May 6, 1994 Randolph Hill, Esquire Office of General Counsel U.S. Environmental Protection Agency 401 M Street, S.W. Washington, D.C. 20460 Re: Edison Electric Institute, et al. v. U.S. Environmental Protection Agency, No. 93-1474 (D.C. Cir.) Dear Randy: Outlined below are the outstanding issues in the above referenced litigation involving the Edison Electric Institute's ("EEI") challenge to EPA's May 3, 1993 used oil technical amendments and EEI's proposals for resolving these issues. After you have had a chance to review the same, we would like to meet with EPA to try to resolve this matter. I. Management of Materials Containing Used Oil That is Not Free-Flowing One of EEI's major issues involves EPA's clarification that materials containing used oil from which used oil has been removed to the extent possible such that "no visible signs of free-flowing oil remain in or on the material" are not used oil and are not subject to the Part 279 used oil management standards. 58 Fed. Reg. 26420, 26425 (May 3, 1993) (to be codified at 40 C.F.R. § 279.10(c)). Expressly excluded from this provision are materials "containing or otherwise contaminated with used oil that are burned for energy recovery." Id. (emphasis added). In other words, materials that contain or are contaminated with used oil that are burned for energy recovery are regulated as used oil fuel, even if the used oil contained in the material is not "free-flowing." This provision raises two issues on which EEI seeks clarification. ----------------------------------------------------------------- Randolph Hill, Esquire May 6, 1994 Page 2 A. Regulatory Status of Soils A common utility practice for managing soil containing trace amounts of used oil is to burn the soil in utility boilers. These materials do not contain free-flowing used oil and are not burned for energy recovery. Rather, combustion simply offers the most practical and effective management option for these non-hazardous materials. Because the soils are not burned for energy recovery, they fall within the general exclusion from the definition of used oil for materials that do not contain free-flowing used oil and are not subject to regulation under Part 279. We believe that the Agency concurs in this position, but would like confirmation by EPA of the following points: 1. Soil containing used oil that is not free-flowing (e.g., soil that contains used oil from a spill) and that is not burned in an industrial boiler is not used oil and is not subject to regulation under Part 279; 2. Soil containing used oil that is not free-flowing, has a fuel value of less than 5,000 Btu (EPA's benchmark for determining whether a material has fuel value), and is burned in an industrial boiler or furnace, is not used oil fuel and is not subject to Part 279 because it is not being burned for energy recovery; and 3. Soil containing used oil that meets the "specification" limits in 40 C.F.R. § 279.11 is not subject to the Part 279 requirements (with the exception of the on-specification marketer requirements in §§ 279.72-.74). B. Regulatory Status of Absorbent Materials A related issue involves the burning of absorbent materials used to cleanup used oil spills. After the cleanup process is complete, these absorbent materials -- e.g., commercial booms/pads -- are often burned in utility boilers. As part of the marketing of these products, the absorbents are intentionally manufactured using ingredients (e.g., polypropylene) that have a fuel value greater than 5,000 Btu/lb so that they can be burned as fuel after the cleanup ----------------------------------------------------------------- Randolph Hill, Esquire May 6, 1994 Page 3 is complete.1 This option makes economic and environmental sense because it allows companies engaged in spill response activities to recycle the cleanup materials in their boilers as a supplemental fuel, thus avoiding excessive land disposal costs and the uncertainties associated with any off-site management of waste materials. EEI is concerned, however, that absorbent materials managed in the above manner could inadvertently be classified as "used oil fuel" under the Agency's technical amendments simply because they are being recycled as a fuel, even though the primary fuel value of the material is contained in the commercial absorbent. We do not believe this is EPA's intent since such an erroneous classification would sharply curtail an environmentally sound management practice and most likely would result in spill cleanup materials being land disposed as opposed to being recycled as supplemental fuel. EEI therefore seeks clarification from EPA that such absorbent materials are not "used oil" because (1) the oil is not free-flowing, and (2) the material with the fuel value is the absorbent material itself since it was intentionally manufactured to be burned as a fuel after the cleanup process is complete. Confirmation of this point is important to EEI members because the recycling of spill cleanup absorbent materials as a supplemental fuel has proven to be a cost-effective and environmentally sound management option that should not be discouraged. EEI believes that an interpretive letter clarifying the above two points regarding the regulatory status of soils and absorbent materials would be satisfactory. II. Application of Used Oil to Coal Piles EEI also seeks clarification regarding the regulatory consequences of applying used oil to coal piles or into coal feed hoppers. This practice is conducted by a number of electric utilities because applying used oil to coal, which is then fed into a boiler, is often the most practical method for injecting ________________________ 1 Indeed, certain commercial products are marketed as having a heating value ranging from 10,000 Btu/lb to 20,000 Btu/lb. ----------------------------------------------------------------- Randolph Hill, Esquire May 6, 1994 Page 4 the used oil into the boiler. EEI raises this issue because it is aware of language in the preamble to the September 10, 1992 final used oil rules that states that the application of used oil to coal in a rail car for purposes of dust suppression converts the used oil/coal mixture to used oil fuel. See 57 Fed. Reg. 41566, 41583 (Sept. 10, 1992). While EEI is not familiar with the specific circumstances regarding this particular practice, we seek confirmation that this result does not apply in cases where used oil is applied to a coal pile or a feed hopper for purposes of feeding the used oil into the boiler and thus does not convert the entire coal pile or into "used oil fuel," with all the attendant consequences of used oil storage requirements (e.g., storage in tanks or containers with secondary containment). Such a reading of the regulations would be nonsensical. It would be virtually impossible to attempt to manage an entire electric utility coal pile in a container or tank simply because small amounts of used oil have been applied to the coal pile prior to the coal being inserted into the boiler.2 Indeed, one EEI member reports that its coal piles range in size from five to 50 acres and have a maximum height of four stories. We expect that these numbers are representative of coal piles throughout the industry. Aside from being completely unworkable, this interpretation is wholly unnecessary from an an environmental perspective. While there is no uniform used oil to coal ratio, based on discussions with EEI member companies, the amount of used oil that could potentially be applied to a coal pile is minute and inconsequential when compared to the total volume of the coal pile. Moreover, even for these extremely small volumes, the coal acts as an effective absorbent of oil and therefore makes it highly unlikely that any material volume of such oil would pose a run-off concern. Even assuming such effects could be identified, any possible run-off would be adequately addressed by a facility's coal pile runoff controls, which are often incorporated into a facility's NPDES permits. Finally, where such application takes place, it occurs on the active portion of the coal pile where the coal is generally inserted into ________________________ 2 EEI notes that this issue is being raised only in the context of "off-specification" used oil being applied to a coal pile since "specification" used oil that is burned for energy recovery is not subject to the 40 C.F.R. Part 279 standards. See id. at § 279.11. ----------------------------------------------------------------- Randolph Hill, Esquire May 6, 1994 Page 5 the boiler within a week, if not on the same day. Again, this practice minimizes any possibility of run-off. EEI recognizes that if off-specification used oil fuel is applied to a coal pile prior to its injection into a boiler, the owner/operator of the facility is a used oil burner and must comply with all applicable used oil burner requirements, including ensuring that the boiler is qualified to burn off-specification used oil fuel. Furthermore, prior to its application onto the coal pile, the used oil must be stored in accordance with applicable storage requirements. EEI seeks confirmation only of the position that the mere application of used oil onto a coal pile or into a feed hopper does not convert the entire pile or hopper into used oil fuel, thus subjecting the pile or hopper to the used oil storage requirements. III. The Regulatory Status of Used Oil Containing PCBs Finally, EEI believes that in attempting to clarify the applicability of the TSCA and EPA regulations to certain used oils containing PCBs, EPA's technical amendment to 40 C.F.R § 279.10(i) could be mistakenly construed as sweeping all used oils containing PCBs into the Part 279 program. EEI does not believe this was EPA's intent since used oil containing greater than 50 ppm PCBs is comprehensively regulated under TSCA and therefore was expressly excluded from the Part 279 program in the September 10, 1992 used oil rules. EEI does not believe that EPA intended to eliminate this important determination through a "technical clarification." Rather, EEI believes that what EPA was attempting to do in the May 1992 technical correction was to clarify that used oils containing between 2 ppm and 50 ppm PCBs that are burned for energy recovery are subject to both the TSCA § 761.20(e) rules and the applicable Part 279 rules governing the burning of used oil fuel under RCRA. As EPA explained in the preamble, the Agency mistakenly excluded this category of used oil from the Part 279 rules altogether, and therefore in the May 1992 technical correction was simply attempting to reinstate the pre-existing RCRA rules that applied to these used oils prior to the promulgation of the new Part 279 rules (i.e., the former 40 C.F.R. Part 266 used oil rules, now recodified at 40 C.F.R. Subparts G & H (applicable to burners and marketers of used oil fuel)). The problem, however, is that EPA's technical amendment to 40 C.F.R. § 279.10(i) could be construed as sweeping far broader than simply addressing used oil containing between 2 ppm and 50 ppm PCBS. The former regulation -- promulgated on September 10, 1992 -- provided that "PCB- ----------------------------------------------------------------- Randolph Hill, Esquire May 6, 1994 Page 6 containing used oil regulated under part 761 [of TSCA] is exempt from regulation under [Part 279]." The amended regulatory language, however, provides that [i]n addition to the requirements of 40 C.F.R. Part 279, marketers and burners of used oil who market used oil containing any quantifiable level of PCBs are subject to the requirements found at 40 C.F.R. § 761.20(e). 58 Fed. Reg. at 26425 (emphasis added). Because there is no qualification on the type of used oil addressed under this regulation, the rule could be mistakenly construed as completely eliminating the exclusion from the Part 279 program for all used oil containing PCBs, specifically used oil containing greater than 50 ppm PCBs. EPA has made clear, however, that such used oils are not subject to regulation under RCRA. Indeed, in the preamble to the September 10, 1992 rule, EPA stated that [t]he manufacture, use, import, and disposal of ... (PCBs) in used oils are controlled under ... (TSCA). TSCA controls the manufacture, import, use, and disposal of oils containing over 50 ppm PCBs. In addition, TSCA requires reporting of any spill of material containing 50 ppm or greater PCBs, into sewers, drinking water, surface water, grazing lands, or vegetable gardens .... Note that used oils containing less than 50 ppm of PCBs are covered under RCRA. 57 Fed. Reg. at 41569 (emphasis added). Further, in direct response to comments on this issue, EPA explained during the rule making that [u]sed oils containing greater than 50 ppm PCBs are subject to TSCA regulation, rather than RCRA regulation. Thus, management requirements currently in place under TSCA supersede the newly promulgated used oil management standards if the used oil contains PCBs at a concentration of greater than 50 ppm. EPA Public Comment and Response on Used Oil Proposed Rule: General Issues (Nov. 29, 1985), G. 10 (Relationship to Other EPA Programs - TSCA) at comment UO 004 (emphasis added). Thus, it has always been EPA's position that used oil containing between 2 ppm and 50 ppm PCBs is regulated under ----------------------------------------------------------------- Randolph Hill, Esquire May 6, 1994 Page 7 applicable provisions of both TSCA and RCRA, while used oil containing greater than 50 ppm PCBs is regulated exclusively under TSCA. In view of the detailed consideration given this issue during the development of the September 1992 used oil rules, EEI is confident that EPA was not attempting to reverse this position through its May 3, 1992 technical amendment. Nonetheless, because the new regulatory language could possibly be construed in this manner by the states adopting the Part 279 rules, EEI requests that EPA clarify this position as soon as possible in writing. Specifically, EEI requests that EPA clarify that the purpose of the technical amendment to 40 C.F.R. § 279.10(i) was to clarify that used oil fuel containing between 2 ppm and 50 ppm PCBs is subject to both applicable Part 279 rules (including 40 C.F.R. Subparts G and H), in addition to the TSCA controls under 40 C.F.R. § 761.20(e). EPA should also confirm that used oil containing greater than 50 ppm PCBs is not subject to the Part 279 program. * * * * * Please call me after you have had an opportunity to review the above issues. We look forward to meeting with EPA staff shortly to resolve these matters. Sincerely yours, Douglas H. Green Counsel to the Edison Electric Institute cc: Eileen T. McDonough, Esq.