After years of controversy, EPA recently adopted more stringent regulations for waste recyclers. On January 13, 2015, EPA issued its Final Rule in the Federal Register that amended the Resource Conservation and Recovery Act (“RCRA”) Subtitle C “Definition of Solid Waste.” Under the Rule, EPA restricted the recycling exemption by codifying a prohibition on “sham recycling” that requires all recycling activities to be “legitimate” in order to claim an exemption from RCRA. The Rule will become effective on July 13, 2015 in those states where EPA is authorized to administer the RCRA program. However, in the majority of the states that are authorized to administer and enforce the RCRA program, the states will have to adopt the Rule for it to become effective.

Recycling Must Meet All Four Legitimacy Factors

In general, solid hazardous wastes are subject to full regulation under RCRA. Requirements for parties involved with these hazardous wastes relate to permitting, storing, manifesting, reporting and personnel training. Recycling activities may be exempt from these hazardous waste requirements, but the recycling activity must meet all of the following four legitimacy factors presented in the new 40 CFR 260.43 to claim the exemption:

• Factor 1: Hazardous secondary material must provide a useful contribution to the recycling process or to a product or an intermediate.
• Factor 2: Recycling must produce a valuable product or an intermediate.
• Factor 3: Hazardous secondary material must be managed as a valuable commodity.
• Factor 4: The product of the recycling process must be comparable to a legitimate product or an intermediate.

Under Factor 4, the recycler can either compare constituent levels of its recycling product to those found in an analogous product, or “commodity standards” can be used to determine if the recycling product is comparable to a virgin product. Also, EPA does not require a further demonstration of comparability in closed-loop recycling situations, where the hazardous secondary material is returned to its originating industrial process.

Furthermore, the Rule requires documentation of legitimacy when the recycled product has elevated levels of hazardous constituents when compared to products made from raw materials and when parties are operating under the generator-controlled exclusion for recycling.

Exclusions

Along with the exemption for recycling, EPA also excludes certain solid wastes from the definition of hazardous waste. Under the new Rule, EPA has made several changes to these exclusions.

Verified Recycler Exclusion, 40 CFR 261.4(a)(24): The Rule replaces the 2008 transfer-based exclusion with a new verified recycler exclusion. The verified recycler exclusion requires, among other requirements, that a party sending off-site transfers of hazardous secondary material for recycling utilizes a RCRA permitted recycler or a recycler that has obtained a variance from EPA or the state.

Remanufacturing Exclusion, 40 CFR 261.4(a)(27): The Rule excludes remanufacturing for 18 higher-value hazardous spent solvents which are used for reacting, extracting, blending or purifying chemicals in the pharmaceutical, organic chemical, plastics and resins, and the paint and coatings sectors. However, the remanufacturing exclusion is subject to several conditions, including managing the solvents in RCRA-equivalent tanks and containers, meeting applicable air emission standards, and prohibiting speculative accumulation.
Generator-Controlled Exclusion, 40 CFR 261.4(a)(23): The 2008 generator-controlled exclusion for hazardous secondary material recycled under the control of the generator (on-site, same company and toll manufacturing recycling) is still effective in the new Rule, but the Rule adds several requirements, including recordkeeping, notification, emergency preparedness and response conditions.

Speculative Accumulation Recordkeeping

The speculative accumulation requirement is intended to ensure that recyclable materials are not stored indefinitely prior to recycling. In most cases, secondary materials that are accumulated on-site for too long are treated as wastes under RCRA. The Rule adds a new recordkeeping requirement for all persons subject to speculative accumulation. Under 40 CFR 261.1(c)(8), materials must be placed in a storage unit with a label noting the date the material began accumulating. If labeling is not practicable, then the accumulation time must be documented through other appropriate methods.

In conclusion, materials that would otherwise be subject to the expansive requirements of RCRA may be exempt if the recycling meets the “legitimacy” factors or if the activity satisfies an exclusion under the modified hazardous waste exclusion provisions. Legitimate recyclers may lose the exemption if they do not meet the Rule’s new requirements.