[Federal Register Volume 61, Number 59 (Tuesday, March 26, 1996)]
[Rules and Regulations]
[Pages 13103-13106]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-7275]



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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 261

[FRL-5446-2]
RIN 2050-AE31


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

AGENCY: Environmental Protection Agency.

ACTION: Direct final rule.

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SUMMARY: EPA is correcting the text of a regulatory exclusion from the 
regulatory definition of solid waste for recovered oil which is 
inserted into the petroleum refining process. The current text of the 
exclusion contains a factual error as to the location in the refining 
process at which recovered oil can be inserted. The result of this 
error is to inappropriately restrict legitimate recycling of recovered 
oil. The corrected rule also in fact reflects the result EPA initially 
intended, which was to condition the exclusion of recovered oil on that 
oil being reinserted into the petroleum refining process at a point 
where that process removes or will remove at least some contaminants.
    In the proposed rules Section of today's Federal Register, EPA is 
proposing this identical correction and soliciting public comment on 
this correction. If adverse comments are received, EPA will withdraw 
this direct final rule and address the comments in a subsequent final 
rule. EPA will not provide additional opportunity for comment on the 
correction.

DATES: This final action will become effective on May 28, 1996, unless 
EPA is notified by April 9, 1996, that any person wishes to submit 
adverse comment. If such notification is received and EPA withdraws 
this final rule, then timely notice will be published in the Federal 
Register.

ADDRESSES: Comments and materials supporting this rulemaking are 
contained in Public Docket No. F-96-SW2F-FFFFF and are located in the 
EPA RCRA docket, Crystal Gateway #1, 1st Floor, 1235 Jefferson Davis 
Highway, Arlington, VA. 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 (703) 603-9230. The 
public may copy a maximum of 100 pages from any one regulatory docket 
at no cost. Additional copies cost Sec. .15 per page. Persons wishing 
to notify EPA of their intent to submit adverse comments on this action 
should contact Steven Silverman, Office of General Counsel (2366), 401 
M Street, S.W., Washington, D.C. 20460.

FOR FURTHER INFORMATION CONTACT: Steven Silverman, (202) 260-7716, 
Office of General Counsel at the above address.

SUPPLEMENTARY INFORMATION:

Outline of Today's Action

I. Authority
II. Background
III. Clarification of Issues Discussed in the Preamble
    A. Status of Recovered Oil from Refineries with Synthetic 
Organic Chemical Manufacturing Industry (SOCMI) Units
    B. Status of Recovered Oil from Co-Located Petroleum Refineries 
and Petrochemical Facilities
    C. Recycling of Secondary Materials Between Industries
IV. State Authority
V. 60-Day Effective Date
VI. Regulatory Requirements
    A. Executive Order No. 12866
    B. Regulatory Flexibility Act
    C. Paperwork Reduction Act
    D. Unfunded Mandates Reform 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

    In this document, EPA is correcting a significant error in the text 
of a regulatory exclusion relating to recycling of recovered oil--oil 
that has been recovered from secondary materials such as wastewater 
generated from normal petroleum exploration, refining, and transport 
activities--back into the petroleum refining process. Although the 
genesis of this error requires some detailed explanation (which appears 
below), the ultimate resolution is straightforward: the Agency intended 
to exclude from the definition of solid waste, and RCRA Subtitle C 
authority, recovered oil that is inserted into a petroleum refining 
process at a point at which the process removes or will remove at least 
some contaminants. Today's document corrects the erroneous regulatory 
text to restore this intended result.
    The rule at issue is an exclusion for recovered oil found at 40 CFR 
261.4(a)(12) (promulgated at 59 FR 38545 (July 28, 1994)). That rule 
excludes recovered oil from the definition of solid waste, and RCRA 
Subtitle C authority, provided the recovered oil is reinserted into a 
petroleum refining process ``prior to crude distillation or catalytic 
cracking.'' 40 CFR 261.4(a)(12). The purpose of the exclusion is to 
exclude from RCRA regulation recovered oil which is used as a feedstock 
in the petroleum refining process. 59 FR at 38538. Conditioning the 
exclusion on insertion into the refining process at a point where the 
process removes contaminants from the recovered oil also helps assure 
the legitimacy and safety of the activity. 59 FR at 38542.
    However, the rule's limitation on the point of reinsertion is, in 
fact, erroneously restrictive. The correct formulation is that 
reinsertion should be at, or before, any point in the petroleum 
refining process where at least some

[[Page 13104]]
contaminants are removed (i.e. separated from the matrix). Crude 
distillation and catalytic cracking are examples of such points but are 
not the exclusive locations where the refining process removes 
contaminants. See, e.g., 50 FR at 28725 (July 15, 1985).
    The regulatory history of this rule, although tangled, indicates 
that the Agency did not intend to impose the limiting condition 
(insertion before crude distillation or catalytic cracking only) in 
fact promulgated, but rather to condition the exclusion on insertion 
into any part of the refining process that removes contaminants. Since 
November 1985, EPA has exempted certain fuels resulting from refining 
of materials derived from oil-containing petroleum industry hazardous 
wastes. See 50 FR 49169, 49203 (Nov. 29, 1985) (codifying 40 CFR 
261.6(a)(viii)(B)). The accompanying preamble explained that these 
exemptions were based on the waste being inserted into a part of the 
petroleum refining process ``designed to remove contaminants in the 
normal operation of the refining process.'' 50 FR at 49169. The 
preamble further explained that the source of the test was a comparable 
statutory exemption from hazardous waste fuel labelling requirements 
for fuels produced from oil-bearing refining wastes that are inserted 
into the refining process at a point where ``contaminants are 
removed.'' 50 FR at 49169, referring to RCRA sections 3004(r)(2)(B), 
and (r)(3). As set out in the legislative history to those provisions, 
the underlying principle is that ``(r)efineries often take oily wastes 
and refining transportation wastes and reintroduce these wastes into 
the refining process where the oil component is incorporated into a 
product and contaminants are removed. Refineries should not 
automatically have to place a warning label on these fuels.'' S. Rep. 
No. 98-284, 98th Cong. 1st Sess. at 40.
    The 1994 rule at issue here meant to retain this principle by 
requiring that the recovered oil be inserted into the refining process 
``at or before a point * * * designed to remove toxic metal and organic 
contaminants * * *.'' 59 FR at 38542 (July 28, 1994). The preamble then 
incorrectly stated that this means that insertion had to be ``prior to 
crude distillation or catalytic cracking.'' Id. As noted above, this is 
factually incorrect. The refining process removes contaminants at a 
number of points after distillation and catalytic cracking, an example 
being in fractionation units located downstream of catalytic crackers. 
See letter from Ralph Colleli, Esq. to Ross Elliott, April 5, 1995; 
letter from Ralph Colleli, Esq. to Mr. Michael Shapiro, June 20, 1995.
    The 1994 regulatory text is consequently factually wrong, and 
inappropriately reduces recycling opportunities for recovered oil 
without corresponding environmental benefit. For these reasons, EPA is 
correcting the text of the exclusion by revising the first sentence to 
state that insertion of recovered oil must be into the refining process 
``at or before a point where contaminants are removed.''
    There is also one further caveat about the regulatory language. EPA 
did not extend the scope of the exclusion to include situations where 
recovered oil is inserted into a petroleum coker. 59 FR at 38542. 
Instead, EPA deferred making a final decision on that issue until a 
later rulemaking. 59 FR at 38536, 38541, 38542. In fact, EPA has 
recently proposed that petroleum coking operations be expressly 
encompassed within the scope of an expanded exclusion. 60 FR 57747, 
57796 (Nov. 20, 1995). EPA will take final action on that proposal as 
part of that separate rulemaking proceeding.
    However, because a final decision on the status of petroleum cokers 
is being made in that other rulemaking, and because petroleum cokers do 
remove contaminants from incoming materials, at this time EPA is adding 
to the amended regulatory text the qualification that insertion be into 
or before a part of the process where contaminants are removed, but not 
direct insertion to petroleum cokers. In addition, EPA wishes to 
clarify that neither the July 28, 1994 rule nor this document is 
intended to change the current regulatory status of petroleum cokers.

III. Clarification of Issues Discussed in the Preamble

    In addition to the correction discussed above, EPA wishes to 
clarify several issues discussed in the preamble to the July 28, 1994 
recovered oil rule.

A. Status of Recovered Oil From Refineries With Synthetic Organic 
Chemical Manufacturing Industry (SOCMI) Units

    The recovered oil rule, as corrected by today's document, provides 
an exclusion from RCRA regulation for oil that is recovered from 
``normal'' petroleum refinery operations and inserted prior to points 
in the petroleum refining process, other than direct insertion into a 
coker, where contaminant removal occurs (Sec. 261.4(a)(12)). Under this 
provision, oil recovered from a petroleum refinery's wastewater 
treatment system is excluded from RCRA regulation if it is inserted 
into designated refinery process points. Since promulgation of the 
recovered oil rule, EPA has learned that a number of petroleum 
refineries also operate petrochemical processing units on-site and that 
wastewater from these units is discharged into the refinery's 
wastewater treatment system. The wastewater from these units represents 
2%-12% of the total refinery wastewater volumes and rarely contains 
recoverable oil according to some petroleum industry sources. In 
response to questions from the regulated community regarding whether 
the recovered oil exclusion applies to oil recovered from petroleum 
refineries with SOCMI units on-site, EPA provides the following 
clarification.
    While EPA did not specifically address this situation in the 
recovered oil rule, the Agency intended that the exclusion apply to 
refineries with on-site petrochemical processing units. EPA views these 
SOCMI units as part of the normal petroleum refining operation. 
Therefore, the presence of these units at a petroleum refining facility 
does not preclude the refinery's eligibility for the recovered oil 
exclusion.

B. Status of Recovered Oil From Co-Located Petroleum Refineries and 
Petrochemical Facilities

    The recovered oil rule also failed to specifically address how the 
regulations apply in cases where co-located petroleum refineries and 
petrochemical facilities share the same wastewater treatment system. In 
these situations, the proximally located facilities are generally owned 
and operated by the same parent company. However, the facilities may be 
separately owned and operated in some instances. This situation 
presents essentially the same issue as that posed by the previous case 
involving on-site SOCMI units. The difference in this case is that the 
petrochemical processes are located off-site of the petroleum refining 
facility. In response to questions from the regulated community 
regarding whether the recovered oil exclusion applies to oil recovered 
from wastewater treatment systems that service both petrochemical and 
petroleum refining operations, EPA provides the following 
clarification.
    The Agency's intent in crafting the recovered oil exclusion was to 
limit its applicability to oil recovered from petroleum industry 
sources for reasons explained in the preamble to the recovered oil 
rule. 51 FR 38539. Accordingly, the exclusion specifically does not 
apply to oil generated from non-petroleum industry operations. The

[[Page 13105]]
exclusion does, however, apply broadly to recovered oil generated from 
both on- and off-site sources within the petroleum industry (e.g., the 
exclusion applies to recovered oil from petroleum exploration and 
production activities). It is EPA's position that, in cases where 
petrochemical and petroleum refining operations are co-located and 
share a common wastewater treatment system, the petrochemical 
operations are appropriately considered part of normal petroleum 
refining for purposes of the recovered oil exclusion. In these 
situations, given the common wastewater treatment system and the 
predominance of petroleum refining wastewater, the integration between 
the two facilities is such that the petrochemical facility falls within 
scope of the exclusion. The recovered oil exclusion therefore applies 
to oil recovered from a wastewater treatment system that a refinery 
shares with a co-located petrochemical facility. The exclusion does 
not, however, apply to recovered oil from a petrochemical facility that 
is sent to a petroleum refinery for recycling via any route other than 
a shared wastewater treatment system (e.g., via truck, rail, etc). 
However, in a separate document published in the Federal Register on 
November 20, 1995 (60 FR 57747), EPA is proposing to expand the 
exclusion to cover recovered oil that is sent from petrochemical 
facilities to co-located or commonly owned refineries for recycling by 
other means of transport.

C. Recycling of Secondary Materials Between Industries

    With the above exceptions, the recovered oil exclusion does not 
extend to recovered oil from non-petroleum industries. As explained in 
the preamble to the July 28, 1994 rule, ``such an extension is beyond 
the scope of the recovered oil rule. It is also beyond the scope of 
judicial decisions construing the definition of solid waste'' which 
indicated that, ``when one industry sends its residual materials to 
another industry for recycling, the initial industry can be considered 
to have discarded them.'' (emphasis added) 59 FR 38,539, July 28, 1994. 
EPA wishes to clarify that this preamble discussion was not intended to 
modify in any way the pre-existing state of law regarding EPA's 
regulatory jurisdiction over recycling. More specifically, EPA wishes 
to make clear that this discussion was not meant to imply that all 
secondary materials that are sent off-site for recycling must be 
considered to be discarded materials in all situations. Rather, the 
intent of this discussion was merely to: (1) explain the court's and 
EPA's position that recycling of secondary materials (on- or off-site) 
may involve an element of discard and may therefore be subject to 
regulation under RCRA subtitle C; and (2) make clear that the scope of 
the recovered oil rule is limited to determining the Agency's 
jurisdiction only over recycling that occurs within the petroleum 
refining industry.

IV. State Authority

    Under Section 3006 of RCRA, EPA may authorize qualified States to 
administer and enforce the RCRA program within the State. Following 
authorization, EPA retains enforcement authority under Sections 3008, 
3013, and 7003 of RCRA, although authorized States have primary 
enforcement responsibility. The standards and requirements for 
authorization are found in 40 CFR Part 271.
    Today's amendments are not imposed pursuant to the Hazardous and 
Solid Waste Amendments of 1984 (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.
    Today's direct final rule eliminates a factual error, an error that 
inappropriately restricts the location in the refining process at which 
recovered oil can be inserted for the legitimate recycling of the 
recovered oil. Therefore, today's rule restores the Agency's intended 
result to exclude from the definition of solid waste, and RCRA Subtitle 
C authority, recovered oil that is inserted into a petroleum refining 
process at a point at which the process removes or will remove at least 
some contaminants. The effect of today's direct final rule is therefore 
considered to be less stringent than the existing federal standards. 
Authorized States are only required to modify their programs when EPA 
promulgates federal regulations that are more stringent or broader in 
scope than the existing federal regulations. Therefore, States that are 
authorized for the July 28, 1994 rule are not required to modify their 
programs to adopt today's rule. However, EPA strongly urges States to 
do so. EPA's authorization guidance to States will link the July 28, 
1994 rule and today's final amendments.
    Given the minor scope of today's amendment, those States that are 
authorized for the July 28, 1994 rule may submit an abbreviated 
authorization revision application to the Region for today's amendment. 
This application should consist of a letter from the State to the 
appropriate Regional office, certifying that it has adopted provisions 
equivalent to and no less stringent than today's final rule (see the 
December 19, 1994, memorandum from Michael Shapiro, Director of the 
Office of Solid Waste, to the EPA Regional Division Directors that is 
in the docket for today's rule). The State should also submit a copy of 
its final rule or other authorizing authority. Revisions to the revised 
Program Description, Memorandum of Agreement, and Attorney General's 
statement are not necessary (see 40 CFR 271.21(b)(1)). EPA expects that 
this simplified process will expedite the review of the authorization 
submittal for this rule.

V. 60-Day Effective Date

    Because the regulatory community does not need 6 months to come 
into compliance with this rule, EPA finds, pursuant to RCRA section 
3010(b)(1), that this rule can be made effective in less than six 
months.

VI. Regulatory Requirements

A. Executive Order 12866

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), the 
Agency must determine whether this 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 lead to a rule that may:
    (1) have an annual effect on the economy of $100 million or more, 
or adversely and materially affect a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or State, local, or tribal governments or communities;
    (2) create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) materially alter the budgetary impact of entitlement, 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 amendment to the final rule is not 
a ``significant regulatory action'' under the terms of the Executive 
Order and is therefore not subject to OMB review.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601-602, requires that 
Federal agencies examine the impacts of their regulations on ``small 
entities''. If a

[[Page 13106]]
rulemaking will have a significant impact on a substantial number of 
small entities, agencies must consider regulatory alternatives that 
minimize economic impact.
    EPA believes that this amendment will have negligible impact on any 
small entity because it expands the terms of an exclusion from 
regulation. In addition, the underlying rule itself was deregulatory 
and so did not have significant adverse economic impact on small 
entities. See 59 FR 38545. 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 
this amendment reduces the scope of the RCRA 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.

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), P.L. 
104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, EPA 
generally must prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with ``Federal mandates'' that 
may result in expenditures to State, local, and tribal governments, in 
the aggregate, or to the private sector, of $100 million or more in any 
one year. When a written statement is needed for an EPA rule, section 
205 of the UMRA generally requires EPA to identify and consider a 
reasonable number of regulatory alternatives and adopt the least 
costly, most cost-effective or least burdensome alternative that 
achieves the objectives of the rule. The provisions of section 205 do 
not apply when they are inconsistent with applicable law. Moreover, 
section 205 allows EPA to adopt an alternative other than the least 
costly, most cost-effective or least burdensome alternative if the 
Administrator publishes with the final rule an explanation why that 
alternative was not adopted. Before EPA establishes any regulatory 
requirements that may significantly or uniquely affect small 
governments, including tribal governments, it must have developed under 
section 203 of the UMRA a small government agency plan. The plan must 
provide for notifying potentially affected small governments, giving 
them meaningful and timely input in the development of EPA regulatory 
proposals with significant Federal intergovernmental mandates, and 
informing, educating, and advising them on compliance with the 
regulatory requirements.
    Today's rule contains no Federal mandates (under the regulatory 
provisions of Title II of the UMRA) for State, local, or tribal 
governments or the private sector because it imposes no enforceable 
duties on any of these governmental entities or the private sector. The 
rule merely corrects a factual error in the regulatory text of the 
regulatory definition of solid waste. In any event, EPA has determined 
that this rule does not include a Federal mandate that may result in 
estimated costs of $100 million or more to either State, local, or 
tribal governments in the aggregate, or to the private sector in any 
one year. Thus, today's rule is not subject to the requirements of 
sections 202 and 205 of the UMRA. Similarly, EPA has determined that 
this rule contains no regulatory requirements that might significantly 
or uniquely affect small governments.

List of Subjects in 40 CFR Part 261

    Environmental protection, Hazardous waste, Solid waste, Petroleum, 
Recycling.

    Dated: March 19, 1996.
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. Section 261.4 is amended by revising paragraph (a)(12) 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) at or 
before a point (other than direct insertion into a coker) where 
contaminants are removed. 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 waste 
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.
* * * * *
[FR Doc. 96-7275 Filed 3-25-96; 8:45 am]
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