Air Emissions and NHSM Waste Determinations—Certain Uncertainty

Vol. 28 No. 3

Ms. Morrison is a native Oklahoman who has practiced with Hopping Green & Sams since the start of her career in 1990. Her practice focuses primarily on air quality and climate change issues and the siting of energy facilities. She represents utility, manufacturing, and industrial clients on regulatory, permitting, and compliance matters. She also represents clients on related Florida legislation, in agency rulemaking proceedings, and in administrative litigation before the Division of Administrative Hearings.

The U.S. Environmental Protection Agency (EPA) continues to send mixed messages regarding whether and to what extent air emissions should be taken into account when determining whether materials are wastes for purposes of the Clean Air Act (CAA). While one might assume that air emissions are relevant given the CAA context, that is not necessarily the case, which makes some sense because the determination should focus on whether a material is a “waste” or not. EPA’s “non-hazardous secondary materials” (NHSM) criteria under 40 C.F.R. part 241 are intended to help prevent “sham” recycling of wastes, and EPA has focused in large part on contaminants found within the material itself, and regardless of the CAA-related purpose, EPA has tended not to consider air emissions resulting from the combustion of the fuel. Despite EPA’s general approach and numerous statements to the contrary during the rulemaking process, EPA sometimes takes air emissions into account, although inconsistently. For example, in recent “comfort letters” implementing the NHSM rule, EPA compares contaminants in the NHSM to traditional fuels but also indicates that air emissions can indeed play an important role in waste determinations. This article explores EPA’s stated goals for the NHSM rule and the role air emissions have played in solid waste determinations under section 129 of the CAA.

Laudably, Congress intended the CAA to improve air quality, promote public health, and prevent and control air pollution. Section 101(a), CAA. Prior to the CAA Amendments of 1990, EPA relied on CAA Sections 111 (New Source Performance Standards or NSPS) and 112 (National Emissions Standards for Hazardous Air Pollutants or NESHAP) to regulate sources of air emissions that may adversely affect human health and welfare. Under that authority, EPA first regulated municipal waste combustors in the early 1970s and in the mid-1980s established particulate matter standards for industrial, commercial, and institutional steam-generating units burning municipal waste.

In response to public concerns regarding solid waste incineration, Congress added section 129 as part of the 1990 CAA Amendments. This new provision required that EPA regulate all categories of nonhazardous waste incinerators, including not only those combusting municipal waste but other categories as well (collectively referred to as “incinerators”) pursuant to sections 111 and 129. The statutory language also clarified that units subject to emission standards under section 129 would not be subject to emission standards under section 112. Specifically, EPA must establish numeric emission limits for four criteria pollutants: particulate matter, sulfur dioxide, nitrogen oxides, and carbon monoxide, as well as five hazardous air pollutants: hydrogen chloride, cadmium, mercury, lead, and dioxins/dibenzofurans. EPA also has the discretion to establish standards, as appropriate, for other regulated air pollutants. While combustion sources are regulated under section 111 and either section 112 or 129, the type of fuel being used and whether it is considered “waste” will determine which set of standards apply.

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Both sections 112 and 129 require regulation of new and existing units, use the same criteria for setting standards, and help meet the overarching goals of the CAA. For example, in setting standards under both sections, EPA must take into account the level of emissions that is achieved in practice by the best controlled similar unit and for existing units the average emission limitation achieved by the best performing 12 percent of units in a particular category. Similarly, both sections allow EPA to consider both residual risks and whether even more stringent standards are achievable.

While the process is the same, there are a few important differences. Section 129, for example, includes monitoring and operator training requirements that would not necessarily apply to sources regulated under section 112. Regardless of the additional requirements, however, the CAA does not mandate that more stringent standards be established under section 129. EPA could in theory establish virtually identical standards for energy recovery units whether waste is used as a fuel or not. Because EPA is relying on the “top 12 percent” from particular source categories to establish the standards, however, the current emission limits are not the same, and the section 129 standards are generally more stringent. That is why the distinction between solid wastes and other nonhazardous secondary materials has become so important. The difficulty has been in determining whether materials are wastes or not, based primarily on the test to be met.

EPA initially decided that if solid waste is used for energy recovery purposes, such as in a utility boiler or in a cement kiln, then the unit would continue to be regulated under sections 111 and 112 as an energy recovery unit and not as an incinerator under sections 111 and 129. The U.S. District Court of Appeals for the District of Columbia Circuit disapproved of that approach and remanded EPA’s initial set of applicability criteria, insisting that if “any solid waste material at all” is combusted, then the unit must be regulated under section 129 instead of section 112.

While historically EPA has regulated source categories based on the primary function of the unit, such as producing steam, generating electricity, or producing cement, that is no longer the case if any type of “secondary material” is used as a fuel and that material is considered to be a solid waste. Rather than establishing a different emission limit specific to the type of fuel being used, an entirely different set of standards would apply (and one that does not distinguish among fuel types). Whether a material being used as a fuel for energy recovery constitutes a “solid waste” or not has become “the” deciding factor for applicability of air emission standards under section 112 versus section 129. Further, as explained above, whether a unit is regulated under section 129 or is regulated under section 112 has considerable consequences.

While industry wants to take advantage of secondary materials as fuel sources, which are often less expensive and have a smaller carbon footprint than traditional fossil fuels, are potentially renewable sources of fuel, can have lower air emissions, and can even generate carbon credits, implementation of the NHSM rule has caused considerable confusion and threatens these growing fuel markets. Examples of secondary materials used as fuels include scrap tires, crop residue, forest-derived biomass, urban wood waste, reject paper, plastics, and cardboard, as well as fuels manufactured from these types of materials. If these types of secondary materials are used, facilities face having their units being categorized as “incinerators” and subject to section 129 even though the primary purpose of their operations remains the same (e.g., production of steam, electricity, cement) and in some cases the unit would be recategorized as an incinerator even if the air emissions are lower when using the alternative fuels.

Sham Recycling

EPA could have adopted a rule explaining that material with a meaningful heating value and used for energy recovery purposes is not a solid waste. Such a rule would have been relatively easy to understand and implement. Instead, EPA focused on whether material has been “discarded” and whether “sham recycling” was occurring. Pulling from a body of case law and prior agency guidance tied to the regulation of hazardous waste, EPA concluded that once a material is discarded, it continues to be a waste even if it might be recycled and even if it has value. EPA also recognized that, at least in some situations, secondary material can be “legitimately recycled” if it resembles “normal” commercial or industrial materials or products rather than “waste management.” EPA was concerned with waste treatment being called “recycling” in an effort to evade hazardous waste regulation and considered the “intent” of the owner or operator by evaluating circumstantial evidence. This hazardous waste context is a much different situation than determining whether combustion of alternative fuels with a valuable heat content and managed as a commodity are being regulated under section 112 or section 129. Nevertheless, and despite any history of fraudulent intent, EPA established a complex set of criteria in the NHSM rule to determine whether the use of alternative fuels is really what it considers to be “sham recycling.”


EPA broadly defines NHSM to be any material that would not be a hazardous waste when discarded. EPA clarified that traditional fossil fuels such as coal, oil, and natural gas are not secondary materials or wastes until they are actually discarded. Any other material is “NHSM” by definition, and EPA presumes that NHSM constitutes solid waste when combusted, although there are exceptions.

Essentially and in its simplest terms, if NHSM is “discarded,” then it is a waste. The NHSM rule allows waste to be recycled into a fuel product and no longer considered a waste, however, if it is sufficiently processed and if it meets certain criteria.

EPA also established by rule that four NHSMs are not a waste when used as a fuel but for different reasons. Scrap tires from an established tire collection program that are not discarded are not wastes when used as a fuel. Dewatered pulp and paper sludges generated and burned on-site are not solid wastes if they are not discarded and are managed to preserve the meaningful heating value. In addition, resinated wood and coal refuse are not solid wastes when used as a fuel.

More generally, the NHSM rule provides that if the generator of the NHSM uses the material as a fuel, the NHSM remains within the control of the generator and the NHSM meets certain “legitimacy criteria” then the material is not considered to have been “discarded” and it is not a waste. In this situation, the legitimacy criteria are used to determine the NHSM’s “discard” status.

NHSM that does not remain within the generator’s control is “discarded” and is therefore a solid waste. That material will retain its label as a “waste” unless it is “sufficiently processed” and it also meets the “legitimacy criteria.” To meet the processing requirement, the NHSM must be transformed into a fuel, such as through removing or destroying contaminants, significantly improving fuel characteristics, or chemically improving the energy content, and the new fuel must meet the same legitimacy criteria to determine whether the use of the processed fuel material is appropriately considered recycling or whether it is a form of waste control (what EPA calls “sham recycling”). Essentially, the waste never loses its characterization as waste and the use of the material as a fuel is a form of “discard.”

The “legitimacy criteria” for both situations—to determine whether discard has occurred and to determine whether sham recycling has occurred—is therefore the same. First, the material must be managed as a valuable commodity and second the fuel must have a meaningful heating value. Third and more difficult to implement (as well as more controversial) is that the contaminant concentrations must be at levels that are comparable to or lower than those in traditional fuel products that the combustion unit is designed to burn, based on a direct comparison of the contaminant levels in the NHSM to levels found in the traditional fuel.

Contaminant Comparison

EPA has consistently explained that “contaminant levels” are a key factor in determining whether a material has been “discarded” and whether “sham recycling” might be occurring. EPA’s position is that if a material has a high level of contaminants, the material is being burned for the purpose of destroying waste materials and “it would be considered sham recycling, which is one type of way a material can be discarded.” 75 Fed. Reg. 31,844, 31,859 (June 4, 2010). So, despite the fact that material has been transformed into a new fuel product at some expense, is treated like a commodity, and has value as a fuel, if the contaminant comparison does not bode well, it is presumed to still be a waste and subject to section 129, rather than a fuel and subject to section 112.

In response to comments that the contaminant comparison concept is “far removed from the true meaning of ‘discard,’” and alleging that EPA had no “legal, rational or scientific basis” for considering the presence of contaminants such as sulfur or nitrogen in NHSMs as evidence of intent to “discard SO2 or NOx during combustion,” EPA insisted that the comparison was important and appropriate. And EPA continues to rely on this comparison as a necessary step in determining if NHSM has been discarded or its combustion is essentially sham recycling. 78 Fed. Reg. 9112, 9141 (Feb. 7, 2013).

Because the contaminant comparison is so important for these determinations of discard and sham recycling, and because the outcome of the determination is relevant for purposes of regulation under the Clean Air Act, it is interesting to consider the extent to which air emissions are taken into account. Remember the stated goals of the Clean Air Act noted above—air quality and human health. Notwithstanding EPA repeatedly stating during the rulemaking process that air emissions were not important for the contaminant comparison (to determine discard or sham recycling), there are times when EPA has taken air emissions into consideration. EPA’s inconsistency is puzzling, especially from an air quality and health impact standpoint.

When Air Emissions Are Not Considerations

There are times when air emissions are not a consideration at all. For example, nondiscarded whole tires are not a waste. The same whole tires, if actually discarded, would be a waste. The air emissions would be the same, but a facility would be considered an incinerator if it burned whole discarded tires. The key for this exemption is whether the tires were “discarded” in a traditional sense (e.g., sent to a landfill or not). If the tires are maintained by an established tire collection facility, even though the tires are no longer fit for use as tires, they are not considered to be “discarded” and categorically a nonwaste. Interestingly, EPA took air emissions into account when establishing this category for exemption, but nevertheless the rule ignores air emissions altogether and its applicability is tied only to the source of the tires and whether tires have been discarded or not (and that part of the test continues to be relevant and applied on a case-by-case basis).

Throughout the development of the NHSM rule and consistent with its wording, EPA has repeatedly stated that the contaminant comparisons must be based on the presence of contaminants in the NHSM that enter the combustion unit and not based on the resulting emissions from the combustion unit. When commentors pointed to data indicating that the combustion of various NHSM-based fuels would have similar or lower air emissions compared with traditional fuels, EPA responded that the determination of whether a material is a waste or a commodity is based on fuel input and not air emissions output. EPA explained that a comparison of emissions only tells how well the combustion unit is operating and the unit’s destruction efficiency, not whether the material is a waste or a legitimate fuel. Even when EPA admitted that emissions data could be useful in determining whether or not combustion of the material presents a human health or environmental risk, EPA did not believe it was necessarily relevant in determining whether a material was a waste or a legitimate fuel.

If the contaminants are not comparable, EPA has explained that it is an indication that “discard” must be occurring. “The contaminants in these cases could not be considered a normal part of a legitimate fuel and are being discarded, either through destruction in the combustion unit or through releases into the air. Units that burn such materials are therefore most appropriately regulated under the CAA Section 129 standards for solid waste incinerators.” 76 Fed. Reg. 15,456, 15,523–15,524 (Mar. 21, 2011). If the contaminants are higher in the NHSM but the emissions are not higher compared to a traditional fuel, EPA is convinced that this is evidence of waste management and therefore is sham recycling.

In response to suggestions that it should be considering the emission profiles from the combustion units instead of considering the contaminants in the NHSM material itself as part of the legitimacy criteria, EPA said that while it recognizes that emissions data can be useful in determining whether or not combusting NHSM presents a risk to human health or the environment, “such a concept says nothing in terms of whether or not the non-hazardous secondary material is a legitimate non-waste commodity fuel.” 76 Fed. Reg. at 15,525. Interestingly, EPA took the position that many contaminants have no “fuel value” and therefore are being combusted for destruction with no energy recovery intent. EPA said that even if the heat recovery is legitimate and there is a “beneficial use” burning is an “inherently destructive process” and that it therefore needs to be “cautious.” While recognizing that contaminant levels could vary based on the source and geographic region, EPA maintained that the presence of contaminants in NHSM at levels that are not comparable in concentrations to traditional fuel “could result in contaminants being combusted as a means of discarding them.” 76 Fed. Reg. at 15,525.

When EPA revised the NHSM rule in 2013, it confirmed that there was no change from the original 2011 version and maintained that it was necessary to evaluate the contaminant levels in the NHSM itself and not the resulting air emissions to determine whether the legitimacy criteria are being met. EPA rejected comments, suggesting that it would be more appropriate to consider air emissions rather than the content of the material or that the focus should be on contaminants released as combusted emissions. EPA also rejected suggestions that if a comparison is needed it would be more appropriate to compare emitted contaminants to applicable emission standards.

When Air Emissions Are Considerations

EPA certainly took air emissions into account in identifying contaminants for purposes of the comparison. EPA’s initial contaminant list was based only on parameters that would result in emissions of the nine pollutants regulated under section 129 along with all hazardous air pollutants regulated under section 112 (even though section 112 does not apply to incinerators). EPA stated that this list of contaminants was appropriate because the comparison is intended to ensure that the purpose of combusting the NHSM is not for disposal and because the health and environmental impacts of concern will be those resulting from the air emissions of concern identified in the CAA. EPA later changed the list to reflect only contaminants that might be found in NHSM, eliminating opacity and products of combustion such as particulate matter, which are not likely to be found in NHSM prior to combustion. EPA also changed some parameters on the list based on what might be found in the NHSM rather than what might be emitted, such as removing sulfur dioxide and nitrogen oxides but including sulfur and nitrogen on the list of parameters to consider.

EPA reasoned that if contaminant levels in the NHSM being used as a fuel were high and there was good destruction efficiency in the unit, this would be an indicator that incineration was occurring—not energy recovery—and that the material should therefore be considered a waste when burned as a fuel. EPA reiterated that destruction of contaminants indicates a waste treatment activity rather than a “commodity fuel.” For purposes of the contaminant comparison, EPA therefore considered parameters within the NHSM tied to air emissions, but not the actual air emissions resulting from the combustion of the material.

EPA has also stated that the contaminant comparison is needed to ensure that the use of NHSM in combustion units will not result in increased releases to the environment that could impact the health and environment of the local community, indicating that air emissions are relevant—yet not necessarily directly compared. EPA emphasized that its requirement for the contaminant levels to be “comparable” was sufficiently protective “because it ensures that no more contaminants than those found in traditional fuels are released into the environment,” apparently presuming that the combustion emissions would be the same, or at least comparable, if the contaminant levels in the NHSM were comparable. 76 Fed. Reg. at 15,524.

Along those lines, when determining that resinated wood used as fuel is not a waste, EPA took air emissions into account. Despite statements during the original rulemaking that the legitimacy determination for resinated wood would be based on the level of contaminants in the material itself and not the differences in resulting air emissions, EPA noted that it was concerned with formaldehyde emissions. In a follow-up rulemaking, EPA ultimately concluded that air emissions were likely to decrease over time due to a requirement to reduce formaldehyde levels in resinated wood products. Even though the level of formaldehyde in the NHSM could at times be higher than levels in traditional fuels, based on the totality of circumstances, EPA concluded that resinated wood was not a waste when used as a fuel.

This is consistent with the NHSM rule provisions allowing for petitions to be submitted for a formal determination that a particular material that might have been discarded is not a solid waste, even though all of the processing requirements or legitimacy criteria might not be met. In deciding whether to grant or deny an application, EPA must consider among other things whether combustion of the material would result in releases to the air at levels comparable to what would otherwise be released from traditional fuels.

Even when all of the processing requirements and legitimacy criteria have apparently been met, EPA has expanded its waste determination analysis to include consideration of air emissions. In one recent unofficial “comfort letter,” EPA found that the total nitrogen content of the NHSM was not relevant for purposes of the contaminant comparison because nitrogen dioxide (an air pollutant) was not produced from the combustion of this particular NHSM-based fuel. EPA made this determination for nitrogen based on air emissions even though the list of contaminants to be compared for purposes of the legitimacy criteria specifically includes nitrogen. For all other parameters, EPA compared the contaminants in the NHSM-based fuel to the levels found in coal.

In another recent comfort letter, EPA relied on air emissions data and research to tie a nonwaste determination to a requirement that the sulfur content of the NHSM be equal to or greater than the chlorine content. Even though EPA agreed that both the sulfur level and the chlorine level in the NHSM are each much lower than levels found in traditional fuels, EPA is requiring daily composite sampling of the NHSM to ensure that this particular ratio of sulfur to chlorine is met. So, even though the sulfur level in the NHSM is well below that of coal, if it happens to be below the chlorine level in the NHSM (which is 0.3 percent or less), the NHSM fuel could be considered a waste for purposes of section 129. Although it is not directly stated in the comfort letter, this ratio is apparently tied to research indicating that sulfur in the presence of chlorine inhibits the formation of dioxin and furans. Rather than focusing only on a comparison of contaminants in the NHSM to those in traditional fuels, EPA appears to be concerned with air emissions and dioxin emissions in particular and has even tied its nonwaste determination to these suspected emissions.

EPA recognizes the value and benefits of using alternative fuels, such as reduced greenhouse gas emissions, reduced fuel imports, reduced mining impacts, and reduced environmental impacts from landfilling. EPA also recognizes that air pollutant emissions are often reduced or not significantly different from other conventional fossil fuels as long as the combustion occurs in a well-designed, well-operated, and well-maintained combustion device ensuring that human health is protected. Moreover, the methods of establishing the standards are the same for incinerators and nonincinerators. The labyrinth of the NHSM rule is not an easy one, however, which could minimize and discourage the use of alternative fuels.

Even when the recycling is truly legitimate and the environment is not threatened, application of the criteria under the NHSM could require the material to be considered a waste and the unit treated as an incinerator, which ultimately will discourage reuse of materials with good heating values that would otherwise be landfilled or used for a lesser purpose, and many of these benefits might never be fully realized.

If EPA focuses on contaminants alone and even if air emissions are considered, how does this really determine whether generator-maintained NHSM has been “discarded” or whether sufficiently processed NHSM is nevertheless “sham recycling”? The use of alternative fuels is increasing due to the higher costs of traditional fuels and the increasing emphasis on renewable and lower carbon fuels—not necessarily to avoid landfilling or other traditional methods of waste disposal and management. The NHSM rule and its focus on discard and sham recycling is unfortunate, and based on the mixed messages regarding the importance of air emissions in waste determinations, the implementation remains a bit mysterious and complex and certainly not user friendly. Air emissions we understand; EPA’s NHSM rule, the contaminant comparison, and its focus on sham recycling, we don’t.


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