October 10, 2022

Transfer-Based vs. Verified Recycler DSW Exclusions

EPA issued guidance on the definition of solid waste (DSW) exclusions in August 2022, which compares the 2015 verified recycler exclusion and the 2018 transfer-based exclusion. It highlights the differences between the 2015 and 2018 DSW rules and provides information on interstate transportation of hazardous secondary materials (HSM) managed under these exclusions. The DSW exclusions are intended to facilitate the legitimate reclamation of HSM while protecting human health and the environment. The requirements of the exclusions at §261.4(a)(24) are designed to ensure HSM are safely and legitimately recycled, not discarded.

The national landscape surrounding the DSW exclusions is complex due to the extensive litigation history from 2008 to 2018 and because not all states have adopted these rules. Currently, a state program could have one of two different versions of §261.4(a)(24), the 2015 “verified recycler exclusion” or the 2018 “transfer-based exclusion.” In 2015, EPA updated the original 2008 version of the rule via four key changes to the language in §261.4(a)(24) by:

  1. Removing a prohibition making K171 and K172 spent petroleum catalysts ineligible for the new recycling exclusion;
  2. Adding a specific “contained” standard for managing HSMs before they are recycled;
  3. Adding emergency preparedness and response requirements; and,
  4. Replacing the requirement for generators to make a “reasonable effort” to audit the recycling facility before sending their material to be recycled with a requirement that the recycling facility obtain a variance from the regulations before accepting the recyclable materials.

In a 2018 court case, the first three provisions were upheld but the fourth was vacated. When EPA subsequently revised the DSW exclusions, it changed the fourth provision to require generators to make “reasonable efforts” to ensure the recycling facility legitimately recycles the HSM. This environmental audit is required every three years and is found in §261.4(a)(24)(v)(B). For a generator to adequately complete this requirement, it must answer the following questions:

  1. Is the reclamation process legitimate under §260.43?
  2. Does publicly available information indicate the reclamation facility notified the appropriate authorities of the HSM reclamation under §260.42 and that its financial assurance condition is satisfied per §261.4(a)(24)(vi)(F)?
  3. Does publicly available information indicate the reclamation facility has not had any formal enforcement actions over the past three years? If a formal enforcement action was taken against the facility and it has been classified as a significant non-complier, does the generator have credible evidence the reclamation facility will manage the HSM properly?
  4. Does the available information indicate the reclamation facility has the equipment and trained personnel to safely recycle the hazardous secondary material?
  5. If residuals are generated during the recycling process, does the reclamation facility have the permits required to manage the residuals? If not, does the reclamation facility have a contract with a permitted facility to dispose of them? Does the generator have credible evidence the residuals will be managed in a manner protective of human health and the environment?

Interstate transport between states with different versions of §261.4(a)(24) changes how facilities must manage a HSM. If a state has adopted either version of the exclusion, a generator can use the exclusion and send its HSM to a state that has not adopted either of the DSW exclusions. However, when the HSM enters the receiving state, it must be managed as a hazardous waste. The opposite is not true—a generator may not claim either of the exclusions if the state the waste was generated in has not adopted the exclusions, even if the would-be receiving state has. If the generating state adopted the verified recycler exclusion and the receiving state adopted the transfer-based exclusion, the exclusion could only be claimed if the HSM is recycled at a RCRA-permitted recycler. If the generating state adopted the transfer-based exclusion and the receiving state adopted the verified recycler exclusion, the exclusion could be claimed if the HSM is recycled at a RCRA-permitted recycler or if the HSM is recycled at a verified recycled on which the generator performed a "reasonable efforts" audit. EPA has more information on the 2018 final rule and additional resources on its website.


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