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Energy and Environment Monitor

EPA Announces New RCRA Regulations to Limit “Sham Recycling”

March 11, 2015

By: Blair M. Gardner

On January 13, 2015, the U.S. EPA published a preamble and final rule that places new restrictions on recycling under the Resource Conservation and Recovery Act of 1976 (RCRA), part of the Solid Waste Disposal Act, 42 U.S.C. §§ 6901-6992k. The revised regulations focus on businesses that recycle, often for a fee, hazardous secondary materials accepted from off-site industrial sources. The new rule was promulgated in settlement of a petition for rulemaking and a civil action filed by the Sierra Club in 2009.

Regulatory Background

RCRA Subtitle C authorizes EPA to regulate “hazardous wastes,” which are a subset of “solid wastes.”  Thus, the definition of “solid waste” plays a key role in defining the scope of EPA's authority. Since 1980, EPA has interpreted “solid waste” to include materials destined for final, permanent disposal, while exempting materials designated for recycling.

EPA Rule Rationale

In its final rule, EPA asserts that some commercial recyclers are engaging in “sham recycling” by accepting materials that exhibit hazardous characteristics under the guise of recycling them. Because materials destined for recycling are not “solid wastes,” they in turn cannot be regulated as “hazardous wastes.” This practice allows businesses to avoid costly compliance with solid waste and hazardous waste regulations. According to EPA, many commercial recycling facilities are susceptible to environmental problems resulting from the over-accumulation and mishandling of hazardous secondary materials. When the market prices of recycled products fall, commercial recyclers rely on profits from accepting materials exhibiting hazardous characteristics, which can result in over-accumulation, mismanagement, sham recycling, and the potential abandonment of hazardous secondary materials.

EPA Rule Changes

EPA’s long-standing policy is that all recycling of hazardous secondary materials must be bona fide. To effectuate this policy, the agency added a new “legitimacy” provision at 40 C.F.R. §261.2(g) forbidding “sham” recycling. To distinguish legitimate recycling from “sham” recycling, EPA provides four factors at 40 C.F.R. §260.43 that must be met for recycling of hazardous waste to be deemed legitimate.

               (1)           The hazardous secondary material provides a useful contribution to the recycling process or to a final product;

               (2)           The recycling process must produce a valuable product;

               (3)           Both the generator and recycler must manage the waste as a valuable commodity by containing it or treating the waste like an analogous raw product;

               (4)           The product produced by the recycling process must be comparable to a legitimate product and cannot exhibit hazardous characteristics not found in analogous products.

A Specific Example: Scrap Metal

Scrap metal dealers have historically avoided EPA regulation under an exemption found at 40 CFR §261.4(a)(13) for excluded scrap metal (processed scrap metal, unprocessed home scrap metal, and unprocessed prompt scrap metal) or 40 CFR §261.6(a)(3)(ii). Thirty-two (32) such exclusions and exemptions exist for various recycling industries. EPA’s new regulations place these exemptions at risk. Nevertheless, EPA has deferred changes to the language of the recycling exclusions and exemptions, concluding that more study is needed before taking action.   

EPA’s preamble illustrates how the existing exclusion for scrap metal recycling will be analyzed under the new criteria. Scrap metal recycling provides a useful contribution to the valuable final product of the recycling process, thereby satisfying the first two legitimacy factors listed above. If the recycler uses good practices to store and manage scrap metal (including the customary practice of storing the scrap on the ground) to prevent releases of hazardous secondary materials to the environment, the recycler would generally meet factor 3 for managing the scrap metal as a valuable commodity. Finally, as long as the final recycled metal meets widely recognized commodity standards/specifications and does not exhibit hazardous characteristics not found in analogous products, factor 4 will be satisfied. If a recycled product does not meet widely recognized commodity specifications, the persons creating the recycled product must keep documentation demonstrating the legitimacy of their recycling. While this record-keeping requirement is unlikely to affect scrap metal recyclers, it could prove burdensome for those recycling less common materials.

Applicability of Rules: What Agency Enforces the Rules in Which States

EPA’s final rules add one final level of complexity to their administration. Under RCRA, EPA may authorize states to administer and enforce their own hazardous waste programs in lieu of the federal program. A list of states approved to administer their own hazardous waste programs is available at 40 C.F.R. §272.  Within the states where Jackson Kelly maintains offices, Indiana and Ohio are the only authorized states. Authorized states are required to modify their programs only when EPA enacts federal requirements that are more stringent or broader in scope than the existing federal program. The extent to which authorized states must modify their existing state programs to remain at least as stringent as the EPA’s new federal rules will vary, and Indiana and Ohio will likely spend the new year trying to figure this out. In states that are not authorized to administer their own hazardous waste programs (such as West Virginia, Pennsylvania, Kentucky and Colorado), the new regulations described above will be applicable immediately on the effective date of July 13, 2015.

This article was authored by Blair M. Gardner and Aaron S. Heishman, Jackson Kelly PLLC.


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