Rule Framework

1. Overview of the NHSM RuleBiomass Power Association &California Biomass Energy Alliance Susan BodineMarch 22, 2013

2. Rule Framework • Non-hazardous secondary materials NHSM are wastes when combusted for energy recovery unless: • The combustor is the generator and can demonstrate that the combustion meets EPA’s legitimacy criteria. • The combustor can demonstrate that the NHSM has been processed from a discarded material and the combustion meets EPA’s legitimacy criteria. • The combustor is not the generator and can demonstrate that EPA has granted a petition agreeing that the NHSM meets the legitimacy criteria and is not a waste even though it is combusted by a third party. • EPA has promulgated a rule that identifies the NHSM as a non-waste fuel. • The NHSM Rule does not apply to traditional fuel.

3. What is “Traditional Fuel?” • “Materials produced as fuels and are unused products that have not been discarded, including:” • Fuels that have been historically managed as valuable fuel products rather than wastes, including “cellulosic biomass (virgin wood),” and • Alternative fuels developed from virgin materials that can now be used as fuel products. • EPA’s list of “alternative fuels” includes some secondary materials: • On-specification used oil • Currently mined coal refuse • Clean cellulosic biomass

4. What is “Clean Cellulosic Biomass?” • Clean Cellulosic biomass is defined as residuals that are “akin to traditional cellulosic biomass.” Includes: • agricultural and forest-derived biomass (e.g., green wood, forest thinnings, clean and unadulterated bark, sawdust, trim, tree harvesting residuals from logging and sawmill materials, hogged fuel, wood pellets, untreated wood pallets); • urban wood (e.g., tree trimmings, stumps, and related forest-derived biomass from urban settings); • corn stover and other biomass crops used specifically for the production of cellulosic biofuels (e.g., energy cane, other fast growing grasses, byproducts of ethanol natural fermentation processes); • bagasse and other crop residues (e.g., peanut shells, vines, orchard trees, hulls, seeds, spent grains, cotton byproducts, corn and peanut production residues, rice milling and grain elevator operation residues); • wood collected from forest fire clearance activities, • trees and clean wood found in disaster debris, • clean biomass from land clearing operations, and • clean construction and demolition wood.

5. What Does “Clean Biomass” Mean? • Clean biomass is biomass that does not contain contaminants at concentrations not normally associated with virgin biomass materials. • Clean construction and demolition wood is wood that is “clean”before processing. For example, dimensional lumber.

6. What Are EPA’s “Legitimacy Criteria” For Fuels? Combustion of a NHSM is “legitimate” if the NHSM is: • Managed as a valuable commodity; • Has meaningful heating value and is used as a fuel in a combustion unit that recovers energy; • and • Has contaminants or groups of contaminants at levels that are lower than or comparable to the traditional fuel that the unit is designed to burn.

7. What is “Management as a Valuable Commodity?” • The storage of the non-hazardous secondary material prior to use must not exceed reasonable time frames. • This is intended to be a flexible standard to allow the accumulation of NHSM to be cost-effective. A combustor should document the “reasonable time frame” selected and the basis for it. • Where there is an analogous fuel, the non-hazardous secondary material must be managed in a manner consistent with the analogous fuel or otherwise be adequately contained to prevent releases to the environment. • The “analogous fuel” is the traditional fuel that the NHSM replaces and that has similar physical and chemical properties. • If there is no analogous fuel, the non-hazardous secondary material must be adequately contained so as to prevent releases to the environment. • EPA expects NHSM to be managed as a valuable fuel so “adequate” containment means “adequate” (not perfect) prevention of releases, considering the nature and toxicity of the material.

8. What is “Meaningful” Heating Value? • If the fuel value is at least 5000 Btu on an as-fired basis you can presume that this criterion is met. • If the Btu value is less than 5000, the combustor can demonstrate that the NHSM has meaningful heating value by showing that the energy recovery unit can cost-effectively recover meaningful energy from that NHSM. Examples include: • Cost savings from not having to purchase a traditional fuel. • Whether the combustor paid for the NHSM. • Whether the NHSM can self-sustain combustion • Whether the boiler using the NHSM is producing energy that is sold for a profit.

9. What is a “Contaminant?” • Contaminants are pollutants listed under section 112(b) and 129(a)(4) of the Clean Air Act, measured as concentrations in the NHSM before it is combusted, as well as chlorine, fluorine, nitrogen and sulfur because they are precursors to listed pollutants. • Precursors are not contaminants if the NHSM is used as an ingredient. • Precursors are not contaminants if the listed pollutant will not form the precursor of concern. For example, a low NOx burner will not form nitrogen oxide from nitrogen. • The definition also excludes HCl, Cl2, HF, NOx SO2, fine mineral fibers, PM, coke oven emissions, opacity, diazomethane, white phosphorus, and titanium tetrachloride because EPA believes they are unlikely to be found in NHSM. • A list of contaminants is found in table 8 of the proposed rule published in the December 23, 2011, Federal Register.

10. What is a “group of contaminants?” • When comparing contaminants in NHSM to contaminants in traditional fuels, a combustor may group the contaminants in both fuels, instead of making a comparison on a contaminant by contaminant basis. • Contaminants may be grouped if they share physical and chemical properties that influence their behavior in a combustion unit. • Grouping may be based on properties such as volatility (such as separate groupings of volatile, semi-volatile, and low-volatile metals), on how the contaminant is regulated (such as a grouping of all volatile and semi-volatile hydrocarbons that are regulated as CO under CAA regulations). • Elements cannot be grouped. • Suggested groupings are found in the December 23, 2011 proposed rule.

11. What is a Comparable Level of a Contaminant? • “Comparable” means “within a small acceptable range.” • However, recognizing the variability of contaminant levels in traditional fuels the comparison can be made at any point within a range of contaminant levels as long as the comparison is “apples to apples.” • A mean value in traditional fuel can be compared to a mean value in the NHSM. • The highest value in traditional fuel can be compared to the 90% UPL in the NHSM.

12. What Data Can You Use? • A combustor can use EPA’s data on contaminants in traditional fuels (which includes some international data). • If a combustor uses other data on traditional fuels, it must be from U.S. sources unless EPA determines there is only minimal U.S. data and EPA has no reason to believe the international sources would be significantly different. • A combustor can use process knowledge for determining what contaminants are present in NHSM. • A supplier certification does not provide a safe harbor: “While fuel suppliers may provide their customers with documentation supporting a legitimacy determination, persons who burn NHSMs are ultimately responsible for the materials burned at their units.”

13. How Do You Identify a Traditional Fuel That the Unit is “Designed to Burn?” • You can compare the contaminant levels in NHSM to any traditional fuel that the combustion unit is physically able to burn. • The unit needs a delivery mechanism so that the traditional fuel that is used for contaminant comparison purposes could be delivered to the combustion zone of the unit. • The unit must be able ensure a traditional fuel used for comparison purposes would be well mixed and could keep flame temperatures within unit specifications. • The comparison is hypothetical. • The unit does not need to be permitted to burn that traditional fuel. • The unit does not need to actually burn that traditional fuel.

14. Will EPA Help With A “Self-Determination?” • EPA will review a fact pattern and data set and will provide persons with “comfort letters.” • In a “comfort letter,” EPA agrees based on the facts and data provided demonstrate that the combustion of a NHSM meets EPA’s legitimacy criteria. • The “comfort letter” provides no protection if the facts or data change. • EPA has posted its comfort letters on its web site: http://www.epa.gov/epawaste/nonhaz/define/index.htm

15. What is the Process for Petitioning EPA for a Non-Waste Determination? • Any person may submit a petition to EPA for a determination that a NHSM is not a waste when used as a fuel by a third party. • A petition may apply to a class of NHSM, not just a particular facility. • If the combustors are located in multiple EPA Regions, the petition goes to EPA Headquarters, otherwise it goes to the Regional Administrator. • The petition is subject to public notice via newspaper or radio. • The petitioner must demonstrate that the NHSM meets the legitimacy criteria and must address – • Whether market participants treat the NHSM as a product • Whether the NHSM is comparable to commercial fuels • Whether the NHSM will be used in a reasonable time frame • Whether the releases from the NHSM prior to combustion comparable to releases from traditional fuels • Other relevant factors.

16. What is the Process for Obtaining a Non-Waste Determination by Rule? • Any person may submit a rulemaking petition to EPA identify a NHSM as a non-waste fuel. • EPA may determine a NHSM is not a waste even if it does not meet the legitimacy criteria, based on a balancing of the legitimacy criteria with other relevant factors. • If the legitimacy criteria are not met, EPA will look at • Whether the use of the NHSM is integrally tied to the production process. • Whether the NHSM is functionally the same as the comparable traditional fuel, or • Other relevant factors. • Combustors that burn listed NHSM do not need to make a demonstration that the legitimacy criteria are met.

17. What is the Status of Resinated Wood? • Resinated wood is listed as a non-waste fuel in 241.4(a). “Resinated wood means wood products (containing binders and adhesives) produced by primary and secondary wood products manufacturing. Resinated wood includes residues from the manufacture and use of resinated wood, including materials such as board trim, sander dust, panel trim, and off-specification resinated wood products that do not meet a manufacturing quality or standard.”

18. What is the Status of Scrap Tires? • Scrap tires that are not discarded and are managed under the oversight of established tire collection programs, including tires removed from vehicles and off-specification tires, are listed as non-waste fuels in 241.4(a). • The definition of “established tire collection programs” includes contracts. • A combustor need only know that the tires come from an “established tire collection program.” The combustor does not need to know the origin of every tire that is collected.

19. What is the Status of Pulp and Paper Wastewater Treatment Residuals? “Dewatered pulp and paper sludges that are not discarded and are generated and burned on-site by pulp and paper mills that burn a significant portion of such materials where such dewatered residuals are managed in a manner that preserves the meaningful heating value of the materials” are listed as non-waste fuels in 241.4(a). • Combustion of 70% of WWTR is a “significant portion.” • Combustion of 20% of WWTR is not a “significant portion.” • If a combustor burns less than 70% it should document that the mill relies on the use of the sludge for its energy value. • Those who do not burn a significant percent (less than 20%) can make a self determination that the sludge is not a waste but must keep records supporting that self determination (including documentation on the legitimacy criteria).

20. What is the Status of C&D Wood? • Currently, any combustor can make a self-determination that C&D wood is a non-waste fuel based on documentation of adequate processing and the legitimacy criteria. • EPA has said that it believes C&D wood that is “processed pursuant to best practices” is a non-waste fuel and plans to initiate a rule making to list C&D wood in 241.4(a) “in the near future.”

21. What is the Status of Paper Recycling Residuals? • Currently, a combustor that is the generator can make a self-determination that paper recycling residuals are non-waste fuel based on documentation of the legitimacy criteria. • EPA has said that it believes paper recycling residuals that are burned on-site or under the control of the generator are non-waste fuels and plans to initiate a rule making to list them in 241.4(a) “in the near future.” • The listing could include off-site combustion of paper recycling residuals if EPA receives information on how and where they are burned and whether they are managed as a valuable commodity.

22. What is the Status of Railroad Ties? • Currently, any combustor can make a self-determination that railroad ties are a non-waste fuel based on documentation of adequate processing and the legitimacy criteria. • EPA has received a petition to list creosote treated railroad ties as non-wastes in 241.4. EPA has said that said that it needs more data but if it receives that data it will propose to list creosote treated railroad ties as non-waste fuels.

23. Are Gases Wastes? • The CISWI Rule includes a definition of solid waste that mirrors the RCRA statutory definition. • The RCRA definition of solid waste includes “contained gaseous materials.” Uncontained gases are not wastes under RCRA. • The CISWI Rule includes a definition of “contained gaseous materials”: “Contained gaseous material means gases that are in a container when that container is combusted.” • Thus, combustion of a gas is not subject to CISWI unless the gas is in a container when that container is combusted. • This clarification is relevant to the use of landfill gas, fuels produced by the gasification of secondary materials, flares, and air pollution control equipment.

24. What Are “Homogeneous Wastes?” • CAA section 129 exempts qualifying small power producers and qualifying cogeneration facilities that burn “homogeneous wastes.” • The statute identifies tires and used oil as homogeneous waste and excludes refuse derived fuel. • The CISWI Rule does not define “homogeneous waste.” • Instead, • EPA expects homogeneous waste to have a consistent makeup that allows the combustor and the enforcement authority to predict the range of emissions from the combustion of the waste on an ongoing basis. • EPA expects the waste to be material specific, like the wastes listed in the statute (tires and used oil) and “of known origin.” • EPA expects the material composition to be within a consistent range with respect to size, contaminant levels, state of matter, etc. • EPA also expects homogeneous waste to have predictable known contaminant levels, even if those contaminant levels vary within a range. • A qualifying facility must notify EPA if they are combusting homogeneous wastes.

25. CISWI Recordkeeping 40 CFR 60.2175(v), 60.2740(u): • For fuels for which a combustor makes a self-determination you must keep a record which documents how the secondary material meets each of the legitimacy criteria under §241.3(d)(1). • For fuels that are processed into non-wastes, you must keep records as to how the operations that produced the fuel satisfies the definition of processing in §241.2 and each of the legitimacy criteria of §241.3(d)(1) of this chapter. • For fuels that are the subject of a non-waste petition, you must keep a record that documents how the fuel satisfies the requirements of the petition process. • For fuels that are categorically listed as non-waste fuels, you must keep records documenting that the material is a listed non-waste under §241.4(a).

26. CISWI Recordkeeping - continued • The CISWI Rule also requires units that combust homogeneous wastes to keep records establishing that the unit is a small power production facility or a cogeneration facility and that the waste material the unit is proposed to burn is homogeneous. 40 CFR 60.2175(w) and (x); 60.2740(v) and (w). • Failure to keep records documenting a NHSM is a non-waste turns a boiler into a CISWI unit: “If the operating unit burns materials other than traditional fuels as defined in §241.2 that have been discarded, and you do not keep and produce records as required by §60.2175(v), the operating unit is a CISWI unit.” 40 CFR 60.2265; 40 CFR 60.2875.

27. Boiler MACT Recordkeeping 40 CFR 63.7555(d)(2): • If you make a self-determination that the NHSM you combust is not a solid waste, you must keep a record that documents how the secondary material meets each of the legitimacy criteria. • If you combust a fuel that has been processed from a discarded NHSM, you must keep records as to how the operations that produced the fuel satisfy the definition of processing. • If the fuel received a non-waste determination pursuant to the petition process submitted under § 241.3(c), you must keep a record that documents how the fuel satisfies the requirements of the petition process. • If the fuel is listed as non-waste, you must keep records documenting that the material is listed as a non-waste under § 241.4(a) of this chapter. • Units exempt from the incinerator standards under section 129(g)(1) of the Clean Air Act because they are qualifying facilities burning a homogeneous waste stream do not need to maintain the records described in paragraph (d)(2).

28. Effective Dates and Compliance Dates • March 2011 NHSM Rule – effective May 20, 2011. • Changes to March 2011 NHSM Rule – effective April 8, 2013. • March 2011 Boiler MACT – effective January 31, 2013. • 2013 Changes to March 2011 Boiler MACT – effective April 8, 2013. • Compliance deadline for Boiler MACT emission standards – 3-4 years. • March 2011 CISWI Rule -- effective February 7, 2013. • 2013 Changes to the March 2011 CISWI Rule -- effective February 7, 2013 for subpart DDDD and August 7, 2013 for subpart CCCC. • However, nothing changes for existing units until states modify their regulations to conform to subpart DDDD (within 5 years).

29. Questions? Susan Parker Bodine Barnes & Thornburg 202-371-6364 susan.bodine@btlaw.com