[Federal Register Volume 59, Number 144 (Thursday, July 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-18452]


[Federal Register: July 28, 1994]


_______________________________________________________________________

Part VII





Environmental Protection Agency





_______________________________________________________________________



40 CFR Parts 261 and 266



_______________________________________________________________________



Identification and Listing of Hazardous Waste; Final Rule
ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 261 and 266

[EPA-530-Z-94-009; SWH-FRL-5022-4]


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

AGENCY: Environmental Protection Agency.

ACTION: Final rule.

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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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    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