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Another challenge is that it is currently unclear how to legally dispose of retired lithium-ion batteries as waste. As of July, federal policy in the United States did not directly involve the retirement of battery energy storage systems, nor did it mandate or incentivize the reuse or recycling of lithium-ion batteries.

Generally speaking, retired lithium-ion batteries are generally considered hazardous waste or general waste, both of which have their own regulations. The regulations vary from jurisdiction to jurisdiction, and non-compliance may result in fines.

In some states, penalties for violating hazardous waste laws or regulations are stricter than federal penalties. For example, intentional or negligent violations of a certain provision of California hazardous waste laws or regulations can result in fines of up to $70000 per day for each violation.

The report states that the US Environmental Protection Agency has developed alternative regulatory measures for recycling materials such as lead-acid batteries. The purpose of these rules is to encourage the collection and recycling of hazardous waste. The NREL report states that similar designations for lithium-ion batteries can alleviate liability issues and make the economy of recycling more ideal.

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