On a Tightrope Over Sludge: EPA Re-Revises Its Waste Rules Regarding Biomass and Other Alternative Fuels

December 19, 2011

On Dec. 2, EPA issued proposed rules elaborating on its definition of Non-Hazardous Secondary Materials (NHSM) in conjunction with revisions to its Commercial and Solid Waste Incinerator Unit (CWISW) regulations. By this proposal, EPA intends to clarify the types of alternative fuels, including biomass, that can be burned for energy recovery without the combustion unit being characterized as a solid waste incinerator and subject to more stringent emission controls. As a result, the proposal provides a significant opportunity for generators and users of alternative fuels to obtain EPA’s determination that those fuels are not solid wastes and can be combusted for energy recovery in traditional boilers.

These revisions arise from a fundamental conflict between the EPA’s desire to encourage the use of broader categories of fuels for energy generation and the tortuous definition of “solid waste” in the Resource Conservation and Recovery Act (RCRA). Under the Clean Air Act (CAA), any boiler using “solid waste” as fuel must be regulated as a “solid waste incinerator,” thus subjecting the boiler to more stringent compliance standards than other industrial boilers. Because the EPA’s regulatory definition of “solid waste” in its hazardous waste rules includes recycled materials burned for energy recovery, the EPA faced a significant quandary in how it could promote the use of nonfossil fuels like biomass.

In 2005 EPA originally proposed that an industrial boiler operated for thermal energy recovery could not be a solid waste incinerator, even if it burned material characterized as industrial or commercial waste. In NRDC v. EPA, 489 F. 3d 1250 (D.C. Cir. 2007) the U.S. Court of Appeals for the D.C. Circuit struck down this approach, holding that the EPA could not ignore the specific language of the CAA requiring facilities that burned “solid waste” to be regulated as incinerators.

After years of further discussion, the EPA issued final rules in March 2011 (76 Fed. Reg. 15465), which sought to exclude from the solid waste definition a category of Non-Hazardous Secondary Materials. EPA noted that there were a number of materials that had consistently been used for fuels (ranging from wood to coke oven gas), as well as a growing number of materials that were used as fuels due to improvements in technology and the evolving renewable energy market, including biomass and shredded tires. EPA reasoned that the former category of “traditional fuels” could not be considered “discarded” (and thus could not be solid wastes) because of their value and utility. EPA applied this same reasoning to the latter category of “alternative fuels.” In its regulations, EPA developed “legitimacy criteria” to measure whether the materials in question were actually being handled, used and valued as “traditional fuels.” While EPA sought to draw a fine line between groups of materials, the resulting ambiguities generated grave concerns for a number of suppliers and users of both traditional and alternative fuels. On Oct. 12, EPA Administrator Lisa Jackson issued a letter to Maine Sen. Olympia Snowe to quell the dispute, acknowledging that EPA intended to clarify the extent of the rules.

Not surprisingly, the Dec. 2 proposal follows the outline described in Administrator Jackson’s letter. EPA expanded its definition of “clean cellulosic biomass” to include a broader, if still not exhaustive, list of additional items, including agricultural-derived biomass, hogged fuel, wood pellets, untreated pallets, urban wood (i.e., forestry debris from urban settings), corn stover and other biomass crops used specifically for the production of cellulosic biofuels, including energy cane, fast-growing grasses and byproducts of ethanol natural fermentation.

As part of this expansion EPA also extended the rule to specific other crop residues, including vines, orchard trees, hulls seeds, spent grains, cotton products, corn and peanut production residues, and rice milling and grain elevator operation residue. It also expanded one type of NHSM that had been categorically excluded from being listed as a solid waste. EPA previously identified as a NHSM used tires managed under existing tire recovery programs, but modified the exclusion to include tires and off-spec tires from tire manufacturing processes as well. To cover all bases, EPA further proposed to set up a rulemaking process to allow individuals to propose additional substances to be categorically excluded based on a showing that these were not discarded materials but closer to traditional fuels.

Finally, in what may be the most significant change, EPA expanded the criteria used to evaluate whether the material being considered as a NHSM contained contaminants, which made it more like a waste and less like a fuel. EPA had previously identified contaminant content as one of the relevant “legitimacy criteria,” and required a showing that a material had a lower level of contaminants than a comparable fuel, thereby demonstrating the material was more like a fuel than a waste. EPA’s new proposal allows comparisons based on groups of contaminants. If a questioned material contains a particular volatile organic compound (VOC), the person evaluating the material would be able to compare its total VOC content to a traditional fuel rather than the level of the individual VOC. Moreover, the person evaluating the material could compare it to any other fuel that the applicable combustion unit was designed to burn rather than the actual fuel it was burning or was permitted to burn. Both of these changes allow for a far greater range of comparisons, ensuring a stronger probability that the material would be deemed a fuel and not a solid waste.

Promoters of nonfossil or sustainable fuels should review this new EPA proposal closely to determine whether it addresses the concerns caused by EPA’s prior rule, which could have severely limited the use of the fuel by requiring it to be burned in a solid waste incinerator. In addition, promoters of fuels not addressed by the proposal should consider submitting comments to ensure either that EPA excludes their fuel from being a solid waste or to lay the groundwork for a subsequent petition pursuant to the EPA’s proposed exclusion process. Comments will be required to be submitted within 60 days of the date of publication of the proposal in the Federal Register, which should be very soon.