currently
reclaimed as RCRA hazardous waste, and about 2% of hazardous waste that
is currently disposed of (e.g., landfilled, incinerated, or deepwell
injected), which EPA expects may switch from disposal to reclamation as
a result of this action. This $95 million annual net cost savings
estimate is 11% less than the $107 million annual net cost savings
estimated in our 2007 RIA in support of the March 2007 supplemental
proposal for this action. This difference is largely explained by
enhancements made to the methodology of the RIA based on public comments
received from 30 organizations on our 2003 and 2007 RIA’s in support
of this action, as well as by updates of key data underlying the RIA.

These impact estimates are EPA's best estimates within the economic
impact estimation uncertainty range of $41 million to $138 million in
annual materials management cost savings, and 0.7 million to 2.2 million
tons per year in affected hazardous secondary materials, respectively,
for the net effect of the exclusions. These impact ranges reflect the
overall uncertainty range of -57% to +45% across eight different
uncertainty factors addressed as a sensitivity analysis in our RIA. The
specific uncertainty factors evaluated are (1) state government
adoption, (2) future fluctuations in affected hazardous secondary
materials generation tonnages, (3) within-year discrepancies between
hazardous secondary materials generation and corresponding management
tonnages, (4) future industrial production levels, (5) omission of SQG
facility counts in our impact estimates by artifact that we based the
impacts on LQG and TSDRF data from the RCRA Biennial Report database,
(6) Biennial Report database quality assurance considerations, (7)
physical and chemical quality of the hazardous secondary materials
affected, and (8) impact estimation methodology level of effort.
Concerning the uncertainty of state government adoption, included as one
component of potential industry cost savings is the transfer effect of
an expected $5 million reduction in future annual state government
hazardous waste fee revenues if all state governments adopt today’s
rule.

With respect to each of the regulatory exclusions in today’s action,
the $95 million per year net cost savings effect consists of
approximately (a) $7 million per year for hazardous secondary materials
reclaimed under the control of the generator in either land or non-land
based units (which includes on-site, same-company, and tolling
exclusions), plus (b) an $87 million cost savings for exclusion of other
offsite transfers, plus (c) $1 million per year in cost savings for
case-by-case non-waste determinations.

Embedded in this overall impact estimate is $4.3 million per year in
potential commodity market value of three categories of 15 constituents
in affected materials we expect may begin to be recovered from hazardous
secondary materials that would otherwise continue to be disposed of as
hazardous wastes in absence of today’s action: (1) commodity metals
(chromium, copper, lead, molybdenum disulfide, nickel, zinc), (2)
commodity solvents (acetone, alkyl benzenes, C9-C10 alkyl benzenes,
methanol, methyl ethyl ketone, toluene, xylene), and (3) other commodity
materials (acids, carbon). However, the RIA estimate of potential new
induced recycling does not include an evaluation of whether the U.S. or
global recycling markets are large enough to sustain this potential
future increase in supply of recovered materials. Market conditions for
recycled hazardous secondary materials can vary considerably over time.
Demand for recycled solvents, for example, is largely dependent on the
petroleum market: because virgin solvents are made from petroleum
products, high petroleum prices encourage solvent recycling. Similarly,
high metals prices obviously favor the recycling of metal-bearing
hazardous secondary materials.

The RIA, available from the docket (http://www.regulations.gov),
provides many more details and descriptions about these assorted
components of expected economic impacts, including potential
distributional effects on other industries not directly subject to
today’s action.

B. Paperwork Reduction Act (Information Collection Request)

The information collection requirements in this rule have been submitted
for approval to the Office of Management and Budget (OMB) under the
Paperwork Reduction Act, 44 U.S.C. 3501 et seq. The information
collection requirements are not enforceable until OMB approves them. The
information collection request has been updated since the March 2007
supplemental proposal to reflect the final rule requirements and to
respond to public comments.

	The information requirements established for this action are voluntary
to the extent that the exclusions being finalized today are voluntary
and represent an overall reduction in burden as compared with the
alternative information requirements associated with managing the
hazardous secondary materials as hazardous waste. The information
requirements help ensure that (1) entities operating under the
regulatory exclusions contained in today's action are held accountable
to the applicable requirements; (2) state inspectors can verify
compliance with the restrictions and conditions of the exclusions when
needed; and (3) hazardous secondary materials exported for recycling are
actually handled as commodities abroad.

	For the recordkeeping and reporting requirements applicable to
hazardous secondary materials sent for reclamation, the aggregate annual
burden to respondents over the three-year period covered by this ICR is
estimated to be 11,552 hours, with a cost to affected entities (i.e.,
industrial facilities) of $1,417,242. However, this represents an annual
reduction in burden to respondents of 52,050 hours, representing a cost
reduction of $3,474,035 per year. The estimated annual operation and
maintenance costs to affected entities are $739,469 per year, primarily
for purchasing audit or other similar type reports. There are no startup
costs and no costs for purchases of services. Administrative costs to
the Agency are estimated to be 1,257 hours per year, representing an
annual cost of $49,891. Burden is defined at 5 CFR 1320.3(b).

An agency may not conduct or sponsor, and a person is not required to
respond to, a collection of information unless it displays a currently
valid OMB control number. The OMB control numbers for EPA's regulations
in 40 CFR are listed in 40 CFR part 9. When this ICR is approved by OMB,
the Agency will publish a technical amendment to 40 CFR part 9 in the
Federal Register to display the OMB control number for the approved
information collection requirements contained in this final rule.

C. Regulatory Flexibility Act

	The Regulatory Flexibility Act (RFA), as amended by the Small Business
Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C. 601 et.
seq., generally requires an agency to prepare a regulatory flexibility
analysis of any rule subject to notice and comment rulemaking
requirements under the Administrative Procedure Act or any other
statute, unless the agency certifies that the rule will not have a
significant economic impact on a substantial number of small entities.
Small entities include small businesses, small organizations, and small
governmental jurisdictions.

	For purposes of assessing the impacts of today's rule on small
entities, small entity is defined as: (1) a small business as defined by
the Small Business Administration’s (SBA) regulations at 13 CFR
121.201;” (2) a small governmental jurisdiction that is a government
of a city, county, town, school district or special district with a
population of less than 50,000; and (3) a small organization that is any
not-for-profit enterprise which is independently owned and operated and
is not dominant in its field.. For more information regarding the
expected economic impact of this action, please refer to our "Regulatory
Impact Analysis" available from the docket for this final rule.

	After considering the economic impacts of this final rule on small
entities, I certify that this action will not have a significant
economic impact on a substantial number of small entities.  In
determining whether a rule has a significant economic impact on a
substantial number of small entities, the impact of concern is any
significant adverse economic impact on small entities, since the primary
purpose of the regulatory flexibility analyses is to identify and
address regulatory alternatives “which minimize any significant
economic impact of the rule on small entities.” 5 USC 603 and 604. 
Thus, an agency may certify that a rule will not have a significant
economic impact on a substantial number of small entities if the rule
relieves regulatory burden, or otherwise has a positive economic effect
on all of the small entities subject to the rule.  Because today's
action is designed to lower the cost of industrial hazardous secondary
materials management for entities subject to today's requirements, this
final rule will not result in an adverse economic impact effect on
affected small entities.  EPA therefore concludes that today's action
will relieve regulatory burden for all size entities, including small
entities. 

D. Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), P.L. 104-4,
establishes requirements for Federal agencies to assess the effects of
their regulatory actions on state, local, and tribal governments and the
private sector. Under section 202 of the UMRA, EPA generally must
prepare a written statement, including a cost-benefit analysis, for
proposed and final rules with "Federal mandates" that may result in
expenditures to state, local, and tribal governments, in the aggregate,
or to the private sector, of $100 million or more in any one year.
Before promulgating an EPA rule for which a written statement is needed,
section 205 of the UMRA generally requires EPA to identify and consider
a reasonable number of regulatory alternatives and adopt the least
costly, most cost-effective or least burdensome alternative that
achieves the objectives of the rule. The provisions of section 205 do
not apply when they are inconsistent with applicable law. Moreover,
section 205 allows EPA to adopt an alternative other than the least
costly, most cost-effective or least burdensome alternative if the
Administrator publishes with the final rule an explanation why that
alternative was not adopted. Before EPA establishes any regulatory
requirements that may significantly or uniquely affect small
governments, including tribal governments, it must have developed under
section 203 of the UMRA a small government agency plan. The plan must
provide for notifying potentially affected small governments, enabling
officials of affected small governments to have meaningful and timely
input in the development of EPA regulatory proposals with significant
Federal intergovernmental mandates, and informing, educating, and
advising small governments on compliance with the regulatory
requirements.

	EPA has determined that this rule does not include a Federal mandate
that may result in expenditures of $100 million or more for state,
local, or tribal governments, in the aggregate, or the private sector in
any one year. This is because this rule imposes no enforceable duty on
any state, local, or tribal governments. Although one public commenter
noted that many states choose to incorporate EPA’s regulations by
reference, EPA does not require them to do so. EPA also has determined
that this rule contains no regulatory requirements that might
significantly or uniquely affect small governments. In addition, as
discussed above, the private sector is not expected to incur costs
exceeding $100 million. Therefore, today's rule is not subject to the
requirements of sections 202 and 205 of UMRA.

E. Executive Order 13132: Federalism

  SEQ CHAPTER \h \r 1 Executive Order 13132, entitled Federalism (64 FR
43255, August 10, 1999), requires EPA to develop an accountable process
to ensure meaningful and timely input by state and local officials in
the development of regulatory policies that have federalism
implications. Policies that have federalism implications are defined in
the Executive Order to include regulations that have substantial direct
effects on the states, on the relationship between the national
government and the states, or on the distribution of power and
responsibilities among the various levels of government.

	This final rule does not have federalism implications. It will not have
substantial direct effects on the states, on the relationship between
the national government and the states, or on the distribution of power
and responsibilities among the various levels of government, as
specified in Executive Order 13132. There are no state and local
government bodies that incur direct compliance costs by this rulemaking.
State and local government implementation expenditures are expected to
be less than $500,000 in any one year. Thus, the requirements of Section
6 of the Executive Order do not apply to this final rule. Although one
public commenter noted that many states choose to incorporate EPA’s
regulations by reference, EPA does not require them to do so.  

F. Executive Order 13175: Consultation and Coordination with Indian
Tribal Governments

Executive Order 13175, entitled Consultation and Coordination with
Indian Tribal Governments (65 FR 67249, November 9, 2000), requires EPA
to develop an accountable process to ensure a meaningful and timely
input by tribal officials in the development of regulatory policies that
have tribal implications. This final rule does not have tribal
implications, as specified in Executive Order 13175. It does not
significantly or uniquely affect the communities of Indian tribal
governments, nor would it impose substantial direct compliance costs on
them. Thus, Executive Order 13175 does not apply to this final rule. 

G. Executive Order 13045: Protection of Children from Environmental
Health Risks and Safety Risks

This action is not subject to EO 13045 (62 F.R. 19885, April 23, 1997)
because the Agency does not believe the environmental health risks or
safety risks addressed by this action present a disproportionate risk to
children. An assessment of countervailing risk and a discussion of how
today’s rule addresses those risks can be found in Chapter 11 of the
Regulatory Impact Analysis, found in the docket for today’s
rulemaking.

H. Executive Order 13211: Actions that Significantly Affect Energy
Supply, Distribution, or Use

This final rule is not a “significant energy action” as defined in
Executive Order 13211, “Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use” (66 Fed.
Reg. 28355, May 22, 2001) because it is not likely to have a significant
adverse effect on the supply, distribution, or use of energy. This final
rule reduces regulatory burden and as explained in our Regulatory Impact
Analysis, may possibly induce fuel efficiency and energy savings from
the voluntary shifting of some types of hazardous secondary materials,
where it is cost-effective for firms to do so, from current landfill and
incineration to reclamation. It therefore should not adversely affect
energy supply, distribution, or use.

I. National Technology Transfer and Advancement Act of 1995 

Section 12(d) of the National Technology Transfer and Advancement Act of
1995 (“NTTAA”), Public Law No. 104-113, 12(d) (15 U.S.C. 272 note)
directs EPA to use voluntary consensus standards in its regulatory
activities unless to do so would be inconsistent with applicable law or
otherwise impractical. Voluntary consensus standards are technical
standards (e.g., materials specifications, test methods, sampling
procedures, and business practices) that are developed or adopted by
voluntary consensus standards bodies. NTTAA directs EPA to provide
Congress, through OMB, explanations of when the Agency decides not to
use available and applicable voluntary consensus standards. 

	This action does not involve technical standards. Therefore, EPA did
not consider the use of any voluntary consensus standards. 

J. Executive Order 12898: Environmental Justice

Executive Order 12898, Federal Actions to Address Environmental Justice
in Minority Populations and Low-Income Population (February 11, 1994),
is designed to address the environmental and human health conditions of
minority and low-income populations. EPA is committed to addressing
environmental justice concerns and has assumed a leadership role in
environmental justice initiatives to enhance environmental quality for
all citizens of the United States. The Agency's goals are to ensure that
no segment of the population, regardless of race, color, national
origin, income, or net worth bears disproportionately high and adverse
human health and environmental impacts as a result of EPA's policies,
programs, and activities. Our goal is to ensure that all citizens live
in clean and sustainable communities. In response to Executive Order
12898, and to concerns voiced by many groups outside the Agency, EPA's
Office of Solid Waste and Emergency Response (OSWER) formed an
Environmental Justice Task Force to analyze the array of environmental
justice issues specific to waste programs and to develop an overall
strategy to identify and address these issues (OSWER Directive No.
9200.3-17). 

This final rule would streamline the requirements for certain hazardous
secondary materials sent for reclamation. Facilities that would be
affected by today’s final rule include those generating hazardous
secondary materials, as well as facilities which reclaim such materials.
Disposal and treatment facilities would not be affected by this final
rule. While commenters assert that minorities now comprise a majority in
neighborhoods with commercial hazardous waste facilities, and much
larger (over two-thirds) majorities can be found in neighborhoods with
clustered facilities, EPA does not believe that such neighborhoods will
be adversely impacted by today’s rule. As explained in Chapter 11 of
the Regulatory Impact Analysis found in the docket to today’s rule,
EPA has performed an assessment of potential countervailing risks and
has determined that the conditions address those risks and no net impact
is expected. Thus, overall, no disproportionate impacts to minorities or
low income communities are expected. 

K. Congressional Review Act

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by Subtitle
E of the Small Business Regulatory Enforcement Fairness Act of 1996
(SBREFA), generally provides that before a rule may take effect, the
agency promulgating the rule must submit a report containing the rule
and other required information to the U.S. Senate, the U.S. House of
Representatives, and to the Comptroller General of the United States,
prior to publication of the rule in the Federal Register. Furthermore, a
"major rule" cannot take effect until 60 days after it is published in
the Federal Register. Today's action is expected to be a "major rule''
as defined by 5 U.S.C. 804(2) according to the first of its three "major
rule" definitions: "The term "major rule" means any rule that the
Administrator of the Office of Information and Regulatory Affairs of OMB
finds has resulted in or is likely to result in-- (A) an annual effect
on the economy of $100,000,000 or more; (B) a major increase in costs or
prices for consumers, individual industries, Federal, state, or local
government agencies, or geographic regions; or (C) significant adverse
effects on competition, employment, investment, productivity,
innovation, or on the ability of United States-based enterprises to
compete with foreign-based enterprises in domestic and export markets."
EPA has submitted a copy of this rule to each House of the Congress and
to the Comptroller General, and this rule will be effective [insert date
180 days after its publication today.]

List of Subjects

40 CFR Part 260

Environmental protection, Administrative practice and procedure,
Confidential business information, Hazardous waste, Reporting and
recordkeeping requirements.

40 CFR Part 261

Environmental protection, Hazardous waste, Recycling, Reporting and
recordkeeping requirements.

Dated: ___________________________________

Stephen L. Johnson, 

Administrator.

For the reasons stated in the preamble, title 40, Chapter I of the Code
of Federal Regulations is amended to read as follows:

PART 260 – Hazardous Waste Management System:  General

1.  The authority citation for part 260 continues to read as follows:

Authority: 42 U.S.C. 6905, 6912(a), 6921-6927, 6930, 6935, 6937, 6938,
6939 and 6974.

Subpart B – Definitions

2.  Section 260.10 is amended by revising the definition of “
Facility” and “Transfer facility” and by adding in alphabetical
order the definitions of “Intermediate facility,” “Land-based
unit,” “Hazardous secondary material,” “Hazardous secondary
materials generated and reclaimed under the control of the generator”
and “Hazardous secondary material generator” to read as follows:

§260.10 Definitions

*   *   *   

Facility means:

    (1) All contiguous land, and structures, other appurtenances, and
improvements on the land, used for treating, storing, or disposing of
hazardous waste, or for managing hazardous secondary materials prior to
reclamation. A facility may consist of several treatment, storage, or
disposal operational units (e.g., one or more landfills, surface
impoundments, or combinations of them).

    (2) For the purpose of implementing corrective action under 40 CFR
264.101 or 267.101, all contiguous property under the control of the
owner or operator seeking a permit under Subtitle C of RCRA. This
definition also applies to facilities implementing corrective action
under RCRA Section 3008(h).

    (3) Notwithstanding paragraph (2) of this definition, a remediation
waste management site is not a facility that is subject to 40 CFR
264.101, but is subject to corrective action requirements if the site is
located within such a facility.

* * *

Hazardous secondary material means a secondary material (e.g., spent
material, by-product, or sludge) that, when discarded, would be
identified as hazardous waste under part 261 of this chapter.

*  *  *

Hazardous secondary material generated and reclaimed under the control
of the generator means:

(1) that such material is generated and reclaimed at the generating
facility (for purposes of this paragraph, generating facility means all
contiguous property owned, leased, or otherwise controlled by the
hazardous secondary material generator); or 

(2) that such material is generated and reclaimed at different
facilities, if the reclaiming facility is controlled by the generator or
if both the generating facility and the reclaiming facility are
controlled by a person as defined in §260.10, and if the generator
provides  one of the following certifications: (1)  “on behalf of
[insert generator facility name],  I certify that this facility will
send the indicated hazardous secondary material to [insert reclaimer
facility name], which is controlled by [insert generator facility name]
and that [insert the name of either facility] has acknowledged full
responsibility for the safe management of the hazardous secondary
material,” or (2) on behalf of [insert facility name] I certify that
this facility will send the indicated hazardous secondary material to
[insert facility name], that both facilities are under common control,
and that [insert name of either facility] has acknowledged full
responsibility for the safe management of the hazardous secondary
material.” For purposes of this paragraph, “control” means the
power to direct the policies of the facility, whether by the ownership
of stock, voting rights, or otherwise, except that contractors who
operate facilities on behalf of a different person as defined in
§260.10 shall not be deemed to “control” such facilities, or

(3) that such material is generated pursuant to a written contract
between a tolling contractor and a toll manufacturer and is reclaimed by
the tolling contractor, if  the tolling contractor certifies the
following: “On behalf of [insert tolling contractor name], I certify
that [insert tolling contractor name], has a written contract with
[insert toll manufacturer name] to manufacture [insert name of product
or intermediate] which is made from specified virgin materials, and that
[insert tolling contractor name] will reclaim the hazardous secondary
materials generated during this manufacture. On behalf on [insert
tolling contractor name], I also certify that [insert tolling contractor
name] retains ownership of, and responsibility for, the hazardous
secondary materials that are generated during the course of the
manufacture, including any releases of hazardous secondary materials
that occur during the manufacturing process. For purposes of this
paragraph, tolling contractor means a person who arranges for the
production of a product or intermediate made from specified virgin
materials through a written contract with a toll manufacturer.  Toll
manufacturer means a person who produces a product or intermediate made
from specified virgin materials pursuant to a written contract with a
tolling contractor.

*  *  * 

Hazardous secondary material generator means any person whose act or
process produces hazardous secondary materials at the generating
facility.  For purposes of this paragraph, “generating facility”
means all contiguous property owned, leased, or otherwise controlled by
the hazardous secondary material generator.  For the purposes of
§261.2(a)(2)(ii) and §261.2(a)(4)(23), a facility that collects
hazardous secondary materials that have been discarded by other persons
is not the hazardous secondary material generator.

*  *  *

Intermediate facility means any facility that stores hazardous secondary
materials for more than 10 days, other than a hazardous secondary
material generator or reclaimer of such material. 

*  *  *

Land-based unit means an area where hazardous secondary materials are
placed in or on the land before recycling.  

*  *  *  

Transfer facility means any transportation-related facility, including
loading docks, parking areas, storage areas and other similar areas
where shipments of hazardous waste or hazardous secondary materials are
held during the normal course of transportation. 

* 	*	 *	 *	 *

3.   Section 260.30 is amended by revising the section heading, the
introductory text, paragraph (b), and adding paragraphs (d) and (e) to
read as follows:

* 	*	 *	 *	 *

§ 260.30 Non-waste determinations and variances from classification as
a solid waste.

In accordance with the standards and criteria in §260.31 and §260.34
and the procedures in §260.33, the Administrator may determine on a
case-by-case basis that the following recycled materials are not solid
wastes:

 *	 *	 *

 (b) Materials that are reclaimed and then reused within the original
production process in which they were generated; 

*         *          *         

(d) Hazardous secondary materials that are reclaimed in a continuous
industrial process; and

(e) Hazardous secondary materials that are indistinguishable in all
relevant aspects from a product or intermediate.

* 	*	 *	 *	 *

4.  Section 260.33 is amended by revising the section heading, the
introductory text, paragraph (a) and adding paragraph (c) to read as
follows:

§ 260.33 Procedures for variances from classification as a solid waste,
for variances to be classified as a boiler, or for non-waste
determinations.

The Administrator will use the following procedures in evaluating
applications for variances from classification as a solid waste,
applications to classify particular enclosed controlled flame combustion
devices as boilers, or applications for non-waste determinations.

(a)	The applicant must apply to the Administrator for the variance or
non-waste determination.  The application must address the relevant
criteria contained in §260.31, §260.32, or §260.34, as applicable. 

* 	*	 *	

(c)       For non-waste determinations, in the event of a change in
circumstances that affect how a hazardous secondary material meets the
relevant criteria contained in §260.34 upon which a non-waste
determination has been based, the applicant must re-apply to the
Administrator for a formal determination that the hazardous secondary
material continues to meet the relevant criteria and therefore is not a
solid waste. 

* 	*	 *	 *	 *

5.   Section 260.34 is added to Subpart C to read as follows:

§ 260.34 Standards and criteria for non-waste determinations.

(a) An applicant may apply to the Administrator for a formal
determination that a hazardous secondary material is not discarded and
therefore not a solid waste. The determinations will be based on the
criteria contained in paragraphs (b) or (c) of this section, as
applicable. If an application is denied, the hazardous secondary
material might still be eligible for a solid waste variance or exclusion
(for example, one of the solid waste variances under §260.31).
Determinations may also be granted by the State if the State is either
authorized for this provision or if the following conditions are met:

(1)	The State determines the hazardous secondary material meets the
criteria in paragraphs (b) or (c) of this section, as applicable;

(2)	The State requests that EPA review its determination; and 

(3)	EPA approves the State determination.

(b)  The Administrator may grant a non-waste determination for hazardous
secondary material which is reclaimed in a continuous industrial process
if the applicant demonstrates that the hazardous secondary material is a
part of the production process and is not discarded. The determination
will be based on the following criteria:

(1) 	The extent that the management of the hazardous secondary material
is part of the continuous primary production process and is not waste
treatment;

(2)  	Whether the capacity of the production process would use the
hazardous secondary material in a reasonable time frame and ensure that
the hazardous secondary material will not be abandoned (for example,
based on past practices, market factors, the nature of the hazardous
secondary material, or any contractual arrangements); 

(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.

(c)   The Administrator may grant a non-waste determination for
hazardous secondary material which is indistinguishable in all relevant
aspects from a product or intermediate if the applicant demonstrates
that the hazardous secondary material is comparable to a product or
intermediate and is not discarded.  The determination will be based on
the following criteria:

(1) 	Whether market participants treat the hazardous secondary material
as a product or intermediate rather than a waste (for example, based on
the current positive value of the hazardous secondary material,
stability of demand, or any contractual arrangements);	

(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 and ensure that the
hazardous secondary material will not be abandoned (for example, based
on past practices, market factors, the nature of the hazardous secondary
material, or any contractual arrangements);	

(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.

6.   Section 260.42 is added to Subpart C to read as follows:

§260.42 Notification requirement for hazardous secondary materials. 

Hazardous secondary material generators, tolling contractors, toll
manufacturers, reclaimers, and intermediate facilities managing
hazardous secondary materials which are excluded from regulation under
§261.2(a)(2)(ii), §261.4(a)(23),(24), or (25) must send a notification
prior to operating under the exclusion(s) and at a minimum of every two
years thereafter to the Regional Administrator using EPA Form 8700-12
that includes the following information:

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

The name and telephone number of a contact person; 

The NAICS code of the facility;

The exclusion under which the hazardous secondary materials will be
managed (e.g., §261.2(a)(2)(ii), §261.4(a)(23),(24), and/or (25));

For reclaimers and intermediate facilities managing hazardous secondary
materials in accordance with §261.4(a)(24) or (25), whether the
reclaimer or intermediate facility has financial assurance (not
applicable for persons managing hazardous secondary materials generated
and reclaimed under the control of the generator); 

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

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

For each hazardous secondary material:

i. Whether the hazardous secondary material, or any portion thereof,
will be managed in a land-based unit;

ii. The quantity of hazardous secondary material to be managed annually.

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

Hazardous secondary material generators, tolling contractors, toll
manufacturers, reclaimers and intermediate facilities managing hazardous
secondary materials must also submit an updated notification within
thirty (30) days of a change to (a)(1), (a)(4), (a)(5), (a)(7) (where
hazardous secondary materials are added to the list of materials to be
managed under the exclusion) or (a)(8)(i) of this section. 

(c)	If a hazardous secondary material generator, tolling contractor,
toll manufacturer, reclaimer or intermediate facility has submitted a
notification, but then subsequently stops managing hazardous secondary
materials in accordance with the exclusion, the facility must notify the
Regional Administrator using EPA Form 8700-12. For purposes of this
section, a facility has stopped managing hazardous secondary materials
if at least one of the following occurs: the facility chooses to manage
the hazardous secondary materials as hazardous waste; the facility
undergoes closure and requests release from financial assurance per 40
CFR 261.143(h); or, the facility chooses to temporarily suspend
management of hazardous secondary materials and does not expect to
manage any amount of hazardous secondary materials for at least one
year.

  SEQ CHAPTER \h \r 1 PART 261–IDENTIFICATION AND LISTING OF HAZARDOUS
WASTE

7.  The authority citation for part 261 continues to read as follows:

	Authority: 42 U.S.C. 6905, 6912(a), 6921, 6922, 6924(y), and 6938.

Subpart A – [Amended]

8. Section 261.1 is amended by revising paragraph (c)(4) to read as
follows:

§261.1 Purpose and scope

* * * * *

(c) * * *

(4) A material is “reclaimed” if it is processed to recover a usable
product, or if it is regenerated.  Examples are recovery of lead values
from spent batteries and regeneration of spent solvents.  In addition,
for purposes of §§261.2(a)(2)(ii), 261.4(a)(23), and 261.4(a)(24)
smelting, melting and refining furnaces are considered to be solely
engaged in metals reclamation if the metal recovery from the hazardous
secondary materials meets the same requirements as those specified for
metals recovery from hazardous waste found in §266.100(d)(1)-(3), and
if the residuals meet the requirements specified in §266.112.

* * * * *

9.  Section 261.2 is amended by revising paragraph (a)(1), (a)(2),
(c)(3), Table 1 in paragraph (c)(4) and adding paragraph (g) to read as
follows:

*   *   *   *   *

(a)(1) A solid waste is any discarded material that is not excluded
under §261.4(a) or that is not excluded by a variance granted under
§§260.30 and 260.31 or that is not excluded by a non-waste
determination under §§260.30 and 260.34.  

*  *  * * * 

(2)(i) A discarded material  is any material which is:

(A) Abandoned, as explained in paragraph (b) of this section; or

(B) Recycled, as explained in paragraph (c) of this section; or

(C) Considered inherently waste-like, as explained in paragraph (d) of
this section; or

(D) A military munition identified as a solid waste in §266.20.

(ii)  A hazardous secondary material is not discarded if it is generated
and reclaimed under the control of the generator as defined in §260.10,
it is not speculatively accumulated as defined in §261.1(c)(8), it is
handled only in non-land-based units and is contained in such units, it
is generated and reclaimed within the United States and its territories,
it is not otherwise subject to specific management conditions under
§261.4(a) when reclaimed, it is not a spent lead acid battery (see
§266.80 and §273.2) and it does not meet the listing description for
K171 or K172 in §261.32. (See also the notification requirements of
§260.42)

*   *   *   *  *  

(c)   *   *   *   

(3) Reclaimed.    Materials noted with a “–“ in column 3 of Table
1 are not solid wastes when reclaimed.  Materials noted with an “*”
in column 3 of Table 1 are solid wastes when reclaimed unless they meet
the requirements of §§261.2(a)(2)(ii), or  261.4(a)(17), or
261.4(a)(23), or 261.4(a)(24) or 261.4(a)(25).  

 *  *  *  * * 

(4) * * * 

Table 1

	Use constituting disposal (§261.2(c)(1))	Energy recovery/ fuel
(§261.2(c)(2))	Reclamation (261.2(c)(3)), except as provided in
§§261.2(a)(2)(ii), 261.4(a)(17), 261.4(a)(23), 261.4(a)(24), or
261.4(a)(25).  	Speculative accumulation (§261.2(c)(4))

	1	2	3	4

Spent Materials	(*)	(*)	(*)	(*)

Sludges (listed in 40 CFR Part 261.31 or 261.32	(*)	(*)	(*)	(*)

Sludges exhibiting a characteristic of hazardous waste	(*)	(*)	----	(*)

By-products (listed in 40 CFR 261.31 or 261.32)	(*)	(*)	(*)	(*)

By-products exhibiting a characteristic of hazardous waste	(*)	(*)	----
(*)

Commercial chemical products listed in 40 CFR 261.33	(*)	(*)	----	----

Scrap metal other than excluded scrap metal (see 261.1(c)(9))	(*)	(*)
(*)	(*)

Note: The terms “spent materials,” “sludges,” “by-products,”
and “scrap metal” and “processed scrap metal” are defined in
261.1.

*     *     *    

(g) Legitimate Recycling.  

(1) Hazardous secondary material that is not legitimately recycled is
discarded material and is a solid waste. Persons who recycle a hazardous
secondary material, as well as persons claiming to be excluded from
hazardous waste regulation under §260.30, §261.2 or §261.4 because
they are engaged in recycling, must be able to demonstrate that the
recycling is legitimate. Moreover, hazardous secondary material must be
legitimately recycled to qualify for the special management standards
under §261.6 and 40 CFR Part 266.  In determining if their recycling is
legitimate, persons must address the requirements of §261.2(g)(2) and
§261.2(g)(3) below.

(2) Legitimate recycling must involve a hazardous secondary material
that provides a useful contribution to the recycling process or to a
product or intermediate of the recycling process, and the recycling
process must produce a valuable product or intermediate. 

(i) The hazardous secondary material provides a useful contribution if
it

(A) contributes valuable ingredients to a product or intermediate; or 

(B) replaces a catalyst or carrier in the recycling process; or 

(C) is the source of a valuable constituent recovered in the recycling
process; or

(D) is recovered or regenerated by the recycling process; or 

(E) is used as an effective substitute for a commercial product.

(ii) The product or intermediate is valuable if it is

(A) sold to a third party; or 

(B) used by the recycler or the generator as an effective substitute for
a commercial product or as an ingredient or intermediate in an
industrial process.

(3) The following factors must be considered in making a determination
as to the overall legitimacy of a specific recycling activity. If these
factors are not met, then this fact may be an indication that the
material is not legitimately recycled:  

(i) The generator and the recycler should manage the hazardous secondary
material as a valuable commodity. Where there is an analogous raw
material, the hazardous secondary material should be managed, at a
minimum, in a manner consistent with the management of the raw material.
 Where there is no analogous raw material, hazardous secondary material
should be contained. Hazardous secondary materials that are released to
the environment and are not recovered immediately are discarded.

(ii) The product of the recycling process does not 

(A) contain significant concentrations of any hazardous constituents
found in Appendix VIII of part 261 that are not found in analogous
products; or 

(B) contain concentrations of any hazardous constituents found in
Appendix VIII of part 261 at levels that are significantly elevated from
those found in analogous products; or 

(C) exhibit a hazardous characteristic (as defined in part 261 subpart
C) that analogous products do not exhibit.  

10.  Section 261.4 is amended by adding new paragraphs (a)(23), (24),
and (25) to read as follows:

§ 261.4  Exclusions.

(a) * * * 

(23) Hazardous secondary material generated and reclaimed within the
United States or its territories and managed in land-based units as
defined in §260.10 is not a solid waste provided that:

(i)  the material is contained; and 

(ii)  the material is a hazardous secondary material generated and
reclaimed under the control of the generator, as defined in §260.10; 

(iii) the material is not speculatively accumulated, as defined in
§261.1(c)(8); and

(iv) the material is not otherwise subject to the specific management
conditions under §261.4(a) when reclaimed, is not a spent lead acid
battery (see §266.80 and §273.2), and it does not meet the listing
description for K171 or K172 in §261.32.

(v)  In addition, persons claiming the exclusion under this paragraph
(a)(23) must provide notification as required by §260.42.

 (24) Hazardous secondary material that is generated and then
transferred to another person for the purpose of reclamation is not a
solid waste, provided that:  

(i) The material is not speculatively accumulated, as defined in
§261.1(c)(8); 

(ii)  the material is not handled by any person or facility other than
the hazardous secondary material generator, the transporter, an
intermediate facility or a reclaimer, and, while in transport, is not
stored for more than 10 days at a transfer facility, as defined in
§260.10, and is packaged according to applicable Department of
Transportation regulations at 49 CFR Parts 173, 178, and 179 while in
transport; and 

(iii) it is not otherwise subject to the specific management conditions
under §261.4(a) when reclaimed, it is not a spent lead-acid battery
(see §266.80 and §273.2), and it does not meet the listing description
for K171 or K172 in §261.32; and 

(iv) the hazardous secondary material generator satisfies all of the
following conditions:

(A)  The material must be contained. 

(B)  Prior to arranging for transport of hazardous secondary materials
to a reclamation facility (or facilities) where the management of the
hazardous secondary materials is not addressed under a RCRA Part B
permit or interim status standards, the hazardous secondary material
generator must make reasonable efforts to ensure that each reclaimer
intends to properly and legitimately reclaim the hazardous secondary
material and not discard it, and that each reclaimer will manage the
hazardous secondary material in a manner that is protective of human
health and the environment.  If the hazardous secondary material will be
passing through an intermediate facility that is not addressed under a
RCRA Part B permit or interim status standards, the hazardous secondary
material generator must make contractual arrangements with the
intermediate facility to ensure that the hazardous secondary material is
sent to the reclamation facility identified by the hazardous secondary
material generator, and the hazardous secondary material generator must
perform reasonable efforts to ensure that the intermediate facility will
manage the hazardous secondary material in a manner that is protective
of human health and the environment.  Reasonable efforts must be
repeated at a minimum of every three years for the hazardous secondary
material generator to claim the exclusion and to send the hazardous
secondary materials to each reclaimer and any intermediate facility.  In
making these reasonable efforts, the generator may use any credible
evidence available, including information gathered by the hazardous
secondary material generator, provided by the reclaimer or intermediate
facility, and/or provided by a third party. The hazardous secondary
material generator must affirmatively answer all of the following
questions for each reclamation facility and any intermediate facility:

(1) Does the reclamation facility intend to reclaim the hazardous
secondary materials legitimately pursuant to §261.2(g)? (Note that by
responding to this question, the hazardous secondary material generator
has also satisfied the requirement in §261.2(g)(1) to be able to
demonstrate that the recycling is legitimate).

(2) Has the reclamation facility and any intermediate facility notified
the appropriate authorities of hazardous secondary materials reclamation
activities pursuant to §260.42 and have they notified the appropriate
authorities that the financial assurance condition is satisfied per
§261.4(a)(24)(v)(F)?

(3) Are there any unresolved significant violations of environmental
regulations at the reclamation facility or at any intermediate facility,
or any formal enforcement actions taken against the facilities in the
previous three years for violations of environmental regulations? If
yes, does the hazardous secondary material generator have credible
evidence that the facilities will manage the hazardous secondary
materials properly?

(4) Do the reclamation facility and any intermediate facility have the
equipment and trained personnel to properly manage the hazardous
secondary material, and does the reclamation facility have the equipment
and trained personal to properly reclaim the hazardous secondary
materials?

(5) If residuals are generated from the reclamation of the excluded
hazardous secondary materials, does the reclamation facility have the
permits required (if any) to manage the residuals? If not, does the
reclamation facility have a contract with an appropriately permitted
facility to dispose of the residuals? If not, does the hazardous
secondary material generator have credible evidence that the residuals
will be managed in a manner that is protective of human health and the
environment?

(C) The hazardous secondary material generator must maintain for a
minimum of three years documentation and certification that reasonable
efforts were made for each reclamation facility and, if applicable,
intermediate facility prior to transferring hazardous secondary
material. Documentation and certification must be made available upon
request by a regulatory authority within 72 hours, or within a longer
period of time as specified by the regulatory authority. The
certification statement must:

(1) be signed and dated by an authorized representative of the hazardous
secondary material generator company;

(2) incorporate the following language: “I hereby certify in good
faith and to the best of my knowledge that, prior to arranging for
transport of excluded hazardous secondary materials to [insert name(s)
of reclamation facility and any intermediate facility], reasonable
efforts were made to ensure that the hazardous secondary materials would
be recycled legitimately, and otherwise managed in a manner that is
protective of human health and the environment, and that such efforts
were based on current and accurate information.” 

(D)  The hazardous secondary material generator must maintain at the
generating facility for no less than three (3) years records of all
off-site shipments of hazardous secondary materials. For each shipment,
these records must, at a minimum, contain the following information:

(1) Name of the transporter and date of the shipment; 

(2) Name and address of each reclaimer and, if applicable, the name and
address of each intermediate facility to which the hazardous secondary
material was sent;  

(3) The type and quantity of hazardous secondary material in the
shipment. 

(E) The hazardous secondary material generator must maintain at the
generating facility for no less than three (3) years confirmations of
receipt from each reclaimer and, if applicable, each intermediate
facility for all off-site shipments of hazardous secondary materials.
Confirmations of receipt must include the name and address of the
reclaimer (or intermediate facility), the type and quantity of the
hazardous secondary materials received and the date which the hazardous
secondary materials were received.

(v) Reclaimers of hazardous secondary material excluded from regulation
under this exclusion and intermediate facilities as defined in §260.10
satisfy all of the following conditions:

(A)  The reclaimer and intermediate facility must maintain at its
facility for no less than three (3) years records of all shipments of
hazardous secondary material that were received at the facility and, if
applicable, for all shipments of hazardous secondary materials that were
received and subsequently sent off-site from the facility for further
reclamation. For each shipment, these records must at a minimum contain
the following information:

(1) Name of the transporter and date of the shipment;

(2) Name and address of the hazardous secondary material generator and,
if applicable, the name and address of the reclaimer or intermediate
facility which the hazardous secondary materials were received from; 	

(3) The type and quantity of hazardous secondary material in the
shipment; and

(4) For hazardous secondary materials that, after being received by the
reclaimer or intermediate facility, were subsequently transferred
off-site for further reclamation, the name and address of the
(subsequent) reclaimer and, if applicable, the name and address of each
intermediate facility to which the hazardous secondary material was
sent. 

(B) The intermediate facility must send the hazardous secondary material
to the reclaimer(s) designated by the hazardous secondary materials
generator.

(C) The reclaimer and intermediate facility must send to the hazardous
secondary material generator confirmations of receipt for all off-site
shipments of hazardous secondary materials. Confirmations of receipt
must include the name and address of the reclaimer (or intermediate
facility), the type and quantity of the hazardous secondary materials
received and the date which the hazardous secondary materials were
received.

(D) The reclaimer and intermediate facility must manage the hazardous
secondary material in a manner that is at least as protective as that
employed for analogous raw material and must be contained.  An
"analogous raw material" is a raw material for which a hazardous
secondary material is a substitute and serves the same function and has
similar physical and chemical properties as the hazardous secondary
material 

(E)  Any residuals that are generated from reclamation processes will be
managed in a manner that is protective of human health and the
environment.  If any residuals exhibit a hazardous characteristic
according to subpart C of 40 CFR part 261, or if they themselves are
specifically listed in subpart D of 40 CFR part 261, such residuals are
hazardous wastes and must be managed in accordance with the applicable
requirements of 40 CFR parts 260 through 272.

(F) The reclaimer and intermediate facility has financial assurance as
required under subpart H of 40 CFR part 261.

(vi)  In addition, all persons claiming the exclusion under this
paragraph (24) must provide notification as required under §260.42.

(25)  Hazardous secondary material that is exported from the United
States and reclaimed at a reclamation facility located in a foreign
country is not a solid waste, provided that the hazardous secondary
material generator complies with the applicable requirements of
§261.4(a)(24)(i)-(iv) (excepting (iv)(B)(2) of this section for foreign
reclaimers and foreign intermediate facilities), and that the hazardous
secondary material generator also complies with the following
requirements:  

(i)  Notify EPA of an intended export before the hazardous secondary
material is   scheduled to leave the United States.  A complete
notification must be submitted at least sixty (60) days before the
initial shipment is intended to be shipped off-site.  This notification
may cover export activities extending over a twelve (12) month or lesser
period.  The notification must be in writing, signed by the hazardous
secondary material generator, and include the following information:

(A)  Name, mailing address, telephone number and EPA ID number (if
applicable) of the hazardous secondary material generator; 

(B) A description of the hazardous secondary material and the EPA
hazardous waste number that would apply if the hazardous secondary
material was managed as hazardous waste and the U.S. DOT proper shipping
name, hazard class and ID number (UN/NA) for each hazardous secondary
material as identified in 49 CFR parts 171 through 177; 

(C) The estimated frequency or rate at which the hazardous secondary
material is to be exported and the period of time over which the
hazardous secondary material is to be exported;

(D) The estimated total quantity of hazardous secondary material;  

(E) All points of entry to and departure from each foreign country
through which the hazardous secondary material will pass;    

(F) A description of the means by which each shipment of the hazardous
secondary material will be transported (e.g., mode of transportation
vehicle (air, highway, rail, water, etc.), type(s) of container (drums,
boxes, tanks, etc.)); 

(G) A description of the manner in which the hazardous secondary
material will be reclaimed in the receiving country;        

(H) The name and address of the reclaimer, any intermediate facility and
any alternate reclaimer and intermediate facilities; and      

(I) The name of any transit countries through which the hazardous
secondary material will be sent and a description of the approximate
length of time it will remain in such countries and the nature of its
handling while there.   

(ii)  Notifications submitted by mail should be sent to the following
mailing address:  Office of Enforcement and Compliance Assurance, Office
of Federal Activities, International Compliance Assurance Division,
(Mail Code 2254A), Environmental Protection Agency, 1200 Pennsylvania
Ave., N.W., Washington, DC 20460. Hand-delivered notifications should be
delivered to: Office of Enforcement and Compliance Assurance, Office of
Federal Activities, International Compliance Assurance Division,
Environmental Protection Agency, Ariel Rios Bldg., Room 6144, 12th St.
and Pennsylvania Ave., N.W., Washington, DC 20004.  In both cases, the
following shall be prominently displayed on the front of the envelope:
“Attention:  Notification of Intent to Export.” 

(iii)  Except for changes to the telephone number in paragraph (i)(A) of
this section and decreases in the quantity of hazardous secondary
material indicated pursuant to paragraph (i)(D) of this section, when
the conditions specified on the original notification change (including
any exceedance of the estimate of the quantity of hazardous secondary
material specified in the original notification), the hazardous
secondary material generator must provide EPA with a written
renotification of the change. The shipment cannot take place until
consent of the receiving country to the changes (except for changes to
paragraph i(I) of this section and in the ports of of entry to and
departure from transit countries pursuant to paragraphs (i)(E) of this
section) has been obtained and the hazardous secondary material
generator receives from EPA an Acknowledgment of Consent reflecting the
receiving country’s consent to the changes.   

(iv) Upon request by EPA, the hazardous secondary material generator
shall furnish to EPA any additional information which a receiving
country requests in order to respond to a notification.  

(v) EPA will provide a complete notification to the receiving country
and any transit countries.  A notification is complete when EPA receives
a notification which EPA determines satisfies the requirements of
paragraph (i) of this section.  Where a claim of confidentiality is
asserted with respect to any notification information required by
paragraph (i) of this section, EPA may find the notification not
complete until any such claim is resolved in accordance with 40 CFR
260.2.  

 (vi) The export of hazardous secondary material under this paragraph is
prohibited unless the receiving country consents to the intended export.
When the receiving country consents in writing to the receipt of the
hazardous secondary material, EPA will send an Acknowledgment of Consent
to the hazardous secondary material generator. Where the receiving
country objects to receipt of the hazardous secondary material or
withdraws a prior consent, EPA will notify the hazardous secondary
material generator in writing.  EPA will also notify the hazardous
secondary material generator of any responses from transit countries.  

(vii) For exports to OECD Member countries, the receiving country may
respond to the notification using tacit consent. If no objection has
been lodged by any receiving country or transit countries to a
notification provided pursuant to paragraph (i) of this section within
thirty (30) days after the date of issuance of the acknowledgement of
receipt of notification by the competent authority of the receiving
country, the transboundary movement may commence. In such cases, EPA
will send an Acknowledgment of Consent to inform the hazardous secondary
material generator that the receiving country and any relevant transit
countries have not objected to the shipment, and are thus presumed to
have consented tacitly. Tacit consent expires one (1) calendar year
after the close of the thirty (30) day period; renotification and
renewal of all consents is required for exports after that date.

(viii)  A copy of the Acknowledgment of Consent must accompany the
shipment. The shipment must conform to the terms of the Acknowledgment
of Consent.    

(ix)  If a shipment cannot be delivered for any reason to the reclaimer,
intermediate facility or the alternate reclaimer or alternate
intermediate facility, the hazardous secondary material generator must
re-notify EPA of a change in the conditions of the original notification
to allow shipment to a new reclaimer in accordance with paragraph (iii)
of this section and obtain another Acknowledgment of Consent.     

(x) Hazardous secondary material generators must keep a copy of each
notification of intent to export and each Acknowledgment of Consent for
a period of three years following receipt of the Acknowledgment of
Consent.  

(xi) Hazardous secondary material generators must file with the
Administrator no later than March 1 of each year, a report summarizing
the types, quantities, frequency and ultimate destination of all
hazardous secondary materials exported during the previous calendar
year. Annual reports submitted by mail should be sent to the following
address: Office of Enforcement and Compliance Assurance, Office of
Federal Activities, International Compliance Assurance Division (Mail
Code 2254A), Environmental Protection Agency, 1200 Pennsylvania Ave.,
NW., Washington, DC 20460. Hand-delivered reports should be delivered
to: Office of Enforcement and Compliance Assurance, Office of Federal
Activities, International Compliance Assurance, Office of Federal
Activities, International Compliance Assurance Division, Environmental
Protection Agency, Arial Rios Bldg., Room 6144, 12th St. and
Pennsylvania Ave., NW., Washington, D.C. 20004. Such reports must
include the following information:

(A) Name, mailing and site address, and EPA ID number (if applicable) of
the hazardous secondary material generator;   

(B) The calendar year covered by the report;

(C) The name and site address of each reclaimer and intermediate
facility;   

(D) By reclaimer and intermediate facility, for each hazardous secondary
material exported, a description of the hazardous secondary material,
the type of hazardous secondary material (reported as the EPA hazardous
waste number that would apply if the hazardous secondary material was
managed as hazardous waste), DOT hazard class, the name and US EPA ID
number (where applicable) for each transporter used, the total amount of
hazardous secondary material shipped and the number of shipments
pursuant to each notification;

(E) A certification signed by the hazardous secondary material generator
which states: I certify under penalty of law that I have personally
examined and am familiar with the information submitted in this and all
attached documents, and that based on my inquiry of those individuals
immediately responsible for obtaining the information, I believe that
the submitted information is true, accurate, and complete. I am aware
that there are significant penalties for submitting false information
including the possibility of fine and imprisonment.

(xii) All persons claiming an exclusion under this paragraph (a)(25)
must provide notification as required by §260.42. 

11. Part 261 Subpart F and Subpart G have been reserved.

12. Part 261 has been amended by adding new Subpart H to read as
follows:

PART 261

Subpart H—Financial Requirements for Management of Excluded Hazardous
Secondary Materials

§261.140  Applicability.

(a) The requirements of this subpart apply to owners or operators of
reclamation and intermediate facilities managing hazardous secondary
materials excluded under 40 CFR §261.4(a)(24), except as provided
otherwise in this section.

(b) States and the Federal government are exempt from the financial
assurance requirements of this subpart.

§261.141  Definitions of terms as used in this subpart.

The terms defined in §265.141(d),(f),(g), and (h) have the same meaning
in this subpart as they do in §265.141.

§261.142  Cost estimate

    (a) The owner or operator must have a detailed written estimate, in
current dollars, of the cost of disposing of any hazardous secondary
material as listed or characteristic hazardous waste, and the potential
cost of closing the facility as a treatment, storage, and disposal
facility.

    (1) The estimate must equal the cost of conducting the activities
described in paragraph (a) at the point when the extent and manner of
the facility’s operation would make these activities the most
expensive; and

    (2) The cost estimate must be based on the costs to the owner or
operator of hiring a third party to conduct these activities. A third
party is a party who is neither a parent nor a subsidiary of the owner
or operator. (See definition of parent corporation in §265.141(d).) The
owner or operator may use costs for on-site disposal in accordance with
applicable requirements if he can demonstrate that on-site disposal
capacity will exist at all times over the life of the facility.

    (3) The cost estimate may not incorporate any salvage value that may
be realized with the sale of hazardous secondary materials, or hazardous
or non-hazardous wastes if applicable under 265.5113(d), facility
structures or equipment, land, or other assets associated with the
facility.

    (4) The owner or operator may not incorporate a zero cost for
hazardous secondary materials, or hazardous or non-hazardous wastes if
applicable under 265.5113(d) that might have economic value.

    (b) During the active life of the facility, the owner or operator
must adjust the cost estimate for inflation within 60 days prior to the
anniversary date of the establishment of the financial instrument(s)
used to comply with Sec. 261.143. For owners and operators using the
financial test or corporate guarantee, the cost estimate must be updated
for inflation within 30 days after the close of the firm's fiscal year
and before submission of updated information to the Regional
Administrator as specified in Sec. 261.143(e)(3). The adjustment may be
made by recalculating the cost estimate in current dollars, or by using
an inflation factor derived from the most recent Implicit Price Deflator
for Gross National Product published by the U.S. Department of Commerce
in its Survey of Current Business, as specified in paragraphs (b)(1) and
(2) of this section. The inflation factor is the result of dividing the
latest published annual Deflator by the Deflator for the previous year.

    (1) The first adjustment is made by multiplying the cost estimate by
the inflation factor. The result is the adjusted cost estimate.

    (2) Subsequent adjustments are made by multiplying the latest
adjusted cost estimate by the latest inflation factor.

    (c) During the active life of the facility, the owner or operator
must revise the cost estimate no later than 30 days after a change in a
facility’s operating plan or design that would increase the costs of
conducting the activities described in paragraph (a) or no later that 60
days after an unexpected event which increases the cost of conducting
the activities described in paragraph (a).The revised cost estimate must
be adjusted for inflation as specified in paragraph (b).

    (d) The owner or operator must keep the following at the facility
during the operating life of the facility: The latest cost estimate
prepared in accordance with paragraphs (a) and (c) and, when this
estimate has been adjusted in accordance with paragraph (b), the latest
adjusted cost estimate.

§261.143  Financial assurance condition

Per §261.4(a)(24)(v)(F), an owner or operator of a reclamation or
intermediate facility must have financial assurance as a condition of
the exclusion as required  under §261.4(a)(24).  He must choose from
the options as specified in paragraphs (a) through (e) of this section.

(a) Trust fund.  (1) An owner or operator may satisfy the requirements
of this section by establishing a trust fund which conforms to the
requirements of this paragraph and submitting an originally signed
duplicate of the trust agreement to the Regional Administrator.  The
trustee must be an entity which has the authority to act as a trustee
and whose trust operations are regulated and examined by a Federal or
State agency.

(2) The wording of the trust agreement must be identical to the wording
specified in §261.151(a)(1), and the trust agreement must be
accompanied by a formal certification of acknowledgment (for example,
see §261.151(a)(2)).  Schedule A of the trust agreement must be updated
within 60 days after a change in the amount of the current cost estimate
covered by the agreement.

(3) The trust fund must be funded for the full amount of the current
cost estimate before it may be relied upon to satisfy the requirements
of this section.

 (4)  Whenever the current cost estimate changes, the owner or operator
must compare the new estimate with the trustee's most recent annual
valuation of the trust fund.  If the value of the fund is less than the
amount of the new estimate, the owner or operator, within 60 days after
the change in the cost estimate, must either deposit an amount into the
fund so that its value after this deposit at least equals the amount of
the current cost estimate, or obtain other financial assurance as
specified in this section to cover the difference.

(5) If the value of the trust fund is greater than the total amount of
the current cost estimate, the owner or operator may submit a written
request to the Regional Administrator for release of the amount in
excess of the current cost estimate.

(6) If an owner or operator substitutes other financial assurance as
specified in this section for all or part of the trust fund, he may
submit a written request to the Regional Administrator for release of
the amount in excess of the current cost estimate covered by the trust
fund.

(7) Within 60 days after receiving a request from the owner or operator
for release of funds as specified in paragraph (a) (5) or (6) of this
section, the Regional Administrator will instruct the trustee to release
to the owner or operator such funds as the Regional Administrator
specifies in writing.  If the owner or operator begins final closure
under subpart G of 40 CFR part 264 or 265, an owner or operator may
request reimbursements for partial or final closure expenditures by
submitting itemized bills to the Regional Administrator. The owner or
operator may request reimbursements for partial closure only if
sufficient funds are remaining in the trust fund to cover the maximum
costs of closing the facility over its remaining operating life. No
later than 60 days after receiving bills for partial or final closure
activities, the Regional Administrator will instruct the trustee to make
reimbursements in those amounts as the Regional Administrator specifies
in writing, if the Regional Administrator determines that the partial or
final closure expenditures are in accordance with the approved closure
plan, or otherwise justified. If the Regional Administrator has reason
to believe that the maximum cost of closure over the remaining life of
the facility will be significantly greater than the value of the trust
fund, he may withhold reimbursements of such amounts as he deems prudent
until he determines, in accordance with Sec. 265.143(i) that the owner
or operator is no longer required to maintain financial assurance for
final closure of the facility. If the Regional Administrator does not
instruct the trustee to make such reimbursements, he will provide to the
owner or operator a detailed written statement of reasons.

(8) The Regional Administrator will agree to termination of the trust
when:

(i) An owner or operator substitutes alternate financial assurance as
specified in this section; or

(ii) The Regional Administrator releases the owner or operator from the
requirements of this section in accordance with §261.143(i).   

(b) Surety bond guaranteeing payment into a trust fund.  (1) An owner or
operator may satisfy the requirements of this section by obtaining a
surety bond which conforms to the requirements of this paragraph and
submitting the bond to the Regional Administrator.  The surety company
issuing the bond must, at a minimum, be among those listed as acceptable
sureties on Federal bonds in Circular 570 of the U.S. Department of the
Treasury.

(2) The wording of the surety bond must be identical to the wording
specified in §261.151(b).

(3) The owner or operator who uses a surety bond to satisfy the
requirements of this section must also establish a standby trust fund. 
Under the terms of the bond, all payments made thereunder will be
deposited by the surety directly into the standby trust fund in
accordance with instructions from the Regional Administrator.  This
standby trust fund must meet the requirements specified in §261.143(a),
except that:

(i) An originally signed duplicate of the trust agreement must be
submitted to the Regional Administrator with the surety bond; and

(ii) Until the standby trust fund is funded pursuant to the requirements
of this section, the following are not required by these regulations:

(A) Payments into the trust fund as specified in §261.143(a);

(B) Updating of Schedule A of the trust agreement (see §261.151(a)) to
show current cost estimates;

(C) Annual valuations as required by the trust agreement; and

(D) Notices of nonpayment as required by the trust agreement.

(4) The bond must guarantee that the owner or operator will:

(i) Fund the standby trust fund in an amount equal to the penal sum of
the bond before loss of the exclusion under §261.4(a)(24) or

(ii) Fund the standby trust fund in an amount equal to the penal sum
within 15 days after an administrative order to begin closure issued by
the Regional Administrator becomes final, or within 15 days after an
order to begin closure is issued by a U.S. district court or other court
of competent jurisdiction; or

(iii) Provide alternate financial assurance as specified in this
section, and obtain the Regional Administrator's written approval of the
assurance provided, within 90 days after receipt by both the owner or
operator and the Regional Administrator of a notice of cancellation of
the bond from the surety.

(5) Under the terms of the bond, the surety will become liable on the
bond obligation when the owner or operator fails to perform as
guaranteed by the bond.

(6) The penal sum of the bond must be in an amount at least equal to the
current cost estimate, except as provided in § 261.143(f).

(7) Whenever the current cost estimate increases to an amount greater
than the penal sum, the owner or operator, within 60 days after the
increase, must either cause the penal sum to be increased to an amount
at least equal to the current cost estimate and submit evidence of such
increase to the Regional Administrator, or obtain other financial
assurance as specified in this section to cover the increase.  Whenever
the current cost estimate decreases, the penal sum may be reduced to the
amount of the current cost estimate following written approval by the
Regional Administrator.

(8) Under the terms of the bond, the surety may cancel the bond by
sending notice of cancellation by certified mail to the owner or
operator and to the Regional Administrator.  Cancellation may not occur,
however, during the 120 days beginning on the date of receipt of the
notice of cancellation by both the owner or operator and the Regional
Administrator, as evidenced by the return receipts.  

(9) The owner or operator may cancel the bond if the Regional
Administrator has given prior written consent based on his receipt of
evidence of alternate financial assurance as specified in this section.

(c) Letter of credit.  (1) An owner or operator may satisfy the
requirements of this section by obtaining an irrevocable standby letter
of credit which conforms to the requirements of this paragraph and
submitting the letter to the Regional Administrator.  The issuing
institution must be an entity which has the authority to issue letters
of credit and whose letter-of-credit operations are regulated and
examined by a Federal or State agency.

(2) The wording of the letter of credit must be identical to the wording
specified in §261.151(c).

(3) An owner or operator who uses a letter of credit to satisfy the
requirements of this section must also establish a standby trust fund. 
Under the terms of the letter of credit, all amounts paid pursuant to a
draft by the Regional Administrator will be deposited by the issuing
institution directly into the standby trust fund in accordance with
instructions from the Regional Administrator.  This standby trust fund
must meet the requirements of the trust fund specified in
§ 261.143(a), except that:

(i)  An originally signed duplicate of the trust agreement must be
submitted to the Regional Administrator with the letter of credit; and

(ii) Unless the standby trust fund is funded pursuant to the
requirements of this section, the following are not required by these
regulations:

(A) Payments into the trust fund as specified in § 261.143(a);

(B) Updating of Schedule A of the trust agreement (see §261.151(a)) to
show current cost estimates;

(C) Annual valuations as required by the trust agreement; and

(D) Notices of nonpayment as required by the trust agreement.

(4) The letter of credit must be accompanied by a letter from the owner
or operator referring to the letter of credit by number, issuing
institution, and date, and providing the following information: The EPA
Identification Number (if any issued), name, and address of the
facility, and the amount of funds assured for the facility by the letter
of credit.

(5) The letter of credit must be irrevocable and issued for a period of
at least 1 year.  The letter of credit must provide that the expiration
date will be automatically extended for a period of at least 1 year
unless, at least 120 days before the current expiration date, the
issuing institution notifies both the owner or operator and the Regional
Administrator by certified mail of a decision not to extend the
expiration date.  Under the terms of the letter of credit, the 120 days
will begin on the date when both the owner or operator and the Regional
Administrator have received the notice, as evidenced by the return
receipts.

(6) The letter of credit must be issued in an amount at least equal to
the current cost estimate, except as provided in §261.143(f).

(7) Whenever the current cost estimate increases to an amount greater
than the amount of the credit, the owner or operator, within 60 days
after the increase, must either cause the amount of the credit to be
increased so that it at least equals the current cost estimate and
submit evidence of such increase to the Regional Administrator, or
obtain other financial assurance as specified in this section to cover
the increase.  Whenever the current cost estimate decreases, the amount
of the credit may be reduced to the amount of the current cost estimate
following written approval by the Regional Administrator.

(8) Following a determination by the Regional Administrator that the
hazardous secondary materials do not meet the conditions of the
exclusion under §261.4(a)(24), the Regional Administrator may draw on
the letter of credit.

(9) If the owner or operator does not establish alternate financial
assurance as specified in this section and obtain written approval of
such alternate assurance from the Regional Administrator within 90 days
after receipt by both the owner or operator and the Regional
Administrator of a notice from the issuing institution that it has
decided not to extend the letter of credit beyond the current expiration
date,  the Regional Administrator will draw on the letter of credit. 
The Regional Administrator may delay the drawing if the issuing
institution grants an extension of the term of the credit.  During the
last 30 days of any such extension the Regional Administrator will draw
on the letter of credit if the owner or operator has failed to provide
alternate financial assurance as specified in this section and obtain
written approval of such assurance from the Regional Administrator.

(10) The Regional Administrator will return the letter of credit to the
issuing institution for termination when:

(i) An owner or operator substitutes alternate financial assurance as
specified in this section; or

(ii) The Regional Administrator releases the owner or operator from the
requirements of this section in accordance with §261.143(i).

(d) Insurance.  (1) An owner or operator may satisfy the requirements of
this section by obtaining insurance which conforms to the requirements
of this paragraph and submitting a certificate of such insurance to the
Regional Administrator   At a minimum, the insurer must be licensed to
transact the business of insurance, or eligible to provide insurance as
an excess or surplus lines insurer, in one or more States.

(2) The wording of the certificate of insurance must be identical to the
wording specified in §261.151(d).  

(3) The insurance policy must be issued for a face amount at least equal
to the current cost estimate, except as provided in §261.143(f).  The
term ``face amount'' means the total amount the insurer is obligated to
pay under the policy.  Actual payments by the insurer will not change
the face amount, although the insurer's future liability will be lowered
by the amount of the payments.

(4) The insurance policy must guarantee that funds will be available
whenever needed to pay the cost of removal of all hazardous secondary
materials from the unit, to pay the cost of decontamination of the unit,
to pay the costs of the performance of activities required under subpart
G of 40 CFR parts 264 or 265, as applicable, for the facilities covered
by this policy.  The policy must also guarantee that once funds are
needed, the insurer will be responsible for paying out funds, up to an
amount equal to the face amount of the policy, upon the direction of the
Regional Administrator, to such party or parties as the Regional
Administrator specifies.

(5) After beginning partial or final closure under 40 CFR parts 264 or
265, as applicable,  an owner or operator or any other authorized person
may request reimbursements for closure expenditures by submitting
itemized bills to the Regional Administrator.  The owner or operator may
request reimbursements only if the remaining value of the policy is
sufficient to cover the maximum costs of closing the facility over its
remaining operating life.  Within 60 days after receiving bills for
closure activities, the Regional Administrator will instruct the insurer
to make reimbursements in such amounts as the Regional Administrator
specifies in writing if the Regional Administrator determines that the
expenditures are in accordance with the approved plan or otherwise
justified.  If the Regional Administrator has reason to believe that the
maximum cost over the remaining life of the facility will be
significantly greater than the face amount of the policy, he may
withhold reimbursement of such amounts as he deems prudent until he
determines, in accordance with § 261.143(h), that the owner or
operator is no longer required to maintain financial assurance for the
particular facility.  If the Regional Administrator does not instruct
the insurer to make such reimbursements, he will provide to the owner or
operator a detailed written statement of reasons.

(6) The owner or operator must maintain the policy in full force and
effect until the Regional Administrator consents to termination of the
policy by the owner or operator as specified in paragraph (i)(10) of
this section.  Failure to pay the premium, without substitution of
alternate financial assurance as specified in this section, will
constitute a significant violation of these regulations warranting such
remedy as the Regional Administrator deems necessary.  Such violation
will be deemed to begin upon receipt by the Regional Administrator of a
notice of future cancellation, termination, or failure to renew due to
nonpayment of the premium, rather than upon the date of expiration.

(7) Each policy must contain a provision allowing assignment of the
policy to a successor owner or operator.  Such assignment may be
conditional upon consent of the insurer, provided such consent is not
unreasonably refused.

(8) The policy must provide that the insurer may not cancel, terminate,
or fail to renew the policy except for failure to pay the premium.  The
automatic renewal of the policy must, at a minimum, provide the insured
with the option of renewal at the face amount of the expiring policy. 
If there is a failure to pay the premium, the insurer may elect to
cancel, terminate, or fail to renew the policy by sending notice by
certified mail to the owner or operator and the Regional Administrator. 
Cancellation, termination, or failure to renew may not occur, however,
during the 120 days beginning with the date of receipt of the notice by
both the Regional Administrator and the owner or operator, as evidenced
by the return receipts.  Cancellation, termination, or failure to renew
may not occur and the policy will remain in full force and effect in the
event that on or before the date of expiration:

(i) The Regional Administrator deems the facility abandoned; or

(ii) Conditional exclusion or interim status is lost, terminated, or
revoked; or

(iii) Closure is ordered by the Regional Administrator or a U.S.
district court or other court of competent jurisdiction; or

(iv) The owner or operator is named as debtor in a voluntary or
involuntary proceeding under Title 11 (Bankruptcy), U.S. Code; or

(v) The premium due is paid.

(9) Whenever the current cost estimate increases to an amount greater
than the face amount of the policy, the owner or operator, within 60
days after the increase, must either cause the face amount to be
increased to an amount at least equal to the current cost estimate and
submit evidence of such increase to the Regional Administrator, or
obtain other financial assurance as specified in this section to cover
the increase.  Whenever the current cost estimate decreases, the face
amount may be reduced to the amount of the current cost estimate
following written approval by the Regional Administrator.

(10) The Regional Administrator will give written consent to the owner
or operator that he may terminate the insurance policy when:

(i) An owner or operator substitutes alternate financial assurance as
specified in this section; or

(ii) The Regional Administrator releases the owner or operator from the
requirements of this section in accordance with §261.143(i).

(e) Financial test and corporate guarantee.  (1) An owner or operator
may satisfy the requirements of this section by demonstrating that he
passes a financial test as specified in this paragraph.  To pass this
test the owner or operator must meet the criteria of either paragraph
(e)(1)(i) or (ii) of this section:

(i) The owner or operator must have:

(A) Two of the following three ratios: A ratio of total liabilities to
net worth less than 2.0; a ratio of the sum of net income plus
depreciation, depletion, and amortization to total liabilities greater
than 0.1; and a ratio of current assets to current liabilities greater
than 1.5; and

(B) Net working capital and tangible net worth each at least six times
the sum of the current cost estimates and the current plugging and
abandonment cost estimates; and

(C) Tangible net worth of at least $10 million; and

(D) Assets located in the United States amounting to at least 90 percent
of total assets or at least six times the sum of the current cost
estimates and the current plugging and abandonment cost estimates.

(ii) The owner or operator must have:

(A) A current rating for his most recent bond issuance of AAA, AA, A, or
BBB as issued by Standard and Poor's or Aaa, Aa, A, or Baa as issued by
Moody's; and

(B) Tangible net worth at least six times the sum of the current cost
estimates and the current plugging and abandonment cost estimates; and

(C) Tangible net worth of at least $10 million; and

(D) Assets located in the United States amounting to at least 90 percent
of total assets or at least six times the sum of the current cost
estimates and the current plugging and abandonment cost estimates.

(2) The phrase ``current cost estimates'' as used in paragraph (e)(1) of
this section refers to the cost estimates required to be shown in
paragraphs 1-4 of the letter from the owner's or operator's chief
financial officer (§261.151(e)).  The phrase ``current plugging and
abandonment cost estimates'' as used in paragraph (e)(1) of this section
refers to the cost estimates required to be shown in paragraphs 1-4 of
the letter from the owner's or operator's chief financial officer
(§ 144.70(f) of this title).

(3) To demonstrate that he meets this test, the owner or operator must
submit the following items to the Regional Administrator:

(i) A letter signed by the owner's or operator's chief financial officer
and worded as specified in §261.151(e); and

(ii) A copy of the independent certified public accountant's report on
examination of the owner's or operator's financial statements for the
latest completed fiscal year; and

(iii) If the chief financial officer’s letter providing evidence of
financial assurance includes financial data showing that the owner or
operator satisfies paragraph (e)(1)(i)of this section that are different
from the data in the audited financial statements referred to in
paragraph (e)(3)(ii)of this section or any other audited financial
statement or data filed with the SEC, then a special report from the
owner’s or operator’s independent certified public accountant to the
owner or operator is required. The special report shall be based upon an
agreed upon procedures engagement in accordance with professional
auditing standards and shall describe the procedures performed in
comparing the data in the chief financial officer’s letter derived
from the independently audited, year-end financial statements for the
latest fiscal year with the amounts in such financial statements, the
findings of the comparison, and the reasons for any differences.

 (4) The owner or operator may obtain an extension of the time allowed
for submission of the documents specified in paragraph (e)(3) of this
section if the fiscal year of the owner or operator ends during the 90
days prior to the effective date of these regulations and if the
year-end financial statements for that fiscal year will be audited by an
independent certified public accountant. The extension will end no later
than 90 days after the end of the owner's or operator's fiscal year. To
obtain the extension, the owner's or operator's chief financial officer
must send, by the effective date of these regulations, a letter to the
Regional Administrator of each Region in which the owner's or operator's
facilities to be covered by the financial test are located.  This letter
from the chief financial officer must:

(i) Request the extension;

(ii) Certify that he has grounds to believe that the owner or operator
meets the criteria of the financial test;

(iii) Specify for each facility to be covered by the test the EPA
Identification Number (if any issued), name, address, and current cost
estimates to be covered by the test;

(iv) Specify the date ending the owner's or operator's last complete
fiscal year before the effective date of these regulations;

(v) Specify the date, no later than 90 days after the end of such fiscal
year, when he will submit the documents specified in paragraph (e)(3) of
this section; and

(vi) Certify that the year-end financial statements of the owner or
operator for such fiscal year will be audited by an independent
certified public accountant.

(5) After the initial submission of items specified in paragraph (e)(3)
of this section, the owner or operator must send updated information to
the Regional Administrator within 90 days after the close of each
succeeding fiscal year. This information must consist of all three items
specified in paragraph (e)(3) of this section.

(6) If the owner or operator no longer meets the requirements of
paragraph (e)(1) of this section, he must send notice to the Regional
Administrator of intent to establish alternate financial assurance as
specified in this section. The notice must be sent by certified mail
within 90 days after the end of the fiscal year for which the year-end
financial data show that the owner or operator no longer meets the
requirements. The owner or operator must provide the alternate financial
assurance within 120 days after the end of such fiscal year.  

(7) The Regional Administrator may, based on a reasonable belief that
the owner or operator may no longer meet the requirements of paragraph
(e)(1) of this section, require reports of financial condition at any
time from the owner or operator in addition to those specified in
paragraph (e)(3) of this section. If the Regional Administrator finds,
on the basis of such reports or other information, that the owner or
operator no longer meets the requirements of paragraph (e)(1) of this
section, the owner or operator must provide alternate financial
assurance as specified in this section within 30 days after notification
of such a finding.

(8) The Regional Administrator may disallow use of this test on the
basis of qualifications in the opinion expressed by the independent
certified public accountant in his report on examination of the owner's
or operator's financial statements (see paragraph (e)(3)(ii) of this
section).  An adverse opinion or a disclaimer of opinion will be cause
for disallowance.  The Regional Administrator will evaluate other
qualifications on an individual basis.  The owner or operator must
provide alternate financial assurance as specified in this section
within 30 days after notification of the disallowance.

 (9) The owner or operator is no longer required to submit the items
specified in paragraph (e)(3) of this section when:

(i) An owner or operator substitutes alternate financial assurance as
specified in this section; or

(ii) The Regional Administrator releases the owner or operator from the
requirements of this section in accordance with §261.143(i).

(10) An owner or operator may meet the requirements of this section by
obtaining a written guarantee.  The guarantor must be the direct or
higher-tier parent corporation of the owner or operator, a firm whose
parent corporation is also the parent corporation of the owner or
operator, or a firm with a ``substantial business relationship'' with
the owner or operator.  The guarantor must meet the requirements for
owners or operators in paragraphs (e)(1) through (8) of this section and
must comply with the terms of the guarantee.  The wording of the
guarantee must be identical to the wording specified in §261.151(g)(1).
  A certified copy of the guarantee must accompany the items sent to the
Regional Administrator as specified in paragraph (e)(3) of this section.
 One of these items must be the letter from the guarantor's chief
financial officer.  If the guarantor's parent corporation is also the
parent corporation of the owner or operator, the letter must describe
the value received in consideration of the guarantee.  If the guarantor
is a firm with a ``substantial business relationship'' with the owner or
operator, this letter must describe this ``substantial business
relationship'' and the value received in consideration of the guarantee.
 The terms of the guarantee must provide that:

(i) Following a determination by the Regional Administrator that the
hazardous secondary materials at the owner or operator’s facility
covered by this guarantee do not meet the conditions of the exclusion
under §261.4(a)(24), the guarantor will dispose of any hazardous
secondary material as hazardous waste and close the facility in
accordance with closure requirements found in parts 264 or 265 of this
chapter, as applicable,  or establish a trust fund as specified in
§ 261.143(a) in the name of the owner or operator in the amount of the
current cost estimate.  

(ii) The corporate guarantee will remain in force unless the guarantor
sends notice of cancellation by certified mail to the owner or operator
and to the Regional Administrator.  Cancellation may not occur, however,
during the 120 days beginning on the date of receipt of the notice of
cancellation by both the owner or operator and the Regional
Administrator, as evidenced by the return receipts.

(iii) If the owner or operator fails to provide alternate financial
assurance as specified in this section and obtain the written approval
of such alternate assurance from the Regional Administrator within 90
days after receipt by both the owner or operator and the Regional
Administrator of a notice of cancellation of the corporate guarantee
from the guarantor, the guarantor will provide such alternate financial
assurance in the name of the owner or operator.

(f) Use of multiple financial mechanisms.  An owner or operator may
satisfy the requirements of this section by establishing more than one
financial mechanism per facility.  These mechanisms are limited to trust
funds, surety bonds, letters of credit, and insurance.  The mechanisms
must be as specified in paragraphs (a) through (d), respectively, of
this section, except that it is the combination of mechanisms, rather
than the single mechanism, which must provide financial assurance for an
amount at least equal to the current cost estimate.  If an owner or
operator uses a trust fund in combination with a surety bond or a letter
of credit, he may use the trust fund as the standby trust fund for the
other mechanisms.  A single standby trust fund may be established for
two or more mechanisms.  The Regional Administrator may use any or all
of the mechanisms to provide for the facility.

(g) Use of a financial mechanism for multiple facilities.  An owner or
operator may use a financial assurance mechanism specified in this
section to meet the requirements of this section for more than one
facility.  Evidence of financial assurance submitted to the Regional
Administrator must include a list showing, for each facility, the EPA
Identification Number (if any issued), name, address, and the amount of
funds assured by the mechanism.  If the facilities covered by the
mechanism are in more than one Region, identical evidence of financial
assurance must be submitted to and maintained with the Regional
Administrators of all such Regions.  The amount of funds available
through the mechanism must be no less than the sum of funds that would
be available if a separate mechanism had been established and maintained
for each facility.  In directing funds available through the mechanism
for any of the facilities covered by the mechanism, the Regional
Administrator may direct only the amount of funds designated for that
facility, unless the owner or operator agrees to the use of additional
funds available under the mechanism

(h) Removal and Decontamination Plan for Release (1) An owner or
operator of a reclamation facility or an intermediate facility who
wishes to be released from his financial assurance obligations under
§261.4(a)(24)(v)(F) must submit a plan for removing all hazardous
secondary material residues to the Regional Administrator at least 180
days prior to the date on which he expects to cease to operate under the
exclusion.

(2) The plan must include, at least:

(A) For each hazardous secondary materials storage unit subject to
financial assurance requirements under §261.4(a)(24)(v)(F), a
description of how all excluded hazardous secondary materials will be
recycled or sent for recycling, and how all residues, contaminated
containment systems (liners, etc), contaminated soils, subsoils,
structures, and equipment will be removed or decontaminated as necessary
to protect human health and the environment, and

(B) A detailed description of the steps necessary to remove or
decontaminate all hazardous secondary material residues and contaminated
containment system components, equipment, structures, and soils
including, but not limited to, procedures for cleaning equipment and
removing contaminated soils, methods for sampling and testing
surrounding soils, and criteria for determining the extent of
decontamination necessary to protect human health and the environment;
and

(C) A detailed description of any other activities necessary to protect
human health and the environment during this timeframe, including, but
not limited to, leachate collection, run-on and run-off control, etc;
and

(D) A schedule for conducting the activities described which, at a
minimum, includes the total time required to remove all excluded
hazardous secondary materials for recycling and decontaminate all units
subject to financial assurance under §261.4(a)(24)(v)(F) and the time
required for intervening activities which will allow tracking of the
progress of decontamination.

(3) The Regional Administrator will provide the owner or operator and
the public, through a newspaper notice, the opportunity to submit
written comments on the plan and request modifications to the plan no
later than 30 days from the date of the notice. He will also, in
response to a request or at his discretion, hold a public hearing
whenever such a hearing might clarify one or more issues concerning the
plan. The Regional Administrator will give public notice of the hearing
at least 30 days before it occurs. (Public notice of the hearing may be
given at the same time as notice of the opportunity for the public to
submit written comments, and the two notices may be combined.)   The
Regional Administrator will approve, modify, or disapprove the plan
within 90 days of its receipt. If the Regional Administrator does not
approve the plan, he shall provide the owner or operator with a detailed
written statement of reasons for the refusal and the owner or operator
must modify the plan or submit a new plan for approval within 30 days
after receiving such written statement. The Regional Administrator will
approve or modify this plan in writing within 60 days. If the Regional
Administrator modifies the plan, this modified plan becomes the approved
plan. The Regional Administrator must assure that the approved plan is
consistent with §261.  A copy of the modified plan with a detailed
statement of reasons for the modifications must be mailed to the owner
or operator.

(4).    Within 60 days of completion of the activities described for
each hazardous secondary materials management unit, the owner or
operator must submit to the Regional Administrator, by registered mail,
a certification that all hazardous secondary materials have been removed
from the unit and the unit has been decontaminated in accordance with
the specifications in the approved plan. The certification must be
signed by the owner or operator and by a qualified Professional
Engineer. Documentation supporting the Professional Engineer's
certification must be furnished to the Regional Administrator, upon
request, until he releases the owner or operator from the financial
assurance requirements for §261.4(a)(24)(v)(F).

(i) Release of the owner or operator from the requirements of this
section. Within 60 days after receiving certifications from the owner or
operator and a qualified Professional Engineer that all hazardous
secondary materials have been removed from the facility or a unit at the
facility  and the facility or a unit  has been decontaminated in
accordance with the approved plan per paragraph (h), the Regional
Administrator will notify the owner or operator in writing that he is no
longer required under §261.4(a)(24)(v)(F) to maintain financial
assurance for that facility or a unit at the facility, unless the
Regional Administrator has reason to believe that that all hazardous
secondary materials have not been removed from the facility or unit at a
facility or that the facility or unit has not been decontaminated in
accordance with the approved plan. The Regional Administrator shall
provide the owner or operator a detailed written statement of any such
reason to believe that all hazardous secondary materials have not been
removed from the unit or that the unit has not been decontaminated in
accordance with the approved plan.

§261.144  (reserved).

§261.145  (reserved)

§261.146  (reserved)

§261.147 Liability requirements. 

(a) Coverage for sudden accidental occurrences. An owner or operator of
a hazardous secondary material reclamation facility or an intermediate
facility subject to financial assurance requirements under
§261.4(a)(24)(v)(F), or a group of such facilities, must demonstrate
financial responsibility for bodily injury and property damage to third
parties caused by sudden accidental occurrences arising from operations
of the facility or group of facilities. The owner or operator must have
and maintain liability coverage for sudden accidental occurrences in the
amount of at least $1 million per occurrence with an annual aggregate of
at least $2 million, exclusive of legal defense costs. This liability
coverage may be demonstrated as specified in paragraphs (a) (1), (2),
(3), (4), (5), or (6) of this section:

(1) An owner or operator may demonstrate the required liability coverage
by having liability insurance as specified in this paragraph.

(i) Each insurance policy must be amended by attachment of the Hazardous
Secondary Material Facility Liability Endorsement, or evidenced by a
Certificate of Liability Insurance.  The wording of the endorsement must
be identical to the wording specified in §261.151(h).  The wording of
the certificate of insurance must be identical to the wording specified
in § 261.151(i).  The owner or operator must submit a signed duplicate
original of the endorsement or the certificate of insurance to the
Regional Administrator, or Regional Administrators if the facilities are
located in more than one Region.  If requested by a Regional
Administrator, the owner or operator must provide a signed duplicate
original of the insurance policy.

(ii) Each insurance policy must be issued by an insurer which, at a
minimum, is licensed to transact the business of insurance, or eligible
to provide insurance as an excess or surplus lines insurer, in one or
more States.

(2) An owner or operator may meet the requirements of this section by
passing a financial test or using the guarantee for liability coverage
as specified in paragraphs (f) and (g) of this section.

(3) An owner or operator may meet the requirements of this section by
obtaining a letter of credit for liability coverage as specified in
paragraph (h) of this section.

(4) An owner or operator may meet the requirements of this section by
obtaining a surety bond for liability coverage as specified in paragraph
(i) of this section.

(5) An owner or operator may meet the requirements of this section by
obtaining a trust fund for liability coverage as specified in paragraph
(j) of this section.

(6) An owner or operator may demonstrate the required liability coverage
through the use of combinations of insurance, financial test, guarantee,
letter of credit, surety bond, and trust fund, except that the owner or
operator may not combine a financial test covering part of the liability
coverage requirement with a guarantee unless the financial statement of
the owner or operator is not consolidated with the financial statement
of the guarantor.

The amounts of coverage demonstrated must total at least the minimum
amounts required by this section.  If the owner or operator demonstrates
the required coverage through the use of a combination of financial
assurances under this paragraph, the owner or operator shall specify at
least one such assurance as ``primary'' coverage and shall specify other
assurance as ``excess'' coverage.

 (7) An owner or operator shall notify the Regional Administrator in
writing within 30 days whenever:

(i) A claim results in a reduction in the amount of financial assurance
for liability coverage provided by a financial instrument authorized in
paragraphs (a)(1) through (a)(6) of this section; or    

(ii) A Certification of Valid Claim for bodily injury or property
damages caused by a sudden or non-sudden accidental occurrence arising
from the operation of a hazardous secondary material reclamation
facility or intermediate facility is entered between the owner or
operator and third-party claimant for liability coverage under
paragraphs (a)(1) through (a)(6) of this section; or

(iii) A final court order establishing a judgment for bodily injury or
property damage caused by a sudden or non-sudden accidental occurrence
arising from the operation of a hazardous secondary material reclamation
facility or intermediate facility is issued against the owner or
operator or an instrument that is providing financial assurance for
liability coverage under paragraphs (a)(1) through (a)(6) of this
section.	

(b) Coverage for nonsudden accidental occurrences. An owner or operator
of a hazardous secondary material reclamation facility or intermediate
facility with land-based units, as defined in §260.10, which are used
to manage hazardous secondary materials excluded under §261.4(a)(24) or
a group of such facilities, must demonstrate financial responsibility
for bodily injury and property damage to third parties caused by
nonsudden accidental occurrences arising from operations of the facility
or group of facilities. The owner or operator must have and maintain
liability coverage for nonsudden accidental occurrences in the amount of
at least $3 million per occurrence with an annual aggregate of at least
$6 million, exclusive of legal defense costs. An owner or operator who
must meet the requirements of this section may combine the required
per-occurrence coverage levels for sudden and nonsudden accidental
occurrences into a single per-occurrence level, and combine the required
annual aggregate coverage levels for sudden and nonsudden accidental
occurrences into a single annual aggregate level. Owners or operators
who combine coverage levels for sudden and nonsudden accidental
occurrences must maintain liability coverage in the amount of at least
$4 million per occurrence and $8 million annual aggregate. This
liability coverage may be demonstrated as specified in paragraph (b)
(1), (2), (3), (4), (5), or (6) of this section:

(1) An owner or operator may demonstrate the required liability coverage
by having liability insurance as specified in this paragraph.

(i) Each insurance policy must be amended by attachment of the Hazardous
Secondary Material Facility Liability Endorsement or evidenced by a
Certificate of Liability Insurance.  The wording of the endorsement must
be identical to the wording specified in § 261.151(h).  The wording of
the certificate of insurance must be identical to the wording specified
in § 261.151(i).  The owner or operator must submit a signed duplicate
original of the endorsement or the certificate of insurance to the
Regional Administrator, or Regional Administrators if the facilities are
located in more than one Region.  If requested by a Regional
Administrator, the owner or operator must provide a signed duplicate
original of the insurance policy.

(ii) Each insurance policy must be issued by an insurer which, at a
minimum, is licensed to transact the business of insurance, or eligible
to provide insurance as an excess or surplus lines insurer, in one or
more States.

(2) An owner or operator may meet the requirements of this section by
passing a financial test or using the guarantee for liability coverage
as specified in paragraphs (f) and (g) of this section.

(3) An owner or operator may meet the requirements of this section by
obtaining a letter of credit for liability coverage as specified in
paragraph (h) of this section.

(4) An owner or operator may meet the requirements of this section by
obtaining a surety bond for liability coverage as specified in paragraph
(i) of this section.

(5) An owner or operator may meet the requirements of this section by
obtaining a trust fund for liability coverage as specified in paragraph
(j) of this section.

(6) An owner or operator may demonstrate the required liability coverage
through the use of combinations of insurance, financial test, guarantee,
letter of credit, surety bond, and trust fund, except that the owner or
operator may not combine a financial test covering part of the liability
coverage requirement with a guarantee unless the financial statement of
the owner or operator is not consolidated with the financial statement
of the guarantor.  The amounts of coverage demonstrated must total at
least the minimum amounts required by this section.  If the owner or
operator demonstrates the required coverage through the use of a
combination of financial assurances under this paragraph, the owner or
operator shall specify at least one such assurance as ``primary''
coverage and shall specify other assurance as ``excess'' coverage.

(7) An owner or operator shall notify the Regional Administrator in
writing within 30 days whenever:

(i) A claim results in a reduction in the amount of financial assurance
for liability coverage provided by a financial instrument authorized in
paragraphs (b)(1) through (b)(6) of this section; or

(ii) A Certification of Valid Claim for bodily injury or property
damages caused by a sudden or non-sudden accidental occurrence arising
from the operation of a hazardous secondary material treatment and/or
storage facility is entered between the owner or operator and
third-party claimant for liability coverage under paragraphs (b)(1)
through (b)(6) of this section; or

(iii) A final court order establishing a judgment for bodily injury or
property damage caused by a sudden or non-sudden accidental occurrence
arising from the operation of a hazardous secondary material treatment
and/or storage facility is issued against the owner or operator or an
instrument that is providing financial assurance for liability coverage
under paragraphs (b)(1) through (b)(6) of this section.

(c) Request for variance.  If an owner or operator can demonstrate to
the satisfaction of the Regional Administrator that the levels of
financial responsibility required by paragraph (a) or (b) of this
section are not consistent with the degree and duration of risk
associated with treatment and/or storage at the facility or group of
facilities, the owner or operator may obtain a variance from the
Regional Administrator.  The request for a variance must be submitted in
writing to the Regional Administrator.  If granted, the variance will
take the form of an adjusted level of required liability coverage, such
level to be based on the Regional Administrator's assessment of the
degree and duration of risk associated with the ownership or operation
of the facility or group of facilities.  The Regional Administrator may
require an owner or operator who requests a variance to provide such
technical and engineering information as is deemed necessary by the
Regional Administrator to determine a level of financial responsibility
other than that required by paragraph (a) or (b) of this section. 

(d) Adjustments by the Regional Administrator.  If the Regional
Administrator determines that the levels of financial responsibility
required by paragraph (a) or (b) of this section are not consistent with
the degree and duration of risk associated with treatment and/or storage
at the facility or group of facilities, the Regional Administrator may
adjust the level of financial responsibility required under paragraph
(a) or (b) of this section as may be necessary to protect human health
and the environment.  This adjusted level will be based on the Regional
Administrator's assessment of the degree and duration of risk associated
with the ownership or operation of the facility or group of facilities. 
In addition, if the Regional Administrator determines that there is a
significant risk to human health and the environment from nonsudden
accidental occurrences resulting from the operations of a facility that
is not a surface impoundment, pile, or land treatment facility, he may
require that an owner or operator of the facility comply with paragraph
(b) of this section.  An owner or operator must furnish to the Regional
Administrator, within a reasonable time, any information which the
Regional Administrator requests to determine whether cause exists for
such adjustments of level or type of coverage.  

(e) Period of coverage. Within 60 days after receiving certifications
from the owner or operator and a qualified Professional Engineer that
all hazardous secondary materials have been removed from the facility or
a unit at the facility  and the facility or a unit has been
decontaminated in accordance with the approved plan per §261.143(h),
the Regional Administrator will notify the owner or operator in writing
that he is no longer required under §261.4(a)(24)(v)(F) to maintain
liability coverage for that facility or a unit at the facility, unless
the Regional Administrator has reason to believe that that all hazardous
secondary materials have not been removed from the facility or unit at a
facility or that the facility or unit has not been decontaminated in
accordance with the approved plan.  

(f) Financial test for liability coverage. (1) An owner or operator may
satisfy the requirements of this section by demonstrating that he passes
a financial test as specified in this paragraph. To pass this test the
owner or operator must meet the criteria of paragraph (f)(1) (i) or (ii)
of this section:

(i) The owner or operator must have:

(A) Net working capital and tangible net worth each at least six times
the amount of liability coverage to be demonstrated by this test; and

(B) Tangible net worth of at least $10 million; and

(C) Assets in the United States amounting to either: ( 1 ) At least 90
percent of his total assets; or ( 2 ) at least six times the amount of
liability coverage to be demonstrated by this test.

(ii) The owner or operator must have:

(A) A current rating for his most recent bond issuance of AAA, AA, A, or
BBB as issued by Standard and Poor's, or Aaa, Aa, A, or Baa as issued by
Moody's; and

(B) Tangible net worth of at least $10 million; and

(C) Tangible net worth at least six times the amount of liability
coverage to be demonstrated by this test; and

(D) Assets in the United States amounting to either: ( 1 ) At least 90
percent of his total assets; or ( 2 ) at least six times the amount of
liability coverage to be demonstrated by this test.

(2) The phrase “amount of liability coverage” as used in paragraph
(f)(1) of this section refers to the annual aggregate amounts for which
coverage is required under paragraphs (a) and (b) of this section and
the annual aggregate amounts for which coverage is required under
paragraphs (a) and (b) of  40 CFR 264.147 and 265.147.

(3) To demonstrate that he meets this test, the owner or operator must
submit the following three items to the Regional Administrator:

(i) A letter signed by the owner's or operator's chief financial officer
and worded as specified in §261.151(f). If an owner or operator is
using the financial test to demonstrate both assurance as specified by
§261.143(e), and liability coverage, he must submit the letter
specified in §261.151(f) to cover both forms of financial
responsibility; a separate letter as specified in §261.151(e) is not
required.

(ii) A copy of the independent certified public accountant's report on
examination of the owner's or operator's financial statements for the
latest completed fiscal year.

(iii) If the chief financial officer’s letter providing evidence of
financial assurance includes financial data showing that the owner or
operator satisfies paragraph (f)(1)(i)of this section that are different
from the data in the audited financial statements referred to in
paragraph (f)(3)(ii)of this section or any other audited financial
statement or data filed with the SEC, then a special report from the
owner’s or operator’s independent certified public accountant to the
owner or operator is required. The special report shall be based upon an
agreed upon procedures engagement in accordance with professional
auditing standards and shall describe the procedures performed in
comparing the data in the chief financial officer’s letter derived
from the independently audited, year-end financial statements for the
latest fiscal year with the amounts in such financial statements, the
findings of the comparison, and the reasons for any difference.

(4) The owner or operator may obtain a one-time extension of the time
allowed for submission of the documents specified in paragraph (f)(3) of
this section if the fiscal year of the owner or operator ends during the
90 days prior to the effective date of these regulations and if the
year-end financial statements for that fiscal year will be audited by an
independent certified public accountant. The extension will end no later
than 90 days after the end of the owner's or operator's fiscal year. To
obtain the extension, the owner's or operator's chief financial officer
must send, by the effective date of these regulations, a letter to the
Regional Administrator of each Region in which the owner's or operator's
facilities to be covered by the financial test are located. This letter
from the chief financial officer must:

(i) Request the extension;

(ii) Certify that he has grounds to believe that the owner or operator
meets the criteria of the financial test;

(iii) Specify for each facility to be covered by the test the EPA
Identification Number, name, address, the amount of liability coverage
and, when applicable, current closure and post-closure cost estimates to
be covered by the test;

(iv) Specify the date ending the owner's or operator's last complete
fiscal year before the effective date of these regulations;

(v) Specify the date, no later than 90 days after the end of such fiscal
year, when he will submit the documents specified in paragraph (f)(3) of
this section; and

(vi) Certify that the year-end financial statements of the owner or
operator for such fiscal year will be audited by an independent
certified public accountant.

(5) After the initial submission of items specified in paragraph (f)(3)
of this section, the owner or operator must send updated information to
the Regional Administrator within 90 days after the close of each
succeeding fiscal year. This information must consist of all three items
specified in paragraph (f)(3) of this section.

(6) If the owner or operator no longer meets the requirements of
paragraph (f)(1) of this section, he must obtain insurance, a letter of
credit, a surety bond, a trust fund, or a guarantee for the entire
amount of required liability coverage as specified in this section.
Evidence of liability coverage must be submitted to the Regional
Administrator within 90 days after the end of the fiscal year for which
the year-end financial data show that the owner or operator no longer
meets the test requirements.

(7) The Regional Administrator may disallow use of this test on the
basis of qualifications in the opinion expressed by the independent
certified public accountant in his report on examination of the owner's
or operator's financial statements (see paragraph (f)(3)(ii) of this
section). An adverse opinion or a disclaimer of opinion will be cause
for disallowance. The Regional Administrator will evaluate other
qualifications on an individual basis. The owner or operator must
provide evidence of insurance for the entire amount of required
liability coverage as specified in this section within 30 days after
notification of disallowance.

(g) Guarantee for liability coverage. (1) Subject to paragraph (g)(2) of
this section, an owner or operator may meet the requirements of this
section by obtaining a written guarantee, hereinafter referred to as
“guarantee.” The guarantor must be the direct or higher-tier parent
corporation of the owner or operator, a firm whose parent corporation is
also the parent corporation of the owner or operator, or a firm with a
“substantial business relationship” with the owner or operator. The
guarantor must meet the requirements for owners or operators in
paragraphs (f)(1) through (f)(6) of this section. The wording of the
guarantee must be identical to the wording specified in §261.151(g)(2)
of this chapter. A certified copy of the guarantee must accompany the
items sent to the Regional Administrator as specified in paragraph
(f)(3) of this section. One of these items must be the letter from the
guarantor's chief financial officer. If the guarantor's parent
corporation is also the parent corporation of the owner or operator,
this letter must describe the value received in consideration of the
guarantee. If the guarantor is a firm with a “substantial business
relationship” with the owner or operator, this letter must describe
this “substantial business relationship” and the value received in
consideration of the guarantee.

(i) If the owner or operator fails to satisfy a judgment based on a
determination of liability for bodily injury or property damage to third
parties caused by sudden or nonsudden accidental occurrences (or both as
the case may be), arising from the operation of facilities covered by
this corporate guarantee, or fails to pay an amount agreed to in
settlement of claims arising from or alleged to arise from such injury
or damage, the guarantor will do so up to the limits of coverage.

(ii) [Reserved]

(2)(i) In the case of corporations incorporated in the United States, a
guarantee may be used to satisfy the requirements of this section only
if the Attorneys General or Insurance Commissioners of (A) the State in
which the guarantor is incorporated, and (B) each State in which a
facility covered by the guarantee is located have submitted a written
statement to EPA that a guarantee executed as described in this section
and §264.151(g)(2) is a legally valid and enforceable obligation in
that State.

(ii) In the case of corporations incorporated outside the United States,
a guarantee may be used to satisfy the requirements of this section only
if (A) the non-U.S. corporation has identified a registered agent for
service of process in each State in which a facility covered by the
guarantee is located and in the State in which it has its principal
place of business, and if (B) the Attorney General or Insurance
Commissioner of each State in which a facility covered by the guarantee
is located and the State in which the guarantor corporation has its
principal place of business, has submitted a written statement to EPA
that a guarantee executed as described in this section and
§261.151(h)(2) is a legally valid and enforceable obligation in that
State.

(h) Letter of credit for liability coverage. (1) An owner or operator
may satisfy the requirements of this section by obtaining an irrevocable
standby letter of credit that conforms to the requirements of this
paragraph and submitting a copy of the letter of credit to the Regional
Administrator.

(2) The financial institution issuing the letter of credit must be an
entity that has the authority to issue letters of credit and whose
letter of credit operations are regulated and examined by a Federal or
State agency.

(3) The wording of the letter of credit must be identical to the wording
specified in §261.151(j) of this chapter.

(4) An owner or operator who uses a letter of credit to satisfy the
requirements of this section may also establish a standby trust fund.
Under the terms of such a letter of credit, all amounts paid pursuant to
a draft by the trustee of the standby trust will be deposited by the
issuing institution into the standby trust in accordance with
instructions from the trustee. The trustee of the standby trust fund
must be an entity which has the authority to act as a trustee and whose
trust operations are regulated and examined by a Federal or State
agency.

(5) The wording of the standby trust fund must be identical to the
wording specified in §261.151(m).

(i) Surety bond for liability coverage. (1) An owner or operator may
satisfy the requirements of this section by obtaining a surety bond that
conforms to the requirements of this paragraph and submitting a copy of
the bond to the Regional Administrator.

(2) The surety company issuing the bond must be among those listed as
acceptable sureties on Federal bonds in the most recent Circular 570 of
the U.S. Department of the Treasury.

(3) The wording of the surety bond must be identical to the wording
specified in §261.151(k) of this chapter.

(4) A surety bond may be used to satisfy the requirements of this
section only if the Attorneys General or Insurance Commissioners of (i)
the State in which the surety is incorporated, and (ii) each State in
which a facility covered by the surety bond is located have submitted a
written statement to EPA that a surety bond executed as described in
this section and §261.151(k) of this chapter is a legally valid and
enforceable obligation in that State.

(j) Trust fund for liability coverage. (1) An owner or operator may
satisfy the requirements of this section by establishing a trust fund
that conforms to the requirements of this paragraph and submitting an
originally signed duplicate of the trust agreement to the Regional
Administrator.

(2) The trustee must be an entity which has the authority to act as a
trustee and whose trust operations are regulated and examined by a
Federal or State agency.

(3) The trust fund for liability coverage must be funded for the full
amount of the liability coverage to be provided by the trust fund before
it may be relied upon to satisfy the requirements of this section. If at
any time after the trust fund is created the amount of funds in the
trust fund is reduced below the full amount of the liability coverage to
be provided, the owner or operator, by the anniversary date of the
establishment of the Fund, must either add sufficient funds to the trust
fund to cause its value to equal the full amount of liability coverage
to be provided, or obtain other financial assurance as specified in this
section to cover the difference. For purposes of this paragraph, “the
full amount of the liability coverage to be provided” means the amount
of coverage for sudden and/or nonsudden occurrences required to be
provided by the owner or operator by this section, less the amount of
financial assurance for liability coverage that is being provided by
other financial assurance mechanisms being used to demonstrate financial
assurance by the owner or operator.

(4) The wording of the trust fund must be identical to the wording
specified in §261.151(l) of this part.

§261.148 Incapacity of owners or operators, guarantors, or financial
institutions. 

    (a) An owner or operator must notify the Regional Administrator by
certified mail of the commencement of a voluntary or involuntary
proceeding under Title 11 (Bankruptcy), U.S. Code, naming the owner or
operator as debtor, within 10 days after commencement of the proceeding.
A guarantor of a corporate guarantee as specified in §261.143(e) must
make such a notification if he is named as debtor, as required under the
terms of the corporate guarantee.

 (b) An owner or operator who fulfills the requirements of § 261.143 or
§ 261.147 by obtaining a trust fund, surety bond, letter of credit, or
insurance policy will be deemed to be without the required financial
assurance or liability coverage in the event of bankruptcy of the
trustee or issuing institution, or a suspension or revocation of the
authority of the trustee institution to act as trustee or of the
institution issuing the surety bond, letter of credit, or insurance
policy to issue such instruments. The owner or operator must establish
other financial assurance or liability coverage within 60 days after
such an event.

§261.149 Use of State-required mechanisms. 

    (a) For a reclamation or intermediate facility located in a State
where EPA is administering the requirements of this subpart but where
the State has regulations that include requirements for financial
assurance of closure or liability coverage, an owner or operator may use
State-required financial mechanisms to meet the requirements of §
261.143 or § 261.147 if the Regional Administrator determines that the
State mechanisms are at least equivalent to the financial mechanisms
specified in this subpart. The Regional Administrator will evaluate the
equivalency of the mechanisms principally in terms of (1) certainty of
the availability of funds for the required closure activities or
liability coverage and (2) the amount of funds that will be made
available. The Regional Administrator may also consider other factors as
he deems appropriate. The owner or operator must submit to the Regional
Administrator evidence of the establishment of the mechanism together
with a letter requesting that the State-required mechanism be considered
acceptable for meeting the requirements of this subpart. The submission
must include the following information: The facility's EPA
Identification Number (if available), name, and address, and the amount
of funds for closure or liability coverage assured by the mechanism. The
Regional Administrator will notify the owner or operator of his
determination regarding the mechanism's acceptability in lieu of
financial mechanisms specified in this subpart. The Regional
Administrator may require the owner or operator to submit additional
information as is deemed necessary to make this determination. Pending
this determination, the owner or operator will be deemed to be in
compliance with the requirements of § 261.143 or § 261.147, as
applicable.

 (b) If a State-required mechanism is found acceptable as specified in
paragraph (a) of this section except for the amount of funds available,
the owner or operator may satisfy the requirements of this subpart by
increasing the funds available through the State-required mechanism or
using additional financial mechanisms as specified in this subpart. The
amount of funds available through the State and Federal mechanisms must
at least equal the amount required by this subpart.

 §261.150 State assumption of responsibility. 

    (a) If a State either assumes legal responsibility for an owner's or
operator's compliance with the closure or liability requirements of this
part or assures that funds will be available from State sources to cover
those requirements, the owner or operator will be in compliance with the
requirements of § 261.143 or § 261.147 if the Regional Administrator
determines that the State's assumption of responsibility is at least
equivalent to the financial mechanisms specified in this subpart. The
Regional Administrator will evaluate the equivalency of State guarantees
principally in terms of (1) certainty of the availability of funds for
the required closure activities or liability coverage and (2) the amount
of funds that will be made available. The Regional Administrator may
also consider other factors as he deems appropriate. The owner or
operator must submit to the Regional Administrator a letter from the
State describing the nature of the State's assumption of responsibility
together with a letter from the owner or operator requesting that the
State's assumption of responsibility be considered acceptable for
meeting the requirements of this subpart. The letter from the State must
include, or have attached to it, the following information: The
facility's EPA Identification Number (if available), name, and address,
and the amount of funds for closure or liability coverage that are
guaranteed by the State. The Regional Administrator will notify the
owner or operator of his determination regarding the acceptability of
the State's guarantee in lieu of financial mechanisms specified in this
subpart. The Regional Administrator may require the owner or operator to
submit additional information as is deemed necessary to make this
determination. Pending this determination, the owner or operator will be
deemed to be in compliance with the requirements of § 265.143 or §
265.147, as applicable.

 (b) If a State's assumption of responsibility is found acceptable as
specified in paragraph (a) of this section except for the amount of
funds available, the owner or operator may satisfy the requirements of
this subpart by use of both the State's assurance and additional
financial mechanisms as specified in this subpart. The amount of funds
available through the State and Federal mechanisms must at least equal
the amount required by this subpart.

§261.151 Wording of the instruments.

(a)(1) A trust agreement for a trust fund, as specified in §261.143(a)
of this chapter, must be worded as follows, except that instructions in
brackets are to be replaced with the relevant information and the
brackets deleted:

Trust Agreement

Trust Agreement, the “Agreement,” entered into as of [date] by and
between [name of the owner or operator], a [name of State] [insert
“corporation,” “partnership,” “association,” or
“proprietorship”], the “Grantor,” and [name of corporate
trustee], [insert “incorporated in the State of _______-----” or
“a national bank”], the “Trustee.” 

Whereas, the United States Environmental Protection Agency, “EPA,”
an agency of the United States Government, has established certain
regulations applicable to the Grantor, requiring that an owner or
operator of a   facility regulated under parts 264, or 265, or
satisfying the conditions of the exclusion under §261.4(a)(24) shall
provide assurance that funds will be available if  needed for care of
the facility under 40 CFR parts 264 or 265, subparts G, as applicable  ,

Whereas, the Grantor has elected to establish a trust to provide all or
part of such financial assurance for the facilities identified herein,

Whereas, the Grantor, acting through its duly authorized officers, has
selected the Trustee to be the trustee under this agreement, and the
Trustee is willing to act as trustee,

Now, Therefore, the Grantor and the Trustee agree as follows: 

Section 1.  Definitions.  As used in this Agreement:

(a) The term “Grantor” means the owner or operator who enters into
this Agreement and any successors or assigns of the Grantor.

(b) The term “Trustee” means the Trustee who enters into this
Agreement and any successor Trustee.

Section 2.  Identification of Facilities and Cost Estimates.  This
Agreement pertains to the facilities and cost estimates identified on
attached Schedule A [on Schedule A, for each facility list the EPA
Identification Number (if available), name, address, and the current
cost estimates, or portions thereof, for which financial assurance is
demonstrated by this Agreement].  

Section 3.  Establishment of Fund.  The Grantor and the Trustee hereby
establish a trust fund, the “Fund,” for the benefit of EPA in the
event that the hazardous secondary materials of the grantor no longer
meet the conditions of the exclusion under §261.4(a)(24).   The Grantor
and the Trustee intend that no third party have access to the Fund
except as herein provided.  The Fund is established initially as
consisting of the property, which is acceptable to the Trustee,
described in Schedule B attached hereto.  Such property and any other
property subsequently transferred to the Trustee is referred to as the
Fund, together with all earnings and profits thereon, less any payments
or distributions made by the Trustee pursuant to this Agreement.  The
Fund shall be held by the Trustee, IN TRUST, as hereinafter provided. 
The Trustee shall not be responsible nor shall it undertake any
responsibility for the amount or adequacy of, nor any duty to collect
from the Grantor, any payments necessary to discharge any liabilities of
the Grantor established by EPA.

Section 4.  Payments from the Fund.  The Trustee shall make payments
from the Fund as the EPA Regional Administrator  shall direct, in
writing, to provide for the payment of the costs of the performance of
activities required under subpart G of 40 CFR parts 264 or 265 for the
facilities covered by this Agreement.  The Trustee shall reimburse the
Grantor or other persons as specified by the EPA Regional Administrator
from the Fund for expenditures for such activities in such amounts as
the beneficiary shall direct in writing.  In addition, the Trustee shall
refund to the Grantor such amounts as the EPA Regional Administrator
specifies in writing.  Upon refund, such funds shall no longer
constitute part of the Fund as defined herein.

Section 5.  Payments Comprising the Fund.  Payments made to the Trustee
for the Fund shall consist of cash or securities acceptable to the
Trustee.

Section 6.  Trustee Management.  The Trustee shall invest and reinvest
the principal and income of the Fund and keep the Fund invested as a
single fund, without distinction between principal and income, in
accordance with general investment policies and guidelines which the
Grantor may communicate in writing to the Trustee from time to time,
subject, however, to the provisions of this section.  In investing,
reinvesting, exchanging, selling, and managing the Fund, the Trustee
shall discharge his duties with respect to the trust fund solely in the
interest of the beneficiary and with the care, skill, prudence, and
diligence under the circumstances then prevailing which persons of
prudence, acting in a like capacity and familiar with such matters,
would use in the conduct of an enterprise of a like character and with
like aims; except that: 

(i) Securities or other obligations of the Grantor, or any other owner
or operator of the facilities, or any of their affiliates as defined in
the Investment Company Act of 1940, as amended, 15 U.S.C.  80a-2.(a),
shall not be acquired or held, unless they are securities or other
obligations of the Federal or a State government;

(ii) The Trustee is authorized to invest the Fund in time or demand
deposits of the Trustee, to the extent insured by an agency of the
Federal or State government; and

(iii) The Trustee is authorized to hold cash awaiting investment or
distribution uninvested for a reasonable time and without liability for
the payment of interest thereon.

Section 7.  Commingling and Investment.  The Trustee is expressly
authorized in its discretion: 

(a) To transfer from time to time any or all of the assets of the Fund
to any common, commingled, or collective trust fund created by the
Trustee in which the Fund is eligible to participate, subject to all of
the provisions thereof, to be commingled with the assets of other trusts
participating therein; and 

(b) To purchase shares in any investment company registered under the
Investment Company Act of 1940, 15 U.S.C.  80a-1 et seq., including one
which may be created, managed, underwritten, or to which investment
advice is rendered or the shares of which are sold by the Trustee.  The
Trustee may vote such shares in its discretion.  

Section 8.  Express Powers of Trustee.  Without in any way limiting the
powers and discretions conferred upon the Trustee by the other
provisions of this Agreement or by law, the Trustee is expressly
authorized and empowered: 

(a) To sell, exchange, convey, transfer, or otherwise dispose of any
property held by it, by public or private sale.  No person dealing with
the Trustee shall be bound to see to the application of the purchase
money or to inquire into the validity or expediency of any such sale or
other disposition;

(b) To make, execute, acknowledge, and deliver any and all documents of
transfer and conveyance and any and all other instruments that may be
necessary or appropriate to carry out the powers herein granted; 

(c) To register any securities held in the Fund in its own name or in
the name of a nominee and to hold any security in bearer form or in book
entry, or to combine certificates representing such securities with
certificates of the same issue held by the Trustee in other fiduciary
capacities, or to deposit or arrange for the deposit of such securities
in a qualified central depositary even though, when so deposited, such
securities may be merged and held in bulk in the name of the nominee of
such depositary with other securities deposited therein by another
person, or to deposit or arrange for the deposit of any securities
issued by the United States Government, or any agency or instrumentality
thereof, with a Federal Reserve bank, but the books and records of the
Trustee shall at all times show that all such securities are part of the
Fund;

(d) To deposit any cash in the Fund in interest-bearing accounts
maintained or savings certificates issued by the Trustee, in its
separate corporate capacity, or in any other banking institution
affiliated with the Trustee, to the extent insured by an agency of the
Federal or State government; and

(e) To compromise or otherwise adjust all claims in favor of or against
the Fund.

Section 9.  Taxes and Expenses.  All taxes of any kind that may be
assessed or levied against or in respect of the Fund and all brokerage
commissions incurred by the Fund shall be paid from the Fund.  All other
expenses incurred by the Trustee in connection with the administration
of this Trust, including fees for legal services rendered to the
Trustee, the compensation of the Trustee to the extent not paid directly
by the Grantor, and all other proper charges and disbursements of the
Trustee shall be paid from the Fund.

Section 10.  Annual Valuation.  The Trustee shall annually, at least 30
days prior to the anniversary date of establishment of the Fund, furnish
to the Grantor and to the appropriate EPA Regional Administrator a
statement confirming the value of the Trust.  Any securities in the Fund
shall be valued at market value as of no more than 60 days prior to the
anniversary date of establishment of the Fund.  The failure of the
Grantor to object in writing to the Trustee within 90 days after the
statement has been furnished to the Grantor and the EPA Regional
Administrator shall constitute a conclusively binding assent by the
Grantor, barring the Grantor from asserting any claim or liability
against the Trustee with respect to matters disclosed in the statement. 


Section 11.  Advice of Counsel.  The Trustee may from time to time
consult with counsel, who may be counsel to the Grantor, with respect to
any question arising as to the construction of this Agreement or any
action to be taken hereunder.  The Trustee shall be fully protected, to
the extent permitted by law, in acting upon the advice of counsel.  

Section 12.  Trustee Compensation.  The Trustee shall be entitled to
reasonable compensation for its services as agreed upon in writing from
time to time with the Grantor.  

Section 13.  Successor Trustee.  The Trustee may resign or the Grantor
may replace the Trustee, but such resignation or replacement shall not
be effective until the Grantor has appointed a successor trustee and
this successor accepts the appointment.  The successor trustee shall
have the same powers and duties as those conferred upon the Trustee
hereunder.  Upon the successor trustee's acceptance of the appointment,
the Trustee shall assign, transfer, and pay over to the successor
trustee the funds and properties then constituting the Fund.  If for any
reason the Grantor cannot or does not act in the event of the
resignation of the Trustee, the Trustee may apply to a court of
competent jurisdiction for the appointment of a successor trustee or for
instructions.  The successor trustee shall specify the date on which it
assumes administration of the trust in a writing sent to the Grantor,
the EPA Regional Administrator, and the present Trustee by certified
mail 10 days before such change becomes effective.  Any expenses
incurred by the Trustee as a result of any of the acts contemplated by
this Section shall be paid as provided in Section 9.  

Section 14.  Instructions to the Trustee.  All orders, requests, and
instructions by the Grantor to the Trustee shall be in writing, signed
by such persons as are designated in the attached Exhibit A or such
other designees as the Grantor may designate by amendment to Exhibit A. 
The Trustee shall be fully protected in acting without inquiry in
accordance with the Grantor's orders, requests, and instructions.  All
orders, requests, and instructions by the EPA Regional Administrator to
the Trustee shall be in writing, signed by the EPA Regional
Administrators of the Regions in which the facilities are located, or
their designees, and the Trustee shall act and shall be fully protected
in acting in accordance with such orders, requests, and instructions. 
The Trustee shall have the right to assume, in the absence of written
notice to the contrary, that no event constituting a change or a
termination of the authority of any person to act on behalf of the
Grantor or EPA hereunder has occurred.  The Trustee shall have no duty
to act in the absence of such orders, requests, and instructions from
the Grantor and/or EPA, except as provided for herein.

Section 15.  Amendment of Agreement.  This Agreement may be amended by
an instrument in writing executed by the Grantor, the Trustee, and the
appropriate EPA Regional Administrator, or by the Trustee and the
appropriate EPA Regional Administrator if the Grantor ceases to exist.  

Section 16.  Irrevocability and Termination.  Subject to the right of
the parties to amend this Agreement as provided in Section 16, this
Trust shall be irrevocable and shall continue until terminated at the
written agreement of the Grantor, the Trustee, and the EPA Regional
Administrator, or by the Trustee and the EPA Regional Administrator, if
the Grantor ceases to exist.  Upon termination of the Trust, all
remaining trust property, less final trust administration expenses,
shall be delivered to the Grantor.

Section 17.  Immunity and Indemnification.  The Trustee shall not incur
personal liability of any nature in connection with any act or omission,
made in good faith, in the administration of this Trust, or in carrying
out any directions by the Grantor or the EPA Regional Administrator
issued in accordance with this Agreement.  The Trustee shall be
indemnified and saved harmless by the Grantor or from the Trust Fund, or
both, from and against any personal liability to which the Trustee may
be subjected by reason of any act or conduct in its official capacity,
including all expenses reasonably incurred in its defense in the event
the Grantor fails to provide such defense.

Section 18.  Choice of Law.  This Agreement shall be administered,
construed, and enforced according to the laws of the State of [insert
name of State].

Section 19.  Interpretation.  As used in this Agreement, words in the
singular include the plural and words in the plural include the
singular.  The descriptive headings for each Section of this Agreement
shall not affect the interpretation or the legal efficacy of this
Agreement.

In Witness Whereof the parties have caused this Agreement to be executed
by their respective officers duly authorized and their corporate seals
to be hereunto affixed and attested as of the date first above written:
The parties below certify that the wording of this Agreement is
identical to the wording specified in 40 CFR 261.151(a)(1) as such
regulations were constituted on the date first above written.  

[Signature of Grantor]

[Title]

Attest:

[Title]

[Seal]

[Signature of Trustee]

Attest: 

[Title]

[Seal]

(2) The following is an example of the certification of acknowledgment
which must accompany the trust agreement for a trust fund as specified
in §261.143(a) this chapter.  State requirements may differ on the
proper content of this acknowledgment.  

State
of_________________________________________________________________

County of_______________________________________________________________

On this [date], before me personally came [owner or operator] to me
known, who, being by me duly sworn, did depose and say that she/he
resides at [address], that she/he is [title] of [corporation], the
corporation described in and which executed the above instrument; that
she/he knows the seal of said corporation; that the seal affixed to such
instrument is such corporate seal; that it was so affixed by order of
the Board of Directors of said corporation, and that she/he signed
her/his name thereto by like order.

[Signature of Notary Public]

(b) A surety bond guaranteeing payment into a trust fund, as specified
in §261.143(b) of this chapter, must be worded as follows, except that
instructions in brackets are to be replaced with the relevant
information and the brackets deleted:

Financial Guarantee Bond

Date bond executed:

Effective date:

Principal:  [legal name and business address of owner or operator] 

Type of Organization:  [insert “individual,” “joint venture,”
“partnership,” or “corporation”]

State of incorporation: 
_________________________________________________

Surety(ies):  [name(s) and business address(es)] 

EPA Identification Number, name, address and amount(s) for each facility
guaranteed by this bond: 
_________________________________________________ 

Total penal sum of bond: 
$________________________________________________

Surety's bond number: 
___________________________________________________

Know All Persons By These Presents, That we, the Principal and
Surety(ies) are firmly bound to the U.S. EPA in the event that the
hazardous secondary materials at the reclamation or intermediate
facility listed below no longer meet the conditions of the exclusion
under 40 CFR 261.4(a)(24), in the above penal sum for the payment of
which we bind ourselves, our heirs, executors, administrators,
successors, and assigns jointly and severally; provided that, where the
Surety(ies) are corporations acting as co-sureties, we, the Sureties,
bind ourselves in such sum “jointly and severally” only for the
purpose of allowing a joint action or actions against any or all of us,
and for all other purposes each Surety binds itself, jointly and
severally with the Principal, for the payment of such sum only as is set
forth opposite the name of such Surety, but if no limit of liability is
indicated, the limit of liability shall be the full amount of the penal
sum.  

Whereas said Principal is required, under the Resource Conservation and
Recovery Act as amended (RCRA), to have a permit or interim status in
order to own or operate each facility identified above, or to meet 
conditions under 40 CFR sections 261.4(a)(24),and

Whereas said Principal is required to provide financial assurance as a
condition of permit or interim status or as a condition of an exclusion
under 40 CFR sections 261.4(a)(24) and 

Whereas said Principal shall establish a standby trust fund as is
required when a surety bond is used to provide such financial assurance;

Now, Therefore, the conditions of the obligation are such that if the
Principal shall faithfully, before the beginning of final closure of
each facility identified above, fund the standby trust fund in the
amount(s) identified above for the facility, 

Or, if the Principal shall satisfy all the conditions established for
exclusion of  hazardous secondary materials from coverage as solid waste
under 40 CFR sections 261.4(a)(24),

Or, if the Principal shall fund the standby trust fund in such amount(s)
within 15 days after a final order to begin closure is issued by an EPA
Regional Administrator or a U.S. district court or other court of
competent jurisdiction, 

Or, if the Principal shall provide alternate financial assurance, as
specified in subpart H of 40 CFR part261, as applicable, and obtain the
EPA Regional Administrator's written approval of such assurance, within
90 days after the date notice of cancellation is received by both the
Principal and the EPA Regional Administrator(s) from the Surety(ies),
then this obligation shall be null and void; otherwise it is to remain
in full force and effect.  

The Surety(ies) shall become liable on this bond obligation only when
the Principal has failed to fulfill the conditions described above. 
Upon notification by an EPA Regional Administrator that the Principal
has failed to perform as guaranteed by this bond, the Surety(ies) shall
place funds in the amount guaranteed for the facility(ies) into the
standby trust fund as directed by the EPA Regional Administrator.  

The liability of the Surety(ies) shall not be discharged by any payment
or succession of payments hereunder, unless and until such payment or
payments shall amount in the aggregate to the penal sum of the bond, but
in no event shall the obligation of the Surety(ies) hereunder exceed the
amount of said penal sum.  

The Surety(ies) may cancel the bond by sending notice of cancellation by
certified mail to the Principal and to the EPA Regional Administrator(s)
for the Region(s) in which the facility(ies) is (are) located, provided,
however, that cancellation shall not occur during the 120 days beginning
on the date of receipt of the notice of cancellation by both the
Principal and the EPA Regional Administrator(s), as evidenced by the
return receipts.

The Principal may terminate this bond by sending written notice to the
Surety(ies), provided, however, that no such notice shall become
effective until the Surety(ies) receive(s) written authorization for
termination of the bond by the EPA Regional Administrator(s) of the EPA
Region(s) in which the bonded facility(ies) is (are) located.

[The following paragraph is an optional rider that may be included but
is not required.]

Principal and Surety(ies) hereby agree to adjust the penal sum of the
bond yearly so that it guarantees a new amount, provided that the penal
sum does not increase by more than 20 percent in any one year, and no
decrease in the penal sum takes place without the written permission of
the EPA Regional Administrator(s).  

In Witness Whereof, the Principal and Surety(ies) have executed this
Financial Guarantee Bond and have affixed their seals on the date set
forth above.

The persons whose signatures appear below hereby certify that they are
authorized to execute this surety bond on behalf of the Principal and
Surety(ies) and that the wording of this surety bond is identical to the
wording specified in 40 CFR 261.151(b)as such regulations were
constituted on the date this bond was executed.  

Principal

[Signature(s)] 
____________________________________________________________ 

[Name(s)] 
_______________________________________________________________ 

[Title(s)] 
________________________________________________________________ 

[Corporate seal] 
__________________________________________________________ 

Corporate Surety(ies)

[Name and address]

State of
incorporation:______________________________________________________

Liability limit:
$___________________________________________________________

[Signature(s)]

[Name(s) and title(s)] 

[Corporate seal]

[For every co-surety, provide signature(s), corporate seal, and other
information in the same manner as for Surety above.]

Bond premium:  $________________________________________________________

(c)  A letter of credit, as specified in §261.143(c) of this chapter,
must be worded as follows, except that instructions in brackets are to
be replaced with the relevant information and the brackets deleted: 

Irrevocable Standby Letter of Credit

Regional Administrator(s)
Region(s)________________________________________________

U.S. Environmental Protection Agency

Dear Sir or Madam: We hereby establish our Irrevocable Standby Letter of
Credit No.  ____________ in your favor, in the event that the hazardous
secondary materials at the covered reclamation or intermediary
facility(ies) no longer meet the conditions of the exclusion under 40
CFR 261.4(a)(24), at the request and for the account of [owner's or
operator's name and address] up to the aggregate amount of [in words]
U.S. dollars $_________, available upon presentation of

(1) your sight draft, bearing reference to this letter of credit No. 
------, and

(2) your signed statement reading as follows: “I certify that the
amount of the draft is payable pursuant to regulations issued under
authority of the Resource Conservation and Recovery Act of 1976 as
amended.” 

This letter of credit is effective as of [date] and shall expire on
[date at least 1 year later], but such expiration date shall be
automatically extended for a period of [at least 1 year] on [date] and
on each successive expiration date, unless, at least 120 days before the
current expiration date, we notify both you and [owner's or operator's
name] by certified mail that we have decided not to extend this letter
of credit beyond the current expiration date.  In the event you are so
notified, any unused portion of the credit shall be available upon
presentation of your sight draft for 120 days after the date of receipt
by both you and [owner's or operator's name], as shown on the signed
return receipts.

Whenever this letter of credit is drawn on under and in compliance with
the terms of this credit, we shall duly honor such draft upon
presentation to us, and we shall deposit the amount of the draft
directly into the standby trust fund of [owner's or operator's name] in
accordance with your instructions.

We certify that the wording of this letter of credit is identical to the
wording specified in 40 CFR 261.151(c) as such regulations were
constituted on the date shown immediately below.  

[Signature(s) and title(s) of official(s) of issuing institution] [Date]

This credit is subject to [insert “the most recent edition of the
Uniform Customs and Practice for Documentary Credits, published and
copyrighted by the International Chamber of Commerce,” or “the
Uniform Commercial Code”].

(d)  A certificate of insurance, as specified in Sec.  261.143(e) of
this chapter, must be worded as follows, except that instructions in
brackets are to be replaced with the relevant information and the
brackets deleted: 

Certificate of Insurance  

Name and Address of Insurer (herein called the “Insurer”): 
_____________________________

Name and Address of Insured (herein called the “Insured”): 
____________________________

Facilities Covered: [List for each facility: The EPA Identification
Number (if any issued), name, address, and the amount of insurance for
all facilities covered, which must total the face amount shown below. 

Face Amount: 
____________________________________________________________

Policy Number: 
__________________________________________________________

Effective Date: 
___________________________________________________________

The Insurer hereby certifies that it has issued to the Insured the
policy of insurance identified above to provide financial assurance so
that in accordance with applicable regulations all hazardous secondary
materials can be removed from the facility or any  unit at the facility
and the facility or any unit at the facility can be decontaminated at
the facilities identified above.  The Insurer further warrants that such
policy conforms in all respects with the requirements of 40 CFR
261.143(d)  as applicable and as such regulations were constituted on
the date shown immediately below.  It is agreed that any provision of
the policy inconsistent with such regulations is hereby amended to
eliminate such inconsistency.

Whenever requested by the EPA Regional Administrator(s) of the U.S.
Environmental Protection Agency, the Insurer agrees to furnish to the
EPA Regional Administrator(s) a duplicate original of the policy listed
above, including all endorsements thereon.  

I hereby certify that the wording of this certificate is identical to
the wording specified in 40 CFR 261.151(d) such regulations were
constituted on the date shown immediately below.  

[Authorized signature for Insurer]

[Name of person signing] 

[Title of person signing] 

Signature of witness or notary:_________________________________________

[Date] 

(e) A letter from the chief financial officer, as specified in
§261.143(e) of this chapter, must be worded as follows, except that
instructions in brackets are to be replaced with the relevant
information and the brackets deleted: 

Letter From Chief Financial Officer

[Address to Regional Administrator of every Region in which facilities
for which financial responsibility is to be demonstrated through the
financial test are located].  

I am the chief financial officer of [name and address of firm].  This
letter is in support of this firm's use of the financial test to
demonstrate financial assurance, as specified in subpart H of 40 CFR
part 261.

[Fill out the following nine paragraphs regarding facilities and
associated cost estimates.  If your firm has no facilities that belong
in a particular paragraph, write “None” in the space indicated.  For
each facility, include its EPA Identification Number (if any issued),
name, address, and current cost estimates.

1.  This firm is the owner or operator of the following facilities for
which financial assurance is demonstrated through the financial test
specified in subpart H of 40 CFR 261.  The current cost estimates
covered by the test are shown for each facility: ____________.

2.  This firm guarantees, through the guarantee specified in subpart H
of 40 CFR part 261, the following facilities owned or operated by the
guaranteed party.  The current cost estimates so guaranteed are shown
for each facility:  ___________.   The firm identified above is [insert
one or more: (1) The direct or higher-tier parent corporation of the
owner or operator; (2) owned by the same parent corporation as the
parent corporation of the owner or operator, and receiving the following
value in consideration of this guarantee ___________, or (3) engaged in
the following substantial business relationship with the owner or
operator _________, and receiving the following value in consideration
of this guarantee_______].  [Attach a written description of the
business relationship or a copy of the contract establishing such
relationship to this letter].

3.  In States where EPA is not administering the financial requirements
of subpart H of 40 CFR part 261, this firm, as owner or operator or
guarantor, is demonstrating financial assurance for the following
facilities through the use of a test equivalent or substantially
equivalent to the financial test specified in subpart H of 40 CFR part
261.  The current cost estimates covered by such a test are shown for
each facility:________.  

4.  This firm is the owner or operator of the following hazardous
secondary materials management facilities for which financial assurance
is not demonstrated either to EPA or a State through the financial test
or any other financial assurance mechanism specified in subpart H of 40
CFR part 261or equivalent or substantially equivalent State mechanisms. 
The current cost estimates not covered by such financial assurance are
shown for each facility: _________.

5.  This firm is the owner or operator of the following UIC facilities
for which financial assurance for plugging and abandonment is required
under part 144.  The current closure cost estimates as required by 40
CFR 144.62 are shown for each facility:_______. 

6. This firm is the owner or operator of the following facilities for
which financial assurance for closure or post-closure care is
demonstrated through the financial test specified in subpart H of 40 CFR
parts 264 and 265. The current closure and/or post-closure cost
estimates covered by the test are shown for each facility: ____.

7. This firm guarantees, through the guarantee specified in subpart H of
40 CFR parts 264 and 265, the closure or post-closure care of the
following facilities owned or operated by the guaranteed party. The
current cost estimates for the closure or post-closure care so
guaranteed are shown for each facility: ____. The firm identified above
is [insert one or more: (1) The direct or higher-tier parent corporation
of the owner or operator; (2) owned by the same parent corporation as
the parent corporation of the owner or operator, and receiving the
following value in consideration of this guarantee ____; or (3) engaged
in the following substantial business relationship with the owner or
operator ____, and receiving the following value in consideration of
this guarantee ____]. [Attach a written description of the business
relationship or a copy of the contract establishing such relationship to
this letter].

8. In States where EPA is not administering the financial requirements
of subpart H of 40 CFR part 264 or 265, this firm, as owner or operator
or guarantor, is demonstrating financial assurance for the closure or
post-closure care of the following facilities through the use of a test
equivalent or substantially equivalent to the financial test specified
in subpart H of 40 CFR parts 264 and 265. The current closure and/or
post-closure cost estimates covered by such a test are shown for each
facility: ____.

9. This firm is the owner or operator of the following hazardous waste
management facilities for which financial assurance for closure or, if a
disposal facility, post-closure care, is not demonstrated either to EPA
or a State through the financial test or any other financial assurance
mechanism specified in subpart H of 40 CFR parts 264 and 265 or
equivalent or substantially equivalent State mechanisms. The current
closure and/or post-closure cost estimates not covered by such financial
assurance are shown for each facility: ____.

This firm [insert “is required” or “is not required”] to file a
Form 10K with the Securities and Exchange Commission (SEC) for the
latest fiscal year.

The fiscal year of this firm ends on [month, day].  The figures for the
following items marked with an asterisk are derived from this firm's
independently audited, year-end financial statements for the latest
completed fiscal year, ended [date].  

[Fill in Alternative I if the criteria of paragraph (e)(1)(i) of 
§261.143 of this chapter are used.  Fill in Alternative II if the
criteria of paragraph (e)(1)(ii) of §261.143(e) of this chapter are
used.]

Alternative I

1.  Sum of current cost estimates[total of all cost estimates shown in
the nine paragraphs above] $_____ 

*2.  Total liabilities [if any portion of the cost estimates is included
in total liabilities, you may deduct the amount of that portion from
this line and add that amount to lines 3 and 4]$_______

*3.  Tangible net worth $_______

*4.  Net worth $_______- 

*5.  Current assets $_______

*6.  Current liabilities $_______

7.  Net working capital [line 5 minus line 6] $_______

*8.  The sum of net income plus depreciation, depletion, and
amortization $_______- 

*9.  Total assets in U.S. (required only if less than 90% of firm's
assets are located in the U.S.) $_______- 

10.  Is line 3 at least $10 million? (Yes/No) _______

11.  Is line 3 at least 6 times line 1? (Yes/No) _______- 

12.  Is line 7 at least 6 times line 1? (Yes/No) _______- 

*13.  Are at least 90% of firm's assets located in the U.S.? If not,
complete line 14 (Yes/No) _______

14.  Is line 9 at least 6 times line 1? (Yes/No) _______- 

15.  Is line 2 divided by line 4 less than 2.0? (Yes/No) _______- 

16.  Is line 8 divided by line 2 greater than 0.1? (Yes/No) _______- 

17.  Is line 5 divided by line 6 greater than 1.5? (Yes/No) _______- 

Alternative II

1.  Sum of current cost estimates [total of all cost estimates shown in
the eight paragraphs above] $_______- 

2.  Current bond rating of most recent issuance of this firm and name of
rating service _______- 

3.  Date of issuance of bond _______- 

4.  Date of maturity of bond _______- 

*5.  Tangible net worth [if any portion of the cost estimates is
included in “total liabilities” on your firm's financial statements,
you may add the amount of that portion to this line] $_______- 

*6.  Total assets in U.S. (required only if less than 90% of firm's
assets are located in the U.S.) $_______- 

7.  Is line 5 at least $10 million? (Yes/No) _______

8.  Is line 5 at least 6 times line 1? (Yes/No) _______

*9.  Are at least 90% of firm's assets located in the U.S.? If not,
complete line 10 (Yes/No) _______

10.  Is line 6 at least 6 times line 1? (Yes/No) _______- 

I hereby certify that the wording of this letter is identical to the
wording specified in 40 CFR 261.151(e) as such regulations were
constituted on the date shown immediately below.  

[Signature] 
_____________________________________________________________ 

[Name]  ________________________________________________________________


[Title] 
_________________________________________________________________ 

[Date] 
__________________________________________________________________

(f) A letter from the chief financial officer, as specified in Sec.
261.147(f) of this chapter, must be worded as follows, except that
instructions in brackets are to be replaced with the relevant
information and the brackets deleted.

Letter From Chief Financial Officer

[Address to Regional Administrator of every Region in which facilities
for which financial responsibility is to be demonstrated through the
financial test are located].

I am the chief financial officer of [firm's name and address].  This
letter is in support of the use of the financial test to demonstrate
financial responsibility for liability coverage under  §261.147[insert
“and costs assured §261.143(e)” if applicable] as specified in
subpart H of 40 CFR part 261.  

[Fill out the following paragraphs regarding facilities and liability
coverage.  If there are no facilities that belong in a particular
paragraph, write “None” in the space indicated.  For each facility,
include its EPA Identification Number (if any issued), name, and
address].  

The firm identified above is the owner or operator of the following
facilities for which liability coverage for [insert “sudden” or
“nonsudden” or “both sudden and nonsudden”] accidental
occurrences is being demonstrated through the financial test specified
in subpart H of 40 CFR part 261:_______

The firm identified above guarantees, through the guarantee specified in
subpart H of 40 CFR part 261, liability coverage for [insert
“sudden” or “nonsudden” or “both sudden and nonsudden”]
accidental occurrences at the following facilities owned or operated by
the following: _______-.  The firm identified above is [insert one or
more: (1) The direct or higher-tier parent corporation of the owner or
operator; (2) owned by the same parent corporation as the parent
corporation of the owner or operator, and receiving the following value
in consideration of this guarantee _______-; or (3) engaged in the
following substantial business relationship with the owner or operator
_______-, and receiving the following value in consideration of this
guarantee _______-].  [Attach a written description of the business
relationship or a copy of the contract establishing such relationship to
this letter.]

The firm identified above is the owner or operator of the following
facilities for which liability coverage for [insert “sudden” or
“nonsudden” or “both sudden and nonsudden”] accidental
occurrences is being demonstrated through the financial test specified
in subpart H of 40 CFR parts 264 and 265:____

The firm identified above guarantees, through the guarantee specified in
subpart H of 40 CFR parts 264 and 265, liability coverage for [insert
“sudden” or “nonsudden” or “both sudden and nonsudden”]
accidental occurrences at the following facilities owned or operated by
the following: ____. The firm identified above is [insert one or more:
(1) The direct or higher-tier parent corporation of the owner or
operator; (2) owned by the same parent corporation as the parent
corporation of the owner or operator, and receiving the following value
in consideration of this guarantee ____; or (3) engaged in the following
substantial business relationship with the owner or operator ____, and
receiving the following value in consideration of this guarantee ____].
[Attach a written description of the business relationship or a copy of
the contract establishing such relationship to this letter.]

[If you are using the financial test to demonstrate coverage of both
liability and costs assured under §261.143(e) or closure or
post-closure care costs under 40 CFR 264.143, 264.145, 265.143 or
265.145, fill in the following nine paragraphs regarding facilities and
associated cost estimates.  If there are no facilities that belong in a
particular paragraph, write “None” in the space indicated.  For each
facility, include its EPA identification number (if any issued), name,
address, and current cost estimates.]

1.  This firm is the owner or operator of the following facilities for
which financial assurance is demonstrated through the financial test
specified in subpart H of 40 CFR 261.  The current cost estimates
covered by the test are shown for each facility: ____________.

2.  This firm guarantees, through the guarantee specified in subpart H
of 40 CFR part 261, the following facilities owned or operated by the
guaranteed party.  The current cost estimates so guaranteed are shown
for each facility:  ___________.   The firm identified above is [insert
one or more: (1) The direct or higher-tier parent corporation of the
owner or operator; (2) owned by the same parent corporation as the
parent corporation of the owner or operator, and receiving the following
value in consideration of this guarantee ___________, or (3) engaged in
the following substantial business relationship with the owner or
operator _________, and receiving the following value in consideration
of this guarantee_______].  [Attach a written description of the
business relationship or a copy of the contract establishing such
relationship to this letter].

3.  In States where EPA is not administering the financial requirements
of subpart H of 40 CFR part 261, this firm, as owner or operator or
guarantor, is demonstrating financial assurance for the following
facilities through the use of a test equivalent or substantially
equivalent to the financial test specified in subpart H of 40 CFR part
261.  The current cost estimates covered by such a test are shown for
each facility:________.  

4.  This firm is the owner or operator of the following hazardous
secondary materials management facilities for which financial assurance
is not demonstrated either to EPA or a State through the financial test
or any other financial assurance mechanism specified in subpart H of 40
CFR part 261or equivalent or substantially equivalent State mechanisms. 
The current cost estimates not covered by such financial assurance are
shown for each facility: _________.

5.  This firm is the owner or operator of the following UIC facilities
for which financial assurance for plugging and abandonment is required
under part 144.  The current closure cost estimates as required by 40
CFR 144.62 are shown for each facility:_______. 

6. This firm is the owner or operator of the following facilities for
which financial assurance for closure or post-closure care is
demonstrated through the financial test specified in subpart H of 40 CFR
parts 264 and 265. The current closure and/or post-closure cost
estimates covered by the test are shown for each facility: ____.

7. This firm guarantees, through the guarantee specified in subpart H of
40 CFR parts 264 and 265, the closure or post-closure care of the
following facilities owned or operated by the guaranteed party. The
current cost estimates for the closure or post-closure care so
guaranteed are shown for each facility: ____. The firm identified above
is [insert one or more: (1) The direct or higher-tier parent corporation
of the owner or operator; (2) owned by the same parent corporation as
the parent corporation of the owner or operator, and receiving the
following value in consideration of this guarantee ____; or (3) engaged
in the following substantial business relationship with the owner or
operator ____, and receiving the following value in consideration of
this guarantee ____]. [Attach a written description of the business
relationship or a copy of the contract establishing such relationship to
this letter].

8. In States where EPA is not administering the financial requirements
of subpart H of 40 CFR part 264 or 265, this firm, as owner or operator
or guarantor, is demonstrating financial assurance for the closure or
post-closure care of the following facilities through the use of a test
equivalent or substantially equivalent to the financial test specified
in subpart H of 40 CFR parts 264 and 265. The current closure and/or
post-closure cost estimates covered by such a test are shown for each
facility: ____.

9. This firm is the owner or operator of the following hazardous waste
management facilities for which financial assurance for closure or, if a
disposal facility, post-closure care, is not demonstrated either to EPA
or a State through the financial test or any other financial assurance
mechanism specified in subpart H of 40 CFR parts 264 and 265 or
equivalent or substantially equivalent State mechanisms. The current
closure and/or post-closure cost estimates not covered by such financial
assurance are shown for each facility: ____.

This firm [insert “is required” or “is not required”] to file a
Form 10K with the Securities and Exchange Commission (SEC) for the
latest fiscal year.

The fiscal year of this firm ends on [month, day].  The figures for the
following items marked with an asterisk are derived from this firm's
independently audited, year-end financial statements for the latest
completed fiscal year, ended [date].

Part A.  Liability Coverage for Accidental Occurrences

[Fill in Alternative I if the criteria of paragraph (f)(1)(i) of Sec.
261.147 are used.  Fill in Alternative II if the criteria of paragraph
(f)(1)(ii) of Sec. 261.147 are used.] 

Alternative I

1.  Amount of annual aggregate liability coverage to be demonstrated
$_______-.  

*2.  Current assets $_______-.  

*3.  Current liabilities $_______-.  

4.  Net working capital (line 2 minus line 3) $_______-.  

*5.  Tangible net worth $_______-.  

*6.  If less than 90% of assets are located in the U.S., give total U.S.
assets $_______-.  

7.  Is line 5 at least $10 million? (Yes/No) _______-.  

8.  Is line 4 at least 6 times line 1? (Yes/No) _______-.  

9.  Is line 5 at least 6 times line 1? (Yes/No) _______-.  

*10.  Are at least 90% of assets located in the U.S.? (Yes/No) _______. 
If not, complete line 11.  

11.  Is line 6 at least 6 times line 1? (Yes/No) _______-.  

Alternative II

1,  Amount of annual aggregate liability coverage to be demonstrated
$_______-.  

2.  Current bond rating of most recent issuance and name of rating
service _______- _______-.  

3.  Date of issuance of bond ______________--.  

4.  Date of maturity of bond ______________--.  

*5.  Tangible net worth $_______-.  

*6.  Total assets in U.S. (required only if less than 90% of assets are
located in the U.S.) $_______-.  

7.  Is line 5 at least $10 million? (Yes/No) _______-.  

8. Is line 5 at least 6 times line 1? _______-.  

9.  Are at least 90% of assets located in the U.S.? If not, complete
line 10.  (Yes/No) -----.  

10.  Is line 6 at least 6 times line 1? _______-.

[Fill in part B if you are using the financial test to demonstrate
assurance of both liability coverage and costs assured under
§261.143(e) or closure or post-closure care costs under 40 CFR 264.143,
264.145, 265.143 or 265.145.] 

Part B.  Facility Care and Liability Coverage

[Fill in Alternative I if the criteria of paragraphs (e)(1)(i) of Sec.
261.143 and (f)(1)(i) of Sec. 261.147are.  Fill in Alternative II if the
criteria of paragraphs (e)(1)(ii) of Sec. 261.143 and (f)(1)(ii) of Sec.
261.147are used.] 

Alternative I

1.  Sum of current cost estimates (total of all cost estimates listed
above) $_______- 

2.  Amount of annual aggregate liability coverage to be demonstrated
$_______-

3.  Sum of lines 1 and 2 $_______

*4.  Total liabilities (if any portion of your cost estimates is
included in your total liabilities, you may deduct that portion from
this line and add that amount to lines 5 and 6) $_______-

*5.  Tangible net worth $_______

*6.  Net worth $_______- 

*7.  Current assets $_______

*8.  Current liabilities $_______

9.  Net working capital (line 7 minus line 8) $_______

*10.  The sum of net income plus depreciation, depletion, and
amortization $_______- 

*11.  Total assets in U.S. (required only if less than 90% of assets are
located in the U.S.) $_______

12.  Is line 5 at least $10 million? (Yes/No) 

13.  Is line 5 at least 6 times line 3? (Yes/No) 

14.  Is line 9 at least 6 times line 3? (Yes/No) 

*15.  Are at least 90% of assets located in the U.S.? (Yes/No) If not,
complete line 16.  

16.  Is line 11 at least 6 times line 3? (Yes/No)

17.  Is line 4 divided by line 6 less than 2.0? (Yes/No)

18.  Is line 10 divided by line 4 greater than 0.1? (Yes/No) 

19.  Is line 7 divided by line 8 greater than 1.5? (Yes/No)

Alternative II

1.  Sum of current cost estimates (total of all cost estimates listed
above) $_______- 

2.  Amount of annual aggregate liability coverage to be demonstrated
$_______-

3.  Sum of lines 1 and 2 $_______

4.  Current bond rating of most recent issuance and name of rating
service _______- _______- 

5.  Date of issuance of bond ______________-- 

6.  Date of maturity of bond ______________-- 

*7.  Tangible net worth (if any portion of the cost estimates is
included in “total liabilities” on your financial statements you may
add that portion to this line) $_______- 

*8.  Total assets in the U.S. (required only if less than 90% of assets
are located in the U.S.) $_______- 

9.  Is line 7 at least $10 million? (Yes/No) 

10.  Is line 7 at least 6 times line 3? (Yes/No) 

*11.  Are at least 90% of assets located in the U.S.? (Yes/No) If not
complete line 12.

12.  Is line 8 at least 6 times line 3? (Yes/No) 

I hereby certify that the wording of this letter is identical to the
wording specified in 40 CFR 261.151(f) as such regulations were
constituted on the date shown immediately below.  

[Signature]_____________________________________________________________


[Name]__________________________________________________________________


[Title]_________________________________________________________________


[Date]__________________________________________________________________


(g)(1) A corporate guarantee, as specified in §261.143(e) of this
chapter, must be worded as follows, except that instructions in brackets
are to be replaced with the relevant information and the brackets
deleted: 

Corporate Guarantee for Facility Care

Guarantee made this [date] by [name of guaranteeing entity], a business
corporation organized under the laws of the State of [insert name of
State], herein referred to as guarantor.  This guarantee is made on
behalf of the [owner or operator] of [business address], which is [one
of the following: “our subsidiary”; “a subsidiary of [name and
address of common parent corporation], of which guarantor is a
subsidiary”; or “an entity with which guarantor has a substantial
business relationship, as defined in 40 CFR 264.141(h) and 265.141(h)”
to the United States Environmental Protection Agency (EPA). 

Recitals

1.  Guarantor meets or exceeds the financial test criteria and agrees to
comply with the reporting requirements for guarantors as specified in 40
CFR 261.143(e).  

2.  [Owner or operator] owns or operates the following facility(ies)
covered by this guarantee: [List for each facility: EPA Identification
Number (if any issued), name, and address. 

3.  “Closure plans” as used below refer to the plans maintained as
required by subpart H of 40 CFR part 261 for the care of facilities as
identified above.  

4.  For value received from [owner or operator], guarantor guarantees
that in the event of a determination by the Regional Administrator that
the hazardous secondary materials at the owner or operator’s facility
covered by this guarantee do not meet the conditions of the exclusion
under §261.4(a)(24), the guarantor will dispose of any hazardous
secondary material as hazardous waste, and close the facility in
accordance with closure requirements found in parts 264 or 265 of this
chapter, as applicable,  or establish a trust fund as specified in
§ 261.143(a) in the name of the owner or operator in the amount of the
current cost estimate.  

5.  Guarantor agrees that if, at the end of any fiscal year before
termination of this guarantee, the guarantor fails to meet the financial
test criteria, guarantor shall send within 90 days, by certified mail,
notice to the EPA Regional Administrator(s) for the Region(s) in which
the facility(ies) is(are) located and to [owner or operator] that he
intends to provide alternate financial assurance as specified in subpart
H of 40 CFR part261, as applicable, in the name of [owner or operator]. 
Within 120 days after the end of such fiscal year, the guarantor shall
establish such financial assurance unless [owner or operator] has done
so.  

6.  The guarantor agrees to notify the EPA Regional Administrator by
certified mail, of a voluntary or involuntary proceeding under Title 11
(Bankruptcy), U.S. Code, naming guarantor as debtor, within 10 days
after commencement of the proceeding.

7.  Guarantor agrees that within 30 days after being notified by an EPA
Regional Administrator of a determination that guarantor no longer meets
the financial test criteria or that he is disallowed from continuing as
a guarantor, he shall establish alternate financial assurance as
specified in of 40 CFR parts264, 265, or subpart H of 40 CFR part 261,
as applicable, in the name of [owner or operator] unless [owner or
operator] has done so.

8.  Guarantor agrees to remain bound under this guarantee
notwithstanding any or all of the following: amendment or modification
of the closure plan, the extension or reduction of the time of
performance, or any other modification or alteration of an obligation of
the owner or operator pursuant to 40 CFR parts 264, 265, or Subpart H of
40 CFR part 261.  

9.  Guarantor agrees to remain bound under this guarantee for as long as
[owner or operator] must comply with the applicable financial assurance
requirements of 40 CFR parts 264 and 265 or  the financial assurance
condition of 40 CFR 261.4(a)(24)(v)(F) for the above-listed facilities,
except as provided in paragraph 10 of this agreement.

10.  [Insert the following language if the guarantor is (a) a direct or
higher-tier corporate parent, or (b) a firm whose parent corporation is
also the parent corporation of the owner or operator]:

Guarantor may terminate this guarantee by sending notice by certified
mail to the EPA Regional Administrator(s) for the Region(s) in which the
facility(ies) is(are) located and to [owner or operator], provided that
this guarantee may not be terminated unless and until [the owner or
operator] obtains, and the EPA Regional Administrator(s) approve(s),
alternate coverage complying with 40 CFR 261.143.  

[Insert the following language if the guarantor is a firm qualifying as
a guarantor due to its “substantial business relationship” with the
owner or operator]

Guarantor may terminate this guarantee 120 days following the receipt of
notification, through certified mail, by the EPA Regional
Administrator(s) for the Region(s) in which the facility(ies) is(are)
located and by [the owner or operator].

11.  Guarantor agrees that if [owner or operator] fails to provide
alternate financial assurance as specified in 40 CFR parts 264, 265, or
subpart H of 40 CFR 261, as applicable, and obtain written approval of
such assurance from the EPA Regional Administrator(s) within 90 days
after a notice of cancellation by the guarantor is received by an EPA
Regional Administrator from guarantor, guarantor shall provide such
alternate financial assurance in the name of [owner or operator].

12.  Guarantor expressly waives notice of acceptance of this guarantee
by the EPA or by [owner or operator].  Guarantor also expressly waives
notice of amendments or modifications of the closure plan and of
amendments or modifications of the applicable requirements of 40 CFR
parts 264, 265, or subpart H of 40 CFR 261.

I hereby certify that the wording of this guarantee is identical to the
wording specified in 40 CFR 261.151(g)(1) as such regulations were
constituted on the date first above written.  

Effective date:_________________________________________________________

[Name of guarantor]_____________________________________________________


[Authorized signature for guarantor]____________________________________


[Name of person signing]________________________________________________


[Title of person signing]_______________________________________________


Signature of witness or notary:_________________________________________

(2) A guarantee, as specified in Sec. 261.147(g) of this chapter, must
be worded as follows, except that instructions in brackets are to be
replaced with the relevant information and the brackets deleted:

Guarantee for Liability Coverage

Guarantee made this [date] by [name of guaranteeing entity], a business
corporation organized under the laws of [if incorporated within the
United States insert “the State of _______-” and insert name of
State; if incorporated outside the United States insert the name of the
country in which incorporated, the principal place of business within
the United States, and the name and address of the registered agent in
the State of the principal place of business], herein referred to as
guarantor.  This guarantee is made on behalf of [owner or operator] of
[business address], which is one of the following: “our subsidiary;”
“a subsidiary of [name and address of common parent corporation], of
which guarantor is a subsidiary;” or “an entity with which guarantor
has a substantial business relationship, as defined in 40 CFR [either
264.141(h) or 265.141(h)]”, to any and all third parties who have
sustained or may sustain bodily injury or property damage caused by
[sudden and/or nonsudden] accidental occurrences arising from operation
of the facility(ies) covered by this guarantee.  

Recitals

1.  Guarantor meets or exceeds the financial test criteria and agrees to
comply with the reporting requirements for guarantors as specified in 40
CFR 261.147(g).

2.  [Owner or operator] owns or operates the following   facility(ies)
covered by this guarantee: [List for each facility: EPA identification
number (if any issued), name, and address; and if guarantor is
incorporated outside the United States list the name and address of the
guarantor's registered agent in each State.] This corporate guarantee
satisfies RCRA third-party liability requirements for [insert
“sudden” or “nonsudden” or “both sudden and nonsudden”]
accidental occurrences in above-named owner or operator facilities for
coverage in the amount of [insert dollar amount] for each occurrence and
[insert dollar amount] annual aggregate.

3.  For value received from [owner or operator], guarantor guarantees to
any and all third parties who have sustained or may sustain bodily
injury or property damage caused by [sudden and/or nonsudden] accidental
occurrences arising from operations of the facility(ies) covered by this
guarantee that in the event that [owner or operator] fails to satisfy a
judgment or award based on a determination of liability for bodily
injury or property damage to third parties caused by [sudden and/or
nonsudden] accidental occurrences, arising from the operation of the
above-named facilities, or fails to pay an amount agreed to in
settlement of a claim arising from or alleged to arise from such injury
or damage, the guarantor will satisfy such judgment(s), award(s) or
settlement agreement(s) up to the limits of coverage identified above.  

4.  Such obligation does not apply to any of the following:

(a) Bodily injury or property damage for which [insert owner or
operator] is obligated to pay damages by reason of the assumption of
liability in a contract or agreement.  This exclusion does not apply to
liability for damages that [insert owner or operator] would be obligated
to pay in the absence of the contract or agreement.  

(b) Any obligation of [insert owner or operator] under a workers'
compensation, disability benefits, or unemployment compensation law or
any similar law.

(c) Bodily injury to: 

(1) An employee of [insert owner or operator] arising from, and in the
course of, employment by [insert owner or operator]; or

(2) The spouse, child, parent, brother, or sister of that employee as a
consequence of, or arising from, and in the course of employment by
[insert owner or operator].  This exclusion applies: 

(A) Whether [insert owner or operator] may be liable as an employer or
in any other capacity; and 

(B) To any obligation to share damages with or repay another person who
must pay damages because of the injury to persons identified in
paragraphs (1) and (2).  

(d) Bodily injury or property damage arising out of the ownership,
maintenance, use, or entrustment to others of any aircraft, motor
vehicle or watercraft.  

(e) Property damage to: 

(1) Any property owned, rented, or occupied by [insert owner or
operator];

(2) Premises that are sold, given away or abandoned by [insert owner or
operator] if the property damage arises out of any part of those
premises;

(3) Property loaned to [insert owner or operator];

(4) Personal property in the care, custody or control of [insert owner
or operator];

(5) That particular part of real property on which [insert owner or
operator] or any contractors or subcontractors working directly or
indirectly on behalf of [insert owner or operator] are performing
operations, if the property damage arises out of these operations.  

5.  Guarantor agrees that if, at the end of any fiscal year before
termination of this guarantee, the guarantor fails to meet the financial
test criteria, guarantor shall send within 90 days, by certified mail,
notice to the EPA Regional Administrator[s] for the Region[s] in which
the facility[ies] is[are] located and to [owner or operator] that he
intends to provide alternate liability coverage as specified in 40 CFR
261.147, as applicable, in the name of [owner or operator].  Within 120
days after the end of such fiscal year, the guarantor shall establish
such liability coverage unless [owner or operator] has done so.  

6.  The guarantor agrees to notify the EPA Regional Administrator by
certified mail of a voluntary or involuntary proceeding under title 11
(Bankruptcy), U.S. Code, naming guarantor as debtor, within 10 days
after commencement of the proceeding.  

 Guarantor agrees that within 30 days after being notified by an EPA
Regional Administrator of a determination that guarantor no longer meets
the financial test criteria or that he is disallowed from continuing as
a guarantor, he shall establish alternate liability coverage as
specified in 40 CFR 261.147 in the name of [owner or operator], unless
[owner or operator] has done so.

7.  Guarantor reserves the right to modify this agreement to take into
account amendment or modification of the liability requirements set by
40 CFR 261.147, provided that such modification shall become effective
only if a Regional Administrator does not disapprove the modification
within 30 days of receipt of notification of the modification.

8.  Guarantor agrees to remain bound under this guarantee for so long as
[owner or operator] must comply with the applicable requirements of 40
CFR 261.147 for the above-listed facility(ies), except as provided in
paragraph 10 of this agreement.  

9.  [Insert the following language if the guarantor is (a) a direct or
higher-tier corporate parent, or (b) a firm whose parent corporation is
also the parent corporation of the owner or operator]:

10.  Guarantor may terminate this guarantee by sending notice by
certified mail to the EPA Regional Administrator(s) for the Region(s) in
which the facility(ies) is(are) located and to [owner or operator],
provided that this guarantee may not be terminated unless and until [the
owner or operator] obtains, and the EPA Regional Administrator(s)
approve(s), alternate liability coverage complying with 40 CFR 261.147.

[Insert the following language if the guarantor is a firm qualifying as
a guarantor due to its “substantial business relationship” with the
owner or operator]:

Guarantor may terminate this guarantee 120 days following receipt of
notification, through certified mail, by the EPA Regional
Administrator(s) for the Region(s) in which the facility(ies) is(are)
located and by [the owner or operator].

11.  Guarantor hereby expressly waives notice of acceptance of this
guarantee by any party.  

12.  Guarantor agrees that this guarantee is in addition to and does not
affect any other responsibility or liability of the guarantor with
respect to the covered facilities.

13.  The Guarantor shall satisfy a third-party liability claim only on
receipt of one of the following documents: 

(a) Certification from the Principal and the third-party claimant(s)
that the liability claim should be paid.  The certification must be
worded as follows, except that instructions in brackets are to be
replaced with the relevant information and the brackets deleted: 

Certification of Valid Claim

The undersigned, as parties [insert Principal] and [insert name and
address of third-party claimant(s)], hereby certify that the claim of
bodily injury and/or property damage caused by a [sudden or nonsudden]
accidental occurrence arising from operating [Principal's]   facility
should be paid in the amount of $ .  

[Signatures]____________________________________________________________


Principal_______________________________________________________________


(Notary) Date___________________________________________________________


[Signatures]____________________________________________________________


Claimant(s)_____________________________________________________________


(Notary) Date___________________________________________________________

(b) A valid final court order establishing a judgment against the
Principal for bodily injury or property damage caused by sudden or
nonsudden accidental occurrences arising from the operation of the
Principal's facility or group of facilities.  

14.  In the event of combination of this guarantee with another
mechanism to meet liability requirements, this guarantee will be
considered [insert “primary” or “excess”] coverage.

I hereby certify that the wording of the guarantee is identical to the
wording specified in 40 CFR 261.151(g)(2) as such regulations were
constituted on the date shown immediately below.  

Effective date:_________________________________________________________


[Name of guarantor]_____________________________________________________


[Authorized signature for guarantor]____________________________________


[Name of person signing]________________________________________________


[Title of person signing]_______________________________________________


Signature of witness or notary:_________________________________________

(h) A hazardous waste facility liability endorsement as required
§261.147 must be worded as follows, except that instructions in
brackets are to be replaced with the relevant information and the
brackets deleted:

Hazardous Secondary Material Reclamation/Intermediate Facility Liability
Endorsement

1.  This endorsement certifies that the policy to which the endorsement
is attached provides liability insurance covering bodily injury and
property damage in connection with the insured's obligation to
demonstrate financial responsibility under 40 CFR 261.147.  The coverage
applies at [list EPA Identification Number (if any issued), name, and
address for each facility] for [insert “sudden accidental
occurrences,” “nonsudden accidental occurrences,” or “sudden and
nonsudden accidental occurrences”; if coverage is for multiple
facilities and the coverage is different for different facilities,
indicate which facilities are insured for sudden accidental occurrences,
which are insured for nonsudden accidental occurrences, and which are
insured for both].  The limits of liability are [insert the dollar
amount of the “each occurrence” and “annual aggregate” limits of
the Insurer's liability], exclusive of legal defense costs.

2.  The insurance afforded with respect to such occurrences is subject
to all of the terms and conditions of the policy; provided, however,
that any provisions of the policy inconsistent with subsections (a)
through (e) of this Paragraph 2 are hereby amended to conform with
subsections (a) through (e): 

(a) Bankruptcy or insolvency of the insured shall not relieve the
Insurer of its obligations under the policy to which this endorsement is
attached.  

(b) The Insurer is liable for the payment of amounts within any
deductible applicable to the policy, with a right of reimbursement by
the insured for any such payment made by the Insurer.  This provision
does not apply with respect to that amount of any deductible for which
coverage is demonstrated as specified in 40 CFR 261.147(f).

(c) Whenever requested by a Regional Administrator of the U.S.
Environmental Protection Agency (EPA), the Insurer agrees to furnish to
the Regional Administrator a signed duplicate original of the policy and
all endorsements.

(d) Cancellation of this endorsement, whether by the Insurer, the
insured, a parent corporation providing insurance coverage for its
subsidiary, or by a firm having an insurable interest in and obtaining
liability insurance on behalf of the owner or operator of the  facility,
will be effective only upon written notice and only after the expiration
of 60 days after a copy of such written notice is received by the
Regional Administrator(s) of the EPA Region(s) in which the
facility(ies) is(are) located.  

(e) Any other termination of this endorsement will be effective only
upon written notice and only after the expiration of thirty (30) days
after a copy of such written notice is received by the Regional
Administrator(s) of the EPA Region(s) in which the facility(ies) is
(are) located.

Attached to and forming part of policy No.  ------ issued by [name of
Insurer], herein called the Insurer, of [address of Insurer] to [name of
insured] of [address] this ______________ day of ______________, 19----.
 The effective date of said policy is _______----- day of
______________, 19----.  

I hereby certify that the wording of this endorsement is identical to
the wording specified in 40 CFR 261.151(h) as such regulation was
constituted on the date first above written, and that the Insurer is
licensed to transact the business of insurance, or eligible to provide
insurance as an excess or surplus lines insurer, in one or more States. 


[Signature of Authorized Representative of Insurer] 

[Type name]

[Title], Authorized Representative of [name of Insurer]

[Address of Representative] 

(i) A certificate of liability insurance as required in §261.147 must
be worded as follows, except that the instructions in brackets are to be
replaced with the relevant information and the brackets deleted: 

Hazardous Secondary Material Reclamation/Intermediate  Facility
Certificate of Liability Insurance

1.  [Name of Insurer], (the “Insurer”), of [address of Insurer]
hereby certifies that it has issued liability insurance covering bodily
injury and property damage to [name of insured], (the “insured”), of
[address of insured] in connection with the insured's obligation to
demonstrate financial responsibility under 40parts 264, 265, and the
financial assurance condition of 40 CFR 261.4(a)(24)(v)(F)..  The
coverage applies at [list EPA Identification Number (if any issued),
name, and address for each facility] for [insert “sudden accidental
occurrences,” “nonsudden accidental occurrences,” or “sudden and
nonsudden accidental occurrences”; if coverage is for multiple
facilities and the coverage is different for different facilities,
indicate which facilities are insured for sudden accidental occurrences,
which are insured for nonsudden accidental occurrences, and which are
insured for both].  The limits of liability are [insert the dollar
amount of the “each occurrence” and “annual aggregate” limits of
the Insurer's liability], exclusive of legal defense costs.  The
coverage is provided under policy number ------, issued on [date].  The
effective date of said policy is [date].  

2.  The Insurer further certifies the following with respect to the
insurance described in Paragraph 1:

(a) Bankruptcy or insolvency of the insured shall not relieve the
Insurer of its obligations under the policy.  

(b) The Insurer is liable for the payment of amounts within any
deductible applicable to the policy, with a right of reimbursement by
the insured for any such payment made by the Insurer.  This provision
does not apply with respect to that amount of any deductible for which
coverage is demonstrated as specified in 40 CFR 261.147. 

(c) Whenever requested by a Regional Administrator of the U.S.
Environmental Protection Agency (EPA), the Insurer agrees to furnish to
the Regional Administrator a signed duplicate original of the policy and
all endorsements.

(d) Cancellation of the insurance, whether by the insurer, the insured,
a parent corporation providing insurance coverage for its subsidiary, or
by a firm having an insurable interest in and obtaining liability
insurance on behalf of the owner or operator of the hazardous waste
management facility, will be effective only upon written notice and only
after the expiration of 60 days after a copy of such written notice is
received by the Regional Administrator(s) of the EPA Region(s) in which
the facility(ies) is(are) located.  

(e) Any other termination of the insurance will be effective only upon
written notice and only after the expiration of thirty (30) days after a
copy of such written notice is received by the Regional Administrator(s)
of the EPA Region(s) in which the facility(ies) is (are) located.

I hereby certify that the wording of this instrument is identical to the
wording specified in 40 CFR 261.151(i) as such regulation was
constituted on the date first above written, and that the Insurer is
licensed to transact the business of insurance, or eligible to provide
insurance as an excess or surplus lines insurer, in one or more States. 


[Signature of authorized representative of Insurer] 

[Type name]

[Title], Authorized Representative of [name of Insurer]

[Address of Representative] 

(j) A letter of credit, as specified in Sec. 261.147(h) of this
chapter, must be worded as follows, except that instructions in brackets
are to be replaced with the relevant information and the brackets
deleted:

Irrevocable Standby Letter of Credit

Name and Address of Issuing Institution_________________________________


Regional Administrator(s)_______________________________________________


Region(s)_______________________________________________________________


U.S. Environmental Protection Agency____________________________________

Dear Sir or Madam: We hereby establish our Irrevocable Standby Letter of
Credit No.  _______----- in the favor of [“any and all third-party
liability claimants” or insert name of trustee of the standby trust
fund], at the request and for the account of [owner or operator's name
and address] for third-party liability awards or settlements up to [in
words] U.S. dollars $_______----- per occurrence and the annual
aggregate amount of [in words] U.S. dollars $_______-----, for sudden
accidental occurrences and/or for third-party liability awards or
settlements up to the amount of [in words] U.S. dollars $_______-----
per occurrence, and the annual aggregate amount of [in words] U.S.
dollars $_______-----, for nonsudden accidental occurrences available
upon presentation of a sight draft bearing reference to this letter of
credit No.  _______-----, and [insert the following language if the
letter of credit is being used without a standby trust fund: (1) a
signed certificate reading as follows:

Certificate of Valid Claim

The undersigned, as parties [insert principal] and [insert name and
address of third party claimant(s)], hereby certify that the claim of
bodily injury and/or property damage caused by a [sudden or nonsudden]
accidental occurrence arising from operations of [principal's]  
facility should be paid in the amount of $[ ].  We hereby certify that
the claim does not apply to any of the following: 

(a) Bodily injury or property damage for which [insert principal] is
obligated to pay damages by reason of the assumption of liability in a
contract or agreement.  This exclusion does not apply to liability for
damages that [insert principal] would be obligated to pay in the absence
of the contract or agreement.  

(b) Any obligation of [insert principal] under a workers' compensation,
disability benefits, or unemployment compensation law or any similar
law.

(c) Bodily injury to: 

(1) An employee of [insert principal] arising from, and in the course
of, employment by [insert principal]; or 

(2) The spouse, child, parent, brother or sister of that employee as a
consequence of, or arising from, and in the course of employment by
[insert principal].

This exclusion applies: 

(A) Whether [insert principal] may be liable as an employer or in any
other capacity; and 

(B) To any obligation to share damages with or repay another person who
must pay damages because of the injury to persons identified in
paragraphs (1) and (2).  

(d) Bodily injury or property damage arising out of the ownership,
maintenance, use, or entrustment to others of any aircraft, motor
vehicle or watercraft.  

(e) Property damage to: 

(1) Any property owned, rented, or occupied by [insert principal]; 

(2) Premises that are sold, given away or abandoned by [insert
principal] if the property damage arises out of any part of those
premises;

(3) Property loaned to [insert principal]; 

(4) Personal property in the care, custody or control of [insert
principal];

(5) That particular part of real property on which [insert principal] or
any contractors or subcontractors working directly or indirectly on
behalf of [insert principal] are performing operations, if the property
damage arises out of these operations.  

[Signatures]____________________________________________________________


Grantor_________________________________________________________________


[Signatures]____________________________________________________________


Claimant(s)_____________________________________________________________


or (2) a valid final court order establishing a judgment against the
Grantor for bodily injury or property damage caused by sudden or
nonsudden accidental occurrences arising from the operation of the
Grantor's facility or group of facilities.] 

This letter of credit is effective as of [date] and shall expire on
[date at least one year later], but such expiration date shall be
automatically extended for a period of [at least one year] on [date and
on each successive expiration date, unless, at least 120 days before the
current expiration date, we notify you, the USEPA Regional Administrator
for Region [Region ], and [owner's or operator's name] by certified mail
that we have decided not to extend this letter of credit beyond the
current expiration date.

Whenever this letter of credit is drawn on under and in compliance with
the terms of this credit, we shall duly honor such draft upon
presentation to us.

[Insert the following language if a standby trust fund is not being
used: “In the event that this letter of credit is used in combination
with another mechanism for liability coverage, this letter of credit
shall be considered [insert “primary” or “excess” coverage].” 

We certify that the wording of this letter of credit is identical to the
wording specified in 40 CFR 261.151(j) as such regulations were
constituted on the date shown immediately below.  [Signature(s) and
title(s) of official(s) of issuing institution] [Date].

This credit is subject to [insert “the most recent edition of the
Uniform Customs and Practice for Documentary Credits, published and
copyrighted by the International Chamber of Commerce,” or “the
Uniform Commercial Code”].

(k) A surety bond, as specified in Sec.  261.147(i) of this chapter,
must be worded as follows: except that instructions in brackets are to
be replaced with the relevant information and the brackets deleted:

Payment Bond

Surety Bond No.  [Insert number]

Parties [Insert name and address of owner or operator], Principal,
incorporated in [Insert State of incorporation] of [Insert city and
State of principal place of business] and [Insert name and address of
surety company(ies)], Surety Company(ies), of [Insert surety(ies) place
of business].

EPA Identification Number (if any issued), name, and address for each
facility guaranteed by this bond: _______

________________________________________________________________________
________________________________________-----

		Nonsudden

	Sudden accidental	accidental

	      occurrences	occurrences 

________________________________________________________________________
________________________________________-----

Penal Sum Per Occurrence........	   [insert amount]	[insert amount] 

Annual Aggregate......................	   [insert amount]	[insert
amount] 

________________________________________________________________________
________________________________________-----

Purpose:  This is an agreement between the Surety(ies) and the Principal
under which the Surety(ies), its(their) successors and assignees, agree
to be responsible for the payment of claims against the Principal for
bodily injury and/or property damage to third parties caused by
[“sudden” and/or “nonsudden”] accidental occurrences arising
from operations of the facility or group of facilities in the sums
prescribed herein; subject to the governing provisions and the following
conditions.  

Governing Provisions: 

(1) Section 3004 of the Resource Conservation and Recovery Act of 1976,
as amended.

(2) Rules and regulations of the U.S. Environmental Protection Agency
(EPA), particularly 40 CFR parts 264, 265, and Subpart H of 40 CFR part
261 (if applicable).  

(3) Rules and regulations of the governing State agency (if applicable)
[insert citation].

Conditions:

(1) The Principal is subject to the applicable governing provisions that
require the Principal to have and maintain liability coverage for bodily
injury and property damage to third parties caused by [“sudden”
and/or “nonsudden”] accidental occurrences arising from operations
of the facility or group of facilities.  Such obligation does not apply
to any of the following:

(a) Bodily injury or property damage for which [insert Principal] is
obligated to pay damages by reason of the assumption of liability in a
contract or agreement.  This exclusion does not apply to liability for
damages that [insert Principal] would be obligated to pay in the absence
of the contract or agreement.  

(b) Any obligation of [insert Principal] under a workers' compensation,
disability benefits, or unemployment compensation law or similar law.

(c) Bodily injury to: 

(1) An employee of [insert Principal] arising from, and in the course
of, employment by [insert principal]; or 

(2) The spouse, child, parent, brother or sister of that employee as a
consequence of, or arising from, and in the course of employment by
[insert Principal].  This exclusion applies: 

(A) Whether [insert Principal] may be liable as an employer or in any
other capacity; and 

(B) To any obligation to share damages with or repay another person who
must pay damages because of the injury to persons identified in
paragraphs (1) and (2).  

(d) Bodily injury or property damage arising out of the ownership,
maintenance, use, or entrustment to others of any aircraft, motor
vehicle or watercraft.  

(e) Property damage to: 

(1) Any property owned, rented, or occupied by [insert Principal]; 

(2) Premises that are sold, given away or abandoned by [insert
Principal] if the property damage arises out of any part of those
premises;

(3) Property loaned to [insert Principal]; 

(4) Personal property in the care, custody or control of [insert
Principal];

(5) That particular part of real property on which [insert Principal] or
any contractors or subcontractors working directly or indirectly on
behalf of [insert Principal] are performing operations, if the property
damage arises out of these operations.  

(2) This bond assures that the Principal will satisfy valid third party
liability claims, as described in condition 1.

(3) If the Principal fails to satisfy a valid third party liability
claim, as described above, the Surety(ies) becomes liable on this bond
obligation.

(4) The Surety(ies) shall satisfy a third party liability claim only
upon the receipt of one of the following documents: 

(a) Certification from the Principal and the third party claimant(s)
that the liability claim should be paid.  The certification must be
worded as follows, except that instructions in brackets are to be
replaced with the relevant information and the brackets deleted: 

Certification of Valid Claim

The undersigned, as parties [insert name of Principal] and [insert name
and address of third party claimant(s)], hereby certify that the claim
of bodily injury and/or property damage caused by a [sudden or
nonsudden] accidental occurrence arising from operating [Principal's]  
facility should be paid in the amount of $[ ].  

[Signature]

Principal 

[Notary] Date 

[Signature(s)]

Claimant(s) 

[Notary] Date

or (b) A valid final court order establishing a judgment against the
Principal for bodily injury or property damage caused by sudden or
nonsudden accidental occurrences arising from the operation of the
Principal's facility or group of facilities.  

(5) In the event of combination of this bond with another mechanism for
liability coverage, this bond will be considered [insert “primary”
or “excess”] coverage.  

(6) The liability of the Surety(ies) shall not be discharged by any
payment or succession of payments hereunder, unless and until such
payment or payments shall amount in the aggregate to the penal sum of
the bond.  In no event shall the obligation of the Surety(ies) hereunder
exceed the amount of said annual aggregate penal sum, provided that the
Surety(ies) furnish(es) notice to the Regional Administrator forthwith
of all claims filed and payments made by the Surety(ies) under this
bond.  

(7) The Surety(ies) may cancel the bond by sending notice of
cancellation by certified mail to the Principal and the USEPA Regional
Administrator for Region [Region ], provided, however, that cancellation
shall not occur during the 120 days beginning on the date of receipt of
the notice of cancellation by the Principal and the Regional
Administrator, as evidenced by the return receipt.  

(8) The Principal may terminate this bond by sending written notice to
the Surety(ies) and to the EPA Regional Administrator(s) of the EPA
Region(s) in which the bonded facility(ies) is (are) located.

(9) The Surety(ies) hereby waive(s) notification of amendments to
applicable laws, statutes, rules and regulations and agree(s) that no
such amendment shall in any way alleviate its (their) obligation on this
bond.  

(10) This bond is effective from [insert date] (12:01 a.m., standard
time, at the address of the Principal as stated herein) and shall
continue in force until terminated as described above.

In Witness Whereof, the Principal and Surety(ies) have executed this
Bond and have affixed their seals on the date set forth above.

The persons whose signatures appear below hereby certify that they are
authorized to execute this surety bond on behalf of the Principal and
Surety(ies) and that the wording of this surety bond is identical to the
wording specified in 40 CFR261.151(k), as such regulations were
constituted on the date this bond was executed.  

PRINCIPAL

[Signature(s)]

[Name(s)]

[Title(s)]

[Corporate Seal]

CORPORATE SURETY[IES]

[Name and address]

State of
incorporation:___________________________________________________

Liability Limit: 
$______________________________________________________

[Signature(s)]

[Name(s) and title(s)] 

[Corporate seal]

[For every co-surety, provide signature(s), corporate seal, and other
information in the same manner as for Surety above.]

Bond premium: 
$_________________________________________________________

(l)(1) A trust agreement, as specified in Sec. 261.147(j) of this
chapter, must be worded as follows, except that instructions in brackets
are to be replaced with the relevant information and the brackets
deleted:

Trust Agreement

Trust Agreement, the “Agreement,” entered into as of [date] by and
between [name of the owner or operator] a [name of State] [insert
“corporation,” “partnership,” “association,” or
“proprietorship”], the “Grantor,” and [name of corporate
trustee], [insert, “incorporated in the State of _______-” or “a
national bank”], the “trustee.” 

Whereas, the United States Environmental Protection Agency, “EPA,”
an agency of the United States Government, has established certain
regulations applicable to the Grantor, requiring that an owner or
operator  must demonstrate financial responsibility for bodily injury
and property damage to third parties caused by sudden accidental and/or
nonsudden accidental occurrences arising from operations of the facility
or group of facilities.

Whereas, the Grantor has elected to establish a trust to assure all or
part of such financial responsibility for the facilities identified
herein.  

Whereas, the Grantor, acting through its duly authorized officers, has
selected the Trustee to be the trustee under this agreement, and the
Trustee is willing to act as trustee.

Now, therefore, the Grantor and the Trustee agree as follows: 

Section 1.  Definitions.  As used in this Agreement:

(a) The term “Grantor” means the owner or operator who enters into
this Agreement and any successors or assigns of the Grantor.

(b) The term “Trustee” means the Trustee who enters into this
Agreement and any successor Trustee.

Section 2.  Identification of Facilities.  This agreement pertains to
the facilities identified on attached schedule A [on schedule A, for
each facility list the EPA Identification Number (if any issued), name,
and address of the facility(ies) and the amount of liability coverage,
or portions thereof, if more than one instrument affords combined
coverage as demonstrated by this Agreement].

Section 3.  Establishment of Fund.  The Grantor and the Trustee hereby
establish a trust fund, hereinafter the “Fund,” for the benefit of
any and all third parties injured or damaged by [sudden and/or
nonsudden] accidental occurrences arising from operation of the
facility(ies) covered by this guarantee, in the amounts of _______-----
[up to $1 million] per occurrence and _______----- [up to $2 million]
annual aggregate for sudden accidental occurrences and _______----- [up
to $3 million] per occurrence and _______----- [up to $6 million] annual
aggregate for nonsudden occurrences, except that the Fund is not
established for the benefit of third parties for the following: 

(a) Bodily injury or property damage for which [insert Grantor] is
obligated to pay damages by reason of the assumption of liability in a
contract or agreement.  This exclusion does not apply to liability for
damages that [insert Grantor] would be obligated to pay in the absence
of the contract or agreement.  

(b) Any obligation of [insert Grantor] under a workers' compensation,
disability benefits, or unemployment compensation law or any similar
law.

(c) Bodily injury to: 

(1) An employee of [insert Grantor] arising from, and in the course of,
employment by [insert Grantor]; or

(2) The spouse, child, parent, brother or sister of that employee as a
consequence of, or arising from, and in the course of employment by
[insert Grantor].

This exclusion applies: 

(A) Whether [insert Grantor] may be liable as an employer or in any
other capacity; and

(B) To any obligation to share damages with or repay another person who
must pay damages because of the injury to persons identified in
paragraphs (1) and (2).  

(d) Bodily injury or property damage arising out of the ownership,
maintenance, use, or entrustment to others of any aircraft, motor
vehicle or watercraft.  

(e) Property damage to: 

(1) Any property owned, rented, or occupied by [insert Grantor]; 

(2) Premises that are sold, given away or abandoned by [insert Grantor]
if the property damage arises out of any part of those premises;

(3) Property loaned to [insert Grantor]; 

(4) Personal property in the care, custody or control of [insert
Grantor]; 

(5) That particular part of real property on which [insert Grantor] or
any contractors or subcontractors working directly or indirectly on
behalf of [insert Grantor] are performing operations, if the property
damage arises out of these operations.

In the event of combination with another mechanism for liability
coverage, the Fund shall be considered [insert “primary” or
“excess”] coverage.

The Fund is established initially as consisting of the property, which
is acceptable to the Trustee, described in Schedule B attached hereto. 
Such property and any other property subsequently transferred to the
Trustee is referred to as the Fund, together with all earnings and
profits thereon, less any payments or distributions made by the Trustee
pursuant to this Agreement.  The Fund shall be held by the Trustee, IN
TRUST, as hereinafter provided.  The Trustee shall not be responsible
nor shall it undertake any responsibility for the amount or adequacy of,
nor any duty to collect from the Grantor, any payments necessary to
discharge any liabilities of the Grantor established by EPA.

Section 4.  Payment for Bodily Injury or Property Damage.  The Trustee
shall satisfy a third party liability claim by making payments from the
Fund only upon receipt of one of the following documents;

(a) Certification from the Grantor and the third party claimant(s) that
the liability claim should be paid.  The certification must be worded as
follows, except that instructions in brackets are to be replaced with
the relevant information and the brackets deleted: 

Certification of Valid Claim

The undersigned, as parties [insert Grantor] and [insert name and
address of third party claimant(s)], hereby certify that the claim of
bodily injury and/or property damage caused by a [sudden or nonsudden]
accidental occurrence arising from operating [Grantor's] facility or
group of facilities should be paid in the amount of $[ ].  

[Signatures]

Grantor 

[Signatures]

Claimant(s)

(b) A valid final court order establishing a judgment against the
Grantor for bodily injury or property damage caused by sudden or
nonsudden accidental occurrences arising from the operation of the
Grantor's facility or group of facilities.  

Section 5.  Payments Comprising the Fund.  Payments made to the Trustee
for the Fund shall consist of cash or securities acceptable to the
Trustee.

Section 6.  Trustee Management.  The Trustee shall invest and reinvest
the principal and income, in accordance with general investment policies
and guidelines which the Grantor may communicate in writing to the
Trustee from time to time, subject, however, to the provisions of this
section.  In investing, reinvesting, exchanging, selling, and managing
the Fund, the Trustee shall discharge his duties with respect to the
trust fund solely in the interest of the beneficiary and with the care,
skill, prudence, and diligence under the circumstance then prevailing
which persons of prudence, acting in a like capacity and familiar with
such matters, would use in the conduct of an enterprise of a like
character and with like aims; except that: 

(i) Securities or other obligations of the Grantor, or any other owner
or operator of the facilities, or any of their affiliates as defined in
the Investment Company Act of 1940, as amended, 15 U.S.C.  80a-2.(a),
shall not be acquired or held unless they are securities or other
obligations of the Federal or a State government;

(ii) The Trustee is authorized to invest the Fund in time or demand
deposits of the Trustee, to the extent insured by an agency of the
Federal or State government; and

(iii) The Trustee is authorized to hold cash awaiting investment or
distribution uninvested for a reasonable time and without liability for
the payment of interest thereon.

Section 7.  Commingling and Investment.  The Trustee is expressly
authorized in its discretion: 

(a) To transfer from time to time any or all of the assets of the Fund
to any common commingled, or collective trust fund created by the
Trustee in which the fund is eligible to participate, subject to all of
the provisions thereof, to be commingled with the assets of other trusts
participating therein; and 

(b) To purchase shares in any investment company registered under the
Investment Company Act of 1940, 15 U.S.C.  81a-1 et seq., including one
which may be created, managed, underwritten, or to which investment
advice is rendered or the shares of which are sold by the Trustee.  The
Trustee may vote such shares in its discretion.  

Section 8.  Express Powers of Trustee.  Without in any way limiting the
powers and discretions conferred upon the Trustee by the other
provisions of this Agreement or by law, the Trustee is expressly
authorized and empowered: 

(a) To sell, exchange, convey, transfer, or otherwise dispose of any
property held by it, by public or private sale.  No person dealing with
the Trustee shall be bound to see to the application of the purchase
money or to inquire into the validity or expediency of any such sale or
other disposition;

(b) To make, execute, acknowledge, and deliver any and all documents of
transfer and conveyance and any and all other instruments that may be
necessary or appropriate to carry out the powers herein granted; 

(c) To register any securities held in the Fund in its own name or in
the name of a nominee and to hold any security in bearer form or in book
entry, or to combine certificates representing such securities with
certificates of the same issue held by the Trustee in other fiduciary
capacities, or to deposit or arrange for the deposit of such securities
in a qualified central depository even though, when so deposited, such
securities may be merged and held in bulk in the name of the nominee of
such depository with other securities deposited therein by another
person, or to deposit or arrange for the deposit of any securities
issued by the United States Government, or any agency or instrumentality
thereof, with a Federal Reserve bank, but the books and records of the
Trustee shall at all times show that all such securities are part of the
Fund;

(d) To deposit any cash in the Fund in interest-bearing accounts
maintained or savings certificates issued by the Trustee, in its
separate corporate capacity, or in any other banking institution
affiliated with the Trustee, to the extent insured by an agency of the
Federal or State government; and

(e) To compromise or otherwise adjust all claims in favor of or against
the Fund.

Section 9.  Taxes and Expenses.  All taxes of any kind that may be
assessed or levied against or in respect of the Fund and all brokerage
commissions incurred by the Fund shall be paid from the Fund.  All other
expenses incurred by the Trustee in connection with the administration
of this Trust, including fees for legal services rendered to the
Trustee, the compensation of the Trustee to the extent not paid directly
by the Grantor, and all other proper charges and disbursements of the
Trustee shall be paid from the Fund.

Section 10.  Annual Valuations.  The Trustee shall annually, at least 30
days prior to the anniversary date of establishment of the Fund, furnish
to the Grantor and to the appropriate EPA Regional Administrator a
statement confirming the value of the Trust.  Any securities in the Fund
shall be valued at market value as of no more than 60 days prior to the
anniversary date of establishment of the Fund.  The failure of the
Grantor to object in writing to the Trustee within 90 days after the
statement has been furnished to the Grantor and the EPA Regional
Administrator shall constitute a conclusively binding assent by the
Grantor barring the Grantor from asserting any claim or liability
against the Trustee with respect to matters disclosed in the statement. 


Section 11.  Advice of Counsel.  The Trustee may from time to time
consult with counsel, who may be counsel to the Grantor with respect to
any question arising as to the construction of this Agreement or any
action to be taken hereunder.  The Trustee shall be fully protected, to
the extent permitted by law, in acting upon the advice of counsel.  

Section 12.  Trustee Compensation.  The Trustee shall be entitled to
reasonable compensation for its services as agreed upon in writing from
time to time with the Grantor.  

Section 13.  Successor Trustee.  The Trustee may resign or the Grantor
may replace the Trustee, but such resignation or replacement shall not
be effective until the Grantor has appointed a successor trustee and
this successor accepts the appointment.  The successor trustee shall
have the same powers and duties as those conferred upon the Trustee
hereunder.  Upon the successor trustee's acceptance of the appointment,
the Trustee shall assign, transfer, and pay over to the successor
trustee the funds and properties then constituting the Fund.  If for any
reason the Grantor cannot or does not act in the event of the
resignation of the Trustee, the Trustee may apply to a court of
competent jurisdiction for the appointment of a successor trustee or for
instructions.  The successor trustee shall specify the date on which it
assumes administration of the trust in a writing sent to the Grantor,
the EPA Regional Administrator, and the present Trustee by certified
mail 10 days before such change becomes effective.  Any expenses
incurred by the Trustee as a result of any of the acts contemplated by
this section shall be paid as provided in Section 9.  

Section 14.  Instructions to the Trustee.  All orders, requests, and
instructions by the Grantor to the Trustee shall be in writing, signed
by such persons as are designated in the attached Exhibit A or such
other designees as the Grantor may designate by amendments to Exhibit A.
 The Trustee shall be fully protected in acting without inquiry in
accordance with the Grantor's orders, requests, and instructions.  All
orders, requests, and instructions by the EPA Regional Administrator to
the Trustee shall be in writing, signed by the EPA Regional
Administrators of the Regions in which the facilities are located, or
their designees, and the Trustee shall act and shall be fully protected
in acting in accordance with such orders, requests, and instructions. 
The Trustee shall have the right to assume, in the absence of written
notice to the contrary, that no event constituting a change or a
termination of the authority of any person to act on behalf of the
Grantor or EPA hereunder has occurred.  The Trustee shall have no duty
to act in the absence of such orders, requests, and instructions from
the Grantor and/or EPA, except as provided for herein.  

Section 15.  Notice of Nonpayment.  If a payment for bodily injury or
property damage is made under Section 4 of this trust, the Trustee shall
notify the Grantor of such payment and the amount(s) thereof within five
(5) working days.  The Grantor shall, on or before the anniversary date
of the establishment of the Fund following such notice, either make
payments to the Trustee in amounts sufficient to cause the trust to
return to its value immediately prior to the payment of claims under
Section 4, or shall provide written proof to the Trustee that other
financial assurance for liability coverage has been obtained equaling
the amount necessary to return the trust to its value prior to the
payment of claims.  If the Grantor does not either make payments to the
Trustee or provide the Trustee with such proof, the Trustee shall within
10 working days after the anniversary date of the establishment of the
Fund provide a written notice of nonpayment to the EPA Regional
Administrator.

Section 16.  Amendment of Agreement.  This Agreement may be amended by
an instrument in writing executed by the Grantor, the Trustee, and the
appropriate EPA Regional Administrator, or by the Trustee and the
appropriate EPA Regional Administrator if the Grantor ceases to exist.  

Section 17.  Irrevocability and Termination.  Subject to the right of
the parties to amend this Agreement as provided in Section 16, this
Trust shall be irrevocable and shall continue until terminated at the
written agreement of the Grantor, the Trustee, and the EPA Regional
Administrator, or by the Trustee and the EPA Regional Administrator, if
the Grantor ceases to exist.  Upon termination of the Trust, all
remaining trust property, less final trust administration expenses,
shall be delivered to the Grantor.

The Regional Administrator will agree to termination of the Trust when
the owner or operator substitutes alternate financial assurance as
specified in this section.  

Section 18.  Immunity and Indemnification.  The Trustee shall not incur
personal liability of any nature in connection with any act or omission,
made in good faith, in the administration of this Trust, or in carrying
out any directions by the Grantor or the EPA Regional Administrator
issued in accordance with this Agreement.  The Trustee shall be
indemnified and saved harmless by the Grantor or from the Trust Fund, or
both, from and against any personal liability to which the Trustee may
be subjected by reason of any act or conduct in its official capacity,
including all expenses reasonably incurred in its defense in the event
the Grantor fails to provide such defense.

Section 19.  Choice of Law.  This Agreement shall be administered,
construed, and enforced according to the laws of the State of [enter
name of State].

Section 20.  Interpretation.  As used in this Agreement, words in the
singular include the plural and words in the plural include the
singular.  The descriptive headings for each section of this Agreement
shall not affect the interpretation or the legal efficacy of this
Agreement.

In Witness Whereof the parties have caused this Agreement to be executed
by their respective officers duly authorized and their corporate seals
to be hereunto affixed and attested as of the date first above written. 
The parties below certify that the wording of this Agreement is
identical to the wording specified in 40 CFR 261.151(l) as such
regulations were constituted on the date first above written.  

[Signature of Grantor]

[Title] 

Attest: 

[Title]

[Seal] 

[Signature of Trustee] 

Attest: 

[Title]

[Seal]

(2) The following is an example of the certification of acknowledgement
which must accompany the trust agreement for a trust fund as specified
in Sec. Sec. 261.147(j) of this chapter.  State requirements may differ
on the proper content of this acknowledgement.  

State of
________________________________________________________________ 

County of
_______________________________________________________________

On this [date], before me personally came [owner or operator] to me
known, who, being by me duly sworn, did depose and say that she/he
resides at [address], that she/he is [title] of [corporation], the
corporation described in and which executed the above instrument; that
she/he knows the seal of said corporation; that the seal affixed to such
instrument is such corporate seal; that it was so affixed by order of
the Board of Directors of said corporation, and that she/he signed her/
his name thereto by like order.  

[Signature of Notary Public] 

(m)(1) A standby trust agreement, as specified in Sec. 261.147(h) of
this chapter, must be worded as follows, except that instructions in
brackets are to be replaced with the relevant information and the
brackets deleted:

Standby Trust Agreement

Trust Agreement, the “Agreement,” entered into as of [date] by and
between [name of the owner or operator] a [name of a State] [insert
“corporation,” “partnership,” “association,” or
“proprietorship”], the “Grantor,” and [name of corporate
trustee], [insert, “incorporated in the State of ______________” or
“a national bank”], the “trustee.” 

Whereas the United States Environmental Protection Agency, “EPA,” an
agency of the United States Government, has established certain
regulations applicable to the Grantor, requiring that an owner or
operator  must demonstrate financial responsibility for bodily injury
and property damage to third parties caused by sudden accidental and/or
nonsudden accidental occurrences arising from operations of the facility
or group of facilities.

Whereas, the Grantor has elected to establish a standby trust into which
the proceeds from a letter of credit may be deposited to assure all or
part of such financial responsibility for the facilities identified
herein.

Whereas, the Grantor, acting through its duly authorized officers, has
selected the Trustee to be the trustee under this agreement, and the
Trustee is willing to act as trustee.  

Now, therefore, the Grantor and the Trustee agree as follows: 

Section 1.  Definitions.  As used in this Agreement:

(a) The term Grantor means the owner or operator who enters into this
Agreement and any successors or assigns of the Grantor.

(b) The term Trustee means the Trustee who enters into this Agreement
and any successor Trustee.

Section 2.  Identification of Facilities.  This agreement pertains to
the facilities identified on attached schedule A [on schedule A, for
each facility list the EPA Identification Number (if any issued), name,
and address of the facility(ies) and the amount of liability coverage,
or portions thereof, if more than one instrument affords combined
coverage as demonstrated by this Agreement].

Section 3.  Establishment of Fund.  The Grantor and the Trustee hereby
establish a standby trust fund, hereafter the “Fund,” for the
benefit of any and all third parties injured or damaged by [sudden
and/or nonsudden] accidental occurrences arising from operation of the
facility(ies) covered by this guarantee, in the amounts of _______-----
[up to $1 million] per occurrence and _______----- [up to $2 million]
annual aggregate for sudden accidental occurrences and _______----- [up
to $3 million] per occurrence and _______----- [up to $6 million] annual
aggregate for nonsudden occurrences, except that the Fund is not
established for the benefit of third parties for the following: 

(a) Bodily injury or property damage for which [insert Grantor] is
obligated to pay damages by reason of the assumption of liability in a
contract or agreement.  This exclusion does not apply to liability for
damages that [insert Grantor] would be obligated to pay in the absence
of the contract or agreement.  

(b) Any obligation of [insert Grantor] under a workers' compensation,
disability benefits, or unemployment compensation law or any similar
law.

(c) Bodily injury to: 

(1) An employee of [insert Grantor] arising from , and in the course of,
employment by [insert Grantor]; or

(2) The spouse, child, parent, brother or sister of that employee as a
consequence of, or arising from, and in the course of employment by
[insert Grantor].

This exclusion applies: 

(A) Whether [insert Grantor] may be liable as an employer or in any
other capacity; and

(B) To any obligation to share damages with or repay another person who
must pay damages because of the injury to persons identified in
paragraphs (1) and (2).  

(d) Bodily injury or property damage arising out of the ownership,
maintenance, use, or entrustment to others of any aircraft, motor
vehicle or watercraft.  

(e) Property damage to: 

(1) Any property owned, rented, or occupied by [insert Grantor]; 

(2) Premises that are sold, given away or abandoned by [insert Grantor]
if the property damage arises out of any part of those premises;

(3) Property loaned by [insert Grantor]; 

(4) Personal property in the care, custody or control of [insert
Grantor];

(5) That particular part of real property on which [insert Grantor] or
any contractors or subcontractors working directly or indirectly on
behalf of [insert Grantor] are performing operations, if the property
damage arises out of these operations.

In the event of combination with another mechanism for liability
coverage, the fund shall be considered [insert “primary” or
“excess”] coverage.

The Fund is established initially as consisting of the proceeds of the
letter of credit deposited into the Fund.  Such proceeds and any other
property subsequently transferred to the Trustee is referred to as the
Fund, together with all earnings and profits thereon, less any payments
or distributions made by the Trustee pursuant to this Agreement.  The
Fund shall be held by the Trustee, IN TRUST, as hereinafter provided. 
The Trustee shall not be responsible nor shall it undertake any
responsibility for the amount or adequacy of, nor any duty to collect
from the Grantor, any payments necessary to discharge any liabilities of
the Grantor established by EPA.  

Section 4.  Payment for Bodily Injury or Property Damage.  The Trustee
shall satisfy a third party liability claim by drawing on the letter of
credit described in Schedule B and by making payments from the Fund only
upon receipt of one of the following documents: 

(a) Certification from the Grantor and the third party claimant(s) that
the liability claim should be paid.  The certification must be worded as
follows, except that instructions in brackets are to be replaced with
the relevant information and the brackets deleted: 

Certification of Valid Claim

The undersigned, as parties [insert Grantor] and [insert name and
address of third party claimant(s)], hereby certify that the claim of
bodily injury and/or property damage caused by a [sudden or nonsudden]
accidental occurrence arising from operating [Grantor's] facility should
be paid in the amount of $[ ].  

[Signature]_____________________________________________________________


Grantor_________________________________________________________________


[Signatures]____________________________________________________________


Claimant(s)_____________________________________________________________

(b) A valid final court order establishing a judgment against the
Grantor for bodily injury or property damage caused by sudden or
nonsudden accidental occurrences arising from the operation of the
Grantor's facility or group of facilities.  

Section 5.  Payments Comprising the Fund.  Payments made to the Trustee
for the Fund shall consist of the proceeds from the letter of credit
drawn upon by the Trustee in accordance with the requirements of 40 CFR
261.151(k)) and Section 4 of this Agreement.  

Section 6.  Trustee Management.  The Trustee shall invest and reinvest
the principal and income, in accordance with general investment policies
and guidelines which the Grantor may communicate in writing to the
Trustee from time to time, subject, however, to the provisions of this
Section.  In investing, reinvesting, exchanging, selling, and managing
the Fund, the Trustee shall discharge his duties with respect to the
trust fund solely in the interest of the beneficiary and with the care,
skill, prudence, and diligence under the circumstances then prevailing
which persons of prudence, acting in a like capacity and familiar with
such matters, would use in the conduct of an enterprise of a like
character and with like aims; except that: 

(i) Securities or other obligations of the Grantor, or any other owner
or operator of the facilities, or any of their affiliates as 

defined in the Investment Company Act of 1940, as amended, 15 U.S.C.
80a-2(a), shall not be acquired or held, unless they are securities or
other obligations of the Federal or a State government;

(ii) The Trustee is authorized to invest the Fund in time or demand
deposits of the Trustee, to the extent insured by an agency of the
Federal or a State government; and

(iii) The Trustee is authorized to hold cash awaiting investment or
distribution uninvested for a reasonable time and without liability for
the payment of interest thereon.

Section 7.  Commingling and Investment.  The Trustee is expressly
authorized in its discretion: 

(a) To transfer from time to time any or all of the assets of the Fund
to any common, commingled, or collective trust fund created by the
Trustee in which the Fund is eligible to participate, subject to all of
the provisions thereof, to be commingled with the assets of other trusts
participating therein; and 

(b) To purchase shares in any investment company registered under the
Investment Company Act of 1940, 15 U.S.C. 80a-1 et seq., including one
which may be created, managed, underwritten, or to which investment
advice is rendered or the shares of which are sold by the Trustee.  The
Trustee may vote such shares in its discretion.  

Section 8.  Express Powers of Trustee.  Without in any way limiting the
powers and discretions conferred upon the Trustee by the other
provisions of this Agreement or by law, the Trustee is expressly
authorized and empowered: 

(a) To sell, exchange, convey, transfer, or otherwise dispose of any
property held by it, by public or private sale.  No person dealing with
the Trustee shall be bound to see to the application of the purchase
money or to inquire into the validity or expediency of any such sale or
other disposition; 

(b) To make, execute, acknowledge, and deliver any and all documents of
transfer and conveyance and any and all other instruments that may be
necessary or appropriate to carry out the powers herein granted; 

(c) To register any securities held in the Fund in its own name or in
the name of a nominee and to hold any security in bearer form or in book
entry, or to combine certificates representing such securities with
certificates of the same issue held by the Trustee in other fiduciary
capacities, or to deposit or arrange for the deposit of such securities
in a qualified central depositary even though, when so deposited, such
securities may be merged and held in bulk in the name of the nominee of
such depositary with other securities deposited therein by another
person, or to deposit or arrange for the deposit of any securities
issued by the United States Government, or any agency or instrumentality
thereof, with a Federal Reserve Bank, but the books and records of the
Trustee shall at all times show that all such securities are part of the
Fund;

(d) To deposit any cash in the Fund in interest-bearing accounts
maintained or savings certificates issued by the Trustee, in its
separate corporate capacity, or in any other banking institution
affiliated with the Trustee, to the extent insured by an agency of the
Federal or State government; and

(e) To compromise or otherwise adjust all claims in favor of or against
the Fund.

Section 9.  Taxes and Expenses.  All taxes of any kind that may be
assessed or levied against or in respect of the Fund and all brokerage
commissions incurred by the Fund shall be paid from the Fund.  All other
expenses incurred by the Trustee in connection with the administration
of this Trust, including fees for legal services rendered to the
Trustee, the compensation of the Trustee to the extent not paid directly
by the Grantor, and all other proper charges and disbursements to the
Trustee shall be paid from the Fund.

Section 10.  Advice of Counsel.  The Trustee may from time to time
consult with counsel, who may be counsel to the Grantor, with respect to
any question arising as to the construction of this Agreement or any
action to be taken hereunder.  The Trustee shall be fully protected, to
the extent permitted by law, in acting upon the advice of counsel.  

Section 11.  Trustee Compensation.  The Trustee shall be entitled to
reasonable compensation for its services as agreed upon in writing from
time to time with the Grantor.  

Section 12.  Successor Trustee.  The Trustee may resign or the Grantor
may replace the Trustee, but such resignation or replacement shall not
be effective until the Grantor has appointed a successor trustee and
this successor accepts the appointment.  The successor trustee shall
have the same powers and duties as those conferred upon the Trustee
hereunder.  Upon the successor trustee's acceptance of the appointment,
the Trustee shall assign, transfer, and pay over to the successor
trustee the funds and properties then constituting the Fund.  If for any
reason the Grantor cannot or does not act in the event of the
resignation of the Trustee, the Trustee may apply to a court of
competent jurisdiction for the appointment of a successor trustee or for
instructions.  The successor trustee shall specify the date on which it
assumes administration of the trust in a writing sent to the Grantor,
the EPA Regional Administrator and the present Trustee by certified mail
10 days before such change becomes effective.  Any expenses incurred by
the Trustee as a result of any of the acts contemplated by this Section
shall be paid as provided in Section 9.

Section 13.  Instructions to the Trustee.  All orders, requests,
certifications of valid claims, and instructions to the Trustee shall be
in writing, signed by such persons as are designated in the attached
Exhibit A or such other designees as the Grantor may designate by
amendments to Exhibit A.  The Trustee shall be fully protected in acting
without inquiry in accordance with the Grantor's orders, requests, and
instructions.  The Trustee shall have the right to assume, in the
absence of written notice to the contrary, that no event constituting a
change or a termination of the authority of any person to act on behalf
of the Grantor or the EPA Regional Administrator hereunder has occurred.
 The Trustee shall have no duty to act in the absence of such orders,
requests, and instructions from the Grantor and/or EPA, except as
provided for herein.

Section 14.  Amendment of Agreement.  This Agreement may be amended by
an instrument in writing executed by the Grantor, the Trustee, and the
EPA Regional Administrator, or by the Trustee and the EPA Regional
Administrator if the Grantor ceases to exist.  

Section 15.  Irrevocability and Termination.  Subject to the right of
the parties to amend this Agreement as provided in Section 14, this
Trust shall be irrevocable and shall continue until terminated at the
written agreement of the Grantor, the Trustee, and the EPA Regional
Administrator, or by the Trustee and the EPA Regional Administrator, if
the Grantor ceases to exist.  Upon termination of the Trust, all
remaining trust property, less final trust administration expenses,
shall be paid to the Grantor.  

The Regional Administrator will agree to termination of the Trust when
the owner or operator substitutes alternative financial assurance as
specified in this section.  

Section 16.  Immunity and indemnification.  The Trustee shall not incur
personal liability of any nature in connection with any act or omission,
made in good faith, in the administration of this Trust, or in carrying
out any directions by the Grantor and the EPA Regional Administrator
issued in accordance with this Agreement.  The Trustee shall be
indemnified and saved harmless by the Grantor or from the Trust Fund, or
both, from and against any personal liability to which the Trustee may
be subjected by reason of any act or conduct in its official capacity,
including all expenses reasonably incurred in its defense in the event
the Grantor fails to provide such defense.  

Section 17.  Choice of Law.  This Agreement shall be administered,
construed, and enforced according to the laws of the State of [enter
name of State].

Section 18.  Interpretation.  As used in this Agreement, words in the
singular include the plural and words in the plural include the
singular.  The descriptive headings for each Section of this Agreement
shall not affect the interpretation of the legal efficacy of this
Agreement.

In Witness Whereof the parties have caused this Agreement to be executed
by their respective officers duly authorized and their corporate seals
to be hereunto affixed and attested as of the date first above written. 
The parties below certify that the wording of this Agreement is
identical to the wording specified in 40 CFR 261.151(m) as such
regulations were constituted on the date first above written.  

[Signature of Grantor] 

[Title]

Attest: 

[Title]

[Seal] 

[Signature of Trustee] 

Attest: 

[Title]

[Seal]

(2) The following is an example of the certification of acknowledgement
which must accompany the trust agreement for a standby trust fund as
specified in section 261.147(h) of this chapter.  State requirements may
differ on the proper content of this acknowledgement.  

State of________________________________________________________________


County of_______________________________________________________________

On this [date], before me personally came [owner or operator] to me
known, who, being by me duly sworn, did depose and say that she/he
resides at [address], that she/he is [title] of [corporation], the
corporation described in and which executed the above instrument; that
she/he knows the seal of said corporation; that the seal affixed to such
instrument is such corporate seal; that it was so affixed by order of
the Board of Directors of said corporation, and that she/he signed her/
his name thereto by like order.  

[Signature of Notary Public] 

PART 270 – EPA Administered Permit Programs:  The Hazardous Waste
Permit Program

13.  The authority citation for part 270 continues to read as follows:

Authority: 42 U.S.C. 6905, 6912, 6924, 6925, 6927, 6939 and 6974.

Subpart D – Changes to Permits

14.	Section 270.42 Appendix I is amended to add a new A. 9 and A. 10 to
read as follows:

§270.42   Permit modification at the request of the permittee.

* * * * *

Appendix I to §270.42

Modifications	Class

A.  General Permit Provisions.

*   *   *   

9.  Changes to remove a permit conditions applicable to a unit excluded
under the provisions of §261.4. 

10.  Changes in the expiration date of a permit at which all units are
excluded under the provisions of §261.4.

                      

*  *  *

	

11

11

1Class 1 modifications requiring prior Agency approval.

*   *   *   *   *   

 As discussed in section VII.C., persons taking advantage of the
generator-controlled option must also notify the regulatory authority.
This notification requirement is needed to enable credible evaluation of
the status of hazardous secondary materials under RCRA and to ensure the
terms of the exclusions are being met by generators and reclaimers.
These types of notification requirements in this rule are being
promulgated under the authority of RCRA section 3007.  

 These are conditions beyond the prohibition on speculative
accumulation, the requirement that the hazardous secondary material be
contained, and the requirement that the materials be legitimately
recycled, as described in section VII.C., which would also apply to the
transfer-based exclusion. The transfer-based exclusion also includes a
notification requirement, which is needed to enable credible evaluation
of the status of hazardous secondary materials under section 3007 of
RCRA and to ensure the terms of the exclusions are being met by
generators, intermediate facilities, and reclaimers. 

. See, for example the ABR decision, where the Court acknowledged that
the term “discard” could be “ambiguous as applied to some
situations, but not as applied to others,” and particularly cited the
difficulty in examining the details of the many processes in the mineral
processing industry (208 F.3d at 1056). While the court overturned
EPA’s regulations for casting too wide a net over continuous
industrial processes, it acknowledged that there are a large number of
processes, some of which may be continuous and some of which may not.
Determining what is a continuous process in the mineral processing
industry, according to the Court, would require examination of the
details of the processes and does not lend itself, well, to broad
abstraction. Specifically, the Court stated,

Some mineral processing secondary materials covered under the Phase IV
Rule may not proceed directly to an ongoing recycling process and may be
analogous to the sludge in AMC II. The parties have presented this
aspect of the case in broad abstraction, providing little detail about
the many processes throughout the industry that generate residual
material of the sort EPA is attempting to regulate under RCRA, 

208 F.3d at 1056 

	In the case of today’s final rule, which applies across industries,
there are far larger and more diverse processes. While EPA believes it
is establishing a reasonable set of principles, they must still be
applied to the details of the industrial processes in question. 

 For current EPA guidance for companies using the financial test in 40
CFR part 264 or 265, please see the February 27, 1997 Memorandum from
Elizabeth Cotsworth to Senior RCRA Policy Advisors entitled “Obsolete
Language in the Financial Test for Subtitle C Treatment Storage and
Disposal Facilities,” at
http://yosemite.epa.gov/osw/rcra.nsf/ea6e50dc6214725285256bf00063269d/C6
8C99D730932BE28525670F006C2B4A/$file/14066.pdf

 Hazardous secondary material generators may choose, in the notice of
export, to designate alternate reclaimers or alternate intermediate
facilities to which the hazardous secondary materials may be exported in
the event that delivery to the primary reclaimer or intermediate
facility cannot take place. Hazardous secondary material generators, of
course, must comply with all conditions (e.g., reasonable efforts) for
each alternate reclaimer and alternate intermediate facility as with a
primary reclaimer and intermediate facility.

 The Office of Enforcement and Compliance Assurance (OECA) is the office
within EPA that implements the notice and consent process for exports.

 As an example of sham recycling, in a recent case the owner of a
facility in Mississippi was found to be illegally burying hazardous
waste on his property, where it was leaching into surrounding soil and
groundwater, while he was telling regulators and customers that he was
recycling it into a salable product (Department of Justice,
“Mississippi Hazardous Waste Operator Sentenced to 41 Months in Prison
for Environmental Crimes,” news release, February 7, 2008,
http://www.epa.gov/compliance/resources/cases/criminal/highlights/2008/p
ridemore-02-07-08.pdf). 

 Under the transfer-based exclusion being finalized in today’s rule, a
reclaimer should also anticipate that a hazardous secondary material
generator will inquire as to whether the reclaimer intends to
legitimately reclaim hazardous secondary materials (40 CFR
261.4(a)(24)(iv)(B)(1)). Reasonable effort inquiries will vary by
generator and may include a request for information or documentation of
legitimacy.

In the March 2007 supplemental proposal, EPA also proposed (but is not
finalizing) a third type of non-waste determination for hazardous
secondary materials reclaimed under the control of the generator via a
tolling arrangement or similar contractual arrangement. EPA, however,
did not identify any comments that described specific types of
contractual arrangements that would meet the proposed criteria for this
non-waste determination. See section XIX for more information.

 Again, the owner/operator of the facility must comply with the
applicable conditions and limitations of the exclusion (including the
containment of the hazardous secondary material in the unit and the
prohibition against speculative accumulation) to maintain the exclusion.

 The commenter discussed above who disagreed with the Agency’s
approach for permit modifications to remove units that are no longer
regulated, also believed that Class 2 permit modification procedures
were necessary to provide the public an opportunity to comment on the
owner or operator’s request to terminate a permit by modifying the
permit term. The Agency disagrees with this commenter. As was discussed
above, the regulations governing permit modifications classify changes
to the expiration date to allow earlier permit termination as Class 1
with prior Agency approval.  

 Owners and operators of permitted and interim status facilities with
corrective action obligations should refer to the Agency's February 25,
2003, guidance entitled “Final Guidance on Completion of

Corrective Action Activities at RCRA Facilities,” (see 68 FR 8757) for
a detailed discussion of corrective action completion.

 Similar provisions at 40 CFR 264.145(i) and 265.145(h) provide for
release of financial assurance for post-closure care.

 See section VIII.C.4 of this preamble for a complete discussion of
financial assurance as a condition of the exclusion for this group of
facilities.

 The Office of Enforcement and Compliance Assurance (OECA) is the office
within EPA that implements the notice and consent process for exports.

 Estimates are from the Regulatory Impact Analysis for U.S. EPA’s 2008
Final Rule Amendments to the Industrial Recycling Exclusions from the
Definition of Solid Waste.

DRAFT – INTERNAL EPA – DELIBERATIVE – FOIA EXEMPT

DSW final rule preamble and regulation- OMB Review draft – March 25,
2008

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