Page 2 of 7
The Solid Waste Rule: A Summary of 2015 Revisions
Environmental statutes are creatures of legislative imagination. Each is designed to identify a problem, and the administrative agency with the authority to implement and enforce the environmental statue is tasked with creating an administrative program to address the identified problem. In the federal environmental realm, Congress is the legislature, and the administrative agency is the U.S. Environmental Protection Agency (EPA). In interpreting these statutes, virtually every word is a term of art – certainly each regulated activity has no plain or universally accepted meaning. Nothing could be more true than the federal regulation of waste, authorized pursuant to the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. § 6901, et seq. And, virtually no regulated activity has undergone more scrutiny and change than the regulation of what is known as "Solid Waste" under RCRA – which, according to its definition, can be solid, liquid, or gaseous.
Following many changes over the years since RCRA was enacted in 1976, the Solid Waste Rule was once again recently revised, effective as of July 15, 2015, as described below.
Historical Changes to the Solid Waste Rule
When Congress initially sought to address the issues associated with waste, Congress defined Solid Waste broadly, 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 § 1004(27), 42 U.S.C. § 6903(27) (emphasis added). RCRA's definition of Hazardous Waste incorporates the definition of Solid Waste (see RCRA § 1004(7), 42 U.S.C. § 6903(7)), and all Solid and Hazardous Waste is regulated under the RCRA Program implemented by EPA (and sometimes delegated to selected states, as in Illinois).
In the 1980s, EPA began interpreting "Solid Waste" and "discarded materials" to include both materials that are disposed of, as well as materials that are recycled. Defining Solid Waste for regulatory purposes is an existential inquiry. That is, is it waste when it is sent to a recycler or only when it is generated as a waste? If we assume that it is a waste when it is generated as a waste, when does the material lose its existential character as waste and become a valuable product? Does a non-waste, originally generated as a waste, cease to be regulated?
It should come as no surprise that EPA's definition of "Solid Waste" has spawned a great deal of litigation over the years.
For example, in 1987, the D.C. Circuit Court held that EPA's interpretation exceeded its statutory authority, and that "discarded materials" could not include materials that were "destined for beneficial reuse or recycling in a continuous process by the generating industry itself [because they] are not part of the waste disposal problem." American Mining Companies v. EPA, 824 F.2d 1177, 1190 (D.C. Cir. 1987). However, the Circuit Court, surprisingly, also held that "recycled materials" could be regulated, but (apparently) not as Hazardous Waste.
In 1998 EPA promulgated a Solid Waste Rule seeking to address the generation of byproducts associated with the mineral industry, and the mineral industry's practice of recycling (reclaiming) those byproducts – referred to as "Secondary Materials." EPA's 1998 Solid Waste Rule included a conditional exclusion from the definition of "Solid Waste," for Secondary Material scheduled for reclamation. However, the 1998 Solid Waste Rule prohibited the storage of Secondary Material by the generator, but conditionally allowed storage by the recycler (while simultaneously increasing the regulation of by-products and sludge generated incident to the reclamation process).
With the 1998 Solid Waste Rule, EPA permitted offsite reclamation and recycling, but indicated that it did not have sufficient statutory authority to promote a rule that would allow the generator of the Secondary Material to recycle the Secondary Material itself, as part of the permitted process associated with the generation of the Secondary Materials.
The D.C. Circuit Court was then presented with the question of EPA's authority to permit in-house recycling. In Association of Battery Recyclers v. EPA, 208 F.3d 1047 (D.C. Cir. 2000), the Court found that Secondary Materials that are recycled as part of the generator’s ongoing process was not an act of disposal or abandonment, but rather a process that EPA had authority to regulate. Id. at 1051-1052.
In the following years, EPA also developed a working definition of "Legitimate Recycling" – a concept fundamental to EPA's interpretation of its regulatory authority. Indeed, every generator of waste is of the view that materials it generated as waste are secondary materials that can be recycled – and the removal of the material from the generator's facility was not an act disposal, but an act of recycling. (See, also, CERCLA Section 127, Recycling Transactions, Exempt from CERCLA liability, 42 U.S.C. § 9627.) EPA and the regulated community have been wrestling with an exemption from liability and regulatory responsibility for legitimate recycling operations. Indeed, various studies commissioned by the Agency have confirmed that sham recycling (attempts to avoid hazardous waste regulation) has caused significant harm to the environment. In 2007, EPA published those studies and recommended two exclusions for Secondary Materials: (i) Secondary Materials reclaimed by the generator (known as the "Generator-Controlled Exclusion"); and (ii) Secondary Materials reclaimed offsite by someone other than the generator (known as the "Transfer-Based Exclusion").
The 2015 Solid Waste Rule
The deliberative process continued in the court system, within the EPA, and in the public discourse for several more years, culminating in another revision to the Solid Waste Rule this past year. In summary, the 2015 Solid Waste Rule:
(i) Retains the Generator-Controlled Exclusion (with some additional requirements);
(ii) Replaces the Transfer-Based Exclusion with a "Verified Recycler Exclusion";
(iii) Codifies "Legitimate Recycling" and recognizes in-process recycling of commodity-grade materials;
(iv) Establishes a "Remanufacturing Exclusion" for certain high-value used solvents; and
(v) Implements better procedures in seeking variance and a non-waste determination.
(i) The Generator-Controlled Exclusion – § 261.4(a)(23)
The 2015 Solid Waste Rule retains the exclusion from hazardous waste regulation for Secondary Materials destined for recycling by the generator – so long as the reclamation/recycling is performed onsite, within the same company, and happens in a timely manner. In addition, in an attempt to provide for the protection of the environment, the 2015 Solid Waste Rule requires that stored Secondary Material destined for recycling is "contained" as that term is defined in the regulation.
In short, "contained" refers to storage in a "unit" (i.e., a pile) that is in good condition, with no leaks, and which does not allow unpermitted releases. Unpermitted releases are those releases not allowed under the RCRA permit, or other applicable permit. In addition, the unit must be properly labeled, and the generator must maintain books and records describing the contents of the contained unit. The generator's logs must also confirm that all of the material within the contained unit (i.e., the stored material) is compatible. Secondary Materials contained in underground storage tanks that meet RCRA hazardous waste standards are presumptively permitted.
In addition, the 2015 Sold Waste Rule requires written recordkeeping in order to establish that the same company is involved, and that the recycling occurred on time. Notices to EPA are also required, and the entity seeking the exclusion must document that "Legitimate Recycling," as defined by the 2015 Solid Waste Rule, was employed. Finally, the 2015 Rule prohibits the generator from participating in any "speculative accumulation" of Secondary Materials and requires the generator to create and maintain an emergency preparedness and response plan.
As with virtually every other regulated activity, the generator is advised to make a record of compliance with the assistance of consultants and counsel.
(ii) The Verified Recycler Exclusion – § 261.4(a)(4)
The 2015 Solid Waste Rule replaced the 2007 Transfer-Based Exclusion with the "Verified Recycler Exclusion." In order for Secondary Materials to qualify for this exclusion, those Secondary Materials must go to a "Verified Recycler" – that is, a recycler with a RCRA Permit or an approved variance either from EPA or a state environmental protection agency with an EPA approved state program.
The Verified Recycler Exclusion is subject to the same restrictions on speculative accumulation and required recordkeeping as the Generator-Controlled Exclusion. In addition, in order to take advantage of the Verified Recycler Exclusion, the generator must notify EPA of the claimed exemption (see Form 8700-12). And, like the generator, the Verified Recycler must also properly store (i.e., "contain") the Secondary Materials and employ an emergency preparedness and response plan. In addition, the receiving/recycling/reclaiming facility must be physically located in the United States, and the entity seeking the exclusion must keep records and receipts for three years.
Verified Recyclers without a RCRA permit must be able to show that their activities are legitimate, while providing adequate financial assurance. In addition, a Verified Recycler without a RCRA Permit must not have been the target of RCRA violations within the previous three years, or it must provide credible evidence that the facility will properly manage the Secondary Materials. In addition, the Verified Recycler must show that it has the proper equipment and trained personnel to perform the recycling activity. Finally, the Verified Recycler must demonstrate that it will manage the residual materials generated in the recycling process in a responsible manner.
(iii) Codification of 'Legitimate Recycling' – § 260.43
What is Legitimate Recycling? In essence, it is not "sham" recycling. For example, foundry sand cannot be recycled as playground sand, but could be recycled for use in creating industrial molds. Sham is now more than what is in the eye of the beholder.
The 2015 Solid Waste Rule codifies language that has been in the preamble of earlier versions of the Solid Waste Rule. In order to be "legitimate," the recycling process must: (1) provide a useful contribution to recycling or a product (or an intermediate to a final product); (2) produce a valuable product (or intermediate); (3) the Secondary Material must be managed as a valuable commodity (i.e., not as a waste), and (4) the final product must be comparable to a legitimate product (or intermediate).
(iv) The 'Remanufacturing Exclusion' – § 261.4(a)(27)
According to EPA, there are 18 high-value solvents used in pharmaceutical, organic chemical process, paints and coatings that can be, and should be, recycled. The 2015 Solid Waste Rule provides an incentive to reclaim those solvents used in those processes. In order for these solvents to qualify under this exclusion, both the generator and the remanufacturer must notify EPA of the claimed exemption (see Form 8700-12), and both the generator and the remanufacturer must jointly develop and maintain a remanufacturing plan, and keep and maintain records for three years. Similar to the "contained" requirement discussed above, the spent solvents must be stored in RCRA-compliant containers (i.e., with secondary containment, overfill and spill protection). Finally, the 2015 Solid Waste Rule provides that the prohibition against speculative accumulation also applies to this exemption.
(v) Revised Variance and Non-Waste Determination Procedures – § 260.30-34
The 2015 Solid Waste Rule also revised the administrative process associated with applications for variances and requests for administrative determinations that certain Secondary Materials are not regulated waste. In the event that an entity applies for a variance or seeks an administrative interpretation that certain Secondary Materials are not waste, that entity is required to file a final application with EPA (or with an authorized state agency), and demonstrate why the existing exemptions are not adequate.
The request for a variance/waste determination must be limited to a term not to exceed 10 years, and after 10 years the applicant must either comply with the Solid Waste Rule, or seek another variance or non-waste determination. In the event that a variance or a non-waste determination is issued by EPA, the reporting parties are required to continue to provide EPA with current information every two years.
The 2015 Solid Waste Rule is more stringent than the earlier versions of the Rule, and EPA is requiring authorized states to modify their programs in order to comply with the 2015 Sold Waste Rule. The Illinois Pollution Control Board, for example, just recently revised its program consistent with the 2015 Solid Waste Rule. Compliant states are required to implement prohibitions against sham recycling, to implement data tracking methods, and to make appropriate changes to the administrative procedure associated with variances and waste determinations.
Waste Regulation Continues to Impact Generators, Recyclers, Scrap Dealers and Scrap Yard Operators
The 2015 Solid Waste Rule became effective on July 13, 2015, and while it recognizes an exemption for recycled/reclaimed Secondary Materials associated with RCRA regulated processes, entities involved in the generation of these Secondary Materials and facilities involved in reclamation/recycling are not exempt from regulation. To a large extent, recyclers, scrap dealers, and scrap yards are experiencing increased scrutiny and regulation – and each is advised to contact environmental counsel to discuss, in confidence, compliance with Storm Water Regulations, Exempt Transactions identified in CERCLA § 127, and the exemptions/regulations referred to in the 2015 Solid Waste Rule. In the final analysis, generators, operators, recyclers and others are advised to understand the constantly evolving rules and regulations associated with the state and federal regulation of waste – now notably articulated in the 2015 Solid Waste Rule. Compliance is best shown in a record with admissible evidence of compliance.