[*PG275]ECO-INDUSTRIAL DEVELOPMENT AND THE RESOURCE CONSERVATION AND RECOVERY ACT: EXAMINING THE BARRIER PRESUMPTION

Jo Jeanne Lown*

Abstract:  Environmental regulation certainly has its supporters and its critics, but even the most ardent environmentalists recognize that regulation alone has not solved all environmental problems. Creative alternatives in land-use, pollution reduction, and sustainable development are continuously proposed and debated. One possible solution that bodes well for pollution reduction, or even prevention, has been the concept of eco-industrial development (EID). EID describes a closed-loop industrial cycle where generated materials or by-products are returned to the manufacturing process, either used by another facility, or as feedstock for the production of other products. It has been argued, usually by the regulated community, that environmental regulations create unnecessary impediments to creative solutions like EID. The Resource Conservation and Recovery Act (RCRA) regulations are often cited as the most obstructing. This Note examines whether RCRA creates barriers, and if so, to what extent RCRA regulations complicate EID in the United States.

“They don’t waste anything here,” said the guide. . . . “They use everything about the hog except the squeal.”1

Introduction

Industrial ecology describes a closed-loop industrial cycle where generated materials or by-products are returned to the manufacturing process, either used by another facility, or as feedstock for the production of other products.2 The concept is not new. Industries have long sought ways to maximize use and minimize waste, as long as it helped [*PG276]the bottom line.3 During the mid-nineteenth century, for example, when animals were slaughtered, every useable portion was turned into a marketable commodity.4 Converting waste into a resource often depends, however, on whether an economically feasible market exists, or can be created.5

Before environmental regulation, it was often cheaper to dispose of unmarketable wastes into the “commons” of the air, water, or land, than it was to find alternatives.6 Without controls, the natural environment is exploited first as a source of raw materials, and second as a “sink” for industrial and consumer waste.7 The accumulated consequences were not recognized until the 1960s8 when environmental regulation began to force industries to pay for these previously externalized costs.9

Industry’s initial hostility to regulation has given way to grudging compliance.10 Market attitudes continue to evolve “beyond compliance” to include strategies for pollution prevention or reduction11 [*PG277]and the “voluntary provision of environmental public goods.”12 Industry will undertake such measures if they will improve strategic competitiveness, distinguish product lines, provide opportunities for greater economic efficiency,13 or reduce costs of regulatory compliance.14

For example, in advance of regulatory mandates against the use of chlorofluorocarbons (CFCs), E.I. Du Pont de Nemours & Co. (DuPont) made costly investments to find CFC substitutes.15 This strategy proved profitable, allowing DuPont to corner the market, make the global regulatory phase out of CFCs technically feasible, and dominate the field in CFC substitutes.16

Some businesses recognize the economic advantages of proactive, rather than merely reactive, environmental management policies.17 The New York Times recently reported that pollution prevention not only improves the corporate image, but can also be surprisingly cost-effective.18 Nova Chemicals in Chesapeake, Virginia, for example, saved sixteen thousand dollars annually by planting fruit-bearing trees and shrubs for migratory birds, which incidentally eliminated the need for lawn mowing services.19 Tennessee Valley Authority’s air pollution control equipment investment, though initially expensive, also resulted in three million dollars in additional annual sales because the million tons of calcium sulfate powder per year “produced” by the new equipment could be sold as raw material for wallboard.20

[*PG278] The Tennessee Valley Authority’s approach exemplifies the lure of the nascent field of industrial ecology, bringing industrial development and pollution prevention together into the new model of eco-industrial development (EID).21 If EID can improve both economic efficiency and environmental quality, then it may actually bridge the market/environmentalist gap.22

Calls for pollution prevention as the new regulatory philosophy may be an industry generated public relations strategy aimed at weakening environmental regulation.23 Even so, many analysts acknowledge the need to transition from end-of-pipe control to significant pollution reduction or prevention policies.24 Nonetheless, environmentalists insist that regulatory enforcement is essential to protect public health and the environment against market failure.25

Some critics argue that most current environmental regulations impede progress,26 except those that force technology or provide opportunities for competitive advantage.27 Others contend that reducing the costs associated with regulatory compliance is a strong impetus for innovation.28 For example, when the Illinois Department of Environmental Protection lowered the allowable limits of ammonium sulfate discharge, 3M’s Cordova chemical manufacturing facility responded [*PG279]by substituting the ammonium sulfate used in its manufacturing process with non-regulated sodium hydroxide.29

Recognizing the limits of existing media-specific, end-of-pipe pollution control programs to improve environmental quality, in 1989 the Environmental Protection Agency (EPA) proposed the establishment of the Pollution Prevention Office to develop and implement a “comprehensive pollution prevention policy.”30 The new policy sought to encourage “pollution prevention through source reduction and environmentally sound recycling” to supplement EPA’s pollution treatment, storage, and disposal regulations.31 Congress followed suit in 1990, enacting the Pollution Prevention Act32 requiring EPA to “develop and implement a strategy to promote source reduction.”33 The Act was designed to “stimulate voluntary pollution prevention” strategies with an emphasis on source reduction.34

The George H.W. Bush and William J. Clinton administrations sponsored a number of initiatives to reform regulatory policy.35 President Clinton, for example, established the President’s Council on Sustainable Development in 1993 to “develop and recommend to the President a sustainable development strategy,”36 which he expected would “promote healthy communities and environmentally sound products and services.”37 EPA initiatives arising from these new policy directives included the multimedia cluster permitting concept that was challenged by industry and environmentalists alike,38 as well as [*PG280]the somewhat more successful Common Sense Initiative (CSI)39 and Project XL programs.40

The regulatory structures existing at the time required separate permits for each type of medium (air, water, and land disposal) and each facility source.41 The “cluster” proposal involved combining Clean Air Act and Clean Water Act directives into single cluster permits for the pulp and paper industry.42 Criticism from both industry and environmentalists caused EPA to shelve the idea.43 In 1994, EPA’s CSI proposed pilot programs to develop industry-based multimedia permitting with the goal of allowing more regulatory flexibility than available under traditional “command-and-control” regulations.44 The idea was to find “cleaner, cheaper, [and] smarter” ways to achieve pollution prevention and reduction goals “for entire industries.”45

EPA’s 1995 Project XL proposal, with a stated goal of implementing fifty pilot programs across the country, asked business and industry to present projects that, if accepted, would receive EPA “flexibility from existing regulation.”46 As of September 2000, Project XL produced over fifty proposals or projects.47 Multimedia and bubble permitting are examples of the flexibility options currently offered by EPA.48

[*PG281] Seeing the glass as half-empty, some critics argue that the under-funded EPA programs were ineffective because they did not sufficiently shift regulatory focus from command-and-control strategies.49 Critics contend that without dramatic regulatory change, pollution prevention concepts like industrial ecology cannot be implemented. The Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 (RCRA),50 and its regulations distinguishing discarded from recycled materials are commonly cited as serious impediments to EID.51

This Note considers recent trends in regulatory flexibility and the current and potential distinctions between discarded and recycled materials under RCRA, to examine whether such claims are valid. Part I commences with the concept of EID and the perceived barriers to its inception. Part II introduces the statute and examines the statutory, regulatory, and judicial definitions of solid waste, hazardous waste, and recycling; including exemptions, exclusions, and variances. Part III considers whether RCRA is a significant barrier to EID in light of recent cases and regulatory trends, and suggests opportunities to minimize remaining impediments.

I.  Eco-Industrial Development

A.  The Concept

Eco-industrial development (EID) is essentially a blend of resource conservation, pollution prevention, and industry efficiency;52 encompassing a variety of approaches including “industrial ecology, industrial clustering, sustainable design, and product life cycle analysis.”53 The concept involves the creation of synergistic relationships between various industries for the purposes of resource sharing, conservation, waste stream recycling, and, ultimately, cost savings.54

[*PG282]1.  Industrial Ecology

EID is the practical application of the theory of “industrial ecology,” a phrase coined by General Motors’ researchers Robert A. Frosch and Nicholas E. Gallopoulos.55 Industrial ecology is the theory that an industrial system can mimic nature, such that “materials, and the energy embedded in them . . . circulate in a large, complex web,” eliminating or minimizing waste.56 Each firm, “analogous to biological organisms,”57 inputs materials, utilizes them for the production of its externally marketed products, and then outputs what it cannot use for use by other firms within the system.58

Robert Frosch argued that if we are to avoid eventually wallowing in our own waste, the existing open industrial system, which takes in virgin materials and discards wastes, must be supplanted by a closed-loop system where materials retain value and use.59 Even when discarded, he asserts, many materials could be inventoried for future use.60 They are unrecoverable only because we do not design landfills “like filing cabinets from which we can readily remove desired items.”61 In its broadest concept, industrial ecology envisions industries networking with communities and other industries to create a giant closed-loop industrial ecosystem.62

2.  From Theory to Practice

The theory of a closed-loop, symbiotic industrial system has, perhaps, been most fully actuated in Kalundborg, Denmark.63 The mu[*PG283]nicipality and four industries (a coal-fired power plant, an oil refinery, a pharmaceutical and enzyme manufacturer, and a plasterboard manufacturer) reuse each other’s waste streams in their own operations.64 The power plant’s hot water discharge is used to provide heat for tanks in its fish farm, while the plant’s steam release is used to heat the pharmaceutical company, and thirty-five hundred homes in the district.65 Surrounding farms use organic sludge from the pharmaceutical company as fertilizer.66 The plasterboard manufacturer uses gypsum from the power plant’s sulphur dioxide (SO2) scrubber and gas as fuel from the oil refinery.67 This networking of systems has resulted in both the reduction of wastes68 and significant cost savings.69

Kalundborg’s success was not the result of eco-industrial planning,70 but rather developed over time, facilitated by the interpersonal relationships and initiative of the individual managers.71 Arguably, the primary motivation may have been to reduce compliance costs of “ever-stricter environmental regulations,” not environmental altruism.72 Regardless of the motivation, the results are impressive.73

So far, eco-industrial projects have followed one of two models: the eco-industrial park (EIP) or the eco-industrial network (EIN) model. In the former, symbiotic relationships are planned and maintained within a limited defined area. The EIN model expands the relationship to the municipality or region.74 Existing EIPs vary in design and emphasis.75 They may have physically connected business net[*PG284]works (closed-loop model); restrict park members to companies that are “green” or do not emit pollution; focus on infrastructure by using buildings and landscaping designed to conserve energy, water, and other resources; or any combination of the above.76

The closed-loop model has proven the most challenging to put into practice.77 Finding and matching the waste stream and raw material requirements of firms with the financial and technical resources necessary for success can be daunting,78 but a few examples exist.79 In 1994, EPA, under the auspices of the President’s Council on Sustainable Development,80 worked with various projects including a sustainable community concept in Chattanooga, Tennessee.81 Commenced as a standard urban redevelopment project, it became a conservation and preservation model.82 It attracted national attention while turning an economically disadvantaged area into a thriving environmental technology center.83

The second eco-industrial model, EIN, has a broader field of vision. Analogous to the concept of industrial ecology as a system-wide ideal, EIN focuses on developing joint ventures or “waste exchange networks” among various entities within a community or region.84 Like the Kalundborg model, these ventures tend to develop “naturally” as business managers look beyond regulation compliance to maximize environmental and market efficiency. 85

Sometimes labeled “virtual eco-parks,” EINs involve geographically separated businesses working together to minimize pollution and [*PG285]maximize savings.86 The joint venture between Con Agra and DuPont provides an example.87 Working collectively, they developed the technology to turn Con Agra’s cheese whey waste into lactic acid used by DuPont to make polylacticides, a biodegradable plastic.88

Some EIP advocates insist that engineers are required to design and develop successful parks.89 Others point out that Kalundborg evolved naturally because of private business priorities90 and the development of business relationships.91 Yet, Kalundborg is a hybrid of the two models; its relationships extend beyond the core industries to the surrounding community (like an EIN), but it is small and insular similar to a park.92

These differences in model and approach are significant, affecting the analysis of impediments to eco-industrial development.93 Through proactive planning and design of an EIP, for example, regulatory barriers may be avoidable, whereas existing hazardous waste generators seeking to reduce responsibility through EINs will likely encounter more obstacles.94

B.  Barriers to Eco-Industrial Development

1.  General Problems Facing EIDs

As previously mentioned, the closed-loop system presents certain unique challenges.95 First, finding appropriate firms for a park can mean turning away unsuitable businesses, often requiring both political will and economic flexibility.96 Additionally, some risk management strategies may advise against the interdependency needed in the EIP model.97 Economic justification for the necessary front-loaded investment is directly related to the viability of the other partners.98 To [*PG286]avoid raw material source disruption, businesses can arrange alternative supply sources as a back up,99 yet costs for occasionally substituted raw materials would be higher than that for larger volumes under contractual agreement.100 Finally, liability exposure may initially discourage some businesses from building in an eco-industrial park.101 If a waste stream is hazardous, park tenants may be potentially responsible parties under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).102

Differences in business philosophy can also create hurdles.103 Before their joint venture could work, Con Agra and DuPont had to reconcile their divergent corporate mind-sets, investment strategies, and research and development policies.104 The cooperation and information sharing requirements of eco-industrial development goes against the dominant corporate mind-set.105 For both EINs and EIPs, partner matching is further complicated by corporate reluctance to share production, waste discharge, and raw material information with potential competitors.106 Over the past ten years, waste exchange databases,107 EPA software programs,108 chambers of commerce network[*PG287]ing, and various university programs have improved EID information resources.109

2.  The Regulatory Barriers Presumption

In addition to market-based barriers, EID proponents insist that new regulatory philosophies must be developed before pollution prevention ideas like industrial ecology can be achieved,110 citing the potential regulatory impediments of antitrust and environmental laws.111 Environmental regulatory barriers, particularly those posed by RCRA, are found on, or near the top of the list of EID obstacles.112 RCRA’s definition of waste is cited as “the most glaring regulatory problem[] in the creation of industrial loops . . . .”113 Specifically, it is claimed that the circular logic of EPA’s solid waste definition114 causes many recycling options to become mired in the expensive bureaucratic quagmires of permitting, reporting, and potential liabilities.115

Industrial ecology advocates usually do not deny the need to regulate hazardous material management or recycling.116 Rather, it is asserted that changes in RCRA’s definition and treatment of recycled materials are necessary before pollution prevention strategies like EID can work.117 Efforts to redefine recycling, however, are hampered by [*PG288]EPA’s legitimate concern that “sham recycling” could allow toxic materials to bypass regulatory protections.118

The question of whether RCRA poses a formidable barrier to an eco-industrial development requires answers to other questions. First, does the project involve transfer of “solid wastes” as currently defined by RCRA, and if so, are the wastes hazardous? Second, even if a project includes generators of hazardous solid waste, does RCRA necessarily foreclose the project?

II.  The Resource Conservation and Recovery Act of 1976

A.  Overview

1.  Statutory Framework

Congress amended the Solid Waste Disposal Act by passing RCRA to “reduce the generation of hazardous waste . . . ‘so as to minimize the present threat to human health and the environment.’”119 Existing and new facilities that generate, treat, store, or dispose of hazardous wastes are subject to RCRA’s controls,120 while inactive and abandoned sites fall under the jurisdiction of CERCLA.121 CERCLA assigns liability for the cleanup of any site contaminated by a hazardous substance to any responsible party including those who “arrange for disposal.”122 Hazardous substances under CERCLA include “any hazardous waste having the characteristics identified under or listed” under [*PG289]RCRA.123 Thus, any substance identified as a hazardous waste under RCRA also carries potential liability under CERCLA.124

The Hazardous and Solid Waste Amendments of 1984 (HSWA),125 with seventy-two major provisions, substantially expanded RCRA’s scope and impact on businesses in the United States.126 Congress determined that land disposal “should be the least favored method for managing hazardous wastes.”127 Thus, HSWA required EPA to promulgate restrictions on hazardous waste land disposal by May 1990 to avoid the “hammer” of a statutory ban on all such land disposal.128 Congress also directed EPA to divide hazardous wastes into groups and establish a schedule for setting standards for each group.129 Finally, since “methods are available to separate usable materials from solid waste”130 providing “a potential source of solid fuel, oil, or gas that can be converted into energy,”131 Congress also directed EPA to consider recycling as an alternative to disposal.132

Solid waste is subdivided into non-hazardous and hazardous wastes.133 Individual states regulate non-hazardous solid waste pursuant to subtitle D for which EPA has limited enforcement authority.134 Subtitle C’s stringent requirements authorize EPA to control hazardous wastes.135

[*PG290] Subtitle C requires the monitoring of hazardous wastes from “cradle-to-grave” by imposing permitting, tracking, and handling requirements on those who generate and transport hazardous waste, as well as the operators and owners of treatment, storage, and disposal (TSD) facilities.136 Generators or producers of hazardous waste maintain responsibility for the materials from the point of production (the “cradle”) to the point of disposal (the “grave”) and must prepare tracking manifests to follow the material throughout its “life.”137 Persons who move any hazardous materials any distance off the production site must comply with RCRA’s transport standards.138 Finally, TSD facilities are strictly regulated to ensure that hazardous wastes are treated, stored, and disposed of safely.139

2.  Definitions of Solid Waste

Meeting RCRA’s subtitle C requirements can be onerous and costly, so the critical threshold issues are determining, first, whether a material is a “solid waste” and, if so, whether it is “hazardous.”140 If it is not a solid waste, it cannot be classified as a hazardous waste, and RCRA does not apply.141 Thus, the solid waste determination may be crucial to cost-effective, waste-stream reuse in eco-industrial development.142

[*PG291] Unfortunately, making such determinations can be confusing.143 The vague statutory definition of solid waste differs from the regulatory definition.144 Congress defined solid waste as:

[A]ny garbage, refuse, sludge from a waste treatment plant, water supply treatment plant, or air pollution control facility and other discarded material, including solid, liquid, semisolid, or contained gaseous material resulting from industrial, commercial, mining, and agricultural operations, and from community activities . . . .145

The solid waste definition does not include: (1) domestic sewage; (2) irrigation return flows; (3) point source industrial discharges under the Clean Water Act; or (4) “source, special nuclear, or byproduct material as defined by the Atomic Energy Act of 1954.”146 Courts have applied the statutory interpretation only in limited situations.147

The statute does not specifically define the key phrase discarded materials, leaving the agency and/or courts to provide meaning.148 The broad statutory definition of “disposal” as “the discharge, deposit, injection, dumping, spilling, leaking, or placing of any solid waste or hazardous waste into or on any land or water” has not provided significant guidance.149

EPA’s regulatory definition of “solid waste” is “any discarded material that is not excluded” under 40 C.F.R. § 261.4(a) or by variance.150 If a material is discarded, it is solid waste unless EPA specifically removes it from the solid waste category, usually by conditional exemption.151 EPA defines “discarded” as “abandoned,”152 “re[*PG292]cycled,”153 “inherently waste-like,”154 or “military munition”155 materials. Although tracking these definitions can be complex, EPA’s logic is to widely spread its regulatory authority, then remove from the solid waste category anything that it deems to be legitimately recycled or actually needed to make a product.156

A material is “abandoned” when it is disposed of, burned, or incinerated, or when it is accumulated, stored, or treated but not recycled.157 Certain listed materials are solid wastes due to the manner in which they are recycled, such as by disposal on land, or when used to make other products that are placed on land, either directly or in containers.158 This exception to the “recycled” exemption covers materials recycled by application onto roads or ground as, for example, a road base for skid reduction or dust control.159 EPA asserts regulatory authority over such activities to keep hazardous materials from running off into sewers, groundwater, and the environment.160

Similarly, recycled materials are solid waste if they are burned to recover materials or energy, are found in fuels, or are used to produce a fuel¾all activities that affect air quality.161 Materials may also be solid waste when recycled by reclamation,162 or if they have been “accumulated speculatively.”163 These distinctions are necessary to regulate incineration, reclamation, and accumulation activities and to protect against what EPA calls “sham recycling.”164

[*PG293] Some materials are “inherently waste-like,” and therefore are solid wastes no matter how they are recycled.165 Few inherently waste-like materials are listed,166 but the EPA Administrator may also add any materials that match EPA’s criteria.167 If the material is “ordinarily disposed of, burned, or incinerated . . . [or] contain[s] toxic constituents” that are not usually present in the substituted raw material, and it is “not used or reused during the recycling process,” it is classified as “inherently waste-like” if it “may pose a substantial hazard to human health and the environment when recycled.”168

If the material is not a solid waste, RCRA does not apply.169 The crucial distinctions between recycled solid waste and recycled materials are examined further in Part III.B infra.170 If the material is a solid waste, the next step is to ascertain whether it is also a “hazardous waste.”171

3.  Defining Hazardous Waste

RCRA authorizes EPA to determine when a solid waste is also hazardous, which it has done in a “two-part definition.”172 First, EPA published a list of hazardous wastes, each of which is described and assigned a code.173 This list is divided into three types, categorized by letter codes: (1) “F” applies to hazardous wastes from unspecified sources;174 (2) “K” includes hazardous wastes from specified sources;175 and (3) “P” and “U” designate commercial chemical product, manufactured chemical intermediates, or residues that are “discarded,” including off-specification products, whether spilled or in [*PG294]containers.176 P-listed chemicals are deemed “acute hazardous wastes” and thus are more rigorously controlled than U-listed wastes, which are identified as toxic.177

Second, a solid waste exhibiting any of the characteristics of a hazardous waste identified by EPA will fall under RCRA’s subtitle C regulations.178 These characteristics are: reactivity (unstable materials which may “react violently, . . . generate toxic gases, vapors or fumes,” or explode);179 ignitability (has a flash point below 140° Fahrenheit, or can cause or exacerbate a fire);180 corrosivity (could eat through steel or has a pH level at or below 2 or equal to or greater than 12.5);181 and toxicity (capable of leaching listed contaminants into groundwater above specified levels).182

B.  Recycled or Solid Waste: What Does it All Mean?

Recycled materials can be divided into three categories: those that are solid wastes, but not hazardous; solid wastes that are hazardous wastes under RCRA’s subtitle C;183 and those that are not solid wastes at all, and thus outside the regulatory scheme.184

1.  When Are Recycled Materials Not Solid Wastes?

Two factors determine whether EPA retains jurisdiction over a recycled material as a solid waste: the type of secondary material being recycled and the recycling method employed.185 Secondary materials are divided into five main classifications: spent materials, sludges, by-products, commercial chemical products, and scrap metal.186 [*PG295]“Spent materials” include used solvents, activated carbon, catalysts, and acids that must be regenerated, reclaimed, or reprocessed before they can again serve their original purpose.187 If spent materials are disposed, recovered for fuel, reclaimed, or speculatively accumulated, they are categorized as solid wastes.188

Sludges are wastes resulting from water and wastewater treatment or from air pollution control equipment.189 Regulated hazardous waste sludges are either listed on the F or K hazardous waste lists, or exhibit a hazardous characteristic.190 Listed sludges may be those from non-specific sources (F list)191 or from specific sources, such as wood preservation (K list).192 If the sludge is not listed, but does have a hazardous characteristic, it may, nonetheless, be reclaimed without regulation,193 unless it is “generated within [the] primary mineral processing industry” pursuant to section 261.4(a)(17), which conditions the exemption.194

The term “by-products” is a catch-all for most remaining wastes that are not classified as spent material or sludges, but does not include primary products or materials that are “solely or separately produced by the production process.”195 By-products are treated like sludges¾either listed or exhibiting hazardous characteristics.196 Sludges are not solid wastes, if reclaimed, unless they fall within section 261.4(a)(17).197 Co-products, which are materials produced in a form ordinarily used by the general public, are neither by-products nor solid wastes.198

Commercial chemical products (CCPs) are broadly defined to include: (1) discarded, off-specification, or unused chemicals; (2) products containing chemicals listed as hazardous in 40 C.F.R. [*PG296]§ 261.33; or (3) chemicals exhibiting hazardous characteristics.199 For the purposes of solid waste definition, CCPs also include non-chemical, commercial products with a hazardous waste characteristic, such as unused batteries.200 Surprisingly, CCPs are not considered solid wastes if they are recycled by reclamation or are speculatively accumulated.201 Recycling of CCPs by disposal on land, however, is regulated unless such application is the normal use of that chemical, as in pesticide use, for example.202 Unless it is a fuel to begin with, commercial chemical products are also classified as solid wastes when burned to recover energy, or used to produce fuel.203

The final category of potentially regulated secondary materials is scrap metals. Defined as worn or excess pieces of metal parts, such as wire and shavings not excluded by definition,204 scrap metals are solid wastes if recycled by disposal on land, recovered for fuel, reclaimed, or speculatively accumulated.205

EPA’s authority under RCRA to regulate recycling does not extend to regular production activities or “normal uses of commercial products,” because these are not waste discard activities meaning that the resulting materials are not discarded.206 EPA does assert jurisdiction over recycling that involves materials that are: (1) burned to recover energy or fuel; (2) disposed on land; (3) used in a product that is disposed on the land; (4) speculatively accumulated; (5) reclaimed; or (6) inherently waste-like.207

Although EID might involve any of these methods, the “speculatively accumulated” and “reclamation” designations may be the most common issues bringing an EID project under RCRA’s jurisdiction.208 Unless the production of secondary materials exactly matches the [*PG297]quantity required for reuse as a raw material, some accumulation or inventorying of materials may be necessary. Many secondary materials require reclamation to recover useable products, potentially triggering expensive RCRA regulation if the material is listed as hazardous.209 These recycling exceptions require a closer look to understand how they affect EID.

To protect public health and the environment against improper storage of hazardous waste under the guise of recycling, EPA categorizes secondary materials that are “speculatively accumulated” as solid wastes.210 If there is no known or feasible recycling market for the material, or if seventy-five percent of the material is not recycled within one calendar year beginning on January 1,211 EPA assumes authority to regulate it as speculatively accumulated material.212 Materials “generated . . . in a manufacturing process unit or associated non-waste-treatment-manufacturing unit” are exempted even if accumulation occurs.213

Reclaimed spent materials, sludge, and by-products identified in table 1 of section 261.2 and not excluded under section 261.4(a)(17), are solid wastes.214 Reclamation entails regeneration or processing to remove contaminants and “recover usable product.”215 Direct uses of secondary materials, however, “as ingredients to make new products without distinct components of the materials being recovered as end-products,” or “as substitutes for commercial products,” are excluded, [*PG298]however, because they are production, not “waste management,” activities.216

EPA sets out three categories of “recycled” materials that are not solid wastes, at least at first glance.217 Materials “used or reused” to make a product are not solid wastes unless reclaimed, or otherwise included under the recycling exceptions.218 Likewise, materials employed “in a particular function or application as an effective substitute for a commercial product”219 or returned back into the original generating process are not solid wastes,220 unless specifically included.221 The final category, again with certain exceptions,222 includes secondary materials used in a closed-loop recycling system as a “feedstock” substitute.223

The “used or reused” category includes ingredients or intermediates used to make a product, such as the distillation bottoms resulting from carbon tetrachloride production, used to make tetrachloroethelyne, or the production of cement using fly ash.224 Commercial product substitutions include, for example, the use of pickle juice waste as “phosphorous precipitant and sludge conditioner in wastewater treatment.”225

EPA retains jurisdiction “even if the recycling involves use, reuse, or return to the original process” for wastes that are disposed or used in products for land application.226 Wastes that are “inherently waste-like,”227 “used in a manner constituting disposal,”228 “burned for energy recovery,” used for fuel production or otherwise found in fuels,229 or “accumulated speculatively”230 are solid wastes, regardless of how they are recycled.

[*PG299] These exceptions maintain EPA’s authority to regulate hazardous recycled materials or processes, that pose potential harm to public health or the environment, are prone to “sham recycling” methods, or both.231 The premise that control of sham recycling requires all recycling to be defined under solid wastes is a major source of the criticism that RCRA impedes recycling efforts,232 echoed even by some EPA and state regulators.233 EPA retains discretion to determine that a recycling method is legitimate, through exceptions, exemptions, variances, and delisting options.234

2.  Controlling Hazardous Waste Recycling

Under RCRA, recycled hazardous wastes are “recyclable materials,”235 which are divided into three categories.236 The first group includes recyclable materials that are not conditionally exempt, for which generators and transporters of recyclable materials must follow the specified guidelines of RCRA for notification, manifesting, handling, storage, and transportation.237

Owners and operators of facilities that store recyclable materials before recycling are more heavily regulated,238 while those who do not store have significantly fewer responsibilities.239 The recycling process itself is generally exempt from regulation, although the “[o]wners [*PG300]and operators of facilities subject to RCRA permitting” must still meet certain requirements.240

The next category is only “regulated under subparts C through O” of section 266 and “all applicable provisions in parts 270 and 124.”241 This group includes: (1) hazardous materials that are disposed;242 (2) burned for energy recovery;243 (3) provide for the reclamation of precious metals,244 including reclaimed lead-acid batteries;245 and (4) site-specific waste from “US Filter Recovery Services XL”(USFRS XL).246

The final category includes industrial ethyl alcohol,247 scrap metal,248 fuels refined out of “oil-bearing hazardous waste,”249 certain hazardous waste fuels, and recycled used oil.250 This category exempts the notification requirements and the regulations under sections 262 through 266, 268, 270, and 124.251

Another point worth considering in determining EIP viability is that hazardous waste generators are treated differently depending on size.252 There are large-quantity and small-quantity generators,253 with conditional exemptions allowed for certain small-quantity genera[*PG301]tors.254 The reporting and storage requirements for small and conditionally exempt generators are less stringent than for large generators.255

3.  Judicial “Clarification”?

Many of the significant decisions attempting to distinguish regulated discarded materials from non-regulated products have come out of the United States Court of Appeals for the District of Columbia.256 The first major case, American Mining Congress v. United States Environmental Protection Agency (AMC I), limited EPA’s authority under RCRA to those materials that were actually part of the “waste disposal problem” and not those which are “destined for beneficial reuse or recycling in a continuous process by the generating industry itself.”257 Thus, if a material was still part of the “ongoing manufacturing or industrial process,” it was outside EPA’s jurisdiction.258

In American Petroleum Institute v. United States Environmental Protection Agency, the issue was whether the court’s ruling in AMC I precluded EPA from regulating the treatment of zinc-bearing waste created in the steel production process because it was no longer “discarded” when it reached a recycling facility.259 The court determined that the slag was “discarded” before it reached the facility, and since the delivery was “not . . . part of an ‘ongoing manufacturing or industrial process’ within ‘the generating industry,’” but rather “part of a mandatory waste treatment plan,” AMC I was distinguishable.260 This ruling expanded EPA’s jurisdiction to include materials recycled [*PG302]outside the generating facility, even if they were later sold as a product.261

The following month, American Mining Congress v. United States Environmental Protection Agency (AMC II) drew a further distinction between “discarded” and “beneficially reused.”262 The court narrowed AMC I’s ruling to include only those materials “‘destined for immediate reuse in another phase of the industry’s ongoing process,’”263 and therefore, the “potential reuse of a material” at some later time, does not prevent EPA “from classifying it as ‘discarded.’”264

EPA understood the AMC I and AMC II rulings to mean that it could treat a “secondary material as ‘discarded’” whenever the material left “the production process and [was] stored for any length of time”265 because it was not immediately reused. In Association of Battery Recyclers v. United States Environmental Protection Agency, the court disagreed, declaring “material stored for recycling is plainly not in [the waste] category.”266 Association of Battery Recyclers placed a different emphasis on AMC I’s language,267 defining “immediate reuse” not as a measure of time, but rather as a direct or sequential part of the industrial process.268

The issue involved the “conditional exclusion” for “reclaimed mineral processing secondary materials” which are not solid wastes unless improperly stored.269 The petitioners challenged EPA’s position that a secondary material “held for recycling in production” could be regulated as a “waste” regardless of whether it was stored before it was recycled.270

The court agreed with the petitioners, noting that because “[a]t least some of the secondary material [was] destined for reuse as part of a continuous industrial process [it was] not abandoned or thrown away.”271 By attempting to regulate “in-process secondary materials,” which are being reclaimed “‘for beneficial reuse or recycling in a continu[*PG303]ous process by the generating industry itself,’”272 EPA “acted in contravention of Congress’ intent.”273 Thus, storage of in-process, secondary materials, at least the part that is slated for recycling within the generating industry, may be outside EPA’s jurisdiction.274

The American Petroleum Institute challenged EPA’s regulations again in 2000; this time contending that primary treatment of oil-bearing wastewater was intended to recover useable oil as part of the production process, not, as EPA insisted, primarily to prepare for discard in compliance with the Clean Water Act.275 If conducted as part of a mandatory treatment plan under the AMC I analysis, a characterization for which EPA is “entitled to deference,” then such treatment could be regulated.276

The court noted, however, that “[i]f refiners got nothing from primary treatment” then EPA’s assertion would be compelling, but because they recovered a valuable resource, EPA would have to do more than merely conclude that discard was the primary motivation.277 Further, the relative quantity of oil recovered was not in itself indicative of a primary intent to discard.278

The court held EPA’s regulation of the primary treatment to be arbitrary and capricious, remanding to the agency in order to: (1) “set forth why it has concluded that the primary motivation predominates over the reclamation motivation”; and (2) even if that conclusion is valid, explain why it “compels the further conclusion that the wastewater has been discarded.”279 Thus, the court suggests that if the intent of the treatment is primarily to reclaim useable product, or if any useable material is recovered from the process no matter how small, EPA may not be authorized to regulate it if used in the generating industry itself.280

Other courts have had a hand in clarifying when a secondary material is “discarded.” In United States v. ILCO, Inc., for example, the question was whether previously discarded vehicle batteries collected for the beneficial recovery of lead were no longer discarded once they [*PG304]were recycled.281 The Eleventh Circuit agreed with the Court of Appeals for the District of Columbia that a secondary material merely has to have been thrown away at some point to be considered “discarded” not remain in that condition indefinitely.282

In Catellus Development Corp. v. United States, the Ninth Circuit applied the reasoning from ILCO to establish CERCLA liability.283 General Automotive argued that because they sold used whole batteries as a product to a third party¾who then cracked them open, recovered the valuable components, and discarded the casings on Catellus Development Corp.’s property¾they should not be held liable.284 The court stated that General Automotive could not avoid arranging for disposal liability by selling the non-recyclable casings¾known to require disposal¾along with recyclable lead plates as a product to a third party.285

C.  EPA Flexibility: Exemptions, Exceptions, Waivers, and Delisting Petitions

Further complicating the issue, the regulations provide for nineteen solid waste286 and eighteen hazardous waste exemptions.287 EPA also created various conditional exclusions288 and variances,289 as well as a procedure to enable delisting of certain materials from the hazardous waste classification.290

1.  Exclusions and Variances from Solid Waste Classification

The first few solid waste exclusions concern discharges and materials covered by the Clean Water Act and the Atomic Energy Act of 1954.291 A few industries receive special solid waste exemptions, including those involved in wood preservation292 and petroleum refinery.293 Certain materials or processes are individually excluded [*PG305]from solid wastes under certain conditions.294 For example, “[s]pent sulphuric acid used to produce virgin sulphuric acid” is an exclusion, unless it is speculatively accumulated.295

Some exemptions conditionally enable recycled secondary materials to avoid solid or hazardous waste classification. For instance, according to the regulations, reclaimed secondary materials that are returned to the original generating process are not solid wastes when they are properly handled.296 The conditions for this exemption include tank storage for less than twelve months with closed pipe conveyance, and preclude processes involving flame combustion, reclamation to produce fuels, or to produce products “used in a manner constituting disposal.”297 Another example is recycled shredded circuit boards, which are included as solid wastes unless they are properly stored before recovery and free from mercury, nickel-cadmium, and lithium.298

The EPA Administrator may also determine that in certain situations the rules classifying recycled materials as solid wastes may be waived without adversely affecting human health or the environment.299 Waivers, in the form of variances, may be obtained for certain speculatively accumulated and reclaimed materials on a case-by-case basis.300

The speculatively accumulated materials variance is renewable annually.301 The variance may be issued in cases where insufficient amounts of speculatively accumulated materials are recycled,302 or when reclaimed materials are either reused within their original generating processes,303 or require further reclamation for complete recovery.304 The Administrator considers when, whether, and how the material is expected to be recycled in the future, the reason for not meeting the recycling quota, how much has been and will be accumulated, and whether the material handling procedures minimize loss.305

[*PG306] Reclaimed materials qualify for a waiver if they are returned back into the generating process from which they originated, as long as the reclamation operation “is an essential part” of production.306 Factors considered in determining this waiver include: (1) the economic viability of virgin material use; (2) how prevalent the practice is; (3)the risk of loss through handling; (4) the time and distance involved between production and reclamation, if the generator also reclaims the material, and (5) whether the material is returned substantially to its original form and use.307 Finally, reclaimed material requiring further reclamation may also be excluded from solid waste classification if the resulting material will be “commodity-like.”308

2.  Hazardous Waste Exemptions, Exceptions, and Delisting

After determining that a secondary material is classified as a solid waste, the next step is to ascertain if it is nonetheless deemed “not hazardous waste.”309 In 1988, Congress added the Bevill Amendment310 to RCRA, requiring EPA to remove a number of wastes from its list, although some have since been replaced.311 This exception includes “[f]ly ash, bottom ash waste, slag waste, and flue gas emission control waste” from coal and fossil fuel combustion.312 Other listed exclusions include household waste,313 solid wastes generated by agricultural means and returned to the soil,314 mining material returned to the mine,315 and “wastes associated with the exploration, development, or production of crude oil, natural gas, or geothermal energy.”316

Some exclusions are industry specific. For example, certain solid wastes containing trivalent chromium generated by the “leather tan[*PG307]ning and refinishing industry” are excluded,317 and the mining industry enjoys various exclusions for twenty solid wastes, including slag, process wastewater, and dust.318 Others, such as cement kiln dust, used oil distillation bottoms for asphalt manufacturing, reclaimed chloroflurocarbon refrigerants, and used oil filters appear aimed at supporting recycling efforts.319

Under the “product rule,” products “produced for the general public’s use” to be placed on land, which contain recyclable materials may not be subject to regulation.320 To qualify, the recyclable materials must first undergo a “chemical reaction in the course of producing the products” that makes them “inseparable by physical means” and the product must meet applicable land disposal treatment standards.321 EPA interprets this rule to include the requirement that the recycling of the hazardous waste must be legitimate, and not simply a means to avoid RCRA regulations.322 “Sham recycling” is distinguished from legitimate recycling by determining whether the recyclable material serves a legitimate function in the process or is “merely along for the ride.”323

Another option available to EID project planners may be to petition for a site specific delisting of a waste stream material from EPA.324 Because individual waste streams vary “depending on raw materials, industrial processes, and other factors,” a waste that is otherwise hazardous may not be under the conditions existing at a particular facility.325 Thus, the regulations allow persons “to demonstrate that a specific waste from a particular generating facility should not be regulated as a hazardous waste.”326 For example, in October 2000, Nissan successfully petitioned EPA Region 4 to exclude certain listed alumi[*PG308]num wastes,327 for its automobile manufacturing facility in Smyrna, Tennessee.

To succeed, the petitioner must show that the facility’s waste does not meet EPA’s hazardous or acutely hazardous waste criteria, and satisfy the Administrator that no other factors exist requiring such listing.328 This option is more suitable for larger operations with greater technical and financial resources because submission requirements are likely too expensive for smaller facilities.329 Additionally, the procedural requirements take time, which smaller operations may not have.330

III.  Analysis: in the Right Direction

To presume RCRA is an impediment based solely on complexity of the “waste” versus “recycle” analysis would do a disservice to the significant pollution prevention or reduction opportunities eco-industrial development has to offer. The solid waste definition is only one of many relevant factors.

A.  EID Options and Strategies

Because a number of eco-industrial projects exist, there are obviously waste streams successfully exchanged, with or without RCRA’s alleged impediments.331 Persons seeking to plan an EID should first consider exchanges of secondary materials that are neither solid waste nor hazardous waste because, as indicated, RCRA would not apply at all.332 This determination is well worth the effort to avoid the regulatory responsibilities.333

[*PG309] Solid waste definition begins with “any discarded material” because manufactured products for sale to other businesses or to the public are not regulated under RCRA, whether hazardous or not.334 EPA does not consider secondary material discarded when it is directly used as a substitute for commercial products or to make new products unless “distinct components” of the secondary material come out at the end as waste.335

In Association of Battery Recyclers v. United States Environmental Protection Agency, however, the court suggested a narrower EPA authority by stating that because “[a]t least some of the secondary material [was] destined for reuse as part of a continuous industrial process [, it was] not abandoned or thrown away.”336 This language suggests that RCRA would not apply to the “used or reused” secondary material, but only to that which actually did come out as waste.337

EIDs, however, could potentially involve secondary materials, deemed “discarded” when “inherently waste-like,” or under certain recycling methods.338 Regulated recycling methods are limited to inherently waste-like secondary materials and methods that involve reclamation, speculative accumulation, incineration to recover energy or materials, involve fuels, or result in a product that is placed on land.339

The “discarded” recycling classifications are more limited than they initially appear to be. For example, although the Administrator has the discretion to add to the list of inherently waste-like materials, only a few F-listed items and halogen acid furnace incineration are listed as “discarded.”340 Further, if the F-listed materials are ingredients to make a product “at the site of generation,” they are not included.341 Thus, even if a secondary material contains one of the F-listed wastes, its use within the same EIP site (where it was generated) as an ingredient may arguably takes it out of RCRA’s jurisdiction.

[*PG310] Additionally, certain secondary materials are not considered solid waste by EPA, even when reclaimed or speculatively accumulated.342 For example, commercial chemical products, which by definition are hazardous, are not solid wastes even when recycling involves reclamation or accumulation.343 Non-hazardous water, wastewater, and air pollution treatment waste (sludge)344 are not regulated, and even sludge exhibiting a hazardous characteristic may be reclaimed without triggering RCRA.345 Finally, the product rule allows hazardous secondary materials to be used for products properly treated for placement on land, such as asphalt or cement, as long as it is a necessary (i.e., legitimate) ingredient of the process.346

Thus, in EID planning, restricting exchanged materials and recycling processes to avoid combinations that invoke the solid waste classification is clearly possible. Although limiting participants may present some recruitment difficulties, RCRA avoidance would also be a marketing advantage.347 Operations can also be designed to avoid speculatively accumulated materials by ensuring that secondary materials have a viable recycling market and will not be stored for longer than one year.348

Where the solid waste classification for reclaimed materials or speculative accumulation cannot be avoided, a variance is obtainable.349 Although EPA’s interest in protecting public health against sham recycling broadened the classification of solid wastes by maintaining the waiver option on a case-by-case basis,350 EPA has the flexibility to facilitate recycling efforts of a legitimate EID.

EPA also either completely excludes or conditionally exempts many types of secondary materials from solid or hazardous waste classifications.351 Conditional exemptions often place reduced burdens on the regulated parties or completely exclude legitimate recycling methods from regulation, while still protecting against sham re[*PG311]cycling.352 If certain types of EIDs fall into the RCRA quagmire, EPA should consider exemptions to enable such operations to function economically. In addition, larger facilities or networks could apply for site-specific delisting of a hazardous waste.353

Finally, even where RCRA does apply, not all compliance requirements are the same. Small generators have significantly fewer obligations than large generators,354 so size can be an important factor in determining RCRA responsibility. For EIPs the “cradle-to-grave” manifesting requirements could be relatively simple if the majority of the secondary materials were reused onsite.

B.  Targeted Flexibility and Future Possibility

Recent EPA trends towards flexibility and practical solutions may have particular application for eco-industrial development.355 The flexibility provided to a number of special projects under Project XL can be applied to the EIP concept.356

For example, site specific “case-by-case” deferrals of RCRA standards provided to the Crompton Corporation in Sisterville, West Virginia,357 may similarly be applied to specific EID projects that meet Project XL’s waste-minimization/pollution-prevention targets. EPA is currently considering variances or delisting approval for recycling of low level toxic sludge at Hadco Corporation’s Salem, New Hampshire facility,358 and a “facility-wide cap on air emissions” at Intel’s Ocotillo site in Chandler, Arizona.359 EPA anticipates using successful Project XL pilots as models for other similar applications.360

EPA is also considering the possibility of new regulatory approaches to distinguish waste from raw materials.361 Toward the end of 2001, the EPA Office of Solid Waste requested public comments on its [*PG312]draft discussion paper, Beyond RCRA: Prospects for Waste & Material Management in the Year 2020, which, among other things, suggests new approaches in waste/products analysis as technology and market incentives introduce new strategies for recycling and reuse.362

One interesting possibility would be for EPA to classify secondary materials exchanged within a closed-loop EIP as materials “destined for beneficial recycling within a continuous process” under the AMC I/Association of Battery Recyclers/American Petroleum Institute analysis363 rather than a “waste disposal problem.”364 When Congress enacted RCRA, its stated goals included the encouragement of recycling, pollution prevention or reduction, and non-land disposal methods of dealing with wastes.365

Association of Battery Recyclers reaffirmed that Congress did not give EPA authority over by-products of industrial processes that are recycled, at any time, back into the process of the generating industry itself.366 The latest American Petroleum Institute v. United States Environmental Protection Agency case also suggests a narrowing of EPA’s authority to regulate reclamation where a useable resource is recovered within the same generating industry.367 First the court considered whether the intent was primarily to discard or to recover the useable material,368 which should be good news for EID. Even more interesting is the suggestion that intent may be irrelevant: the process or treatment within the generating industry where the usable material is recovered is outside EPA’s jurisdiction unless EPA can justify why it should not be.369 If this is the case, then within the same EIP, treatment at one facility to recover material useable directly for production at another should not be treated as waste management. Unless narrowly drawn, however, this interpretation could detrimentally affect EPA’s ability to control “sham recycling.”

Where EIPs must be regulated under RCRA, umbrella or “bubble” permitting could simplify the process.370 Rather than requiring [*PG313]each facility to apply for individual permits, EPA could potentially issue a single permit for the entire park, similar to the Intel Project XL.371 A park corporation established for that purpose could be responsible for all reporting requirements. Conceivably, cost incentives would sufficiently offset the risks of shared liability.372 Such an arrangement would also naturally encourage self-policing because each “shareholder” would have a stake in mutual compliance.

Conclusion

To categorically state that RCRA is a barrier to eco-industrial development, or that such projects are doomed to fail in the U.S. without regulatory restructuring of RCRA, is simply unfounded. First, for RCRA to even apply, the recycled secondary material must be a solid waste, must be hazardous, and must involve one of the regulated secondary materials and recycling methods. Considering the exclusions and exemptions, there appear to be many unregulated recycling possibilities. Second, RCRA’s recycling-as-solid-waste definitions are designed to restrict unsafe methods of recycling, not legitimate recycling.

The type of eco-industrial project proposed affects the analysis. EIPs can be designed to avoid or significantly limit regulatory requirements. Where the materials are recycled on site, in a closed-loop process, RCRA may not apply at all, or have limited application. Smaller facilities generating nominal amounts of waste at the end are significantly less regulated than larger sites.

On the other hand, larger industries seeking ways to recycle existing hazardous waste streams may need to be more innovative and environmentally conscientious to avoid the need for RCRA regulation. Where the proposal is not simply a way to dodge RCRA requirements through creative hazardous waste disposal, EPA offers flexibility through variances, waivers, a delisting option, and Project XL pilot programs. The potential economic benefits of reduced disposal costs, new product sales, reduced regulatory burdens, and improved public relations may be well worth the investment.

Those seeking proactive ways to reduce or minimize pollution should give serious consideration to the EID concept. Whether starting from scratch or legitimately recycling existing solid or hazardous waste streams, there are many options available within and outside of [*PG314]RCRA’s regulatory structure. Perhaps it is time for industry to match EPA’s efforts toward flexibility.

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