[Federal Register Volume 68, Number 208 (Tuesday, October 28, 2003)]
[Proposed Rules]
[Pages 61558-61599]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-26754]



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Part II





Environmental Protection Agency





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40 CFR Parts 260 and 261



Revisions to the Definition of Solid Waste; Proposed Rule

  Federal Register / Vol. 68 , No. 208 / Tuesday, October 28, 2003 / 
Proposed Rules  

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 260 and 261

[RCRA-2002-0031; FRL-7577-7]
RIN 2050-AE98


Revisions to the Definition of Solid Waste

AGENCY: Environmental Protection Agency.

ACTION: Proposed rule.

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SUMMARY: The Environmental Protection Agency (EPA) is today proposing 
revisions to the definition of solid waste that identify certain 
recyclable hazardous secondary materials as not discarded, and thus not 
subject to regulation as wastes under Subtitle C of the Resource 
Conservation and Recovery Act (RCRA). The proposed rule would also 
establish specific regulatory criteria for determining whether or not 
hazardous secondary materials are recycled legitimately.

DATES: To make sure we consider your comments on this proposed rule, 
they must be postmarked by January 26, 2004.

ADDRESSES: Comments may be submitted by mail to: OSWER Docket, 
Environmental Protection Agency, Mailcode: 5305T, 1200 Pennsylvania 
Ave., NW., Washington, DC 20460, Attention Docket ID No. RCRA-2002-
0031. Comments may also be submitted electronically, or through hand 
delivery/courier. Follow the detailed instructions as provided in 
Section C of the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: For general information, contact the 
RCRA Call Center at (800) 424-9346 or TDD (800) 553-7672 (hearing 
impaired). In the Washington, DC, metropolitan area, call (703) 412-
9810 or TDD (703) 412-3323. For more detailed information on specific 
aspects of this rulemaking, contact Dave Fagan at (703) 308-0603 
([email protected]), or Ingrid Rosencrantz at (703) 605-0709 
([email protected]).

SUPPLEMENTARY INFORMATION: 

A. Regulated Entities

    Entities potentially affected by this action are expected to 
include more than 1700 facilities that generate and/or recycle 
hazardous secondary materials. Most of these facilities are in 
manufacturing industries, and the most common types of recyclable 
materials that would be affected by the rule are metal-bearing 
secondary materials and solvents. The rule is expected to result in a 
net savings to industry of approximately $178 million per year. More 
detailed information on the entities, industries and materials 
potentially affected by this rule is presented in section VII.A. of 
this preamble.

B. How Can I Get Copies of This Document and Other Related Information?

    Docket. EPA has established an official docket for this action 
under Docket ID No. RCRA-2002-0031. The official docket consists of the 
documents specifically referenced in this action, any public comments 
received, and other information related to this action. Although a part 
of the official docket, the public docket does not include Confidential 
Business Information (CBI) or other information whose disclosure is 
restricted by statute. The public docket is the collection of materials 
that is available for public viewing at the OSWER Docket at the EPA 
Docket Center (EPA/DC), Room B102, EPA West Building, 1301 Constitution 
Avenue NW., Washington, DC. The EPA/DC 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 Reading Room is (202) 566-1744, and the OSWER 
Docket telephone number is (202) 566-0270. Copies are $0.15 per page. 
Electronic Access. You may access this Federal Register document 
electronically through the EPA Internet under the ``Federal Register'' 
listings at http://www.epa.gov/fedrgstr. Comments on the proposed rule 
can be submitted through the federal e-rulemaking portal, http://www.regulations.gov.
    An electronic version of the public docket is also available 
through EPA's electronic public docket and comment system, EPA Dockets. 
You may use EPA Dockets at http://www.epa.gov/edocket/ to submit or 
view public comments, access the index listing of the contents of the 
public docket, and access those documents in the public docket that are 
available electronically. Once in the system, select ``search,'' then 
key in the appropriate docket identification number.
    Certain types of information will not be placed in the EPA Docket. 
Information claimed as CBI and other information whose disclosure is 
restricted by statute, which is not included in the official public 
docket, will not be available for public viewing in EPA's electronic 
public docket. EPA's policy is that copyrighted material will not be 
placed in EPA's electronic public docket but will be available only in 
printed, paper form in the official public docket. Although not all 
docket materials may be available electronically, you may still access 
any of the publicly available docket materials through the docket 
facility. EPA intends to work toward providing electronic access to all 
of the publicly available docket materials through EPA's electronic 
public docket.
    For public commenters, it is important to note that EPA's policy is 
that public comments, whether submitted electronically or in paper, 
will be made available for public viewing in EPA's electronic public 
docket as EPA receives them and without change, unless the comment 
contains copyrighted material, CBI, or other information whose 
disclosure is restricted by statute. When EPA identifies a comment 
containing copyrighted material, EPA will provide a reference to that 
material in the version of the comment that is placed in EPA's 
electronic public docket. The entire printed comment, including the 
copyrighted material, will be available in the public docket.
    Public comments submitted on computer disks that are mailed or 
delivered to the docket will be transferred to EPA's electronic public 
docket. Public comments that are mailed or delivered to the Docket will 
be scanned and placed in EPA's electronic public docket. Where 
practical, physical objects will be photographed, and the photograph 
will be placed in EPA's electronic public docket along with a brief 
description written by the docket staff.
    For additional information about EPA's electronic public docket 
visit EPA Dockets online or see 67 FR 38102, May 31, 2002.

C. How and to Whom Do I Submit Comments?

    You may submit comments electronically, by mail, or through hand 
delivery/courier. To ensure proper receipt by EPA, identify the 
appropriate docket identification number in the subject line on the 
first page of your comment. Please ensure that your comments are 
submitted within the specified comment period. Comments received after 
the close of the comment period will be marked ``late.'' EPA is not 
required to consider these late comments.
    Electronically. If you submit an electronic comment as prescribed 
below, EPA recommends that you include your name, mailing address, and 
an e-mail address or other contact information in the body of your 
comment. Also include this contact information on the outside of any 
disk

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or CD ROM you submit, and in any cover letter accompanying the disk or 
CD ROM. This ensures that you can be identified as the submitter of the 
comment and allows EPA to contact you in case EPA cannot read your 
comment due to technical difficulties or needs further information on 
the substance of your comment. EPA's policy is that EPA will not edit 
your comment, and any identifying or contact information provided in 
the body of a comment will be included as part of the comment that is 
placed in the official public docket, and made available in EPA's 
electronic public docket. If EPA cannot read your comment due to 
technical difficulties and cannot contact you for clarification, EPA 
may not be able to consider your comment.
    Your use of EPA's electronic public docket to submit comments to 
EPA electronically is EPA's preferred method for receiving comments. Go 
directly to EPA Dockets at http://www.epa.gov/edocket, and follow the 
online instructions for submitting comments. To access EPA's electronic 
public docket from the EPA Internet Home Page, select ``Information 
Sources,'' ``Dockets,'' and ``EPA Dockets.'' Once in the system, select 
``search,'' and then key in Docket ID No. RCRA-2002-0031. The system is 
an ``anonymous access'' system, which means EPA will not know your 
identity, e-mail address, or other contact information unless you 
provide it in the body of your comment.
    Comments may be sent by electronic mail (e-mail) to [email protected], Attention Docket ID No. RCRA-2002-0031. In 
contrast to EPA's electronic public docket, EPA's e-mail system is not 
an ``anonymous access'' system. If you send an e-mail comment directly 
to the Docket without going through EPA's electronic public docket, 
EPA's e-mail system automatically captures your e-mail address. E-mail 
addresses that are automatically captured by EPA's e-mail system are 
included as part of the comment that is placed in the official public 
docket, and made available in EPA's electronic public docket.
    You may submit comments on a disk or CD ROM that you mail to the 
mailing address identified in the following paragraph. These electronic 
submissions will be accepted in WordPerfect or ASCII file format. Avoid 
the use of special characters and any form of encryption.
    By Mail. Send comments to: OSWER Docket, Environmental Protection 
Agency, Mailcode: 5305T, 1200 Pennsylvania Ave. NW., Washington, DC 
20460, Attention Docket ID No. RCRA-2002-0031.
    By Hand Delivery or Courier. Deliver your comments to: OSWER 
Docket, EPA West Building, Room B102, 1301 Constitution Avenue NW., 
Washington, DC, Attention Docket ID No. RCRA-2002-0031. Such deliveries 
are only accepted during the Docket's normal hours of operation as 
identified in the ``How Can I Get Copies of This Document and Other 
Related Information?'' section.
How Should I Submit CBI to the Agency?
    Do not submit information that you consider to be confidential 
business information (CBI) electronically through EPA's electronic 
public docket or by e-mail. Send or deliver information identified as 
CBI only to the following address: RCRA CBI Document Control Officer, 
Office of Solid Waste (5305W), U.S. EPA, 1200 Pennsylvania Avenue, NW., 
Washington, DC 20460, Attention Docket ID No. RCRA-2002-0031. You may 
claim information that you submit to EPA as CBI by marking any part or 
all of that information as CBI (if you submit CBI on disk or CD ROM, 
mark the outside of the disk or CD ROM as CBI and then identify 
electronically within the disk or CD ROM the specific information that 
is CBI). Information so marked will not be disclosed except in 
accordance with procedures set forth in 40 CFR, Part 2.
    In addition to one complete version of the comment that includes 
any information claimed as CBI, a copy of the comment that does not 
contain the information claimed as CBI must be submitted for inclusion 
in the public docket and EPA's electronic public docket. If you submit 
the copy that does not contain CBI on disk or CD ROM, mark the outside 
of the disk or CD ROM clearly that it does not contain CBI. Information 
not marked as CBI will be included in the public docket and EPA's 
electronic public docket without prior notice. If you have any 
questions about CBI or the procedures for claiming CBI, please consult 
the person identified in the FOR FURTHER INFORMATION CONTACT section.

D. What Should I Consider as I Prepare My Comments for EPA?

    You may find the following suggestions helpful for preparing your 
comments:
    1. Explain your views as clearly as possible.
    2. Describe any assumptions that you used.
    3. Provide any technical information and/or data you used that 
support your views.
    4. If you estimate potential burden or costs, explain how you 
arrived at your estimate.
    5. Provide specific examples to illustrate your concerns.
    6. Offer alternatives.
    7. Make sure to submit your comments by the comment period deadline 
identified.
    8. To ensure proper receipt by EPA, identify the appropriate docket 
identification number in the subject line on the first page of your 
response. It would also be helpful if you provided the name, date, and 
Federal Register citation related to your comments.

Preamble Outline

I. Statutory Authority
II. Background
    A. What Is the Intent of Today's Proposed Rule?
    B. Who Would be Affected by Today's Rule?
    C. How Is Hazardous Waste Recycling Currently Regulated?
    D. What Are the Legal Issues Surrounding the Definition of Solid 
Waste?
    1. Background
    2. A series of D.C. Circuit Court decisions
    3. Today's action
    E. What Suggestions Have Stakeholders Offered for Future Efforts 
to Revise the Current Recycling Regulations?
    F. What Is the Scope of Today's Proposed Rule?
III. Detailed Description of the Proposed Rule
    A. Exclusion for Hazardous Secondary Materials Generated and 
Reclaimed in a Continuous Process Within the Same Industry
    1. What is the intent of the proposed exclusion?
    2. What is reclamation?
    3. What types of materials would be eligible for the proposed 
exclusion?
    4. What is meant by a ``continuous process within the same 
industry?''
    5. What other options were considered for defining ``continuous 
process within the same industry?''
    6. How is EPA proposing to define ``industry?''
    7. How is EPA proposing to define ``continuous process?''
    8. What type of notification will be required?
    9. What conforming changes to existing regulations are proposed?
    10. How would the proposal be implemented and enforced?
    B. Legitimate Recycling
    1. What is legitimate recycling?
    2. What is the current guidance for legitimate recycling?
    3. Today's proposed criteria for legitimate recycling
IV. Request for Comment on a Broader Exclusion for Legitimate 
Recycling
V. Effect of Today's Proposal on Other Programs
    A. Exports and Imports
    B. Superfund
VI. State Authority

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    A. Applicability of rules in authorized states
    B. Effect on state authorization
    C. Interstate transport
VII. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination with 
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children from 
Environmental Health & Safety Risks
    H. Executive Order 13211: Actions that Significantly Affect 
Energy Supply, Distribution, or Use
    I. National Technology Transfer Advancement Act of 1995

I. Statutory Authority

    These regulations are proposed under the authority of sections 
2002, 3001, 3002, 3003, and 3004 of the Solid Waste Disposal Act of 
1970, as amended by the Resource Conservation and Recovery Act of 1976 
(RCRA), as amended by the Hazardous and Solid Waste Amendments of 1984 
(HSWA), 42 U.S.C. 6921, 6922, 6923, and 6924.

II. Background

A. What Is the Intent of Today's Proposed Rule?
    Today's proposed rule is intended to revise and clarify the RCRA 
definition of solid waste as it pertains to certain types of hazardous 
secondary materials that are not considered to be discarded, and thus 
are not considered wastes subject to regulation under RCRA Subtitle C. 
This regulatory action was initiated primarily in response to decisions 
by the United States Court of Appeals for the D.C. Circuit, which, 
taken together, have provided the Agency with additional direction in 
this area. Specifically, this proposal would define those circumstances 
under which materials would be excluded from RCRA's hazardous waste 
regulations because they are generated and reclaimed in a continuous 
process within the same industry.
    This proposal represents an important restructuring of the RCRA 
regulations that distinguish wastes from non-waste materials for 
Subtitle C purposes, and that ensure environmental protections over 
hazardous waste recycling practices. As such, it is also an opportunity 
for the Agency to clarify in a regulatory context the concept of 
``legitimate recycling,'' which has been and is a key component of 
RCRA's regulatory program for hazardous material recycling, but which 
to date has been implemented without specific regulatory criteria. 
Today's proposal thus includes specific regulatory provisions for 
determining when hazardous wastes and other hazardous secondary 
materials are recycled legitimately.
    Today's proposal is de-regulatory in nature, in that certain 
recyclable materials that have heretofore been subject to hazardous 
waste regulations would no longer be regulated under the hazardous 
waste regulatory system. The proposed criteria for legitimate recycling 
codify existing principles, without increasing regulation. This 
proposal is not intended to bring new wastes into the RCRA Subtitle C 
regulatory system.
    By removing hazardous waste regulatory controls over certain 
recycling practices, and by providing more explicit criteria for 
determining the legitimacy of recycling practices in general, EPA 
expects that this proposed rule will encourage safe, beneficial 
recycling of hazardous secondary materials by industry. This regulatory 
initiative is thus consistent with the Agency's longstanding policy of 
encouraging the recovery and reuse of valuable resources as an 
alternative to land disposal. It is also consistent with one of the 
primary goals of the Congress in enacting the RCRA statute (as 
evidenced by its name), and with the Agency's vision of how the RCRA 
program could evolve over the longer term to promote sustainability and 
more efficient use of resources.\1\ Finally, this regulatory proposal 
is an important component of EPA's recently announced ``Resource 
Conservation Challenge,'' which is designed to encourage and provide 
new incentives for increased reuse and recycling of materials, 
including hazardous wastes and hazardous secondary materials (for 
further information on this initiative see http://www.epa.gov/epaoswer/osw/conserve/index.htm).
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    \1\ The Agency's long-term ``vision'' of the future of the RCRA 
program is discussed in the document ``Beyond RCRA: Prospects for 
Waste and Materials Management in the Year 2020,'' which is 
available on the Agency's Web site at http://www.epa.gov/epaoswer/osw/vision.htm.
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    It should be understood that today's proposal does not attempt to 
resolve all issues surrounding the current RCRA Subtitle C recycling 
regulations. Since the current regulations were put in place in 1985 
(see 50 FR 614-668, January 4, 1985), many of the program's 
stakeholders have expressed the view that the current system is 
unnecessarily restrictive, and imposes regulatory controls that often 
discourage legitimate recycling opportunities by industry. These 
stakeholders have often argued that the Agency should commit itself to 
fundamentally restructuring the current rules, to ease controls over a 
wide range of recycling practices. On the other hand, other 
stakeholders have argued that the current regulations are in some ways 
too lenient, and that greater accountability and tighter controls 
should be built into the system.
    EPA has participated with a variety of stakeholder groups in 
several initiatives aimed at exploring and developing comprehensive new 
approaches to regulating hazardous material recycling. Unfortunately, 
these initiatives have been largely unsuccessful. In EPA's view, these 
unsuccessful efforts to comprehensively revise the RCRA recycling 
system are in large part attributable to the fundamental difficulty of 
trying to distinguish wastes from non-waste materials in a national 
regulatory framework that applies to an exceptionally broad array of 
industries, materials and recycling practices.
    Today's proposal, which addresses a particular set of recycling 
activities, is prompted by concerns articulated in the D.C. Circuit 
Court's opinions. Together with the legitimacy criteria also discussed 
today, the proposed exclusion is crafted to cover those cases where 
discard most likely does not occur because materials are being truly 
reused or recycled in a continuous process within the generating 
industry. EPA intends to continue exploring whether further initiatives 
aimed at encouraging legitimate recycling of hazardous secondary 
materials are warranted. We invite comment on this issue. Specifically, 
we are interested in stakeholder views as to whether EPA should 
undertake additional actions to encourage recycling of materials that 
would remain regulated as wastes under today's proposal. In this 
regard, most helpful would be comments describing what specific actions 
might be appropriate for this purpose, and the potential environmental 
and economic impacts that might be associated with such actions.
B. Who Would Be Affected by Today's Proposed Rule?
    Today's proposal would most directly affect those who generate, 
reclaim and reuse hazardous secondary materials in a continuous process 
within the generating industry, in accordance with the provisions of 
today's proposal. These materials would not be considered to be 
discarded under the proposal (and thus would not be wastes), so those 
who manage them would no longer be subject to hazardous waste 
regulatory requirements. EPA estimates that approximately 70% of the

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materials potentially affected by today's proposed regulatory exclusion 
are generated in the following industries:

[sbull] Inorganic chemicals
[sbull] Plastic Materials and Resins
[sbull] Pharmaceutical Preparations
[sbull] Cyclic Crudes and Intermediates
[sbull] Industrial Organic Chemicals
[sbull] Secondary Smelting of Nonferrous Metals
[sbull] Plating and Polishing
[sbull] Printed Circuit Boards

    More detailed discussion of the potential impacts of this rule on 
the regulated community is presented in section VII.A. of this 
preamble.
    In addition to the industries that may potentially benefit from the 
regulatory exclusion in today's proposal, the proposed provisions 
relating to legitimacy of recycling activities should provide a more 
general benefit to those who are engaged in hazardous material 
recycling, by providing clearer, more explicit rules for distinguishing 
between recycling practices that are legitimate, and those that EPA 
considers to be ``sham'' recycling.
C. How Is Hazardous Waste Recycling Currently Regulated?
    The basic regulatory provisions for defining ``solid wastes'' and 
``hazardous wastes'' under RCRA are found in part 261 of title 40 of 
the Code of Federal Regulations (CFR). To be subject to RCRA's 
hazardous waste regulatory program, a material must be a solid waste 
that is also a hazardous waste. A solid waste is a hazardous waste if 
it is explicitly listed as such (in subpart D of part 261), or if it 
exhibits a hazardous characteristic (as specified in subpart C of part 
261).
    In general, hazardous wastes are subject to RCRA's full ``cradle to 
grave'' regulatory system, from the time they are generated to when 
they ultimately are disposed of. However, hazardous secondary materials 
can often be recycled instead of being disposed, which can change how 
those wastes are regulated. The ``definition of solid waste'' 
regulations in part 261 in effect separate recyclable hazardous 
secondary materials into two broad categories--those that are 
classified as solid wastes when recycled, and are therefore subject to 
regulation under RCRA, and those that are not considered solid wastes 
when they are recycled, and thus are not regulated. It should be 
understood that the term ``hazardous secondary material'' as it is used 
in today's proposed rule and preamble therefore refers to both 
categories of recyclable materials; that is, materials that are 
regulated as hazardous wastes when recycled, and materials that are not 
considered wastes when recycled.
    Hazardous secondary materials that are not regulated as wastes when 
they are recycled include, for example, those which are used or reused 
directly as effective substitutes for commercial products, and those 
which can be used as ingredients in an industrial process, provided the 
materials are not being reclaimed. See 40 CFR 261.2(e). In essence, EPA 
considers these types of recycling practices to be more akin to normal 
industrial production than waste management. EPA does not consider them 
to involve management of discarded materials for purposes of RCRA 
Subtitle C.
    In contrast, some recycling practices bear more resemblance to 
waste management, and the hazardous secondary materials therefore 
remain regulated as wastes. One type of recycling that falls within 
this category and that is especially relevant to this proposed rule is 
reclamation of certain types of hazardous secondary materials. 
Reclamation involves processing of secondary materials in some way so 
that the materials can be used or reused. See 40 CFR 261.1(c)(4) and 40 
CFR 261.2(c)(3). An example of reclamation is processing of a spent 
solvent to restore its solvent properties before it is suitable for 
reuse as a solvent. As explained elsewhere in this preamble, today's 
proposal would de-regulate a specific subset of these materials that 
are recycled by being reclaimed.
    The existing part 261 regulations identify other types of recycling 
practices that are fully regulated because they generally are more 
likely to involve discard of materials (see 40 CFR 261.2(c)). These 
practices include recycling of ``inherently waste-like'' materials, 
recycling of materials that are ``used in a manner constituting 
disposal,'' and ``burning of materials for energy recovery.'' Today's 
proposal is not intended to affect how these recycling practices are 
regulated.
    The current regulations also provide certain specific exemptions 
and exclusions from the definition of solid waste for particular 
recycling practices. For example, pulping liquors from paper 
manufacturing that are reclaimed in a pulping liquor recovery furnace 
and then reused in the pulping process are excluded from regulation 
under 40 CFR 261.4(a)(6). In some cases, these exclusions specify 
certain conditions that must be met in order to qualify for and 
maintain the excluded status of the recycled material. An example of 
such a ``conditional exclusion'' is the one provided in 40 CFR 
261.4(a)(9) for spent wood preserving solutions that are reclaimed and 
reused. Today's proposal would impact some of these existing 
exclusions, as discussed in Section III.A. below.
D. What Are the Legal Issues Surrounding the Definition of Solid Waste?
1. Background
    RCRA gives EPA authority to regulate the management of ``solid 
wastes'' under its non-hazardous waste program. See, e.g, RCRA sections 
1008(a), 4001 and 4004(a). RCRA also gives EPA authority to regulate 
hazardous wastes. See, e.g., RCRA sections 3001-3004. ``Hazardous 
wastes'' are the subset of solid wastes that present threats to human 
health and the environment. See section 1004(5). EPA may also 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 wastes are generally not 
subject to regulation under RCRA Subtitle C. Thus, the definition of 
``solid waste'' plays a key role in defining the scope of EPA's RCRA's 
authorities.
    The statute defines ``solid waste'' as ``* * * any garbage, refuse, 
sludge from a waste treatment plant, water supply treatment plant, or 
air pollution control facility and other discarded material * * * 
resulting from industrial, commercial, mining, and agricultural 
operations, and from community activities.* * *'' RCRA Section 1004 
(27) (emphasis added). In its RCRA regulations, EPA has historically 
defined some materials destined for recycling as ``waste,'' while 
excluding others.
    Since 1980, EPA has interpreted ``solid waste'' under its Subtitle 
C regulations to encompass both materials that are destined for final, 
permanent placement in disposal units, as well as some materials that 
are destined for recycling. 45 FR 33090-95 (May 19, 1980); 50 FR 604-
656 (Jan. 4, 1985) (see especially pages 616-618). EPA has offered 
three arguments in support of this approach:
    [sbull] The statute and the legislative history suggest that 
Congress expected EPA to regulate as wastes some 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).
    [sbull] Many materials stored or transported prior to recycling 
present the same types of threats to human health and the environment 
as materials

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stored or transported prior to disposal. In fact, EPA found that 
recycling operations have accounted for a number of notorious damage 
incidents. For example, materials destined for recycling were involved 
in one-third of the first 60 filings under RCRA's imminent and 
substantial endangerment authority, and 20 of the first sites listed 
under CERCLA. (48 FR 14474, April 4, 1983) (The Agency has not, 
however, compiled definitive data on more recent damage cases 
associated with recycling operations.) Congress also cited some damage 
cases which can be interpreted to involve recycling. H.R. Rep. 94-1491, 
94th Cong., 2d Sess., at 17, 18, 22.
    [sbull] Excluding all materials destined for recycling would allow 
materials to move in and out of the hazardous waste management system 
depending on what any person handling the material intended to do with 
it. This seems inconsistent with the mandate to track hazardous wastes 
and control them from ``cradle to grave.''
    Interpreting the statute to confer jurisdiction over at least some 
materials destined for recycling, EPA has developed in part 261 of 40 
CFR a definition of ``solid waste'' for Subtitle C regulatory purposes. 
(Note that this definition is narrower than the definition of ``solid 
waste'' for RCRA endangerment and information gathering authorities. 
See 40 CFR 261.1(b) and Connecticut Coastal Fishermen's Association v. 
Remington Arms Co., 989 F.2d 1305, 1315 (2d Cir. 1993), holding that 
EPA's use of a broader and more specific definition of solid waste for 
Subtitle C purposes is a reasonable interpretation of the statute.)
    Under its Subtitle C regulations, EPA classifies as solid wastes 
some--but not all--secondary materials that are recycled by 
``reclamation.'' The regulations define ``spent materials'' as being 
``discarded'' if they are destined for reclamation. However, 
``commercial chemical products'' are not defined as ``discarded'' when 
reclaimed. Byproducts and sludges are defined as ``discarded'' on a 
case-by-case basis. EPA regulates these materials when they are 
reclaimed, when it has listed them in the context of a hazardous waste 
listing determination. However, EPA does not regulate by-products and 
sludges being reclaimed that are not listed hazardous wastes. See Table 
1 to 40 CFR 261.2. Finally, EPA has promulgated three exceptions from 
the Subtitle C definition for materials destined for reclamation. See 
260.31(b) and (c); 40 CFR 261.4(a)(8).
    In a reclamation operation, some components of a material are 
recovered and reused, while others are separated and in some cases are 
discarded. The variety of regulatory approaches to reclamation reflects 
the fact that EPA has found that some reclamation processes involve 
discard (because they more closely resemble waste management), while 
other such processes do not (because they more closely resemble normal 
manufacturing).
    Finally, EPA has always asserted that materials are not excluded 
from its jurisdiction simply because someone claims that they will be 
recycled. EPA has consistently considered 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);
2. A Series of D.C. Circuit Court Decisions
    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). Although the Court clearly 
articulated this concept, it did not specify which portions of the 
rules exceeded EPA's authority. It more generally ``granted the 
petition for review.''
    The Court held that some of the materials EPA was seeking to 
regulate were not ``discarded materials'' under section 1004(27). After 
reviewing numerous statutory provisions and portions of the legislative 
history, the Court held that Congress used the term ``discarded'' in 
its ordinary sense, to mean ``disposed of'' or ``abandoned.'' 824 F.2d 
at 1188-89. The Court further held that the term ``discarded 
materials'' could not include materials * * * destined for beneficial 
reuse or recycling in a continuous process by the generating industry 
itself (because they) are not yet part of the waste disposal problem.'' 
824 F.2d at 1190 (italics in original). The Court held that Congress 
had directly spoken to this issue, so that EPA's use of a conflicting 
definition was not entitled to deference under Chevron U.S.A., Inc. v. 
NRDC, 467 U.S. 837 (1984). 824 F.2d at 1183, 1189-90, 1193.
    At the same time, the Court did not hold that no recycled materials 
could be discarded. The Court mentioned at least two examples of 
recycled materials that EPA properly considered within its statutory 
jurisdiction, noting that used oil to be reused as fuel and metal-
bearing secondary materials stored in open piles which leached into the 
environment while stored for reuse in metals recovery can be considered 
to be solid wastes. 824 F.3d at 1187 (fn 14) and 1191 (fn 20). 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. The Court held that emission control dust from 
steelmaking operations listed as hazardous waste ``K061'' is a solid 
waste, even where 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). The Court held that 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. (``AMC II''), 
907 F. 2d 1179 (D.C. Cir. 1990). Also, the Court found that EPA 
potentially had jurisdiction over oil-bearing wastewaters recycled at 
petroleum refineries, although in the rule under review EPA failed to 
provide a rational basis for asserting jurisdiction. American Petroleum 
Institute v. EPA (``API II''), 216 F.3d 50, 57-58 (D.C. Cir. 2000).
    It is also worth noting that two other Circuits also have held that 
EPA has authority over at least some materials destined for reuse 
rather than final discard. The U.S. Court of Appeals for the 11th 
Circuit found that ``[i]t is unnecessary to read into the term 
`discarded' a congressional intent that the waste in question must 
finally and forever be discarded.'' U.S. v. ILCO, 996 F.2d 1126, 1132 
(11th Cir. 1993) (finding that used lead batteries sent to a reclaimer 
have been ``discarded once'' by the entity that sent the battery to the 
reclaimer). The Fourth Circuit found that slag held on the ground 
untouched for six months before sale for use as road bed could be a 
solid waste. Owen Electric Steel Co. v. EPA, 37 F.3d 146, 150 (4th Cir. 
1994).
    Considering all of these decisions (except the API case decided in 
2000), in 1998 EPA promulgated a rule adjusting its Subtitle C 
jurisdiction over

[[Page 61563]]

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 materials destined for reclamation. EPA imposed a 
condition prohibiting land-based storage prior to reclamation because 
it considered secondary materials from the mineral processing industry 
that were stored on the land to be part of the waste disposal problem. 
63 FR at 28581. The conditional exclusion decreased regulation over 
spent materials stored prior to reclamation, but increased regulation 
over by-products and sludges that exhibit a hazardous characteristic, 
and that are stored prior to reclamation. EPA noted that the statute 
does not authorize it to regulate ``materials that are destined for 
immediate reuse in another phase of the industry's ongoing production 
process.'' EPA, however, took the position that materials that are 
removed from a production process for storage are not ``immediately 
reused,'' and therefore, are ``discarded.'' 63 FR at 28580.
    The mining industry challenged the rule, and the 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 here in its 
opinion in AMC I, where it found that ``* * * Congress unambiguously 
expressed its intent that `solid waste' (and therefore EPA's regulatory 
authority) be limited to materials that are `discarded' by virtue of 
being disposed of, abandoned, or thrown away.'' 208 F.2d at 1051. It 
repeated that materials reused within an ongoing industrial process are 
neither disposed of or abandoned. 208 F.3d at 1051-52. It explained 
that the intervening API I and AMC II decisions had not narrowed the 
holding in AMC I. 208 F.3d at 1054-1056.
    At the same time, the Court did not hold that storage before 
reclamation automatically makes materials ``discarded.'' Rather, it 
held that ``* * * at least some of the secondary material EPA seeks to 
regulate as solid waste (in the mineral processing rule) is destined 
for reuse as part of a continuous industrial process and thus is not 
abandoned or thrown away.'' 208 F.3d at 1056.
3. Today's Action
    EPA has promulgated a final rule removing from the Code of Federal 
Regulations the byproduct and sludge provisions of the 1998 mineral 
processing exclusion that the Court vacated in ABR. 67 FR 11251 (Mar. 
13, 2002). Nonetheless, EPA views ABR as creating an opportunity to re-
examine its rules and interpretations and clarify whether they regulate 
certain materials that are not ``discarded.'' In today's proposed rule, 
therefore, EPA is attempting to identify a certain class or category of 
materials that EPA has determined are not discarded for purposes of 
Subtitle C. As explained in more detail elsewhere in this notice, EPA 
generally believes that such materials may include those that are 
recycled by being reclaimed within the same industry in which they were 
generated. EPA thinks that other classes of recycling activities, such 
as ``burning for energy recovery,'' ``use constituting disposal,'' and 
recycling of materials classified as ``inherently waste-like'' clearly 
involve elements of discard.
    EPA is today proposing that any material which is generated and 
reclaimed in a continuous process within the same industry (as defined 
in today's proposal) is not ``discarded'' for purposes of Subtitle C, 
provided that the recycling process is ``legitimate.'' Guided by the 
AMC I and ABR opinions, EPA is proposing to exclude these materials 
from the definition of solid waste for purposes of Subtitle C. Under 
this approach, EPA is proposing that when generation and reclamation 
occur on a continuous basis within a single industry (as the terms are 
defined in this proposal), secondary materials would not be regulated 
as solid wastes.
    Looking to the D.C. Circuit decisions for guidance, EPA is 
proposing today to exercise its discretion to interpret the statutory 
term ``discard'' for Subtitle C purposes. EPA is proposing that 
materials recycled in a continuous process within the generating 
industry would not be considered solid wastes for Subtitle C purposes. 
For reasons articulated later in this preamble, EPA believes that it 
must draw lines to provide a measure of regulatory certainty. EPA 
believes that the lines it is proposing today reflect reasonable 
judgments.
    EPA notes that the term ``solid waste'' is used in several places 
in the statute in addition to Subtitle C. EPA, however, is limiting the 
specific definitions in today's proposal to its Subtitle C regulations. 
While the general concepts that the Court articulated may also play a 
role in other RCRA provisions, EPA does not think the detailed scheme 
involving ``industry'' classifications and time limits on processing 
which it has developed for this rule are necessarily appropriate for 
other RCRA provisions. For example, RCRA section 7003 gives EPA 
authority to compel actions to abate conditions that may present an 
``imminent and substantial endangerment'' involving solid wastes. EPA 
uses this authority on a case-by-case basis. The Agency can determine 
in a specific factual context whether a material which causes an 
endangerment is discarded. Finally, EPA notes that it continues to 
regard any material intended for recycling that escapes into the 
environment as ``discarded'' and, therefore, within its statutory 
jurisdiction.

E. What Suggestions Have Stakeholders Offered for Future Efforts To 
Revise the Current Recycling Regulations?

    In the final rule responding directly to the vacaturs ordered by 
the United States Court of Appeals for the District of Columbia Circuit 
in Association of Battery Recyclers, v. EPA 208 F.3d 1047 (2000) (67 FR 
11251-4, March 13, 2002), EPA asked stakeholders to submit suggestions 
for possible future revisions to the current recycling regulations.
    The Agency received responses from both States and industry 
stakeholders. Some comments pertained to specific waste streams or 
industrial processes, but others were broader in nature. Although many 
of the broader suggestions are outside the scope of the current 
proposal, EPA would like to briefly summarize the comments here in 
order to continue the public dialogue on possible future efforts. In 
addition, the full set of these suggestions are included in the docket 
to today's proposed rulemaking. EPA requests comment on both these and 
any other possible revisions to the definition of solid waste that 
might be included in future proposals.
    Most of the comments from industry stakeholders focused on the 
regulatory definition of ``discarded material'' found in 40 CFR 
261.2(a)(2). Many of these stakeholders encouraged the Agency to 
address broadly the issue of when ``discard'' of recyclable materials 
occurs. Several commenters, including the American Chemistry Council 
(ACC), American Petroleum Institute (API), Chevron-Texaco and the 
International Precious Metals Institute (IPMI) suggested removing 
``recycled'' from the definition of discarded materials. Commenters 
offered different regulatory alternatives to ensuring that ``sham 
recycling'' does not occur as a result of removing recycling from the 
definition of discard, including suggesting that EPA specify 
``legitimacy criteria'' (ACC), suggesting EPA delineate material 
management factors that would indicate discard (IPMI), or including 
specific

[[Page 61564]]

``sham'' practices in the definition of solid waste (API and Chevron-
Texaco).
    The Synthetic Organic Chemical Manufacturers Association (SOCMA) 
raised issues on clarifying the terms ``continuous industrial 
process,'' ``generating industry'' and ``off-site/on-site.'' SOCMA 
provided examples of how the different terms could be applied to the 
Association's members. SOCMA also provided specific comments and 
regulatory language for an expanded variance procedure to exempt 
materials from the definition of solid waste.
    API and Chevron-Texaco offered the most specific comments, 
attaching regulatory language for discussion. Chevron-Texaco suggested 
adding a requirement that material with hazardous constituents above 
Universal Treatment Standard (UTS) levels that is managed such that the 
material is released to the environment would be considered discarded. 
API offered several possible new additions to the definition of 
discarded material, which closely follow examples that EPA has used in 
past rulemaking and guidance. (see October 3, 2002 letter from API to 
EPA).
    Several commenters (e.g. API, SOCMA) focused on the decision's 
discussion of a waste being recycled in a ``continuous industrial 
process.'' They stated that a ``continuous'' process encompasses all of 
the steps between original production of a raw material and eventual 
disposal, including any reclamation that might occur. These commenters 
believed that ``continuous industrial process'' did not necessarily 
imply only a single industry. Commenters cited examples of generators 
sending material off-site to recyclers who reclaim the material for 
reuse in other industries.
    Other industry-suggested revisions include creating a variance 
process for waste going to environmentally protective recycling (ACC), 
adding specific language that co-products are not solid waste (Hogan 
and Hartson, LLP), extending the storage accumulation times (SOCMA), 
revising the definition of ``accumulated speculatively'' in 40 CFR 
261.1(b)(8) for the mining and mineral processing industry (National 
Mining Association), and a recycling exclusion for spent pickle liquor 
recycling efforts (American Iron and Steel Institute).
    The Association of State and Territorial Solid Waste Management 
Officials (ASTSWMO) expressed general support for simplifying the 
current regulations and encouraging recycling. However, they also 
expressed the strong opinion that codified legitimacy criteria should 
be included in any changes, and that a notification or certification 
provision be added to allow state regulatory agencies to determine 
whether recycling practices are legitimate.

F. What Is the Scope of Today's Proposed Rule?

    As discussed previously in this section of today's preamble, spent 
materials, listed sludges and listed byproducts that are recycled by 
being reclaimed are currently considered wastes for RCRA regulatory 
purposes. Today's proposal would affect a particular subset of these 
waste materials. Specifically, materials that are ``generated and 
reclaimed in a continuous process within the same industry'' (as 
defined in this proposal) would no longer be regulated under RCRA's 
Subtitle C hazardous waste management system.
    Today's proposed 40 CFR 261.2(g)(2) also requires that reclamation 
of excluded materials within the generating industry must produce a 
product or ingredient that can be used or reused without any further 
reclamation. This requirement is intended to prevent situations where 
excluded materials might be only partially reclaimed within the 
generating industry, and then sent to a different industry for one or 
more ``final'' reclamation steps. We do not believe that such partial 
reclamation practices would be consistent with the concept of 
``continuous process within the same industry'' as it is articulated in 
today's proposal.
    Today's proposal would not affect materials that are reclaimed in 
other ways. Thus, spent materials, listed by-products and listed 
sludges that are generated and reclaimed in different industries would 
generally remain subject to regulation as wastes. This proposal would 
also not affect materials that are currently considered wastes because 
they are recycled in a certain way. This category of wastes includes 
materials that are ``inherently waste-like,'' materials that are 
``speculatively accumulated,'' materials that are recycled and ``used 
in a manner constituting disposal,'' and materials that are ``burned 
for energy recovery.'' The regulatory provisions for these categories 
of wastes are found in 40 CFR 261.2.
    Today's proposal would also codify in regulations criteria for 
assessing ``legitimate recycling'' of hazardous secondary materials. 
These criteria would apply not only to the materials that would be 
excluded under today's proposal, but more broadly to recycling of 
hazardous wastes, as well as recycling of hazardous secondary materials 
that are not considered wastes when they are recycled. These criteria 
for legitimate recycling would not, however, apply to materials that 
are not hazardous wastes, or materials that do not exhibit a hazardous 
characteristic.

III. Detailed Description of Today's Proposed Rule

A. Exclusion for Hazardous Secondary Materials Generated and Reclaimed 
in a Continuous Process Within the Same Industry

1. What Is the Intent of the Proposed Exclusion?
    Today's proposal would exclude from the RCRA regulatory definition 
of solid waste hazardous secondary materials that are generated and 
reclaimed in a continuous process within the same industry. As 
discussed in the previous section of this preamble, the D.C. Circuit 
Court's decisions have provided general direction to the Agency as to 
the meaning of ``discarded materials'' in section 1004(27) and the 
extent of the Agency's Subtitle C jurisdiction over recycling. Today's 
proposed rule is intended to define ``solid waste'' for Subtitle C 
purposes in a way that we believe is consistent with the Court's 
general direction, to establish specific rules for how the exclusion 
will be implemented, and explain how the exclusion fits into RCRA's 
general regulatory framework.
    Today's proposal would modify the current regulatory provision at 
40 CFR 261.2(c)(3), which specifies that some types of hazardous 
secondary materials are wastes if their recycling involves reclamation. 
In effect, we are proposing to relinquish regulatory controls over such 
materials, provided that they are generated and reclaimed in accordance 
with today's proposal. This proposal, which we believe is consistent 
with the Court's opinions, would generally exclude materials that are 
recycled in a manner more akin to normal industrial production than 
waste management.
2. What Is ``Reclamation?''
    ``Reclamation'' of materials can involve a number of different 
types of activities and end results. As defined in 40 CFR 261.1(c), a 
material is reclaimed ``* * *if it is processed to recover a usable 
product, or if it is regenerated.'' From a technical standpoint, some 
reclamation processes are relatively simple, such as magnetic 
separation of ferrous metals from a pollution control sludge. Other 
types of reclamation may be much more complex, and may involve a series 
of processing steps to

[[Page 61565]]

obtain the desired end-product. An example could be where a solid-form 
secondary material is separated into different fractions and then 
smelted to recover metal constituents.
    In some cases, reclamation essentially involves extraction of a 
valuable component from a waste or other material. An example of this 
type of reclamation occurs in the mineral processing industry, such as 
when smelter by-products are processed in a series of steps to 
successively extract several different precious metals. Another type of 
reclamation involves ``regenerating'' used products or materials so 
that they can be reused for their original purpose, or some other 
purpose. A common example of this type of reclamation is found in the 
steel making industry, where ``pickling'' acids are used to remove 
scale and other impurities from steel, eventually lose their acidic 
properties, and must be reclaimed before they can be used again as 
pickling agents. In this case, the reclamation process may yield both 
regenerated pickling acid, as well as a marketable iron oxide product.
3. What Types of Materials Would Be Eligible for the Proposed 
Exclusion?
    Under the current regulations, certain hazardous secondary 
materials that are recycled by being reclaimed are considered wastes 
(see 40 CFR 261.2(c)(3)). These materials include sludges and by-
products that are listed hazardous wastes (see listings in 40 CFR 
261.31 and 40 CFR 261.32), scrap metal, and listed or characteristic 
``spent materials.'' As defined in 40 CFR 261.1(c), materials are 
``spent'' when they are used and as a result of contamination can no 
longer serve the purpose for which they were produced without 
processing. Additional guidance on the definition of ``spent material'' 
may be found on the Agency's ``RCRA Online'' Internet data base, at 
http://yosemite.epa.gov/OSW/rcra.nsf//Documents/8D46F076812A58D0852565DA006F0565 D0852565DA006F0565.
    An example of a spent material would be a solvent that is used for 
degreasing metal parts, and which eventually becomes too contaminated 
for further use in degreasing. Similarly, under the current regulations 
some types of scrap metal are wastes prior to reclamation (although 
they are subject to less stringent Subtitle C regulations under 40 CFR 
261.6).
    Some materials that are ``generated and reclaimed in a continuous 
process within the same industry'' (as proposed today) would not be 
eligible for the exclusion. As specified in proposed 40 CFR 261.(g)(1), 
the exclusion would not apply to recycling of materials that are 
``inherently waste-like'' (see 40 CFR 261.2(d)), materials used in ``a 
manner constituting disposal'' (see 40 CFR 261.2(c)(1) and part 266, 
subpart C), or materials that are ``burned for energy recovery'' (see 
40 CFR 261.2(c)(2)). Any of these recycling practices could potentially 
be conducted intra-industry. Nevertheless, these particular recycling 
practices have been identified by the Agency as being akin to discard, 
and therefore materials that are recycled in these specific ways are 
explicitly identified as wastes under the current regulations. The 
Agency does not intend to change the way these waste materials are 
regulated in today's proposal. We believe that the original logic for 
maintaining regulatory jurisdiction over these materials remains valid.
    The basic premise of today's proposed exclusion is that materials 
that are ``generated and reclaimed in a continuous process within the 
same industry'' (as defined in this proposal) would not be considered 
wastes for Subtitle C purposes. Generally, when a material is reclaimed 
within the same industry that generated it, the material can remain 
useful to that industry, and thus is not discarded. In effect, the 
industry has not ``finished'' with the material; rather, it is to the 
advantage of the industry to continue using it as a substitute for 
other types of materials.
    While the Agency believes that the types of material that would be 
eligible for the exclusion in today's proposal would generally not be 
discarded, we believe there may also be more technical reasons for 
excluding such materials. For one, processes and facilities that 
operate within the same industry are likely to use similar raw 
materials and process them in a similar manner. They are also likely to 
have expertise as to the types of secondary materials produced by their 
industry, their potential for recycling, and appropriate practices for 
managing such materials. For these practical reasons, EPA believes that 
the potential for environmental harm from de-regulating this type of 
recycling practice is likely to be relatively small compared to other 
types of recycling practices.
    While we are proposing to define materials generated and reclaimed 
within the same industry as in-process materials that are not solid 
wastes for purposes of Subtitle C, this is not to say that all 
materials legitimately recycled between different industries are always 
solid wastes. In fact, the Agency has promulgated several specific 
exclusions to the definition of solid waste for materials that are 
generated in one industry and reclaimed in another. We are not 
proposing to revisit those exclusions.
4. What Is Meant by a ``Continuous Process Within the Same Industry?''
    Proposed 40 CFR 261.2(g)(2) would establish the general regulatory 
framework for defining ``continuous process within the same industry,'' 
and thus, how recycling must be conducted in order to qualify for the 
exclusion. As explained below, we are co-proposing today two different 
options for defining ``continuous process within the same industry.'' 
The two options differ only in that one option (Option 2) 
would treat differently reclamation facilities that also accept 
hazardous wastes generated from different industries. We are co-
proposing these two options today because the Agency believes both are 
viable and appropriate approaches and deserve equal consideration by 
commenters.
    Co-Proposal Option 1: Under this option, hazardous secondary 
materials would have to be generated and reclaimed within a single 
industry in order to qualify for the exclusion (the definition of 
``industry'' for the purpose of this proposal is discussed in section 
III.A.6 of this preamble, below). Thus, for example, if a hazardous 
secondary material was generated in the motor vehicle manufacturing 
industry and then shipped for reclamation to a facility in the ship and 
boat building industry, the exclusion would not apply, and the 
materials would be regulated as hazardous wastes.
    Under proposed 40 CFR 261.2(g)(2), reclamation of excluded material 
could take place in multiple processing steps, provided that each 
processing step takes place in the same industry that generated the 
material. To illustrate, if a copper-bearing sludge required three 
separate reclamation steps in order to produce a marketable product 
such as copper sulfate, each of those reclamation steps would have to 
take place within the same industry in order to qualify for the 
exclusion.
    Proposed 40 CFR 261.2(g)(2) would also allow reclamation of 
excluded material to take place at one or more different locations or 
facilities, as long as each reclamation step occurs within the 
generating industry. In fact, we anticipate that, in many situations, 
reclamation of materials will take place at a different facility from 
where the materials were generated, but would remain within in the same 
industry. In some cases, excluded materials might be reclaimed in 
several steps, each time at a different location or facility, but 
within the same industry. As proposed, therefore, the exclusion would 
not place

[[Page 61566]]

any geographical limits on movements of excluded materials, provided 
that each facility where the material is reclaimed is in the same 
industry that originally generated the material.
    It is likely that there will be many situations in which 
reclamation of an excluded material results in a finished end-product 
that needs no further reclamation, as well as a residual secondary 
material that has no further use and must be disposed of. Such 
residuals would be wastes, and thus not eligible for the exclusion. If 
the wastes were hazardous, they would need to be managed according to 
applicable hazardous waste regulations.
    Today's proposal also anticipates situations where residuals from 
reclamation of excluded materials are sent to a different industry for 
further reclamation. As proposed in 40 CFR 261.2(g)(2)(ii), such 
residual materials would not be eligible for today's exclusion, since 
they would no longer be managed within the same industry. The fact that 
such materials are sent to another industry and are thus ineligible for 
the exclusion would not, however, affect the exclusion for materials 
that remained within the generating industry. To illustrate, if intra-
industry reclamation of an excluded metal-bearing sludge generated a 
residual material that was then sent to a different industry for 
further reclamation, that residual would be considered a waste, but the 
exclusion for the original metal-bearing sludge would not be affected. 
Similarly, a reclamation process might generate two types of residual 
materials--one which could be further reclaimed in the same industry, 
and another that is amenable to reclamation in a different industry. In 
such cases, the material that continues to move in the same industry 
would continue to be excluded, while the residual material sent to a 
different industry would not be excluded.
    Co-Proposal Option #2: Today's co-proposed Option 2 is 
identical to the first option described above, with one exception. 
Under Option 2, hazardous secondary materials that are 
generated and reclaimed in a continuous process within the same 
industry would not be eligible for the exclusion if the reclamation 
takes place at a facility that also recycles regulated hazardous wastes 
generated in a different industry. This option would, however, allow 
the exclusion for materials recycled within the same industry if the 
reclamation facility is also recycling non-hazardous wastes, or 
hazardous materials that are excluded from regulation under other 
provisions (such materials could include, for example, characteristic 
by-products and sludges that are not solid wastes when reclaimed 
according to 40 CFR 261.2(c), or materials being used as effective 
substitutes for commercial products under 40 CFR 261.2(e)). This 
regulatory option would, in effect, establish a bright line to 
distinguish facilities that are engaged in recycling that is eligible 
for today's proposed exclusion, and facilities which could be 
considered to be engaged in commercial recycling, and which should thus 
be ineligible for the exclusion.
    To illustrate this co-proposed option, if a paint manufacturer who 
reclaims spent solvents were to accept spent solvents from other paint 
manufacturers, as well as spent solvents from a generator in a 
different industry (e.g., an automobile repair shop), none of the spent 
solvents managed by the paint manufacturer would be eligible for the 
exclusion proposed today. If, however, in this example the solvents 
from the automobile repair shop were excluded under a different 
regulatory provision (e.g., because they are reused without 
reclamation--see 40 CFR 261.2(e)), the solvents generated and reclaimed 
within the paint manufacturing industry would be eligible for the 
exclusion.
    Advantages and disadvantages of Options #1 and #2. The Agency 
believes that Option 1 described above would likely encourage 
more beneficial recycling, since it would allow the exclusion for a 
somewhat broader set of recycling practices. Another argument for this 
option might be that the exclusion for a material managed at a 
reclamation facility should not be affected by the fact that more 
stringently regulated materials (i.e., hazardous wastes) are also being 
managed at the facility. Such facilities would typically have RCRA 
permits, and thus would be subject to stringent design, operating and 
corrective action requirements. Some might argue, therefore, that such 
regulated facilities are well-suited to manage materials that would not 
be regulated under the terms of today's proposed exclusion.
    With regard to Option 2, an advantage to this approach 
would be greater certainty to the regulated community as to when they 
would be ineligible for the exclusion we propose today. Otherwise, it 
could be difficult for a generator to determine if facilities engaged 
in intra-industry recycling that also recycle hazardous wastes from one 
or more different industries are engaged in a continuous process within 
the generating industry. Option 2 clearly defines whether the 
recycling is taking place within the generating industry by drawing a 
bright line between excluded recycling and commercial recycling. As 
explained below, commercial recycling presents different legal and 
policy issues compared with recycling within other industries. For some 
facilities, this regulatory option would also address potential 
concerns regarding the mixing of excluded secondary materials with 
regulated hazardous wastes. Another concern is that if excluded 
secondary materials were allowed to be mingled with regulated hazardous 
wastes, it could be much more difficult for overseeing agencies to 
determine whether the generator and/or reclaimer were in compliance 
with the terms of the exclusion.
    EPA requests comment on the two co-proposed regulatory options 
described above, particularly with regard to the advantages and 
disadvantages of the different approaches, their potential associated 
benefits, and whether such approaches would be consistent with the 
general direction given in this area by the D.C. Circuit Court of 
Appeals.
5. What Other Options Were Considered for Defining ``Continuous Process 
Within the Same Industry?''
    In developing the exclusion in today's proposal, the Agency 
considered several alternative approaches to defining the concept of 
``continuous process within the generating industry.'' One option that 
was considered would define the scope of the exclusion depending on who 
uses the products of the recycling process after the secondary 
materials are reclaimed. Under this approach, to be eligible for the 
exclusion, the products from reclamation of secondary materials could 
be: (a) Sold to the general public if such products were considered 
typical products of the generating industry; or (b) reused as a product 
or ingredient within the generating industry, if the reclaimed material 
was not a typical product of the generating industry.
    To illustrate this option, if a paint manufacturer received spent 
solvent from another paint manufacturer that s/he then reclaimed, the 
reclaimed solvent could not be sold to the general public and maintain 
the exclusion, under the assumption that solvent is not a typical 
product of the paint manufacturing industry. In this example, the 
reclaimed solvent would have to be reused within the paint 
manufacturing industry in order to maintain the exclusion. The paint 
manufacturer would thus have the option of reusing the solvent (e.g., 
as an ingredient in making paint), or selling it to another party 
within the paint manufacturing industry. Under this alternative 
approach, if the reclaimed

[[Page 61567]]

solvent were sold to, for example, a semi-conductor manufacturer, the 
incoming spent solvent would not be covered by the exclusion. This 
approach would, however, allow metal manufacturers to reclaim metals 
from excluded metal-bearing secondary materials and sell it to the 
general public, since metals would be a typical product of the metals 
industry.
    EPA believes that promulgating the exclusion in this way could be a 
reasonable interpretation of the concept of ``continuous process within 
the generating industry.'' One important issue that such an approach 
would raise, however, would be defining what would be considered a 
``typical product'' of the generating industry (i.e., what is a typical 
product of an industry as identified by a particular 4-digit NAICS 
code?). We request comment on this alternative generally, and on how to 
define ``typical product of the generating industry.''
    EPA requests comment on the regulatory alternatives described 
above, particularly with regard to the need for such additional 
restrictions, their potential associated benefits, and whether such 
approaches would be consistent with the general direction given in this 
area by the D.C. Circuit Court of Appeals.
6. How Is EPA Proposing To Define ``Industry?''
Considerations for Defining ``Same Generating Industry''
    Consistent with the court's language, we are proposing to limit 
EPA's regulatory jurisdiction in cases where hazardous secondary 
materials are being generated and legitimately reclaimed in a 
continuous process within the same industry, because the activity is 
essentially ongoing manufacturing. In order to draft a regulation that 
sets out this principle, however, we needed to develop a useful 
definition of ``industry'' so that today's proposed exclusion could be 
implemented across a variety of materials, activities, and industries. 
In developing a definition of industry for this proposal, we considered 
(1) whether the definition could be easily identified and readily 
implemented; (2) whether it was simple (versus unnecessarily 
complicated); and (3) the degree to which the definition, when used as 
part of an ``intra-industry'' exclusion, resulted in outcomes 
consistent with the principle described above (i.e., that the materials 
were being continuously used rather than discarded). After 
consideration of these criteria against several approaches described in 
more detail below, we decided to propose using the North American 
Industry Classification System (NAICS) developed by the Office of 
Management and Budget (OMB) as the foundation for industry definitions 
in today's proposed rule.
    We considered proposing a narrative definition of industry, using 
an engineering-oriented approach based on similarity of inputs, 
processes, and/or outputs (products). Under this comparative approach, 
industry would first be defined as a set of manufacturing or service 
activities. Conceptually, two or more industries would be considered 
the same industry where this set of manufacturing or service activities 
applies similar processes to input materials (e.g., feedstocks, 
reagents, catalysts, etc.) having similar composition and/or value, to 
produce products or services with similar composition and/or value. We 
would then set out specific criteria, in a regulation, for measuring 
these similarities and determining when they were similar enough to be 
considered the same industry.
    For example, this regulation could establish that processes are 
similar if they utilize comparable equipment and/or engineering 
principles; compositions (of either input materials, or products 
produced) are similar if concentrations of specific constituents (e.g., 
hazardous constituents, valuable constituents) are within an order of 
magnitude; and values (again, of either input materials, or products 
produced) are similar if they are within some specified amount (e.g., 
+/-30%) on a per unit basis. We would also have to consider what the 
relative importance should be amongst the three elements described 
(inputs, processes, and outputs). For example, we would need to decide 
whether we consider similar inputs to be more important than similar 
outputs, in determining whether two industries would be considered the 
same.
    This approach was initially attractive because it would not require 
us to evaluate or compile industry categories or lists, it could 
possibly be tailored to reflect certain principles to help distinguish 
discard from ongoing production, or it might have been more flexible 
than a prescriptive industry list. However, we found this approach 
unworkable for a number of reasons. Primarily, it would leave too much 
uncertainty about the boundaries of the Agency's jurisdiction. 
Specifically, it would provide little certainty to the regulated 
community, and would require regulatory agencies to consider individual 
reclamation scenarios on a case-by-case basis. Therefore, we decided 
not to pursue this approach.
    We also considered creating our own list of specific industries or 
industry categories. We found, however, that while there might be some 
advantages to drafting our own list based on our own institutional 
knowledge and experience across Agency programs, a large amount of time 
and resources would be needed to classify many of the diverse types of 
industrial, service and government operations that produce waste and/or 
engage in recycling. While we have studied wastes and recycling for 
some industries in great detail (usually when making hazardous waste 
listing determinations), we have not studied many others. Another 
disadvantage to developing our own list would be that such a list would 
not necessarily reflect standardized, commonly accepted definitions of 
industry. The most widely-recognized existing industry classification 
system in the United States is the NAICS. In the past, we have used the 
Standard Industrial Classification (SIC) system (predecessor to the 
NAICS) to implement parts of RCRA Subtitle C. EPA has also commonly 
used the SIC system to implement portions of regulatory programs under 
other statutes.
    We are therefore proposing to use the NAICS as the foundation for 
the industry definitions in today's proposed rule. We believe that the 
developers of the NAICS are more familiar with many of these diverse 
operations, and the NAICS list is also well known and widely accepted 
by industry. Consequently, we find it to be a reasonable starting point 
for defining ``industry'' with regard to identifying materials that are 
not ``discarded'' for purposes of RCRA Subtitle C.\2\
---------------------------------------------------------------------------

    \2\ EPA does not assert that all processes classified as the 
same industry within a single NAICS code are, in fact, so similar 
that spent materials, by-products and sludges from one process can 
easily be used by all other processes in the classification. 
However, given the structure and the purposes of the NAICS, EPA 
believes that it is reasonable to assume that they are substantially 
similar. EPA needs to classify broad categories of materials in this 
rule; it is impracticable to study every factual variation on a 
case-by-case basis.
---------------------------------------------------------------------------

Background of NAICS
    NAICS is a new industry classification system that has replaced the 
Standard Industrial Classification (SIC) system (most recently updated 
in 1987) that has traditionally been used by government agencies for 
collecting statistical data and for other administrative and regulatory 
purposes. Beginning in 1992, NAICS was developed on behalf of the OMB 
by the Economic Classification Policy Committee (ECPC), which was 
comprised of representatives of the

[[Page 61568]]

Bureau of Economic Analysis, the Bureau of the Census, and the Bureau 
of Labor Statistics. On April 9, 1997, OMB published a Federal Register 
Notice of final decision (62 FR 17288) to adopt the NAICS for the 
United States.
    Table 1 below provides an overview of the NAICS hierarchy, 
including identification of the 20 NAICS sectors and the number of 
entities contained within the hierarchy at each of the various levels 
of detail. Under the NAICS classification hierarchy, the first two 
digits (of the 6-digit code) designate the Sector, the third digit 
designates the Sub-sector, the fourth digit designates the Industry 
Group, the fifth digit represents the NAICS Industry (the most detailed 
level for making data comparisons across the U.S., Mexico, and Canada), 
and the sixth digit designates individual country-level national 
industries.

                           Table 1.--NAICS United States Structure (From NAICS, 2002)
----------------------------------------------------------------------------------------------------------------
                                                                                        6-digit industries
                                                  Sub-     Industry     NAICS   --------------------------------
               Sector and name                  sectors   groups (4- industries     U.S.    Same as 5-
                                               (3-digit)    digit)    (5-digit)    detail     digit      Total
----------------------------------------------------------------------------------------------------------------
11--Agriculture, Forestry, Fishing and                 5         19          42         32         32         64
 Hunting.....................................
21--Mining...................................          3          5          10         28          1         29
22--Utilities................................          1          3           3          6          4         10
23--Construction.............................          3         10          28          4         27         31
31-33--Manufacturing.........................         21         86         184        408         65        473
42--Wholesale Trade..........................          3         19          71          0         71         71
44-45--Retail Trade..........................         12         27          61         24         51         75
48-49--Transportation and Warehousing........         11         29          42         25         32         57
51--Information..............................          7         16          30         12         24         36
52--Finance and Insurance....................          5         11          32         15         27         42
53--Real Estate and Rental and Leasing.......          3          8          19          9         15         24
54--Professional, Scientific, and Technical            1          9          35         17         30         47
 Services....................................
55--Management of Companies and Enterprises..          1          1           1          3          0          3
56--Administrative and Support and Waste               2         11          29         23         20         43
 Management and Remediation Services.........
61--Educational Services.....................          1          7          12          7         10         17
62--Health Care and Social Assistance........          4         18          30         16         23         39
71--Arts, Entertainment, and Recreation......          3          9          23          3         22         25
72--Accommodation and Food Services..........          2          7          11          7          8         15
81--Other Services (except Public                      4         14          30         30         19         49
 Administration).............................
92--Public Administration....................          8          8          29          0         29         29
                                              ------------
      Total..................................        100        317         725        669        510      1,179
----------------------------------------------------------------------------------------------------------------

    While the NAICS uses a 6-digit coding system as just described, the 
1987 SIC system it replaced employed a 4-digit coding system, where the 
fourth digit designates the industry. According to OMB, the two extra 
digits in the NAICS system (1) allow for more sectors \3\ to be used 
(compared with the SIC system which was limited to ten sectors), and 
(2) allow for a category at the six-digit level to be available for 
national industry detail (that is, industries that would not appear on 
the Canadian or Mexican version of the NAICS). The additional two 
digits in the NAICS add flexibility to the hierarchy, but do not 
necessarily reflect a greater level of detail in the classification 
compared with the SIC. 62 FR 17291.
---------------------------------------------------------------------------

    \3\ ``Sectors'' are at the top of the classification hierarchy, 
the most fundamental category, such as agriculture, mining, 
manufacturing, education, retail, etc.
---------------------------------------------------------------------------

    There are several important points we wish to emphasize regarding 
the NAICS system. First, this system was developed using a 
``production-oriented'' concept, whereby producing units that use 
identical or similar production processes are grouped together in 
NAICS. 62 FR 17289. We believe this is relevant for our purposes, 
because it makes sense that materials being generated from, and 
returned to, ``identical or similar production processes'' can be 
likewise viewed as being beneficially recycled ``within the same 
industry.'' Second, the NAICS, and its SIC predecessor, were designed 
solely for statistical purposes. The OMB emphasizes that while the 
NAICS will also be used for non-statistical purposes, such as 
regulatory purposes, the ``requirements of government agencies that use 
it for non-statistical purposes have played no role in its 
development.'' 62 FR 17294. Thus, we want to be clear that our proposal 
to rely on the NAICS system is, above all else, based upon its 
functionality as an existing, recognized system for classifying 
industries, which serves our purpose well. Finally, under the NAICS 
system, the owner/operator of a facility (or more appropriately, of an 
establishment) is tasked with determining his/her own industry 
classification, largely using the NAICS Manual for help in determining 
how to categorize his/her own establishment. In today's proposal, we 
will not be ``assigning'' NAICS categories to particular facilities or 
establishments. Rather, we are designing a system under which owners of 
facilities handling secondary materials will identify which NAICS code 
applies to them for RCRA recycling purposes. It simply is not 
practicable for EPA to review and make determinations for all of the 
individual facilities involved.
    This aspect of NAICS (and its predecessor SIC) is not new. There 
are already EPA regulations where certain facility owner/operators need 
to identify their SIC category (e.g., for determining the applicability 
of the Toxic Chemical Release Reporting/Community Right-To-Know 
requirements; see 40 CFR 372.22); or that refer to the SIC categories 
(e.g., RCRA regulations that rely in part on SIC codes to delineate the 
scope of certain existing industry-specific hazardous waste listings 
and exclusions); or that require SIC classification information as part 
of required reporting for large quantity hazardous waste generators and 
RCRA permit applicants). There is a relatively long history of the use 
of an accepted

[[Page 61569]]

industrial classification system for both regulatory and non-regulatory 
purposes. We believe that the regulated community's familiarity with 
the NAICS system and its implementation is an important justification 
for our proposing this approach. We also believe this is particularly 
the case for those industries that generate hazardous secondary 
materials. We request comment on whether the regulated community will 
be unfamiliar with the existing NAICS system, or its implementation, 
particularly for those industries that would most directly be affected 
(i.e., those that generate hazardous secondary materials).
    Finally, we are proposing to identify industry for purposes of 
today's rule at the Industry Group level, or the 4-digit NAICS level of 
classification. Two establishments will be considered within the ``same 
industry'' if they share the same 4-digit NAICS code. In arriving at 
this approach, we considered using the 3-digit, 4-digit, and 5-digit 
level (NAICS Sub-sector, Industry Group, and Industry, respectively). 
We selected the 4-digit level because we believe that this level struck 
the appropriate balance between being overly broad (i.e., undermining 
any meaningful distinctions of industry) and too narrow. We think 
operations that are similar, but not identical, can generate and 
reclaim secondary materials without discarding them. Moreover, we think 
the narrower 5- and 6-digit NAICS classifications would potentially be 
more complicated (i.e., more categories to consider), and this could be 
considerably more difficult to implement. In addition, narrower 
industry categories could unrealistically and inappropriately restrict 
beneficial resource recovery and recycling opportunities.
    Specifically, we first looked at the overall distribution of 
industry classifications within the NAICS hierarchy, as shown in Table 
1, focusing in particular on the Manufacturing Sectors (31-33). We 
would estimate that the Manufacturing Sector in general, and the 
Chemical Manufacturing Sub-sector in particular, have the potential to 
generate the widest array of listed hazardous secondary materials, 
based on the industries found in these sectors and the listing 
descriptions in 40 CFR part 261, Subpart D. Under the NAICS 
Manufacturing Sectors, there are 184 Industries (5-digit), 86 Industry 
Groups (4-digit), and 21 Sub-sectors (3-digit). While it is evident 
simply from the number of categories that industry classification under 
NAICS is broader at the 3-digit level compared with the 5-digit level, 
it is difficult to make any further conclusions as to the effect of 
this broadening or narrowing without looking at specific examples.
    Looking more closely within the Chemical Manufacturing Sub-sector, 
there are seven Industry Groups at the 4-digit level, and 17 Industries 
at the 5-digit level. According to the NAICS 2002 Manual, the seven 
Industry Groups within the Chemical Manufacturing Sub-sector were 
defined with a particular relationship in mind. That is,

    The Chemical Manufacturing subsector is based on the 
transformation of organic and inorganic raw materials by a chemical 
process and the formulation of products. This subsector 
distinguishes the production of basic chemicals that comprise the 
first industry group from the production of intermediate and end 
products produced by further processing of basic chemicals that make 
up the remaining industry groups. (emphasis added).

    In other words, the ``first industry group'' under the Chemical 
Manufacturing Sub-sector is NAICS 3251, Basic Chemical Manufacturing, 
which includes basic chemical industries such as Petrochemical and 
Industrial Gas manufacturing. Looking at the remaining 4-digit Industry 
Groups, this relationship is evident--away from the production of basic 
chemicals, towards the production of more refined chemical 
intermediates and end products. For example, the next several Industry 
Groups: 3252 (industries that manufacture Resin, Synthetic Rubber, and 
Artificial Synthetic Fibers and Filaments), 3253 (Pesticide, 
Fertilizer, and Other Agricultural Chemical Manufacturing), 3254 
(Pharmaceutical and Medicine Manufacturing), and 3255 (Paint, Coating, 
and Adhesive Manufacturing) all represent the ``further processing of 
basic chemicals.''
    We think that these distinctions made at the 4-digit level in the 
Chemical Manufacturing industry present a reasonable and logical 
categorization of the different parts of the Chemical Manufacturing 
industry. In our view, these distinctions are important, and should be 
preserved by using the 4-digit level in this proposed approach. In 
general, we found that the use of the 3-digit codes grouped together 
processes that are too dissimilar to be considered the same 
``industry'' under a basic, ``common sense'' approach. Use of the 3-
digit NAICS would have the effect of collapsing these distinct 
categories into the NAICS 325 Sub-sector. A 3-digit NAICS 
classification might, however, have certain advantages, such as 
possibly providing more opportunities for recycling, or fewer disputes 
over the classification of establishments (because it is a broader 
categorization). Alternatively, use of the 5-digit level increases the 
number of industry categories within the NAICS 325 Sub-sector to 17. 
Within the Chemical Manufacturing Industry Groups, this results largely 
in a breakout of the industries that are described in the Industry 
Group title. For example, the 4-digit Industry Group ``Paint, Coating, 
and Adhesive Manufacturing'' splits into ``Paint and Coating'' and 
``Adhesive'' manufacturing at the 5-digit level; or, ``Resin, Synthetic 
Rubber, and Artificial Synthetic Fibers and Filaments'' breaks out to 
``Resin and Synthetic Rubber'' and ``Artificial and Synthetic Fibers 
and Filaments'' at the 5-digit level. Because we are using the NAICS 
principally because it is a widely recognized, familiar system that can 
be consistently applied, we do not necessarily see an advantage in 
further dividing (in the Chemical Manufacturing example) the 4-digit 
Industry Groups into 5-digit Industries. In fact, the more finely 
divided one makes the NAICS hierarchy, the more complex the overall 
approach can become. We believe that using 4-digit NAICS industry 
groups strikes the appropriate balance for this rule, given the options 
available using the NAICS hierarchy.
    Therefore, we do not find that the possible advantages of a 3-digit 
approach outweigh the reasons articulated for proposing the 4-digit 
NAICS classification; nor do we see the advantage for using the 5-digit 
approach, and have identified possible disadvantages compared with the 
4-digit approach. Although this review involved only the chemical 
industry hierarchy, we would point out that the chemical manufacturing 
industry is an important component of the universe of RCRA generators, 
and therefore how it is defined under today's proposal is important. 
(As will be discussed further below, two other important industry 
categories in terms of waste generation--petroleum and mineral 
processing--are being handled in a manner different from the NAICS 
approach described here, for reasons explained in the next section of 
this preamble.) Nevertheless, we request comment on whether or not the 
4-digit NAICS classification is the most appropriate, given the goals 
we have articulated, or whether the 3-digit or 5-digit approach would 
be more appropriate, and why.
    Finally, we note that there are a number of 4-digit NAICS industry 
codes that are designated as ``Other'' activities

[[Page 61570]]

within an industry Sub-sector.\4\ Generally, these categories seem to 
represent a more diverse set of process activities than occurs under 
other 4-digit NAICS codes. For example, NAICS 3259 (Other Chemical 
Product and Preparation Manufacturing) includes Printing Ink 
Manufacturing; Explosives Manufacturing; Custom Compounding of 
Purchased Resins; Photographic Film, Paper, Plate, and Chemical 
Manufacturing; and All Other Miscellaneous Chemical Product and 
Preparation Manufacturing. Moreover, as illustrated by the example 3259 
industry group, even within the ``Other'' 4 digit designation there are 
classifications (usually ending with an ``8'' or ``9'') that are often 
labeled as ``All Other.'' Using the proposed 4-digit NAICS approach, 
all of these categories, and activities under these categories, would 
fall under the same Industry Group (3259).
---------------------------------------------------------------------------

    \4\ For example: NAICS 2379--Other Heavy and Civil Engineering 
Construction; 2389--Other Specialty Trade Contractors; 3259--Other 
Chemical Product and Preparation Manufacturing; 3279--Other 
Nonmetallic Mineral Product Manufacturing; Other Electrical 
Equipment and Component Manufacturing; 3379--Other Furniture Related 
Product Manufacturing; 3399--Other Miscellaneous Manufacturing.
---------------------------------------------------------------------------

    The ``All Other'' classifications also occur in industry groups 
that are not designated as ``Other'' in and of themselves. Using the 
Chemical Manufacturing example, there is NAICS 325188 (All Other Basic 
Inorganic Chemical Manufacturing) and 325199 (All Other Basic Organic 
Chemical Manufacturing). Within each of these categories, the NAICS 
provides eight examples of chemical manufacturing that fall under these 
categories (e.g., Enzyme Proteins, Plasticizers, and Silicone 
manufacturing under Organic; Hydrochloric acid, Sulfuric acid, 
Carbides, and Fluorine manufacturing under Inorganic). Using the 
proposed 4-digit NAICS approach, these categories would fall under the 
same Industry Group (3251).
    Although EPA rejected an approach that would mix and match industry 
definitions using differing levels of the NAICS hierarchy, due to 
concerns that this would result in a NAICS list that would be too 
complicated while not achieving a clear benefit, EPA is soliciting 
comment on whether those Industry Groups or Industry designations that 
involve ``Other'' or ``All Other'' categorizations should be handled 
differently given the potential diversity within those categories.
Existing Definitions of ``Industry'' in RCRA Regulations
    In some cases, EPA has promulgated definitions of certain 
``industries'' in the RCRA regulations, to clarify the scope of a 
particular hazardous waste listing, hazardous waste exemption, or 
exclusion from the definition of solid waste. For example, the 
hazardous waste listing for ``spent pickle liquor from the iron and 
steel industry'' (K062) references SIC codes 331 and 332 to describe 
the scope of the listing. 40 CFR 261.32. Other examples are found at 40 
CFR 261.32, a list of hazardous wastes from ``specific sources.'' These 
wastes are grouped by ``industry'' category (e.g, inorganic pigments, 
organic chemicals, inorganic chemicals, pesticides, etc.), and each 
waste has a detailed listing description to help identify the waste.
    The definition of industry being proposed today is only applicable 
to the changes we are proposing to make to the definition of solid 
waste for purposes of Subtitle C. For example, we are not proposing to 
change how the ``source specific'' hazardous wastes listed in 40 CFR 
261.32 are defined. We also do not intend today's proposed redefinition 
of solid waste to change existing exclusions in a manner that regulates 
hazardous secondary materials as solid wastes, where prior rulemakings 
have established that these materials are excluded.
    Finally, EPA has previously defined the scope of the petroleum and 
mineral processing industries in earlier rules establishing exclusions 
from the definition of solid waste for Subtitle C regulatory purposes. 
We are proposing to retain these definitions for these industries in 
lieu of using the NAICS approach under today's rule. As discussed 
below, we have already looked closely at the recycling of hazardous 
secondary materials within these industries, and have already described 
in various rulemaking documents the types of activities and operations 
that comprise these industries, for purposes of existing exclusions. To 
implement these existing definitions under today's proposal, we have 
added clarifying provisions to proposed Appendix X (Industries for the 
Purpose of 40 CFR 261.2(g)).
    Primary Mineral Processing. EPA has described the scope of the 
primary mineral processing industry in several previous rulemakings, 
beginning with the 1986 Regulatory Determination on extraction and 
beneficiation wastes (51 FR 24496), and the September 1, 1989 Mining 
Waste Exclusion (54 FR 36592). In the September 1, 1989 rule, we 
articulated the factors we would use to determine the scope of the 
mineral processing industry.\5\ We are proposing to require the use of 
these same factors for determining whether a generating or reclamation 
process falls within the mineral processing industry. Specifically:
---------------------------------------------------------------------------

    \5\ Additional guidance was provided in the Phase IV Land 
Disposal Restrictions (LDR) preamble (63 FR 28556; May 26, 1998). 
EPA stated that it views ``mineral processing'' to include but not 
be limited to 41 primary mineral processing sectors described in the 
Agency's 1996 Identification of Mineral Processing Sectors and Waste 
Streams.
---------------------------------------------------------------------------

    [sbull] Operation must follow the beneficiation of an ore or 
mineral and does not include beneficiation as defined in 40 CFR 
261.4(b)(7)(i).
    [sbull] Operation must serve to remove the desired product from or 
enhance the characteristics of an ore or mineral or a beneficiated ore 
or mineral.
    [sbull] Operation uses feedstock that is comprised of less than 50 
percent scrap materials.
    [sbull] Operation produces either a final or an intermediate to the 
final mineral product.
    [sbull] Operation does not combine the mineral product with another 
material that is not an ore or mineral, or beneficiated ore or mineral 
(e.g., alloying) and does not involve fabrication or other 
manufacturing activities.
    EPA is proposing to retain this industry classification, rather 
than deferring to the various NAICS categories, for purposes of 
implementing the exclusion for primary mineral processing secondary 
materials recycled within the industry, because it has examined this 
sector in detail and believes that its current system reflects the 
boundaries of this industry better than the 4-digit NAICS approach.
    For secondary materials that would not be excluded under today's 
proposed rule, mineral processing facilities may continue to determine 
whether those materials are exempt from Subtitle C regulation under the 
Bevill exclusion, section 3001(b)(3)(A)(iii) of RCRA and 40 CFR 
261.4(b)(7). They must use currently applicable regulatory provisions, 
as clarified by the criteria articulated in preamble to the September 
1, 1989 Federal Register (54 FR 36592). Note that to be excluded under 
the Bevill Amendment, solid wastes must be uniquely associated with the 
mineral processing industry. For purposes of today's rule, non-uniquely 
associated wastes, although not Bevill exempt, are still eligible for 
today's proposed exclusion if they are generated and reclaimed within 
the mineral processing industry.

[[Page 61571]]

    Petroleum Industry. EPA has previously promulgated exclusions 
related to the recycling of oil and oil-bearing hazardous secondary 
materials. See July 28, 1994 Federal Register (59 FR 38536); see also 
August 6, 1998 Federal Register (63 FR 42110). In those rules, EPA 
identified the various industry sectors related to petroleum (e.g., 
exploration and production, transportation and storage, refining and 
marketing, etc.) that collectively were defined as the petroleum 
industry for purposes of excluding recovered oil, when such oil is 
returned to the petroleum refinery for insertion. (We note that this 
particular ``intra-industry'' exclusion is uni-directional, that is, it 
is conditioned on the recovered oil being sent from facilities at any 
point within the industry, back to a petroleum refinery.) In order to 
avoid any confusion between this existing definition, and the approach 
being proposed in today's rule for defining ``industry,'' we would like 
to make several clarifications, and request comment on specific 
questions.
    First, we reiterate that in today's notice we are not proposing to 
change the definition of petroleum industry as it is used in the 
exclusions already mentioned, specifically, 40 CFR 261.4(a)(12) \6\. 
See Section A.III.7. of today's preamble for additional discussion of 
conforming changes to the regulatory framework. Second, because the 
reuse of secondary materials by burning for energy recovery or the 
manufacture of fuels is not within the scope of today's proposal (as 
mentioned elsewhere in today's preamble and reiterated in the proposed 
regulatory text) there may not be any overlap between today's proposed 
exclusion, and the existing exclusion that utilizes the broad 
definition of petroleum industry. However, because there may be some 
hazardous secondary materials that could be generated and legitimately 
reclaimed in a continuous process within the petroleum industry, in a 
manner that does not produce a fuel, to avoid confusion we have 
proposed to define petroleum industry in today's rule the same way as 
described in 40 CFR 261.4(a)(12). Therefore, we have added a clarifying 
provision in proposed Appendix X to effect this departure from using 
the NAICS.
---------------------------------------------------------------------------

    \6\ We note that the exclusion for oil-bearing hazardous 
secondary materials in 40 CFR 261.4(a)(12)(i) is limited only to 
refinery-generated materials, returned to a refinery; and the 
exclusion for recovered oil in 40 CFR 261.4(a)(12)(ii) involves the 
broader definition of petroleum industry. We are not proposing to 
change the scope of either exclusion in today's rule.
---------------------------------------------------------------------------

    We request comment on using the definition of petroleum industry 
from existing 40 CFR 261.4(a)(12) for hazardous secondary materials 
that are not already excluded under that same provision, or are 
reclaimed within the petroleum industry for reasons other than making 
fuels, in lieu of using the 4-digit NAICS approach. We believe that 
retaining the existing definition of petroleum industry makes the most 
sense, because we have already looked closely at the recycling of 
hazardous secondary materials within the petroleum industry, and have 
already described in various rulemaking documents the types of 
activities and operations that comprise these industries. We also 
request comment on whether or not the definition of industry using the 
4-digit NAICS Industry Group 3241 (Petroleum and Coal Products 
Manufacturing) should instead be used for hazardous secondary materials 
reclaimed within the petroleum industry for reasons other than making 
fuels.
    Waste Management and Remediation Services. We are not including 
``Waste Management and Remediation Services'' (NAICS 562) on the list 
of industries in Appendix X of today's proposed rule. We think that 
this industry is in business to manage waste, and presents different 
legal and policy issues than do traditional manufacturing industries. 
Put another way, this type of activity is essentially waste management, 
as opposed to ongoing manufacturing. We do not think that most 
materials reclaimed by waste management industries are generated within 
those industries. On the contrary, we believe that most if not all 
materials reclaimed in waste management operations are first discarded 
by another entity that has no further use for them, such as used 
solvents generated at an automobile repair shop sent to a third-party 
solvent reclaimer, or lead from spent batteries being reclaimed in a 
secondary smelter (see U.S. v. Ilco, 996 F.2d 1126 (11th Cir. 1993)).
    Therefore, we have expressly excluded ``Waste Management and 
Remediation Services'' from the scope of today's proposal. NAICS codes 
corresponding to these operations do not appear on the list of 
industries in Appendix X of today's proposed rule. The NAICS 562 Sub-
sector includes the Industry Groups ``Waste Collection'' (NAICS 5621), 
``Waste Treatment and Disposal'' (NAICS 5622), and ``Remediation and 
Other Waste Management Services'' (NAICS 5629).
    In addition, we have identified specific activities described 
within certain NAICS industry categories that should remain within our 
Subtitle C jurisdiction under the same logic (that is, they manage 
materials that have been discarded by another entity that has no 
further use for them). These are activities that fall within two 
separate Industry Groups within the Chemical Manufacturing Sector 
(325). Based upon the NAICS description for these activities, they 
appear to reclaim secondary materials from facilities that generate 
them, and unlike the other operations in the same NAICS codes, they do 
not produce any products made from non-secondary materials, nor do they 
provide the kinds of services that the other operations provide. 
Moreover, they are often owned and operated by independent third 
parties. We are proposing to exclude these activities from the industry 
classifications as follows:

3256 Soap, Cleaning Compound, and Toilet Preparation Manufacturing 
(except for third-party operations that reclaim drycleaning fluids 
at sites that do not conduct drycleaning).
3259 Other Chemical Product and Preparation Manufacturing (except 
for third-party operations that reclaim degreasing solvents at sites 
that do not conduct degreasing operations).

    Finally, we assume that identifying facilities properly classified 
under the Waste Management Services NAICS Industry Group should be 
relatively straightforward, and that such facilities would not be 
readily confused with facilities that are recycling secondary materials 
in a continuous process within the generating industry. Generally 
speaking, where such waste service facilities are stand-alone 
operations (i.e., are not physically on-site with respect to industrial 
or manufacturing operations), and it is clear that virtually all 
materials reclaimed at such facilities are secondary materials received 
from off-site generators (in one or more industry categories), then 
reclamation services are quite obviously the principal activity 
undertaken at the site, and the secondary materials have been discarded 
by the generators, as discussed above. In addition to excluding 
facilities with NAICS Codes 5621, 5622, and 5629 from the list of 
industries in Appendix X as described above, proposed 40 CFR 
261.2(g)(2)(iv) makes clear that materials sent to these waste service 
industries are not excluded from the definition of solid waste under 
today's rule.
Manufacturing Versus Other NAICS Sectors
    Today's proposed rule is incorporating all of the NAICS

[[Page 61572]]

categories into Appendix X, with the exception of the categories 
described above for mineral processing, petroleum, and waste management 
services.
    However, because we are relying on the NAICS list, which is 
designed to capture the entire breadth and scope of the U.S. economy, 
there may be categories on the list that do not generally generate or 
recycle hazardous secondary materials. Including such industries on the 
list used in this regulation makes the list rather large and unwieldy. 
In addition, for some industries, inclusion on the list in Appendix X 
may create some confusion and concern as to whether we are implying 
that a particular industry generates hazardous secondary material by 
virtue of it appearing on this list in the RCRA regulations (which we 
are not). We believe that the majority of hazardous secondary materials 
presently being recycled are generated within traditional manufacturing 
industry sectors (e.g., NAICS Sectors 31-33). For example, it may be 
more straightforward to limit the list of industries in Appendix X to 
mining and manufacturing sectors. We are requesting comment on whether 
the list of industries in Appendix X should be modified, beyond what is 
being proposed today, based on the knowledge that certain industry 
categories do not generate hazardous secondary materials or will not 
engage in reclamation of hazardous secondary materials.
How Will the Regulated Community Identify Which NAICS Code Applies for 
Purposes of This Rule?
    The 2002 NAICS Manual contains guidelines for using the system, 
along with fairly detailed descriptions of the industry categories. 
Individual NAICS categories contain information, such as examples, to 
help identify an establishment's industry classification. We are 
proposing today to require the regulated community to use the existing 
NAICS guidance (NAICS 2002 Edition) to identify what industry their 
operations fall within for purposes of today's exclusion from the RCRA 
definition of solid waste. See paragraph (d) in proposed Appendix X.
    The NAICS is a ``classification system for establishments.'' As 
discussed in more detail below, an establishment is a collection of one 
or more activities, and under NAICS the establishment is what is 
classified as a particular industry. The introductory text to the 2002 
NAICS Manual states that ``The establishment as a statistical unit is 
defined as the smallest operating entity for which records provide 
information on the cost of resources, materials, labor, and capital 
employed to produce the units of output.'' Establishment is further 
clarified in the same text as ``generally a single physical location, 
where business is conducted or where services or industrial operations 
are performed (for example, a factory, a mill, store, hotel, movie 
theater, mine, farm, airline terminal, sales office, warehouse, or 
central administrative office).''\7\ In cases where distinctly 
different and potentially significant activities occur at one location, 
in determining whether these activities should be classified as a 
separate establishment, the 2002 NAICS Manual states that an ``activity 
is treated as a separate establishment provided: (1) No one industry 
description in the classification includes such combined activities; 
(2) separate reports can be prepared on the number of employees, their 
wages and salaries, sales or receipts, and expenses; and (3) employment 
and output are significant for both activities.
---------------------------------------------------------------------------

    \7\ NAICS Manual, 2002, p. 21.
---------------------------------------------------------------------------

    Thus, the NAICS system first defines what is an establishment. An 
establishment is then classified to an industry when its primary 
activity meets the definition of that industry. In the simplest case, 
where an establishment consists of one activity, the industry 
classification for that establishment is that which best describes that 
single activity. When there are two or more activities, the NAICS 
Manual describes procedures for identifying the primary activity. The 
NAICS Manual states:

    In most cases, if an establishment is engaged in more than one 
activity, the industry code is assigned based on the establishment's 
principal product or group of products produced or distributed, or 
services rendered. Ideally, the principal good or service should be 
determined by its relative share of current production costs and 
capital investment at the establishment. In practice, however, it is 
often necessary to use other variables such as revenue, shipments, 
or employment as proxies for measuring significance.\8\
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    \8\ NAICS Manual, 2002, p. 22.

    Thus, establishments are classified under NAICS based on the 
primary activity within that establishment. It should also be pointed 
out, however, that for certain types of combined activities, the NAICS 
guidance provides exceptions to this ``primary activity'' rule 
approach. For example, vertically-integrated facilities can be 
described as consecutive stages of production in which the output of 
one step is the input to the next. Rather than determining which of 
these stages of production are the largest (or primary), NAICS would 
classify this series of activities based on the final process. One 
example of this is where the NAICS Manual specifies that a physical 
location with both a Pulp Mill activity and Paper Mill activity, should 
be classified as a Paper Mill because that is the final stage of 
production. But there are even exceptions to this, such as where the 
NAICS Manual specifies that a particular set of vertically-integrated 
activities should be classified based upon the first stage of the 
manufacturing process (e.g., a Steel Mill where other activities such 
as producing Steel Castings occurs, should be classified as a Steel 
Mill nonetheless). An important point here, other than illustrating how 
the ``primary activity rule'' may be superseded by the way in which the 
NAICS manual defines particular vertically-integrated establishments, 
is that the NAICS Manual will specify how such an establishment is 
classified, rather than the owner/operator having to in every case make 
a judgement (such as determining the primary activity, for example).
    Another example of how NAICS may classify certain combined 
activities, other than via the primary activity rule, is in certain 
examples of joint production of goods and services. Some establishments 
may have two activities (e.g., a gasoline station with a convenience 
store) where the combined activities have been identified in the NAICS 
as a third, separate industry. Thus, rather than making a determination 
of which activity (gasoline retail versus convenience store) is primary 
using receipts/sales and revenue data as a proxy, NAICS provides a 
category Gasoline Stations with Convenience Stores (NAICS code 44711). 
In this case, this third category should be used in lieu of determining 
the ``primary activity'' for these establishments.
    Because today's rule proposes to use the NAICS for classifying 
establishments (at the 4-digit, or Industry Group level) for 
determining whether or not the generating industry and the reclaiming 
industry are the same, the concept of the establishment is important. 
We are proposing to add a definition of establishment to the RCRA 
regulations, where establishment means ``an economic unit, generally at 
a single physical location, where business is conducted or where 
services or industrial operations are performed. An establishment is 
the smallest such unit for which records provide

[[Page 61573]]

information on the cost of resources, materials, labor and capital 
employed to produce the units of output.'' The language in this 
definition follows closely the language in the 2002 NAICS Manual, and 
is also consistent with the same language EPA used in a separate 
rulemaking under EPA's Toxic Chemical Release Reporting program (see 40 
CFR 372.3). We request comment on our use of this definition for 
today's proposed rule. (An additional point, the phrase ``generally at 
a single physical location'' in the proposed definition of 
establishment does not mean that under today's proposal, ``same 
industry'' is somehow limited only to materials generated and reclaimed 
on site. As discussed throughout this preamble, today's proposed 
exclusion can apply to materials sent off site from the generator 
facility.)
    Multiple Establishments. Thus far, we have discussed how the NAICS 
system defines an establishment, and how that establishment is 
classified to an industry from the 2002 NAICS Manual of industry 
classifications. We are proposing that hazardous secondary materials, 
generated at an establishment, are excluded if reclaimed at the same or 
another establishment, whether on-site or off-site, where the 
establishment reclaiming the material is classified under the same 
NAICS (at the 4-digit level) classification as the generating 
establishment (industry). This approach is relatively straightforward 
when it involves transactions within and between sites where each site 
has a single establishment, classified to a particular NAICS industry 
group. All one needs to know is the correct industry classifications, 
and then determining whether or not the secondary material is being 
reclaimed within the generating industry in accordance with today's 
proposed exclusion should be a straightforward task.
    However, some locations will have two or more establishments 
operating, where these establishments are classified differently from 
one another under the NAICS. Where there are two or more different 
industries (establishments) operating at the location where the 
secondary material is generated, or at the location where the secondary 
material is reclaimed, the individual establishments that generate and 
reclaim the secondary materials, respectively, must be classified the 
same under NAICS, in order to be excluded under today's proposed rule. 
In other words, where there are multi-industry sites, we look to 
whether NAICS classifications of the specific establishments generating 
and reclaiming the secondary material are the same. We are not 
suggesting that a particular multi-industry site be classified as a 
single industry, based for example on some type of determination of the 
``dominant'' or ``primary'' industry or establishment at that site.\9\ 
In fact, one scenario under today's proposal would be that secondary 
materials are not considered to be reclaimed in a continuous process 
within the same industry when sent from one industry to a different 
industry on the same site. While there may be opportunities for 
legitimate recycling between two different industries at the same site, 
for reasons already discussed, we are limiting today's exclusion to a 
``same industry'' approach. Although ``inter-industry'' recycling is 
outside the scope of today's proposal, we would be interested in 
obtaining additional information on specific examples of situations 
where two different industries (based upon the NAICS definition 
proposed today) are located at the same site, and where hazardous 
secondary materials are generated in one industry and could be 
reclaimed in a different, on-site industry. Again, this type of 
recycling is outside the scope of today's proposal, but we solicit 
comment and would be interested in obtaining examples of where this 
type of recycling might occur.
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    \9\ Whereas the NAICS attaches an industry classification to an 
individual establishment based upon the most significant activity 
within that establishment (determined using either the `primary' 
activity rule, or in some other way as discussed for certain 
establishments with combined activities), the NAICS Manual does not 
appear to have any type of `primary rule' for identifying the 
primary industry at multi-industry facilities. However, there is at 
least one example of where determining the primary industry is 
required in a different program; the EPA Toxic Release Inventory 
(TRI) regulations require that a primary establishment, or industry, 
be identified at multi-establishment complexes. This is in order to 
determine applicability of the TRI rules, because the TRI rules, 
because the TRI program applies to some industries and not others. 
40 CFR 372.22(b).
---------------------------------------------------------------------------

    Specialty Batch Chemical Manufacturers. EPA is also aware of 
certain practices within the chemical manufacturing industry that might 
present unique situations regarding defining ``intra-industry'' 
reclamation using the NAICS approach. Specifically, within the chemical 
manufacturing industry, larger manufacturers will contract out 
production of certain chemicals to smaller manufacturers (referred to 
as batch or tolling operations). These smaller manufacturers produce 
chemicals in batches, where the product slates may change several times 
over the course of a year, for example. These smaller manufacturers 
(often referred to collectively as Specialty Batch Chemical 
Manufacturers) may generate hazardous secondary materials that could be 
returned to the larger chemical manufacturer for reclamation along with 
similar secondary materials (generated by the larger facility from 
producing the same chemical). To the extent that the NAICS approach 
proposed today classifies both establishments (the specialty batch 
establishment, and the larger chemical manufacturing establishment) the 
same at the 4-digit level, this reclamation would be excluded under 
today's proposal. As stated above, we would look to whether the NAICS 
classifications of the specific establishments generating and 
reclaiming the secondary material are the same. However, we solicit 
comment on this particular situation, and are interested to know if 
there are specific examples of where `same industry' reclamation, as 
outlined under today's proposed rule, would be precluded as a result of 
uncertain application of the NAICS classification approach at specialty 
batch chemical facilities (e.g., due to frequently changing product 
slates, or different products being produced from the same equipment at 
different times, etc.).
    Under today's definition of industry, we are proposing that owners 
and operators, as well as implementing agencies, rely on the NAICS 
system to identify establishments and define the bounds of an industry. 
As our lead approach, we are not proposing to overlay additional 
criteria to determine whether or not particular reclamation units, 
processes, or activities are ``adequately'' associated with an industry 
so as to be included within the scope of that industry definition. In 
fact, we believe the NAICS approach simplifies this determination 
because it generally views establishments as a collection of 
activities, and provides a consistent system for classifying the 
collection of activities as an industry. Generally, where reclamation 
units, processes or activities are located at a particular site, and 
are supporting the principal activities of that industry in a 
legitimate fashion, they should be considered part of that 
establishment (industry) unless the NAICS approach (e.g., industry 
descriptions or other guidance in the 2002 NAICS Manual) yields a 
different answer.
    For instance, in the example provided in Section III.A.4. above, if 
a paint manufacturer reclaims used solvents from within the paint 
manufacturing industry, the used solvents would not be wastes under 
today's proposed exclusion. If, based upon the NAICS,

[[Page 61574]]

this solvent reclamation activity is part of the paint manufacturing 
process, and thus merely one of several activities comprising an 
establishment best classified as paint manufacturing under NAICS, then 
the reclamation activity would be part of the paint manufacturing 
industry. Alternatively, if the solvent reclamation activity became a 
centralized solvent reclamation facility for paint manufacturers, then 
under the NAICS approach the reclamation could ultimately become so 
significant (e.g., due to the number of employees, or receipts from its 
activities, etc.) as to be a separate establishment. In that case, the 
reclamation activity would likely be classified in an industry other 
than paint manufacturing, and the used solvents would no longer be 
excluded because they are not being reclaimed in a continuous process 
within the same industry.
    The key point here is that in one instance, the reclamation 
activity clearly supports paint manufacturing, and is one of several 
activities in an establishment called paint manufacturing. In the other 
instance, the reclamation activity has become significant enough to be 
a separate establishment, and is thus classified based on its own 
activity, which would be different from the activity of the 
establishment (paint manufacture) it serves in this example. 
Classifying establishments based on their own activity, rather than the 
activity of the establishment being served, is consistent with the way 
in which the NAICS is intended to operate in situations involving 
``auxiliary'' establishments.\10\
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    \10\ Under the SIC, establishments that primarily provided 
services to manufacturing establishments were classified based on 
the establishment being served: NAICS changed this to emphasize that 
each establishment should be classified based upon what the 
establishment does. (See NAICS Clarification Memorandum No. 3 in 
docket to today's proposed rulemaking.)
---------------------------------------------------------------------------

    While we believe the NAICS appears to offer a clear, consistent, 
and familiar way to classify establishments for purposes of today's 
rule, we acknowledge that there may be some situations where this 
system might not provide definitive, ``bright line'' answers. As 
discussed above, a reclamation process could expand to a point where 
such a ``sideline'' reclamation process would rightly be considered 
significant enough to be a separate establishment, and a different 
industry, for the purpose of this rule. The reclamation establishment 
likely would then be classified as a waste management industry.
    As stated above, the 2002 NAICS Manual contains guidance to help 
identify whether a particular activity can be defined as a separate 
establishment, in situations where there are other activities occurring 
at the same location.\11\ However, our concern is whether this guidance 
is sufficient for determining more precisely when ``sideline'' 
reclamation systems would become ``significant'' enough to be 
considered separate establishments. Today's proposal would help resolve 
such issues for certain types of on-site reclamation processes. First, 
under proposed 40 CFR 261.2(g)(2)(v), if there is still some question 
(after consulting the 2002 NAICS Manual) as to the correct 
classification of a particular reclamation unit, process, or activity, 
we are proposing that with respect to hazardous secondary materials 
generated and reclaimed on site (as defined in 40 CFR 260.10), the on-
site reclamation unit, process, or activity be considered part of the 
generating industry with which it is associated. This proposed 
provision reflects the idea that the scale or ``significance'' of on-
site reclamation processes should be less relevant for the purpose of 
this rule when only materials that are generated on-site are involved.
---------------------------------------------------------------------------

    \11\ These are (1) No one industry description in the 
classification includes such combined activities; (2) separate 
reports can be prepared on the number of employees, their wages and 
salaries, sales or receipts, and expenses; and (3) employment and 
output are significant for both activities. NAICS Manual, 2002, pp. 
21-22.
---------------------------------------------------------------------------

    The issue of when an on-site reclamation process would be 
significant enough to be considered a separate establishment under 
NAICS is more complex when the process also reclaims hazardous 
secondary materials generated off-site. Facilities that decide to 
accept such secondary materials from off-site for reclamation need to 
know at what point such reclamation processes would be considered 
separate establishments. In the paint manufacturer example discussed 
above, a risk-averse facility manager might unnecessarily restrict his 
or her reclamation activity. We believe that it may be advisable in the 
final rule to provide some more specific means of determining when such 
sideline reclamation processes would be significant enough to be 
considered separate establishments and, therefore, separate (and 
different) industries.
    In order to clarify when a sideline operation becomes a waste 
management operation, EPA could identify several relevant criteria for 
facilities and regulators to evaluate. One of the criteria could be how 
much secondary material from off-site is being reclaimed in the 
process. For example, the regulation could specify that an on-site 
reclamation process should be a separate establishment if more than 50% 
of the material reclaimed originates from off-site. Some different 
percentage (e.g., 25% or 75%) could also be appropriate for this 
purpose. Another criterion could be based on how much of the facility's 
revenue (e.g., more than 50%) is generated from reclaiming material 
from off-site. Another criterion might be based on the number of off-
site generators (e.g., more than five) that supply secondary material 
to the reclamation process. The Agency requests comment on the need for 
additional regulatory clarification to determine when such sideline 
reclamation processes would be significant enough to be considered 
separate establishments, particularly where reclamation processes take 
materials from off-site generators. We also request comment on the 
specific options outlined above for addressing this issue.
    We point out that elsewhere in today's preamble, we discuss co-
proposing two options as part of defining what is a ``continuous 
process within the generating industry.'' (See Section III.A.4. above, 
where under one option we propose that hazardous secondary materials 
that are generated and reclaimed in a continuous process within the 
same industry would not be eligible for today's exclusion, if the 
reclamation takes place at a facility that also recycles regulated 
hazardous wastes generated in a different industry.) However, here in 
this section we are requesting comment on possible ways to more clearly 
define industry, or more specifically, establishment, particularly 
where there are materials being received and reclaimed from off-site 
sources. While these two aspects of today's proposal address similar 
issues (e.g., improving clarity, and identifying reclamation outside 
the scope of today's proposal), we emphasize that here we are asking 
for comment on possible criteria for further defining establishment, 
which would conceivably apply under either of the co-proposed options 
described in section III.A.4.
    EPA also requests comment on using the existing 2002 NAICS Manual 
for implementing the definition of industry under today's rule, and 
specifically as it is incorporated into the industry categories and 
definitions in the newly proposed Appendix X. We anticipate that for 
most locations, in most cases, the NAICS classification system 
described in the 2002 NAICS Manual,

[[Page 61575]]

summarized above, will serve the purpose of a clear and consistent 
definition of industry.
Regulatory Option for On-Site Recycling
    As explained in the preceding discussion, today's proposed 
exclusion would only be available for materials recycled within the 
same industry in which they are generated, and we are proposing to use 
the NAICS system as the primary means of identifying and classifying 
the industries associated with generation and reclamation of recyclable 
materials. However, as discussed above, we acknowledge that our 
proposed approach may have certain drawbacks, particularly with regard 
to situations where the recycling activities all occur on-site. For 
example, we expect there will be numerous facilities that will have two 
or more establishments that would be classified as separate industries 
according to the NAICS system (e.g., a facility that produces 
petrochemicals as well as pharmaceuticals). As proposed today, 
materials would not be excluded if the generating and reclaiming 
establishments were in different industries according to NAICS, even if 
both establishments were situated at the same site and operated by the 
same company. In a somewhat different example, a large manufacturer 
such as an integrated steel production plant may find it advantageous 
to have a separate, specialized company operate a dedicated reclamation 
process at the plant site. Under the NAICS system, that reclamation 
process would likely not be classified as part of the steel making 
industry, since it could be viewed as a distinct, separate economic 
unit. We also acknowledge that for large, integrated facilities it 
could be difficult using the NAICS guidance to easily classify 
processes that may produce different types of outputs, but are 
physically or operationally linked. Finally, as discussed previously, a 
specific unit or process at a facility may be flexibly designed to 
produce a variety of outputs, and its NAICS classification might thus 
change relatively often, depending on which products are being produced 
at any given time.
    In developing today's proposal, several stakeholders suggested that 
an exclusion for on-site recycling could be a more practical and 
simpler approach to encouraging legitimate recycling while maintaining 
environmental protections. The Agency believes that such an option may 
have merit, and in light of the potential difficulties in making clear, 
definitive NAICS classifications at more complex facilities, we are 
considering a regulatory option that could simplify implementation of 
today's proposed exclusion in situations where materials are all 
generated and reclaimed in a continuous process on-site.\12\ Under this 
option, the NAICS system would be used to classify generating and 
reclaiming industries that are located at different sites, consistent 
with today's proposal. However, materials that are generated and 
reclaimed in a continuous process at the same site would be excluded, 
regardless of whether different industries were involved. This option 
would also involve the same notification requirements that would apply 
to off-site, intra-industry recycling excluded under today's proposal.
---------------------------------------------------------------------------

    \12\ ``On-site'' is defined for RCRA Subtitle C purposes in 40 
CFR 260.10.
---------------------------------------------------------------------------

    It should be noted that such an on-site recycling exclusion would 
not be based on the direction of the D.C. Circuit Court (in the 
opinions discussed in section II.D of this preamble), but rather would 
rest on the premise that materials recycled on-site in a continuous 
process are unlikely to be discarded because they would be closely 
managed and monitored by a single entity who is intimately familiar 
with both the generation and reclamation of the material, no off-site 
transport of the material (with its attendant risks) would occur, and 
there would be few questions as to potential liability in the event of 
mismanagement or mishap.
    We believe that this regulatory option would have the advantage of 
being somewhat more straightforward to implement, both for industry and 
regulators, by avoiding many of the uncertainties and complexities of 
using the NAICS system, particularly at larger facilities. We also 
believe that it would likely encourage more legitimate recycling than 
would occur under today's proposed regulatory framework for intra-
industry recycling. We request comment on this regulatory option.
7. How Is EPA Proposing to Define ``Continuous Process?'
What Is a ``Continuous Process?'
    As explained above, we are proposing today to define ``discard'' 
for Subtitle C purposes in the context of the opinions of the D.C. 
Circuit pertaining to the definition of solid waste. EPA is proposing 
to exclude from the Subtitle C definition of ``solid waste'' materials 
recycled in a continuous process within the generating industry. In 
this section of the preamble, we propose that generation and 
reclamation of materials would take place in a ``continuous process'' 
only if the materials are handled exclusively by facilities or entities 
(except for transporters) that are within the generating industry, and 
the materials are not ``speculatively accumulated'' as defined in 40 
CFR 261.1(c)(8).
    Today's proposed definition for continuous process would not allow 
a generator to ship excluded materials to a broker or other middleman 
before it is received at a reclamation facility. While middlemen such 
as brokers are often better able to find markets for recyclable 
secondary materials, and thus can facilitate their beneficial reuse, we 
do not believe that such arrangements are consistent with the idea of 
recycling in a ``continuous process.'' Brokers do not manufacture the 
same goods or provide the same type of services as the entities which 
generate the secondary materials. We do not regard them as falling 
within the same industry as the generators. Moreover, often a generator 
who consigns materials to a broker does not know where or how the 
material will be reclaimed. This suggests that these generators are 
more likely to be ``finished'' with a material and to be willing to let 
the material go to a different industry for reclamation. We also note 
that brokers have been associated with releases requiring cleanups, 
though we have not compiled definitive data on any such recent damage 
cases. In sum, we regard the use of brokers as a significant 
discontinuity in the use of a secondary material, although we request 
comment on this issue. Today's proposal would, however, allow the use 
of independent transporters (who typically would not be in the same 
industry that generated the secondary material) to ship excluded 
materials from one facility to another, as long as each facility is 
within the generating industry.
    In addition to requiring materials to be shipped directly between 
generator and reclaimer, we believe that a continuous process requires 
some limitations on the timing of the activities in question; i.e., how 
soon a material is reclaimed and reused after being generated. 
Obviously, if a secondary material is generated but never reclaimed and 
reused it must be considered a waste. On the other hand, if a material 
is generated and subsequently reclaimed and reused more or less 
immediately (e.g., within a few hours or days), it might easily be 
concluded that such recycling takes place in a ``continuous process.''
    To address this timing aspect in defining continuous process, we 
are proposing to use RCRA's existing ``speculative accumulation'' 
provisions (see 40 CFR 261.1(c)(8)) to distinguish

[[Page 61576]]

between processes that are continuous and those that are not. Under 
this existing rule, a material is accumulated speculatively if the 
person accumulating it cannot show that the material is potentially 
recyclable and has a feasible means of being recycled. More importantly 
for the purpose of this proposal, the person accumulating the material 
must show that during a calendar year (beginning January 1) the amount 
of material that is recycled, or transferred to a different site for 
recycling, must equal at least 75 percent by weight or volume of the 
amount of that material at the beginning of the period. This provision 
already applies to secondary materials 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 byproducts 
being reclaimed. These restrictions on speculative accumulation have 
been an important element of the RCRA recycling regulations since they 
were promulgated on January 4, 1985.
    EPA believes that using the existing regulatory provisions for 
speculative accumulation as the time limit for defining ``continuous 
process'' in this rule is consistent with the D.C. Circuit Court's 
direction, and fits well within the existing regulatory structure for 
hazardous waste recycling. In the ABR decision, the Court suggested 
that temporary storage of secondary materials prior to reclamation may 
be a necessary phase in the overall reclamation process. However, in 
that decision the court did not suggest a particular time limit beyond 
which accumulation of materials could no longer be considered part of a 
continuous process.
    For most types of recycling that are excluded from regulation under 
RCRA, the existing speculative accumulation provisions serve to define 
the point at which potentially recyclable secondary materials 
nevertheless become solid and hazardous wastes. As an example, 
secondary materials that can be directly used or reused without 
reclamation are not considered wastes, as long as they are not 
speculatively accumulated. Today's rule is consistent with this 
regulatory approach, in that it applies the same logic and limitations 
to storage of materials prior to recycling. We see no compelling reason 
why the speculative accumulation provisions should not serve the same 
purpose for recycling that would be excluded under today's proposal, 
and recycling that is excluded under other, existing regulatory 
provisions.
    With regard to implementing the existing restrictions on 
speculative accumulation, persons accumulating secondary materials are 
required to demonstrate that they are recycling materials in the 
amounts specified in 40 CFR 261.1(c)(8). Making such demonstrations 
will generally require such persons to provide appropriate 
documentation to substantiate their claims, as specified in existing 40 
CFR 261.2(f). In the preamble to the final speculative accumulation 
rule (50 FR 636, January 4, 1985), the Agency discussed certain types 
of documentation that would be appropriate in making satisfactory 
demonstrations, such as customarily maintained data on industrial 
process throughputs, and bills of lading for shipments sent off-site to 
a recycler. Other such documentation could include records identifying 
the recyclers receiving the secondary materials, or contracts and 
correspondence with a recycler.
    The Agency believes that today's proposed definition of 
``continuous process'' is consistent with the direction in the D.C. 
Circuit Court's opinions. Thus, this definition, as it fits within the 
broader context of today's proposed exclusion, should help to ensure 
that materials that would be excluded from regulation under today's 
proposal will not be discarded, and therefore do not need to be 
regulated as wastes under Subtitle C.
What Alternatives Did EPA Consider for Defining ``Continuous Process?'
    EPA considered several alternative approaches to placing time 
limits on ``continuous process'' in this proposed rule. One such 
alternative was to establish a limit of 90 days for accumulation of 
recyclable materials as the maximum time limit for a ``continuous 
process.'' This would in some ways be consistent with the current time 
limit for accumulation of hazardous wastes by large quantity generators 
that do not have RCRA permits. Another alternative could be to 
establish a somewhat longer limit, such as 180 days (this alternative 
has some support in the decision of the U.S. Court of Appeals for the 
Fourth Circuit in Owen Electric Steel Co. v. Browner, 37 F. 3d 146 (4th 
Cir. 1994)). This is also the allowable accumulation time for small 
quantity generators that do not have RCRA permits.
    Establishing a specific time limit in this rule (such as 90 or 180 
days) to define ``continuous process'' could be coupled with a 
provision that would allow generators to exceed such time limits (for 
example, up to one-year) in cases where they could demonstrate that 
recycling of the materials would be done within the extended time 
frame.
    EPA chose not to set such stricter time limits to define 
``continuous process,'' largely because we believe that using the 
speculative accumulation provisions is more consistent with the current 
regulatory framework for recycling, and is familiar to the regulated 
community. It represents EPA's longstanding judgment that materials 
recycled within the one calendar year timeframe are in continuous use, 
and therefore are not discarded. Moreover, EPA is concerned that it 
might be difficult to select a shorter time limit that would be 
appropriate to the wide variety of materials and industries covered by 
this rule. This approach also offers greater flexibility for generators 
and reclaimers to optimize recycling opportunities. Shorter time limits 
could discourage some promising recycling opportunities, particularly 
in industries that tend to generate recyclable secondary materials 
episodically, as is often the case with (for example) specialty batch 
chemical manufacturers.
    The Agency is aware, however, that there may be some potential 
complications with using the speculative accumulation time limit to 
define ``continuous process.'' For one thing, establishing how long 
specific secondary materials have been stored at a generator's facility 
can be difficult for regulatory agencies, particularly since there are 
no explicit record keeping requirements in the regulations for 
speculative accumulation. Although we are not proposing today to modify 
the current regulations for speculative accumulation, we solicit 
comment as to whether those regulations should be strengthened as they 
would apply specifically to today's proposed exclusion, or perhaps more 
generally. Specifically, we request comment on the idea of requiring 
generators and off-site recyclers to maintain records that would serve 
to establish when specific volumes of materials were generated, and 
when they were recycled. EPA believes that such record keeping 
requirements might assist inspectors from regulatory agencies to verify 
that secondary materials stored for recycling are actually being 
reclaimed on a regular basis, rather than accumulating in increasing 
volumes over months and years. We also believe that such record keeping 
would likely impose a minimal burden on generators, since we understand 
that maintaining such records of inputs and outputs, and bills of 
lading for off-site shipments, is a standard business practice.

[[Page 61577]]

    In addition to requiring direct transfer of excluded materials from 
generators to reclaimers, and using the speculative accumulation 
concept to establish a time limit on storage of such materials, we 
considered whether there are other aspects of ``continuous process'' 
that we should attempt to capture in defining the term. For example, it 
could be argued that inherent in the concept of ``continuous process'' 
is the idea of regularity or predictability; i.e., that the generation 
and subsequent reclamation of materials should take place in a more or 
less routine, ongoing manner. It might be further argued that the term 
``continuous process'' implies some kind of physical linkage between 
the processes that generate specific secondary materials and the 
processes that reclaim them. Similarly, some might say that some type 
of geographic limit should also be imposed, such that (for example) 
materials shipped from New Jersey to California might not be considered 
within a continuous process, even if they remained within the same 
industry.
    EPA chose not to impose further tests or requirements in defining 
continuous process, beyond the limits established for speculative 
accumulation. For one thing, we believe that placing additional 
restrictions on what we would consider to be a continuous process for 
the purpose of this rule could create additional complexity in its 
implementation. Such additional restrictions might also be somewhat 
arbitrary, since it would be difficult to develop restrictions 
appropriate to the wide range of materials and processes potentially 
covered by this rule. Such an approach could also discourage beneficial 
recycling in some industries where generation and reclamation of 
secondary materials happen in a less than routine, predictable manner. 
We are interested, however, in receiving comments on this issue, 
particularly any specific suggestions as to how today's proposed 
definition of continuous process could be refined or enhanced, and the 
benefits that such changes would bring.
8. What Type of Notification Would Be Required?
    Today's proposal would require generators who wish to use the 40 
CFR 261.2(g) exclusion to submit a one-time notice to EPA or the 
authorized state. As specified in 40 CFR 261.2(g)(3), the notice would 
need to identify the name, address and EPA ID number (if applicable) of 
the generating facility, the name and telephone number of a contact 
person for that facility, the type of material(s) that would be subject 
to the exclusion, and the industry that generated the material, as 
classified according to Appendix X of Part 261.
    This notice requirement would only apply to generators of secondary 
materials that have previously been regulated under RCRA Subtitle C, 
and that would become excluded under today's proposal. Thus, generators 
of materials that have been previously exempted or excluded from 
regulation under other provisions because they are recycled would not 
need to submit a one-time notice. If a generator were to generate both 
types of materials (i.e., materials that were previously regulated, as 
well as materials that were previously excluded or exempted under 
different provisions), the generator would have to submit a one-time 
notice only for the materials that were previously regulated.
    As discussed in the following section of this preamble, we are 
proposing today to modify or eliminate existing exemptions and 
exclusions that ``overlap'' with the proposed 40 CFR 261.2(g) 
exclusion. Thus, materials that heretofore have not been subject to 
regulation under existing provisions would remain unregulated, but 
would be subject to the new exclusion. It should be noted that, with 
few exceptions, the current regulations do not require generators of 
excluded materials to notify EPA or authorized state agencies. 
Requiring these generators to submit one-time notices once they become 
subject to the new 40 CFR 261.2(g) exclusion would in effect be a more 
stringent requirement. Since today's proposal is intended to be 
generally de-regulatory, we do not believe it appropriate to impose 
such a new notice requirement on generators who have not been required 
to submit such notices under the current regulations.
    To illustrate, generators of secondary materials that (for example) 
are recycled in a ``closed loop'' system have been excluded from 
regulation under 40 CFR 261.2(e)(iii), and have not heretofore been 
required to notify the Agency of their recycling activities. Since we 
assume that closed loop recycling is intra-industry, today's proposal 
would subsume and eliminate the existing closed loop exclusion, and the 
materials would become subject to today's proposed exclusion. These 
generators would not need to submit the one-time notice required under 
proposed 40 CFR 261.2(g)(4). However, if a generator has been recycling 
regulated hazardous wastes that would become newly excluded under 
today's proposal, he/she would need to submit the notice.
    The Agency is not proposing any specific format or form for these 
one-time notices. However, to provide one idea of how such a notice 
might be formatted, we have included a sample form in the docket for 
today's rule (see Sample Notification Form for Materials that are 
Excluded from the Definition of Solid Waste Under 40 CFR 261.2(g)). 
This sample form is also available on the web site that EPA has 
established for this rulemaking.
    The intent of today's proposed notification requirement is to 
provide basic information to regulatory agencies as to who would be 
managing hazardous secondary materials under the terms of today's 
exclusion, and the types of materials being recycled. We believe our 
right to require such basic notification is inherent in our authority 
to regulate discarded materials, and we consider this to be the minimum 
information needed to enable credible oversight of such activities, and 
ensure that the terms of the exclusion are being met by generators and 
recyclers. As such, we believe that this minimal notification is a 
reasonable requirement for those who will find advantage in the 
regulatory exclusion proposed today. We estimate that this requirement 
will impose an incremental reporting ``burden'' of approximately one 
hour per affected facility.
    It should be understood that as proposed, providing this 
notification would not be required more than once. We are also 
requesting comment, however, on an alternative option for such 
notification. Under this alternative, generators would be required to 
submit revised notices if certain information on the original notice 
were to change. Requiring submission of revised notices might 
particularly be appropriate, for example, if the location or ownership 
of the generating facility changes or if the type of excluded material 
were to change.
    Another option being considered with regard to reporting would be a 
requirement that notifications be signed by a responsible corporate 
official. In addition, we are considering the option of requiring 
persons using the 40 CFR 261.2(g) exclusion to submit periodic (e.g., 
annual) reports detailing their recycling activities, to provide 
information on the types and volumes of materials recycled, where off-
site shipments were sent, the types of reclamation processes used, the 
types of products produced from the reclamation processes, how 
residuals from reclamation processes were managed, and other relevant 
information. Requiring such additional information could give 
regulators and the public a

[[Page 61578]]

much clearer picture of the types of recycling being conducted under 
this exclusion, where it is being done, and by whom. We are also 
considering (and solicit comment on) the option of requiring the 
information in the proposed notice to be submitted in a particular 
format (such as in the sample form cited above), or submitted 
electronically.
    Recordkeeping. Section 261.2(f) requires persons managing materials 
under exclusions from the Subtitle C definition of solid waste to be 
able to provide ``appropriate documentation'' that they meet the terms 
of the exclusion they are claiming. Nevertheless, in addition to the 
notification requirements discussed above, we are considering the 
option of requiring generators and reclaimers to keep on-site records 
relating to types and volumes of materials they handle. For example, we 
are considering requiring generators of materials subject to this 
exclusion to keep records of volumes generated, volumes reclaimed 
onsite, and volumes sent offsite, while requiring offsite reclaimers to 
keep records of shipments received and volumes actually recycled.
    The Agency chose not to include more frequent or more detailed 
reporting requirements in today's proposal such as those discussed 
above, primarily because we are committed to minimizing recordkeeping 
and reporting requirements. In fact, the Agency recently proposed a 
``burden reduction'' rule that would eliminate a number of existing 
RCRA reporting and record keeping requirements that the Agency believes 
are unnecessary or duplicative (67 FR 2517, January 17, 2002).
    We invite comment on whether or not any (or all) of the regulatory 
options discussed above for increased reporting and recordkeeping by 
generators and other parties may be necessary and appropriate in 
providing sufficient data for regulatory oversight, and should 
therefore be included in the final rule.
9. What Conforming Changes to Existing Regulations Are Proposed?
    As discussed above, today's proposed exclusion for intra-industry 
recycling would affect a number of existing regulatory provisions that 
also provide regulatory relief for hazardous secondary materials that 
are recycled. We are therefore proposing a number of specific 
``conforming changes'' to the existing regulations to address these 
situations where today's proposed regulatory exclusion ``overlaps'' 
with existing regulatory provisions. Since we are co-proposing two 
different options for defining ``continuous process within the same 
industry'' (see section III.A.3 of this preamble), the conforming 
changes that would be necessary would differ depending on which option 
is adopted in the final rule. The following is an explanation of our 
proposed conforming changes for each regulatory option.
    a. Proposed conforming changes for co-proposed regulatory Option 
1--Provisions that would be deleted. Under regulatory Option 
1, several existing regulatory provisions that provide waivers 
or exclusions for recycled hazardous secondary materials would be 
rendered entirely moot, since all of the materials that are potentially 
subject to these provisions would be excluded under today's proposal 
for intra-industry recycling. To illustrate, 40 CFR 261.4(a)(6) 
currently provides an exclusion from the definition of solid waste for 
``pulping liquors * * * that are reclaimed in a pulping liquor recovery 
furnace and then reused in the pulping process, unless it is 
accumulated speculatively.'' Under proposed Option 1 this 
existing exclusion would no longer be needed, since we believe that the 
exclusion for intra-industry recycling would cover all of the pulping 
liquors that are currently excluded under 40 CFR 261.4(a)(6).
    The following is a list of existing provisions that would be 
eliminated entirely under today's co-proposed Option 1. We 
believe that each of these provisions would completely overlap with the 
Option 1 exclusion, and we are thus proposing to delete them 
entirely if the Agency decides to finalize this option.
    A. Section 261.2(e)(1)(iii). Under this existing provision, 
materials are not solid wastes when they are recycled by being 
``returned to the original process from which they are generated, 
without first being reclaimed or land disposed.'' We are proposing to 
eliminate this provision, since we believe that all of the materials 
that it potentially applies to would be addressed by today's proposed 
exclusion (Option 1) for intra-industry recycling.
    B. Section 261.4(a)(6). This existing provision excludes from the 
definition of solid waste ``pulping liquors (i.e., black liquors) that 
are reclaimed in a pulping liquor recovery furnace and then reused in 
the pulping process, unless it is accumulated speculatively.'' We 
believe that all of the materials excluded under this current provision 
would be excluded under 40 CFR 261.2(g) (Option 1), and are 
therefore proposing to eliminate this provision.
    C. Section 261.4(a)(8). This existing ``conditional exclusion'' is 
for ``secondary materials that are reclaimed and returned to the 
original process or processes in which they were generated where they 
are reused in the production process.'' This is often referred to as 
the ``closed loop reclamation'' exclusion. The following conditions 
apply to this exclusion:
    [sbull] Only tank storage may be involved, and the entire process 
through completion of reclamation must be closed by being entirely 
connected with pipes or other comparable closed means of conveyance;
    [sbull] Reclamation must not involve controlled flame combustion;
    [sbull] The secondary materials must not be accumulated in tanks 
for over twelve months without being reclaimed; and
    [sbull] The reclaimed material must not be used to produce a fuel, 
or used to produce products that are used in a manner constituting 
disposal.
    This conditional exclusion would no longer be necessary if the 
exclusion in today's proposed Option 1 were promulgated, and 
we are thus proposing to eliminate it. In fact, such closed loop 
recycling processes may be particularly clear examples of intra-
industry recycling that does not involve discard, and that would 
therefore be covered under the proposal.
2. Exclusions and Variances That Would Be Partially Affected by Today's 
Co-proposed Option 1
    In addition to the existing regulatory provisions that could be 
eliminated completely under today's proposed Option 1, we are 
proposing conforming changes to several other provisions that would 
only partially ``overlap'' with the 40 CFR 261.2(g) exclusion. Most of 
these existing exclusions and exemptions are not contingent on intra-
industry recycling, and allow secondary materials to be generated and 
reclaimed in different industries. Thus, in cases where materials are 
generated and reclaimed in different industries, the existing 
exclusions would still be needed to provide regulatory relief for such 
materials. Accordingly, EPA is proposing to retain existing exclusions 
and waivers that allow for recycling across different industries, while 
clarifying that the proposed 40 CFR 261.2(g) exclusion will apply to 
materials that are recycled in a continuous process within the same 
industry. These existing provisions are in some cases conditioned on 
compliance with certain management practices and/or notification or 
record keeping requirements; we are not proposing to modify the 
substance of these provisions. Rather, in each case we are simply 
proposing to add regulatory language to clarify that the

[[Page 61579]]

existing exemptions and exclusions will be somewhat narrower in scope, 
and the exclusion for intra-industry recycling may instead apply to 
some materials previously subject to the existing provisions.
    The following is a brief description of existing exclusions and 
variances that would likely apply to a smaller universe of materials if 
today's proposed Option 1 exclusion were promulgated, and for 
which we are proposing clarifying conforming changes:
    A. Conforming change to 40 CFR 261.4(a)(9). This existing 
conditional exclusion is for ``spent wood preserving solutions that 
have been reclaimed and are reused for their original intended 
purpose,'' and ``wastewaters from the wood preserving process that have 
been reclaimed and are reused to treat wood.'' The conditions for this 
exclusion, which are prescribed in more detail in 40 CFR 
261.4(a)(9)(iii)(A)-(E), are as follows:
    [sbull] The excluded materials must be reused on-site for their 
original intended purpose;
    [sbull] Prior to reuse, the excluded materials must be managed to 
prevent releases to land or groundwater;
    [sbull] Units managing excluded materials must be readily 
determined to be preventing such releases;
    [sbull] Drip pads used to manage excluded materials must comply 
with the standards for drip pads in Subpart W of 40 CFR Part 265; and
    [sbull] A one-time notice must be submitted by the facility owner/
operator to the appropriate regulatory agency.
    Some of these wood preserving solutions would actually be eligible 
for today's proposed exclusion, and some would not. Thus, the existing 
exclusion would need to be maintained in order for some of these 
materials to continue to be managed outside the Subtitle C regulatory 
system. The reason these materials would not be eligible for today's 
proposed 40 CFR 261.2(g) exclusion is because the product of the 
recycling process (treated lumber) is often used in ``a manner 
constituting disposal'' (i.e., the treated lumber is used in or on the 
land, such as for landscaping timbers, fenceposts, railroad ties, 
etc.). As explained in previous sections of this preamble, this is one 
of the specific types of recycling that the Agency believes should 
remain regulated, even if the recycling is conducted intra-industry.
    It is possible, of course, that in some cases lumber treated with 
recycled spent wood preserving solutions would not be used in a manner 
constituting disposal. In these cases the new exclusion for intra-
industry recycling would apply. Thus, both exclusions are needed for 
this particular recycling practice. For the purpose of clarity, we are 
proposing today to add a new paragraph (F) to the current 40 CFR 
261.4(a)(9) exclusion, which would read as follows: ``If the products 
of this recycling practice are not used in a manner constituting 
disposal, the spent wood preserving solutions are subject to the 
exclusion in 40 CFR 261.2(g), rather than this paragraph, provided the 
wood preserving solutions are generated and reclaimed in a continuous 
process within the same industry.''
    B. Conforming change to 40 CFR 261.4(a)(17). EPA is proposing to 
revise the existing conditional exclusion at 40 CFR 261.4(a)(17) to 
conform with today's proposal. Currently, 40 CFR 261.4(a)(17) excludes 
from the definition of solid waste ``spent materials * * * generated 
within the primary mineral processing industry from which minerals, 
acids, cyanide, water or other values are recovered by mineral 
processing or by beneficiation.'' Under today's proposal, spent 
materials from mineral processing that are subsequently reclaimed 
within the mineral processing industry would not be solid wastes for 
purposes of Subtitle C. We are therefore proposing to delete the 
reference to mineral processing in the existing exclusion, since it 
would no longer be needed for those materials. However, 
``beneficiation'' is not included within the ``mineral processing 
industry'' and, therefore, the existing exclusion as it pertains 
specifically to beneficiation would still be necessary and would remain 
in effect.
    C. Conforming change to 40 CFR 260.30(b), and the associated 
criteria in 260.31(b)). Current 40 CFR 260.30(b) allows variances to be 
granted on a case-by-case basis for materials that are ``reclaimed and 
then reused within the original production process in which they were 
generated.'' This provision is sometimes known as the ``closed loop 
reclamation'' variance. The standards and criteria for granting such 
variances are specified in 40 CFR 260.31(b). This provision is not, 
however, limited to intra-industry recycling--there may be situations 
in which a generator of a secondary material could arrange for 
reclamation of the material by a reclaimer in a different industry 
(e.g., the waste management industry). We therefore intend to maintain 
this existing variance to address such situations. We are proposing, 
however, to clarify its applicability by adding the following language: 
``If the materials are reclaimed as part of a continuous process within 
the generating industry, they are subject to the exclusion in 40 CFR 
261.2(g) rather than the standards and criteria listed in 40 CFR 
260.31(b).''
    D. 40 CFR 260.30(c), and the associated criteria in 40 CFR 
260.31(c). Under this existing provision, a variance from being 
classified as a solid waste can be obtained on a case-by-case basis for 
materials that ``have been reclaimed but must be reclaimed further 
before the materials are completely recovered.'' This is commonly 
referred to as the ``partially reclaimed'' variance. Since this type of 
recycling may occur within the same industry or between two or more 
different industries (similar to 40 CFR 260.30(b), discussed above), we 
are proposing to add the following language as a conforming change: 
``If the materials are reclaimed as part of a continuous process within 
the generating industry, they are subject to the exclusion in 40 CFR 
261.2(g) rather than the standards and criteria listed in 40 CFR 
261.31(c).''
    E. Section 261.4(a)(7). This provision excludes from the definition 
of solid waste ``spent sulfuric acid used to produce virgin sulfuric 
acid,'' unless it is accumulated speculatively. To address situations 
where this type of recycling occurs in a continuous process within the 
same industry, we are proposing to add the following language as a 
conforming change to 40 CFR 261.4(a)(7): ``Spent sulfuric acid that is 
reclaimed to produce virgin sulfuric acid in a continuous process 
within the generating industry is subject to the exclusion in 40 CFR 
261.2(g), rather than this paragraph.'' Similar language is proposed to 
be added as a conforming change to each of the following provisions (F 
through J, below) that would be partially affected by today's proposed 
rule:
    F. Section 261.4(a)(10). This is a conditional exclusion for 
certain types of hazardous wastes that are recycled to coke ovens or to 
produce coal tar.
    G. Section 261.4(a)(11). This conditional exclusion applies to non-
wastewater splash condenser dross residue from treatment of K061 in 
high-temperature metals recovery (HTMR) units.
    H. Section 261.4(a)(13). This exclusion is for certain scrap metal 
being recycled.
    I. Section 261.4(a)(14). This provides a conditional exclusion for 
shredded circuit boards being recycled.
    J. Section 261.4(a)(19). This is a conditional exclusion for 
``spent caustic solutions from petroleum refining liquid treating 
processes used as a feedstock to produce cresylic or naphthenic acid.''
    The Agency solicits comment on these proposed conforming changes.

[[Page 61580]]

3. Proposed Conforming Changes for Co-proposed Regulatory Option 
2
    As explained above, under co-proposed Option 1 some 
existing regulatory waivers and exclusions would be rendered moot, 
since all of the materials addressed by those provisions would also be 
covered under the proposed 40 CFR 261.2(g) exclusion. However, this 
would not be the case under Option 2, since a recycler of 
these currently unregulated materials would be ineligible for today's 
proposed exclusion if the recycling facility also managed regulated 
hazardous wastes generated from a different industry. To illustrate, a 
recycler handling pulping liquors that are currently excluded from 
regulation under 40 CFR 261.4(a)(6) would not be able to use the 40 CFR 
261.2(g) exclusion if he/she also were recycling hazardous wastes from 
a different industry. Thus, under this option we would need to maintain 
the existing 40 CFR 261.4(a)(6) exclusion in order to avoid changing 
the coverage of the existing exclusion.
    If the Agency chooses to adopt Option 2 in the final rule, 
we are proposing that the four existing provisions which would be 
rendered moot and deleted under Option 1 (these are discussed 
above in section III.A.7.a of this preamble) would be retained, but 
would be amended so that they would remain effective for recyclers that 
would not be eligible for the 40 CFR 261.2(g) exclusion. For example, 
the current 40 CFR 261.4(a)(6) exclusion for pulping liquors would be 
retained, but would be amended to add the following sentence: ``Pulping 
liquors that are reclaimed as part of a continuous process within the 
generating industry are subject to the exclusion in 40 CFR 261.2(g) 
rather than this paragraph.'' The other three provisions that would 
otherwise be eliminated completely under Option 1 would be 
amended similarly if Option 2 were promulgated in the final 
rule.
    In the above discussion of conforming changes for co-proposed 
Option 1, we identify a number of existing provisions that 
would be only partially affected by today's proposed exclusion, and we 
are proposing to add text to each provision specifying that if the 
materials are reclaimed as part of a continuous process within the 
generating industry they would be subject to the exclusion in 40 CFR 
261.2(g), rather than the existing provision. Under Option 2, 
these provisions would also be only partially affected. We are thus 
proposing to make the same conforming changes to those provisions in 
the final rule if we choose to adopt Option 2 to define 
``continuous process within the generating industry.''
    EPA invites comment on the proposed conforming changes described 
above, for both regulatory options.
4. Used Oil Regulations--40 CFR Part 279
    This part contains management standards for used oil, including 
used oil that is recycled. Used oil is a solid waste under RCRA. 
Because EPA promulgated these provisions pursuant to a specific 
Congressional mandate governing used oil (i.e., section 3014 of RCRA, 
as amended by the Used Oil Recycling Act of 1980), they will not be 
affected by today's proposed 40 CFR 261.2(g).
10. How Would the Proposal Be Implemented and Enforced?
    Implementation. Since the exclusion from the definition of solid 
waste in today's proposal is de-regulatory in nature, implementing the 
rule as proposed may have important consequences at certain facilities 
where recycling activities are currently regulated under RCRA, but 
would no longer be regulated if this rule were promulgated and became 
effective.
    One key issue has to do with the effects of the rule on facilities 
that currently have RCRA permits or interim status, and are managing 
hazardous wastes that would become excluded under this rule. Under one 
scenario, a facility that manages a variety of hazardous waste 
materials, including some that become excluded under this rule, would 
be affected only to the extent that certain units or processes at the 
facility would no longer be subject to hazardous waste regulations. A 
somewhat different scenario could involve a facility whose hazardous 
wastes would all become excluded from regulation when this rule takes 
effect (i.e., the facility is no longer a hazardous waste management 
facility).
    For permitted facilities that would be managing hazardous secondary 
materials excluded under this rule in addition to regulated hazardous 
wastes, some changes to the facility's permit would likely need to be 
made, though they may be relatively minor. These facilities would need 
to maintain their permits, but the units used solely to manage excluded 
materials would no longer need to be subject to permit conditions. In 
such cases, the facility owner/operator could seek a permit 
modification from EPA or the authorized state agency to remove the 
formerly subject unit(s) from the permit.
    A permitted facility that would no longer be considered a hazardous 
waste management facility under the exclusion (e.g., a facility 
managing only hazardous secondary materials that become excluded under 
today's proposal) would no longer need a hazardous waste operating 
permit. Owner/operators of such facilities could therefore apply to the 
overseeing agency to have the facility's permit terminated. However, 
where such a facility has not yet completed facility-wide corrective 
action (see 40 CFR 264.101), the obligation to conduct such cleanup 
would remain in effect. Therefore, in such cases, the permit would not 
be terminated, but could be modified to remove the requirements that 
applied to the now-excluded material, and maintain the corrective 
action provisions of the permit. In such a case, the facility would 
thereafter have a Acorrective action-only@ permit that would expire 
only when facility-wide corrective action is determined to be complete. 
It should be noted that for facilities in these situations, EPA or an 
authorized state might also choose to address a facility's cleanup 
obligations under an alternative Federal or State enforcement mechanism 
that may be available, rather than continuing to pursue corrective 
action under a permit.
    A facility that is operating under RCRA interim status would be 
affected by promulgation of today's proposed rule in much the same way 
as permitted facilities, and the issue of corrective action would be 
addressed in a similar manner. For an interim status facility managing 
only materials that become excluded under today's proposal, 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, would be moot and no longer in effect. Under 
RCRA regulations, however, cessation of hazardous waste operations 
alone does not eliminate a facility's interim status. See 40 CFR. 
270.73. A facility that wishes to no longer be in interim status could 
seek a denial of its pending permit application. Since the Agency 
believes it appropriate to ensure that corrective action is addressed 
prior to denying a permit under these circumstances, we would expect to 
grant the denial only when we concluded that the facility's corrective 
action obligations have been satisfied.
    In addition to the above described issues relating to permits and 
corrective action, today's proposed rule may also have implications 
with regard to closure of hazardous waste storage units at affected 
facilities. In cases where hazardous waste storage units would only be 
managing excluded material pursuant to today's proposal, the

[[Page 61581]]

current regulations could be read as triggering the closure 
requirements for those units, since owners/operators of non-land based 
hazardous waste units (e.g., tanks, containers, containment buildings) 
must begin closure within 90 days of receiving a unit's final volume of 
hazardous wastes. See 40 CFR 264.113(a) and 265.113(a). EPA is 
concerned 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) 
material. It should also be noted that, under today's proposal, units 
storing excluded materials would be considered essentially the same as 
similar units used to store products. Thus, we do not believe that 
requiring these particular units to close through RCRA Subtitle C 
procedures is necessary to protect human health and the environment.
    The Agency is today proposing that closure of storage units would 
not be required when such units cease storing hazardous wastes and are 
subsequently used to store the same materials that would no longer be 
regulated as wastes under today's proposed exclusion. If, however, such 
units were used previously to store different types of hazardous 
wastes, the units would be subject to hazardous waste closure 
requirements. We request comment as to whether more explicit regulatory 
provisions to address RCRA closure requirements in these types of 
situations would be appropriate in the final rule.

Enforcement

    Today's proposed rule describes an exclusion from Subtitle C 
regulations for hazardous secondary materials recycled in certain ways, 
with the regulatory text describing the ``boundaries'' of the 
exclusion. If a material is not managed within these boundaries, the 
material is not excluded and is a hazardous waste for Subtitle C 
purposes from the time the generator first generated it. Therefore, 
each person who manages a hazardous secondary material that loses its 
exclusion would have to manage it consistently with hazardous waste 
management requirements from the point when the material was first 
generated, regardless of whether the person is the one who actually 
causes the loss of the exclusion.\13\ EPA could choose to bring an 
enforcement action under RCRA section 3008(a) for all violations of 
Subtitle C requirements occurring from the time the material is 
generated through the time that it is finally disposed. States could 
choose to enforce for violations of state hazardous waste requirements 
under state authorities. Any enforcement action would address the 
management of those hazardous secondary materials that are outside the 
boundaries of the exclusion.
---------------------------------------------------------------------------

    \13\ The loss of the exclusion for some materials at a facility 
does not automatically effect the status of other hazardous 
secondary materials managed under the exclusion. For example, if a 
hazardous secondary material at a reclaimer loses the exclusion and 
thus is hazardous waste, the status of other hazardous secondary 
materials managed by that reclaimer remain unaffected, provided that 
they are managed consistently with the boundaries of the exclusion.
---------------------------------------------------------------------------

    EPA believes that this approach, which treats hazardous secondary 
material that does not come within the boundaries of the exclusion as 
hazardous waste from its point of generation, provides everyone 
involved with an incentive to handle materials to prevent the loss of 
the exclusion. It also encourages each person to use all appropriate 
steps to see that others handle the material so it is legitimately 
reclaimed.
    To illustrate, if the generator of a hazardous secondary material 
claims the exclusion and then sends the material, via a transporter, to 
a reclamation facility not in the same industry, then the material 
would not be excluded. It would be a hazardous waste. Further, if a 
generator considered a hazardous secondary material to be excluded, and 
sent the material via a transporter to a reclaimer who decided to 
dispose of it rather than reclaim it, the material again would be a 
hazardous waste. In both cases, EPA and an authorized state could 
choose to bring an enforcement action against the reclaimer, 
transporter, and/or generator, for violations of applicable RCRA 
hazardous waste requirements. The material would be a hazardous waste 
from the time the generator first generated it. Those who managed the 
waste also could be subject to EPA and/or state enforcement.
    As with any violation, EPA and authorized states would have a range 
of enforcement options. Enforcing agencies would use their discretion 
to select the option that is appropriate to a specific case and its 
factual circumstances. Some of these options include sending a notice 
of violation, ordering that the situation be remedied, or assessing 
fines or other penalties as appropriate.
    In an enforcement action, a respondent who claims that a particular 
hazardous secondary material is excluded because that material was 
managed consistently with 40 CFR 261.2(g) would have the burden of 
proof, including the burden of persuasion, to demonstrate that the 
material has been managed in a manner that maintains the exclusion from 
the point it was generated. 40 CFR 261.2(f). For example, a reclamation 
facility rebutting an allegation that it disposed of hazardous waste in 
violation of RCRA Subtitle C would have the burden of proving the 
material was an excluded hazardous secondary material because it had 
been managed consistently with 40 CFR 261.2(g) from the point when it 
was generated.
    In addition, the exclusion in today's rule would not affect the 
obligation to promptly respond to and remediate any releases of 
hazardous secondary material that may occur. If, for example, a 
hazardous secondary material is spilled or released, then the material 
would be discarded. Any management of the released material not in 
compliance with applicable Federal and State hazardous waste 
requirements could result in an enforcement action. For example, a 
person who spilled or released a hazardous secondary material, and 
failed to immediately clean it up, could potentially be subject to 
enforcement for illegal disposal of the waste. See, for example, 40 CFR 
264.1(g)(8). In addition, the waste could potentially be addressed 
through enforcement orders, such as orders under RCRA sections 3013 and 
7003.

B. Legitimate Recycling

1. What Is Legitimate Recycling?
    Under the current Subtitle C definition of solid waste, many 
hazardous secondary materials that would otherwise be subject to 
regulation under RCRA's ``cradle to grave'' system are not considered 
wastes if they are recycled. The general idea behind this construct is 
that recycling of such materials often closely resembles normal 
industrial production, rather than waste management. Since there can be 
a considerable economic incentive to manage recyclable materials 
outside the RCRA regulatory system, there is a clear 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.
    In the preamble to the 1985 regulations (50 FR 638, January 4, 
1985), EPA articulated the need to distinguish between ``sham'' and 
``legitimate'' recycling of hazardous secondary materials. The issue is 
whether these activities are legitimate recycling, or are rather some 
form of treatment or disposal being called recycling in an attempt to 
evade regulation. The 1985 preamble discussion cited above outlined 
several guidelines for making such distinctions. Subsequent guidance

[[Page 61582]]

(discussed in more detail below) elaborated on those guidelines, and 
reinforced the principle that recycling of hazardous secondary 
materials that is not legitimate amounts to treatment or disposal, 
which is a regulated activity under RCRA.
    In recent years, a wide range of RCRA stakeholders, including many 
state agency officials, have expressed concern that the statements in 
preamble and current guidance on legitimate recycling do not provide 
sufficient clarity or predictability for making recycling legitimacy 
determinations. Because of these concerns, many stakeholders have 
encouraged EPA to revise and clarify the current legitimacy criteria, 
and to promulgate them in regulations.
    EPA believes that today's proposed rulemaking is a good opportunity 
to establish RCRA's recycling legitimacy criteria in regulations, and 
at the same time to make clarifying revisions to them. Accordingly, 
today's proposal includes specific regulatory provisions for 
distinguishing legitimate recycling from sham recycling practices, 
which reorganize and clarify the existing criteria that have been 
articulated in preamble statements and guidance. Today's proposal to 
codify recycling legitimacy criteria is not based on any direction from 
the D.C. Circuit Court.
    Today's proposed legitimacy criteria are intended primarily to 
clarify and simplify the same basic legitimacy principles that have 
been in use since 1985. We believe that the new codified regulatory 
criteria will, when applied to actual recycling scenarios, result in 
determinations that are consistent with those based on current 
guidance. As such, we do not anticipate the need for overseeing 
agencies to revisit previous legitimacy determinations if the proposed 
criteria are finalized.
2. What Is the Current Guidance for Legitimate Recycling?
    In the January 4, 1985 preamble to the final rule that established 
the current definition of solid waste regulations, EPA described 
several indications of sham recycling. A similar discussion that 
addressed legitimacy as it pertains to burning 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), portions of 
which were never finalized. On April 26, 1989, the Office of Solid 
Waste issued a memorandum that consolidated preamble statements 
concerning legitimate recycling into a single list of criteria to be 
considered in evaluating legitimacy (OSWER directive 9441.1989(19)). 
This memorandum has been, and still is, the primary source of guidance 
for the regulated community and for overseeing agencies in 
distinguishing between legitimate and sham recycling.
    As explained in the 1989 memorandum, a legitimacy determination 
involves evaluating case-specific information to determine whether or 
not a secondary material being recycled is in effect being used as a 
commodity, rather than as a waste. The 1989 memorandum identified six 
criteria to be considered in evaluating this fundamental question, 
explaining that each recycling scenario is likely to require a case-
specific evaluation. The memorandum further explained that, depending 
on the case-specific facts and circumstances, certain criteria may 
weigh more heavily than others in making legitimacy determinations. The 
general criteria presented in the 1989 guidance memorandum are as 
follows:
    [sbull] Is the secondary material similar to an analogous raw 
material or product?
    [sbull] What degree of processing is required to produce a finished 
product?
    [sbull] What is the value of the secondary material?
    [sbull] Is there a guaranteed market for the end product?
    [sbull] Is the secondary material handled in a manner consistent 
with the raw material/product it replaces?
    [sbull] Other relevant factors (e.g., economics of the recycling 
process, toxic constituents ``along for the ride'')?
3. Today's Proposed Criteria for Legitimate Recycling
    A. What types of recycling would be addressed by today's legitimacy 
criteria? Today's proposal would add a new paragraph (h) to the 40 CFR 
261.2 definition of solid waste, specifying four general criteria to be 
used in determining whether recycling of hazardous secondary materials 
is legitimate.\14\ These legitimacy criteria are intended to apply 
generally to the following types of materials:
---------------------------------------------------------------------------

    \14\ It should be noted that today's proposed legitimacy 
criteria are not intended to apply to recycling of materials that 
are non-hazardous (i.e., materials that are not listed hazardous 
wastes, and that do not exhibit a hazardous characteristic). Thus, 
for example, recycling of non-hazardous household wastes, such as 
newspapers and aluminum cans, would not be subject to the proposed 
criteria. Likewise, the proposed criteria would not apply to 
recycling of non-hazardous secondary materials generated from 
industrial operations.
---------------------------------------------------------------------------

    [sbull] Recyclable hazardous secondary materials that would be 
excluded from Subtitle C regulation as wastes under today's proposal 
for intra-industry recycling.
    [sbull] Hazardous secondary materials that, because they are 
recycled, are excluded or exempted from Subtitle C regulation under 
other regulatory provisions (see, for example, the exclusions in 40 CFR 
261.4).
    [sbull] Recyclable hazardous wastes that are regulated under 
Subtitle C prior to recycling.
    Today's proposal is the Agency's first attempt to codify in 
regulatory form general, broadly applicable principles for making 
recycling legitimacy determinations. It should be noted, however, that 
the Agency has examined in depth a number of waste-specific and 
industry-specific recycling practices, and has promulgated regulations 
that address the legitimacy of many of these practices in much more 
specific terms. Thus, there will be situations where today's broadly-
applicable proposed criteria would in a sense overlap with these more 
specific legitimacy provisions. One example of this would be the 
recently promulgated regulations for zinc fertilizers made from 
recycled hazardous secondary materials, which (among other things) 
specifies numerical limits on five heavy metal contaminants and dioxins 
in these zinc fertilizer products (67 FR 48393, July 24, 2002). Other 
examples of more specific legitimacy provisions are found in the 
regulations promulgated for comparable fuels (63 FR 33782, June 19, 
1998), 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.
    Where more specific criteria or requirements have been established 
in regulations, affected parties should look to those regulatory 
provisions, in addition to the generic legitimacy criteria being 
proposed in today's rule. For example, for a zinc micronutrient 
fertilizer manufacturer, the analysis of ``toxics along for the ride'' 
(see Criterion 4, discussed below) would involve an analysis 
of whether his fertilizer product meets the contaminant limits 
specified in 40 CFR 261.4(a)(21). The Agency specifically requests 
comments on any scenarios where the public sees a conflict between the 
generic legitimacy criteria and more specific regulatory provisions for 
a particular recycling practice, and what potential problems could 
arise from any such conflicting legitimacy provisions.
    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 regulation under 
RCRA Subtitle C, if hazardous. These proposed criteria are intended to 
apply to all recycling of hazardous secondary materials,

[[Page 61583]]

including any recycling that may be covered under today's proposed 
exclusion for ``materials recycled in a continuous process within the 
generating industry.'' If an owner/operator claims they are conducting 
legitimate recycling but the appropriate regulatory agency determines 
that the process is sham recycling, the recycler and the generator(s) 
of the recycled material may be subject to enforcement action. As noted 
earlier, if a hazardous secondary material is discarded through sham 
recycling, the generator and all others who have handled or managed the 
material may be subject to enforcement for violations of RCRA Subtitle 
C requirements. To avoid enforcement, a prudent generator will take 
steps to ensure that the recycling of his materials is legitimate.
    B. What are today's proposed legitimacy criteria, and how would 
they be used? The following is a discussion of today's proposed 
legitimacy criteria, with an explanation of how each of the proposed 
criteria relates to preamble statements and guidance currently in use. 
The four proposed criteria are:
    1. Criterion 1: The secondary material to be recycled is 
managed as a valuable commodity. Where there is an analogous raw 
material, the secondary material should be managed in a manner 
consistent with the management of the raw material. Where there is no 
analogous raw material, the secondary material should be managed to 
minimize the potential for releases into the environment.
    2. Criterion 2: The secondary material provides a useful 
contribution to the recycling process or to a product of the recycling 
process and evaluating this criterion should include consideration of 
the economics of the recycling transaction. The recycling process 
itself may involve reclamation, or direct reuse without reclamation.
    3. Criterion 3: The recycling process yields a valuable 
product or intermediate that is: (i) Sold to a third party; or (ii) 
Used by the recycler or the generator as an effective substitute for a 
commercial product or as a useful ingredient in an industrial process.
    4. Criterion 4: The product of the recycling process:
    (i) Does not contain significant amounts of hazardous constituents 
that are not found in analogous products; and
    (ii) Does not contain significantly elevated levels of any 
hazardous constituents that are found in analogous products; and
    (iii) Does not exhibit a hazardous characteristic that analogous 
products do not exhibit.
    As proposed today, these legitimacy criteria are not expressed as 
questions to be answered, as they were in the 1989 guidance. Rather, 
they are expressed as principles to be assessed on a case-specific 
basis. As proposed, therefore, a legitimacy determination would be a 
case-specific judgment as to whether a particular recycling practice is 
consistent with the four criteria in 40 CFR 261.2(h).
    The proposed legitimacy criteria are intended to apply to a wide 
range of recycling scenarios across a wide array of industries. 
Although EPA expects that most, if not all, legitimate recycling 
practices will conform to each of the four criteria, the application of 
the criteria will require some subjective evaluation and balancing. 
Furthermore, there may be situations when a recycling activity that 
does not conform to one or more of the criteria could be considered 
legitimate. For example, with regard to the first criterion listed 
above, there could be a situation in which the secondary material to be 
recycled is managed in a different (though protective) manner than 
analogous raw materials are managed. Such recycling might nevertheless 
be considered legitimate if the recycling process satisfied the other 
three criteria, and management of the materials is reasonable and 
appropriate. There are likely to be other types of situations where a 
particular legitimacy criterion may not be met, but where the overall 
recycling practice would nevertheless be considered legitimate. 
Although we believe that today's proposed criteria would provide a 
sound basis for making legitimacy determinations, we are interested in 
any examples of legitimate recycling practices that might not meet all 
of the criteria proposed today.
    The proposed legitimacy criteria, if finalized, would continue to 
be used in the same way as the current guidance has been used. That is, 
we would expect the regulated community to continue to evaluate their 
recycling operations using the criteria, and reach their own 
conclusions without prior approval by an overseeing agency. Such 
conclusions would, of course, be subject to review by EPA or the 
authorized state should the need arise.
    EPA requests comment as to whether the proposed legitimacy criteria 
should be structured differently in the final rule, such as in the form 
of mandatory requirements that must all be met, or perhaps in a system 
where certain criteria are mandatory and others are not. We are 
especially interested as to whether structuring the legitimacy criteria 
differently would necessitate revisiting previous legitimacy 
determinations made by regulated entities or implementing agencies. We 
are also interested in comments as to any case-specific examples of 
legitimate recycling where one or more of the proposed factors would 
not be relevant in making determinations, and whether or not other 
additional criteria beyond those proposed today should be considered in 
making legitimacy determinations.
    The following is an explanation of each of the four proposed 
legitimacy criteria, including a discussion of how each proposed 
criterion relates to existing guidance.
    1. Criterion 1: ``The secondary material to be recycled is 
managed as a valuable commodity. Where there is an analogous raw 
material, the secondary material should be managed in a manner 
consistent with the management of the raw material. Where there is no 
analogous raw material, the secondary material should be managed to 
minimize the potential for releases into the environment.''
    In EPA's view, a recycler will value secondary materials that 
provide an important contribution to his process or product and will 
manage them in a manner consistent with a valuable feedstock material 
(i.e., will manage them to minimize their loss). If the recycler does 
not manage them as he would manage valuable feedstock, it may indicate 
that the ``recycling'' practice actually involves disposal of the 
secondary material.
    Therefore, the secondary material to be recycled should be managed 
prior to recycling in essentially the same way as raw materials are 
managed in the course of normal manufacturing. EPA expects all parties 
involved in handling secondary materials destined for recycling to 
handle them as carefully as ``analogous'' raw materials would be 
handled. Such parties include generators, transporters, and recyclers, 
as well as any other parties that manage the secondary materials prior 
to recycling. To illustrate, hazardous metal-bearing secondary 
materials can often be used as substitutes for ``raw'' metal ore 
concentrates in making metal products. Assuming both types of materials 
have similar physical properties, the Agency would expect the secondary 
materials and the metal ore concentrates to be managed in the same or 
similar units. If, however, in this example the secondary materials 
were managed in outdoor piles, while the ore concentrate materials were 
managed in containers, an overseeing agency might well determine that 
the practice of storing the secondary materials in outdoor piles 
indicates sham recycling.

[[Page 61584]]

(In addition, any releases of the hazardous secondary materials to the 
environment would also be considered discard under RCRA.)
    In some recycling situations, a hazardous secondary material could 
be used as a substitute for a raw material that has very different 
physical characteristics, and thus would not be considered 
``analogous'' for the purposes of this criterion. This could be the 
case, for example, if a secondary material is in dry powder form, while 
the raw material is a solid material that is not susceptible to 
dispersal by wind or rain. Similarly, if the secondary material 
contains hazardous constituents that the raw material it replaces does 
not, it also might not be considered ``analogous'' for the sake of this 
criterion. Similarly, there may be some situations where there is no 
``analogous'' raw material, such as where the recycling process is 
uniquely designed to use a specific secondary material.
    In these types of situations, where it may be difficult to compare 
management of secondary materials with ``analogous'' practices for raw 
materials, consideration of this specific legitimacy criterion should 
focus on whether or not the secondary material is managed to minimize 
the potential for releases into the environment. This is consistent 
with the idea that normal manufacturing processes are designed to use 
valuable material inputs efficiently, rather than allowing them to be 
released into the environment. Thus, in situations where it is not 
feasible to compare management practices for hazardous secondary 
materials with analogous practices, assessment of this legitimacy 
criterion would involve examining the effectiveness of a facility's 
equipment and systems in preventing releases of the hazardous secondary 
materials into the environment.
How Does This Criterion Compare to Existing Guidance?
    Although worded somewhat differently, this criterion is essentially 
the same as the fifth criterion in the previously cited 1989 guidance 
memorandum (``Is the secondary material handled in a manner consistent 
with the raw material/product it replaces?''). The 1985 preamble 
similarly asked whether recyclable secondary materials were ``handled 
in a manner consistent with their use as raw materials or commercial 
product substitutes * * *.'' In one respect, however, today's proposed 
criterion is less restrictive--the 1989 guidance posed an additional 
question ``Is the secondary material stored on the land?,'' implying 
that storage on the land is an indication of sham recycling. However, 
the Agency is aware of situations where storage of raw materials on the 
land is a normal part of the manufacturing process (this is the case 
with certain large-scale mineral processing operations, for example). 
Thus, today's proposal does not identify land storage as a specific 
indicator of sham recycling. EPA notes, however, that land storage may 
result in releases to the environment that constitute discard.
    2. Criterion 2: ``The secondary material provides a useful 
contribution to the recycling process or to a product of the recycling 
process and evaluating this criterion should include consideration of 
the economics of the recycling transaction. The recycling process 
itself may involve reclamation, or direct reuse without reclamation.''
    This criterion expresses the fundamental principle that secondary 
materials should actually be useful (i.e., contribute value) to a 
recycling process. This is intended to prevent the practice of adding 
secondary materials to manufacturing operations simply as a means of 
disposing of them, which is sham recycling. An example of a recycling 
operation that would fail to satisfy this criterion would be a 
wastewater treatment sludge that is fed into a metals smelter, but that 
contains no recoverable amounts of metal, and does not otherwise 
contribute to the smelting process. Another example would be using a 
toxic metal-bearing sludge as a feedstock to make ceramics, where 
neither the toxic metals or other components of the sludge contribute 
valuable properties to the ceramic products. There may also be 
situations where some amount of a secondary material is useful to a 
recycling process, but much larger volumes of the material are actually 
introduced into the process. A material that is added in excess of the 
amount actually needed to make an end-product might also fail to meet 
this criterion for useful contribution.
    Not every component of a secondary material would necessarily have 
to contribute to the product or process to satisfactorily meet this 
criterion. For example, a legitimate recycling operation involving 
recovery of precious metals might not recover all of the components of 
a hazardous secondary material, but would recover precious metals with 
sufficient value to justify the recycling. A similar example might be 
where recycling involves recovery of the hazardous component of a 
secondary material (e.g., cadmium in batteries), where the more inert 
constituents of the secondary material are not recovered or reused, but 
the recovered portion is of sufficient value to justify reclamation.
    This proposed criterion consolidates and clarifies existing 
guidance that addresses how useful or valuable a hazardous secondary 
material should be to a recycling process. In practice, this issue has 
often been viewed primarily as an economic question, such as whether 
the secondary material is marketable as a valuable commodity, or 
whether it has a marketplace value comparable to an analogous virgin 
material. EPA is not proposing a particular economic test for 
evaluating this criterion, nor do we necessarily believe that a 
secondary material must be marketable to the public in order for it to 
have sufficient value for the recycling process to be legitimate 
recycling. In general, we believe that evaluation of the usefulness of 
a secondary material to the recycling process should be based on the 
nature of the material and its value to the recycling process. The 
question of who pays whom, the amounts of money involved, and other 
aspects of the transaction between the generator and recycler can be an 
indicator as to whether or not the recycling is legitimate or is 
disposal in the guise of recycling. It is EPA's experience that in many 
legitimate recycling transactions the generator pays the recycler to 
accept the material to be recycled. However, the Agency is also aware 
that in many sham recycling cases the recycler has received payment 
from the generator. The usefulness of the secondary material to the 
recycling process (whether established through knowledge of the 
material and process or consideration of the economics of the 
transaction) needs to be evaluated along with the other legitimacy 
criteria articulated in today's proposal in evaluating whether the 
recycling is legitimate.
    Another issue that could arise in evaluating this ``useful 
contribution'' criterion is the efficiency of a recycling process in 
recovering or regenerating the useful component of a recyclable 
material. For example, if the objective of a recycling process were 
recovery of copper from a secondary material, but only a small fraction 
of the copper in the material is actually recovered, sham recycling 
could be indicated. If, however, the recycling process was reasonably 
efficient and recovered all but a small amount of the copper (e.g., 90 
to 95 percent), it would likely meet this criterion and thus indicate 
legitimate recycling. A pattern of mismanagement of the residues by the 
recycling facility may also be an indicator of sham recycling.

[[Page 61585]]

    In a similar vein, there may be instances where more than one 
secondary material is used in a single recycling process, and the 
materials are mixed or blended as part of the process. In such cases, 
each of the recyclable materials used would need to satisfy the 
``useful contribution'' criterion. This is to avoid situations where a 
relatively worthless secondary material could be mixed with a more 
valuable or useful material in an attempt to disguise and dispose of 
it, which is sham recycling.
    Given the wide variety of possible recycling practices that may be 
subject to legitimacy determinations under today's proposed criteria, 
and the many different ways materials may be ``useful'' to those 
practices, the following examples are offered to clarify what we mean 
by ``useful contribution'' under this criterion.
    The secondary material contributes valuable ingredients to a 
product of the recycling process. Secondary materials often contribute 
to a recycling process by becoming ingredients in a product. For 
example, spent solvents from a paint spray booth can often be used 
directly as ingredients in manufacturing paint. In some cases, 
secondary materials will need to be reclaimed first to remove 
contaminants or to make them otherwise suitable for use as ingredients 
in making a product. An example would be a zinc-bearing sludge that is 
first processed (i.e., reclaimed) into zinc oxide, which is used as a 
feedstock in an electrolytic zinc refinery that manufactures zinc 
metal.
    The secondary material replaces a catalyst or carrier in the 
process. In some cases, secondary materials can be reused (either 
directly, or after being reclaimed) in production processes, but are 
not incorporated as ingredients in the resulting products. This 
includes catalysts and chemicals that act as carriers or synthesis 
media for other chemicals in a production process. In either case, the 
secondary material must be useful for that purpose.
    The secondary material is the source of a valuable constituent(s) 
recovered in the recycling process. Many legitimate recycling 
operations involve reclamation of a secondary material primarily to 
recover a specific, valuable component of the material. A common 
example is mineral processing, where metal-bearing secondary materials 
such as baghouse dusts and other sludges are reclaimed to extract 
valuable minerals.
    The secondary material is regenerated by the recycling process. 
Regeneration is a type of ``useful contribution,'' where a spent 
material is reclaimed to restore its original useful properties so that 
it can be reused. Regeneration of spent solvents through distillation 
is one example of this type of recycling. Another example is 
regeneration of acid baths used to ``pickle'' steel by removing 
impurities and restoring their acidic properties.
    The secondary material is used as an effective substitute for a 
commercial product. In many cases, a secondary material can be used 
directly as a substitute for a commercial product without reclamation. 
This type of recycling is perhaps the clearest example of ``useful 
contribution,'' in that the secondary material is used productively, 
and it replaces a commercial product that would otherwise have to be 
purchased. Use of spent pickling acid as a conditioning agent in 
wastewater treatment plants is an example of such a practice.
How Does This Criterion Compare to Existing Guidance?
    This proposed criterion addressing ``useful contribution'' has been 
distilled from and clarifies concepts in the Agency's existing guidance 
for legitimate recycling. For example, the preamble to the January 4, 
1985 recycling regulations noted that if a secondary material is 
``ineffective or only marginally effective for the claimed use, the 
activity is not recycling but surrogate disposal.'' Similarly, the 
January 8, 1988 proposed rule discussed as a legitimacy concept ``how 
much energy or material value each waste contributes to the recycling 
purpose.'' In the 1989 legitimacy guidance, the issue of effectiveness 
was addressed by the questions: ``Is much more of the secondary 
material used as compared with the analogous raw material/product it 
replaces?''; ``Is only a nominal amount used?''; and ``Is the secondary 
material as effective as the raw material or product it replaces?'' The 
guidance also addressed the value of the secondary material by posing 
the questions, ``Is it (the secondary material) listed in industry news 
letters, trade journals, etc.?'' and ``Does the secondary material have 
economic value comparable to the raw material that normally enters the 
process?''
    3. Criterion 3: ``The recycling process yields a valuable 
product or intermediate that is:
    (i) Sold to a third party; or
    (ii) Used by the recycler or the generator as an effective 
substitute for a commercial product or as a useful ingredient in an 
industrial process.''
    This proposed criterion is intended to capture the fundamental 
precept that legitimate recycling must produce something of value. If a 
``recycling'' process creates a material that no one wants or will use, 
it can be presumed that the process is conducted to dispose of the 
material; i.e., it is sham recycling.
    For the purpose of this criterion, a recycled product may be 
considered ``valuable'' if it can be shown to have either economic 
value, or a value that is more intrinsic (i.e., it is useful to the end 
user, though it may not be salable as a product or commodity in the 
marketplace). One relatively simple 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, as well as contracts or agreements 
establishing the terms of sale or transaction. A recycler that has not 
yet arranged for sale of its product to a third party could establish 
the value of the recycled product by demonstrating that it can replace 
another product or intermediate (process input) that is available in 
the marketplace. It is also possible that in some situations a recycled 
product could be sold at a loss (e.g., as a ``loss leader'' to attract 
customers, or because of normal market fluctuations), and nevertheless 
be considered a ``valuable product'' under this criterion. In such 
cases, however, the recycler would need to demonstrate how selling the 
product at a loss is economically beneficial to the seller, and that 
the product is actually valuable to the person who uses it.
    Many recycling processes produce outputs that are not sold to 
another party, but are instead used by the generator or recycler. For 
example, some recycled products or intermediates may be very useful as 
feedstocks in a specific manufacturing process, but may have no 
established monetary value in the marketplace. Such recycled products 
or intermediates would be considered to have ``intrinsic'' value, 
though demonstrating that value may be less straightforward than for 
products that are sold in the marketplace.
    Demonstrating the value of recycled products that are not sold to 
third parties could involve showing that the recycled product replaces 
an alternative product or material that would otherwise have to be 
purchased. In other cases, the recycler could show that the product or 
intermediate meets certain specific product specifications, or meets 
established industry standards. Another approach to demonstrating the 
value of these types of recycled products or intermediates could be to 
compare their characteristics (e.g., their physical/chemical 
properties, or their efficacy for certain uses or applications) with

[[Page 61586]]

comparable products or intermediates made from raw materials.
    Some recycling processes may consist of multiple steps, which may 
occur at separate facilities. In some cases, each processing step will 
yield a valuable product, 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 that is salable or usable in that form, that 
recycling process would meet this proposed criterion. If, however, a 
particular step in a recycling process does not yield a separate 
salable or ready-for-use product, that process step would typically 
need to add value to the material in some way in order to satisfy this 
criterion. Thus, for example, if the first step in reclaiming a metal-
bearing secondary material results in a fused or agglomerated material, 
a second step consisting of particle size reduction may be necessary to 
facilitate the next reclamation step. Although reducing the particle 
size in this case would not by itself produce a valuable product, it 
may add value to the recycling process and is consistent with the 
intent of this criterion.
How Does This Criterion Compare to Existing Guidance?
    This proposed criterion distills several of the questions posed by 
the 1989 legitimacy guidance. In that guidance, the value of recycled 
products sold to third parties was addressed by posing the questions, 
``Is there a guaranteed market for the end product?'' and ``Is there a 
contract in place to purchase the ``product'' ostensibly produced from 
the hazardous secondary materials?'' The guidance addressed recycled 
products used by the recycler or the generator as process ingredients 
by posing the questions `` * * * is the product used by the (recycler)? 
The generator? Is there a batch tolling agreement?'' The ``usefulness'' 
of a recycled material was addressed by the questions: ``Is the 
(recycled) product a recognized commodity?'' and ``Are there industry-
recognized quality specifications for the product?'' The language we 
are proposing today attempts to reflect these concepts in a concrete 
manner by, for example, making it clear that one needs to assess not 
only whether there are industry-recognized quality specifications, but 
also that the recycled product would need to meet or exceed any 
applicable specifications to be considered legitimate recycling. We 
believe that today's proposed Criterion 3 captures the essence 
of the original guidance.
    The 1989 guidance posed additional questions aimed at 
distinguishing recycling operations that involve direct use or reuse of 
secondary materials from recycling operations that involve reclamation. 
These concepts, however, are not particularly relevant to 
distinguishing legitimate from sham recycling, and we therefore did not 
attempt to capture them in today's proposed legitimacy criteria.
    4. Criterion 4: ``The product of the recycling process:
    (i) Does not contain significant amounts of hazardous constituents 
that are not found in analogous products; and
    (ii) Does not contain significantly elevated levels of any 
hazardous constituents that are found in analogous products; and
    (iii) Does not exhibit a hazardous characteristic that analogous 
products do not exhibit.''
    This proposed criterion addresses ``toxics along for the ride'' in 
products made from recycled secondary materials. Put another way, the 
question posed by this criterion is whether hazardous constituents are 
``discarded'' by being incorporated into a product made from hazardous 
secondary materials, which would indicate sham recycling.\15\
---------------------------------------------------------------------------

    \15\ Hazardous constituents are defined in 40 CFR part 261, 
Appendix VIII.
---------------------------------------------------------------------------

    In evaluating this aspect of legitimacy, a recycler would 
ordinarily compare the recycled product to an analogous product made 
with raw materials. Thus, if a recycling process produced (for example) 
paint, the levels of hazardous constituents in the paint could be 
compared with the levels of the same constituents found in similar 
paint made from raw materials.
    Although this criterion focuses on hazardous constituents that may 
be found in the end-products of recycling processes, a recycler could 
choose to evaluate this criterion indirectly by comparing the hazardous 
constituents in the secondary material feedstock with those in an 
analogous raw material feedstock. If the secondary material feedstock 
does not contain higher concentrations of hazardous constituents than 
the raw material feedstock, then the end product of the recycling 
process should not contain excess hazardous constituents ``along for 
the ride.'' This feedstock comparison may be simpler than the product 
comparison when the recycler knows the secondary material is very 
similar in profile to the raw material. It may also be more practical 
than the product comparison when there is no analogous product, or when 
production of the recycled product has not yet begun.
    Today's proposed criterion 4 identifies three specific 
tests for evaluating whether or not this criterion is met. This 
criterion is designed to determine whether or not unacceptable amounts 
of toxic constituents are passed through to recycled products. The 
first test specifies that where analogous products made with raw 
materials do not contain hazardous constituents, the recycled product 
should not contain significant amounts of any hazardous constituent. 
For example, if paint made from reclaimed solvent contains significant 
amounts of cadmium, while the same type of paint made from raw 
materials does not contain cadmium, it would likely indicate that the 
cadmium serves no useful purpose and is being passed through the 
recycling process and discarded.
    The second test addresses situations where an analogous product 
does contain some hazardous constituents, and asks whether those 
hazardous constituents are found in the recycled product at levels 
significantly higher than in the analogous product. This test ensures 
that levels of hazardous constituents in recycled products are 
comparable to levels of the same constituents in analogous products 
made from raw materials. 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 lead 
level found in similar tiles made of raw materials, discard would 
likely be indicated. As with the previous test, the comparison could be 
made product-to-product, or could be made by comparing the constituent 
levels in the secondary material with those in the analogous raw 
material.
    The third test under this criterion is whether the recycled product 
exhibits a hazardous characteristic that analogous products do not 
exhibit. This test ensures that recycled products do not exhibit the 
characteristics of toxicity, ignitability, corrosivity, or reactivity 
when the analogous products do not.\16\ 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 
tests discussed above. We believe that there are few, if any, cases 
where the first two tests described above would be met for a recycled 
product, but the product would nevertheless

[[Page 61587]]

exhibit the hazardous characteristic of toxicity.
---------------------------------------------------------------------------

    \16\ These characteristics are defined in 40 CFR Part 261, 
Subpart C.
---------------------------------------------------------------------------

    It is possible, though, that the use of a hazardous secondary 
material as an ingredient could cause a product to exhibit a hazardous 
characteristic, such as corrosivity, that is not exhibited by analogous 
products. We seek comments as to how often this test might be relevant 
to making legitimacy determinations, and information as to any specific 
recycling processes that might be affected by this test.
    In evaluating this criterion for a particular recycling process, 
regulators and the regulated community may frequently need to assess 
what amount of a hazardous constituent is a ``significant amount'' or a 
``significantly elevated level.'' EPA is not proposing a specific 
formula or method for defining ``significant'' in this context. Given 
the exceptional diversity and variability of potentially recyclable 
materials, we believe that this issue is best addressed on a case-by-
case basis, instead of imposing a generic limit that could apply to all 
recycling and all recyclable materials.
    The following examples are offered to illustrate how 
``significant'' might be evaluated for certain recycled products. In 
one example, 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 evaluating this legitimacy criterion. If, on the 
other hand, in this example the lead levels in the recycled zinc 
product were 1,000 ppm, it would likely indicate discard of significant 
amounts of lead. To offer another example, if a ``virgin'' solvent 
contains no detectable amount 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 (e.g., 50 ppm), it 
would likely indicate discard of the barium.
    Evaluating the ``significance'' of levels of hazardous constituents 
in recycled products for the purpose of this criterion may involve 
taking into account several factors, such as the type of product, how 
it is used and by whom, whether or not elevated levels of hazardous 
constituents compromise in any way the efficacy of the product, and 
other factors. To illustrate one such situation, if a recycled plastic 
product contains low but detectable levels of vinyl chloride (a human 
carcinogen) that analogous plastics do not contain, and the plastic 
could be used to make children's teething toys, a more rigorous 
evaluation of the ``significance'' of the vinyl chloride in the 
recycled product would be called for than if the product were used for 
some type of industrial application.
How Does This Criterion Compare to Existing Guidance?
    The 1989 guidance and the preamble statements that support it have 
addressed the question of ``toxics along for the ride'' in a more 
general way than today's proposed criterion. The 1989 guidance, for 
example, places emphasis on examining the presence of toxic 
constituents in the secondary material destined for recycling, rather 
than focusing primarily on the presence of such constituents in the 
recycled product. As noted above, today's criterion is intended to 
primarily address the question of ``toxics along for the ride'' in the 
products of recycling. We believe that the presence of toxic 
constituents in recyclable secondary materials is less relevant to 
assessing the legitimacy of recycling, primarily because much if not 
most recycling (as well as manufacturing) involves removing or 
destroying such harmful materials. As reflected in this proposed 
criterion, the central question is whether or not (and in what amount) 
hazardous constituents pass through the recycling process and become 
incorporated into the products of recycling.
    We do not believe that this shift in emphasis will substantially 
affect the outcome of legitimacy determinations. In fact, the approach 
in today's proposal (i.e., focusing on toxic constituents in recycled 
products) may be somewhat less restrictive than the guidance it would 
replace. It is possible, however, that by focusing the proposed 
criterion on toxics in recycled products, some recycling that may have 
previously been considered legitimate might not be under today's 
proposal. We invite comment on this issue, and specifically solicit 
examples where existing legitimacy determinations could change if 
today's proposed criterion were finalized.

Alternatives Considered

    The Agency examined two main alternative approaches to addressing 
the issue of ``toxics along for the ride'' that would have provided 
greater specificity in assessing the ``significance'' of elevated 
levels of toxic constituents in recycled products. These regulatory 
alternatives are discussed below.
    ``Bright Line'' Approach. One alternative approach would be to 
establish a specific numerical limit to define ``significant'' for the 
purpose of evaluating this legitimacy criterion. This approach would in 
effect establish a ``bright line'' for defining ``significant amounts'' 
and ``significantly elevated levels'' under today's proposal. Under 
such an approach, this criterion might specify that the amount of 
hazardous constituents in a recycled product could be present at levels 
no greater than one or two standard deviations above those in an 
analogous product made from raw materials. The limit could also be 
expressed as a percentage (e.g., ``no greater than 5 percent more * * 
*'').
    Such a bright line approach could provide greater clarity and 
predictability to the regulated community and state and federal 
agencies overseeing new regulations for legitimate recycling. On the 
other hand, this alternative, in establishing a specific quantitative 
test for whether hazardous constituents are along for the ride in a 
recycled product, could be somewhat arbitrary, and depending on the 
particular constituents of concern and product use, could result in 
either over-regulation or under-regulation, or both.
    Risk-based Approach. The ``bright line'' approach described above 
would only function to compare levels of constituents in recycled 
products with those in analogous products. That approach would not, 
therefore, directly address the issue of the potential risks posed by 
those hazardous constituents. Depending on the hazardous constituents 
of concern and the uses of the recycled product, some increased levels 
of hazardous constituents may not pose any risk to workers (where the 
recycled product is a process intermediate) or the public (where the 
recycled product is a consumer product). It is also possible that such 
hazardous constituents could pose unacceptable risks, even if they are 
present at levels below a statistical ``cutoff'' limit that might be 
established under the option described above. Thus, in developing this 
proposed criterion, we considered an alternative approach that would 
more explicitly address the risks posed by toxic constituents in 
recycled products.
    One possible approach could be to specify that if a recycled 
product contains hazardous constituents at higher levels than those in 
an analogous product made with raw materials, the recycler would need 
to assess the risks to human health and the environment posed by those 
increased levels. This criterion would be met if the risks were 
acceptable (``acceptable'' risks would presumably also be defined under 
such an approach).

[[Page 61588]]

    This approach would likely require recyclers in many cases to 
perform a life-cycle risk assessment, examining potential exposure 
scenarios from use of recycled products, and estimating the risks 
associated with such exposures. In many cases, such analyses could be 
relatively straightforward ``screening'' analyses, though in other 
cases more elaborate analysis might be needed, particularly for 
consumer products.
    EPA is not proposing a risk-based approach to setting limits on 
``toxics along for the ride,'' primarily due to its potential 
complexity. It can also be argued that the legitimacy of a recycling 
process relates more directly to how it compares with normal industrial 
production, rather than the risks that may be posed by recycled 
products (since products made from raw materials can also pose risks). 
Finally, a risk-based approach in assessing toxics along for the ride 
would be a radical departure from how this issue is currently 
considered, which is not our intent in today's proposal.
    The Agency invites comment on the alternative approaches described 
above, and other approaches for establishing legitimate recycling with 
regard to hazardous constituents or characteristics in recycled 
products.

IV. Request for Comment on a Broader Exclusion for Legitimate Recycling

    While the scope of today's lead proposal is limited to materials 
that are generated and reclaimed within the same industry, discussions 
with various stakeholders during the development of this proposal 
identified an alternative regulatory option that could further 
encourage recycling and reuse while maintaining protection of human 
health and the environment. EPA is considering this regulatory option, 
and may adopt it in the final rule; we therefore solicit comment on the 
option, as described below.
    This option, as identified by stakeholders, would provide a broader 
regulatory conditional exclusion from RCRA regulation for essentially 
all materials that are legitimately recycled by reclamation, whether 
the recycling is done within the generating industry, or between 
industries. Although RCRA provides the authority to regulate many of 
those materials recycled between industries, such a broader regulatory 
exclusion, properly crafted, could encourage additional recycling and 
reuse while protecting human health and the environment. It is not 
envisioned that such a broader regulatory exclusion would alter the 
current status of the three types of recycling practices that are 
specifically outside the scope of today's proposal (i.e., burning for 
energy recovery, as defined at 40 CFR 261.2(c)(2); use constituting 
disposal, as defined at 40 CFR 261.2(c)(1); or recycling of inherently 
waste-like materials, as defined at 40 CFR 261.2(d)).
    By removing most regulatory controls from all legitimate 
reclamation, this broader option could encourage additional recycling 
of hazardous secondary materials above and beyond that expected as a 
result of the intra-industry option proposed today. This broader 
regulatory exclusion could thus potentially result in less disposal of 
valuable materials, less use of virgin materials, and better resource 
conservation. In addition, it could result in lower costs associated 
with RCRA permits, manifesting, and other requirements. Such an 
approach might be of particular benefit for an industry that is 
composed primarily of small business entities. For onsite recycling to 
be economically feasible, large quantities of secondary materials may 
be required. Small businesses generally do not generate such large 
quantities. Therefore, smaller businesses may often not be able to 
recycle materials themselves, and may rely primarily on third party 
recyclers that are considered part of the waste management industry. 
These specialized recycling businesses may have particular expertise 
with reclaiming materials and finding markets for them. A broader 
exclusion would tend to encourage these types of inter-industry 
recycling transactions. Stakeholders suggesting this approach also 
believe that legitimate recycling activities do not pose risks of 
hazardous material releases or human exposures to such releases, and 
hence such an exclusion could achieve the benefits of increased 
recycling and at the same time protect human health and the 
environment.
    A broader regulatory exclusion of this kind would apply only to 
hazardous secondary materials that are legitimately recycled by 
reclamation. With regard to defining legitimate recycling, today's 
proposal specifies four legitimacy criteria that would be evaluated on 
a case-by-case basis in judging whether a particular recycling practice 
is legitimate. As discussed in detail in section III.B., there may be 
some situations in which a recycling activity that does not conform to 
one or more of the criteria could be considered legitimate. The 
proposed criteria, and the manner in which they would be used, are 
modeled on EPA's current guidance for legitimate recycling.
    Today's proposed legitimacy criteria could be adopted as part of a 
broader regulatory exclusion for legitimate recycling. Alternatively, 
the same legitimacy principles could be expressed as explicit 
regulatory requirements that would each have to be met, rather than as 
criteria to be considered, as discussed in section III.B. Expressing 
legitimacy principles as regulatory requirements could result in more 
transparent and predictable legitimacy determinations, which could be 
an advantage in implementing a broader regulatory exclusion that would 
apply to a wider, more diverse set of industries and recycling 
practices. However, such an approach would be a departure from the 
current system for evaluating legitimacy, and could be considered more 
stringent than the legitimacy criteria proposed today. We anticipate 
that, whichever approach to defining legitimacy is adopted in the final 
rule (i.e., the approach proposed today, or expressing legitimacy 
principles as regulatory requirements), the new legitimacy provisions 
would apply universally to all recycling, rather than only to materials 
affected by the new exclusion. We solicit comment on this issue.
    If a broader regulatory exclusion were to be adopted, we envision 
that certain key requirements in today's proposal would be maintained. 
For example, persons claiming the exclusion would be required to submit 
a one-time notification to the appropriate State or EPA Region, as 
proposed today in 40 CFR 261.2(g)(4). Persons handling these materials 
would also be required to comply with the existing requirements for 
speculative accumulation (see 40 CFR 261.1(c)(8) and 261.2(c)(4)). We 
generally impose these limits when we issue conditional exclusions from 
the definition of solid waste, to help ensure that secondary materials 
are actually recycled.
    In addition, to ensure protection of human health and the 
environment, it might be appropriate to impose additional requirements 
or conditions beyond those included for the intra-industry option 
discussed in section III.A of this preamble. For example, more frequent 
reporting and recordkeeping requirements might be appropriate, similar 
to those types of conditions included in EPA's recently-promulgated 
rulemaking for zinc fertilizers made from hazardous secondary materials 
(see 67 FR 48393, July 24, 2002). Alternatively, recordkeeping 
approaches as discussed in section III.A.8. of today's rule could 
provide additional safeguards through monitoring and documentation. 
Additional safeguards on storage or handling (e.g., a ban on land 
placement,

[[Page 61589]]

or requiring a tracking system for off-site shipments) might also be 
appropriate to ensure environmental protection and/or assist regulatory 
agencies in their oversight efforts.
    Regulatory text implementing such a broader exclusion for 
legitimately reclaimed materials would be codified in 40 CFR 261.4(a), 
which lists a series of exclusions from the definition of solid waste. 
Specifically, a new exclusion would be added at 40 CFR 261.4(a), 
stating that secondary materials that are legitimately recycled by 
reclamation are not solid wastes, provided that certain conditions are 
met. The exclusion would include a notification requirement identical 
to that set out in 40 CFR 261.2(g)(4) of the regulatory text proposed 
today for the intra-industry option, except that identification of the 
industry would not be required. The exclusion would also include a 
requirement prohibiting speculative accumulation identical to that set 
out in 40 CFR 261.2(g)(3)(ii) of the regulatory text proposed today for 
the intra-industry option. If it were determined appropriate to express 
the legitimacy principles for this broader exclusion as regulatory 
requirements, the exclusion would restate the legitimacy criteria 
proposed today in 40 CFR 261.2(h), and would specify that each of the 
four criteria must be met. If it were determined appropriate to apply 
today's proposed legitimacy criteria to this broader option, restating 
the criteria would not be necessary because 40 CFR 261.2(h) as proposed 
would apply to all recycling (including materials subject to the 
broader exclusion).
    The regulatory text for this broader exclusion would also include a 
provision specifying that materials used in a manner constituting 
disposal, materials burned for energy recovery, and inherently waste-
like materials are not eligible for the exclusion. This provision would 
be identical to that set out in 40 CFR 261.2(g)(1)(i)-(3) of the 
regulatory text proposed today. Finally, the text for the broader 
exclusion would (if deemed necessary) include a provision specifying 
any additional reporting and any recordkeeping requirements applied to 
the exclusion, and any other conditions determined appropriate to 
protect human health and the environment.
    EPA seeks comment on the potential advantages and disadvantages of 
the broader regulatory exclusion for reclaimed materials described 
above. Specifically, we request comment on the increased recycling and 
reuse that would result from broadening the rule in this way, as well 
as comment on the potential effects to human health and the 
environment. We also request comment on whether the legitimacy criteria 
proposed today would be sufficient to ensure that only real recycling 
and reuse would be exempted under such a provision, and on whether the 
proposed criteria should be reformulated into more prescriptive 
regulatory requirements. We are further interested in whether a case-
by-case variance mechanism (i.e., analogous to the existing provision 
for variances from classification as a solid waste--see 40 CFR 260.30) 
would be a more appropriate means of providing the type of regulatory 
relief for reclaimed materials that would flow from a broader exclusion 
based on legitimate recycling. Finally, we request comment on any 
additional requirements, restrictions or conditions that should be 
added to such a broader exclusion. The Agency will carefully consider 
all comments received on this regulatory option in determining the 
appropriate scope of the final rule.

V. Effect of Today's Proposal on Other Programs

A. Exports and Imports

    The 40 CFR 261.2(g) exclusion in today's proposed rule for 
materials that are recycled ``intra-industry'' does not place any 
geographic restrictions on movements of such materials, provided they 
remain within the generating industry. It is therefore possible that in 
some cases excluded materials could be generated in the United States 
and subsequently exported for reclamation to a facility in a foreign 
country that is in the same industry that generated the material. Under 
today's proposal, the exclusion would be effective while the excluded 
material is within the United States. However, such excluded materials 
may be subject to regulation as hazardous wastes in the receiving 
country, even if they are excluded from the definition of solid waste 
domestically (i.e., under RCRA). If this is the case, the U.S. exporter 
of the excluded material will need to comply with any applicable 
requirements of the importing country.
    It is also important to note that there is an international 
agreement regarding imports and exports of hazardous wastes and other 
wastes that can affect international waste shipments. As of November 
2002, 152 countries are Parties to the 1989 Basel Convention on the 
Control of Transboundary Movements of Hazardous Wastes and Their 
Disposal (``Basel Convention''). The Basel Convention prohibits 
transboundary movements of Basel-controlled hazardous and other wastes 
between Parties and non-Parties, unless a Party and a non-Party have 
concluded a separate agreement pursuant to Article 11 of the Basel 
Convention. The United States signed the Basel Convention in 1990, but 
has not ratified it and therefore is not a party to the Convention. The 
United States is a party to two bilateral agreements and one 
multilateral agreement governing exports of RCRA-defined hazardous 
wastes. The 1986 ``Agreement Between the Government of United States of 
America and the Government of Canada Concerning the Transboundary 
Movement of Hazardous Waste,'' and the 1986 ``Agreement of Cooperation 
Between the United Mexican States and the United States of America 
Regarding the Transboundary Movement of Hazardous Waste and Hazardous 
Substances'' are valid Basel Convention Article 11 bilateral 
agreements, and the 2001 ``Decision C(2001)107 Concerning the Revision 
of Decision C(92)39 on the Control of Transboundary Movements of Wastes 
Destined for Recovery Operations'' of the Organization for Economic 
Cooperation and Development (OECD) is a valid Basel Convention Article 
11 multilateral agreement among the 30 OECD member countries.
    The U.S. government over the last decade has considered 
ratification of the Basel Convention at various times. In order to 
ratify the Convention, legislation must be enacted that would amend 
RCRA to provide new authorities necessary to implement the terms of the 
Convention fully. The Basel Convention defines ``hazardous waste'' more 
broadly than RCRA does, subjecting a larger universe of materials to 
its jurisdiction. EPA is currently studying options for implementing 
the Basel Convention, including ways of defining ``waste'' for import 
and export purposes. Under various approaches, certain materials that 
are excluded from the RCRA definition of solid wastes domestically 
would be regulated for purposes of the Basel Convention when they are 
exported. Basel Convention protocols would not affect the domestic 
classification of excluded materials while such materials are 
physically located within the legal jurisdiction of the United States.
    If the U.S. ratifies the Basel Convention, Basel-covered hazardous 
and other wastes, potentially including certain domestically excluded 
materials that are exported, would be subject to notice and consent 
procedures. Furthermore, if such wastes and excluded materials were to 
be exported to countries with which we do not have Article 11 
agreements, EPA would have

[[Page 61590]]

to be satisfied that there is no reason to believe the exported wastes 
and materials would not be managed in an ``environmentally sound 
manner'' (ESM) at the receiving facility in the importing country. For 
example, certain copper plating wastes are excluded from the RCRA 
definition of solid waste, even though they may exhibit the toxicity 
characteristic for lead, cadmium, chromium, or even cyanide. If the 
U.S. were to ratify the Basel Convention, these materials would be 
subject to the Basel Convention (assuming the importing country defined 
the materials as hazardous wastes), and the U.S. exporter would be 
required to comply with notification and consent procedures for the 
export of the materials. Additionally, if these materials were to be 
exported to smelters in countries with which we do not have existing 
Article 11 agreements, such as Chile or Peru, the export would be 
subject to additional requirements, including ESM determinations by 
EPA.
    Imported Basel Convention hazardous and other wastes that meet 
domestic exclusions under the definition of solid waste would become 
subject to their exclusions upon entry into the legal jurisdiction of 
the United States; however, U.S. importers of such excluded materials 
may be required to comply with certain Basel Convention requirements if 
necessary for the U.S. to meet its Basel obligations and/or if the 
exporting Basel Party requires it. For example, the Basel Convention 
requires that, ``* * * each person who takes charge of a transboundary 
movement of hazardous wastes or other wastes, sign the movement 
document upon delivery or receipt of the wastes in question.'' (Basel 
Convention Article 6, paragraph 9). Thus, the U.S. importer, 
transporter(s) and receiving facility would be required to undertake 
this responsibility for the excluded material when it is imported into 
the United States.

B. Superfund

    A primary purpose of today's proposed rule is to encourage 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 
potentially may be exempted from liability under the Comprehensive 
Environmental Response, Compensation and Liability Act (CERCLA). CERCLA 
section 9627. Today's proposed rule does not change the universe of 
recycling activities that could be exempted from CERCLA liability 
pursuant to CERCLA section 127. Today's proposed rule only changes the 
regulatory definition of solid waste for purposes of implementing the 
RCRA Subtitle C regulatory requirements. The proposed 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.

VI. State Authority

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 (and does not delegate) authority under 
sections 3007, 3008(h), 3013 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 also 40 CFR 271.1). Therefore, authorized States may, but 
are not required to, adopt Federal regulations, both HSWA and non-HWSA, 
that are considered less stringent than previous Federal regulations.

B. Effect on State Authorization

    Today's proposed rule is less stringent than the current federal 
program. Because states are not required to adopt less stringent 
regulations, they do not have to adopt the exclusions being proposed, 
although EPA encourages them to do so. If a state's standards for the 
materials discussed here are less stringent than those in today's 
proposed rule, the state will need to amend its regulations to make 
them equivalent to today's standards and pursue authorization.

C. Interstate Transport

    Because some states may choose not to seek authorization for 
today's proposed rulemaking, there will probably be cases where the 
materials in question will be transported through states with different 
regulations governing these wastes.
    First, a waste which is subject to an exclusion from the definition 
of solid waste regulations may be sent to a state, or through a state, 
where it is subject to the full hazardous waste regulations. In this 
scenario, for the portion of the trip through the originating state, 
and any other states where the waste is excluded, neither a hazardous 
waste transporter with an EPA identification number per 40 CFR 263.11 
nor a manifest would be required. However, for the portion of the trip 
through the receiving state, and any other states that do not consider 
the waste to be excluded, the transporter must have a manifest, and 
must move the waste in compliance with 40 CFR part 263. In order for 
the final transporter and the receiving facility to fulfill the 
requirements concerning the manifest (40 CFR 263.20, 263.21, 263.22, 
264.71, 264.72, 264.76 or 265.71, 265.72, and 265.76), the initiating 
facility should complete a manifest and forward it to the first 
transporter to travel in a state where the waste is not excluded. The 
receiving facility must then sign the manifest and send a copy to the 
initiating facility. EPA recommends that the initiating facility note 
in block 15 of the manifest (Special Handling Instructions and 
Additional

[[Page 61591]]

Information) each state where the wastes are not covered by an 
exclusion.
    Second, a hazardous waste generated in a state which does not 
provide an exclusion for the waste may be sent to a state where it is 
excluded. In this scenario, the waste must be moved by a hazardous 
waste transporter while the waste is in the generator's state or any 
other states where it is not excluded. The initiating facility would 
complete a manifest and give copies to the transporter as required 
under 40 CFR 262.23(a). Transportation within the receiving state and 
any other states that exclude the waste would not require a manifest 
and need not be transported by a hazardous waste transporter. However, 
it is the initiating facility's responsibility to ensure that the 
manifest is forwarded to the receiving facility by any non-hazardous 
waste transporter and sent back to the initiating facility by the 
receiving facility (see 40 CFR 262.23 and 262.42).
    Third, a waste may be transported across a state in which it is 
subject to the full hazardous waste regulations although other portions 
of the trip may be from, through, and to states in which it is 
excluded. Transport through the State must be conducted by a hazardous 
waste transporter and must be accompanied by a manifest. In order for 
the transporter to fulfill its requirements concerning the manifest 
(subpart B of part 263), the initiating facility must complete a 
manifest as required under the manifest procedures and forward it to 
the first transporter to travel in a state where the waste is not 
excluded. The transporter must deliver the manifest to, and obtain the 
signature of, either the next transporter or the receiving facility.
    As more states streamline their regulatory requirements for these 
wastes, the complexity of interstate transport will be reduced.

VII. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

    Under Executive Order 12866 (58 FR 51735), the Agency must 
determine whether this regulatory action is ``significant'' and 
therefore subject to formal review by the Office of Management and 
Budget (OMB) and to the requirements of the Executive Order, which 
include assessing the costs and benefits anticipated as a result of the 
proposed regulatory action. The Order defines ``significant regulatory 
action'' as one that is likely to result in a rule that may: (1) Have 
an annual effect on the economy of $100 million or more or adversely 
affect in a material way the economy, a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or state, local, or tribal governments or communities; (2) 
create a serious inconsistency or otherwise interfere with an action 
taken or planned by another agency; (3) materially alter the budgetary 
impact of entitlements, grants, user fees, or loan programs or the 
rights and obligations of recipients thereof; or (4) raise novel legal 
or policy issues arising out of legal mandates, the President's 
priorities, or the principles set forth in the Executive Order. 
Pursuant to the terms of Executive Order 12866, the Agency has 
determined that today's proposed rule is a significant regulatory 
action because this proposed rule may have an annual effect on the 
economy of $100 million or more. As such, this action was submitted to 
OMB for review. Changes made in response to OMB suggestions or 
recommendations are documented in the docket to today's proposal.
    To estimate the cost savings, incremental costs, economic impacts 
and benefits from this rule to affected regulated entities, we 
completed an economic analyses for this rule. Copies of these analyses 
(entitled ``Economic Assessment of the Association of Battery Recyclers 
Proposed Rule'') have been placed in the RCRA docket for public review. 
The Agency solicits comment on the methodology and results from the 
analysis as well as any data that the public feels would be useful in a 
revised analysis.
1. Methodology
    To estimate the cost savings, incremental costs, economic impacts 
and benefits of this rule, the Agency estimated both the affected 
volume of hazardous secondary materials and affected entities. The 
Agency has evaluated a baseline (pre-regulatory) scenario based on 
prior management practice in the 1997 and 1999 Biennial Reporting 
System database. The Agency identified on-site recycling or recycling 
that occurred offsite between facilities with the same 4 digit SIC 
code.\17\ Entities that reclaimed hazardous wastes in 1997 but 
abandoned (e.g., landfilled or incinerated) in 1999 are modeled to 
abandon their waste in the 1999 baseline and reclaim post-rule. 
Entities that reclaim in the 1999 baseline are modeled to continue 
reclaiming at lower costs. EPA has also evaluated regulated entities 
that recycled their waste off-site at facilities outside of their 
industry, generally commercially established hazardous waste treatment 
facilities. Finally, the Agency has evaluated entities that have land 
disposed of wastes that may be technically and economically recycleable 
under today's proposal.
---------------------------------------------------------------------------

    \17\ Note: The Standard Industrial Classification (SIC) system 
was the predecessor to the North American Industrial Classification 
System (NAICS) that the Agency is using to define industry today. 
Because only the SIC code as a data element was reported in the 1997 
and 1999 BRS, EPA is using 4 digit SIC codes as a proxy for the 4 
digit NAICS code with the exception of the definitions of petroleum 
and mineral processing which remain as previously described and are 
discussed above in this proposal.
---------------------------------------------------------------------------

    EPA has estimated incremental costs and costs savings for affected 
entities through comparing hazardous waste management costs in the 1999 
baseline (whether recycled or abandoned) with the cost of reclaiming 
these secondary materials as excluded from RCRA jurisdiction. To do 
this, the Agency examined two options as previously described above as 
Co-Proposal Option  1 and Co-Proposal Option  2. 
Option 1 provides that hazardous secondary materials that are recycled 
within the same generating industry are not solid wastes under RCRA 
irrespective of whether the recycling facility also receives wastes 
from other industries. By contrast, Option 2 limits the scope of the 
exclusion to facilities that solely recycle hazardous secondary 
materials from within the same generating industry and do not receive 
waste from other industries.
    The benefits from today's proposed rulemaking are presented 
qualitatively. EPA solicits comment on the need and means to evaluate 
more quantitative benefits from today's rule.
2. Results
a. Volume
    The estimated volume of secondary materials affected by this 
rulemaking for Option 1 are 1570 thousand tons. Of this total 1506 
thousand tons of material are recycled onsite and 64 thousand tons of 
material recycled offsite. This volume of material is generated by 1749 
affected plants. For Option 2 the estimated volume is 1534 thousand 
tons. Because it is possible for the affected volume of hazardous waste 
to be either higher or lower than the estimated volume, EPA notes that 
the estimated cost savings and impacts to affected entities could be 
greater or smaller as well. The Agency solicits comment on how it 
should adjust its methodology to account for this uncertainty and 
whether it would be more appropriate to use a range than this value.
b. Cost/Economic Impact
    For Option 1, EPA has estimated the average annual cost savings 
from this

[[Page 61592]]

rulemaking at $178 million. For Option 2, EPA has estimated this amount 
at $172 million. These cost savings for both those who are modeled to 
switch to recycling and those who currently recycle either on-site or 
within the same industry comes from reduced administrative costs, 
transportation costs, disposal/management costs, state hazardous waste 
taxes, contingency planning costs and increased salvage revenue (for 
entities that shift from disposal to recycling). The Agency notes that 
the cost saving results are relatively sensitive (i.e., change with) to 
the proportion of entities and volumes that are modeled to shift from 
disposal to recycling. In particular, the estimated cost savings in 
this rulemaking for entities that shift from treatment and disposal to 
recycling are much higher on a per ton basis due to the disposal cost 
avoided by recycling and the salvage revenue of the reclaimed product. 
Salvage revenue is the market price of the reclaimed material less the 
cost of recycling it. The Agency also notes that it has only been able 
to evaluate a portion of those entities in the Biennial Reporting 
Systems 1997 and 1999 database who potentially may elect to shift from 
disposal to recycling. And although there is uncertainty inherent in 
estimating these cost savings for both entities that are modeled to 
recycle pre-rule and post-rule, as well as those who are modeled to 
shift from disposal to recycling, the Agency notes that the potential 
magnitude of this uncertainty is greater in those who are modeled to 
shift from disposal to recycling both because the cost savings are more 
sensitive to these volumes and because the coverage of these types of 
entities is less complete than it is for those who currently recycle. 
EPA solicits comment on additional methodologies, sources of data or 
other information that would help to minimize this uncertainty in 
prospective analysis.
    To estimate the economic impact of this proposed rule, the Agency 
evaluated the cost savings or incremental costs as a percentage of firm 
sales. In virtually all cases, economic impacts are cost savings and 
are less than one percent of firm sales. The average cost savings for 
an affected entity that either recycles onsite or within the same 
industry in the 1999 BRS or did so in the 1997 and is projected to 
shift back to recycling post-rule from this proposal for both Options 
ranges from $4 thousand to $150 thousand annually.
c. Benefits
    EPA has evaluated the qualitative benefits and to a lesser extent, 
the quantitative benefits of the proposed revisions to the definition 
of solid waste. Some of the benefits resulting from today's rule 
include conservation of landfill capacity, increase in resource 
efficiency, growth of a recycling infrastructure and development of 
innovative technologies for affected secondary materials. EPA estimates 
that approximately 425 thousand tons or over 460 thousand cubic feet of 
secondary materials would be redirected away from landfills towards 
recycling under the Agency's proposal today. In addition, as mentioned 
above, the use of secondary materials generated onsite or within the 
same industry benefits the manufacturer by mitigating the need to 
purchase expensive virgin feed materials. This rule will facilitate the 
growth and development of the innovative recycling technologies in the 
United States by reducing regulatory barriers to new technologies 
becoming established.
    The Agency acknowledges that some 1500 thousand tons of hazardous 
secondary materials would be no longer subject to regulation as 
hazardous waste under subtitle C of RCRA under this proposal. As part 
of today's proposal, EPA has not evaluated any potential for changes 
resulting in either higher or lower releases to the environment of 
hazardous constituents from different handling methods for affected 
secondary materials. The Agency notes that most hazardous waste that is 
currently recycled is stored in tanks, containers or buildings prior to 
the reclamation process. And this practice is likely to continue post-
rule both because most affected entities have already purchased these 
storage units and as a means of avoiding legal liability for releases 
to groundwater from land based units (materials excluded from RCRA 
subtitle C regulation if recycled under this proposal would still be 
considered hazardous wastes if released to the environment and then 
abandoned). Also, residuals from excluded recycling processes would 
still be considered hazardous wastes if they exhibit a hazardous 
characteristic and are discarded.\18\ However, residuals from formerly 
listed hazardous wastes would not be considered hazardous wastes under 
the derived-from rule if recycled under this proposal. In such cases, 
these residuals could be land disposed in units other than hazardous 
waste landfills. The Agency has not evaluated the potential for such 
management of these materials to result in a change in releases to the 
environment.
---------------------------------------------------------------------------

    \18\ Note, characteristic sludges and byproducts from recycling 
processes that are themselves recycled are not solid wastes or 
hazardous wastes currently (40 CFR 261.2(c)(3)) and would not be 
under today's proposal.
---------------------------------------------------------------------------

B. Paperwork Reduction Act

    The information collection requirements in this proposed 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. An 
Information Collection Request (ICR) document has been prepared by EPA 
(ICR No. 2106.01) and a copy may be obtained from Susan Auby by mail at 
U.S. Environmental Protection Agency, Collection Strategies Division 
(Mail Code 2822), 1200 Pennsylvania Avenue, NW., Washington, DC 20460-
0001, by e-mail at [email protected], or by calling (202) 260-
4901. A copy may also be downloaded off the internet at http://www.epa.gov/icr.
    Under Section 3001 of RCRA, Congress directed EPA to promulgate 
regulations identifying the characteristics of hazardous waste and 
listing particular hazardous wastes. The proposed exclusion, when 
finalized, will be self-implementing. Notification of a facility's 
basis for claiming the exclusion would allow authorized States or EPA 
Regions to more effectively render assistance to recyclers wishing to 
ensure that their operations are within the exclusion. In addition, 
persons claiming to be excluded from hazardous waste regulation because 
they are engaged in recycling must be able to demonstrate that the 
recycling is legitimate. These demonstration criteria are comparable 
to, if not more streamlined than, the existing guidance. Following are 
the affected ICRs, along with a brief description of relevant 
assumptions:
    Manifest ICR (EPA ICR Number 801): All claimants are expected to be 
relieved of manifesting their excluded waste under the proposal. O&M 
costs are associated with postage for sending and returning copies of 
the manifest forms.
    Generator Standards ICR (EPA ICR Number 820): Large quantity 
generators (LQGs) generating excluded waste under 40 CFR 261.2(g) are 
expected to become small quantity generators (SQGs) under the rule, 
i.e, their excluded waste will not count toward their generator status 
determinations. SQGs are subject to less burdensome paperwork 
requirements than LQGs. O&M costs are associated with postage for 
sending various documents to EPA.

[[Page 61593]]

    Biennial Report ICR (EPA ICR Number 976): Claimants are expected to 
be relieved of the need to prepare a Waste Generation and Management 
(GM) Form for their excluded materials. Destination facilities will be 
relieved of the need to prepare a Waste Received from Off-Site (WR) 
Form. O&M costs are associated with maintaining copies of GM and WR 
Forms.
    Specific Units ICR (EPA ICR Number1572): EPA assumes that recyclers 
with a storage permit will be relieved of the need to comply with their 
permit conditions for their storage units, if they receive and recycle 
only hazardous materials generated, reclaimed, and legitimately reused 
within their same four digit NAICS code. Based on 1999 BRS data, EPA 
estimates that each year approximately 12 recyclers would be relieved 
of these requirements.
    Part B ICR (EPA ICR Number 1573): EPA assumes that recyclers with a 
storage permit will be relieved of the need for a permit under the 
rule, if they receive and recycle only hazardous materials generated, 
reclaimed, and legitimately reused within their same four digit NAICS 
code. Based on 1999 BRS data, EPA estimates that each year 
approximately 12 recyclers would be relieved of the requirement to 
renew their permit.
    EPA estimates the total annual burden to respondents to be 
approximately 226 hours and $7,018. The total bottom-line burden to 
respondents over three years is estimated to be approximately 678 hours 
and $21,054. EPA estimates the total annual aggregate burden savings to 
respondents to be approximately 15,985 hours and $531,169. The total 
bottom-line burden savings over three years is estimated to be 
approximately 47,955 hours and $1,593,507. EPA estimates the total 
annual burden to the Agency under the proposed rule to be about 260 
hours and $10,807. The total bottom-line burden to the Agency over 
three years is estimated to be about 780 hours and $32,421.
    EPA believes the proposed notification requirement is needed to 
ensure safe and compliant management of waste. Because the exclusion at 
40 CFR 261.2(g) is self-implementing, EPA believes that submittal of 
the notification is necessary to inform the regulatory agency of the 
exclusion claim and the claimant's excluded waste. As shown in Exhibit 
3 of ICR No. 2106.01, EPA believes the notification requirement would 
result in only a minor burden to respondents. This burden would be 
greatly offset by the expected savings for no longer complying with the 
existing RCRA paperwork requirements for the excluded waste. The public 
reporting burden from the notification requirement is estimated to be 
about 30 minutes per respondent. This time includes reading the rule 
and preparing/submitting the one-time notification. Burden means the 
total time, effort, or financial resources expended by persons to 
generate, maintain, retain, or disclose or provide information to or 
for a Federal agency. This includes the time needed to review 
instructions; develop, acquire, install, and utilize technology and 
systems for the purposes of collecting, validating, and verifying 
information, processing and maintaining information, and disclosing and 
providing information; adjust the existing ways to comply with any 
previously applicable instructions and requirements; train personnel to 
be able to respond to a collection of information; search data sources; 
complete and review the collection of information; and transmit or 
otherwise disclose the information.
    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 are listed in 40 CFR part 9 and 48 CFR chapter 15.
    Comments are requested on the Agency's need for this information, 
the accuracy of the provided burden estimates, and any suggested 
methods for minimizing respondent burden, including through the use of 
automated collection techniques. Send comments on the ICR to the 
Director, Collection Strategies Division; U.S. Environmental Protection 
Agency (2823); 1200 Pennsylvania Avenue NW., Washington, DC 20460-0001; 
and to the Office of Information and Regulatory Affairs, Office of 
Management and Budget, 725 17th St. NW., Washington, DC 20503, marked 
``Attention: Desk Officer for EPA.'' Include the ICR number in any 
correspondence. Since OMB is required to make a decision concerning the 
ICR between 30 and 60 days after October 28, 2003, a comment to OMB is 
best assured of having its full effect if OMB receives it by November 
28, 2003. The final rule will respond to any OMB or public comments on 
the information collection requirements contained in this proposal.

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 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 that has 
fewer than 1000 or 100 employees per firm depending upon the SIC code 
the firm primarily is classified; (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.
    The economic impact analysis conducted for today's proposal 
indicates that these revisions to the definition of solid waste would 
generally result in savings to affected entities compared to baseline 
requirements. The rule is not expected to result in a net cost to any 
affected entity. Thus, adverse impacts are not anticipated.
    After considering the economic impacts of today's proposed rule on 
small entities, I certify that this action will not have a significant 
economic impact on a substantial number of small entities.

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 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 the proposed and final rules with ``federal mandates'' 
that may result in expenditures by State, local, and tribal 
governments, in the aggregate, or to the private sector, of $100 
million or more in any one year.
    Before promulgating a 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

[[Page 61594]]

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, enable 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.
    The Agency's analysis of compliance with the Unfunded Mandates 
Reform Act (UMRA) of 1995 found that today's proposed rule imposes no 
enforceable duty on any State, local or tribal government or the 
private sector. This proposed rule contains no Federal mandates (under 
the regulatory provisions of Title II of the UMRA) for State, local, or 
tribal governments or the private sector. In addition, EPA has 
determined that this rule contains no regulatory requirements that 
might significantly or uniquely affect small governments. The Act 
generally excludes from the definition of ``federal intergovernmental 
mandate'' (in sections 202, 203, and 205) duties that arise from 
participation in a voluntary Federal program. Today's proposed rule is 
voluntary, and because it is less stringent than the current 
regulations, state governments are not required to adopt the proposed 
changes. The UMRA generally excludes from the definition of ``Federal 
intergovernmental mandate'' duties that arise from participation in a 
voluntary Federal program. The UMRA also excludes from the definition 
of ``Federal private sector mandate'' duties that arise from 
participation in a voluntary Federal program. Therefore we have 
determined that today's proposal is not subject to the requirements of 
sections 202 and 205 of UMRA.

E. Executive Order 13132: Federalism

    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'' is 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 
proposed 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.

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 6, 2000), 
requires EPA to develop an accountable process to ensure ``meaningful 
and timely input by tribal officials in the development of regulatory 
policies that have tribal implications.'' ``Policies that have tribal 
implications'' is defined in the Executive Order to include regulations 
that have ``substantial direct effects on one or more Indian tribes, on 
the relationship between the Federal Government and the Indian tribes, 
or on the distribution of power and responsibilities between the 
Federal government and Indian tribes. This proposed rule does not have 
tribal implications. It will not have substantial direct effects on 
tribal governments, on the relationship between the Federal government 
and Indian tribes, or on the distribution of power and responsibilities 
between the Federal government and Indian tribes, as specified in 
Executive Order 13175.

G. Executive Order 13045: Protection of Children From Environmental 
Health & Safety Risks

    Executive Order 13045: ``Protection of Children from Environmental 
health Risks and Safety Risks'' (62 FR 19885, April 23, 1997) applies 
to any rule that: (1) is determined to be ``economically significant'' 
as defined under Executive Order 12866, and (2) concerns an 
environmental health or safety risk that EPA has reason to believe may 
have a disproportionate effect on children. If the regulatory action 
meets both criteria, the Agency must evaluate the environmental health 
or safety effects of the planned rule on children, and explain why the 
planned regulation is preferable to other potentially effective and 
reasonably feasible alternatives considered by the Agency.
    EPA interprets Executive Order 13045 as applying only to those 
regulatory actions that are based on health or safety risks, such that 
the analysis required under section 5-501 of the Order has the 
potential to influence the regulation. This proposed rule defines some 
of the limits of EPA's regulatory jurisdiction under Subtitle C of 
RCRA. It is not based on any analysis of health or safety risks. EPA 
believes that it is not subject to Executive Order 13045.

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

    This 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 FR 
28355, May 22, 2001) because it is not likely to have a significant 
adverse effect on the supply, distribution, or use of energy. Today's 
proposed rule excludes secondary materials reclaimed within the 
generating industry from RCRA Subtitle C jurisdiction. By encouraging 
reuse and recycling, the rule may save energy costs associated with 
manufacturing new materials. It will not cause reductions in supply or 
production of oil, fuel, coal, or electricity. Nor will it result in 
increased energy prices, increased cost of energy distribution, or an 
increased dependence on foreign supplies of energy.

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 104-113, section 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. The NTTAA directs EPA 
to provide Congress, through OMB, explanations when the Agency decides 
not to use available and applicable voluntary consensus standards. This 
rule does not establish technical standards. Therefore, EPA did not 
consider the use of any voluntary consensus standards.

[[Page 61595]]

List of Subjects

40 CFR Part 260

    Administrative practices and procedure, Confidential business 
information, Hazardous waste.

40 CFR Part 261

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

    Dated: October 20, 2003.
Marianne Lamont Horinko,
Acting Administrator.

    For the reasons set forth in the preamble, title 40, chapter I of 
the Code of Federal Regulations is proposed to be amended as follows:

PART 260--HAZARDOUS WASTE MANAGEMENT SYSTEM: GENERAL

Subpart C--[Amended]

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

    Authority: 42 U.S.C. 6905, 6912(a), 6921-6927, 6930, 6934, 6935, 
6937, 6938, 6939, and 6974.

    2. Section 260.30 is amended by removing and reserving paragraph 
(b), and by revising paragraph (c) to read as follows:.


Sec.  260.30  Variances from classification as solid wastes.

* * * * *
    (c) Materials that have been reclaimed but must be reclaimed 
further before the materials are completely recovered. If the materials 
are reclaimed as part of a continuous process within the generating 
industry, they are subject to the exclusion in Sec.  261.2(g) rather 
than the standards and criteria listed in Sec.  261.31(c).


Sec.  260.31  [Amended]

    3. Section 260.31 is amended by removing and reserving paragraph 
(b).

PART 261--IDENTIFICATION AND LISTING OF HAZARDOUS WASTE

Subpart A--[Amended]

    4. 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.

    5. Section 261.2 is amended by:
    a. Revising the heading for Column 3 of Table 1 in paragraph (c)(4) 
to read:
    Reclamation (261.2(c)(3)), except for materials marked with an 
``*'' that are generated and reclaimed in a continuous process within 
the generating industry, as provided in Sec.  261.2(g).
    b. Revising paragraph (c)(3).
    c. Removing paragraph (e)(1)(iii).
    d. Adding paragraphs (g) and (h).
    The revisions and additions read as follows:


Sec.  261.2  Definition of solid waste.

* * * * *
    (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 except when generated and 
reclaimed in a continuous process within the same industry, as provided 
in paragraph (g) of this section.
* * * * *
    (g) Hazardous secondary materials generated and reclaimed in a 
continuous process within the same industry. (1) Spent materials, 
listed sludges and listed by-products that are identified in paragraph 
(c)(3) of this section and accompanying Table 1 of this section are not 
discarded, and therefore are not solid wastes, if they are generated 
and reclaimed in a continuous process within the same industry. This 
exclusion does not apply, however, to the following materials:
    (i) Materials that are inherently waste-like, as provided in 
paragraph (d) of this section.
    (ii) Materials used in a manner constituting disposal, or used to 
produce products that are applied to the land, as provided in paragraph 
(c)(1) of this section.
    (iii) Materials burned for energy recovery, used to produce a fuel, 
or contained in fuels, as provided in paragraph (c)(2) of this section.

Option 1 for Paragraph (g)(2)

    (2) For the purposes of this paragraph:
    (i) Both the generation and reclamation of the hazardous secondary 
materials must occur within a single industry listed in Appendix X of 
this Subpart. Such reclamation may involve one or more processing 
steps, provided that all steps take place within the same industry in 
which the secondary material was generated, and that such reclamation 
produces a product or ingredient that is used or reused without further 
reclamation. Reclamation steps need not take place at the site where 
the material was generated, provided such reclamation activities take 
place within the generating industry.
    (ii) If such reclamation produces any materials that are sent to a 
different industry for further reclamation, those materials will not be 
eligible for the exclusion in paragraph (g)(1) of this section. This 
would not, however, affect the exclusion for other materials that are 
generated and reclaimed within the same industry.
    (iii) The guidelines and industry classifications specified in 
Appendix X of this Part must be used to identify the appropriate 
industry classification of each establishment that generates or 
reclaims materials excluded under this paragraph (g). An 
``establishment'' for the purpose of this paragraph is an economic 
unit, generally at a single physical location, where business is 
conducted or where services or industrial operations are performed. An 
establishment is the smallest such unit for which records provide 
information on the cost of resources, materials, labor and capital 
employed to produce the units of output.
    (iv) Facilities comprised solely of establishments engaged in waste 
management services are in industries not eligible for this exclusion. 
This includes facilities with establishments classified under NAICS 
Codes 5621, 5622, or 5629, and any other facility that reclaims 
secondary materials received from off-site generators, and that does 
not produce any products made from non-secondary materials. Hazardous 
secondary materials sent to these facilities are not considered to be 
generated and reclaimed in a continuous process within the same 
industry.
    (v) If, using the guidelines in Appendix X of this Part, it is not 
clear whether a reclamation unit, process, or activity is part of the 
same industry in which the material was generated, then the generation 
and reclamation of these materials will be presumed to occur within the 
same industry, provided that the reclamation unit, process, or activity 
is located on-site (as defined in Sec.  260.10) with respect to the 
process that generated the material.

Option 2 for Paragraph (g)(2)

    (2) For the purposes of this paragraph:
    (i) Both the generation and reclamation of the hazardous secondary 
materials must occur within a single industry listed in Appendix X of 
this Subpart. Such reclamation may involve one or more processing 
steps, provided that all steps take place within the same industry in 
which the secondary material was generated, and that such reclamation 
produces a product or ingredient that is used or reused without further 
reclamation. Reclamation steps need not take place at the site where 
the material was generated, provided such reclamation activities take 
place within the generating industry.

[[Page 61596]]

    (ii) If such reclamation produces any materials that are sent to a 
different industry for further reclamation, those materials will not be 
eligible for the exclusion in paragraph (g)(1). This would not, 
however, affect the exclusion for other materials that are generated 
and reclaimed within the same industry.
    (iii) The guidelines and industry classifications specified in 
Appendix X of this Part must be used to identify the appropriate 
industry classification of each establishment that generates or 
reclaims materials excluded under this paragraph (g). An 
``establishment'' for the purpose of this paragraph is an economic 
unit, generally at a single physical location, where business is 
conducted or where services or industrial operations are performed. An 
establishment is the smallest such unit for which records provide 
information on the cost of resources, materials, labor and capital 
employed to produce the units of output.
    (iv) Facilities comprised solely of establishments engaged in waste 
management services are in industries not eligible for this exclusion. 
This includes facilities with establishments classified under NAICS 
Codes 5621, 5622, or 5629, and any other facility that reclaims 
secondary materials received from off-site generators, and that does 
not produce any products made from non-secondary materials. Hazardous 
secondary materials sent to these facilities are not considered to be 
generated and reclaimed in a continuous process within the same 
industry.
    (v) If, using the guidelines in Appendix X of this Part, it is not 
clear whether a reclamation unit, process, or activity is part of the 
same industry in which the material was generated, then the generation 
and reclamation of these materials will be presumed to occur within the 
same industry, provided that the reclamation unit, process, or activity 
is located on-site (as defined in Sec.  260.10) with respect to the 
process that generated the material.
    (vi) The exclusion provided under this paragraph for materials that 
are generated and reclaimed in a continuous process within the same 
industry does not apply if the reclamation facility also recycles 
hazardous waste from a different industry.
    (3) For the purpose of this paragraph, materials are generated and 
reclaimed in a continuous process if:
    (i) The materials are not handled by any entity or facility outside 
of the generating industry, except for a transporter; and
    (ii) The materials are not speculatively accumulated, as defined in 
Sec.  261.1(c)(8).
    (4) Generators of secondary materials that have previously been 
subject to regulation as hazardous wastes, but which will be excluded 
from regulation under this paragraph, must send a one-time notification 
to the Regional Administrator. The notification must identify the name, 
address, and EPA ID number (if applicable) of the generator facility; 
the name and phone number of a contact person; the type of material 
that will be excluded; and the industry that generated the material, as 
classified according to Appendix X of this Part.
    (h) Legitimate Recycling. Materials that are not legitimately 
recycled are discarded and are solid wastes. Persons who recycle 
hazardous wastes, as well as persons claiming to be excluded from 
hazardous waste regulation under Sec.  261.2 or Sec.  261.4(a) because 
they are engaged in recycling, must be able to demonstrate that the 
recycling is legitimate. Moreover, hazardous wastes must be 
legitimately recycled to qualify for special management standards under 
40 CFR 261.6 and 40 CFR Part 266. Determinations as to the legitimacy 
of specific recycling activities must be made by considering whether:
    (1) The secondary material to be recycled is managed as a valuable 
commodity. Where there is an analogous raw material, the secondary 
material should be managed in a manner consistent with the management 
of the raw material. Where there is no analogous raw material, the 
secondary material should be managed to minimize the potential for 
releases to the environment.
    (2) The secondary material provides a useful contribution to the 
recycling process or to a product of the recycling process and 
evaluating this criterion should include consideration of the economics 
of the recycling transaction. The recycling process itself may involve 
reclamation, or direct reuse without reclamation.
    (3) The recycling process yields a valuable product or intermediate 
that is:
    (i) Sold to a third party; or
    (ii) Used by the recycler or the generator as an effective 
substitute for a commercial product or as an ingredient in an 
industrial process.
    (4) The product of the recycling process:
    (i) Does not contain significant amounts of hazardous constituents 
that are not found in analogous products; and
    (ii) Does not contain significantly elevated levels of any 
hazardous constituents that are found in analogous products; and
    (iii) Does not exhibit a hazardous characteristic that analogous 
products do not exhibit.
    6. Section 261.4 is amended by removing and reserving paragraphs 
(a)(6) and (a)(8), and by revising paragraphs (a)(7), (a)(10), (a)(11), 
(a)(13), (a)(14), (a)(17) introductory text and (a)(19) and by adding 
paragraph (a)(9)(iii)(F) to read as follows:


Sec.  261.4  Exclusions.

    (a) * * *
    (6) [Reserved]
    (7) Spent sulfuric acid used to produce virgin sulfuric acid, 
unless it is accumulated speculatively as defined in Sec.  261.1(c). 
Spent sulfuric acid that is reclaimed to produce virgin sulfuric acid 
in a continuous process within the generating industry is subject to 
the exclusion in Sec.  261.2(g), rather than this paragraph.
    (8) [Reserved]
    (9) * * *
    (iii) * * *
    (F) If the products of this recycling practice are not used in a 
manner constituting disposal, the spent wood preserving solutions are 
subject to the exclusion in Sec.  261.2(g), rather than this paragraph, 
provided the wood preserving solutions are generated and reclaimed in a 
continuous process within the same industry.
    (10) EPA Hazardous Waste Nos. K060, K087, K141, K142, K143, K144, 
K145, K147, and K148, and any wastes from the coke by-product processes 
that are hazardous only because they exhibit the Toxicity 
Characteristic (TC) specified in Sec.  261.24 when, subsequent to 
generation, these materials are recycled to coke ovens, to the tar 
recovery process as a feedstock to produce coal tar, or mixed with coal 
tar prior to the coal tar's sale or refining. This exclusion is 
conditioned on there being no land disposal of the wastes from the 
point they are generated to the point they are recycled to coke ovens 
or tar recovery or refining processes, or mixed with coal tar. If the 
wastes described above in this paragraph are reclaimed and recycled in 
a continuous process within the generating industry and are not burned 
for energy recovery, they are subject to the exclusion in Sec.  
261.2(g), rather than this paragraph.
    (11) Nonwastewater splash condenser dross residue from the 
treatment of K061 in high temperature metals recovery units, provided 
it is shipped in drums (if shipped) and not land disposed before 
recovery. If the residue is reclaimed as part of a continuous process 
within the generating industry,

[[Page 61597]]

it is subject to the exclusion in Sec.  261.2(g), rather than this 
paragraph.
* * * * *
    (13) Excluded scrap metal (processed scrap metal, unprocessed home 
scrap metal, and unprocessed prompt scrap metal) being recycled. If the 
scrap metal is recycled in a continuous process within the generating 
industry, it is subject to the exclusion in Sec.  261.2(g), rather than 
this paragraph.
    (14) Shredded circuit boards being recycled provided that they are 
stored in containers sufficient to prevent a release to the environment 
prior to recovery; and free of mercury switches, mercury relays and 
nickel-cadmium or lithium batteries. Shredded circuit boards that are 
reclaimed in a continuous process within the generating industry are 
subject to the exclusion in Sec.  261.2(g), rather than this paragraph.
* * * * *
    (17) Spent materials (as defined in Sec.  261.1) (other than 
hazardous wastes listed in subpart D of this part) generated within the 
primary mineral processing industry from which minerals, acids, 
cyanide, water, or other values are recovered by beneficiation, 
provided that:
* * * * *
    (19) Spent caustic solutions from petroleum refining liquid 
treating processes used as a feedstock to produce cresylic or 
naphthenic acid unless the material is placed on the land, or 
accumulated speculatively as defined in Sec.  261.1(c). Such spent 
caustic solutions that are reclaimed in a continuous process within the 
generating industry are subject to the exclusion in Sec.  261.2(g), 
rather than this paragraph.
* * * * *
    7. Part 261 is amended by adding new Appendix X, to read as 
follows:

Appendix X to Part 261--Industries for the Purpose of Sec.  261.2(g)

    (a) This Appendix defines ``industry'' for the purposes of Sec.  
261.2(g). It does not affect other industry definitions within 40 
CFR Parts 260 through 283.
    (b) Primary Mineral Processing Industry. For the purpose of this 
Appendix, an establishment falls within the primary mineral 
processing industry if it: (1) involves operations that follow 
beneficiation of an ore or mineral; (2) serves to remove the desired 
product from or enhance the characteristics of and ore or mineral or 
a beneficiated ore or mineral; (3) uses feedstock that is comprised 
of less than 50 percent scrap materials; (4) produces either a final 
or an intermediate to the final mineral product, and (5) does not 
combine the mineral product with another material that is not an ore 
or mineral, or beneficiated ore or mineral (e.g., alloying) and does 
not involve fabrication or other manufacturing activities.
    (c) Petroleum Refining Industry. This industry is defined as 
petroleum refining, exploration, production and bulk storage, and 
transportation incident thereto, as specified in 40 CFR 
261.4(a)(12).
    (d) All other industries are classified using the following 
categories; these classifications must be made in accordance with 
the reference document ``North American Industry Classification 
System'' or NAICS, effective January 1, 2002:

1111 Oilseed and Grain Farming
1112 Vegetable and Melon Farming
1113 Fruit and Tree Nut Farming
1114 Greenhouse, Nursery, and Floriculture Production
1119 Other Crop Farming
1121 Cattle Ranching and Farming
1122 Hog and Pig Farming
1123 Poultry and Egg Production
1124 Sheep and Goat Farming
1125 Animal Aquaculture
1129 Other Animal Production
1131 Timber Tract Operations
1133 Logging
1141 Fishing
1142 Hunting and Trapping
1151 Support Activities for Crop Production
1152 Support Activities for Animal Production
1153 Support Activities for Forestry
2111 Oil and Gas Extraction
2121 Coal Mining,
2122 Metal Ore Mining
2123 Nonmetallic Mineral Mining and Quarrying
2131 Support Activities for Mining
2211 Electric Power Generation, Transmission and Distribution
2212 Natural Gas Distribution
2213 Water, Sewage and Other Systems
2361 Residential Building Construction
2362 Nonresidential Building Construction
2371 Utility System Construction
2372 Land Subdivision
2379 Other Heavy and Civil Engineering Construction
2381 Foundation, Structure, and Building Exterior Contractors
2382 Building Equipment Contractors
2383 Building Finishing Contractors
2389 Other Specialty Trade Contractors
3111 Animal Food Manufacturing
3112 Grain and Oilseed Milling
3113 Sugar and Confectionery Product Manufacturing
3114 Fruit and Vegetable Preserving and Specialty Food Manufacturing
3115 Dairy Product Manufacturing
3116 Animal Slaughtering and Processing
3117 Seafood Product Preparation and Packaging
3118 Bakeries and Tortilla Manufacturing
3119 Other Food Manufacturing
3121 Beverage Manufacturing
3122 Tobacco Manufacturing
3131 Fiber, Yarn, and Thread Mills
3132 Fabric Mills
3133 Textile and Fabric Finishing and Fabric Coating Mills
3141 Textile Furnishings Mills
3149 Other Textile Product Mills
3151 Apparel Knitting Mills
3152 Cut and Sew Apparel Manufacturing
3159 Apparel Accessories and Other Apparel Manufacturing
3161 Leather and Hide Tanning and Finishing
3162 Footwear Manufacturing
3169 Other Leather and Allied Product Manufacturing
3211 Sawmills and Wood Preservation
3212 Veneer, Plywood, and Engineered Wood Product Manufacturing
3219 Other Wood Product Manufacturing
3221 Pulp, Paper, and Paperboard Mills
3222 Converted Paper Product Manufacturing
3231 Printing and Related Support Activities
3241 Petroleum and Coal Products Manufacturing \1\
---------------------------------------------------------------------------

    \1\ Although this industry classification may include 
establishments in the petroleum refining industry, note that as 
specified in subparagraph (c) of this Appendix, the petroleum 
refining industry for the purpose of the exclusion in Sec.  261.2(g) 
is defined at Sec.  261.4(a)(12).
---------------------------------------------------------------------------

3251 Basic Chemical Manufacturing
3252 Resin, Synthetic Rubber, and Artificial Synthetic Fibers and 
Filaments Manufacturing
3253 Pesticide, Fertilizer, and Other Agricultural Chemical 
Manufacturing
3254 Pharmaceutical and Medicine Manufacturing
3255 Paint, Coating, and Adhesive Manufacturing
3256 Soap, Cleaning Compound, and Toilet Preparation Manufacturing 
(except for third-party operations that reclaim dry cleaning fluids 
at sites that do not conduct dry-cleaning).
3259 Other Chemical Product and Preparation Manufacturing (except 
for third-party operations that reclaim degreasing solvents at sites 
that do not conduct degreasing operations).
3261 Plastics Product Manufacturing
3262 Rubber Product Manufacturing
3271 Clay Product and Refractory Manufacturing
3272 Glass and Glass Product, Manufacturing
3273 Cement and Concrete Product Manufacturing
3274 Lime and Gypsum Product Manufacturing
3279 Other Nonmetallic Mineral Product Manufacturing \2\
---------------------------------------------------------------------------

    \2\ Although this industry classification may include 
establishments in the mineral processing industry, note that for the 
purpose of the exclusion provided in Sec.  262.2(g), the mineral 
processing industry is defined in subparagraph (b) of this appendix.
---------------------------------------------------------------------------

3311 Iron and Steel Mills and Ferro alloy Manufacturing \2\
3312 Steel Product Manufacturing from Purchased Steel \2\
3313 Alumina and Aluminum Production and Processing \2\
3314 Nonferrous Metal (except Aluminum) Production and Processing 
\2\
3315 Foundries
3321 Forging and Stamping
3322 Cutlery and Handtool Manufacturing
3323 Architectural and Structural Metals Manufacturing
3324 Boiler, Tank, and Shipping Container Manufacturing
3325 Hardware Manufacturing

[[Page 61598]]

3326 Spring and Wire Product Manufacturing
3327 Machine Shops; Turned Product; and Screw, Nut, and Bolt 
Manufacturing
3328 Coating, Engraving, Heat Treating, and Allied Activities
3329 Other Fabricated Metal Product Manufacturing
3331 Agriculture, Construction, and Mining Machinery Manufacturing
3332 Industrial Machinery Manufacturing
3333 Commercial and Service Industry Machinery Manufacturing
3334 Ventilation, Heating, Air-Conditioning, and Commercial 
Refrigeration Equipment Manufacturing
3335 Metalworking Machinery Manufacturing
3336 Engine, Turbine, and Power Transmission Equipment Manufacturing
3339 Other General Purpose Machinery Manufacturing
3341 Computer and Peripheral Equipment Manufacturing
3342 Communications Equipment Manufacturing
3343 Audio and Video Equipment Manufacturing
3344 Semiconductor and Other Electronic Component Manufacturing
3345 Navigational, Measuring, Electromedical, and Control 
Instruments Manufacturing
3346 Manufacturing and Reproducing Magnetic and Optical Media
3351 Electric Lighting Equipment Manufacturing
3352 Household Appliance Manufacturing
3353 Electrical Equipment Manufacturing
3359 Other Electrical Equipment and Component Manufacturing
3361 Motor Vehicle Manufacturing
3362 Motor Vehicle Body and Trailer Manufacturing
3363 Motor Vehicle Parts Manufacturing
3364 Aerospace Product and Parts Manufacturing
3365 Railroad Rolling Stock Manufacturing
3366 Ship and Boat Building
3369 Other Transportation Equipment Manufacturing
3371 Household and Institutional Furniture and Kitchen Cabinet 
Manufacturing
3372 Office Furniture (including Fixtures) Manufacturing
3379 Other Furniture Related Product Manufacturing
3391 Medical Equipment and Supplies Manufacturing
3399 Other Miscellaneous Manufacturing
4231 Motor Vehicle and Motor Vehicle Parts and Supplies Merchant 
Wholesalers
4232 Furniture and Home Furnishing Merchant Wholesalers
4233 Lumber and Other Construction Materials Merchant Wholesalers
4234 Professional and Commercial Equipment and Supplies Merchant 
Wholesalers
4235 Metal and Mineral (except Petroleum) Merchant Wholesalers
4236 Electrical and Electronic Goods Merchant Wholesalers
4237 Hardware, and Plumbing and Heating Equipment and Supplies 
Merchant Wholesalers
4238 Machinery, Equipment, and Supplies Merchant Wholesalers
4239 Miscellaneous Durable Goods Merchant Wholesalers
4241 Paper and Paper Product Merchant Wholesalers
4242 Drugs and Druggists' Sundries Merchant Wholesalers
4243 Apparel, Piece Goods, and Notions Merchant Wholesalers
4244 Grocery and Related Product Wholesalers
4245 Farm Product Raw Material Merchant Wholesalers
4246 Chemical and Allied Products Merchant Wholesalers
4247 Petroleum and Petroleum Products Merchant Wholesalers
4248 Beer, Wine, and Distilled Alcoholic Beverage Merchant 
Wholesalers
4249 Miscellaneous Nondurable Goods Merchant Wholesalers
4251 Wholesale Electronic Markets and Agents and Brokers
4411 Automobile Dealers
4412 Other Motor Vehicle Dealers
4413 Automotive Parts, Accessories, and Tire Stores
4421 Furniture Stores
4422 Home Furnishings Stores
4431 Electronics and Appliance Stores
4441 Building Material and Supplies Dealers
4442 Lawn and Garden Equipment and Supplies Stores
4451 Grocery Stores
4452 Specialty Food Stores
4461 Health and Personal Care Stores
4471 Gasoline Stations
4481 Clothing Stores
4482 Shoe Stores
4483 Jewelry, Luggage, and Leather Goods Stores
4511 Sporting Goods, Hobby, and Musical Instrument Stores
4512 Book, Periodical, and Music Stores
4521 Department Stores
4529 Other General Merchandise Stores
4531 Florists
4532 Office Supplies, Stationery, and Gift Stores
4533 Used Merchandise Stores
4539 Other Miscellaneous Store Retailers
4541 Electronic Shopping and Mail-Order Houses
4542 Vending Machine Operators
4543 Direct Selling Establishments
4811 Scheduled Air Transportation
4812 Nonscheduled Air Transportation
4821 Rail Transportation
4831 Deep Sea, Coastal, and Great Lakes Water Transportation
4832 Inland Water Transportation
4841 General Freight Trucking
4842 Specialized Freight Trucking
4851 Urban Transit Systems
4852 Interurban and Rural Bus Transportation
4853 Taxi and Limousine Service
4854 School and Employee Bus Transportation
4855 Charter Bus Industry
4859 Other Transit and Ground Passenger Transportation
4861 Pipeline Transportation of Crude Oil
4862 Pipeline Transportation of Natural Gas
4869 Other Pipeline Transportation
4871 Scenic and Sightseeing Transportation, Land
4872 Scenic and Sightseeing Transportation, Water
4879 Scenic and Sightseeing Transportation, Other
4881 Support Activities for Air Transportation
4882 Support Activities for Rail Transportation
4883 Support Activities for Water Transportation
4884 Support Activities for Road Transportation
4885 Freight Transportation Arrangement
4889 Other Support Activities for Transportation
4911 Postal Service
4921 Couriers
4931 Warehousing and Storage
5111 Newspaper, Periodical, Book, and Directory Publishers
5112 Software Publishers
5121 Motion Picture and Video Industries
5122 Sound Recording Industries
5151 Radio and Television Broadcasting
5152 Cable and Other Subscription Programming
5161 Internet Publishing and Broadcasting
5171 Wired Telecommunications Carriers
5172 Wireless Telecommunications Carriers (except Satellite)
5173 Telecommunications Resellers
5174 Satellite Telecommunications
5175 Cable and Other Program Distribution
5179 Other Telecommunications
5181 Internet Service Providers and Web Search Portals
5182 Data Processing, Hosting, and Related Services
5191 Other Information Services
5211 Monetary Authorities--Central Bank
5221 Depository Credit Intermediation
5222 Nondepository Credit Intermediation
5223 Activities Related to Credit Intermediation
5231 Securities and Commodity Contracts Intermediation and Brokerage
5232 Securities and Commodity Exchanges
5239 Other Financial Investment Activities
5241 Insurance Carriers
5242 Agencies, Brokerages, and Other Insurance Related Activities
5251 Insurance and Employee Benefit Funds
5259 Other Investment Pools and Funds
5311 Lessors of Real Estate
5312 Offices of Real Estate Agents and Brokers
5313 Activities Related to Real Estate
5321 Automotive Equipment Rental and Leasing
5322 Consumer Goods Rental
5323 General Rental Centers
5324 Commercial and Industrial Machinery and Equipment Rental and 
Leasing
5331 Lessors of Nonfinancial Intangible Assets (except Copyrighted 
Works)
5411 Legal Services
5412 Accounting, Tax Preparation, Bookkeeping, and Payroll Services
5413 Architectural, Engineering, and Related Services
5414 Specialized Design Services
5415 Computer Systems Design and Related Services

[[Page 61599]]

5416 Management, Scientific, and Technical Consulting Services
5417 Scientific Research and Development Services
5418 Advertising and Related Services
5419 Other Professional, Scientific, and Technical Services
5511 Management of Companies and Enterprises
5611 Office Administrative Services
5612 Facilities Support Services
5613 Employment Services
5614 Business Support Services
5615 Travel Arrangement and Reservation Services
5616 Investigation and Security Services
5617 Services to Buildings and Dwellings
5619 Other Support Services

    Note: NAICS Category 562, Waste Management and Remediation 
Services is not included in appendix X.

5629 Remediation and Other Waste Management Services
6111 Elementary and Secondary Schools
6112 Junior Colleges
6113 Colleges, Universities, and Professional Schools
6114 Business Schools and Computer and Management Training
6115 Technical and Trade Schools
6116 Other Schools and Instruction
6117 Educational Support Services
6211 Offices of Physicians
6212 Offices of Dentists
6213 Offices of Other Health Practitioners
6215 Medical and Diagnostic Laboratories
6216 Home Health Care Services
6219 Other Ambulatory Health Care Services
6221 General Medical and Surgical Hospitals
6223 Specialty (except Psychiatric and Substance Abuse) Hospitals
6231 Nursing Care Facilities
6232 Residential Mental Retardation, Mental Health and Substance 
Abuse Facilities
6233 Community Care Facilities for the Elderly
6239 Other Residential Care Facilities
6241 Individual and Family Services
6242 Community Food and Housing, and Emergency and Other Relief 
Services
6243 Vocational Rehabilitation Services
6244 Child Day Care Services
7111 Performing Arts Companies
7112 Spectator Sports
7113 Promoters of Performing Arts, Sports, and Similar Events
7114 Agents and Managers for Artists, Athletes, Entertainers, and 
Other Public Figures
7115 Independent Artists, Writers, and Performers
7121 Museums, Historical Sites, and Similar Institutions
7131 Amusement Parks and Arcades
7132 Gambling Industries
7139 Other Amusement and Recreation Industries
7211 Traveler Accommodation
7212 RV (Recreational Vehicle) Parks and Recreational Camps
7213 Rooming and Boarding Houses
7221 Full-Service Restaurants
7222 Limited-Service Eating Places
7223 Special Food Services
7224 Drinking Places (Alcoholic Beverages)
8111 Automotive Repair and Maintenance
8112 Electronic and Precision Equipment Repair and Maintenance 
(except recycling inkjet cartridges when conducted off-site as a 
service provided by a third party reclaimer that does not conduct 
repair of office machines.)
8113 Commercial and Industrial Machinery and Equipment (except 
Automotive and Electronic) Repair and Maintenance
8114 Personal and Household Goods Repair and Maintenance
8121 Personal Care Services
8122 Death Care Services
8123 Dry-cleaning and Laundry Services
8129 Other Personal Services
8131 Religious Organizations
8132 Grantmaking and Giving Services
8133 Social Advocacy Organizations
8134 Civic and Social Organizations
8139 Business, Professional, Labor, Political, and Similar 
Organizations
8141 Private Households
9211 Executive, Legislative, and Other General Government Support
9221 Justice, Public Order, and Safety Activities
9231 Administration of Human Resource Programs
9241 Administration of Environmental Quality Programs
9251 Administration of Housing Programs, Urban Planning, and 
Community Development
9261 Administration of Economic Programs
9271 Space Research and Technology
9281 National Security and International Affairs

[FR Doc. 03-26754 Filed 10-27-03; 8:45 am]
BILLING CODE 6560-50-P