DSW Comment FINAL22504

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February 25, 2004 Marianne L. Horinko Assistant Administrator U.S. Environmental Protection Agency Ariel Rios Building, 5101T 1200 Pennsylvania Avenue, N. W. Washington, DC 20460 Re: Comments of the Synthetic Organic Chemical Manufacturers Association on the Proposed Rule on Revisions to the Definition of Solid Waste Dear Ms. Horinko: The Synthetic Organic Chemical Manufacturers Association (“SOCMA”) is pleased to offer the following comments on the Proposed Rule for Revisions to the Definition of Solid Waste (the “Proposed Rule”) (68 Fed. Reg. 61557 (Oct. 28, 2003)). By a notice dated December 29, 2003, EPA extended the deadline for comments on the Proposed Rule to February 25, 2004 (68 Fed. Reg. 74907). SOCMA is the leading trade association representing the batch and custom chemical industry. SOCMA’s 300+ member companies make the products and refine the raw materials that make our standard of living possible. From pharmaceuticals to cosmetics, soaps to plastics and all manner of industrial and construction products, SOCMA members make at save lives, make our food supply safe and abundant, and enable the manufacture of literally thousands of other products. Over 75% of SOCMA’s active members are small businesses. In connection with their regular manufacturing operations, a number of SOCMA members routinely generate and manage materials which are presently regulated as hazardous waste. In many instances, SOCMA ...
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February 25, 2004
Marianne L. Horinko Assistant Administrator U.S. Environmental Protection Agency Ariel Rios Building, 5101T 1200 Pennsylvania Avenue, N. W. Washington, DC 20460  Re: Comments of the Synthetic Organic Chemical Manufacturers Association on the Proposed Rule on Revisions to the Definition of Solid Waste Dear Ms. Horinko: The Synthetic Organic Chemical Manufacturers Association (SOCMA) is pleased to offer the following comments on the Proposed Rule for Revisions to the Definition of Solid Waste (the Proposed Rule) (68 Fed. Reg. 61557 (Oct. 28, 2003)). By a notice dated December 29, 2003, EPA extended the deadline for comments on the Proposed Rule to February 25, 2004 (68 Fed. Reg. 74907). SOCMA is the leading trade association representing the batch and custom chemical industry. SOCMAs 300+ member companies make the products and refine the raw materials that make our standard of living possible. From pharmaceuticals to cosmetics, soaps to plastics and all manner of industrial and construction products, SOCMA members make materials that save lives, make our food supply safe and abundant, and enable the manufacture of literally thousands of other products. Over 75% of SOCMAs active members are small businesses. In connection with their regular manufacturing operations, a number of SOCMA members routinely generate and manage materials which are presently regulated as hazardous waste. In many instances, SOCMA members could recycle secondary materials from their operations but presently do not so due to the regulatory constraints imposed by a set of EPA regulations known as the definition of solid waste. SOCMA and its members have consistently sought revision of these regulations with one goal in mind  to enable members to recycle valuable secondary materials SOCMA has evaluated the Proposed Rule and determined that an exemption based on a three-digit NAICS code would provide significant regulatory relief to the specialty batch chemical manufacturing sector and thereby promote increased recycling of secondary materials by its members. SOCMA also supports EPAs pursuit of a broader exclusion from the definition of
solid waste, given the additional legitimate recycling opportunities that could be pursued under this approach. SOCMA and its members thus have a direct and substantial interest in the relief to be provided in the final rule. SOCMA commends EPA for its work on the development of the Proposed Rule and would be pleased to meet with the Agency or provide additional information regarding any aspects of these comments. Please comment me at (202) 721-4198 or at gunnulfsenj.@socma.com. Sincerely, Jeff Gunnulfsen Manager
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OSWER Docket No. RCRA  2002-0031 Paul Noe, White House Office of Management and Budget Karen Hale, Ohio Environmental Protection Agency
COMMENTS OF THE SYNTHETIC ORGANIC CHEMICAL MANUFACTURERS ASSOCIATION ON THE PROPOSED RULE ON REVISIONS TO THE DEFINITION OF SOLID WASTE 68 Fed. Reg. 61558 (Oct. 28, 2003) Docket No. RCRA  2002-0031 February 25, 2004
Submitted to: OSWER Docket U.S. Environmental Protection Agency Mail Code: 5305T 1200 Pennsylvania Avenue, N.W. Washington, D.C. 20460
TABLE OF CONTENTS
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INTRODUCTION........................................................................................................................ 1 SUMMARYOFCOMMENTS...................................................................................................2I. SOCMA Supports Revision of the Definition of Solid Waste to Promote Recycling of Secondary Materials by Its Members ......................................................... 3 A. The Proposed Rule, Implemented with a Three-Digit NAICS Code, Will Provide Long-Awaited Regulatory Relief for the Specialty Batch Chemical Manufacturing Sector........................................................................... 3 B. If EPA Instead Implements a Four-Digit NAICS Approach, then Focused Exemptions Should Also Be Established to Provide Relief for the Specialty Batch Chemical Manufacturing Sector ................................................ 4 C. SOCMA Supports Updating and Reissuing the Legitimacy Criteria as Guidance, But Opposes Their Codification ......................................................... 5 D. SOCMA Supports Continued Pursuit of A Broad Exemption, in Addition to Adoption of the More Focused Conditional Exemptions under the Proposed Rule ...................................................................................................... 5 E. Action on the Proposed Rule Will Effectively Promote Resource Recovery and Recycling While Assuring that Secondary Materials Are Recycled in a Manner Consistent with Ongoing Protection of Health and the Environment ................................................................................................... 8 The Nature and Scope of Specialty Batch Chemical Manufacturing Operations Warrants Recognition as a Distinct Industry Sector ...................................................... 10 A. The Specialty Batch Chemical Manufacturing Sector Is Defined Both by Its Unique Products and by Use of Batch Manufacturing Operations ............... 10 1. Nature of Specialty Chemical Products and Markets............................. 10 2. Distinctive Nature of Batch Manufacturing Is Key to Specialty Chemical Manufacturing Operations and Competitiveness................... 11 B. The Specialty Batch Chemical Manufacturing Sector and Batch Operations Have Already Been Recognized In Existing Regulatory Programs............................................................................................................. 12 C. Specialty Batch Chemical Manufacturing Operations Are Often Small Businesses and Small Facilities That Are Hampered by Both Practical and Regulatory Constraints on Their Ability to Recycle Secondary Materials............................................................................................................. 13 1. SOCMA Member Companies Are Often Small Businesses with Operations Conducted at Small Manufacturing Sites Where Real World Constraints Limit Recycling Opportunities ................................ 13
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TABLE OF CONTENTS(continued)
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2. The Existing Regulations Pose Significant Obstacles That Severely Limit The Ability of SOCMA Members to Recycle Secondary Materials ............................................................................... 15 Specialty Batch Chemical Manufacturing Is a Distinct Industry Sector That Cannot Be Properly Classified for this Rule by a Four-Digit NAICS System .............. 17 A. A Four-Digit NAICS Code Is Too Narrow; It Fragments the Specialty Batch Manufacturing Sector.............................................................................. 17 B. Even at an Individual Facility Level, A Four-Digit NAICS Code Fails to Reflect Actual Production Activity at Specialty Batch Chemical Manufacturing Facilities .................................................................................... 19 C. The Primary NAICS Code and Establishment Concepts Cannot Effectively Be Implemented at the Four-Digit NAICS Level at Specialty Batch Chemical Manufacturing Facilities.......................................................... 19 D. The Very Purpose of the Proposed Rule Is Frustrated When a Four-Digit NAICS Code is Used to Define the Specialty Batch Chemical Manufacturing Sector ......................................................................................... 22 SOCMA Supports Use of a Three-Digit NAICS Code To Establish An Effective and Appropriate Recycling Exemption for the Specialty Batch Chemical Industry; SOCMA Urges EPA to Adopt Either This Option or Other Appropriate Relief for this Industry Sector ........................................................................................ 24 A. Use of a Three-Digit NAICS Approach Will Effectively Identify Appropriate Recycling Opportunities within the Specialty Batch Chemical Sector, While Also Achieving Important Policy and Regulatory Objectives........................................................................................................... 25 1. Use of a Three-Digit NAICS Code for Specialty Batch Chemical Manufacturing Operations Is the Most Appropriate Basis for Implementing an Exemption for this Sector .......................................... 25 2. Use of the Three-Digit NAICS Code Also Facilitates Implementation and Promotes Increased Recycling By Avoiding the Difficult Classification Issues Created by Application of the Four-Digit Code to Specialty Batch Chemical Manufacturing Facilities ................................................................................................. 26 3. Examples from SOCMA Members Further Demonstrate Effectiveness of Three-Digit NAICS Approach for Specialty Batch Chemical Manufacturing Operations ........................................... 28 B. Application of the Three-Digit NAICS Code To Specialty Batch Chemical Manufacturing Is Warranted and Appropriate Even If a Four-Digit Approach Is Used for Other Industry Sectors ........................................... 32
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C. SOCMA Also Urges EPA to Provide Relief for Specialty Batch Chemical Toll Manufacturing Operations.......................................................... 35 1. Attributes of and Background on Toll Manufacturing as a Distinct Subcategory of Specialty Batch Manufacturing Operations .................. 35 2. Proposal for A Focused Conditional Exemption for Toll Manufacturing Operations...................................................................... 36 3. Justification for a Focused National Exemption for Toll Manufacturing ........................................................................................ 37 V. SOCMAs Views on Additional Issues Raised for Comment in the Proposed Rule ................................................................................................................................ 38 A. SOCMA Supports the On-site Recycling Exemption But Notes Disparate Impact on Smaller Facilities............................................................................... 38 B. SOCMA Supports EPAs Recognition that Continuous Process Is Not Limited to On-Site or Sequential Processing ..................................................... 40 C. SOCMA Supports Limited Notification Requirements That Identify Facilities That Manage Secondary Materials Covered by A New Exemption .......................................................................................................... 42 D. SOCMA Supports Continued Reliance on Routine Business Records as Appropriate Documentation ........................................................................... 46 E. SOCMA Urges EPA To Maintain Existing Exemptions Intact ......................... 47 F. SOCMA Disagrees with EPAs Stated Enforcement Position........................... 48 VI. Comments Regarding the Legitimacy Criteria............................................................... 52 VII. Specialty Batch Manufacturing Operations Are and Will Remain Subject to Effective Regulatory Programs and Controls................................................................. 56
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February 25, 2004 INTRODUCTION
The Synthetic Organic Chemical Manufacturers Association (SOCMA) is pleased to offer the following comments on the Proposed Rule for Revisions to the Definition of Solid Waste (the Proposed Rule) (68 Fed. Reg. 61557 (Oct. 28, 2003)). By a notice dated December 29, 2003, EPA extended the deadline for comments on the Proposed Rule to February 25, 2004. (68 Fed. Reg. 74907.) SOCMA is the leading trade association representing the batch and custom chemical industry. SOCMAs 300+ member companies make the products and refine the raw materials that make our standard of living possible. From pharmaceuticals to cosmetics, soaps to plastics and all manner of industrial and construction products, SOCMA members make materials that save lives, make our food supply safe and abundant, and enable the manufacture of literally thousands of other products. Over 70% of SOCMAs active members are small businesses. In connection with their regular manufacturing operations, SOCMA members routinely generate and manage materials which are presently regulated as hazardous waste. In many instances, SOCMA members could recycle secondary materials from their operations but presently do not do so, because of the regulatory constraints imposed by a set of EPA regulations known as the definition of solid waste. SOCMA and its members have consistently sought revision of these regulations with one goal in mind  to enable members to recycle valuable secondary materials. SOCMA has evaluated the issues raised in the Proposed Rule and determined that an exemption based on a three-digit North American Industry Classification System (NAICS) code would provide significant regulatory relief to the specialty batch chemical manufacturing sector and thereby promote increased recycling of secondary materials by its members. SOCMA also supports EPAs pursuit of a broader exclusion from the definition of solid waste, given the additional legitimate recycling opportunities that could be pursued under this approach. SOCMA and its members have a direct and substantial interest in the relief to be provided in the final rule.
SUMMARY OF COMMENTS SOCMA commends EPA for developing a range of options to address revision of the definition of solid waste and thereby promote increased recycling and resource recovery. The Proposed Rule addressed in detail the establishment of an exemption for ongoing recycling within the same industry sector, recognizing that the decisions of the D.C. Circuit Court of Appeals have confirmed that this type of recycling activity does not involve discard. SOCMA and its members have determined that the Proposed Rule, when implemented with a three-digit NAICS code, will provide substantial relief to its members and effectively promote increased recycling for the specialty batch chemical manufacturing sector. By contrast, if implemented with a four-digit NAICS code, the Proposed Rule would fail to provide any significant regulatory relief, as the four-digit NAICS codes fail to reflect the diversity of specialty chemical products manufactured by the specialty batch chemical manufacturing industry. These comments describe the unique nature of the specialty batch chemical manufacturing sector and the ways in which the current regulations prevent members from pursuing economically valuable opportunities to recycle materials presently regulated as hazardous waste. As over 70% of SOCMAs members are small businesses, these companies and facilities often face resource and space constraints not faced by other industry sectors. Yet, the economic benefits that could result from increased recycling of secondary materials are all the more significant given the predominance of small businesses in this industry sector. Based upon information from a member survey and specific examples from members, these comments demonstrate how and why the Proposed Rule, when implemented with a three-digit NAICS code, can significantly increase the ability of SOCMA members to pursue legitimate recycling of secondary materials. Even if a three-digit NAICS code approach is not generally adopted in the final rule, SOCMA seeks the establishment of a focused exemption for specialty batch chemical manufacturers based on the three-digit NAICS code. As appropriate, SOCMA also asks EPA to consider the establishment of an exemption that promotes recycling of secondary materials from toll manufacturing, which is a special subcategory of specialty batch chemical manufacturing. In conjunction with its request that EPA act to provide effective relief to the specialty batch chemical manufacturing sector, SOCMA also supports continued development of a broader exemption to identify and exempt additional recycling activities. However, SOCMA does not support the Agencys proposal to codify four criteria that purport to define legitimate recycling. SOCMA is concerned that the proposed criteria fail to capture the full range of circumstances that constitute legitimate recycling and that codification will create a significant risk that the criteria will be inappropriately applied, to the detriment of effective regulatory reform. EPA should instead update and reissue its existing guidance on legitimate recycling and ensure that it is broadly available to both regulators and the regulated community.
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COMMENTS I.the Definition of Solid Waste to Promote RecyclingSOCMA Supports Revision of of Secondary Materials by Its Members SOCMA and its member companies have been affected by and have participated in EPAs efforts to distinguish ongoing recycling of secondary materials from waste management since issuance of the initial hazardous waste regulations in 1980. SOCMA strongly supports the goal of expanding resource recovery and recycling of secondary materials. As summarized below and detailed in subsequent sections, SOCMA has confirmed that the Proposed Rule, if implemented with a three-digit NAICS code, will finally provide its members with significantly increased recycling opportunities. To date, none of the regulatory exemptions issued by EPA have been generally applicable to the specialty batch chemical manufacturing industry. However, this Proposed Rule establishes an effective approach to address the particular recycling opportunities that exist within this industry sector. A. The Proposed Rule, Implemented with a Three-Digit NAICS Code, Will Provide Long-Awaited Regulatory Relief for the Specialty Batch Chemical Manufacturing Sector In its many years of work on this issue, SOCMA has identified a range of concerns regarding the impact of the regulatory definition of solid waste on its members, and particularly on small and medium-size facilities and companies. The complexity of the regulatory scheme itself is one hurdle. Often on-site recycling opportunities are precluded by the inability of facilities to store materials on-site for longer than 90 days, and opportunities for off-site recycling are largely precluded by the fact that the receiving facility would need a RCRA Part B permit to receive and store the material prior to recycling. Variance mechanisms and petition alternatives provide no effective relief due to the small volumes of fluctuating materials streams that are the typical result of specialty batch chemical manufacturing operations.1SOCMA has worked closely with its members to evaluate the impact of the Proposed Rule on recycling opportunities available to the specialty batch chemical manufacturing sector. This review has confirmed that the Proposed Rule, when implemented with a three-digit NAICS code, would create significant new opportunities for recycling of secondary materials generated by the specialty batch chemical manufacturing sector. These exempt materials would be able to be recycled by the sectors that order and purchase the products of specialty batch chemical manufacturers. SOCMA strongly supports the Proposed
1The unique nature of specialty batch chemical operations and the constraints that the current definition of solid waste places on recycling of secondary materials in this industry sector are reviewed in detail in Section II of these comments.
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Rule implemented with a three-digit NAICS code and urges EPA to finalize this option in the 2 final rule. B. If EPA Instead Implements a Four-Digit NAICS Approach, then Focused Exemptions Should Also Be Established to Provide Relief for the Specialty Batch Chemical Manufacturing Sector SOCMAs review of the Proposed Rule has confirmed that the use of a four-digit NAICS code would not provide significant relief, as the four-digit codes fragment the specialty batch chemical manufacturing sectors into multiple subcategories and fail to encompass the range of manufacturing operations conducted within the industry.3 In fact, the narrow four-digit NAICS codes often fail to reflect the diversity of operations conducted even at the individual facility level, thereby raising facility classification difficulties due to the fluctuating product lines typical of specialty batch chemical manufacturing operations. SOCMA recognizes that EPA correctly anticipated many of these concerns in its preamble discussion of the specialty batch chemical manufacturing sector.4Accordingly, if EPA concludes that it should generally pursue the four-digit NAICS code approach, SOCMA asks that EPA also issue a focused exemption for the specialty batch chemical manufacturing sector. This exemption would enable specialty batch chemical manufacturers who file a notification to rely upon the focused exemption to recycle secondary materials at facilities identified based upon a common three-digit NAICS code. Subsequent sections of these comments discuss the significant increased recycling and benefits that would result from this relief. In addition, the comments review the particular nature of specialty chemical toll manufacturing operations, as an additional subcategory where regulatory relief is appropriate in the event that these operations were not otherwise covered by broader regulatory relief.5
2and appropriateness of the three-digit NAICS approach are apparent both from a review of generalThe benefits information on the scope of the batch specialty chemical sector and from direct feedback from SOCMA members regarding the potential impact of the Proposed Rule. See discussion in Section IV. 3Section III of these comments addresses the difficulties and limitations created by application of the four-digit NAICS code approach to the specialty batch chemical manufacturing industry. SOCMA has based this assessment both upon a survey of members and on members examples of recycling opportunities that would still be precluded under the four-digit NAICS code approach. 468 Fed. Reg. at 61573-74. 5the terms for a conditional exemption for thisThe distinct nature of specialty chemical toll manufacturing and subsector are addressed in Section IV.C of these comments. 4
C. SOCMA Supports Updating and Reissuing the Legitimacy Criteria as , But Opposes Their Codifi _______________________ Guidance cationSOCMA is pleased that EPA is soliciting comment on the legitimacy criteria discussed in the Proposed Rule. The guidance and interpretations that EPA has developed for distinguishing legitimate recycling from sham recycling have not previously been the subject of general public comment. SOCMA has offered focused comments on various criteria, but its primary concern is that the legitimacy criteria remain as guidance to be applied through an overall balancing of the criteria, in light of case-specific circumstances. SOCMA opposes codification of the proposed regulatory language for two reasons. First, the proposed language fails to incorporate many of the key concepts and relevant considerations that should be taken into account in a legitimacy determination. This fact is evidenced by a comparison of the range of issues addressed in the corresponding preamble that are not adequately reflected in the regulatory language. Second, the regulatory language requires consideration of each of the criteria, with an implication that all four must be met. Thus, the regulatory language absolutely fails to indicate any ability to weigh or balance the criteria. The language also fails to allow a regulator any latitude to deem legitimate an appropriate activity that meets some but not all of the criteria or even to consider other relevant factors beyond the enumerated criteria. To date, the guidance incorporating the legitimacy criteria has been an effective tool for both the regulators and the regulated community. While the guidance should be revised and updated in light of public comments and Agency experience, to date the guidance has been one of the most effective elements of the definition of solid waste program. It should remain as guidance. D. SOCMA Supports Continued Pursuit of A Broad Exemption, in Addition to Adoption of the More Focused Conditional Exemptions under the Proposed Rule In conjunction with the Proposed Rule, EPA solicited comment on the establishment of a broader exemption from the definition of solid waste, one that would effectively seek to identify and exempt all legitimate recycling activity. SOCMA supports this concept and recognizes that such broad relief could provide additional recycling opportunities to those inside and outside the specialty batch chemical manufacturing sector. EPA is considering use of the legitimacy criteria as a key element in defining what would additional recycling would be covered by this further exemption. SOCMA supports this concept, so long as the legitimacy criteria remain as guidance to be applied with flexibility on a case-specific basis. SOCMA understands that the purpose of the broader exemption would be to identify additional categories of recycling activity that do not involve discard and hence would appropriately be exempt from the definition of solid waste. Understandably, a primary focus of this further inquiry would be on delineation of inter-industry recycling activities that do not involve discard. SOCMA supports this further action, but considers it critical that this be
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