On December 10, 2014, EPA released a prepublication version of its long-awaited final rule revising regulations affecting hazardous materials recyclers under the Resource Conservation and Recovery Act (“RCRA”).  The rule, known as the Rulemaking on the Definition of Solid Waste (“2014 DSW final rule”), is expected to be published in the Federal Register by the end of December 2014 and will go into effect six months after it is published.  The final rule may be challenged in the United States Court of Appeals for the District of Columbia within 90 days of the date the final rule is published in the Federal Register.

As anticipated, the 2014 DSW final rule adds a number of new requirements to an existing exclusion, codified at 40 CFR § 261.4(a)(23), that EPA promulgated in 2008 for hazardous secondary materials that are reclaimed under the control of the generator (i.e., spent materials, by-products, and sludges).  Specifically, the 2014 DSW final rule (1) adds a recordkeeping requirement for same-company and toll manufacturing reclamation, (2) requires notification to an entity’s regulatory authority as a condition of the exclusion, (3) requires documentation that recycling under the exclusion is legitimate, and (4) adds emergency preparedness and response requirements.  In addition, the 2014 DSW final rule codifies at 40 CFR § 260.10 a new definition of “contained” for purposes of the requirement that hazardous secondary materials must be contained to qualify for this exclusion.

The 2014 DSW final rule also replaces the exclusions EPA promulgated in 2008 for hazardous secondary materials that are transferred from the generator to other persons or exported for the purpose of reclamation, codified at 40 CFR § 261.4(a)(24) and (25), respectively.  The 2014 DSW final rule replaces those exclusions with a more restrictive exclusion, codified at 40 CFR § 261.4(a)(24), under which generators who wish to recycle their hazardous secondary materials without having them become hazardous wastes must send their materials to either an RCRA-permitted reclamation facility or to a verified recycler of hazardous secondary materials who has obtained a solid waste variance from EPA or the authorized state.  Both the generator controlled exclusion (40 CFR § 261.4(a)(23)) and the verified recycler exclusion (40 CFR § 261.4(a)(24)) are also subject to new recordkeeping requirements to document compliance with the accumulation time limits of 40 CFR § 261.1(c)(8).

While the 2014 DSW final rule rolls back the exclusions EPA promulgated in 2008, it also introduces a new exclusion referred to as the “remanufacturing exclusion,” codified at 40 CFR § 261.4(a)(27).  Under this provision, EPA is excluding from the definition of solid waste certain “higher value” spent solvents transferred from one manufacturer to another for the purpose of extending the useful life of the solvent by remanufacturing the spent solvent back into the commercial-grade solvents.  The scope of this exclusion may be expanded to include other higher value hazardous secondary materials in response to future RCRA rulemaking petitions pursuant to 40 CFR § 260.20.

In addition to the changes mentioned above, the 2014 DSW final rule is also notable for what EPA decided not to change.  EPA decided not to impose the new requirements noted above on the 32 recycling exclusions that existed prior to 2008, as EPA had suggested it might in its 2011 notice of proposed rulemaking.  The preamble to the 2014 DSW final rule explains that EPA decided not to finalize revisions to the pre-2008 recycling exclusions and exemptions under RCRA pending further study of concerns raised in comments on the proposal.  Specifically, EPA acknowledged that it may need to consider each of the pre-2008 exclusions separately in evaluating whether additional conditions are warranted.

While EPA decided not to impose these specific new requirements for the pre-2008 recycling exclusions, the 2014 DSW final rule does subject all exclusions or exemptions from the hazardous waste regulations based on recycling, including the pre-2008 exclusions and exemptions, to four legitimacy factors set forth at 40 CFR § 260.43.  The four factors are as follows: (1) “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”; (2) “The recycling process must produce a valuable product or intermediate”; (3) “The generator and the recycler must manage the hazardous secondary material as a valuable commodity when it is under their control”; and (4) “The product of the recycling process must be comparable to a legitimate product or intermediate.”  Accordingly, even persons relying on the pre-2008 recycling exclusions should be prepared to demonstrate compliance with these four legitimacy factors.  If they cannot, they risk being found to be engaged in “sham recycling,” in which case their hazardous secondary material would be subject to regulation as hazardous waste under RCRA.