Learn What Regulations Apply to Your Project
Today's push to bring biomass energy projects on line and changes in environmental regulations have created some uncertainty for parties seeking to secure waste/fuel supply agreements.
For example, the U.S. EPA's newly proposed definition of “solid waste” may reveal issues that may warrant consideration by the project developer (see 75 FR 31,844, Proposed June 4).
Concurrently with the boiler MACT proposal, the EPA proposed a new definition of solid waste. The definition is key to distinguishing between “industrial commercial and institutional boilers and process heaters” and “commercial and industrial solid waste incinerators” because the Clean Air Act requires the EPA to regulate as an incinerator “any facility which combusts any solid waste.” The relevant definition of solid waste is in the Resource Conservation and Recovery Act and covers “any discarded material.”
Though initially drafted to limit against “sham” fuels, wherein the combustion or use of certain materials as an ingredient or component of a power facility's fuel supply is nothing more than waste disposal. In response, the EPA created new limitations on biomass materials that can be used as fuel. Understanding how this rule distinguishes between "traditional fuel," "legitimate fuel" and solid waste is critical to distinguishing between biomass that can be used as a fuel in an industrial boiler (subject to MACT) and biomass considered a solid waste (subject to Incinerator New Source Performance Standard and MACT). Solid waste cannot be used in commercial or industrial boilers, including power plant boilers.
This reconfigured definition of solid waste can impact a project's fuel/waste supply agreements and material-handling activities.
In brief, traditional fuels are not considered solid waste, and include not only fossil fuels, but also "clean cellulosic biomass." The EPA provides a list of clean cellulosic biomass materials that qualify as a traditional fuel, described as materials that have not been altered, such that they contain contaminants at concentrations normally associated with virgin biomass materials.
EPA’s proposal seeks to clarify whether solid waste includes certain nonhazardous “secondary materials”—materials that are not the primary product of a manufacturing or commercial process that may be discarded but later reused as fuel or ingredients in another process. EPA’s proposed rule would exclude secondary materials from the definition of solid waste if they are combusted by the generator, used as ingredients in another manufacturing process or processed into a fuel or an ingredient. Sources must also meet “legitimacy criteria,” confirming that use of the material is not a sham for disposal, or submit a petition to EPA for a nonwaste determination.
“Legitimate fuel" is nonhazardous secondary materials that are not the primary product of a manufacturing or commercial process that may be discarded but later reused as fuel or ingredients in another process. Such secondary materials are not considered solid waste and are excluded if they are either combusted by the generator, used as ingredients in another manufacturing process, or processed into a fuel or an ingredient. Additional legitimacy criteria must be met to confirm that use of the material is not a sham for disposal.
If determined to be solid waste, the material is subject to handling and reporting requirements promulgated by the RCRA. Further, such materials can only be combusted in regulated solid waste incinerators. Using solid waste improperly as a fuel may result in a fine or an order to cease production.
The above determinations are not easily made, and a full analysis of the applicable decision tree is beyond the scope of this article. An analysis should be performed, however, so that allocating the underlying risks associated with acquiring off-site materials and setting forth appropriate representations and warranties in one's fuel/waste supply agreement is managed accordingly.
Author: John Eustermann
Partner, Stoel Rives LLP