Project XL

(1) Waste and Feed Stream Analysis Plan
(2) Residue Analysis Plan
(3) Coal Feed Rate Plan

Messrs. Kessler, Fogarty, and Patton
March 11, 1996
Page 2

Each of these plans has been submitted, however, only the Residue Analysis Plan has been approved by EPA.

The BIF rules set interim status and permit standards to control organic emissions, particulate matter emissions, metals emissions, and hydrogen chloride and chlorine gas emissions. Eastman has demonstrated in numerous Certification of Compliance test reports since the promulgation of the BIF rules in early 1991 that these applicable emission standards are met. The issues addressed by the CACO relate to a difference of opinion between Eastman and EPA on the definition of compliance with the BIF rules specifically relating to frequencies of waste, feedstream, and residue analyses and methodology for measuring mass coal feed rates and metals feedrates.

These issues, in combination with the BIF rules, the pending RCRA Part B permit for boilers to be permitted to burn hazardous wastes, and anticipated future rulemakings under RCRA and the CAA, are causing Eastman to consider costly alternatives that yield little or no environmental benefit. Management of wastes, including a biosludge stream (classified as a hazardous waste) from our wastewater treatment system, is critical to the operation of our manufacturing processes and burning of these wastes in coal-fired industrial boilers is a cost-effective, environmentally sound and safe practice. For these reasons, Eastman is considering a project to dry the biosludge in order to concentrate it, and burn it in only one or two boilers at a time. Although this alternative is a costly solution for Eastman, it yields regulatory flexibility by simply removing the emissions from burning coal in the boilers not burning RCRA wastes from the compliance determinations. However, it will yield no benefit to the environment since all of the boilers will continue to operate to meet our steam and electric power demands and the same amount of biosolids will be burned in the boilers.

Eastman's Anticipated XL Proposal
Our understanding of Project XL is that it is designed to allow for greater regulatory flexibility in exchange for a commitment to a higher level of environmental results. The XL project Eastman is considering would allow flexibility in meeting the compliance requirements of the BIF rules as well as meeting the CACO requirements (which further articulate EPA's Interpretation of the BIF rules specific to Eastman). Our proposal, as we currently envision it, would request (1) a site-specific conditional delisting of the biosludge waste stream as a RCRA hazardous waste and (2) greater regulatory flexibility as to how emissions from burning coal will be addressed in the Part B permit. In exchange for this regulatory relief, Eastman would commit to an environmentally beneficial project. Eastman is currently developing possible options to offer as an environmentally beneficial project subject to stakeholder input and agreement within the XL process. A successful XL project would obviate much of the CACO requirements, have a large impact on the RCRA Part B permitting process, and provide real and substantial environmental benefits.

Compliance Screening Process for Prolect XL

Upon a review of a policy memorandum issued by Mr. Steve Herman, Assistant Administrator for Office of Enforcement and Compliance Assurance dated December 19, 1995 and entitled "Compliance Screening Process for Project XL", and subsequent discussions with XL staff, a concern has been raised that this policy may prohibit Eastman from pursuing an XL project until the requirements of the CACO are fully implemented. Shown below is the pertinent excerpt from that memorandum:

"In addition, and as we discussed with the Administrator, an XL proposal which includes a facility involved in a pending enforcement matter should be held in abeyance until such time as the enforcement action is resolved. While we do not believe that it is appropriate to use resolution of the enforcement action as an inducement for participation in Project XL, if both the Agency and the XL participant are simultaneously in a cooperative and adversarial posture

Messrs. Kessler, Fogarty, and Patton
March 11, 1996
Page 3

with respect to the same facility, both the Agency and the XL participant would be placed in a difficult (if not untenable) position. Neither the Agency's nor the XL participant's interests are served where an XL project would conflict or disrupt an enforcement action, or vice-versa."

Eastman does not view the CACO as a "pending enforcement matter" as such term is used in Mr. Herman's memorandum. Rather, the enforcement provisions of the CACO have been completed, with the remaining issues to be addressed focusing an meeting and implementing a compliance schedule. However, we understand there may be some ambiguity since the CACO requires submittal and approval of certain plans and implementation of those plans once they are approved and since those plans have not been implemented. Eastman plans to request that the approval of and implementation of the CACO plans, along with any call of our Part B permit application, be held in abeyance while we pursue the XL process with the stakeholders. Our intent would be to submit our XL application within a short time period after receiving these commitments from EPA and the state agency. The CACO requirements can be addressed by EPA and Eastman agreeing to reserve approval of the two plans not yet approved by EPA and delay implementation of the Residue Analysis Plan. This can be accomplished through an amendment to the CACO. In the event the XL project is not approved or is unsuccessful, the approval and implementation of the plans required under the CACO and the Part B permit application process would proceed. Eastman believes the request is an efficient use of both parties' resources since the plans awaiting approval will require significant revision if the XL project is successful.

Request for Guidance
Eastman requests that you review the above-mentioned policy memorandum in light of the site specific facts presented in this letter and provide guidance as to whether EPA would be able to consider an Eastman XL proposal while holding in abeyance implementation of the plans required under the CACO. Given the fact that much of the CACO requirements will be obviated if the XL project is successful, the delay in implementing the CACO plan requirements would pose no harm to human health and the environment.

Upon receipt of affirmative guidance that the CACO plans could be placed in abeyance while we pursue an XL project, it is Eastman's intent to send letters to both Region IV and the State of Tennessee committing to submittal of an XL application and requesting a deferral of both implementation of the CACO plans and the Part B call letter.

Eastman is appreciative of the opportunity to participate in innovative initiatives such as Project XL and we look forward to hearing your response. If you have any questions regarding this request, please contact Mr. Stephen R. Gossett of our Environmental Affairs staff at (423) 229-2327.




Mr. Harry H. Holliman
President, Tennessee Eastman Division
Eastman Chemical Company

cc: Mr. Wayne Scharber, Deputy Commissioner Tennessee Department of Environment and
Conservation, 15th Floor, L & C Tower, 401 Church Street, Nashville, TN 37243-1541