Identification and Listing of Hazardous Waste; Amendments to Definition of Solid Waste

SUMMARY: The Environmental Protection Agency is today excluding from

the RCRA regulatory definition of solid waste certain in-process

recycled secondary materials utilized by the petroleum refining

industry. Specifically, today's rule states that oil recovered from

petroleum refinery wastewaters and from other sources, both on-site and

off-site, is excluded from the regulatory definition of solid waste if

it is subsequently inserted (along with normal process streams) into

the petroleum refining process prior to crude distillation or catalytic

cracking.

EFFECTIVE DATE: This final rule is effective on July 28, 1994.

ADDRESSES: The official record for this rulemaking is identified as

Docket Number F-94-SWF-FFFFF and is located in the EPA RCRA docket,

Room 2616, 401 M Street SW., Washington, DC 20460. The docket is open

from 9:00 to 4:00, Monday through Friday, except for Federal holidays.

The public must make an appointment to review docket materials by

calling (202) 260-9327. The public may copy a maximum of 100 pages from

any one regulatory docket at no cost. Additional copies cost $.15 per

page.

FOR FURTHER INFORMATION CONTACT: General questions about the regulatory

requirements under RCRA should be directed to the RCRA/Superfund

Hotline, Office of Solid Waste, U.S. Environmental Protection Agency,

401 M Street SW., Washington, DC 20460; Telephone: toll-free at (800)

424-9346, or locally at (703) 412-9810. For the hearing impaired, the

number is (800) 553-7672 (toll-free) or (703) 412-3323 (local). For

information on specific aspects of today's notice, contact Ross

Elliott, Office of Solid Waste (5304), U.S. Environmental Protection

Agency, 401 M Street SW., Washington, DC 20460, (202) 260-8551.

SUPPLEMENTARY INFORMATION:

Outline of Today's Rule

I. Authority

II. Background

A. Statutory Definition of Solid Waste

B. Prior Litigation

C. January 8, 1988 Proposal

D. Description of Petroleum Exploration, Development &

Production, and the Petroleum Refining Process

E. Petroleum Refining Wastewater Treatment

F. Recovered Oil and Recovered Oil Systems

G. Status of Wastewater Streams, Wastewater Treatment Units,

Recovered Oil, and Recovered Oil Systems Under Current RCRA Rules

III. Summary of Today's Final Rule

IV. Scope of Today's Final Rule

A. Limiting Scope to Recovered Oil from Petroleum Refining,

Exploration and Production

B. Rationale for Excluding Recovered Oil and Not Wastewater from

Being a Solid Waste

C. Rationale for Excluding Recovered Oil from Off-Site Sources

V. Rationale for Conditioning the Exclusion on Recovered Oil Not

Being Placed on the Land and Not Being Accumulated Speculatively

VI. Rationale for Not Excluding Recovered Oil that is Inserted into

the Petroleum Refining Process After Crude Distillation or Catalytic

Cracking (i.e., into Petroleum Coker)

VII. Rationale for Not Excluding Other Oil-Bearing Hazardous

Materials

VIII. Demonstration that Recovered Oil Meets Conditions of Exclusion

IX. Examples of How Today's Rule Operates

X. Relationship to Other Programs

A. Clean Air Act (Benzene NESHAP)

B. Clean Water Act

C. RCRA

1. RCRA Air Emission Standards

2. Used Oil

D. Enforcement; Effect of Today's Final Rule on RCRA 3007, 3013,

7002 and 7003 Authorities

XI. State Authority

A. Applicability of Rules in Authorized States

B. Effect on State Authorization

XII. Regulatory Requirements

A. Regulatory Impact Analysis Pursuant to Executive Order No.

12866

B. Regulatory Flexibility Act

C. Paperwork Reduction Act

I. Authority

These regulations are issued under the authority of Sections 2002

and 3001 et seq. of the Solid Waste Disposal Act, as amended by the

Resource Conservation and Recovery Act, as amended by the Hazardous and

Solid Waste Amendments of 1984, 42 U.S.C. 6912 and 6921 et seq.

II. Background

A. Statutory Definition of Solid Waste

The statutory definition of solid waste, RCRA Section 1004 (27), is

the starting point for determining RCRA Subtitle C jurisdiction. This

is because the term ``hazardous waste'' is a subset of ``solid waste.''

RCRA Sections 1004 (5) and 1004 (27). The statutory definition of solid

waste indicates that ``garbage, refuse, sludge * * * and other

discarded material'' are solid wastes. The critical issue is when

secondary materials (see definition at 50 FR at 616 n. 4, Jan. 4, 1985)

that are going to be recycled can be solid wastes. Today's rulemaking

addresses this question for certain operations commonly occurring in

the petroleum refining and related industries.

The reader should note that EPA is conducting an assessment of the

RCRA Definition of Solid Waste, as described in the EPA report, RCRA

Implementation Study Update.1 This ongoing effort may result in

proposed regulatory changes to the definition set forth in 40 CFR 261.2

and related requirements. Today's action, however, is fairly narrow,

applying to situations where certain oil-bearing secondary materials

are used or reused within the petroleum refining process. EPA will

continue its broad policy review of the Definition of Solid Waste, but

deemed unnecessary any delay in issuing today's rule.

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\1\RCRA Implementation Study Update: The Definition of Solid

Waste, U.S. EPA, July 1992, #EPA530-R-92-021.

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B. Prior Litigation

In its decision in American Mining Congress v. EPA, 824 F. 2d1177

(D.C. Cir. 1987) (AMC I), a divided panel of the District of Columbia

Circuit held that the Agency's rules defining the statutory term

``solid waste,'' RCRA Section 1004 (27), exceeded the Agency's

statutory authority to the extent that the rules asserted RCRA

authority over ``materials that are recycled and reused in an ongoing

manufacturing or industrial process.'' Id. at 1186 (emphasis original).

Because ``these materials have not yet become part of the waste

disposal problem'', id., they are not yet ``discarded'' within the

meaning of Section 1004 (27) and so cannot be considered to be ``solid

wastes.'' Subsequent judicial decisions confirm that the holding in AMC

I is limited to situations involving ``materials that are `destined for

immediate reuse in another phase of the industry's ongoing production

process' and that `have not yet become part of the waste disposal

problem.''' American Mining Congress v. EPA, 907 F. 2d 1179, 1186 (D.C.

Cir. 1990 (AMC II) (emphasis original); American Petroleum Inst. v.

EPA, 906 F. 2d 729, 740-41 (D.C. Cir. 1990) (API); Shell Oil v. EPA,

950 F. 2d 741, 755-56 (D.C. Cir. 1991); Chemical Waste Management v.

EPA, 976 F. 2d 2, 14 (D.C. Cir. 1992), cert. denied 113 S.Ct. 1961

(1993).

C. January 8, 1988 Proposal

On January 8, 1988, EPA proposed rules to implement the AMC I

opinion. Of particular significance to today's action, EPA proposed

certain amendments relating to the scope of the regulatory definition

of solid waste as applied to operations occurring within the petroleum

refining industry. In particular, the Agency proposed to exclude from

the regulatory definition of solid waste secondary materials associated

with ``on-going fuel production activities in the petroleum refining

industry. These activities involve situations where crude oil is

refined, and oil-bearing residues from that refining process are

returned for further refining as part of one continuous and on-going

process.'' 53 FR at 525 (Jan. 8, 1988). The Agency specifically

proposed to exclude oil-bearing residues from the refining process when

those residues are generated on-site and inserted into that on-site

petroleum refining process or coker, provided that these residues are

not managed in such a way as to be ``characterized by elements of

discard'' such as placement in a disposal unit like a surface

impoundment. Id. EPA is not taking any action today with respect to the

portions of the January 8, 1988 proposal dealing with non-petroleum

materials. These issues are being addressed by other on-going Agency

activities (see above, Section II.A.). The Agency is, as described

below, taking final action with respect to the petroleum materials.

D. Description of Petroleum Exploration, Development & Production, and

the Petroleum Refining Process

The presence of petroleum in geologic formations is confirmed by

the drilling of exploratory wells. Once located, the development of a

petroleum reservoir includes the drilling of additional wells to

extract the oil or gas, and well completion and stimulation techniques

designed to increase the recovery of oil or gas from that reservoir.

Petroleum production generally includes all the activities associated

with the recovery of petroleum from the geologic formation. These

production activities involve the operation and maintenance of the

producing well, and the handling and separation of the recovered crude

oil, natural gas, natural gas liquids, and water. The separation of

water/crude oil emulsions is performed in tanks by gravity settling, or

heat may be added to separate emulsions. Crude oil is then transported

via pipeline, vehicle or vessel to stock tanks and ultimately to the

refinery.

Petroleum refining involves several manufacturing operations and

processes, including crude desalting, atmospheric and vacuum

distillation, hydrotreating, catalytic cracking, thermal processing and

residual upgrading, light hydrocarbon processing, hydrocracking,

catalytic reforming, extraction, isomerization, lubricating oil

processing, sulfur removal and recovery, and product blending and

inventory. Products manufactured from petroleum refining include

hydrogen, fuel gas, sulfur, liquified petroleum gas, butane, aromatic

feedstocks, leaded and unleaded motor gasolines, jet fuel, kerosene,

diesel, heating oil, fuel oil, and asphalt. See generally, 55 FR at

46359 (Nov. 2, 1990); and EPA's Development Document for the effluent

guidelines for the petroleum refining industry.2

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\2\Section III of Development Document for Effluent Limitations

Guidelines, New Source Performance Standards and Pretreatment

Standards for the Petroleum Refining Point Source Category, U.S.

EPA, October 1982, National Technical Information Service #PB838-

172569.

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E. Petroleum Refining Wastewater Treatment

Petroleum refining operations generate large amounts of wastewater

that require treatment in order to reduce or remove wastewater

pollutants so as to produce effluent that meets discharge requirements

of the Clean Water Act. Principal sources of wastewater are refinery

process units (where wastewater comes in direct contact with oil), as

well as oily cooling waters from cooling towers and heat exchangers.

Storm water, which may be subject to minor oil contamination from leaks

or spills, is also a type of wastewater at a petroleum refinery.3

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\3\Id., and see Manual on Disposal of Refinery Wastes: Volume on

Liquid Wastes, American Petroleum Institute, 1969, pp. 3-4 to 3-5.

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Wastewater treatment systems at petroleum refineries generally

consist of: (1) a drainage and collection system to collect and carry

wastewaters to treatment units; (2) a primary treatment system to

separate oil/water/solids, and (3) a secondary treatment system,

normally involving biological treatment, to remove soluble

biodegradable wastewater pollutants. Some refineries have tertiary

treatment systems as well, consisting of water polishing steps before

discharge. Secondary and tertiary treatment is frequently conducted

using surface impoundments. Primary treatment, i.e. the initial

separation of water, oil, and solids, normally occurs in tanks.

F. Recovered Oil and Recovered Oil Systems

Today's rule deals primarily with the status under RCRA Subtitle C

of recovered oil which is returned to the petroleum refining process.

``Recovered oil'' is a generic term that applies to secondary materials

consisting primarily of oil such as oil separator skimmings from plant

wastewaters, slop oil and emulsions, oil skimmed from ballast water

tanks, and oil from refinery process units (e.g., off-specification

process streams). As explained in detail below, today's rule excludes

from the definition of solid waste recovered oil from petroleum

exploration and production, petroleum refining, and transportation

incident to either of these activities, when the recovered oil is

reinserted into a petroleum refining process. The exclusion does not

apply to recovered oil generated from petroleum operations downstream

of refining such as marketing or retail sales--because this oil is

already excluded for the most part, as discussed below --, or from non-

petroleum industry operations.

This rule also does not exclude hazardous sludges (such as wastes

K048, K051, or F037) or other similar wastes from regulation.

Distinguishing between these wastes and recovered oil is sometimes

difficult. Factors EPA will consider in making this distinction include

water content, solids content, and potentially, metals content. See

generally 50 FR at 49170 n. 16 (Nov. 29, 1985). EPA repeats, however,

that the salient characteristic of recovered oil is the obvious one:

that it consist primarily of oil.

Used oil also is not a type of recovered oil, and hence remains

subject to the applicable regulations for used oil. See generally 59 FR

10550 (March 4, 1994). The only exception is when de minimis quantities

of used oil are incidentally captured by refinery wastewater treatment

systems. This could occur, for example, when small leaks, spills, or

drippings of used oil from machinery, pumps, or other refinery

equipment during normal operations are lost to the wastewater treatment

system. In these instances, the used oil present in de minimis

quantities in wastewater is not subject to the used oil standards. See

generally 57 FR at 41566 (Sept. 10, 1992).

The objective of a recovered oil system is to gather and recycle

oil generated throughout the refinery, or (to a lesser extent)

generated from off-site sources.4 Recovered oil operations almost

always occur in tanks, usually a series of tanks that successively

purify the oil to the point where it is sufficiently clean and

dewatered to be inserted into the petroleum refining process. 53 FR at

525. Some oil is collected directly from process units and sent by

means of pipes or vacuum trucks to the refinery's dedicated oil tanks.

Occasionally this recovered oil is of sufficient purity that it can be

inserted directly into the refining process with little or no treatment

in the recovered oil system.

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\4\See RCRA Docket No. F-87-SWRP-FFFFF, submission by the

American Petroleum Institute on ``Recovered Refinery Oil System'',

April 16, 1993.

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Recovered oil from plant wastewater operations is most often a

water-in-oil emulsion, which is sent first to tanks where gravity

separates much of it into oil, emulsion, and water layers. The

intermediate layer of emulsions then may be sent to other tanks where

it will undergo further emulsion-breaking treatment (e.g., mechanical

centrifuging, heating, or chemical additives). At the end of each

stage, the separated water is returned to the refinery oil/water

separators, while the oil is either further treated or, if sufficiently

dewatered, is returned to one or more refinery process units. These may

include crude oil distillation or catalytic cracking units.5

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\5\Id.

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G. Status of Wastewater Streams, Wastewater Treatment Units, Recovered

Oil, and Recovered Oil Systems Under Current RCRA Rules

Under present RCRA regulations, petroleum refinery wastewaters

upstream of a wastewater discharge that is subject to regulation under

Sections 307(b) or 402 of the Clean Water Act, are solid wastes. See 40

CFR 261.4(a)(1) and (2). Such petroleum refinery wastewaters are

hazardous if they exhibit a characteristic of hazardous waste, or are

listed hazardous wastes (although there are presently no specific

hazardous waste listings for petroleum refining industry wastewaters).

Petroleum refining wastewater storage and treatment operations generate

a number of listed hazardous wastes. In particular, sludges from

primary treatment operations are listed under the generic F037 and F038

listings. Sludges from Dissolved Air Flotation (DAF) wastewater

treatment units and API separators (particular types of primary

wastewater treatment devices) are listed as wastes K048 and K051,

respectively. Slop oil systems generate listed wastes as well: slop oil

emulsion solids are listed as K049. Also, EPA is studying additional

petroleum refining wastes as part of a listing determination required

by RCRA 3001 (e)(2).

In addition, petroleum refineries typically generate large volumes

of wastes that exhibit hazardous waste characteristics. Individual

wastewater streams upstream of wastewater treatment may exhibit the

Toxicity Characteristic, particularly for chromium, lead and benzene

(see 40 CFR 261.24), or the characteristics of corrosivity or

ignitability (40 CFR 261.21 and 261.22, respectively). These

wastewaters may also contain other hazardous constituents that are not

part of the Toxicity Characteristic. See Tables in Section V,

Development Document for Effluent Limitations Guidelines, New Source

Performance Standards and Pretreatment Standards for the Petroleum

Refining Point Source Category. Sludges generated from secondary or

tertiary wastewater treatment also may exhibit one or more hazardous

waste characteristics.

Tanks storing listed wastes which engage in primary wastewater

treatment operations are presently exempt from federal Subtitle C

regulation because they are wastewater treatment units (i.e. tanks). 40

CFR 264.1 (g)(6) and 265.1 (c)(10). Hazardous wastes removed from those

units are subject to regulation upon exiting the tanks. However,

recovered oil is exempt from Subtitle C regulation, as is any fuel

produced from such oil, under the current exemptions at Sec. 261.6

(a)(3)(iv)-(vii). The units engaged in recovered oil operations would

also be exempt under current regulations, to the extent that these

units are managing materials exempt under Sec. 261.6 (a)(3)(iv)-(vi).

III. Summary of Today's Final Rule

EPA is finalizing a revised version of the January 8, 1988 proposal

in today's notice. The final rule states in essence that recovered oil

from petroleum refinery operations, petroleum exploration and

production, and transportation incident thereto, is excluded from the

regulatory definition of solid waste if it is subsequently inserted

into the petroleum refining process prior to crude distillation or

catalytic cracking. The recovered oil thus need not be generated at the

site of the refining process--a potentially significant expansion of

the proposal. This exclusion applies, however, only if the oil is not

managed in land disposal units or accumulated speculatively before it

is inserted.

EPA expects that most of the recovered oil affected by this rule

will be generated from wastewater treatment operations. As explained

below, EPA is narrowing the proposal (which would have excluded

petroleum refining wastewaters containing oil that eventually gets

recycled) by finding that refinery operations upstream of recovered oil

systems involve wastewater treatment, not an on-going refining process.

Thus, petroleum refinery wastewaters undergoing treatment should not be

excluded from the definition of solid waste. In addition, even if these

wastewater treatment operations are characterized as also involving

recycling, the operations involve discarded residuals that can be part

of the waste disposal problem, and hence the wastewater treatment

operations need not be characterized as part of an ``ongoing production

process'' for purposes of excluding materials from the definition of

solid waste. Once oil is recovered, however, the Agency believes it

reasonable to exclude it from the definition of solid waste if the oil

is to be reused in the refining process (even though the oil may still

require a significant amount of further processing before it can

actually be so reused). This is because the recovered oil and its

management within refining operations can be viewed as part of the

petroleum refining process and not part of the waste disposal problem.

EPA is also slightly amending the regulatory exemption for

petroleum coke produced using oil-bearing refinery hazardous waste (see

Sec. 261.6 (a)(3)(vii), redesignated (a)(3)(vi) in today's rule). The

Agency is slightly broadening the current exemption so that it also

applies to coke produced by a single petroleum refining entity, but the

coker is located at a different facility from where the hazardous

wastes are generated.

As a matter of drafting, the principal change brought about by

today's rule takes the form of an exclusion from the regulatory

definition of solid waste. Specifically, paragraph (12) is being added

to the list of exclusions in Sec. 261.4 (a). In addition, EPA is

removing the regulatory exemption in Sec. 261.6(a)(3)(v) which is

superseded by today's exclusion, and redesignating the remaining

exemptions in Sec. 261.6(a)(3) (vi) and (vii) as Sec. 261.6(a)(3) (v)

and (vi), respectively, in order to maintain consecutive numbering. EPA

is also revising two other regulatory exemptions in Sec. 261.6(a)(3).

Finally, EPA is making conforming changes to Secs. 261.3(c)(2)(ii)(B)

and 266.100(b)(3), both as a result of today's rulemaking, and to

reflect conforming changes that EPA inadvertently omitted during

promulgation of the used oil final rule (57 FR 41566 (September 10,

1992)).

IV. Scope of Today's Final Rule

A. Limiting Scope to Recovered Oil From Petroleum Refining, Exploration

and Production

As noted above, today's rule excludes recovered oil generated from

petroleum exploration, production and refining activities, and from the

transportation incident thereto, from being a solid waste when the

recovered oil is inserted into a designated point in a petroleum

refining process. This section of the preamble discusses why EPA is

crafting the exclusion in this manner. More specifically, we discuss

why the exclusion does not cover oil recovered in operations downstream

from petroleum refining, and why the exclusion does not apply to

recovered oil from industries other than petroleum refining,

exploration, or production.

EPA is not excluding recovered oil from operations downstream of

refining, such as marketing or retail sales, because such oil is

already excluded from regulation (so long as it is not disposed of).

Under existing section 261.33, unused commercial chemical products that

are recycled in most manners are not solid wastes when they are

recycled. This principle applies to unused fuels that are recycled by

being returned to fuel-production processes. (See also RCRA section

3004 (q)(l), establishing a similar principle.) Thus, for example, if a

bulk oil storage terminal has a spill of product and is able to capture

the spill and return it to a refinery or other legitimate fuel

production operation, the spilled product is not a solid waste. (As

noted at 55 FR 22671 (June 1, 1990) however, mere assertion of an

intent to recycle a commercial product spill does not convert the spill

into a non-waste. There must be objective indicia that recycling is

reasonable, and that it will occur in a timely manner.)

For different reasons, EPA is not extending the exclusion to

recovered oil from non-petroleum industries. First, such an exclusion

is beyond the scope of the proposed rule. It is also beyond the scope

of the judicial decisions construing the definition of solid waste.

These decisions indicate that when one industry sends its residual

materials to another industry for recycling, the initial industry can

be considered to have discarded them. API v. EPA, 906 F. 2d at 741-42;

Ilco v. EPA, 996 F. 2d 1126 (11th Cir. 1993). EPA is also concerned

that when recovered oil originates with non-petroleum industries, the

likelihood increases that the oil can be contaminated with toxic

constituents that would not normally be found in petroleum industry

recovered oil. See generally, 56 FR at 48009 (Sept. 23, 1991); and see,

e.g., EPA's Development Document for effluent guidelines for the iron

and steel industry (skimmed oil from iron and steel industry contains

contaminants not found in petroleum recovered oil).6 Such oily

material consequently is more likely to differ from the feedstocks

customarily processed by refineries and thus need not be viewed as part

of that process, and may also pose risks that can be viewed as part of

the waste disposal problem. Finally, the Agency is studying this issue

under the aegis of the Solid Waste Definition Task Force and is not at

a point where it is in a position to make a final determination.7

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\6\Volumes I-V of Development Document for Effluent Limitations

Guidelines and Standards for the Iron and Steel Manufacturing Point

Source Category, U.S. EPA, May 1982, National Technical Information

Service #PB82-240-425, -433, -458, -466, and -474. See specifically

Volume III, pp. 395-398; Volume IV, pp. 107-129; Volume V, p. 227.

\7\EPA also notes that when Congress created certain exemptions

(not exclusions) from hazardous waste fuel labelling requirements to

accommodate certain petroleum industry practices involving recovered

oil, it limited the scope of those exemptions to fuels produced from

oily materials ``resulting from normal petroleum refining,

production and transportation practices'', RCRA section 3004 (r)(3).

This is similar to the scope of today's rule.

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B. Rationale for Excluding Recovered Oil and Not Wastewater from Being

a Solid Waste

EPA is also determining today that the oil that is skimmed from

plant wastewaters during wastewater treatment (normally during the

initial oil/water/solids separation step occurring during primary

wastewater treatment), as well as oil recovered from other sources, is

not a solid waste if it is going to be inserted into the refining

process prior to the point in the process where crude distillation or

catalytic cracking occurs. Thus, the recovered oil systems themselves

would not be waste management units. (These units may, however, contain

hazardous wastes, such as K049, which become subject to regulation when

removed from such units. See 40 CFR 261.4 (c), which says that

hazardous waste regulation does not begin for (among other things)

hazardous waste which is generated in an associated non-waste-

treatment-manufacturing unit until the waste is removed from the unit.)

The petroleum industry argued in its public comments to the January

8, 1988 proposal that plant wastewaters containing oil are not solid

wastes either. Rather, they characterize the primary wastewater

treatment operations in which oil is skimmed from plant waters as still

being part of the refining process. Thus, the argument goes, any step

at a refinery that involves some recovery of oil for further use is

still part of the ongoing refining process and cannot involve solid

waste under the holding of AMC I.

EPA disagrees with respect to primary wastewater treatment

operations. These operations do not involve secondary materials that

are ``recycled and reused in an ongoing manufacturing or industrial

process'', AMC I, 824 F. 2d at 1186 (emphasis original); see also AMC

II, 907 F. 2d at 1186 (AMC I concerns only ``materials that are

`destined for immediate reuse in another phase of the industry's

ongoing production process''') (emphasis original). Primary wastewater

treatment operations exist to treat plant wastewater. The percentage of

oil in plant wastewaters that form the influent to primary wastewater

treatment is minuscule, on the order of .0001 % to .000001 % (i.e. from

1 to 100 parts per million oil). See Tables in Section V, Development

Document for Effluent Limitations Guidelines, New Source Performance

Standards and Pretreatment Standards for the Petroleum Refining Point

Source Category. While some oil may be recovered from this wastewater

(an activity the Agency certainly encourages, and indeed requires to

prevent the oil's discharge to surface waters and POTWs), the amounts

are not significant in the context of a refinery's overall production

activities. Clearly, wastewater treatment is the main purpose of the

systems in question, and any oil recovery is of secondary import.

Refinery wastewater is not a ``secondary material immediately

reused within an industrial process''. Chemical Waste Management v.

EPA, 976 F. 2d at 14. Primary wastewater treatment is the first step in

the wastewater treatment process that purifies the discarded

wastewaters from the refining process so that those discarded waters

can ultimately be discharged to navigable waters pursuant to Clean

Water Act requirements. That a small amount of oil is removed from

these wastewaters in the course of treatment does not make wastewater

treatment a petroleum refining operation. Put another way, the fact

that a small amount of oil may be recovered from large volumes of the

discarded plant wastewaters does not require EPA to consider those

operations to involve non-discarded materials, and hence to exclude all

of the materials going to primary wastewater treatment operations from

the definition of solid waste. AMC II, 907 F.2d at 1186-7

(``discarded'' is an ambiguous term that EPA may interpret in a

reasonable manner, and EPA's interpretation that recoverable materials

managed in wastewater treatment operations containing surface

impoundments were discarded solid wastes was reasonable).

On the other hand, recovered oil systems can be legitimately viewed

as part of the petroleum refining process. The input to the recovered

oil systems is primarily oil skimmed from wastewater treatment

operations as well as oil recovered from other sources, not discarded

refining process wastewaters. Recovered oil systems do not exist to

remove contaminants from wastewater. Rather, their purpose is to

restore recovered oil to sufficient purity so that it can be reused as

a feedstock material in the refining process. This is a natural point

to characterize activities as being part of the refining process.

It is thus EPA's view that until oil is recovered from refinery

process wastewaters, the wastewaters are discarded materials and hence

solid wastes potentially subject to regulation under RCRA.8

(Wastewaters remaining after oil has been recovered are still solid

wastes, and are typically returned to an upstream point in the

refinery's wastewater treatment system.) The oil recovered from such

wastewaters is not a solid waste, however (assuming it is reinserted

into the refining process). This reading is not only in accord with

common sense, as explained above, but also is in accord with RCRA's

goals and purposes. AMC II, 907 F. 2d at 1186-87; API, 906 F. 2d at

740-41. As these cases make clear, EPA may ordinarily consider

secondary materials that have ``become part of the waste disposal

problem'' to be discarded. API, 906 F. 2d at 741; AMC II, 907 F. 2d at

1186. That is the case here. Discarded plant wastewaters up to and

including the primary wastewater treatment step, can contain high

loadings of hazardous constituents that may pose environmental harm if

released. It is estimated that an average of 34% of the benzene (a

human carcinogen) entering a petroleum refinery's wastewater treatment

system is emitted to air from the wastewater collection portion of the

system; when primary wastewater treatment (i.e., a non-enclosed oil-

water separator) is included in this calculation, the amount of benzene

emitted relative to the influent concentration rises to 47%.9

Primary wastewater treatment also is sometimes conducted in land-based

or in-ground units, which can (and have) resulted in environmental

contamination.10 This further indicates that these operations can

be part of the waste management problem.

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\8\On a similar note, the Agency is aware of activities at

petroleum management facilities where free-phase hydrocarbon (from

spills, etc.) is removed from the water table as part of groundwater

remediation (see 56 FR at 13406 (Apr. 2, 1991)). These hydrocarbon

recovery operations can recover materials ranging from mostly water

to mostly oil; only recovered materials that are primarily oil, and

that can be inserted into a refinery's recovered oil system without

pretreatment (or can be inserted directly into the refining process

itself), would be considered ``recovered oil'' eligible for today's

exclusion. The management of petroleum-contaminated groundwater in

separation and treatment units is clearly solid waste (and

potentially hazardous waste) management, essentially wastewater

treatment.

\9\The Agency addressed benzene emissions from waste operations

in a final rule published January 7, 1993 (58 FR 3072) using risk-

based standards for benzene. See also EPA, Final NESHAP Standards

for Waste Operations: Basis for Impact Calculations, February 16,

1990. This document is available in the Benzene Waste Operations

NESHAP docket.

\1\0``Background Document to Support Listing of Primary Oil/

Water Separation Sludges from the Petroleum Refining Industry,''

U.S. EPA, December 22, 1989, pp. 6, 10-12.

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In addition, petroleum refineries frequently generate individual

wastewater streams that exhibit characteristics of hazardous waste,

which streams are mixed together so that the characteristic is removed.

(The characteristic can be removed either before or during primary

treatment.) These aggregated wastewater streams may still contain high

volumes of hazardous constituents, however, because aggregation (i.e.

dilution) and primary treatment do not significantly remove or destroy

all hazardous constituents. See Tables in Section V, Development

Document for Effluent Limitations Guidelines, New Source Performance

Standards and Pretreatment Standards for the Petroleum Refining Point

Source Category. The aggregated wastewaters are then managed in surface

impoundments, where biological treatment occurs. The D.C. Circuit has

made clear, in Chemical Waste Management v. EPA, that in such

circumstances the decharacterized wastewaters cannot be managed in

surface impoundments unless they have first been treated to meet the

treatment requirements of RCRA Section 3004(m) (requiring treatment

that substantially removes or destroys hazardous constituents so that

threats to human health and the environment are minimized), or unless

treatment equivalent to Section 3004(m) treatment occurs before the

wastewaters are discharged. Id. at 7, 20-24.\11\ The court indeed

repeatedly referred to these treatment standards as the core of RCRA's

hazardous waste management scheme. Id. at 23, 24.

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\1\1EPA is still working to interpret the scope of the

``equivalence'' requirement in the Chemical Waste Management

opinion, and the language in the text should not be taken as

representing the Agency's resolution of the issue. It is clear,

however, that the opinion imposes obligations on facilities that use

impoundments to manage wastewaters that are decharacterized by means

other than full-scale section 3004 (m) treatment.

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EPA's interpretation that the influent into primary wastewater

treatment consists of discarded wastes, not in-process petroleum, is

fully in accord with these core principles of RCRA. Decharacterized

wastewaters that are going to be managed in surface impoundments would

nevertheless receive Section 3004 (m) treatment before their ultimate

discharge, as required by the Chemical Waste Management opinion. Under

industry's preferred reading, however, the decharacterized wastewaters

would not be solid wastes at all until all oil recovery has been

completed, even if held in impoundments. At that point, the wastewaters

would no longer exhibit a characteristic (because they have been

diluted through aggregation), and thus would not be prohibited wastes

subject to Section 3004 (m) treatment. The ``core principles of RCRA''

would thus be avoided. EPA considers its interpretation of

``discarded,'' that assures proper treatment of characteristically

hazardous petroleum refinery wastewaters that are going to be managed

in surface impoundments, to be more reasonable.12

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\1\2EPA views the facts here as similar to those in the AMC II

case. In particular, both situations involve wastewater treatment

operations, where plant wastewaters could ultimately be managed in

surface impoundments.

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EPA acknowledges that it initially proposed to exclude all such

wastewaters from the definition of solid waste. 53 FR 525-526. However,

the Agency's reasoning was based in part on the same mistaken view of

the scope of AMC I that was later rejected by the API court. 906 F. 2d

at 740-41. (EPA even relied in part on the overbroad ``indigenous''

concept, 53 FR 525, 526, that was remanded in API. 906 F. 2d at 739,

742.) The Agency is obviously not bound by its proposal, and subsequent

case law makes clear that the Agency has more interpretive discretion

than it imagined in 1988. The interpretation adopted in today's rule is

reasonable and in accord with statutory goals and purposes.

Nor is today's action inconsistent with AMC I's statements

regarding the scope of petroleum refining activities that are outside

the scope of Subtitle C. That opinion indicated that in petroleum

refining operations ``(a)ny hydrocarbons that are not usable in a

particular form or state are returned to an appropriate stage in the

refining process so they can eventually be used. Likewise, the

hydrocarbons and materials which escape from a refinery's production

vessels are gathered and, by a complex retrieval system, returned to

appropriate parts of the refining process.'' 824 F. 2d at 1181. Today's

rule does not assert RCRA jurisdiction over any refining operations

that process hydrocarbons into products, nor over hydrocarbons that are

lost from process vessels and are gathered for return to refining.

Rather, the Agency is stating that up to and including primary

wastewater treatment, plant wastewaters are just that, and their

management is potentially subject to Subtitle C controls. Oil that is

recovered from wastewater, however, is no longer a solid waste, and

recovered oil systems that do engage in retrieval of hydrocarbons for

eventual refining are not subject to RCRA controls.13

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\1\3The Agency also views its action as consistent with its

rulemaking involving residues from coke by-product operations that

are returned to the coking process, or related processes. 57 FR

27880 (June 22, 1992). The Agency stated that such materials were

not solid wastes provided they were not land disposed before

reinsertion. See 40 CFR 261.4(a)(10). However, unlike the petroleum

wastewaters containing small amounts of oil at issue here, the coke

byproduct residues were found to be very similar to the raw material

being replaced, and required no further purification to be usable.

They could be inserted more or less directly into the coking or

related tar-refining processes. Such residues are conceptually

analogous to the purified oil coming from a petroleum slop oil

facility.

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C. Rationale for Excluding Recovered Oil From Off-Site Sources

Today's final rule, in defining the scope of recovered oil subject

to the exclusion, excludes recovered oil from both off-site and on-site

sources. EPA believes that recovered oil from petroleum refining,

exploration and production, and transportation incident thereto,

whether generated from these off-site or on-site sources, is

essentially the same raw material (i.e., ``oil'') as that which is

normally and routinely transported to, and inserted into, petroleum

refining processes. Therefore, recovered oil from off-site sources

should also be excluded when it is going to be recycled in this

manner.14 Examples of off-site sources of recovered oil include

oil recovered from other petroleum refineries, and from oil and gas

drilling operations.15

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\1\4Certain wastes from petroleum exploration, development and

production are currently exempt from Subtitle C regulation under

Sec. 261.4(b)(5). There may be a degree of overlap between the

materials excluded by today's action, and materials currently exempt

under Sec. 261.4(b)(5). See 53 FR at 25446 (July 6, 1988), 58 FR

15284 (Mar. 22, 1993), and Report to Congress, Management of Wastes

from the Exploration, Development, and Production of Crude Oil,

Natural Gas, and Geothermal Energy, Volumes 1-3 and Executive

Summaries, December 1987, EPA/530-SW-88-003, for descriptions and

clarifications of exempt and non-exempt wastes from oil and gas

exploration, development, and production.

\1\5As noted above, recovered oil does not include ``used oil''

(as defined in 40 CFR 279.1) brought to a refinery from off-site

sources. (De minimis quantities of used oil that are incidentally

captured by refinery wastewater treatment systems and subsequently

recovered with other oil are not considered used oil.) See 57 FR

41566 (September 10, 1992) and 59 FR 1994 (March 4, 1994) for

discussion on the scope of the definition of used oil. See also

Section X.C.2 ``Used Oil'' later in this preamble.

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This exclusion is somewhat broader than that proposed in the

January 8, 1988 notice, which would have limited the exclusion to

materials generated on-site. 53 FR 525. However, the 1988 proposal

would not have been limited to recovered oil, but rather would have

included all oil-bearing secondary materials, so that the Agency was

particularly concerned with limiting the exclusion's scope because such

materials as listed sludges, tank bottoms and contaminated media could

be excluded. Id. In addition, if the exclusion was to cover oil-bearing

hazardous secondary materials, EPA was concerned that RCRA Section

3004(r)(2) would be rendered meaningless. Id. These concerns are no

longer present when the exclusion is limited to recovered oil.

The main reason for extending the exclusion to recovered oil

generated at locations other than a refinery (when such oil is

ultimately returned to a refinery) is that the oil is essentially the

same (in terms of physical composition and potential risk) as recovered

oil generated on-site. (The only significant difference is that

recovered oil generated off-site is transported--in the same manner as

crude oil. EPA does not regard this distinction as significant enough

to warrant different regulatory status for off-site recovered oil.) The

Agency thus is responding to comments received from industry, urging

the Agency to extend the scope of the exclusion to certain off-site

activities. However, these commenters argued further that refineries

comprise but one segment of a large, integrated industry, extending

from the production field, through the pipeline, to the refinery, to

the marketing terminal, to tank trucks, and, ultimately, to the

customer. EPA does not necessarily accept this argument, which is

unnecessary to justify today's rule. Again, EPA will continue its

broader policy review of the Definition of Solid Waste. EPA notes as

well that the action in today's rule is not precedential for other

industries. Determining what activities are a part of on-going

production activities and not part of the waste disposal problem

necessarily entails fact-specific evaluation. The Agency's conclusions

regarding secondary materials generated by particular industries thus

need not be germane to the regulatory status of secondary materials

generated by other industries.

V. Rationale for Conditioning the Exclusion on Recovered Oil Not Being

Placed on the Land and Not Being Accumulated Speculatively

This rule does not exclude land-based hazardous waste management

units from which oil may be recovered. Thus, if recovered oil, or

material containing oil, is placed in land-based units such as surface

impoundments or land treatment units, those units remain subject to

Subtitle C requirements (provided the material being placed is

hazardous under RCRA). The Agency considers material placed in such

units to be discarded, and hence solid wastes. See also AMC I, 824 F.

2d at n.20. These are classic disposal practices (see RCRA Section

1002(b)(7)), and placement of oily materials in such units (whether for

storage, treatment, or disposal) is inconsistent with the use of the

material as a valued product. In addition, the D.C. Circuit held in AMC

II that materials destined for recycling were still solid wastes if

held in surface impoundments before being recycled (907 F. 2d at 1186).

The final condition for the exclusion to apply is that recovered

oil not be accumulated speculatively (as defined in Sec. 261.1(c)(8))

before it is recycled back into a petroleum refining process. This is a

standard condition that the Agency applies to otherwise excluded

secondary materials (see, e.g., Sec. 261.2(e)(2)(iii)) to prevent the

materials being held for prolonged periods without being recycled, with

attendant increased environmental risk. See 50 FR at 634-635, 658-661

(Jan. 4, 1985). No commenter seriously questioned applying this

condition. Thus, recovered oil that would otherwise be excluded that is

accumulated speculatively is considered to be discarded and hence a

solid waste.

VI. Rationale for Not Excluding Recovered Oil That Is Inserted Into the

Petroleum Refining Process After Crude Distillation or Catalytic

Cracking (i.e., Into a Petroleum Coker)

Today's final rule is narrower in scope than the January 8, 1988

notice in that the Agency is not finalizing the proposed exclusion of

recovered oil that is converted to petroleum coke. EPA is deferring the

exclusion at this time because EPA lacks data assuring that hazardous

constituents from petroleum refining do not end up in the product in

quantities that, when such product is utilized as a fuel, could be

harmful to human health and the environment. EPA is also concerned that

toxic constituents, such as heavy metals, can be discarded by simple

incorporation into the coke product. In effect, the product would be

used as a disposal medium for toxic constituents, and so could be part

of the ``waste disposal problem.'' The Agency also lacks sufficient

data to show whether oil recovered from refinery wastewater treatment

systems contains toxic metals that are not present in the normal feed

to a petroleum coker. Such metals could end up in the coke product.

In contrast, the Agency is excluding recovered oil inserted at or

before a point in the refining process designed to remove toxic metal

and organic contaminants, i.e., prior to crude distillation or

catalytic cracking. See 50 FR 28725 (July 15, 1985) and 50 FR 49169

(November 29, 1985). As explained there, the distillation process

splits the feedstock into fractions based on the differing boiling

points of feedstock components. Data submitted by API at that time

indicated that most metals concentrate in the heavier petroleum

fractions, thereby increasing the probability of contaminant removal

from many fuel fractions produced using distillation (and other

contaminant-removing processes). See 50 FR 49170.

Although the proposed exclusion of recovered oil that is converted

to petroleum coke is not being finalized in today's rule, for different

reasons EPA is slightly amending the regulatory exemption at

Sec. 261.6(a)(3)(vii) (redesignated Sec. 261.6(a)(3)(vi) in today's

rule) for petroleum coke produced using oil-bearing refinery hazardous

waste. The exemption states that such coke is subject to regulation

only if it exhibits a characteristic of hazardous waste. (The exemption

recites the provisions of RCRA section 3004(q)(2)(A).) The purpose of

the statute, and the exemption, is to allow petroleum companies to

recycle their oily refinery waste to their petroleum coker, without

automatically subjecting the coke output to the rules applicable to

hazardous waste fuels. (Such automatic effect could occur without the

exemption, if listed wastes are being reinserted into the coker,

because of the derived-from rule.) S. Rept. No. 298, 98th Cong. 1st

Sess. 39 (1983).

Both the statutory and current regulatory exemption, however, are

worded so as to apply only to situations where petroleum coke is

produced from hazardous wastes ``at the same facility at which such

wastes were generated * * *''. EPA believes that this limitation is

unnecessarily narrow, and does not foreclose a regulatory expansion. In

particular, so long as a petroleum refinery is coking its own wastes,

it should not matter whether the coker is located at the site where

wastes are generated or at a different facility. Since the generator

and coker operator remain the same entity (or ``person'', as defined in

Sec. 260.10) there is sufficient guarantee that hazardous wastes of

unknown or uncertain composition will not be used in the coking

process, which is the evident concern behind the limitation in the

statute. Cf. 50 FR at 28725 (July 15, 1985); 50 FR 49170 (Nov. 29,

1985). Since the hazardous wastes would remain regulated under RCRA

when they are generated, transported, and stored prior to recycling,

id., potential concerns regarding tracking are also addressed. EPA also

sees no difference in the composition of coke produced partially from

on-site and off-site hazardous wastes when the coke is produced by the

same entity. Consequently, the Agency is slightly broadening the

current regulatory exemption so that it applies to coke produced by a

single petroleum refining entity, even if the coker is located at a

different facility from where the hazardous wastes are generated.

Finally, the coking process itself continues to be exempt from RCRA

regulation as a recycling unit, provided this recycling is legitimate.

Section 261.6(c)(1) (``The recycling process itself is exempt from

regulation except as provided in Sec. 261.6(d).''). Today's rule does

not affect this provision.

VII. Rationale for Not Excluding Other Oil-Bearing Hazardous Materials

Just as EPA is not excluding oil-bearing wastewaters from the

definition of solid waste, it is not excluding other similar types of

oil-bearing materials, such as hazardous wastewater treatment sludges.

These materials are not composed primarily of oil; they are unlike raw

materials normally used in the petroleum refining process; and the

units in which they are managed--API separators, DAF units, land

treatment units and surface impoundments--are not parts of the refining

process, but rather function as waste holding and treatment units. In

addition, there have been many damage incidents associated with

management of such materials as toxic sludges from wastewater

treatment, confirming that these materials are part of the waste

disposal problem, rather than part of an on-going manufacturing

operation. (See, for example, the Listing Background Documents for

Hazardous Wastes K048-052 and F037-038.) For these reasons, the Agency

continues to classify these materials as discarded, within the meaning

of RCRA Section 1004 (27). Recovered oil that is obtained from such

wastes, however, is excluded from the definition of solid waste under

today's final rule (assuming the rule's conditions are satisfied).

The Agency is also aware of various types of units designed to

treat wastes K048-K052 and F037-F038, in order to reduce the volume and

toxicity of these wastes, as well as to recover oil. See, e.g., 57 FR

37198 (August 18, 1992). EPA does not view these units as part of the

manufacturing (i.e., refining) process, because such units are not part

of a continuing series of unit operations that crack/distill/

fractionate crude oil. The input to these units are materials such as

wastewater treatment sludges, that contain relatively small amounts of

oil. A different determination frustrates the Congressional objective

that hazardous waste be treated properly. These types of units are the

basis for treatment standards under the land disposal restrictions for

K048-K052 and F037-F038. If the sludges treated in these units are no

longer hazardous waste, they would not need to be treated by

application of BDAT so as to minimize the threats they pose. Cf. API,

906 F. 2d at 741-742. Thus, excluding such sludges from jurisdiction

until properly treated could contribute to the waste disposal problem

that Congress sought to remedy. Finally, although EPA is not excluding

these types of oil-bearing materials (such as hazardous wastewater

treatment sludges), the units in which the recovery of oil is occurring

may still be a type of recycling unit, and therefore may be exempt from

RCRA permitting requirements under 40 CFR 261.6(c)(1).

VIII. Demonstration That Recovered Oil Meets Conditions of Exclusion

Under Sec. 261.2(f), persons claiming that recovered oil is

excluded from the definition of solid waste bear the burden of proof in

enforcement actions to demonstrate that they qualify for the exclusion.

This would normally require some type of demonstration that the

recovered oil is going to be and actually is used in a petroleum

refining operation prior to crude distillation or catalytic cracking.

For on-site sources, this documentation could be entries in the

operating records of the facility showing where the oil is recovered

and where it re-enters the refining process. For off-site sources, this

demonstration is especially important. Adequate documentation could

entail bona fide contractual agreements with other facilities to take

the recovered oil, shipping or delivery records to the receiving

facility, or other similar records. These records are important to show

enforcement personnel that the conditions of the exclusion have been

met. Without this documentation, the burden of proof will ordinarily

not be satisfied because enforcement personnel will have no way of

verifying that the recovered oil actually was used in the refining

process and the assumption can be made that the oil was not reused, and

was instead sent off-site or managed on-site as a hazardous waste.

IX. Examples of How Today's Rule Operates

Example 1

Petroleum refinery A generates wastewater. As part of primary

wastewater treatment, it skims oil from the wastewater. This

operation occurs in wastewater treatment tanks. The skimmed oil is

then gathered and inserted directly into crude oil storage units for

insertion into the refining process.

The refinery process wastewater is still considered to be a

solid waste, notwithstanding that some oil is skimmed from it. The

wastewater treatment tanks used for treating the wastewater are

exempt from subtitle C regulation. Section 264.1(g)(6),

265.1(c)(10). The skimmed oil is recovered oil that is excluded from

being a solid waste under today's regulation because it originates

from petroleum refining, it is not land disposed before being

recycled, and it is returned to the designated part of the petroleum

refining process. (This answer assumes that the recovered oil is not

being accumulated speculatively.)

Example 2

Same facts as Example 1, except that the skimmed oil requires

processing in the plant's slop oil system. This process involves

demulsifying and separation via chemical addition, thermal

treatment, and gravity separation.

Same answer as in Example 1. It should also be noted that water

and solids from the slop oil system can be wastes, and if hazardous,

can be subject to Subtitle C regulation once they are removed from

the slop oil tank.

Example 3

Same facts as Example 1, except that the source of the recovered

oil is a petrochemical plant wastewater treatment system.

The oil is not excluded from being a solid waste under today's

rule because it does not come from petroleum refining, exploration

or production operations.

Example 4

Facility B recovers oil from spills at exploration and

production operations. The oil is trucked to a tank, where

separation occurs. The separated oil is put into a pipeline for

ultimate insertion into crude oil storage units at a petroleum

refinery.

The oil recovered from the spills is excluded from being a solid

waste. It is a type of recovered oil, and is excluded because it

originates from exploration and production activities, is not land

disposed or accumulated speculatively, and is inserted into a

refining process.

Example 5

Facility C is a bulk petroleum storage facility. Oil spilled

from its product storage tanks is too contaminated to be directly

used as product. The oil is sent back to a refinery where it is

placed in a slop oil system and returned to the refining process.

The spilled oil is excluded from being a solid waste, not under

today's rule, but under Sec. 261.33 (and Sec. 261.2 Table 1) because

it is a commercial chemical product that is being recycled rather

than abandoned. (EPA interprets this principle to apply to

commercial chemical products that exhibit characteristics as well as

those listed in Sec. 261.33. 50 FR 14219 (April 11, 1985).) (This

answer assumes that the oil is recovered promptly and that the

spills do not create permanent land disposal units. See 55 FR 22671

(June 1, 1990).)

All of these answers assume that legitimate recycling is

occurring. See discussion of sham recycling criteria in many prior

Agency notices, such as 53 FR 522 (Jan. 8, 1988) and 56 FR 7143,

7185 (Feb. 21, 1991).

X. Relationship to Other Programs

A. Clean Air Act (Benzene NESHAP)

On January 7, 1993 (58 FR 3072) EPA promulgated under Section 112

of the Clean Air Act (42 U.S.C. 7412) final amendments to the benzene

waste operations national emission standards for hazardous air

pollutants (NESHAP) (V FF at 40 CFR part 61). Sources affected by V FF

include chemical manufacturing plants, by-product recovery plants,

petroleum refineries, and facilities at which waste management units

are used to treat, store, or dispose of waste generated by chemical

manufacturing plants, by-product recovery plants, or petroleum

refineries.

B. Clean Water Act

Today's rule does not affect petroleum facilities' obligations

under the Clean Water Act, and is consistent with the Agency's prior

descriptions of primary wastewater treatment activities at petroleum

refineries as involving wastewater treatment, not recycling of in-

process material.

C. RCRA

1. RCRA Air Emission Standards

EPA has issued regulations that implement portions of RCRA Section

3004(n), which provision requires EPA to issue rules regulating air

emissions resulting from facilities that treat, store, or dispose of

hazardous wastes. 40 CFR parts 264 and 265 Subparts AA and BB. These

rules control organic emissions from vents and equipment leaks from

units managing hazardous wastes, which units either are already subject

to RCRA Subtitle C permitting requirements, or are recycling units

located at facilities which has other units already subject to Subtitle

C permitting requirements.

Today's rule does not affect any units that are subject to

regulation under subparts AA or BB. This is because the units that are

affected by today's rule are not presently subject to Subtitle C

regulation, either because they are wastewater treatment tanks exempt

from regulation under Secs. 264.1(g)(6) and 265.1(c)(10), because they

are recycling units not covered by the Subpart AA or BB regulations

(i.e., are not ``distillation, fractionation, thin-film evaporation,

solvent extraction, or air or steam stripping operation'', see

Secs. 264.1030(b), 264.1050(b), 265.1030(b), and 265.1050(b)) and

otherwise exempt from regulation under Sec. 261.6(c)(1), or because

they manage materials exempt from regulation under Sec. 261.6(a)(3)

(iv), (v) and (vi).

2. Used Oil

Today's rule does not affect petroleum facilities' obligations

under the Used Oil Rule. See generally, 57 FR 41566 (September 10,

1992) and 59 FR 1994 (March 4, 1994). Today's rule excludes from RCRA

Subtitle C requirements only recovered oil as described. Whether or not

recovered oil excluded under today's rule is subject to the used oil

management standards depends on whether or not the recovered oil does

or does not also meet the definition of used oil. Id. The Agency

recently issued a final used oil rule on March 4, 1994 (see 59 FR

10550) which affects the definition of used oil and deals with issues

similar to those in today's rule. According to this final used oil

rule, de minimis quantities of used oil that are incidentally captured

by a refinery's wastewater treatment system and subsequently recovered

along with other oil in a refinery's recovered oil system are not

regulated as used oil. 59 FR 10550 (March 4, 1994).

D. Enforcement; Effect of Today's Final Rule on RCRA 3007, 3013, 7002

and 7003 Authorities

EPA's action today affects only the final regulatory definition of

solid waste. It does not interpret the scope of the term ``solid

waste'' for purposes of the non-regulatory authorities in RCRA Sections

3007, 3013, 7002 and 7003. See 40 CFR Sec. 261.1(b). Thus, for purposes

of those authorities, the Agency (or citizens in the case of citizen

suits under Section 7002(a)(1)(B)) would have the benefit of the full

jurisdictional reach of the statutory definition of solid waste. See

Comite Pro Rescate de la Salud v. Puerto Rico Aqueduct and Sewer

Authority, 888 F. 2d 180, 185 (1st Cir. 1989), cert. denied, 494 U.S.

1029 (1990) (upholding reasonableness of applying narrower definition

for regulatory purposes than for purposes of imminent and substantial

endangerment authority); Connecticut Coastal Fishermen's Association v.

Remington Arms Company, 989 F. 2d 1305 (2d Cir. 1993) (noting potential

appropriateness of applying narrower regulatory definition of solid

waste for determining scope of Subtitle C regulation, but applying

broader statutory definition in non-regulatory contexts such as RCRA

Sections 7002 and 7003).

XI. State Authority

A. Applicability of Rules in Authorized States

Under Section 3006 of RCRA, EPA may authorize qualified States to

administer and enforce the RCRA program within the State. (See 40 CFR

Part 271 for the standards and requirements for authorization.)

Following authorization, authorized States have primary enforcement

responsibility, although EPA retains enforcement authority under

Sections 3008, 7003 and 3013 of RCRA.

Prior to the Hazardous and Solid Waste Amendments of 1984

(``HSWA''), a State with final authorization administered its hazardous

waste program entirely in lieu of EPA administering the Federal program

in that State. The Federal requirements no longer applied in the

authorized State, and EPA could not issue permits for any facilities in

the State which the State was authorized to permit. When new, more

stringent Federal requirements were promulgated or enacted, the State

was obliged to enact equivalent authority within specified time frames.

New Federal requirements did not take effect in an authorized State

until the State adopted the requirements as State law.

In contrast, under Section 3006(g) of RCRA, 42 U.S.C. 6926(g), new

requirements and prohibitions imposed by HSWA take effect in authorized

States at the same time that they take effect in nonauthorized States.

EPA is directed to carry out those requirements and prohibitions in

authorized States, including the issuance of permits, until the State

is granted authorization to do so. While States must still adopt HSWA-

related provisions as State law to retain final authorization, the HSWA

applies in authorized States in the interim.

Today's amendments are not imposed pursuant to HSWA. The rule

changes, therefore, will become effective immediately only in those

States without interim or final authorization, not in authorized

States. The effect of the rule changes on authorized State programs is

discussed next.

B. Effect on Authorized State Programs

Today's rule will not be effective in authorized States since the

requirements are not being imposed pursuant to HSWA. Thus, the

requirements will be applicable only in those States that do not have

interim or final authorization. In authorized States, the requirements

will not be applicable until the State revises its program to adopt

equivalent requirements under State laws.

40 CFR 271.21(e)(2) requires that States that have final

authorization must modify their programs to reflect Federal program

changes and must subsequently submit the modifications to EPA for

approval. However, it should be noted that authorized States are only

required to modify their programs when EPA promulgates Federal

standards that are more stringent or broader in scope than the existing

Federal standards. Section 3009 of RCRA allows States to impose

standards more stringent than those in the Federal program. For those

Federal program changes that are less stringent or reduce the scope of

the Federal program, States are not required to modify their programs.

See 40 CFR 271.1(k). Today's amendments to Sec. 261.4 reduce the scope

of the existing Federal requirements. Therefore, authorized States will

not be required to modify their programs to adopt requirements

equivalent or substantially equivalent to the provisions proposed

today.

However, as noted above, States are required by Sec. 271.21 to

revise their programs to reflect Federal program changes. 51 FR 33722

(September 22, 1986). A number of States qualified for final

authorization prior to being required to adopt the redefinition of

solid waste rulemaking of January 4, 1985 (50 FR 614). Since the

January 4, 1985 rule is more stringent than the rule under which such

States were authorized, such States were required to revise their

programs in accordance with Part 271.21. Today's changes will not

preclude EPA's ability to authorize States which have subsequently

adopted the January 4, 1985 rule since it would reduce the scope of the

Federal requirements. However, certain aspects of the State's

regulation will be broader in scope than the Federal program and

therefore not part of the authorized State program. This means that

while they are enforceable under State law, they are not subject to

Federal enforcement.

40 CFR 271.21(e) provides for extensions of time at the discretion

of the Regional Administrator for States to adopt changes to their

regulations and/or statutes to conform to change in the Federal

program. The question arises, however, of whether States which have not

yet adopted the January 4 rule must adhere to EPA's published

compliance schedules for such adoption. Where States have delayed

rulemaking pending today's rulemaking clarifying the impact of the

court's decision, the EPA Regional Administrators may be flexible in

further extending the modification deadlines. EPA Regional

Administrators should take into account the States' regulatory and/or

legislative procedures in deciding what further extensions may be

warranted. However, any States which have delayed rulemaking should now

proceed to expeditiously adopt the January 4, 1985 rules as amended by

today's notice.

XII. Regulatory Requirements

A. Regulatory Impact Analysis Pursuant to Executive Order No. 12866

Under Executive Order No. 12866 [58 FR 51735 (October 4, 1993)],

the Agency must determine whether the regulatory action is

``significant'' and therefore subject to OMB review and the

requirements of the Executive Order. The Order defines ``significant

regulatory action'' as one that is likely to result in a rule that may:

(1) have an annual effect on the economy of $100 million or more or

adversely affect in a material way the economy, a sector of the

economy, productivity, competition, jobs, the environment, public

health or safety, or State, local, or tribal governments or

communities; (2) create serious inconsistency or otherwise interfere

with an action taken or planned by another agency; (3) materially alter

the budgetary impact of entitlements, grants, user fees, or loan

programs or the rights and obligations of recipients thereof; or (4)

raise novel legal or policy issues arising out of legal mandates, the

President's priorities, or the principles set forth in the Executive

Order.

It has been determined that this rule is not a ``significant

regulatory action'' under the terms of Executive Order 12866 and is

therefore not subject to OMB review.

B. Regulatory Flexibility Act

The Regulatory Flexibility Act of 1980 (Pub. L. 96-354), requires

Federal regulatory agencies to consider the impact of rulemaking on

``small entities.'' If a rulemaking will have a significant impact on a

substantial number of small entities, agencies must consider regulatory

alternatives that minimize economic impact.

Today's rulemaking does not have a significant impact on any small

entity. Rather, it excludes from the definition of solid waste certain

petroleum materials being recycled within the petroleum industry.

Accordingly, this deregulatory action will not add any economic burdens

to any affected entities, small or large, and a regulatory flexibility

analysis is not required. Therefore, the Administrator certifies

pursuant to 5 U.S.C. 601 et seq., that this rule will not have a

significant impact on a substantial number of small entities because

today's amendments reduce the scope of the Subtitle C regulatory

program.

C. Paperwork Reduction Act

Under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq., EPA must

consider the paperwork burden imposed by any information collection

request in a proposed or final rule. This rule will not impose any new

information collection requirements.

List of Subjects

40 CFR Part 261

Environmental protection, Hazardous waste, Solid waste, Petroleum,

Recycling.

40 CFR Part 266

Environmental protection, Energy, Hazardous waste, Petroleum,

Recycling.

Dated: July 15, 1994.

Carol M. Browner,

Administrator.

For the reasons set out in the preamble, Chapter I of title 40 of

the Code of Federal Regulations is amended as follows:

PART 261--IDENTIFICATION AND LISTING OF HAZARDOUS WASTE

1. The authority citation for part 261 continues to read as

follows:

Authority: 42 U.S.C. 6905, 6912(a), 6921, 6922, and 6938.

2. In Sec. 261.3, paragraph (c)(2)(ii)(B) is revised to read as

follows:

Sec. 261.3 Definition of hazardous waste.

* * * * *

(c) * * *

(2) * * *

(ii) * * *

(B) Waste from burning any of the materials exempted from

regulation by Sec. 261.6(a)(3) (iv) through (vi).

* * * * *

3. A new paragraph (a)(12) is added to Sec. 261.4 to read as

follows:

Sec. 261.4 Exclusions.

* * * * *

(a) * * *

(12) Recovered oil from petroleum refining, exploration and

production, and from transportation incident thereto, which is to be

inserted into the petroleum refining process (SIC Code 2911) along with

normal process streams prior to crude distillation or catalytic

cracking. This exclusion applies to recovered oil stored or transported

prior to insertion, except that the oil must not be stored in a manner

involving placement on the land, and must not be accumulated

speculatively, before being so recycled. Recovered oil is oil that has

been reclaimed from secondary materials (such as wastewater) generated

from normal petroleum refining, exploration and production, and

transportation practices. Recovered oil includes oil that is recovered

from refinery wastewater collection and treatment systems, oil

recovered from oil and gas drilling operations, and oil recovered from

wastes removed from crude oil storage tanks. Recovered oil does not

include (among other things) oil-bearing hazardous wastes listed in 40

CFR part 261 D (e.g., K048-K052, F037, F038). However, oil recovered

from such wastes may be considered recovered oil. Recovered oil also

does not include used oil as defined in 40 CFR 279.1.

4. In Sec. 261.6, paragraph (a)(3)(v) is removed, paragraph

(a)(3)(vi) is redesignated as (a)(3)(v), and paragraph (a)(3)(vii) is

redesignated as (a)(3)(vi). Section 261.6 is further amended by

revising paragraphs (a)(3)(iv) and newly redesignated (a)(3)(vi) to

read as follows:

Sec. 261.6 Requirements for recyclable materials.

* * * * *

(a) * * *

(3) * * *

(iv) Fuels produced from the refining of oil-bearing hazardous

waste along with normal process streams at a petroleum refining

facility if such wastes result from normal petroleum refining,

production, and transportation practices (this exemption does not apply

to fuels produced from oil recovered from oil-bearing hazardous waste,

where such recovered oil is already excluded under Sec. 261.4(a)(12);

* * * * *

(vi) Petroleum coke produced from petroleum refinery hazardous

wastes containing oil by the same person who generated the waste,

unless the resulting coke product exceeds one or more of the

characteristics of hazardous waste in part 261, subpart C.

* * * * *

PART 266--STANDARDS FOR THE MANAGEMENT OF SPECIFIC HAZARDOUS WASTES

AND SPECIFIC TYPES OF HAZARDOUS WASTE MANAGEMENT FACILITIES

5. The authority cite for part 266 continues to read as follows:

Authority: 42 U.S.C. 6905, 6912(a), 6924, and 6934.

6. Section 266.100(b)(3) is revised to read as follows:

Sec. 266.100 Applicability.

* * * * *

(b) * * *

(3) Hazardous wastes that are exempt from regulation under

Secs. 261.4 and 261.6(a)(3) (iv) through (vi) of this chapter, and

hazardous wastes that are subject to the special requirements for

conditionally exempt small quantity generators under Sec. 261.5 of this

chapter; and

* * * * *

[FR Doc. 94-18452 Filed 7-27-94; 8:45 am]

BILLING CODE 6560-50-P