Sugarman/Tuley: Hazardous waste rule changes may impact Indiana businesses

Tuley

Sugarman

By Bradley R. Sugarman
and Aaron F. Tuley

Recent changes to the regulations implementing the federal Resource Conservation and Recovery Act have the potential to significantly affect the environmental management practices of Indiana businesses. In November 2016, the Indiana Department of Environmental Management incorporated the EPA’s alterations to its Definition of Solid Waste (or DSW) Rule into the Indiana Administrative Code. Assuming EPA’s new rule survives a pending legal challenge in the D.C. Circuit Court of Appeals, generators that hope to or who are currently recycling materials that would otherwise be hazardous waste must satisfy additional elements to demonstrate that they are not “sham” recyclers. Also in November 2016, EPA published its final Hazardous Waste Generator Improvements Rule which made over 60 changes to the regulations concerning hazardous waste generators. This rule generally provides businesses with more flexibility in managing hazardous waste, but it could substantially increase the cost of penalties associated with regulatory violations.

Legitimate recycling

Under EPA’s DSW Rule, recycled materials are excluded from the definitions of hazardous and solid waste if the recycler meets certain requirements, such as showing that the recycling is legitimate. In January 2015, EPA modified the DSW Rule to clarify the recycling activities that EPA would consider “legitimate” as opposed to “sham” recycling. In November 2016, IDEM updated the Indiana Administrative Code to specifically incorporate this rule and its clarifying language into its waste management program.

Now, under both federal and Indiana standards, a recycler that claims its material is excluded must maintain documentation of how its recycling activities are legitimate by meeting each of four “legitimacy factors”: (1) the “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) “[t]he recycling process must produce a valuable product or intermediate”; (3) “[t]he generator and the recycler must manage the hazardous secondary material as a valuable commodity when it is under their control”; and (4) “[t]he product of the recycling process must be comparable to a legitimate product or intermediate.” These factors were promulgated in an attempt to crack down on sham recycling where materials were added to a recycling process just for disposal purposes or where only small amounts of the recycled material were actually recovered.

While this clarifying regulation imposes new requirements, it should help both current and potential new recyclers. Current recyclers can have greater confidence that their recycling activities will be considered legitimate or can adjust their processes before any RCRA violations are alleged. New recyclers will understand what systems they must implement in order to legitimately exclude recycled spent materials. By implementing legitimate recycling processes, waste that would otherwise be counted in determining your generator status may be taken out of the equation. However, careful analysis must be conducted to verify that the material meets the legitimacy factors and other requirements. John Crawford, former chief of the IDEM Hazardous Waste Compliance section and now senior project manager of HW Environmental LLC, recommends that facilities review their waste streams and evaluate the potential benefits of the rule, stating: “This Rule could be a game-changer for generators that recycle their hazardous waste. They can potentially move to CESQG status, avoid more stringent regulations and inspections, meet sustainability goals, and potentially save money. They must notify IDEM they are managing excluded material and meet certain management and documentation requirements, but the benefits could be substantial.”

EPA’s Improvements Rule

The Improvements Rule published in November 2016 made a comprehensive update to the federal RCRA hazardous waste generator regulations. In promulgating this rule, EPA sought to make RCRA regulations easier to understand, more flexible and more comprehensive. These efforts resulted in over 60 changes to the then-existing regulations that included reorganizing the structure of the regulations, adding some new provisions and adjusting terminology. Some of the more notable changes are discussed below.

As an initial note for those conversant in RCRA’s terminology, the classification as a “Conditionally Exempt Small Quantity Generator” has been renamed “Very Small Quantity Generator.” The other two volume-based categories — “Small Quantity Generator” and “Large Quantity Generator” — remain.

A number of the changes should benefit most generators. The Improvements Rule includes new guidance regarding how a generator should determine to which volume-based category it belongs. Further, EPA acknowledged that very small and small quantity generators sometimes experience spikes in the amount of hazardous waste they produce, which would normally affect their volume-based category. Now, as long as the waste produced is properly managed, these generators can have one such spike per year without impacting their category. In some cases, facilities with multiple locations may also be able to transport and consolidate hazardous waste at a single location, resulting in management and cost efficiencies.

On the other hand, a number of changes could pose problems for some generators. Under the Improvements Rule, a generator that violates a “condition for exemption” is considered to have failed to meet the conditions for any of the three volume-based categories of generators and is then considered to be operating without a required permit. This could result in compounding violations and penalties. Before this rule, such a failure would have just pushed the generator into a different category with generally limited penalties.

Although the rule does not go into effect federally until May 30, 2017, and sometime thereafter in Indiana, current and potential generators of hazardous waste should begin investigating adjustments they may need to make to their operations to remain in compliance with RCRA. As noted, these changes have the potential to both help and hurt hazardous waste generators.

Conclusion

Attorneys with clients potentially affected by these rules should review each rule in the context of each client’s specific situation. With the right advice, businesses should be able to reap tangible benefits from these changes to the RCRA regulations while avoiding potentially hefty penalties for violations.•

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• Bradley R. Sugarman is a partner at Krieg DeVault LLP. Aaron F. Tuley is an associate at the firm. The opinions expressed are those of the authors.