Kathleen Hartnett White, Chilirman

R. B. "Ralph" Marquez, Commissioner

Larry R. Soward, Commissioner
(;lenn Shankle, Executive Director

Protecting Texas by Reducing und Pwiienting Pollution

July 21,2006

VIA OVERNIGHT DELIVERY

Ms. Heather McMurray

Re: Public Information, Act Request Regarding EPA's h a l y s i s of ENCYCLE

material leading to DOJ's Asarco multimedia consent decree
PIA No. 06.07.05.01 .

Dear Ms. McMurray,

In response to your e-rnail request received by the Agency on July 5, 2006, enclosed
please find a copy of the document referenced above, which may also be referred to as
"EPA Response to Encycle/Asarco Settlement Statement."

If we can be of any further assistance, please do not hesitate to contact me at (512) 239-
41 13.

Sincerely,

{Y
V
i%-
Booker Harriso
Senior Attorney
Environmental Law Division

P.O. Box 13087 Austin, Texas 78711-3087 5121239- 1000 Internet address: www.tc~(l.state.tx.Lls
JUL-18-2@86 15:41 FROM: 9158344948 TO:5122390606

!
U.S. Department of Justice

Environment and Natural Resources Division

90-7-1-886
,-a el D.Goodstain
& l t r i r o n m ~E
l nfo~Seaion Tclcphonc 1703514-111 I
P.0. Bar 7611 F - i t d e (302) 616-6583
Wuhmpton DC 20014- 7611

Peter J. N i c k l e s
Jchn T. Smith
C ~ v i n g t o n& Burling
1201 Pennsylvania Avenue, N.W.
P . O . Box 7566 '
Washington, D.C. 20044-7566

Dear Peter and J . T . :

Enclosed is the EPA's Response To the Encycle/AS?LXo
Settlement Statement. We l o o k f o r w a r d t o m e e t i n g a g a i n on these
issues after Encycle and ASARCO have an opportunity iQ review it.

Sincerely,
.
JUL- 18-20@6 15:41 FROM:

CONFIDENTIAL : F o r Settlement Purposes O n l y J u l y 31, 1998

RESPONSE TO ENCYCLE/- S E T W T STATEMENT

I. Summary

The b a s i c p o s i t i o n p u t f o r t h i n t h e Encycle/ASARCO
s e t t l e m e n t s t a t e m e n t o f J u n e 9, 1998 ("the s e t t l e m e n t statement")
i s t h a t no p e n a l t i e s a r e a p p r o p r i a t e f o r any a c t i v i t i e s that
E n c y c l e and ASARCO perceive t o be c o v e r e d by t h e T e x a s V?ater
Commission ("TWC") l e t t e r of September 2 7 , 1989 {''TWC - e t t e s r ' ) .
Encycle and ASARCO c o n t e n d that t h e letter fron the TWC
referencing the exemption i n 40 C.F.R. § 261.2(e) ( 1 1 ( l i ) for
u s e / r e u s e a s an effective s u b s t i r u t e for a comiiercial p r o d u c t
("the use/reuse exemptionr') c o v e r s the unpermitted management of
hazardous w a s t e , i.~., Encycle a l l e g e d metals c o n c e n t r a t e
p r o d u c t s (Encycle a l l e g e d 'productsr') a t t h e Corpus C h r i s t i
f a c i l r t y , and f u r t h e r c o v e r s t h e unmanifested s h i p m e n t o f Encycle
alleged "products N t o ASARCO's E a s t Helena and E l Paso s m e l t e r s ,
a n d t o o t h e r customers both domestic and i n t e r n a t i o n a l .
A d d i t i o n a l l y , Encycle and ASARCO c o n t e n d that t h e TwC letter also
covers t h e f a i l u r e of ASARCO t o p r o p e r l y manage Encycle alleged
" p r o d u c t s r r a s hazardous waste a t i t s two r e c e i v i n g s m e l t e r s .
Even under Encycle and ASARCO' s s t a t e d , i n t e r p r e t a t i o n , .
however, t h e TWC l e t t e r cannot be construed t o c o v e r sham
recycling. Therefore, t h e e v i d e n c e of sham recycling Is a n
ap?ropriare starting paint in t h i s response, t o the setElement
s r a t e m e n t , A s p r e v i o u s l y discussed and outlined below, E n c y c l e ' s
o w n b u s i n e s s r e c o r d s provide c o m p e l l i n g evidence of sham
r e c y c l i n g . Numerous hazardous w a s t e s w i t h l i c t l e o r no
r e c o v e r a b l e metals v a l u e , were mixed i n t o Encycle alleqed
" ~ : r o d u c t s " . T h i s activity c o n s t i t u t e d unpernitted e r e a c m e n t and
s r a r a g e of K i t 9 hazardous waste at E n c y c l e . T h i s p x a c t j c e l e d t o
f e r r h e r unpermicted s r o r a g e , and d i s p o s a l of 'RCFLP_ hazardous waste
a t t h e smelters. The w h o l e s a l e c o m i n g l i n g of t h e sham h a z a r a u u s
w 2 s z e s i n t o Encycle a l l e g e d "products" rendered the a l l e g e d
" p r o d u c t s " and Encycle's a l l e g e d exempt recycling p r o c e s s e s
irieligible for r e c y c l i n g e x e m p t i o n . F o r t h i s reason alohe,
:+
--zwed, -
t h ? analysis p r o v i d e d in the settlement s t a ~ e m e n tis f a t a l l y
- and should be e x p e d i t i o u s l y r e c o n s i d e r e 2 by t n c y c l e and
AS?I4C 0 .

I n additlon co t h e sham recycling evicience, a r e v i e w o f

ap7licable l a w and the d e t a i l s of E n c y c l e ' s operztions c o m p e l s
tke concl~siont h a t even if it h a d been a c c e p t i n g o n l y l e g ~ t l r n a c e
r e z y c l a b l e s , t h e E n c y c l e a l l e g e d "pxoducts" s t i l l c o u l d n e v e r
h a v e qualified for t h e u s e / r e u s e exemption referenced In the TwC
lerter. The u s e / r e u s e exemption is n o t a v a i l a b l e foz j i a s t e s t h a t
JUL- 1 8 - 2 0 0 6 15: 41 FROM: 9158344940 TO: 5122390606

a r e being reclaimed. B e c a u s e the alleged "pfoducts" w e r e being

reclaimed at smelters and other metals recovery facilities,
Encycle and P.SARCO should have concluded that n o n e of the
use/reuse exemptions were applicable to Encycle a l l e g e d
" p r o d u c t s " . Importantly, i n addition to the language of t h e
regulation, pertizent explanations of the regulations by EPP. w e r e
not.only publicly available to Encycle and ASARCO during the
relevant time period, but were provided to them b y t h e TWC as
early as 1968. Encycle and ASARCO had acjxaJ. notice o f EPAfs
relevant regulatory interpretations prior to r e c e i v i n g the TWC
l e t t e r upon which Encycle and ASARCO so heavily rely.
Additionally, based on the information now available to
t3e governments, including the information I n the settlement
sratement, it renains clear that the submittals made by Encycle
to the TWC about its operations, upon which the 1989 TWC letter
w a s based, did not accurately describe the p r o c e s s e s employed by
Zncycle. A s previously articulated, and outlined below, the
Encycle submittal upon 'which the 1989 TWC letter w a s based,
completely omitted a description of the s u b s t a n t i a l direct mixing
0 5 unprocessed hazardous waste into ~ t alleged
s "product".
Nothing in the settlement statement effectively disputes these
facts. As such, the TWC l e t t e r was inappropriately relied on by
Encycle and ASARC.0, because the application of the exemption to
Ezeycle alleaed ''products" was legally erroneous, and a 1 so
because the 02erations documented to the TWC were different than
Er.cyclels actual operations.

if, E n c y c l e and ASARCO Engaged In Extensive Sham Recycling

\{hen SPA promblgated the ,'new d e f i n i t i o n of solid waste

ir 1985, the Agency discussed t.he imporrance of d e t e r m i n i n g
w k r t h e r a claimed recjrclit?g activity was legitimate or sham.
Tc aid the regulated community and r e g u l a ~ o r sin making such a
de=erminatsan, EPA arriculated the "sham recycling criseria" - a
l ~ s of t f a c t o r s that could be evaluated to deter~inewnerher an
activity was recycling or surrogate disposal. 50 Fed. Reg. 614,
633-639, 646 9 - 3 6 (1985). The Agency has expounded on the
cr~teriaon other occasions as well. -2.a. 5 2 Fed. Reg:
1<382, 17013 (May 6, 1967) and 53 Fed. Rsg. 5 1 9 , 522 ( J a n u a r y 9 ,
1 5 3 8 ) . Encycle's historlc operatioz.~fzir poorly under 9 a s t of
t h e sham r e c y c l i n g criteria. T h e e v i d e ~ c epertailring to one of
tne factors is so compelling, h o w e v e r ) it is not ne essary to
ziseuss the remainder of the factors. EPA has made clear that
s k a n recycling, as opposed t o l e g i t i m a t e recycling, occurs when
the hazardous waste purportedly recycled contributes in no
s l ?ni fican: way to t h e production of r h e prodact a l l e g e d i y
r e s 2 i t i n g from t h e recycling. The 5 : : C i r c u i t U.S. C ~ ' 3 r tof
JUL-18-2086 15:41 FROM:

~ p p e a l s a f f ~ z r n e dchis p o s i t i o n in 9
Processors, 81 F.3d 1 3 7 1 (5'"Cir. 19961. T h e r e the Court h e l d
t h a t SPA had properly r e f u s e d t o g r a n t a Boiler and I n d u s t r i a l
Furnace p e r m i t t o M a r i n e S h a l e a f t e r d e t e r m i n i n g that the company
w z s engaged i n sham r e c y c l i n g . EPA's d e c i s i o n i n & d n e Shak
wes L a s e d i n l a r g e p a r t o n the f a c t t h a t t h e facility was b u r n i n g
"zerz value" w a s t e s , i . ~ . , hazardous w a s t e s that c o n t a i n e d no
m a t e r i a l o r e n e r g y v a l u e , and therefore, c o u l d n o t c o n t r i b u t e t o
t 3 e p r o d u c t i ~ nof the aggregate " p r o d u c t f r Marine Shale claimed to
produce. % u. a t 1381.

T h i s z r i n c i p l e applies e q u a l l y t o Encycle's c p e r a t i o n s .
obviously, metals c a n n o t be recovered f r o m hazardous wastes t h a t
cs---zain virtually no metals. "If t h e waste does not in f a c t
s o r v e its alleged function in t h e process, t h e n sham recycling i s
o c c u ~ r i n gIr. -no S u , 81 F. 3 6 . 1361 at 1365 (5" C i r . 1996).
Fr; Ese in its alleged " p r o d u c t s " , E n c y c l e was p u r p o r t e d l y only
a c c e p t i n g w a s t e s f o r metals recycling t h a t c o u l d c o n t r i b u t e i n a
' significant way t o t h e p r o d u c t i o n o f metal c o n c e n t r a t e s ; t h a t 'is,
wastes t h a t c o n t a i n e d r e c o v e r a b l e q u a n t i t i e s o f target m e t a l s .
-:1 i t s submittal t o the TWC, E n c y c l e r e p r e s e n t e d t h a t i t was
p e r f o r m i n g a p p r o p r i a t e s c r e e n i n g o n w a s t e s a c c e p t e d by Encycle
f o r i n c o r p o r a t i o n i n t o m e t a l s concenrrates. L e t t e r from
CerclerLas t o Reynolds of 7 / 1 2 / 8 9 , at 2 a copy of which i s attached
-ar ns t yZcxlhei bhad
i t E t o t h e s e t t l e m e n t : s t a t e m e n t (maintaining t h a t
a procedure to determine w h e t h e r a qualicy m a t e r i a l
car: Se reclaiaed from t h e w a s t e ) .
A s shown i n Exhibits A - l and A- 2, h e r e t o , h o w e v e r ,
. Er:z:~zle: r o u t i n e l y accepted wastes w i t h l i t t l e ' o r no metals
v e l e s , and \'blended" these w a s t e s into i t s m e t a l s c ~ n c e n t r a t e s ,
The Sera i n Exhibit A-1 is a summary of m a t e r i a l movement
t i z . . ' e z s , also known a s batch sheets ( Y w T s t 8 ) provided t o t h e
gc7.-ernaents by E n c y c l a . As confirmed b y Encycle e m p l o y e e s , t h e
m T s =.re management and process d o c u m e n t s u s e d r o u t i n e l y b y
E ~ c ; J z ~ ~According
. t o Encycle e m p l o y e e s , a s e a c h l o a d of
inzzr.:.;;lg m a t e r i a l i s received i t i s a s s a y e d . The a s s a y d z t a i s
e n ~ e r e di n f o a computer f o r Lse on the MMTs. At no time c u r i n g
ar.1- .=:f t h e s i t e visits by EFA investigators d i d a n y o n e a t E n c y c l e
s c c = 5 :hat t h e d a t a on t h e mTs do not f u l l y and a c c u r a t e l y
--
r e z - e z t a s s a y s o f t h e m a t e r i a l i n question.

.a-fser p r o v i d i n g a ~ u r r b e rMMTs t o t h e g o v e r n r n e n ~ s , m d
af~ea r nunher o f Encycle representatives p z o v ~ d e d sEaLernents t o
gcq:?rxnent ~ ? . v e s t i g a r o r sestablishing ' t h e r e l i a b i l i t y of t h e s e
re=:r5s, Enzyzle a n d ASAilCO c o n t e n d e d I n t h e l r s e t t l e m e n t
str:smenf,' t& =i
--& t ti= c h a t these Encycle r e c o r d s a r e
s o r s n h . i . n a c c z r a r e . A s a result, Texas invesiigators returned
chis week t o E n c y c l e t o r e v i e w E n a y c l e assay d a t a . For the MMTs
summarized on E x h i b i t A-1 w e have c o n f i r m e d that t h e a s s a y d a t a
s u p p o r c s t h e d a t a on t h e WTS, where such data w a s a v a i l a b l e .

!;,:w
Moreover, even in this p r e l i m i n a r y r e v i e w of E n c y c l e assay data
c h i s w e e k a d d i t i o n a l evidence of sham r e c y c l i n g was discovered,
E x h i b i t A-2 i s a sunmary o f a s s a y d a t a f o r a number 02 s p e c i f i c
A
g e n e r a t o r s showing w a s t e l o a d s which were accepted a n d pr'ocessed I '
d i Encycle. e his-data shows t h a t numerous l o a d s o f t h e s e !
s 2 e c i f i c waste streams had v i r t u a l l y no r e c o v e r a b l e m e t a l s . From
o c r p r e l i m i n a r y r e v i e w o f E n c y c l e m a t e r i a l movement t i c k e t s and
assay d a t a , i t can be d e t e r m i n e d t h a t a t least 2 4 7 shipments,
t o t a l i n g s p p r o x i r n a t e l y 5.079 t a of hazardous waste that had
v i r t u a l l y no m e t a l s v a l u e , were received and incorporated i n t o
3 r A c y c l ea l l e g e d " p r o d u c t s " . - T h i s a c r i v i t y ' p l a i n and s i m p l e , was
i l l e g a l treatment and d i s p o s a l of h a z a r d o u s waste, s i n c e t h e
w a s t e s c o u l d not h a v e contributed i n a n y significant way t o t h e
p r o d u c t i o n o f t h e m e t a l s concentrates,
I.

I n a d d i t i o n t o a c c e p t i n g wastes w i t h no significant
v a l u e f o r m i x t u r e into i t s a l l e g e d " p r o d u c t s N , E n c y c l e also m i x e d
h a z a r d o u s w a s t e s l u d g e s generated f r o m i t s w a s t e w a t e r t r e a t m e n t
p l a n t i n t o i t s alleged " p r o d u c t s " . This i s a n o t h e r form o f sham
r e c y c l i n g s i n c e these hazardous waste s l u d g e s had no r e c y c l i n g
value. The sludges from t h e WWTP a r e h a z a r d o u s w a s t e s because
t h e y d e r i v e from hazardous w a s t e s . 40 C. F.R. 5 2 6 1 . 3 (c) ( 2 1 .
Encycle has r e p r e s e n t e d t h a t i t s h y d r o m e t a l u r g i c a l p r o c e s s e s a r e
designed t o remove tF.e m e t a l s from t h e w a s t e s processed.
T h e r e f o r e , t h e s e sludges c o n t a i n e d no s i g n i f i c a n t m e t a l s v a l u e
and m u s t h a v e Seen i n c l u d e d for d i s p o s a l purposes o n l y . S~nce
t h e y , had no l e g i t i m a t e r e c y c l i n g v d l u e t h e y c c u l d have added no
value t 3 t h e e l l e g e d " p r o d u c t s " . Evidence o b t a i n e d r e g a r d i n g the
h i s t o r i c E n c y c l e p r o c e s s e s establish that a l l wastewaters
qenerated from t h e h y d r o m e t a l u r g i c a l p r o c e s s e s Slow t o t h e
Fr?eretiCmerit unLts i n F a c i l i t y 1. Wastewater i s p r e t r e a t e d and
residues wkich may a r g u a b l y c o n t a i n some m e t a l s v a l u e s r e c o v e r a d .
These r e s i d u e s a r e also mixed w i t h t h e a l l e g e d " p r o d u c t " .
P r e t r e a t e d waszewater i s t h e n discharged t o rhe w a s t e w a t e r
r r e s t m e a t p l a n t , a l s o kn.owrr a s t h e n e u t r a l i z a t i o n p l a a t ("WWTP")
f c r f ~ r r r h e rt r e a t s r t e n t . Solids g e n e r a t e d a t the WWTP were p u t
back i n t h e processes w h i l e t h e effluent was d i s c h a r g e d through
N ? X S w t f a l l 001. copies o f E n c y c l e ' s own process flow
di-grms a t t a c h e d h e r e t o a s E x h i b i t B. Cnce these clearly sham
w a s t e s z e r r y i n g l i s t e d wesEe codes were mixed w i t h o c h e r
poientially l e g i t i m a t e w a s t e s t r e m s and i n t o Encycle's a l l q e d
pr,?.duc:s, there was z 0 q u e s t i o n rrhat the r e s l s l t a z t m i x t u r e s were
r e ~ s l 3 : e d HCRA h a z a r d o u s waste.
JUL-18-2006 15:42 FROM:
/"

t h e ilLeqal treatment and disposal activities r e s u l t l n y

from shaa recyc1i:lg could no;; possibly have been sanctioned by
r h e fwc lezter since c h e l e t t e r referer\CeS a exemption
only a v a i l . a b l e f c r legitimate recvcling activities, The T e x a s
regulsti~ncited by the TWC in the 1989 letter, 31 TAC
5 3 j ( i ) is based on federal. r e g u l a t i o n 40 C. F.P..
5 6 . 1 )i . In t h e publication of the definitio:: of s o l i d
w a s t e or! J a n u a r y 4 , 1995, EPA articulated the criteria for
leqitimate recyclinq. 50 Fed. Reg. 614 a c 636-639 [ J a n u a r y 4 ,
1 9 8 ' 5 ). ~lso =, 50 Fed. Reg. at 646 n. 36 (~otingthat "the
w a s t e s mgst contribute t o the effectiveness of the waste-derived
product" to be regarded a s r e c y c l e d ) . These criteria were
reiterabed on numerous ' o c c a s i o n s p r i o r to Encycle's operations.
at e-g.t 53 Fed. Reg. 1 7 , 5 7 8 , 17,606 (1988) (explaining that
recycling means that the h a z a r c o u s waste legitimately contributes
to the product) P.lsa m, Memorandum from Lowrance to Hazardous
Waste Management Division Directors EPA Regions I-X at 1-2 and
attachment (April 26, 19891, a copy of which is attached heret~ ,

as Exhibic C (a major consideration in assessing whether an

activity is sham recycling is whether the material truly has
value). Moreover, in its 1989 letter, the TWC reiterated to
Encycle that any exempt r e c y c l i n g must be legitimate: " [ i l n order
to exempt any w a s t e from regulation as solid w a s t e , TWC must be
assured the method of managing and recycling the waste is
.
:
ate, beneficial, allowable under current state and federal
w n s , and assures the protection of 'the public-health and
the environment." TWC Letter attached as Exhibit A to the .
settlement statement at 5. Therefore, Encycle and ASARCO have no
argument that the TWC letter somehow sanctioned sham recycling or
that they were not fairly notified of the requirement that any
6
recycling must be legitimate.
111. E n c y c l e Alleged ''ProductsW Do N o t Qualify F o r The U s e / R e u s e
Exemption 'claimed.

' The settlement statement accuses EPA of not clearly

articulating its basis for determining that Encycle alleged
"products" are not exempt from the definition of solid waste and
are regulated hazardous w a s t e s . Therefore, once again the
governments shall articulate this basis here. There -is no
dispute that Encycle alleged "products" contain listed hazardous
w a s t e . There is further no dispute that Encycle alleged
"products * are reclaimed at the smelters. As such, the Encycle
f

alleged "products" are hazardous wastes until they are ultimately

reclaimed. 40 C.F.R. 5 2 6 1 . 2 ( c ) (3) and Table 1 therein.
Encycle and ASARCO have claimed that Encycle alleged
"products" are exempt from the'definition of solid waste because
JUL-18-2006 15:42 FROM:

t h e y a r e ylse.5 o r r e u s e d a s e f f e c t i v e s u b s t i t u r e s f o r a
\\

c n m m e r , - i z l product." 40 C . F . X . 5 25: . 2 i e ) (1l ( i i ) and 3 1 T . A . Z .

335.1 ( F ) i ~ i . j When t h e d e f i n i t i o n ~f zolid waste was pro~u1ga:ed
in 1 9 8 5 , k o x e v e r , i t was made c l e a r in t h e F e d e r a l Register
p u b l - c a t i . z n r h a t reclamation and use/reuse a r e m u t u a l l y exclusive
terms arid :hat a n exemption for u s e / r e u s e a s an icgredienr 3r a s
a n e f f e c c . l v e subscituie f o r a c o m , e r z i a l product cannot a p p l y
when rcclazction, sac5 a s r n e c a l s r e c o v e r y , i s occurring.

IC i r s osed definition of reclamation in 1 9 5 3 , Z P A

had eonsidered an g&tion that wolllc have -overed use or r e u s s
o f m a t e r i a l s "as effective s u b s t i t u t e s for r s d materials i : ~
-
p , o c e s s e s u s i n g raw materials a s p r i n c i p a l feedstocks (for
-P

example, s l ~ c i g e sused a s s u b s t i t u t e s f a r ore concehtrates in

primary smelting)" T h i s e x c e p t i o n , however, was -slv
s l u d e d from the f i n a l definition of reclanation promulgated in
1955. ornoare Proposed Rule at 4 8 Fed. R e g , 1 4 4 7 2 a c 1 4 5 0 8 , ,
5 6 . I )( 1 , i i with F i n a l Rule a t
1 . 2 ) 1 ) ( i, i , ( 1 ) a t 5 0 Fed Reg. a t 6 6 4 . N o t e t h a t the
definition of reclamation was proposed essentially as
promulqated, but that three types of reclamation were to be
considered use/reuse ( a n d carved out o f t h e r e c l a m a t i o n
d e f i n ~ t i o n ) ,and that t h e r e was no independent d e f i n i t i o n o f t h e
t e r m u s e / r e u s e in the proposed r u l e . I n t h e final rule, of
course, the terms reclamation and u s e / r e u s e became independent,
and as shown below, m u t u a l l y e x c l u s i v e .
The 1985 preamble t o t h e f i n a l rule unambiguously
e x p l a i n e d t h e f a t e o f .the proposed e x c l u s i o n (See 50 Fed. Reg.
6 1 4 at: 633- 634, and 637-641, (.January 4, 1985) ) , and t h e resultant
R c R a S u b t i t l e C r e g u l a t o r y status o f t h e wastestreams that might

- -
h a v e otherwise q u a l i f i e d for the proposed e x c l u s i o n . EPA
"decided not t o promulgate t h i s e x c l u s i o n as proposed, b u t rather
to limit its scope to t h e c l o s e d - l o o p production situations..
. , at 640. The preamble also states, " [ t l h e final regulations
."
thus provide that ~e f n l l n w i n r r se-v m a w s a r e was-
r ~ c l z i m e dbv- . or marvsecondazv
re-
to t h e urima,v
I--

w e v were a e.nerat_ed w i u f i r s t
b e i n g reclaimed: (11 [ s l l u d g e s and by-products t h a t a r e l i s t e d i n
SS26l.31 and 261.321; I ( 2 )[a] 11 hazardous spent materials.. .'I Id.
at 641 (emphasis added).

The preamble discussion of the final definition of

s o l i d w a s t e provides unequivocally that the u s e / r e u s e exemptions
are n o t a p p l i c a b l e t o materials t h a t are reclaimed. In
explaining the final definition of reclamation EPA states,
JUL-18-2006 15:42 FROM:

5 0 Fed. Reg. 614 at, 6 3 3 ( J ~ n u a r y4 , 1 9 8 5 ) (Emphasis

added)
In the discussion of the use/reuse exemptions the Agency made
c l e a r again that t h e exemptions do n o t apply to materials t h a t
are b e i n g reclaimed. The preamble provides a list of
circumstances where "the nature of the m a t e r i a l or. t h,e n q t u r e of
t h e recycling activity i n d i c a t e s that c&-
EPA concludes the list by stating " w hen tt&
1- i s =covered -an -t. t h eb u
=claimed, not w" 5 0 Fed. R e g . 614, 638 ( January 4 ,
1985) (emphasis added) .
The preamble also elaborates on the d i s t i n c t i o n between
use a s a s u b s t i t u t e for a commercial product and reclamation:
When secondary materials are d i r e c t l y used as s u b s t i t u t e s
f o r commercial products, we also believe these materials are
functioning as raw materials and t h e r e f o r e a r e o u t s i d e o f
RCRA' s jurisdiction and, thus, are not wastes. Examgles.are
c e r t a i n sludges t h a t a r e u s e d ' a s water conditioners and by-
products [sic] hydrochloric acid from chemical manufacture
used in steel pickling. In these examples, the recycled
materials are substituting for other commercial producth,
ed from t m .
U. at' 619-620 (underline added).
In light of the final promulgation of t h e r u l e , u s e / r e u s e can
occur o n l y i f a component of the material ( m a t e r i a l v a l u e s ) is
n o t recovered a s an end product, o t h e r w i s e t h e w a s t e s are b e i n g
reclaamsd.
Any analysis under t h e u s e / r e u s e e ~ c l u s i o n smust
t h e r e f o r e focus on whether reclamation of the w a s t e s i s
occurring. Reclamation i s d e f i n e d a s e i t h e r recovery of a useful
p r o d u c t o r regeneration o f a product f o r its o r i g i n a l use. 40
C.F.R. § 2 6 1 . l ( c ) ( 4 ) . Recovery is defined as the recovery of
distinct components of a secondary material as separate end
JUL- 18-2006 15: 42 FROM:

Encycle and ASARCO base their reliance o n ;he g s e / r e ! l s e

exep.ptior. on the fact that Section 2 6 1 . 2 ( e ) ( 1 ) ( i i ) ( t h e
c o m e r c i a l product u s e / r e u s e exemption) does not c o n t a l a an
e x ? r e s s p r ~ v i s odisallowing the exemption for waszes that a r $
reclaimeb. G i v e n t h e c l e a r intent of t h e comnercial product
use/reuse exemption h o w e v e r , such a p r o v i s o was u n n e c e s s a r y . As
b a c k c p u n d f o r The f i n a l rule, the April 4, 1983 preamble
explained he excl,:sion to cover materials used " as substitutes
for comertial p r c -.lets 1 f un . . w s ar a p - 3 ,

An example i s spent p i c k l e liquor used a s a p h o s p h o r u s

p r e c i p i t a c t and s l u d g e conditioner An wastewater treatment.
-CS~ C P ~
rv-~
tn U P - k l e l i c f ~ o ~ ;43
~ .Fed.
~ Reg.,
at 14458 (emphasis a d d e d ) . The explandtlon i n t h e 1 9 8 5 prea'hle
cited above also states unequivocally that a secondary material
must b e dlrectlv US& "as an "effective substitute f o r a .
II

commerciai product" and n o t undergo a n y type of preprocessing to

be subject to the exemption. In light of t h i s context, E n c y c l e
a n d AsARCO's semantic argument is unavailing. .

Encycle does not produce a reclaimed "produc:" that

would be free from RCRA regulation. Spent materials, or-listed
sludges or by-products (such as E006) w e r e the malority of
Encyclers f eedstacks. EPA' s summary of waste received and
processed at Encyclo, a copy of w h i c h i s attached as Exhibit D - 1
hereto. There i s no q u e s t i o n that Encycle alleged "products"
must undergo reclamation a t the smelters if a>y actual metals
recycling is going to occur. EPA's summary of Encycle
shiphents to ASARCO smelters, a copy o f which i s a t t a c h e d as
E x h i b i t D-2. T h e s e t y p e s of w a s t e s are hazardous w a s t e s under
RCRA because they are destined for metals reclamation and they
remain hazardous wastes until reclamation is complete. There is
no q u e s t ~ o nthat Encycle's hydrometalurgical processes
constitute, at best, only partial reclamation. No actual metals
recovery takes place at Encycle, this occurs only at t h e
smelters. EPA has clearly articulated that hazardous wastes that
are only partially raclalrned or processed minimally, remain
hazardous wastes until material recovery is complete. 40 C . F . R .
.
§ 261.2 ( c ) ( 3 ) See a . 1 4~8 ~F e~d . Reg. at 14489, which shows t h a t
a s early as 1903, EPA clearly articulated that preparation f o r
reclamation was n o t complete reclamation: '[wl e also c a u t l o n that
waste materials do not become products if they are merely
p r o c e s s e d minimally- ~ . e . operations
, that leave materials unfit
for use without further processing. For instance, a h a z a r d o u s
sludge remains a waste when it is dewatered and sent to a metal
reclaimer or used in a manner constituting disposal." and SO Fed.
JUL-18-2ECi6 15:42 FROM:

E?A i n t e r p r e t i v e zemoranda available t o ::-Le public

d u r i n g t h e r e l e v a n t ~ e r i o dr e i t e r a t e d t h i s c o n c e p r . F o r exarngle,
i n 1 9 8 9 , the D i r e c r o r of t h e EP.4 Office o f S o l i d Waste c i r c u l s ~ e d
a memcrandum t o e a c h o f h e r R e a i o n a l Hazardous Waste Manageiner.~
D i r e c t o r s r e g a r d i n g F006 r e c y c l i n g whicn a d d r e s s e d zhese i s s a e s .
T h e memorandum states: "For F006 used as a f e e d s t o c k i n a rnezsls
recoke:y s m e l t e r , t h e Agency v i e w s :his a s a r e c o v e r y p r o c e s s
r a t h e r than use a s a n i n g r e d i e n t i n an f n d u s t r i a l ?recess and
r h e r e f o r e , c o n s i d e r s t h i s t o b e a form of t r e a t m e n t t h a t i s r,cz
c u r r e n t l y r e g u l a t e d [citations o m i t t e d ] . Furt-,,, - em ,
v P , b,,al,9
t=&,4 -
is a r e c n v a r v n r o c . ~ . ~ st h, e FO 0 6 w a s t e w s a h a z a , d +o u 5
w a s t e ( a n d n b g . . m a n a c r e das . , u c h m o rt o ?he .'n t
C
aduction
L h e ~ r o c e s s .) . , " Memorandum f r o m Lowrance t o Hazardous Waste
Management D i v i s i o n D i r e c t o r s EPA Regio,ns I - X a t 2- 3 ( A p r i l 2 9 ,
.
1989) ( e m p h a s i s a d d e d ) E x h i b i t C h e r e t o . A i s o , ir. L989, the
Deputy Director of t h e Characterization and Assessment 'Divisicn
of EPA's O f f i c e of S o l i d Waste i n d i s c u s s i n g the e x c l u s i o n i n 4 0
C.F.R. § 261.2 (el (1) ( i i )[ u s e / r e u s e of a m a t e r i a l as a s u b s t i t u t e
f o r a commercial product), s t a t e d , " T h i s e x c l u s i o n a p p l i e s t o
m a t e r i a l s which a r e used o r reused w i t h o u t r e c l a m a t i o n ( s e e the
January 4 , 1 9 8 5 F e d e r a l Register n o t i c e , 5 0 FR 637, 6 3 8 ) ." EPA
Memorandum from Straus t o U l r i c h a t 2 ( S e p t . 12, 1 9 8 9 ) a copy 3 f
w h i c h i s a t t a c h e d as Exhibit E . Such memoranda have been
p u b l i c a l l y a v a i l a b l e s i n c e the RCRA Po 1 i c y Compendium was started
i n 1985.
~ p p r o p r i a t e l y , t h e TWC cited t o t h e p e r t i n e n t F e d e r a l
R e g l s t e r l a n g u a g e i n i t s f i r s t l e t t e r t o E n c y c l e of December 30,
1 9 8 8 : ''rf t h e m a t e r i a l i s t o be p u t t o use a f t e r i t h a s been
r e c l a i m e d , i t is s t i l l a s o l i d waste u n t i l r e c l a m a t i o n h a s been
c o m p l e t e d . Thus, t h e f a c t t h a t w a s t e s may be used after b e i n g
reclaimed d o e s not affect t h e ~ rs t a t u s as w a s t e s b e f o r e and w h i l e
b e i n g reclaimed. " The TWC l e t t e r f u r t h e r p r o v i d e d t h a t a c c o r d i n g
t o t h e f e d e r a l r e g i s t e r n o t i c e , l i s t e d wastes t h a t have b e e n
p a r t i a l l y reclaimed, b u t must be r e c l a i m e d f u r t h e r , a r e n o t '
exempt from the d e f i n i t i o n of s o l i d waste. && l e t t e r t o
S t e p h e n s o n from H a t t e n a t 1-2 (December 30, 1988) . A copy of
which i s a t t a c h e d a s E x h i b i t F, Again, these p r o v i s i o n s from the
F e d e r a l Register a r e e q u a l l y a p p l i c a b l e t o both t h e ingredient
and commercial p r o d u c t use/reuse exemption.
JUL-18-2006 15:43 FROM:

.- erefor
L fore, i n t h e 1 9 8 3 t o 1 9 8 9 timeframe, E n c y c l e a:-.~:j
A S ~ . . C Owere on n o t i c e fzorn t h e r e g u l a t i o n s ( i n o 1 u d n . i ; rile
definition o f s o l i d w a s t e promulgated I n 1985), the F e c i e r a l
R e g i s t e r preambles c i t e d h e r e i n , a n d EPA i n t e r p r e t i v e
c o r r e s p o n d e n c e i n t h a t p e r i o d , and f u r t h e r , were expressly
noiified b y the TWC l e t t e r of December 30, 1988, of E P A ' s
r e g u l a t o r y interpretation. T h e y were c l e a r l y on notice t h a t
under E p A ' s view, Encycle a l l e g e d " p r o d u c t s " were nor e l i g i b l e
f o r any u s e / r e u s e exemption. The a n a l o g o u s Texas. r e g u l a t i o n s
were based on the Federal regulatians, t h e r e f o r e , ZncycLe and
ASARCO were a l s o o n notice o f EPA's stated p o s i t i c n thag E n c y c l e
alleged "products" could not q u a l i f y f o r t h e a n a l c g o u s !exas
exemption.
E n c y c l e ' s l e g a l analysis p r o v i d e d t o the TWC i n its
l e t t e r of J u l y 1 2 , 1989 was wrong because i t omitted
c o n s i d e r a t i o n of t h e ,,pronouncements o f EPA on t h e s e i s s u e s a n d
did n o t c o n s i d e r t h e i n t e n t and meaning o f the r e g u l a t i ' m s
i n c o r p o r a t e d i n t o t h e Texas program, i n l l g h t o f t h e s e
pronouncements. EncycLets a n a l y s ~ sf a i l e d to c o n s i d e r t h a t
Encycle a l l e g e d "products", containing s p e n t materials and llsred
b y - p r o d u c t s and sludqes, were u l t i m a t e l y r e c l a i m e d at t h e
smelters. As such, Encyele a l l e g e d 'products" could n o t q u a l l f y
f o r a use/reuse exemption. Even assuming t h a t Endycle o n l y
a c c e p t e d legitimate r e c y c l a b l e $ , t h e legal i n t e r p r e t a t i o n i n the
TWC l e t t e r , upon which Encycle and ASARCO r e l y , is erroneous. A s
p r o v t d e d above, t h e RCRA regulations distinguish between
reclamation and use/reuse and make these mutually exclusive
categories. This was overlooked i n E n c y c l e ' s analysis.

Iv. E n c y c l e and ASARC0 cannot Rely ori the September 2 7 , 19B9 TWC
Letter Because The D e s c r i p t i o n of E n c y c l e ' s Processes Was
Inaccurate.
Encycle and ASARCO cannot rely on t h e TWC l e t t e r f o r
t h e a d d i t i o n a l r e a s o n that Encycle failed t o a c c u r a t e l y document
i t s p r o c e s s e s t o t h e TWC. I n its s u b m i t t a l t o t h e TWC on July
1 2 , 1 9 8 9 , Encycle o n l y documented hydrometaLurqical processes and
a s s u r r e d the TWC t h a t a l l wastes would be processed through the
h y d r o m e t a l u r g i c a l processes:

E/TI produces m e t a l l i c compounds from these w a s t e s

t h r o u g h a series of reclamation steps as shown in the
general flow diagram (Attachment B) . The w a s t e streams
a r e f i r s t subjected t o pH adjustment and f i l t r a t i o n
( f o r c o r r o s i v e wastes) ; a l k a l i n e c h l o r i n a t i o n f o r
cyanide wastes; and a reduction s t e p f o r chromium
b e a r i n g wastes. Following these s t e p s , the t r e a t e d
JUL-18-2006 15:43 FROM:

stream f u r t h e r pH a c j u s t m e n : and/i;,r
a o e s thrcsugk
sulfide precipitation and f i l t r a t i o n s t e p s .

L e t t e r , from C a r d e n a s t o B e i n k e a t 1 (July 1 2 , 1 9 8 9 ) . li copy 2:

which is a t t a c h e d as ~ x h i b i tE t o t h e s e t t l e m e n t stztemefir.
Encycle f ~ l r t h e rr e p r e s e n r e d that " t h e p r o c e s s 1s an extetlsive a n e
in.~olv:-,g c a r e f u l pH c o n t r o l a n d sequential pfeciplrazicn " . a.
at 2 . There is no dispute that subsiantial amounrs of h a z a r d a ~ s
w a s t e s received by E n c y c l e were put directly into "prouuc-," b i n s
witklout any processing whatsoever a t Encycle. & EPA summary of
w a s t e s received and processed b y Encycle, a copy of w h i c h i s
atcached as Exhibit D, and EPA process flow diagram w h i c h shows
r n i x r ~ gand blending ("PMP"] operations, a copy 05 which I S
a t t a c h e d .= E x h i b i t G . Since t h e TWC letter was based on the
representa~ions that an extensive hydrometalurgical process was
t o be performed on .all the wastes received by Encycle, i t c a n z c t
b e r e l i e d on t o c o v e r , . w a s t e s t h a t w e r e n o t processed i n t h i s
nanner, or to otherwise "properly" processed wastes chat .were
mixed with unprocessed w a s t e s (in combination, a- ' .
e l v 31.1
I
#-. .
~f rhe fa e c
!
r;
t
o
-
,
l . -.\
d - m c p s d
If
w
u e ~eri_o.destlo~) . % Exhibit D. In addition, the
*
mixture o f sham wastes into the process styeams, or d i r e c t l y into
alleged v p r o d u c t f f d i v e s t s the r e s u l t a n t m' i x t u r e s of any e x c l u s i o n
the non-sham portion might have enjoyed.

Encycle and ASARCO contend that the TWC letter

addressed the mixing and blending activities by providing, "the
- fact t h a t a w o r w o f the described process is performed a t
anorher l o c a t i o n does not alter the status o f Encycle/Texas
I n c f s . solids ..." Exhibit A 'to the settlement statement at 4
(emphasis a d d e d ) , This language, however, cannot possibly be
construed to cover the approximately one third of hazardous
w a s t e s received by Encycle that d i d not undergo m v ~ort_lonof
the process documented to the TWC and which were mixed directly
~ n t o"product bins. In addition, the mixing activity, which
f
f
provides no significant concentrating of metals in the w a s t e
being blended in, constitutes unpermitted treatment because it
does not meet t h e definition of reclamation (rt is not "recovery
of distinct components of a secondary material as separate end
products"). 40 C.F.R. 261.1 (c)( 5 ) (i) .
Encycle and ASARCO attempt to argue t h a t Texas knew
fully at the outset about the direct mixing of hazardous waste
unprocessed at Encycle into its alleged'product" because of
annual inspections under the storage permit, and other
interactions w i t h E n c y c l e representatives. No evidence of this
is provided in the settlement statement, however. Encycle and
JUL- 18-2006 15: 43 FROM:

A-;$Jc-s. m s r e l y ? r e s e n t a copy .2f an 19forrnal. ~ n t e r n a iEncyicle

<ocurr,enc azd t h e self-servir,.?,u n s u k s t . a n t l d t e . r f s g e c ~ l a z l o no f .a
f u r m e = E n c y c l e P r e s ~ b e ~tP.3: C chis document " n a y " h a v e b e e n
provided t a Texas. O t h e r weak a t t e m p t s a t ? r o o f on t h i s p o i n t
are r e f e r e n c e s to ~ n s p e c t i ~r ex p o r c s s t a r t l n g in I994 that tire
j.,,ll,, regarbing the d i r e c t r n i x l n g o 7 e r a t i o x . B y t h e n , oP
course '-,hei n v e r t i - g a t i o r : that c u l m i n a t e d i n t h i s e n f o r z e n e n t
actlox was comencinc;. A s such, t h e s e r e f e r z n c e s do pa: show
acquiescence on the p a r t of t n e stare i n t h e unlawfal b l e n d i r q
activities. T e x a s ' posltlon regarding these m a t t e r s was
cnnfirmed in prior meetlngs with E n c y c l e and further confl=rned
recently i n t h e June 9 , 1998 l e t t ? : t o t h e P r e s i d e ~ tof Er.:ycie
from che E:zardous Waste Director of t h e Texas Natural R ~ s o u r e e s
Conservati.;n Commmissir~n which s t a t e s , u&X u, t h a t \\the
a v a i l a b l e information indicates t h a t the exenption p r o v i s i o n s
cited in t h e e a r l i e r l e t t e r s a r e n o t a p p l i c a b l e to the m a t e r i a l s
E n c y c l e produces and Encycle's r e l i a n c e on the litters has been
misplaced." a l e t t e r from Hibbs t o Mosshoider (June 10, 1 9 9 6 r ,
a copy o f which is a t c a c h e d as Exhibit H h e r e t o .
Encycle did not process hazardous w a s t e s received a s
represented. I c i s t h e r e f o r e , n o t s u r p r i s i n g that inspections b y
TNRCC and site vissts by prospective customers did not initially
disclose the RCi(A violations a s s o c i a t e d with Encycle's
operations. Encycle failed to properly screen wastes e n t e r i z g
its process as outlined in S e c t i o n I1 above [sham r e c y c l i n g ) and
did not process all wastes hydrometalurgically. This was
inconsistent w i t h its representations t o t h e TWC. Additionally,
E n c y c l e did not specify to the T.WC in it s u b m i t t a l s that it was
p u t t i n g w a s t e sludges w i t h no recycling va,lue back into its '
process from its wastewater t r e a t m 6 n t plant. For these r e a s o n s ,
Encycle and ASARCO cannot rely on the TWC l e t t e r .
V. E n c y c l e and ASARCO Were On N o t i c e o f EPA' s Regulatory
Interpretation.

Agency promulgation of a regulation provides f a i r and

adequate n o t i c e of the Agency' s interpretation " [ i ]f , b y
reviewing the regulations and o t h e r p u b l i c s t a t e m e n t s i s s u e d by
t h e a g e n c y , a r e g u l a t e d party acting i n good faith would be able
to i d e n t i f y , w i t h ' a s c e r t a i n a b l e certainty, ' t h e standards w i t h
w h i c n t h e agency 'expects parties to conform." General E l petri-,
Co. v . United St;gtes EPA, 53 F.3d 1 3 2 4 , 1 3 2 9 (D.C. C i r . 1995).
The definition of solid waste, as promulgated by EPA in 1985, is
'reasonably comprehensible to people of good f a i t h . ' u.
at 1330
(citing McElrav E 1 e c t r o m . COD. v . FCC, 990 F. 2d 1351, 1358
( D . C . C i r . 1 9 9 3 ) ) . The preamble t o the regulations in t h e
JUL-18-2006 15:43 FROM:

Federal ReGlsier s t a t e s c ? x q u i ' v o c a i l y t h a t uSe/reuse .and

~ c , , ; l a n a i - l ~ raa--e
. rnxt;:~ 1l y e x c l - ~ s i v e :that t h e p r o p o s e d e r , z l u s ~ - , n
sr,d l \ s a r . - : ~ might have been able to e n J o y .was e x p r e s s l y n o t
p r s ~ ~ u l g a t e dand , chat .Encycle and Asarco' s a c t i v i t i e s , when taken
t.c:qec'r.+r, c l e a r 1 y e o n s t i t i l t e r e c l a m a t i o n a c t i v i t i e s . .- a
d ~ s c : . l s s i o n at Far; III. r h o p r e a & l e t o a r e g u l a t i n r . s h o u l d be
c o n s i , 2 e r e d i n s 3 n s t r u i n g t h e r e g u l a t i o n and determrning t h e
meaning of t h e r e g u l a t i o n . ; - ~ ' ~ - I n c - 3 m .e vn t ey.srt I nf
F . Z d 7'7 ac 7 8 !Temp Ener. C C . App. 19s3!), _=_prt. m.,
Ensrc;v, 66'
456 U.S. 9 0 5 (1982). & k i Q S 2 2 , Kennecott u ~ & lCOO
C
= rorQ. v,
P of T R W ~ O ~ , 8 8 F.3d 1191, 1223 (D.c..Cir. 1396) ( C o u r t
-chat the agency i n t e n d e d -he preamble r 3 be b i n d i n g i f
what i t requires i s sufficiently c l e a r ) . T h e preamble i s c l e a r i n
s t a t i n g t h a t no use/reuse exemption is available if t h e material
is reclaimed and i n defining sham recycling: T a k i n g i n t o a c c o u n t
t + p r e a d 1 ~language the o z l y x e a s o m i n t e r p r e t a t i o n i s t h a t
k h e use/reuse exemptioz c a n n o t apply when r e c l a m a t i o n t y p e
activities are O C C U r . ? l n g .
As s t a t & above, Encycle a n d ASARCO had' f a i r n o t i c e from
the r e g u l a t i o n s . Zowever, even i f E n c y c l e and A S A X 0 successfully ,
a r g u e t h a t t h e y d i d n o t receive f a i r n o t i c e from t h e promulgation
of t h e regulations i n 1985, E n c y c l e and ASARCO d i d receive f a i r
nctice of EPA's interpretation from t h e TWC i n 1 9 8 8 . T h e TWC
l e t t e r o f December 3 0 , 1988, E x h i b i t F hereto, a f f i r m a t i v e l y
s t a t e d t h a t according t o EPA's i n t e r p r e t a t i o n o f t h e regulations
E n c y c l e alleged " p r o d u c t s " were exempt. Therefore, even i f
the l a n g u a g e of t h e r e g u l a t i o n s and federal register notices w e r e
f o u n d t o be ambiguous, E n c y c l e and ASARCO had a c t u a l n o t i c e of
. . E P A f s i n t e r p r e t a . t i o n t h e d a y i t r e c e i v e d the bWC's l e t t e r .

S i m i l a r l y , E n c y c l e and ASARCO have had f a i r n o t i c e f r o m

the regulations and other p u b l i c s t a t e m e n t s b y EPA regarding t h e
distinction between sham r e c y c l i n g and legitimate r e c y c l i n g , ' a
d i s c u s s i o n a t Part 11. Moreover, t h e TWC l e t t e r of
September 2 7 , 1989, Exhibit A t o the s e t t l e m e n r s t a t e m e n t ,
af f i r n a t i v e l y stated that any c l a ~ m e d"recycling" must be
legitimate.

VI. E n c y c l e and Asarco' s Proposal Does Not Appropriately R e f l e c t

The ~ r a v i t yand Duration Of T h e V i o l a t i o n s , And T h e Economic
B e n e f i t R e s u l t i n g From The Violations

I n l i g h t of t h e f o r e g o i n g , it i s c l e a r t h a t t h e central
basis f o r ASARCO's p r o p o s a l i n t h e s e t t l e m e n t statement o f June 9,
1998 is flawed and t h e p r o p o s a l should be r e c o n s i d e r e d i n its
entirety. ont the less, we w i l l address a few points regarding t h e
JUL- 18-200615: 43 FROM:

A . Penalties For E n c y c l e

X i t h regard tc t h e Waste A n a l y s i s Plan violations

~r.cy:le ar.14 ASAiCi3 must c c n s i d e r t h e f a i l u r e 0 5 Encycle's waste
.;-cre~r.irlg;rocedtires i n t h e evaluation o f t 5 e s e claims. As a
r e s u l i , Xr:.z:?;cle encjaqed i n s u b s t a n t i a l s h a r r e c y c l i f t g .
K i t h r e g a r d t o the o t h e r v i o l a t i o n s related t o S n c y c l e ' s
.
..-.eg&
xecyc1l.g activities, E n c y c l e and ASARCO' s a n a l y s i s m u s t
t-;reevaluated I n l i g h t of Sectians I through V above.

B. Penal ties For The ASARCO Smelters

with regard t o t h e E l Paso facility, Encycle and ASLrlCO
c9n:end t b a c because ,Texas did not identify the E n c y c l e a l l e g e d
\.procuc:" a s h a z a r d o u s waste during i n s p e c t i a n s a t El Paso, t h e
governments should not seek a substantial penalty at El Paso. The
Encycle w a s t e s w e r e handled a t E l Paso in t h e same way o z e
concentrates were handled, however. AS s u c h , the Encycle w a s t e s
xere not easily identified at El Paso a s hazardous wastes by
LnsDectors who did n o t have the information that ASARCO had
regarding the composition of the wastes. L i k e w i s e , at East
Helena, although it was difficult f o r inspectors to identify the
E n c y c l e alleged "product" as hazardous wastes, once i d e n t i f i e d by
E P A and State of Montana officials, the mismanagement of Encycle
wastes a t East Helena was included in the investigation of
Encycle. Further action on the part of Montana w a s unnecessary.
Since the key to cmfi'rming t h e r e g u l a t o r y status o f Encycle
w a s t e s a t t h e smelters was the m v e s t i g a t i o n of E n c y c l e r s
facility, i t w a s a p p r o p r i a t e f o r inspectors at t h e smelters to
reserve c ~ t i n gASARCO f o r violations associated w i t h Encycle
w a s t e s until t h e full investigation w a s completed. The delay in
enforcement action was not acquiescence, it was the period of time
r e q u i r e d for the full investigation t o be completed.
With regard t o economic benefit for each of the
s m e l t e r s , t h e economic b e n e f i t ("BEN") s c e n a r i o s used by EPA
( c o s t s saved b y not upgrading t h e smelters t o lawfully manage t h e
hazardous wastes received) is the scenario based on a c t u a l events,
L . B . , ASARCO actually managed hazardous wastes at the s m e l t e r s .
Encycle and ASARCO' s BEN scenario, that the wastes would not have
been r e c e i v e d by ASARCO' s smelters had t h e y been identified as
hazardous w a s t e s r e l i e s on s p e c u l a t i o n . While it is true that the
precise BEN enjoyed by ASARCO a s a result o f the s u b j e c t
JUL-18-2006 '15:44 FROM:

C. World Resources Company

P.sP-?CO and Encycle have asked t h a t t h e p r i o r r e s o l u t i o n
cf RC?A enforcement matters Fnvolvinc; World Resources C o w a n y
( " $ j p . ~ " ~i n f l u e n c e t h e governments in their position i n t h i s
rnat,er. While W R C 1 s operati3ns have some s i m i l a r i t i e s to
Encycle's operaticn, the WRC m a t t e r s referred t o l n :he settlenent
starement were subs.tar.tislly d i f f e r e n t c h a n this o n e , E n c y c l e and
ASFL?CO cite to an adminl->;rative penalty asses .:A a g a i n s t WRC in
1991 5s grounds f o r a s s e s s m e n t o f a m i n o r p e n a i i y for the
violarions of E n c y c l e and ASARCO here. T h a t WRC administrative
o r d e r predated the currenr R C W pena1:ty policy, and is t h e r e f o r e ,
not cbmparable, however. With regard co the a d m i n i s t r a t i v e order
w i t h WRc in Arizona, the facts of that situation were
substantially d i f f e y e n . t than "ce facts p r e s e n t e d h e r e . i n tha: .
rnacter, WRC was handling its "product" as hazardoqs w a s t e . Whle
WRC: b r i e f l y suspended its manifesting, claiming t h e y were
informally authorized to due so by Arizona, once advised t h a t
manifesting #as i n d e e d r e q u i r e d , WRC promptly returned to its
prior hazardous w a s t e handling procedures.
.
D EPA A P ~TNRCC Reactions To Supplemental Environmental
Project ("SEP") Ptopo~als

1. Electrowinning: C e r t a i n aspects of t h i s proposed

p r o j e c t potentially have m e r i t a s a SEP p r o j e c t u n d e r , t h e Texas
N a t u r a l Resource C o n s e r v a t i ~ ncommission ("TNRCC") and the EPA SEP
p o l i c i e s . - The c r e d i t that Encycle can' receive for t h e p r o j e c t ,
however, i s l i m i t e d . First, a l t h o u g h b o t h agencies wish to
encourage efforFs to develop and use experimental technologies,
n e i t h e r the TNRCC n o r t h e EPA can subsidize the expansion or
development o f new busi'ness. This concern reduces the value of
the proposed SEP significantly.
Second, while EPA is w i l l i n g t o g i v e SEP c c e d i t f o r
bench t e s t i n g and pilot testing of new technology i f there is some
evidence that the technology will be s u c c e s s f u l , t h e TNRCC,
believes that the environmental benefit of the assessment and
testing of unproven technology is too intangible to qualify as a
v a l i d SEP p r o j e c t . Encycle's current proposal appears to be a
purely experimental project which may or may not b e n e f l t the
environment. I t would be difficult to approve a SEP project
without some m e a s u r a b l e b e n e f i t t o t h e environment.
JUL- 18-2B06 15:44 FROM:

-'
~ . a eTbiR;3:1 and EPA w o u l d boxh l i k e to escocraqs a
, ..,.,,Eicsti.>n
f7 - (4i tc t'r.2 psopc;al :hat wcjuld q l v e C5e a r o p o s s ~; ; , ~ r i ?
-
'JaLlle 3 5 a SEP. ri)5 exampLe, o n c e t h e r e c h n s l 3 g y was i , n + : a l l s d
and proven s u c c e s s f u l , t h e A q e n c i e s would e n t e r t a i n the
p o s s i b i l i t y o f g l v i n q some SEE' c r e d i : l f E n c y c l e 3 r o c e s s e d
h a z a r d o u s w a s t e P D smali
~ businesses n o t presently served by
E n c y c l e , free cf charge. The Agencies m i q h t also c o n s i d e r SE?
c r e d i r i f Z n c y c l e promoted t h e t e c h n o l o g y or provided training on
t h e technoLogy t o 3 t n e r r e c y c l i n g f a c i l i t i e s .
2. DemoLition P r o j e c t s : B e t h the INRCC and EPA b e l i e v e
t h a t t h e v a l u e of c h e s e p r o p o s e d p r o j ~ : z s i s C.mprOmised by t l e
f a c t t h a t E n c y c l e w i l l benefit s u b s t a n t i a l l y from i h e d e m o l i t l . 3 n
o f t h e s t r u c t u r e s , The Agencies believe that Encycle proSably
w o u l d have performed t h e dernol~rLon f o r a number of r e a s o n s ,
i n c l u d i n g t h e e l i m i n a t i o n of f a c i l i t i e s t h a t a r e no lottger i n u s e ,
e x p a n s i o n o f t h e , ,f a c i l i t i e s , a n d r e d u c t i o n o f long term l i a b i l i t y
f o r t h e companies. To a l l o w e v e n m i n i m a l SEP credit for r h e
demolition p r o j e c t s , ~ncycle' would n e e d t o p r o v e that t h e
b u i l d i n g s a r e i n f a c t c o n t a m i n a t e d and that t h e r e is a real
possibility that the contamination will be released i n t o the
environment. I n e v a l u a t i n g SEP p r o j e c t s , t h e TNRCC and E?F. weigh
h e a v i l y whether the project will improve t h e environment c f t h e
community w h e r e t h e v i o l a t i o n o c c u r r e d . A s s u c h , i n addition t o
s establishing proof o f c o n t a m i n a t i o n , Encycle n e e d s . to p r o v i d e
I
e v i d e n c e that the c o n t a m i n a t i o n has, or w i l l , impact the corninunity
s u r r o u n d i n g t h e f a c i l i t y . Many o f t h e proposed d e m o l i t i o n s i t e s
a p p e a r t o be located in the c e n t e r o f the f a c i l i t i e s , which
- reduces the l i k e l i h o o d of m i g r a t i o n o f c o n t a m i n a n t s off site.
Thus, t h e projects p r o v i d e l i t t l e p r o t e c t i o n for, o r environmental
b e n e f i t t o , t h e community.
3. Mercuzy removal at East Helena: At first blush, t h i s
proposal appears t o have potential m e r i t as a S E P . To make a
final determination, however, EPA would need t o have more
i n f o r m a t i o n a b o u t the e f f i c a c y of t h e technology t h a t would be
installed. I n a d d i t i o n , the Agency would need t o be assured t h a t
the mercury removal was not r e q u i r e d a s p a r t of t h e on-going
c l e a n - u p a c t i v i t i e s a t t h e site or u n d e r Clean A i r A c t
requirements.
4 . N o t e For El Paso: I n t h e recent p a s t , E l Paso has
been t h e s u b j e c t o f a n enforcement a c t i o n by t h e TNRCC whlch
r e s u l t e d in a SEP. When evaluating a respondents
eligibility f o r a SEP, Texasr p o l i c y requires consideration of the
f a c i l i t y ' s compliance h i s t o r y . D u r i n g the s e t t l e m e n t of t h e p r l o r
a c t i o n , the TNRCC agreed t o an an-site demolition p r o j e c t a s a
SEP. ASARCO i s s t i l l p e r f o r m i n g t h i s SEP- The fact that E l Paso
JUL-18-2006 15:44 FROM:

I..; .cl;'rr-nrly Parr;i.c;ipatir.g I n t>,e S E 3 p r o g r a m i r . f l c e n c 2 5 i t s

. .
a:>l:i:y ;o p a r : l c i p a t e i n r 5 t TPPCC S E ? p p r o q r a m a g a x p - W5lle
h a s no: d e c i d e d 3: this t m e t,o e x c l u d e El F a s o from
. . z o ? . s i d e r a i i o n for the S E ? p r o g r a m i n t h i s c a s e , TNRCC i s
s a r t i c u l a r l y concerned a b o u t a n y a d d i c i m a l p r o j e c t s that. credit
ASARC!',, £31 improving i t s own Eacility. C o n s i d e r i n 9 the f a c i l i t y ' s
. c v n g i l a n c e history, i t s i n v o l v e m e n t i n t h e c u r r e n r RCRA
nnforr:.'-ment a c r c i o n , a n d :he T?JRCC1s c o n c e r n s a b o u t ~ r o t 2 c t i n : jt h e
~ n t e g r . i t ; y of the S E P prograrr,, the TNRCC. w i l l subjecz ASAiZCOr s S E P
proposals a t E l Paso t o c a r e f u l s c r u t i n y . T h e TNRCC1s prim.ary
Eoczs i n e v a l u a ~ i n ga n y SEP ~ r o p o s a l sb y ASkRCO f o r E l Paso xi11
be o n securing a s t r o n g e r , more direct b e n j f i t to c h e community.
i?X x o u l d be p a r t i c u l a r l y inrerested i n a n a i r q u a l i t y S E P z r El
"so.
5. Guidance on developing SEP' s f o s this c a s e : T h e
f o c u s o f b o t h t h e EP.9 and che TNRCC SEP p o l i c i e s is o n e n c o u r a g i n g
r o j e c t s t h a t benefit. t h e community where t h e v i o l a t i o n s occurred.
W h i l e t h e p r o p o s e d SE'PS n a y kave some b e n e f i c i a ' l e n v i r o ~ m e n t a l
i n p a t c s , t h e y do not benefit t h e surrounding community, T h i s i s
p a z t i c u l a r y i m p o r t a n t i n l i g h t o f t h e concerns r a i s e d about
c o n t a m i n a t i o n i n n e i g h b o r h o o d s near t h e f a c i l i r i ' e s caused by
facilicy activities. Both a g e n c i e s w o u l d like 'to see, in
r
E n c y c l e s and ASARCO's SEP p r o p o s a l s , a s t r o n g e r focus on
b e n e f i t t i n g t h e environment around t h e f a c i l i t i e s .

E. TNRCC Response T o Encycle and ASARCO Comments on State

Penalty Calculations

E n c y c l e and A S A R C O r s response to t h e TNRCC p e n a l t y

c o m p o n e n t o f t h e governments' Summary o f Violations i s s e l f
serving and misleading. Encycle and ASARCO i m p l y t h a t
E n c y c l e was ready to settle with the TNRCC for the demanded amount
o f $275,000. I n f a c t , when t h e TNRCC determined t o r e f e r
E n c y c l e ' s violations t o t h e Texas Attorney General, E n c y c l e ' s
settlement o f f e r was c o n s i d e r a b l y Less t h a n TNRCC's a d m i n i s t r a t i v e
p e n a l t y demand, I n a l e t t e r from K e i t h Hobson t o Ann Foster,
d a t e d November 2 1 , 1 9 9 5 , €TI made a " l o w b a l l " offer of $ 2 2 , 5 0 0 t o
settle its p e n a l t y liability with the TNRCC. E n c y c l e n e v e r moved
o f f t h i s f i g u r e , and arguably dropped i t s offer, when, o n October
31, 1997 Mr. HopSon submitted a redlined v e r s i o n of TNRCC's
a d m i n i s t r a t i v e order which c o n t a i n e d no p e n a l t y offer a t all. A s
l a t e a s F e b r u a r y 4 , 1 9 9 8 , i n a meeting w i t h TNRCC, Encycle
continued to d i s p u t e the a m o u n t of TNRCC's p e n a l t y demand, b u t
made n o new counter offer. C o n t r a r y to t h e i m p l i c a t i o n of the
settlement statement, t h e p a r t i e s had r e s o l v e d only one t e c h n i c a l
i t e m - E n c y c l e ' s proposed remediation approach t o t h e lagoons at -
t h e t i m e TNRCC determined t o refer the matter to the A t t o r n e y
G e n e r a l ' s O f f l c e . Many questions remained regarding the o t h e r
J U L - 1 8 - ~ 0 0 6 15:44 FROM:

' , ~ k e a n y litigant, TNRCC can t a k e i! non-suit i n a n y a c = i o n

i t p r o s ~ c u E e s adxixfstratively or through the Atcorney General.
Indeed, given t h e Great gag between the TNRCC a n c Z n c y c l e or.
inenalr-tos and the r e l a r i v e l a c k of progress in resolving the
:echnir,31 issues at t h e Encycle facility, TNRCC wes j u s r i f ied i n
exercising its drscretlon and referring t h e m a t r c r to the A t t o r n e y
G e n e r ~ lfor prosecution in connection with the ,peridin9 federal
action. The penalty dertlanded by the S t a t e of Texas r e f l e c t s t 5 e
f ::t tF.3: c h e Attorney General is authorized :t seek a l a r g e r
penalty t h a n the TNRCC ( : ~ pto $ 2 5 , 0 0 0 per day v e r s u s $10,000! .
'Compare Tex, Healih 6 S a f e t y Code A m . 7.102) w i t h 3 6 1 . 2 5 1 (now
Water Code 7 . 0 5 2 ) . The penalty demanded by the State o f Texas
rofiecrs t h i s fact. TNRCCfs penaity demand also refl.ects a mdest
a d d i t i ~ n a lpenalty for a violation not previously considered b y
the TNXCC. I.

VII. EPA and TNRCC Corrective Action Requirements

A. E n c y c l e Facility, Corpus C h r i s t i

Any settlement must include commitments by Encycle and

ASARCO to complete ongoing c o r r e c t i v e action at t h e E n c y c l e
f a c i l i t y and t o perform additional c o r r e c t i v e action as discussed.
Here is a d d i t i o n a l information regarding the governments current
position on corrective action requirements at the Encycle
facility. .
1. Oversight: Oversight of the corrective action at t h e
f a c i l i t y w i l l be conducted under TNRCC supervision with EPA
concurrence.
2. Risk Assessment: Encycle and ASARCO may determine
human health risk and a11 media cleanup levels at the F a c i l i t y
based on t h e most c u r r e n t version of the Texas Risk Reduction
Rules ucder the following conditions:

a. I f clean-up levels are based on TNRCC' s Risk

Reduction S t a n d a r d 1, EPA must c o n c u r on the
background values used as the cleanup levels.

b. I f clean-up levels are based on TNRCC1s Risk

Reduction 2, Encycle and ASARCO shall i n s u r e
t h a t l e v e l s a r e f u l l y protective o f human and
ecological receptors. Where appropriate,
TNRCC reference values s h a l l be adjusted I n
JUL- l8-2EiEi6 IS: 44 FROM:

For assessment oE e c c l 3 g i c a l r i s k , E n c y c l e and A S A ~ C O

s:?ail ~ ; g p TNF:3C13 2 r a f c qilidance for ecological r i s k asso-;smer,t,
provided t h a z EPA csncurr i n the methodology and v a l u e s u s e d . "or
surface LJater, Encycle anc! AS-XXO s h a l l Ese Texas *blent Water
Q u 3 i i . i ~S ~ a n d a r d s .
i n recognition o f t h e f a c t t h a t TNRCC is currently in
the process of revising i:s Risk Reduction Rules, Z n c y c l e and
ASARCO s h a l l use the approved version i- ? l a c e whec t h e Work Plan
i s approved.
3. Corrective Action, Approach : ASARCO and Ezcyzle s h a l l
use a sltewide approach to corrective action as opposed to a unit-
by- uni t approach. A s i tewide approach would involve c o r r e c t i v e
action on releases o f hazardous c o n s t i t u e n t s to all media (soil,
a l r , ' groundwater, surf ace water and s e d i m e n t ) i n c l u d i n g all units
arid on-site/off-site areas which say have been impacted b y t h o s e
releases. T h e sitewide RFI s h a l l , a t a minimum, include
invesrigatlon o f medla in, u n d e r , and n e a r b y t h e u n i t s l i s t e d
below.
w 01 Landfill

m East and West Lagoons

I Railroad Track Azea
m Feed Tanks 1 and 2

rn Road l e a d i n g t o a n d w e s t of B u i l d i n g C

rn G r a i n Elevator

m Former Sludge Drying Beds

I ' Reactor Clarifier
I Facilities 1 , 2, 3 and 4
I West C e l l House
m NOR 4 3
JUL-18-2006 15:45 FROM:

w Bulldlng n o r r h of Facliity 2
I o?d C l s t l n y Suilding

m O u t f a l l Nunber 0 0 2 o f f East Lagoon

m The C o r p u s Christ1 S h i p channel in v l c i n i z y o f t h e o u t f a i l s
m .Qy o z - s i t e o r of f-site waste disposal areas.

Encycle and ASARCO shall i n c l u d e investigative r e s u l t s o f i t s

'

current RFI b e i n g completed

I.
under i t s permit l s s u e d b y TNRCC i.n
its sizewide RFI.
\

4. Corrective Measures: Certain c o r r e c t i v e measures at

_onaratir.a units at the facility may be deferred -u ntil final
facility closure, i f the RFI is completed immediately. However,
'

the g o v e r n r e n t s must r e t a i n the authority t o d e t e r m i n e which

measures may be deferred depending on the r e s u l t s of the RFI and
the risk assessment.

B. ASARCO Smelter, El Paso

Any settlement must include commitments by ASARCO to

complete ongoing corrective action at the ASARCO smelter in El
Pasa and to perform some limited additional c o r r e c t i v e action.
ASARCO's c o o p e r a t i o n regarding the J u l y 1, 1998 s i t e visit was
g r e a t l y appreciAted. The governments' requirements for a d d i t i o n a l
corrective action at El Paso will be provided shortly.
VII I. Encycle Future Operating Conditions
Recycling is an important goal of RCRA and one of the
objectives o f the governments in t h i s matter i s t o facilitate
lawful recycling. As part of an appropriate overall s e t t l e m e n t ,
the governments are willing to sanction continued operations at
Encycle under a consent decree w i t h appropriate c o n d i t i o n s , u n t i l
a p e r m i t application is acted upon. W e believe Encycle has made
substantial progress on redesigning its operations to conform to
applicable law. Once the n e x t version of the o p e r a t i n g plan and
waste analysis plan are received, more detailed discussians can
occur regarding required operating c o n d i t i o n s .
JUL-18-2086 15: 45 FROM: TO: 5122390606

1%. F i n a n c i a l Consideratzons

E n c y c l e and ASAiiC3 5 a v e requested = h a t t h e r ; c ~ v e r n m e n t ~

consider t h e financial cczditions o f Encycle and ASF-?.CZ as pzr: o f
o u r settlement analysis. We Gave submitted a detailed r e q c e s t on
3uLy 2 3 , 1998, to r e v i e w financial information. This ;nformzcion
s h o u l d b e p r o v i d e d a s socn as ~ o s s i b l e . I f Encycle c a n
demonstrate a Sozafide ~ n a b i l i r yto pay, we can :;ns:ier
recornmerding cl:?at. some ? o r = i m of t h e p e n a l t y be p a i d w i t h i n - k i n d
s e r v i c e s cti1i:inq Encycle's recycling c a p a 3 ~ l i t i e s .
 -
DRAFT [O7/3 1/98] CONTAINS CBUCONFIDENTLAL: FOR SETTLEMENT PURPOSES ONLY

TABLE 1
WASTES PROCESSED
PRINCIPAL METAL CONTENT. 0.00%
PRECIOUS METAL CONTENT; LESS THAN 0.1 OZ/TON
JANUARY 1995
Encycle/Texas, Inc.

Process Imd '

(tons) Dertim~ion' Nwnkr

ASARCO, LIC.

. Ihrpnl Suhine R i v a
03699 l'h 0 0
I Na 1 43

13on Coqm~u~iail 0225 1-9 I

 DRAFT [07/31/981- CONTAINS CIIUCONFIDENTIAL: FOR SETTLEMENT PUKI'OSES ONLY

TABLE I
WASTES PROCESSED
PRINCIPAL METAL CONTENT: 0.00%
PREClOUS METAL CONTENT: LESS THAN 0.1 OZ/TON
JANUARY 1995
Encycle/Texas, lnc.
- - --
Number Process
Gencr;ltor CCU of Lwds Callas (tons)
'
Dca~ruiltion

AShRCO, Inc. 0?699 I DQO2 95 t

1 I;Colorado)
E'd
 DKAFT [07/31/98j - CONTAINS CBIfCONFIDENTLAL:FOR SETTLER.1ENT PURPOSES ONLY
Table I
WASTES PROCESSED
PIUNClPAL bETAL CONTENT 0 00 %
PRECIOUS METAL CONTENT: LESS THAN 0.1 OZ/TON
MARCH 1994
Encycte/Texas, Inc.
La
m
La
m
cn
m ;
.. Gawutor I CCU
Number
of Loads
Waste
Codes
Quantity
(tons)
' 1.d '
Nutnkr Prucese l h t c
R i i ~ c i p o Merrrls
(44 Avcrqc) '

Ni 0.W
l

Al 0 0 2
~)IILCI. COIISIIIUCII~S

NB tr
(fi)

I31
N A S A ~ H Ispace ~ u w r t ~ 14-89
3 I Do02 16.1 1 7694 3104/W
d
In m 7
.. *
DO08
e.- Senuteclb Lac: OW3.-I-90 I . Dun2 21.3 t 7083 Jf0IPi.k , C'LI 11 01') . ~ l $ . i ~ u 3 ? i ) ~A.c r l ) i l l X t k
1 ' 001

IIK
%W;I~LTII. I ti ~01-1-90 I MHb2 21 5 I 7755 31 IXf 9.1 C'u' 41 tnt Ag 411133 0 1 :\II 4~lJ17t)~
1' II r l l
DRAFT [07/31/98) - CONTAlNS CBIfCONFlDENTIAL: FOR SETTLEAILN'I' PURPOSES ONLY

Table 1
WASTES PROCESSED
PRINCIPAL METAL CONTENT: 0.00 %
PRECIOUS METAL CONTENT: LESS THAN 0.I OZ/TON
h4ARCH 1997
EncyclelTexas, t nc.
DRAFT 107/31/981- CONTAINS CBUCONFSDENTIAL: FOR SEITLEhlEN'I' I'URPOSES ONLY

Table I
WASTES PROCESSED
PRMCiPAL METAL CONTENT: 0.00%
PRECIOUS METAL CONTENT:LESS THAN 0. I 021TON
APRIL 1995
EncycldTexas, Inc.
L'd
DRAFT [U713LNB(CONTAINS CBI\CONFWENTtAL: FOR SETTLEMENTPURPOSES ONLY

Table 1 (continued)

WASTES PROCESSED
PWCPAL METAL COMTM: 0.00%
PRECIOUS METAL CONTEW. LESS n w 0.1 ovro~
MAY 1993
Enc\clef$esas. Inc.
DWFT [07/31/98] - CONTAlNS CBIICONFIDENTIAL: FOR SETTLEMENT PURPOSES ONLY

Table-1
WASTES PROCESSED
PRINCIPAL METAL CONTENT: 0.00%
PRECIOUS METAL CONTENT: LESS THAN 0.1 OZITON
MAY 1996
Encycle/Texas. tnc.
DIWF1' 107/31/981 CONTAlNS CBUCONFCDENTWL: FOR SETTLEMENT PURPOSES ONLY

Table I
WASTES PROCESSED
PRMCIPAL METAL CONTENT: 0.00%
PRECIOUS METAL CONTENT: LESS TI.IAN 0.1OZ/TON
JUNE 1994
Encyclflexas, 1 nc.
 DIWFT 10713[/981- CONTAlNS CBIICONFIUENTIAL: FOR SE'lTLElUEN'I' I'UKPOSES ONLY

Table 1 .
WASTES PROCESSED
P W C I PAL METAL CONTENT. 0.00 ?6
PRECtOUS METAL CONTENT:LESS THAN 0. I OZiTON
JUNE 1997
Encyclflexas, lnc.

Number
Generator CC U of Loads

Corpus ChriEti Memorial I 05421 I I

Dupnt Sabine River 04 127 3

Dupnt Sabine River I 04117 I 1

-
Cr: 0.W Fc: 0 01 k' il I?

Duponl Sabine River 01127 3

Dupont Sabine River Mi27 1

Duponl Sabine River 01127 1 (el Cr: 0 00 I' 0 ilS

Duponl Sabinc River

Dupont Sabine Rivw 04127

Dupon! Sabine R i w
- ~
04127 I 1

Dupon! Sabine R i m

Dupont 6 b i n c River

Duponl Sabine River

 -
DRAFT 107/31/98] CONTAINS CUUCONFIDENTkL: FOR SEITLEMENT PUIU'OSES ONLY

Tbble I Continued -
WASTES PROCESSED
PFUNClPAL METAL CONTENT: 0.00%
PREClOUS METAL CONTENT: LESS THAN 0.1 OZnON
JUNE 1997

Number Wasre Q~uiitit? Process Lwd ' I f ~~icqxil

hlclxls
Gmeritor CC# ofLaads Corlrs (tons) Dcs~ination ' Nmnkr Process [ h e r % A vzrurc j .'
b
Sabine Rivcr
I)l~wn~ 01 127 I 22.5 I 14209 6112/97 Cr' O (10

I I4209 6/12/97 Cr. (1 tH)

I 13202 . 6li 1/97 Cr 11 011

15203 6!09/9?
l&?O7
 -
DRAFT 107131198] CONTAlNS CBIICONF~DENTML:
FOR SETTLEMENT PURPOSES ONLY

Table 1
WASTES PROCESSED
PRINCIPAL hSTAL CONTENT: 0.00 %
PRECIOUS METAL CONTENT: LESS THAN 0.I OZtTON
JULY !995
EncycleJi'exas, lnc.
 -
DRAFT [07/31/98] CONTAINS CBUCONFIDENTWL: FOR SE'ITLEMENT PURPOSES ONLY

Table I
WASTES PROCESSED
PRINCIPAL METAL CONTENT: 0.00 %
PRECIOUS METAL, CONTENT: LESS THAN 0.1 OUTON
AUGUST 1996
Encycle/Texas, Inc
 -
DRAFT 107/31/98] CONTAINS CBYCONFIDENTIAL: FOR SETTLEMENT PURl P-s'ES ONLY

Table I
WASTES PROCESSED
PRINCIPAL METAL CONTENT. 0 00 96
PRECIOUS METAL CONTENT. LESS THAN 0. I OZ/TON
' SEPTEMBER 1994
Encycle/Texas, 'lnc.

IIU
Sc~n:d~ccla. I I#11 I;.I I I 1)lw
.- LU

Sc.n~:~~c.cli.
Ilk IIII~I~.WI \ I-) 11):

hll Jtllh 1 4>EglIP:

\~\ll~;lll-~ u 11 1lK7$'I I (%PC
l)lllJ?
- -
I

21 -I -I %'J& l i b !//I Ii94 I i!CHI $1 Z i I!\

 -
DRAFT (07/31/98] CONTAINS CBIICONFIDENTML: FOR SETI'LEMENT PURPOSES ONLY

Table 1
WASTES PROCESSED
PRINC[PAL METAL CONTENT: 0 00 %
PRECIOUS hETAL CONTENT: LESS TIIAN 0 I OZ/TON
SEPTEMBER 1997
EncyclerTexas, Inc

Number Wasre Rocm

O ~ W S ~ d c s Ikstina~ian'
 -
DRAFT \07/31/98] CONTAINS CBYCONFIDENTW~:FOR SETTLEMENT PURPOSES ONLY '

Tabie 1
WASTES PROCESSED
PRINCIP'a METAL CONTENT: 0.0094
PREClOUS METAL CONTENT: LESS THAN 0.I OZlTON
OCTOBER 1995
EncycldTexas, I nc.

Smwtech. Inc. iItW)3J-LHl L 16 K Ii w IWM

DRAFT (0713 11981 CONTAINS CBIICONFIDENTLAL: FOR SETTLEMENT PURPOSES ONLY

Table I
WASTES PROCESSED
PRINCIPAL METAL CONTENT; 0.00%
PREClOUS METAL CONTENT: LESS Tl fAN 0.
I OZirON
Noveniber I993
IJcrc~cle/Tcws,IIIC

Nmber Waste (2ualuils Process ~ &J j 1 3 r ~ ~ i cMcI~IIs

~pl
oiLoads Codes (tmrs) Dcs~i~irtim' Nua~bcr Process lhrr {% Aurrapcj ' O111crCO~ISIIILICHIS (96)'

1 'W 22.9 1 7M3 11109193 Zn.U.OI) Ag 0 UGn o r Au O 002 02.

Ca'O I 4 Mp.0 0 1
As (1 (CI Na: 4 4 0

I lxnu 16.2 I 715 : 1 1/30/93 7.t1 o AF u wn W . ' AU. o oo I 02.

CJ 0 I4 h.19. (1 o i
AS (I I)j PA.4 Iti

I w n ~ 2.3 j I 7179 . I 112q:~t; /.N ~ I W L;I 11 12 :TS !I I I I

N:I i1)'

I 1w2 7j I , f l 2-1 I I/ I WJ; I. L, II r i d ] n;~~lls-r~,, :\*III?II?~~J

L..l 11 (I? L!>L I I U '
:I] 1 r 7 5 ~ I tIr I11:
N A t~ 0 4
.. .
I irtie 31 I 61hK I IHHIY! . tI o I!II 1.t IJ 1 1 1 ~3 111-25
1W7
D(LI$
I lHKb7 2tJ 1 - I 70% : 1111~1/')1 CI i l ~ i ng 0 031 tat.. nu 111;,s o/
IX~X I c 0 I)I ~a [J 3
I ' (1 LIZ

1 1X102 21 1 1 71!7il I I NXIY I ('14 i~itli ~ p( i !nl

. 07 - AU rl WI! ~ I J . ,
I t1 i m t
 -
DRAFT 107/31/98] CONTAINS CBI/CONPIDENTL4L: FOR SETTLEMENT PURI'OSESONLY
- - Table 1
WASTES PROCESSED
PRINCIPAL METAL CONTENT 0.00 ?/o
PREC[OUS METAL CONTENT: LESS THAN 0.1 OZlTON
NOVEMBER 1996
Encycle/Texas, Inc.
 -
DMFT (07131/98] CONTAINS CUUCONFIDENTIAL: FOR SETTLEMENT PURPOSES ONLY
 -
DRAFT 1071311981 CONTAINS CBUCONFIDENTIAI,: FOR SElTLEM ENTPUW'OSES ONLY

Tabte 1
WASTES PROCESSED
PWCIPAL METAL CONTENT. 0.00 %
PRECIOUS METAL CONTENT:LESS THAN 0 1 OZITON
DECEhmEU 1997
EncyclelTexas, loc.
u3
m
u3
m Numb Wask Quanlrq Pracss Load ?
cn
N Generator CCIl oflatlds Coda (tons) '
ncsti~la~iori N~wiber I'roccs IMt
W
.A 6 1 o nCory. 02251-91 1 Do02 19 2 14715 ! 12R9197
I
.n. I2131V97
DO07
0
I- lXlOX - ID?1P}7

Ea~onCarp. 0225 1-9 1

 ..9. ..<:
m
-- ;Ix..;. Table 2 (continued)
 DRAFT (07131bBjCONTAWS CBRCONFIDENTIAL FOR SETTLEhIENT YLIRY"aKS ONt 'b

Table 2 (contitrucd)

WASTES PROCFSSED
PRINCIPAL METAL CONTENT fl .O%
PREClOlJS METALCONTENT: LESS'17 LAN 0.1 O m O N
GENERATOR SUMMARY
' - Encyclen'exas, Inc.

Quantity Principal Metals

(ton*) Process Dale (% Averapt) ' ULhcr Constituents (%I) '
20 .o Ag: 0.9 ppm Au: 1 7 pptn
.. .
Ca: 0.36 Fc: U I Y
:
;
'
: .+?
?<...:.
m
:. Na: 0.31
I8
,, %:
. ."' _
. : Wymm @,.don
-...
_.I. :. 87-89 I Cc 0.00 CX 0.42 NP:0.0.1
l&. .-. (Cameron Forge) Ni: 0.00
..
$2;;' w-, Cr: 0.00 Ca: 0.83 Fc: 0.45
t::;, :(Cameron Farge) 87-89 1
Ed.<.
,...:y.
i Ni: 0.00 Na: 0.02

DO02 21.0 I 9446 . .

0ll05mj Cr: 0.00 Ca: 0.94 - Na: O.U6
I W07 Ni: 0100
a, ::.' Wyman Gordon DO02 21.8 I 9495 01/05/95 Cr: 0.00 Ca: 1.64 Fe 006
gi;.:;.'
bra;: Fw) W07 . Ni: 0.00 Na: 0. I I
4 '
$$uPont SabinC River 20.8 I 8294 06117/94 Cr: 0.00
,.: ..,. 4 .
$sa&pontS a b k Riva 4127 20.6 1 8326 06R0/!34 Cr. 0.00 Ag: 0.16 ppnl AU: 0.41
4
20.8 1 8391 0612719.1 Cr: 1).00
4
20.8 1 8392 06/27/91 Cr: 0.00
J
20.8 I 8396 06/27/94 Cr 0.00
I
N6l I 15237 03120#7 Cr: 0.00 Au: fJ 01 ppm
-R
I
1
I Not i 15238 03R3J98 Cr:0.00
Recarded
DRAFT p7/311981CONTAINS CBI\CONFIDENTIAL: FOR SETTLEMENT PURPOSES ONLV

Table 2. (conln~urd)
.

WASTES PROCESSED
PRINCIPAL METAL CONIFNT: 0.00%
PRECJOllS METAL CONTENT: LESS 1-1IAN 0.1O%l'li)N
GENERATOR SUhlMAKY
EncylJLesas, Inc.

Number
~ f 1 . d ~ -
= -
DRAm 107/3lPBiCONTAWS CBI\CONFIDEN.TIAG FOR SETTtEhlENT PURPOSES ONLY

Table 2 (continwrt)
DRAFT [07Ll1191$CONTAINS CBnCONFLDENTIAL: FOR SETTLEMENT PURPOSES ONLY

Table 2 (colhuerlj

WASTES PROCESSED
PRINCIPAL METAL CONTENI': 0.00%
PREC~OUSM n A L CONTJiNT: I.ESS TI U N O 1 U2.I-CIN
CEWMI'OR S W U I R Y
Inc.
Emc~c1t~es;rs.
x*: .....
..,-.: .
DRAFT [ o mlnq CONTAINS CBIKONFIUENT~AL: F O R SETTLEMENT PURPUSES ONLY

Table 2 (confnued)

WASTES PROCESSED
PRINCIPAL METAL CONTENT;0.00%
PKECIOUSMR'AL CONTENT.LESS n m O. I O ~ O N
GENERATOR SUhlMARY
hc.
. E~vfldksas,

O~IICI
- fm4nl.:ti1< P:,\ '
- ...... - . - -.

.-..
. I ".,

I 4)tHtZ 22 I 5x6 t IW~!I~J~ CII 01tnb

I IWMZ 22 I 5991 lJt~!l JXI'I? CN:(I OII

I . 1n~2 22 I 643x2 Wtl2 UILl Cu (1 tK)

I DOU2 22 I 62 I6 O7AWtc1t Cu:0 Oil

I I
 .
DRAFT [ O X I I881 CONTAWS CRI\CONFIDENTlAL: FOR SETTLEMENT PURPOSES ONLY

Table 2 (conlinued)

WASTES PROCESSED
P W I P A L METAL CONTENT:0 00%
PRECIOUS MI~TALCONIENT: LESS n m 0. I OUTON
GEWRA'SOR SUMhlARY
E ~ ~ c y c l e ~ e ~l~lr
ils.
JUL-19-2006 14:08 FROM:
P. 2
07118/98 11:52 NO. 333 DBS
JUL-19-2006 14:08 FROM: TO :5 122390606 P. 3
16/98 11 :51 NO, 333 Dm
JUL-19-2006 14:08 FROM:

SUBJECT: F O O 6 Recycling .
!
i i !
1 ;
1 1 .A

TO : Hazardous Waste Management Division Directors

Regions I-%

It has come t o the attention o f EPA Headquarters that many

of tne Regions and authorized States are being requested to make
determinations on the regulatory s t a t = o f various recycling J

schemes for F006 electroplating sludges, In particular,

companies have claimed that PO06 vaste is being recycled by
being used as: ( I) an ingredient in the m ~ uacture
f of
aggregate,. ( 2 1 an ingredient in +he manufacture of cement, and
( 3 ) feedstock for a metals recovery smelter. The same company .
may make such requests o f more than one Region and/or State.
Given the complexities of the regulations governing recycling
vs. treatment and the definition Of solid waste, and the
possible ramifications o f determinations made in one Region ,

I
affecting another Retgion Is determination, it is extremely
important that such-determinations are consistent and, )where
possible, Coordinated.
TvO issues are presented. The ffrst fssue is whether these
activities are legitimate recycling., or ratnet just some f o m o f
treatment called arecyclingfl in an attempt to evade regulation,
Second, as81tdling the activity is not sham recycling, the issue
is wneMer the activity is a type o f recycling tMt is subject
to regulation under sections 261.2 and 261.6 or is i t excluded
from our authority.
With respect to the issue of whether the activity is sham
recycling, t h i s question involves assessing the intent of the
o-er or operator by evaluating-circumstantial evidence, always

Exhibit C
JUL-19-2006 14:08 FROM:

a e i f f i c t ; ~ : :ask. 3.=s:z=l:y, tl;e dzterrnlnatic?. r e s t s o n vrre;?.~,~

:32 seccnZzry m a t e r l a l i s w c o ~ . C ~ 3 d l t y + l i k eTne
. maln
envrironmec=al c o n s i d e r a : r o n s a r e ( 1 ) vnether the secondary
naserial t r 2 l y has v a l u e a s a raw rnaterlal/product l i . e . , i s i:
l i k e l y t o be abandoned o r mismanaged p r i o r t o r e c l a m a t i o n rather
=>an being reclaimed? and t 2 ) whetaer the recycling process
( including ancillary storage) i s l i k e l y t o r e l e a s e hazardous
constituents ( o r othervise pose risks to human health and the
environmen=) that are different from or greater than the
processing of an analogous raw material/procluct. The a t t a c m e n ;
to this rne~orandumsets out relevant f a c t o r s in more d e t a i l .
T f t h e a c t i v i t y is n o t a sham, then the question is whether
it is regufated. X f Fb06 waste is used as an ingredient to
produce aggregate, then such aggregate would remain a s o l i d
waste i f used in a manner constituting disposal ( e . q - , road-base
material) under sectlons 261.2(C)(1) and 261.2(e)(2)(i) or i f it
i s accumulated speculatively under section 261.2 ( e 1 ( 2 ) ( i i i .
Likewise, the F006 "ingredientu is subject to regulation from
the point of generation t o the p o i n t o f recycling. The
aggregate ~ r o d u c tis, however, entitled to the exemption under
40 C m 266.20tb1, as amended by the August 17, 1988, Land
Disposal Restrictions for First mire Scheduled Wastes final
rule t see 5 3 Ea 3 1 1 9 7 for further discussion) .
aggregate is not used on the land, then the materials uses ta
However, i f the
produce i t would not be solid w a s t e s a t a l l , and therefore
neither those materials nor the aggregate would be regulated
(see section 2 6 l . Z [ e ) (1)(i) 1.
Likewise, cement manufacturing using PO06 waste 'as an
ingreaient vould yield a product that remains a solid waste if
it is used in a m q e r constituting disposal, also subject to
section 266.2Otb). There is an additional q u e s t i o n o f whether
the cement k i a dusk remains subject to the ~ e v i 1 . 1exclusion.
In or8er f o r the cement k i l n dust to remain excluded from
regulatfon, the owner or operator must dambnstrate that the use
of F006 waste has not significantly affectad the character of
the cement k i l n dust (e.g. , dePKJnSErate that the use of PO06
waste has not significantly increased the levels of Appendix
V T I I constituents in the cement k i l n dust leachatel. [NOTE:
!Chis isstre will be addressed mare fully in +he upcoming
supplemeuxtal p r o p a 1 o f the Boiler an8 Industrial hrrnaEe rule,
which i s pending redetal RerJister publication. 1
F o r F006 w a s t e used as a ieeastoek in a metals 'recovery
smelter, the Agency views tnis as a recovery process rather than
use 8s ari ingredient in an i n d d t r i a l process and, therefore,
considers this t o be a form of treatment that is not surrently
regulated (see sections 261.2(c)"and 2 6 1 . 6 ( ~ ) ( 1 ) ) . Furthermore,
because this is a recovery process rather than a production
process, the F006 waste remains a hazardous waste (and must be
JUL-19-2006 14:08 FROM:

.-3naae1 a s S . J C ~ =::= .=
I t.=: ir=rzdcc::or: 20 c.k.6 C ~ X C ~ S J j z
, * :ye
slaq normally be cons;tereS a ' ' d s r ? v e l
fram e5:s p r o c e s s wou!C
'rcin" P O 0 6 *--asre. Rgwever, for prinary smelters, t h e s l a q pzlv
b e conslderee s-3 j e e z to the Bet-*i1 1 e x r l s i o n p r o v l c + d t h a t tp.e
oyner c r c2era:ct can demonstrate tnat t3e u s e ~f F 9 0 6 v a s z e "2s
n o t signif :canzly a f fecced t h e hazardous c o n s t i t u e n c c o n t e n t o f
t h e slag ( i . e . , make a demonstration s i m i l a r t? t h e m e
discussed above f o r the cement k i l r , dust , [NOTE: T n the
supplemental proposal of the B o i Ler and Industrial F u r n a c e r u l e
n o t e d above, the Agency w i l l be proposing a definition o f
aindigenous w a s t e w based on a comparison of the constituents
found in the w a s t e to the constituents found in an analogous rav
material. Should tne F006 waste meet the B e f i n i t -i o n of an
"indigenous vaste,m the vaste vould cease to be a waste when
introduced to the process a d the s l a g vould not be derived from
a hazardous w a s t e . ]
A l s o , you should be aware that OSW is currently reevaluatfnq
the regulations concerning recycling a c t i v i t i e s , i n conjunctron
w i t h finalizing t h e January 0 , 1988 proposal to amend tne
D e f inirion of S o l i d Waste. mile any major manges may depend
on RCRA reauthorization, we are considering regulatory
amendments or changes in regulatory interpretations that L i 11
encourage on-site recycling, Vhile ensuring the p r o t e c t i o n of
human health and the environment.
Headquarters is able to serve as a clearinghouse to h e l p
coordinate determinations on whether a specific case is
recyclingm or "treatmentm and will provide additional guidance
and information, as requested. Ultimately, however, these
determinations are made by t h e Regions and autnorized S t a t e s .
Attached to this memorandum is a list of criteria that should be
considered in evaluating the recyc ling scheme. Should you
receive a request for such a determination, 'or should you have
questions regarding the criteria used to evaluate,a s p e c i f i f 2
case, please contact M l t c h Kidwell, of m y s t a f f , at FTS
475-8553.

Attachment
JUL-19-2006 14:08 FROM:

Y ! ! e d:',if fersrr.co 3cl:'2pon ? a r j s = . ;r.z

l JI~C :Te2',~ac: ;s e.=:ct:mas
r l ~ f:cl.;lc,
f @
: e:=i:ir1=.;;5::. I n 5cze c a s e s , ane is :r;;:rr? :c
: z = e r 2 r e r :r.=ent f r 3 m c : r c m s t a n c i a i eV:ider,ce s1?~-.i:;;q r;~ixeC
- 3 t r v a t i o r 1 , always a d i f f : = ~ ; t ~ r ~ ~ o s i t : c r T5e
, . p o t e ~ t i a l fer
A S U S C 1s S X = R t h a t q r a z z .==,re must 55 used =hen m a k i n g a
. dorerrr.:r.atiorr that a particular recyclinq a c t l v i 7 . y rs to go
~ 3 r e g u : a t e d (i.e., it i s one of those activities w , ? i c h is beyond
:he sca?e o f o u r juristiction). In certain c a s e s , there may be
fey c:ea:-cu: ansvers to :he q u e s t i o n of : h e t h e r a specific
a c t i v i ~ yis this type of excluded recycling (and, by exrension,
- :fiat a Secondary material is n3t . a waste, b u t r a t h e r a r a u
narerial or effective s u b s t i t u ~ e l ;however, the following list of
c r i t e r i a may be useful in focusing the cansideration of a
specific a c t i v i t y . Here too, t h e r e may be no clear-cut answers
b u t , :aken a s a w h o l e , t h e answers t o these ~ ! l e s t i ~ n s
should he13
..draw :?.a distinction between recycling and sham recycling or
L

r rearne:: t .

Is the secondary material similar to an analogous r a v

material or pt08uct?.
Daes it contain Appendix VIII constituents not tound'
in t h e analogous raw material/product (or at higher
levels ) 7
Does it exhibit hazardous characteristirs that t h e
analogous r a w material/ptoduct would not?
Does it contain levels of recoverable material
s i m ' i lar to the analogous raw material/produet?
Is much more o f the secondary material used as
compared with the analogous raw material/product it
replaces? XS only a nominal amount of it used?
Is the seandary material as e f f e c t i v e as the r a w
material or product it replaces? .
What deqiee of processing is required t o produce a
finished product?
0 Can the secondary material be fed directly into t h e
process ( i . e . , direct use) or is reclamation (or
pretreatment regui red?
.
o How much value do- final reclamation add?
JUL-19-2@06 14:08 FROM:

What is. t ? c .:a lue of L 3 e cccondary m a ~ e ir a l ?

Dges t h s secondary r a t e r i a : 5ave e=ozEF,:= vaiue

cospara2:e CQ t 5 e raw marer:al t h a t n c r m a l L y eri-zrs
the p r o c e s s ?

tnere a guaranteed market for the end product?

:s there a conrrac: In place G O p x c h a s e rhe
M p r c d u c = M ostensiS!y produced from t 3 e h a z a s d x s
secondary materials?
:f t.he ::+e o f recyclinq i s r e f ! a m t l o r . ,
1s -.!is
arc=!::== rsclairnsr? T!!k ~ e ~ s r z t c r r ?. c
u s e d by =I!:
t n e r e a 3 a z c h c,oll:ng agresrnenc?
' .,
( I I C t e t . l l . 3 ~5i"- G
'

r e c l a i m e r s are normally TSDFs, assurr.ir.g : m y s t D r e

before reclaiming, reclamation f gcilities presefit
fewer possibilities of systemic a b u s e ) .
1's the .reclaimed product a recognized comnodity?
Are there industry-recognized quality specifications
f o r the product?
the secandaw material handled 5 n a manner
consf stent with-t h e raw material/psoduct i t replaces?

o Is the secondary material stored an t h e land?

o Is the secondary material stored in a similar manner
as the analogous raw material ( f . e . , to prevent
1
loss)?
o Are adequate records regarding the recycling
transactions kept?
o Do t h e companies involved have a h i s t o r y of
mismanagement 0.f hazardous wastes?
Other relevant factors.
a mat are the ecanomics of the recycling process?
Does most of the revenue come from cnarging
generators for managing their w a s t e s or f r o m the
sale o f the product? -
0 Are the toxic constituents actually necessary (or of
sufficient use) to the product or are t h c y just
Ualong far the ride.

These criteria a r e drawn from 5 3 F R at 5 2 2 (January 8 , 1988); 52

FR a t 17013 (May 6 , 1987); and 5 0 FR at 6 3 8 (Zantrary 4 , 1 9 8 5 ) .
 WASTE RECEIVED AND PROCESSED SUM&i:iEtY
ENCYCLrnEXAS mc.
[I093 19971 -
YEAR 1 RECEIVED
TOTAL'
I RECEmD
LISTEDa
( %LISTED' 1 DIRECTLY
BLENDED4
( PRECIPITATED
& BLENDED6 1

TOTAL 168,878 I 118,Q67 1 70% 1 32%? 49%7

1: TOTAL: Total of RCRA linted and charsckrbtk he2ardaus wsata ead m-regulated waste
2: USFED: RCRA Ibted hazardous w u b
is: ILIBTED: Perccat of total w a s h received
Q: BLEM)BD: Pmntege of total waste received which wan mixed (PblP) in bine
R Estimated from M a t c h 1 Movement Ticket data
6: PREaPITATBD k BL&M)BD: Percenkga oftdot a r m received which waa precipitaLed in Fadity Nos. 1 and 2, than mired with other wastes in etoragc bins
7: D a a for January through July, 1997
 SHIPMENTSOF REGULATED MATERIAL
TO ASARCO SMELTERS FROM E/TI
SUMMARY

YEAR
I n PASO, TEXAS
(Tons) I EAST HELENA, MT.
(Tons)
'A'OTAL
(Tons)

TOTAL 1 46,486 I . 37,918

 SJSJECY: Laclede S t e e l Campmy, A l t O a l , 1 Llinois
( I L P 006 2 8 0 6 0 6 1 -
FROM: +M a t t h e w
Scraus. Deputy ~ l ' r e c ~ o r
Characterization and Assessment D i v i s i o n
TO : avid A. w l l r i c n , Associate D i r e c t o r
Office' o f RCRA' -
W a s r e Management, Division
I

mi s memorandum is ' in response to your memorandum.dated

J U L Y 2 5 , 1989 in whlcn you request our review and determination
of tnc regulatory status O f waste produced by Laclade Steel
Company, which manuf actuses. specialty carbon and alloy steel
from scrap iron.
Based on the information provided, the characterizations
'

of the particulates generated in t h e furnacaa during tho melt

down prac,ess, vtaicn are.Collected i q a baghouse, as electric
arc furnace dust (Hazardous Uaote No. K061) and tne spent
p i c k f e liquor as Haruaous Waste No. KO62 are correct. There
appear$ t o be l i f t 1 4 question in this regard. The issues in
queatlon and 'on which this mwnorandrm focusma rafata to t h e
exclusions claimed by Lacleaa Steel Company with respect t o
their KO62 waste.
I

~aclsbsSteel hacl claimed three separate exezuaian8 from

- the definition of .solib wksta for i t s X662 vast*. The Agency
,-a rr
laast und.? radatal rmlrfimn. Each o t tha exclusions i s
discussed b . l W .
ha f i r s t exclua,ian.clrimedlis tha *closM-lopp recyclinga
exclusion found at 4 0 CFR 261.4(a) ( 8 ) . T h i l Qxcluion,
promulgated in 'the Juiy 14, 1986 P.aeralnotice (51
254221, s t a t e a that a material Fa not r dolid va8ta i f it is
reeycled and raturnad t o the original process teem vhkn it w a s
generated provtded t M t c 1) only tank storrgm is LnvolVW; 21,
3 tho entira proeesr is'clared by being entirely cennacto4 by
pipas: 3 ) the rrclaatatfqn does not i n w l v o cembuationj 4 1 thare
l a no ~peculativaaccumulation of the material; 5 ) the
 saclede is n o t e l i g i b l e f o r tnis exemption. T h e reason IS
:sat the KO62 IS trucked (not prped) to t h e recycling s i t e .
m i l e t h e Closed-loop exclusion does allow f o r t h e use o f
" ~ t n e rcornpafable enclosed means o f conveyance," t!-? Agency
z o u ~ dnot deem crucks to be comparable. The p s e w , e
discussion found at 5 1 FR 2 5 4 4 3 Clearly s t a t e s EPAps inrent
that t h e closed n a t u r e O f the process is a decisive f a c t o r an2
f u r t h e r defines t h a t "closed- r e i e r s to "hard connections f r o m
point o f generarion to point of r e t u r n to the original
p r o c e s s . " Trucks do not meet t h i s definition. In a d d i t i o n , i f
the recycled materials are used ta produce a product {such as
f s r r i ~ i z e r )~ h d tis applied to the.1and (&, used in a manner
constituting disposal per Section 26la4(a)(8)(iv)), the s o l i d
uaste exemption would nor apply. , There may also be some
c p e s r i o ~as to whether the storage unit Laelede uses meets tze
definition o f -a tank or a surface impoundment. There uag n o t
enough informat'ion provided to maKe that determination; t h e
Region o r State must define the Storage writ.
The second excausion t h a t Laclede .is claiming i s mound at
section 7 2 3 , 1 0 4 6 a 3 ( 7 ) 8 f the S t a t e regulation (whica is.assumea
. .-i...
. %z... . d
to be equivalent to 4 0 CrR Zbl.Z(e) ( i i ), involving use/reuse af
a material a a substitute for a cammlorclrL product). while
,.
.. ..
.*(
I.
t h i s excrusian ,may apply to the iron s u l f a t e by-product f r o m .
-4
t h e reclamation a c t i v i t y , i t vould definitely not appJy to the
K O 6 2 waste. This exclusion applies ta materfals which a t e used
or reused without reclamation (see the January 4 , 1983
n o t i c e , 5 0 FR 6 3 7 , 6 3 8 ) . The t o 6 2 is clearly being
%%%a and. therefore, is not e l i g i b l e for thi8 ex~2usion.
-Again, the exemption vould not apply i t use constituting
disposal is involv8U (so@ Section 261,2(e)(2)(i)),
m a third axclusion Laclade CltailrW i s under s e t i o n
721.102 ( e ) (11 (8). of th4 State regulation (which is assumed to
be equivalent t o 40 CFR 261.4(a1(7Ir Fnvolving the exemption o f
spent sulfuric acid web to produce virgin sulfuric acid from
the Uefinftion o f solid ~ a a t d . Apparently, Laclede is
confusing rsclraration o f a spent w t e r l a l w i t h the production
of virgin ntmrial. Tho KO62 is datinitaly being reclaimed
ci.e.,contaminants are being removed t o make i t reusable).
The prerabla biscuseign found at 50 FR 642 (January 4 , 1 9 8 5 1
clearly desctibrs tha process of using spent sulfuric acid as
an ingredient in the production o f virgin sulfuric acid.
Nothing in the ~ecl;rmattonprocess indieatma that virgin
sulfuric a c i d is being pfaaucrd w i t h X082 u8Bd as M
ingredient. Therefor., thls exclusion i# a l s o not applicable
to LacLede.
JUL-19-200614:09 FROM: 9158344940 TO :5122390606 P. 13'la
- I'IUL I II'IW
~ iti/ ln r LUL-XJI-CU~~ Jul 16 '98 i, SO P. CJ/O4

regulatory aeterminaczon o f ' c o n q e r n assoc i d z e d ;;i ca

:he ~ a c l e d af a c i l i t y i s t h a t K062 is a nazardous waste befng
re~:laimed. The residues o f the reelamat i o n process r hi:?,
i t s e l f is n o t regulated) are also hazardous vaste ~ 0 6 2
(artnougn the sulfuric a c i d that is recovered i s an e f f e c z i v ~
sumtiruee for a commercial chemical pr0dUCt) and must meet = h e
:reatrnent standards ( and not i f iCati0n requirements 1 under r n e
land disposal resrricclons program ( 4 0 CFR P a r t 2 6 8 ) p r i c r c 3
piacement o n =he land ( U , before a fertilizer proe-;cad f r o m
the iron s u l f a t e can be applied ro t h e land). A l s o , the 4rtn
s u l r a c e ( a f t e r reclamation) may be demonstrared to be ar,
ef f e c c i v e s ~ s i w r t e for a commercial chemical produe= f a r -;ses
o t h e r thkn chose constituting disposal and, i f s o , would c a a s e
r o be a ~ 0 6 2 - d e r i v e dhazardous v a s t e .

I f you have any additional qaestions, p l e a s 9 contac:

hiscn Kidwell a t CTS 4 7 5 - 8 5 5 1 . 1
Re: - Sclirl waste RcgFscration 30003

T h i s is in rcspansc to an October 7, 1988 l e t t e r from

R. Keith Hopson of Brd.irn ~ a r o n e yRose Barber and Dye to G l e n Davis
of t h e Texas Water Conatission (TWC) i n which Mr. Hopson r e q u e s t e d
1WC cotrcurrcnce that tho "precipitated s o l i d s reclaimed from the
solid wastes received at the f a c i l i t y axe not s o l i d w a s t e s . "
According t o the letter, the precipitated solids bre to be s o l d t o
' ' s m e l t e r s o r o t h e r appropriate'metals processing f a c i l i t i e s .
cannot concur t h a t khe
A f t e r review of t h e m a t e r i a l submitted, TWC
precipitated s o l i d s are not s o l i d waste. In t h e preamble of 50
F e d e r a l Rcyister 6 3 3 IJanuary 4 , l98S), which clarifies t h e s t a t u s
of recycling a c t i v i t i e s , EPA stated:
If t S a matszial is tc Se put ts use e f t z r it
has been reclaimed, it is still a s o l i d waste
until reclamation has been completed. Thus,
tile f a c t that wastes may be used a f t e r being
roc1ahcd does not affect their status as
wastes before and while being reclaimed.
The EPA goes on to s t a t e on page 6 3 4 that ''commercial products
reclaimed t tom ttazardous wastes are products, n o t wastes"; howsver ,
they c a u t i o n against misinterpretation of this statement and list
several circumstances under w h i c l ~a wrcclai~acd rnatcrialklmay remain
a s o l i d waste. Included i n t h i s list are wastes which have been
p a r t i a l l y reclaimed. but must be reclaimed Further, and reclaimed
materials which are nut ordinarily considered t o be commercial
products.

Exhibit ,F:-,... , ,
 D. G . Steplrccson
P a g e Two
Deceokr 30, 1980

Smelt inq operations a r e cons idsrcd to be reclamation proccsscs :

t h e r e f o r e , because it appears t h a t the p r e c i p i t a t e d s o l i d s a r e
. f u r t h e r rcclaincd before a f i n a l p r o d u c t is producej, t h e
p r e c i p i t a t e d solids, as described in Mr- Hapson's l e t t e r of
October 7 , 1988, are not cxcludcd from the definition of a s o l i d
w a s t e u n d e r 31 Texas ~dministrativeCode (TAC) 335.1 (Solid
w a s t e ) (I).

If y o u h a v e any questions concerrlitig t h i s ~ l l a t t a r ,please cantac:

Vanessa Scbiller of the Compliance Assistance U n i t at
( 5 1 Z ! -463-8175, f
Sincerely, .
I

-
E. V . H a t t c n , !lead
Compliance Assistance Unit
Hazardous and Solid Waste Division

cc: R. Keith Hopson, Brown Maroncy Rose Barber and Dye, Attornays
end Counselors, 1 4 0 0 One Congress PLaza, 111 Congress Avenue,
Austin, Texas 78701
Texas Qater Commission District 12 Office -
Corpus C h r i s t i
 Legend
Wasta and inlermediale
--- -b Crushed CRTs lo East Helena, MT Material

kTS
Whole

f_

Receiving

1
I
Rail 1 !
Truck dMp I
I
I
Drum , .
Tole I
1
Supersack I
Rollon I
I
I
I
I
I
I
I
I
I
I

t,,,

Agmat Nickel
Storage Slcuage
'PMP Material is Waste
I not Processed in Facility
NOS. 1-4.
"Producl" Shipment

'Products' lnclude PMP Malarial Bit: ted

wilh Processed Material
1
ENCYCLEmEXAS, INC.
Waste and Product Flow
CONFIDENTIAL
JUL-19-2006 14:10 FROM:

Barry R McBre, Chatmarl

R 0.'Ralph' blrrquar, Commlrrlorlrr <
lohn U. Baker. Cvmmlrrtonrr

TEXAS NATURAL RESOURCE CONSERVATNIN COMMISSION

Probttrw T u a b R d u d n g and P r r w r n t i ~Pollutfo~

Mr. Nclson Mossholdcr

Prcddcnt
Enr,yclelTcxns, Ine.
5500 Upriver Road
COQW Christi, 78407

Re: Solid Wmtc Regisvation No. 30003

EPA IDNo. TX0081 171 86
Dew Mr. Mossholder:
The purpose of this letter is to clurify the position of ibc Tcsus Natural Resoutoe Cansewation
Comissian C-CC") concerning previous cdncspondencc *rn the TM2CC relating to &cycle.
S m c d lmur hiwe been written to Encycle by v=riow mcrnbqs of the TNRCC over-a pe&d of
years, datiag h m 1989 to the most fcccnt letter d a d M e h 6,1997. As a rtsult of infomation
gathered and developed by thc TNRCC and the United States Environmentat Protection Agmcy
during the investigation rclattd to thc cumat enfomzncnt adon, it ia now apparent that much of
the information supplied tir Encycle ns a bash fur the p r n i o IXNRCC
~ lcttcrs was incomplete 6
inaccurate, particularly as it dated to the processes which xxwre sctually in use. Because these
p d o u s lcttcra were based on tht incomplete and inaccurate ipf9rmiation. Encycle should not rely
on the previous oorrespondcnce from the TNRCC. includiig the most recent letter dated M a d 6,
1997. Thtrefbrc, as provi~uslydiscussed in various meetings between EPA. TNRCC-a~d.Encyck,
the available inflormation indicatus that cxunption provisions cltcd in the earlier letters tm not
applicable to the matarids Encycle produces lad bcyde's reliance on the lcttKs has been
mimplaccd.

Exhibit B
JUL-19-2006 1 4 : 1 0 FROM:

Mr.Nclsan Massholder
Pegc 2

If you need further clarification regarding thia letter, pluue do not hesitate to contact at 5 512039-
6592,

Sincerely.

Minor Hibbs. ~ . ~ . , k i n x t o r
Indusaial and Hazardous Waste ~ i u i i i o n

Cc: John T. Smith II

Peter Nickles
Cavington & Burling
1201 Pennsyivania Avonuc, N.W.
P.O. Bax 7566
Washington. D.C. 200467566