Since the definition of a solid waste was first introduced in the regulations, one group or another has challenged it as being too narrow or too wide. The agency is ready to try again.

On June 30, 2011, EPA Administrator Lisa Jackson signed a proposed rule seeking to narrow certain recycling exemptions under the Resource Conservation and Recovery Act's (RCRA) "Definition of Solid Waste" (DSW) provisions. A pre-publication copy of the rule and related information can be accessed online at this link. The agency will accept comments on the rule for 60 days after it is published in the Federal Register.

The RCRA DSW is the most litigated and contentious provision in the federal hazardous waste regulatory regime. The DSW is actually a series of regulatory provisions that seek to define when a material that is recycled is "discarded" and thus a solid and potentially hazardous waste. Materials that are recycled in a manner that does not meet the DSW generally are not regulated as hazardous waste under RCRA, while those recycled in a way that the agency considers to be "discard" must be managed as hazardous waste. Over the two and a half decades since the EPA first issued its DSW regulations, industry generally has argued that the definition is too narrow, while environmental groups and others contend that it is too broad. The agency has revised the provisions numerous times over the years and virtually every revision has sparked litigation.

The June 30 proposal is the latest offspring in a long progeny of EPA's attempts to "fix" the DSW provisions. The proposal specifically would revise and clarify certain conditional exclusions for hazardous secondary materials that are recycled. The EPA promulgated these exclusions in October 2008 with the intent of encouraging the recovery and reuse of valuable resources.

Two developments that occurred in the wake of the October 2008 rule prompted EPA's proposed revisions. First, pursuant to Executive Order 12898, the EPA conducted an analysis of the environmental justice impacts the rule would impose. This analysis concluded that the rule may pose a disproportionately adverse impact on low income and minority populations. Second, the EPA responded to the Sierra Club's Jan. 29, 2009, administrative petition seeking to have the October 2008 rule revoked. The agency on Sept. 7, 2010, signed a settlement agreement with the Sierra Club under which the club agreed to withdraw its petition and the EPA agreed to issue a proposed rule no later than June 30, 2011, revising the DSW by addressing the issues raised in the Sierra Club's administrative petition. The June 30, 2011, proposal thus seeks to address both of these developments. It should be noted that at the same time the Sierra Club filed its administrative petition, the American Petroleum Institute and the Sierra Club also filed judicial Petitions for Review under RCRA Section 7006(a) challenging the rule in the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit). These cases are currently before the D.C. Circuit, and it remains to be seen how EPA's proposed revisions will affect the litigation.

EPA is proposing to revise three aspects of the current DSW:

• The so-called "Transfer-Based" exclusion;
• The exclusion for hazardous secondary materials reclaimed under the control of the generator; and
• The criteria for determining whether a recycling activity is legitimate as opposed to "sham recycling."

Further detail on each of these proposed changes is provided below. The EPA is also proposing revisions to the solid waste variances and non-waste determinations, requesting comment on an exclusion from the DSW for specific types of higher-value hazardous secondary materials sent for re-manufacturing into similar products, and requesting comments on revisions that would affect other DSW exclusions and hazardous waste exemptions for recyclable materials.

Revisions to the Transfer-Based Exclusion
The co-called "transfer-based" exclusion currently is codified at 40 C.F.R. Sections 261.4(a)(24) and (25). It exempts certain hazardous secondary materials (i.e., spent materials, listed sludges, and listed by-products) that are generated and transferred to a different person or company for the purpose of legitimate reclamation. There are several conditions that must be met for the exclusion to take effect:

• Hazardous secondary material generators, reclaimers, and intermediate facilities must notify the EPA annually on the volumes and types of hazardous secondary materials being reclaimed.
• Hazardous secondary materials managed at such facilities must not be speculatively accumulated and must be legitimately reclaimed.
• Generators using this exclusion must ensure that the hazardous secondary materials are contained and must make reasonable efforts to ensure that the intermediate facility or reclaimer intends to manage or recycle the hazardous secondary material properly and legitimately.
• Intermediate facilities and reclaimers of hazardous secondary materials must contain the materials, retain certain records, have financial assurance equivalent to that required of hazardous waste facilities, and properly manage any residuals generated from the reclamation activities.

In the June 30 proposed rule, the EPA is proposing to replace in its entirety, the transfer-based exclusion with an alternative set of regulations. Two reasons have prompted the agency's reconsideration of this exclusion. First, the EPA believes that transfers of hazardous secondary materials to third-party reclaimers almost always involve an element of "discard." Second, the EPA now claims that the conditions in the 2008 final rule "have serious gaps that could create a potentially unacceptable likelihood of adverse effects to human health and the environment."

In place of the transfer-based exclusion, the EPA is proposing alternative hazardous waste standards under 40 C.F.R. Part 266, Subpart D for generators of hazardous waste being reclaimed. Little regulatory relief would be granted under these proposed standards. Instead, the hazardous recyclable material would, for the most part, be subject to full hazardous waste regulation. The agency would, however, allow generators to accumulate their recyclable waste onsite for up to one year without a permit or interim status (although the hazardous waste generator standards would continue to apply). Other conditions would also apply, including a requirement that generators notify the EPA or the state prior to taking advantage of the exemption. Aside from the ability to accumulate hazardous waste for one year, however, no other regulatory relief is evident in the proposed rule.

Revisions to the Exclusion for Hazardous Secondary Materials Reclaimed Under the Control of the Generator
In the 2008 rule, the EPA excluded from the DSW those hazardous secondary materials that are legitimately reclaimed under the control of the generator, provided the materials are "contained" in the units in which they are stored, are not speculatively accumulated, and are reclaimed within the U.S. or its territories. The generator must also periodically notify the agency or the authorized state that it is operating under the exclusion. Under this exclusion, hazardous secondary materials are considered "under the control of the generator" under the following circumstances:

• They are generated and then reclaimed at the generating facility; o
• They are generated and reclaimed at different facilities, if the generator certifies that the hazardous secondary materials are sent either to a facility controlled by the generator or to a facility under common control with the generator, and that either the generator or the reclaimer has acknowledged responsibility for the safe management of the hazardous secondary materials; or
• They are generated and reclaimed pursuant to a written agreement between a tolling contractor and toll manufacturer, if the tolling contractor certifies that it has entered into a tolling contract with a toll manufacturer and that the tolling contractor retains ownership of, and responsibility for, the hazardous secondary materials generated during the course of the manufacture, including any releases of hazardous secondary materials that occur during the manufacturing process.

Under this provision, the hazardous secondary materials must be contained, whether they are stored in land-based or non-land-based units. The materials are also subject to the speculative accumulation requirements, as well as the provisions for legitimate recycling.

Unlike the transfer-based exclusion, the EPA is not proposing to replace the generator-controlled exclusion. But the agency has proposed revisions to the exclusion. Perhaps the more significant revision is that the EPA for the first time has codified a definition of "contained." Under the June 30 proposal, a hazardous secondary material is contained if it is managed in a unit, including a land-based unit as defined in 40 C.F.R. Section 260.10, that meets the following criteria:

• The unit is in good condition, with no leaks or other continuing or intermittent unpermitted releases of the hazardous secondary materials to the environment, and is designed, as appropriate for the hazardous secondary material, to prevent releases of the hazardous secondary materials to the environment. Such releases may include, but are not limited to, releases through surface transport by precipitation runoff, releases to groundwater, wind-blown dust, fugitive air emissions, and catastrophic unit failures;
• The unit is properly labeled or otherwise has a system (such as a log) to immediately identify the hazardous secondary materials in the unit; and
• The unit does not hold incompatible materials and addresses any potential risks of fires or explosions.

Revisions to the Definition of Legitimate Recycling
Another significant change proposed by the EPA in the June 30 proposed rule is a redefinition of "legitimate recycling." EPA's long-held policy is that parties that reclaim waste under an exemption must be able to prove that the reclamation is not sham recycling. To do this, in the October 2008 rule EPA allowed parties to meet certain – but not all – conditions of legitimate recycling. The June 30 proposed rule, however, does away with this approach and would codify a far more stringent definition of legitimate recycling.

Under the proposal, legitimate recycling must involve a hazardous secondary material that provides a useful contribution to the recycling process or to a product or intermediate of the recycling process. The hazardous secondary material provides a useful contribution if it:

• Contributes valuable ingredients to a product or intermediate; or
• Replaces a catalyst or carrier in the recycling process; or
• Is the source of a valuable constituent recovered in the recycling process; or
• Is recovered or regenerated by the recycling process; or
• Is used as an effective substitute for a commercial product.

Under this proposed approach, the recycling process must produce a valuable product or intermediate. Under the proposal, the product or intermediate is valuable if it is sold to a third party or used by the recycler or the generator as an effective substitute for a commercial product or as an ingredient or intermediate in an industrial process. The generator and the recycler must also manage the hazardous secondary material as a valuable commodity. Where there is an analogous raw material, the hazardous secondary material must be managed, at a minimum, in a manner consistent with the management of the raw material or in an equally protective manner. Where there is no analogous raw material, the hazardous secondary material must be contained. Moreover, the product of the recycling process must contain concentrations of hazardous constituents found in 40 C.F.R. Part 261, Appendix VIII at levels that are comparable to or lower than those found in analogous products and must not exhibit a hazardous characteristic.

Estimated Impact of the Proposed Rule
The rule is certain to spark controversy, primarily because it does not appear to provide any meaningful relief for reclamation and removes or severely restricts existing exclusions. The scope of the proposed changes is broad. The EPA estimates that it will affect between 6,500 to 9,100 facilities in over 600 industries that generate or recycle hazardous secondary materials. According to EPA, some 27 industries have "the largest counts of potentially affected entities." These industries are (NAICS codes in parentheses):

• (323110) Commercial Lithographic Printing;
• (324110) Petroleum Refineries;
• (325188) All Other Basic Inorganic Chemical Manufacturing;
• (325199) All Other Basic Organic Chemical Manufacturing;
• (325211) Plastics Material and Resin Manufacturing;
• (325412) Pharmaceutical Preparation Manufacturing;
• (325510) Paint and Coating Manufacturing;
• (325998) All Other Miscellaneous Chemical Product and Preparation Manufacturing;
• (326199) All Other Plastics Product Manufacturing;
• (331111) Iron and Steel Mills;
• (331492) Secondary Smelting, Refining, and Alloying of Nonferrous Metal (except Copper, Aluminum);
• (332312) Fabricated Structural Metal Manufacturing;
• (332812) Metal Coating, Engraving (except Jewelry and Silverware), and Allied Services to Manufacturers;
• (332813) Electroplating, Plating, Polishing, Anodizing, and Coloring;
• (332999) All Other Miscellaneous Fabricated Metal Product Manufacturing;
• (333415) Air Conditioning, Warm Air Heating Equipment, and Commercial and Industrial Refrigeration Equipment Manufacturing;
• (334412) Bare Printed Circuit Board Manufacturing;
• (334413) Semiconductor and Related Device Manufacturing;
• (334418) Printed Circuit Assembly;
• (336399) All Other Motor Vehicle Parts Manufacturing;
• (336412) Bare Printed Circuit Board Manufacturing;
• (336413) Other Aircraft Part and Auxiliary Equipment Manufacturing;
• (541710) Research & Development in the Physical, Engineering, and Life Sciences;
• (562211) Hazardous Waste Treatment and Disposal;
• (611310) Colleges, Universities, and Professional Schools;
• (622110) General Medical and Surgical Hospitals; and
• (928110) National Security.

The EPA estimates the future annualized costs to industry to comply with these proposed revisions to be between $7.2 million and $47.5 million, depending upon how many states adopt the proposed revisions.