ASSESSMENT OF THE POTENTIAL COSTS, BENEFITS,

AND OTHER IMPACTS OF THE EXCLUSION FOR GASIFICATION OF PETROLEUM
OIL-BEARING SECONDARY MATERIALS FINAL RULE

Economics, Methods, and Risk Analysis Division

Office of Solid Waste

U. S. Environmental Protection Agency

1200 Pennsylvania Ave., N. W.

Washington, DC 20460

August 2007ACKNOWLEDGMENTS

	The Agency recognizes Industrial Economics, Inc. (IEc), for the overall
organization and development of this report.  Scott Palmer and Elaine
Eby with the U.S. Environmental Protection Agency, Office of Solid
Waste, provided guidance and review.

ADDENDUM TO

ASSESSMENT OF THE POTENTIAL COSTS, BENEFITS,

AND OTHER IMPACTS OF THE EXCLUSION FOR GASIFICATION OF PETROLEUM
OIL-BEARING SECONDARY MATERIALS FINAL RULE

Economics, Methods, and Risk Analysis Division

Office of Solid Waste

U. S. Environmental Protection Agency

1200 Pennsylvania Ave., N. W.

Washington, DC 20460

August 2007TABLE OF CONTENTS

INTRODUCTION	2

EQUITY CONSIDERATIONS AND OTHER IMPACTS	2

Assessment of Small Entity Impacts	2

Environmental Justice Analysis	2

INTRODUCTION

	The purpose of this Addendum is to present a revised assessment of the
equity impacts on small entities and of the environmental justice
considerations associated with the exclusion for gasification of
petroleum oil-bearing secondary materials final rule.  This assessment
reflects EPA’s revisions to the equity considerations and other
regulatory impact concerns evaluated in the Assessment of the Potential
Costs, Benefits, and Other Impacts of the Exclusion for Gasification of
Petroleum Oil-Bearing Secondary Materials Final Rule (the Assessment),
dated December 29, 2006.

The first section of this Addendum modifies the discussion of equity
impacts of the final rule on small entities previously stated in the
Assessment.  The second section provides an amended environmental
justice analysis based on updated data and is intended to supplant the
analysis presented in the Assessment.

EQUITY CONSIDERATIONS AND OTHER IMPACTS

Assessment of Small Entity Impacts

	In the Assessment, EPA notes that in addition to refineries
characterized as small entities, the final rule may also impact small
commercial waste management facilities that currently manage refinery
waste.  These facilities may indirectly experience a loss in revenues as
the result of the rule if secondary material is diverted away from these
facilities to refineries with gasification systems.  However, because
this rule is deregulatory in nature and constitutes an exclusion
available only to manufacturers of OBHSM at petroleum refineries, small
waste management facilities are therefore considered to be non-regulated
small entities.  Furthermore, any revenue losses that may be experienced
by such non-regulated small entities constitute secondary (or indirect)
impacts, and as a result, are outside the normal scope of a regulatory
flexibility analysis.

Environmental Justice Analysis

Executive Order 12898, “Federal Actions to Address Environmental
Justice in Minority Populations and Low-Income Populations” (February
11, 1994), requires federal agencies to identify disproportionately
large and adverse human health or environmental effects of their
programs, policies, and activities on minority and low-income
populations.  Among other actions, agencies are directed to improve
research and data collection regarding health and environmental effects
in minority and low-income communities.

To meet the requirements of the Order, EPA assessed the demographic
characteristics of populations living within a one-mile radius of
refineries with gasification systems using geo-coded data from the U.S.
Census Bureau. Under the final rule, EPA estimates that 123,300 to
177,000 tons of OBHSM will be diverted to gasification from their
baseline disposition at hazardous waste treatment, storage, and disposal
facilities (TSDFs). Although EPA does not believe that gasification of
this material represents a greater risk than baseline management
practices, the final rule will concentrate the processing of excluded
material at the limited number of refineries that could potentially use
this material as a feedstock under the final rule.  Rather than managing
the excluded material as hazardous waste and transporting it to numerous
and more widely dispersed TSDFs as is currently the case (e.g., under
the baseline), the final rule would help limit distribution of these
wastes such that they are instead managed at their source of generation
(e.g., refineries).

As shown in Exhibit 1 below, the areas surrounding gasification systems
affected by the rule have disproportionately high minority and
low-income populations when compared to the national average.  However,
based on a number of published studies, areas in close proximity to
TSDFs and combustion facilities also have disproportionately high
minority and low-income populations that are similar to or greater than
those of refineries with gasification systems. For instance, among the
individuals living within one mile of the existing and planned
gasification systems included in our analysis, 15.8 percent are
low-income individuals, compared to 15.7 percent and 22.3 percent near
TSDFs and hazardous waste combustion facilities, respectively.
Similarly, 28.1 percent of the individuals living near existing and
planned gasification systems are minorities, compared to 27.2 percent
living near TSDFs and 38.3 percent living near hazardous waste
combustion facilities.  These findings show that the percentages of
low-income and minority populations near TSDFs are similar to or greater
than those of populations living near petroleum refineries with
gasification systems.

The implication of our additional analyses is that low-income and
minority populations will not bear a disproportionate share of any human
health or environmental effects associated with shifting the processing
of excluded material to gasification systems.  Furthermore, low-income
and minority populations living near waste management facilities that
manage excluded material in the baseline would likely experience a
reduction in risk under the final rule.

Exhibit 1

DEMOGRAPHICS OF AREAS NEAR REFINERIES WITH GASIFICATION SYSTEMS

Demographic	National Average1	National Average Near TSDFs

(1990)2	National Average Near Combustion Facilities (2000)3	Existing and
Planned Gasification Systems (High-capacity scenario)	Planned
Gasification Systems Only (Low-capacity scenario)

Low-income	12.7%	15.7%	22.3%	15.8%	16.0%

Minorities	19.8%	27.2%	38.3%	28.1%	28.6%

Notes:

1. The national averages shown here are based on U.S. Census Bureau
data.

2. The national averages near TSDFs are based on the demographics of 600
tracts hosting commercial TSDFs using 1990 U.S. Census tracts.

3. The national averages near combustion facilities are based on the
minority and low-income populations living within one-mile of hazardous
waste combustion facilities (i.e., on-site incinerators, commercial
incinerators, boilers and hydrochloric acid production furnaces, and
cement kilns and lightweight aggregate kilns (LWAKs)) using 2000 U.S.
Census tract data.  However, it should be noted that according to BRS
data, neither cement kilns nor LWAKs were shown to have been used in the
baseline as a management method for OBHSM.  As a result, these national
averages would likely be higher if data on minority and low-income
populations living near cement kilns and LWAKs were excluded.

Sources:

1. U.S. Census Bureau. 2007. “USA QuickFacts from the US Census
Bureau.” Accessed on 14 August 2007 at:
http://quickfacts.census.gov/qfd/states/00000.html.

2. Been, Vicki. 1995. “Analyzing Evidence of Environmental Justice.”
Journal of Land Use & Environmental Law, 11(1): 23.

3. U.S. Environmental Protection Agency. Assessment of the Potential
Costs, Benefits, and Other Impacts of the Hazardous Waste Combustion
MACT Final Rule Standards, September 2005, Exhibits 7-2 and 7-3.

TABLE OF CONTENTS

EXECUTIVE SUMMARY	1

Background and Overview	1

Methods Overview	2

Summary of Analytic Results	2

Other Regulatory Issues	4

BACKGROUND AND PURPOSE OF ANALYSIS	5

Motivation for Regulatory Action	5

Summary of the Final Rule	6

Report Organization	6

OVERVIEW OF BASELINE WASTE MANAGEMENT AND GASIFICATION

PRACTICES AT PETROLEUM REFINERIES	7

Affected Waste Streams and Refineries	7

Refineries with Eligible Gasification Units	10

METHODOLOGY OVERVIEW	13

Overview	13

Key Assumptions	15

Potential Impacts for Refineries that Divert OBHSM to Gasification	16

Impacts for Gasification Systems	18

Decision Simulation	19

Third Party Impacts	20

Estimation of Social Benefits and Costs	21

Human Health and Ecological Impacts	24

ANALYTIC RESULTS	25

Sensitivity Analysis	27

EQUITY CONSIDERATIONS AND OTHER IMPACTS	29

Regulatory Planning and Review	30

Assessment of Small Entity Impacts	30

Unfunded Mandates Analysis	33

Federalism Analysis	33

Tribal Government Analysis	34

Children's Health Protection Analysis 	34

Energy Impact Analysis	35

Environmental Justice Analysis	36

Regulatory Takings Analysis	37

Civil Justice Analysis	38

Facilitation of Cooperative Conservation	38

Joint Impacts of Rules	38

APPENDIX A:  REFINERIES AFFECTED BY THE FINAL RULE

APPENDIX B:  DETAILED DESCRIPTION OF ANALYTIC METHODS

LIST OF EXHIBITS

ES-1:  Annual Benefits and Costs of the Final Refinery Gasification
Exclusion Rule	3

Exhibit 1:  Waste Codes for Oil-Bearing Hazardous Secondary Materials	8

Exhibit 2:  Management Methods and Waste Forms for Refinery Wastewaters
9

Exhibit 3:  Oil-Bearing Hazardous Secondary Material (OBHSM) Eligible
for the

                  Petroleum Refinery Gasification Exclusion, by Baseline
Management Method	10

Exhibit 4:  Refineries with Gasification Units that Could Accept OBHSM
Excluded

                  Under the Final Rule	12

Exhibit 5:  Conceptual Schematic for Estimating the Impacts Associated
with a

                  Single Refinery	14

Exhibit 6:  Illustration of Approach for Estimating the Net Social
Impacts of the Rule	24

Exhibit 7:  Annual Benefits and Costs of the Final Refinery Gasification
Exclusion Rule	26

Exhibit 8:  Annual Benefits and Costs of the Final Refinery Gasification
Exclusion Rule:

                  Sensitivity Analysis Assuming Reduced Cost for
Incineration	28

Exhibit 9:  Estimated Benefits (Cost Savings) for Small Entities
Affected by the Final Rule	32

Exhibit 10:  Demographics of Areas Near Refineries with Gasification
Systems	35

EXECUTIVE SUMMARY

BACKGROUND AND OVERVIEW

Under current regulation, many oil-bearing hazardous secondary materials
(OBHSMs) generated by petroleum refineries (Standard Industrial
Classification (SIC)2911) are excluded from the regulatory definition of
solid waste if they are used as an input in the fuel production process.
 For example, refinery wastes recycled through coking and quench coking
processes are excluded from the regulatory definition of solid waste
under the 1998 Petroleum Listing Final Rule.  In contrast, there is no
such exclusion currently available to refineries when they reuse
oil-bearing hazardous secondary materials (i.e., sludges, byproducts, or
spent materials) in gasification processes for the production of
synthesis gas fuel.  To harmonize the regulation of secondary materials
generated by the petroleum refining industry, EPA is amending an
exclusion from the definition of solid waste that applies to OBHSM
generated at a petroleum refinery when these materials are inserted back
into the petroleum refining process (see current exclusion found at 40
CFR 261.4(a)(12)).  Under the final rule, the exclusion will be revised
to include “gasification” as a listed petroleum refinery process
into which oil-bearing hazardous secondary materials can be inserted and
excluded from the definition of solid waste.  The Agency believes that
such an exclusion would be consistent with the regulatory treatment of
other hazardous secondary materials that are currently re-introduced
into the petroleum refining process to produce fuel products.  This
report analyzes the costs, benefits, and other impacts of the final
rule.

Summary of the Final Rule

Under the final rule, oil-bearing hazardous secondary materials
generated by the petroleum refining industry may be excluded from the
regulatory definition of solid waste if a petroleum refinery gasifies
these materials to produce synthesis gas fuel.  The exclusion applies to
OBHSM whether it is generated and gasified onsite by the same refinery
or generated at one refinery and sent to another refinery for
gasification. Additional conditions of the exclusion are as follows: (1)
the excluded material may not be placed on the land or speculatively
accumulated before being placed into a gasification system; (2) the
materials generated by a gasification system are considered newly
generated waste and must be treated prior to disposal on land if they
exhibit the characteristics of a hazardous waste, and (3) the refinery
processing the oil-bearing hazardous secondary materials must be engaged
in gasification as defined at 40 CFR 260.10.

METHODS OVERVIEW

As outlined above, the final rule creates a voluntary exclusion for
OBHSM generated at a petroleum refinery if this material is used as an
input for the production of synthesis gas fuel.  Because the exclusion
is voluntary, the impacts of the final rule will depend significantly on
the number of refineries that decide to use the exclusion and the
baseline waste management practices of these refineries.  To account for
these factors in this analysis, a bottom-up analytic approach was
developed for estimating impacts based on the decisions of individual
refineries to exclude or not exclude their OBHSM under the final rule.
The analysis of each affected refinery begins by estimating the likely
costs and benefits associated with its potential use of the exclusion.
A key assumption of the analysis is that a refinery will divert its
OBHSM to gasification only if the following two conditions apply:

The benefits realized by the refinery if it uses the exclusion exceed
the related costs, and

The benefits realized by the gasification system receiving the
refinery's OBHSM exceed the costs associated with accepting this
material.

After determining whether a refinery is likely to divert its OBHSM to
gasification, we estimate the total impacts associated with its decision
to use or not use the exclusion.  If the refinery is unlikely to use the
exclusion, we assume zero impacts.  If the analysis suggests that the
refinery will use the exclusion, we estimate impacts as the sum of three
items: (a) the savings that the refinery will experience by diverting
its OBHSM to gasification, (b) savings for the refinery that receives
this OBHSM and uses it as a feedstock in its gasification system, and
(c) indirect third-party costs.  Indirect third-party costs include
increased virgin fuel and material costs for facilities that receive and
manage the refinery's OBHSM in the baseline (i.e., prior to the
promulgation of the final rule) and either burn it for energy recovery
or recycle it to recover metals or other valuable materials.

To complete our analysis and estimate the total impacts of the final
rule, we sum the impacts associated with OBHSM diverted to gasification
under the exclusion.  In addition, we assessed the impacts of the rule
under two scenarios to account for uncertainty in the operational status
of gasification systems that are planned but have not yet gone online: a
low-capacity scenario reflecting existing gasification capacity and a
high-capacity scenario reflecting existing and planned capacity.

SUMMARY OF ANALYTIC RESULTS

The central conclusions of our analysis are as follows:

Approximately 324,300 tons of OBHSM generated by 152 refineries would
qualify for the exclusion each year.  Of this quantity, refineries
currently send approximately 205,500 tons offsite for disposal or
recycling; the remaining 118,800 tons are processed onsite by
refineries.

Of the 324,300 tons of OBHSM qualifying for the exclusion, between
123,300 and 177,000 tons are likely to be excluded by refineries each
year.  This represents approximately 38 percent to 55 percent of the
material eligible for the exclusion.

We estimate that the rule will yield between $46.4 million and $48.7
million in net social benefits per year.  As indicated in Exhibit ES-1,
avoided waste management costs make up the most significant share of the
benefits of the rule, followed by feedstock savings for gasification
systems.

Commercial facilities that manage refinery OBHSM in the baseline may
experience annual revenue losses of $10.8 million to $15.1 million under
the final rule.   Based on the limited data available on the revenues of
these facilities, this loss represents a small fraction of their
revenues.

The impact of the final rule depends significantly on the cost of
incineration.  The impacts in Exhibit ES-1 reflect the average cost of
incinerating bulk sludge, as reported by the Environmental Technology
Council (ETC).  If we use the low end of ETC's cost range, the net
social benefits of the rule decline to $5.2 million to $25.5 million per
year.

Exhibit ES-1

ANNUAL BENEFITS AND COSTS OF THE FINAL REFINERY GASIFICATION EXCLUSION
RULE

	Low-capacity Scenario: Existing Capacity Only	High-capacity Scenario:
Existing And Planned Capacity

Annual Social Benefits	$67,959,000	$81,134,000

Avoided Transportation Costs	$4,388,000	$6,854,000

Avoided Waste Management Costs	$58,765,000	$67,379,000

Feedstock Savings	$4,806,000	$6,901,000

Annual Social Costs	($21,546,000)	($32,474,000)

Cost of Transporting OBHSM to Gasification Systems	($10,837,000)
($16,640,000)

Energy Replacement Costs	($36,000)	($182,000)

Value of Materials No Longer Recycled	($7,347,000)	($10,579,000)

Residuals Testing and Management	($3,326,000)	($5,073,000)

ANNUAL NET SOCIAL BENEFITS	$46,414,000	$48,661,000

Other Impacts

Annual OBHSM Tonnage Diverted to Gasification	123,294	177,037

Number of Refineries that Use the Exclusion	40	48

Annual Tipping Fee Losses for Commercial Waste Management Facilities
$10,821,000	$15,119,000

Note: Monetary values presented in year 2005 dollars.

OTHER REGULATORY ISSUES

Our analysis of the final rule satisfies OMB’s requirements for
regulatory review under Executive Order 12866 (as amended by Executive
Order 13258).  Our analysis of the rule also fulfills the requirements
of the following:

The Regulatory Flexibility Act, as amended by the Small Business
Regulatory Enforcement Fairness Act of 1996;

The Unfunded Mandates Reform Act of 1995;

Executive Order 13132, “Federalism”;

Executive Order 13175, “Consultation and Coordination with Indian
Tribal Governments”;

Executive Order 13045, “Protection of Children from Environmental
Health Risks and Safety Risks”;

Executive Order 13211, “Actions Concerning Regulations that Affect
Energy Supply, Distribution, Or Use”;

Executive Order 12898, “Federal Actions to Address Environmental
Justice in Minority Populations”;

Executive Order 12630, “Government Action and Interference with
Constitutionally Protected Property Rights”;

Executive Order 12988, “Civil Justice Reform”; and

Executive Order 13352, “Facilitation of Cooperative Conservation.”

BACKGROUND AND PURPOSE OF ANALYSIS

This document presents EPA's analysis of the costs, benefits, and
economic impacts of the final rule entitled "Regulation of Oil-Bearing
Hazardous Secondary Materials From the Petroleum Refining Industry
Processed in a Gasification System To Produce of Synthesis Gas."
Consistent with EPA's mandate to encourage resource conservation under
the Resource Conservation and Recovery Act (RCRA), this rule promotes
the recycling of oil-bearing hazardous secondary materials generated by
the petroleum refining industry.  In 2002, EPA issued a proposed rule as
an initial step in achieving this end.  Based on additional analysis and
feedback received during the public comment period for the proposed
rule, EPA has developed the final rule examined in this document.

Motivation for Regulatory Action

Under current regulation, many oil-bearing hazardous secondary materials
(OBHSM) generated by petroleum refineries (Standard Industrial
Classification (SIC)2911) are excluded from the regulatory definition of
solid waste if they are used as an input in the fuel production process.
 For example, refinery materials recycled through coking and quench
coking processes are excluded from the regulatory definition of solid
waste under the 1998 Petroleum Listing Final Rule.  In contrast, there
is no such exclusion currently available to refineries when they reuse
oil-bearing hazardous secondary materials (i.e., sludges, byproducts, or
spent materials) in gasification processes for the production of
synthesis gas fuel.  To harmonize the regulation of secondary materials
generated by the petroleum refining industry, EPA is amending an
exclusion from the definition of solid waste that applies to OBHSM
generated at a petroleum refinery  when these materials are inserted
back into the petroleum refining process (see current exclusion found at
40 CFR 261.4(a)(12)).  Under the final rule, the exclusion will be
revised to include “gasification” as a listed petroleum refinery
process into which oil-bearing hazardous secondary materials can be
inserted and excluded from the definition of solid waste.  The Agency
believes that such an exclusion would be consistent with the regulatory
treatment of other hazardous secondary materials that are currently
re-introduced into the petroleum refining process to produce fuel
products.  This report analyzes the costs, benefits, and other impacts
of the final rule.

Summary of the Final Rule

Under the final rule, oil-bearing hazardous secondary materials
generated by the petroleum refining industry may be excluded from the
regulatory definition of solid waste if a petroleum refinery gasifies
these materials to produce synthesis gas fuel.  The exclusion applies to
refinery OBHSM whether it is generated and gasified onsite by the same
refinery, or generated at one refinery and sent offsite to another
refinery for gasification. Additional conditions of the exclusion are as
follows: (1) the excluded material may not be placed on the land or
speculatively accumulated before being placed into a gasification
system; (2) the materials generated by a gasification system are
considered newly generated waste and must be treated prior to disposal
on land if they exhibit the characteristics of a hazardous waste, and
(3) the refinery processing the oil-bearing hazardous secondary
materials must be engaged in gasification as defined at 40 CFR 260.10.

Report Organization

	To support the promulgation of the final rule, EPA designed and
conducted a detailed analysis of the rule's costs, benefits and economic
impacts.  We present the data, methods, and results of this analysis in
the following sections:

Overview of Baseline Waste Management and Gasification Practices at
Petroleum Refineries: The impacts of the final rule will depend
significantly on the baseline practices of refineries affected by the
rule.  This section summarizes the current generation and management of
waste by petroleum refineries and characterizes refineries' current
gasification practices.

Methodology Overview: This section provides an overview of EPA's
analytic methods for estimating the costs, benefits, and economic
impacts of the final rule.  This discussion focuses on potential costs
and cost savings associated with the final rule and the decision of
affected refineries to use or not use the exclusion.

Summary of Results: After outlining the Agency's analytic approach, we
present EPA's estimates of the rule's costs, benefits, and economic
impacts.  Key economic impact results include the tonnage of refinery
OBHSM excluded under the final rule, the number of refineries that
divert their OBHSM to gasification as a result of the exclusion, and
reduced revenues for commercial waste management facilities.

Equity Considerations and Other Impacts: This section assesses
distributional and other impacts of the final rule, including small
entity impacts, environmental justice implications, children's health,
impacts to Tribal Governments, assessments of the potential for unfunded
mandates and regulatory takings, federalism implications, and energy use
and distribution effects resulting from the rule.

OVERVIEW OF BASELINE WASTE MANAGEMENT AND GASIFICATION PRACTICES AT
PETROLEUM REFINERIES

	To evaluate the impacts of the final rule, we first characterize the
baseline waste management and gasification practices of refineries
likely to be affected by the exclusion.  Using EPA’s 2003 Biennial
Reporting System (BRS) database, we identified waste streams that would
be affected by the exclusion, and the refineries that produce these
waste streams.  In addition, based on information from the U.S.
Department of Energy, we identified the limited number of refineries in
the U.S. that have onsite gasification systems where material eligible
for the exclusion could be used as feedstock.  We summarize this
information below.

Affected Waste Streams and Refineries

The first step in assessing the costs and benefits of the final rule is
identifying the types and amount of material that would be affected by
the exclusion. To identify these waste streams, we consulted the 2003
BRS database and followed the steps outlined below:

Because the final rule only affects materials generated by petroleum
refineries, we identified those facilities in the BRS database that were
identified as such (i.e., those facilities with a NAICS code of 32411
– petroleum refining).

As indicated above, the rule would allow refineries to exclude
oil-bearing secondary materials from the regulatory definition of solid
waste. Generally, OBHSM may be excluded from the regulatory definition
of solid waste under the final rule regardless of whether the materials
are listed or exhibit the characteristics of a hazardous material.  For
the purposes of this analysis, we considered only listed materials
because BRS lacks information of sufficient detail to identify
characteristic materials that would qualify for the exclusion.  More
specifically, we assume that listed wastes with the following waste
codes, if generated by a refinery, would qualify for the exclusion:
F037, F038, K048, K049, K050, K051, K052, K169, K170, K171, and K172.
Exhibit 1 provides a detailed description of each of these waste codes.

Exhibit 1

WASTE CODES FOR OIL-BEARING HAZARDOUS SECONDARY MATERIALS

Waste Code	Description

F037	Petroleum refinery primary oil/water/ solids separation sludge

F038	Petroleum refinery secondary (emulsified) oil/water/solids
separation sludge

K048	Dissolved air flotation (DAF) float from the petroleum refining
industry

K049	Slop oil emulsion solids from the petroleum refining industry

K050	Heat exchanger bundle cleaning sludge from the petroleum refining
industry

K051	API separator sludge from the petroleum refining industry

K052	Tank bottoms (leaded) from the petroleum refining industry

K169	Crude oil storage tank sediment from the petroleum refining
operations

K170	Clarified slurry oil tank sediment and/or in-line filter/separation
solids from petroleum refining operations

K171	Spent Hydrotreating catalyst from petroleum refining operations,
including guard beds used to desulfurize feeds to other catalytic
reactors (this listing does not include inert support media)

K172	Spent Hydrorefining catalyst from petroleum refining operations,
including guard beds used to desulfurize feeds to other catalytic
reactors (this listing does not include inert support media)

The refinery waste streams identified in step 2 include both wastewaters
and non-wastewaters.  Consistent with the economic assessment conducted
in support of the 2002 proposed rule, we assume that wastewaters are not
suitable for gasification.  Therefore, we do not include any wastewaters
identified in step 2 in our analysis of the final rule. To exclude such
wastewaters from our analysis, we assume that any waste stream
characterized by one of the management methods or waste forms in Exhibit
2 is a wastewater.  Based on this assumption, we exclude 33,117 tons of
wastewaters from our analysis, and estimate that 324,289 tons of listed
waste managed by 152 refineries represents the total universe of OBHSM
and refineries that may be affected by the final rule.

Exhibit 2

MANAGEMENT METHODS AND WASTE FORMS FOR REFINERY WASTEWATERS

Management Methods

Code	Description

H071	Chemical reduction with or without precipitation

H073	Cyanide destruction with or without precipitation

H075	Wet air oxidation

H076	Chemical oxidation

H077	Other chemical precipitation with or without pre-treatment

H081	Biological treatment with or without precipitation

H082	Adsorption

H083	Air or steam stripping

H121	Naturalization only

H122	Evaporation

H123	Settling or clarification

H124	Phase separation

H129	Other treatment

H135	Discharge to sewer/POTW or NPDES

Waste Forms

Form Code	Description

W101	Very dilute aqueous waste containing more than 90% water

W105	Acidic aqueous wastes less than 5% acid

W113	Other aqueous waste or wastewaters

Following the approach outlined above, the analysis of the BRS data also
reveals that of the 324,289 tons of OBHSM identified as nonwastewaters,
205,481 tons are sent offsite, while the remaining 118,808 tons are
processed onsite at the refineries. Exhibit 3 details, by management
method, the amount of OBHSM processed onsite at refineries and the
amount sent offsite to other processing units.  As the exhibit
indicates, refineries currently manage most of the OBHSM eligible for
the exclusion through metals or other materials recovery, incineration,
or energy recovery.

Exhibit 3

OIL-BEARING HAZARDOUS SECONDARY MATERIAL (OBHSM) ELIGIBLE FOR THE
PETROLEUM REFINERY GASIFICATION EXCLUSION, BY BASELINE MANAGEMENT METHOD

Management

Code	Description	OBHSM Quantity Managed Offsite

(Tons)	OBHSM

Quantity Managed Onsite

(Tons)	Total OBHSM Quantity

(Tons)

H039	Other recovery or reclamation for reuse including acid
regeneration, organics recovery, etc. 	83,645	15,204	98,849

H040	Incineration - thermal destruction other than use as a fuel	17,984
74,648	92,632

H010	Metals recovery including retorting, smelting, chemical, etc.
45,138	0	45,138

H050	Energy recovery at this site - use as fuel (includes onsite fuel
blending)	13,148	12,309	25,457

H132	Landfill or surface impoundment that will be closed as landfill (to
include onsite treatment and/or stabilization)	19,286	582	19,868

H101	Sludge treatment and/or dewatering	0	13,423	13,423

H061	Fuel blending prior to energy recovery at another site	11,278	0
11,278

H111	Stabilization or chemical fixation prior to disposal at another
site	3,925	141	4,066

H131	Land treatment or application (to include onsite treatment and/or
stabilization)	1,401	1,935	3,336

H141	Storage, bulking, and/or transfer off site - no treatment/recovery
(H010-H129), fuel blending (H061), or disposal (H131-H135) at this site
2,610	566	3,176

H134	Deepwell or underground injection (with or without treatment)	119	0
119

H112	Macro-encapsulation prior to disposal at another site	4	0	4

H020	Solvents recovery	3	0	3

H135	Discharge to sewer/POTW or NPDES (with prior storage - with or
without treatment)	0	0	0

N/A	Other	6,939	0	6,939

TOTAL	205,481	118,808	324,289

Source: U.S. EPA, 2003 BRS.

Refineries with Eligible Gasification Units

Our evaluation of the final rule also requires the identification of
refineries that have gasification systems capable of using secondary
hazardous materials as feedstock to produce synthesis gas fuel.
According to a 2003 Department of Energy (DOE) report, as many as seven
refineries in the U.S. are currently equipped with such gasification
systems or plan to install one in the near future.  Of these seven
gasification systems, two produce hydrogen rather than synthesis gas
fuel.  Therefore, because OBHSM must be gasified for the production of
synthesis gas fuel to qualify for the exclusion, we assume that five
existing or planned refinery gasification systems in the U.S. could
potentially use materials that qualify for the exclusion as feedstock
for gasification.  Exhibit 4 summarizes available information on these
gasification systems.

The impacts of the final rule will depend on the capacity of
gasification systems to consume OBHSM feedstock instead of conventional
feedstock (i.e., petroleum coke and residual oil).  Therefore, Exhibit 4
presents the feedstock consumption capacity of each gasification system
that could accept material excluded from the regulatory definition of
solid waste under the final rule.  To estimate the total annual
feedstock consumption for each gasification system listed in Exhibit 4,
we summed their annual petroleum coke and residual oil consumption.
Based on data for the Frontier facility in El Dorado, Kansas, we assume
that ten percent of this total represents potential capacity for OBHSM
feedstock (i.e., that ten percent of conventional feedstock capacity
could be replaced by OBHSM feedstock).,  As indicated in Exhibit 4, we
estimate that, in aggregate, the five gasification systems that we
identified (both existing and planned) could ultimately consume nearly
511,000 tons of OBHSM feedstock per year, which is sufficient capacity
to accommodate all of the material qualifying for the exclusion.
However, the current capacity of the existing gasification systems is
only 124,000 tons per year.  To account for the uncertainty surrounding
the operational status of planned gasification systems, we present
impacts under two gasification capacity scenarios: a low-capacity
scenario that only considers the 124,000 tons of existing capacity and a
high-capacity scenario that reflects the 511,000-ton capacity of both
existing and planned gasification systems.  Our analysis of both the
low-capacity and high-capacity scenarios reflects the following
assumptions:

Refineries with gasification systems will accept new OBHSM from other
facilities.

The introduction of new material into gasification systems will not
adversely affect their ability to produce synthesis gas fuel.

No refineries will construct gasification systems in response to the
final rule, which would expand the national gasification capacity for
OBHSM feedstock.

The information from the Department of Energy report regarding gasifier
capacity is accurate.Exhibit 4

REFINERIES WITH GASIFICATION UNITS THAT COULD ACCEPT OBHSM EXCLUDED
UNDER THE FINAL RULE

EPA ID	Name	City	State	Status	Petcoke Feedstock Use (Tons per Year)
Residual Oil Feedstock

(Tons per Year)	Total Annual Feedstock Use (Tons per Year)	Capacity for
OBHSM Feedstock

(Tons per Year)1

DED002329738	Motiva Enterprises	Delaware City	Delaware	Existing	766,500
0	766,500	76,650

KSD007233422	Frontier El Dorado Refining Company	El Dorado	Kansas
Existing	62,050	0	62,050	6,205

TXD980625966	Exxon Mobil Corporation	Baytown	Texas	Existing	0	407,340
407,340	40,734

LAD008080350	Citgo Petroleum Corporation	Lake Charles	Louisiana	Planned
2,025,020	0	2,025,020	202,502

TXD067285973	Shell Oil Company	Deer Park	Texas	Planned	1,845,440	0
1,845,440	184,544

TOTAL - Existing Gasification Systems	828,550	407,340	1,235,890	123,589

TOTAL - Existing and Planned Gasification Systems	4,699,010	407,340
5,106,350	510,635

Notes:

As described below, we assume that 10 percent of the conventional
feedstock (i.e., pet coke and residual oil) used by refinery
gasification systems could be replaced by OBHSM feedstock.  This
estimate is based on data for existing operations at the Frontier El
Dorado Refining Company facility, which currently has a waiver excluding
its OBHSM from the regulatory definition of solid waste if the facility
uses the material as a feedstock for producing synthesis gas fuel.
These data are summarized in Gary DelGrego, "Experience with Low Value
Feed Gasification at the El Dorado, Kansas Refinery," presented at the
1999 Gasification Technologies Conference.

Source:  John J. Marano, Refinery Technology Profiles: Gasification and
Supporting Technologies, prepared for U.S. Department of Energy National
Energy Technology Laboratory, June 2003.

METHODOLOGY OVERVIEW

In this section we summarize the analytic methods supporting our
assessment of the costs, benefits, and economic impacts of the final
rule.  We begin with a conceptual overview of our methodology, followed
by a description of our key assumptions.  We then outline our approach
for estimating impacts realized by different groups that may be affected
by the exclusion.  Appendix B provides additional detail on our
methodology.

Overview

As outlined above, the final rule would exclude oil-bearing hazardous
secondary materials generated by petroleum refineries from the
regulatory definition of solid waste if these materials are inserted
into a petroleum refinery’s gasification system for the production of
synthesis gas fuel.  Because the exclusion is voluntary, the impacts of
the final rule will depend significantly on the number of refineries
that decide to use the exclusion and the baseline waste management
practices of these refineries.  To account for these factors in our
analysis, we developed a bottom-up analytic approach for estimating
impacts based on the decisions of individual refineries to exclude or
not exclude their OBHSM under the final rule.  As illustrated in Exhibit
5, we begin our analysis of each affected refinery by estimating the
likely costs and benefits associated with its potential use of the
exclusion.  We assume that a refinery will divert its OBHSM to
gasification only if the following two conditions apply:

The benefits to be realized by the refinery if it uses the exclusion
exceed the related costs, and

The benefits realized by the gasification system receiving the
refinery's OBHSM exceed the costs associated with accepting this
material.

After determining whether a refinery is likely to divert its OBHSM to
gasification, we estimate the total impacts associated with its decision
to use or not use the exclusion.  If the refinery is unlikely to use the
exclusion, we assume zero impacts.  If our analysis suggests that a
given refinery will use the exclusion, we estimate impacts as the sum of
three items: (a) the savings that the refinery will experience by
diverting its OBHSM to gasification, (b) the added savings gained by the
refinery that receives this material and uses it as a feedstock in its
gasification system, and (c) indirect third-party costs.  Indirect
third-party costs include increased virgin fuel and material costs for
facilities that receive and manage the refinery's OBHSM in the baseline
(i.e., prior to the promulgation of the final rule) and either burn it
for energy recovery or recycle it to recover metals or other valuable
materials.

To complete our analysis and estimate the total impacts of the final
rule, we sum the impacts associated with the total estimated tonnage of
OBHSM diverted to gasification under the exclusion.

Key Assumptions

	To estimate the impacts of the final rule, we make a number of
assumptions about the operation of petroleum refineries and the
management of their OBHSM.  We summarize the most important of these
assumptions below.

Displacement of Conventional Feedstock: In estimating the impacts of the
final rule, we assume that one ton of OBHSM diverted to gasification
would replace one ton of conventional feedstock (i.e., petroleum coke
and residual oil).  In practice, however, the tonnage of petroleum coke
or residual oil replaced by OBHSM feedstock would depend significantly
on the chemical composition of the individual waste streams diverted to
gasification as a result of the rule.  It is unclear whether this
assumption of a one-for-one substitution of feedstock skews our analysis
of the final rule’s impacts.  Additional information on gasifier
feedstock is available in the docket for this rulemaking.

Capacity for Excluded OBHSM Feedstock: As described above, we estimate
that between three and five refineries could potentially use oil-bearing
hazardous secondary material as a feedstock for gasification under the
final rule, depending on the operational status of the planned
gasification systems listed in Exhibit 4.  The benefits and costs of the
rule will depend on the capacity and willingness of these refineries to
replace their conventional feedstock (e.g., petroleum coke and residual
oil) with OBHSM feedstock.  For example, if they can accept just a small
portion of the material that qualifies for the exclusion, the impacts of
the rule will likely be negligible.  In contrast, if they can accept
large quantities of OBHSM feedstock, the rule could yield significant
impacts.  Based on the experience of the Frontier Oil refinery in
Kansas, which has a temporary permit waiver allowing it to use secondary
hazardous materials as gasification feedstock, EPA estimates that
hazardous secondary materials would make up no more than 10 percent of
the total feedstock consumed by refinery gasification systems.  Applying
this value to the feedstock consumption values listed in Exhibit 4, we
estimate that refinery gasification systems have the capacity to accept
124,000 to 511,000 tons of OBHSM feedstock each year.  As indicated in
our discussion of gasifier feedstock consumption in the previous
section, this range reflects uncertainty about the status of
gasification systems that were planned as of 2003 but have not yet gone
online.  To account for this uncertainty, we present impact estimates
associated with both the low end and high end of this range.  In
addition, it is important to note that refineries with gasification
systems may have significant quantities of petroleum coke stockpiled
onsite.  Therefore, such refineries may, in some cases, be unwilling to
accept OBHSM feedstock from other refineries.  To the extent that this
occurs, we may overestimate the benefits of the final rule.

Residuals from Gasification: Under the final rule, residuals generated
from the gasification of OBHSM feedstock would be considered newly
generated waste and as such would be subject to a Toxicity
Characteristic Leaching Procedure (TCLP) to determine whether they are
to be considered a characteristic hazardous waste under RCRA.  Residuals
that test positive for a hazardous characteristic would require
treatment prior to disposal, whereas residuals that test negative could
be disposed of without any treatment.  In the absence of sufficient test
data, it is not possible to know ex ante whether gasification residuals
associated with the exclusion would test positive or negative for one or
more hazardous waste characteristics.  However, for purposes of
estimation and based on EPA’s experience with waste streams generated
from similar processes, it is assumed that 5 percent of these residuals
may initially test positive and that as many as half of these would
again test positive after a re-test.  Therefore, we assume that 2.5
percent of the residuals associated with the gasification of OBHSM
feedstock may ultimately require treatment prior to disposal.

Facility-level Decision-making: As indicated in Exhibit 5, the total
impact of the rule will depend on the decisions of individual refineries
to use or not use the subject exclusion.  We assume that such decisions
are made at the facility level.  Although a refinery's decision about
using or not using the exclusion could affect other facilities (e.g.,
one or more of the five refineries where they could send their OBHSM for
gasification), it is assumed, for purposes of simplifying the analysis,
that impacts realized by other facilities are not factored into a
refinery's decision-making process.

Potential Impacts for Refineries that Divert OBHSM to Gasification

If a refinery with oil-bearing hazardous secondary material eligible for
the exclusion decides to divert its OBHSM to gasification under the
final rule, it will experience a wide range of benefits and costs. For
each refinery, these benefits and costs may include the following:

Generator Benefit Impacts - Avoided Waste Management Costs: In the
baseline, refineries incur waste management costs for each ton of
secondary material that they generate and manage.  For example, if a
refinery manages its waste through incineration in the baseline, it
either pays a tipping fee to an offsite commercial incinerator where it
sends its secondary materials or incurs costs associated with the
operation of its own incinerator.  If a refinery diverts its OBHSM to a
gasification system under the final rule, it would avoid such costs.  To
estimate a refinery's potential management cost savings, we estimate its
baseline waste management costs for materials that are eligible for the
exclusion.

Generator Benefits Impacts - Avoided Transportation Costs: When
refineries send their waste offsite for recycling or disposal, they
incur costs associated with the transportation of this waste.  Baseline
transportation costs associated with wastes suitable for gasification
represent potential savings under the final rule.

Generator Cost Impacts - Transportation Costs: In addition to realizing
the benefits outlined above, refineries will also incur costs if they
use the exclusion.  For refineries without gasification systems onsite,
these costs include the cost of transporting OBHSM to a refinery that
has a gasification system.

Generator Cost Impacts - Energy Replacement Costs: According to the 2003
BRS, refineries use much of the secondary material that would qualify
for the exclusion as a fuel in the baseline, which yields significant
energy cost savings for refineries that engage in this practice.  If
refineries divert OBHSM from onsite energy recovery to gasification
under the final rule, they will no longer realize these savings.

Generator Cost Impacts - Material Replacement Costs: In addition to
burning waste to reduce baseline energy costs, some refineries also
recycle their waste onsite to recover valuable materials such as metals,
which are used as refinery catalysts.  For refineries that shift waste
from onsite recycling to gasification as a result of the final rule, the
value of these materials represents a cost of using the exclusion.

Generator Cost Impacts – Fees Paid to Gasification Systems: Under the
final rule, refineries that generate OBHSM eligible for the exclusion
but do not have their own gasification systems onsite may pay a tipping
fee to other refineries that have gasification units that would accept
this material and use it as feedstock.  Whether such a fee is ultimately
paid depends on the capacity of eligible gasification systems to consume
OBHSM feedstock relative to the tonnage of available material that
qualifies for the exclusion.  If the volume of OBHSM qualifying for the
exclusion is less than available gasification system capacity, we assume
that the fee is zero.  Otherwise, we assume that refineries with
eligible OBHSM would bid the fee upward until only those refineries that
would benefit the most from gasification would find the cost of
gasification (including the fee) to be less than the cost of baseline
waste management practices.

Impacts for Gasification Systems

In addition to the impacts outlined above for refineries that divert
OBHSM to gasification, the final rule will also affect any refineries
with onsite gasification systems that receive this material.  More
specifically, such refineries will experience a reduction in feedstock
costs for each ton of OBHSM that they receive as a result of the rule,
and may also earn revenues associated with any tipping fees they charge
to facilities for accepting these materials.  These refineries will also
incur costs associated with the management of residuals generated
through the gasification of these materials.  We describe these impacts
in greater detail below.

Gasifier Benefit - Feedstock Savings: For most refineries, the potential
benefits of the final rule are limited to avoided waste management costs
and avoided transportation costs.  Refineries with onsite gasification
systems, however, could enjoy additional benefits in the form of
feedstock savings.  To produce synthesis gas fuel in the baseline, these
refineries gasify feedstocks such as petroleum coke and residual oil.
If these refineries begin using OBHSM as a feedstock in their
gasification systems, they may then reduce their consumption of these
conventional feedstocks, which will reduce their overall operating
costs.

Gasifier Benefit – Gasification Tipping Fees: As indicated above,
refineries that generate OBHSM eligible for the exclusion may be
compelled to pay gasification systems a fee to accept their OBHSM
feedstock, depending on the capacity of eligible gasification systems
relative to the tonnage of material that qualifies for the exclusion.
Although these fees represent a cost to generating facilities, they
represent a benefit to the refineries equipped with gasification systems
that would receive such fees.

Gasifier Cost - Residual Management Costs: Refineries that gasify OBHSM
to produce synthesis gas will in turn incur costs associated with the
management of residuals left over from the gasification process, which
are considered newly generated wastes under the final rule.  These costs
include testing to determine whether these residuals exhibit the
characteristics of a hazardous waste and treatment for any hazardous
characteristics identified through a TCLP.  We do not include disposal
costs in the analysis because gasifiers would incur such costs in the
absence of the final rule (i.e., residuals produced from the
gasification of conventional feedstock would also require disposal).
Therefore, gasifiers are not expected to incur incremental disposal
costs as a result of the rule.

Decision Simulation

As indicated above, an important step in estimating the social costs and
benefits of the final rule is determining which affected refineries are
likely to use the exclusion.  We make this determination for individual
refineries based on the cost and benefit impacts above.  For each
refinery generating eligible material, we estimate the potential impacts
of the exclusion as follows:

(1)	Bgen = AMgen + ATgen

Where	Bgen = Benefits realized by the generator if it uses the
exclusion;

AMgen = Avoided waste management costs realized by the generating
refinery;

ATgen = Avoided waste management related transportation costs realized
by the generating refinery (only applies to waste that refineries send
offsite in the baseline).

(2)	Cgen = Tgen + ERgen + MRgen + F

Where, Cgen = Costs realized by the generator if it uses the exclusion;

	Tgen = Transportation costs for the generating refinery to send OBHSM
to another refinery for gasification (applies to the majority of
refineries that do not have onsite gasification systems);

ERgen = Energy replacement costs for the generating refinery (for
refineries that previously burned such material onsite for energy
recovery in the baseline);

MRgen = Material replacement costs for the generating refinery (for
refineries that previously recycled such material onsite in the baseline
to recover raw materials such as metals used in refinery catalysts);

F = Fee paid by the generating refinery for gasification of their OBHSM
at another refinery.

Although refineries for which the benefits estimated in Equation 1
exceed the costs estimated in Equation 2 would find it advantageous to
use the exclusion, we assume that they could do so only if the benefits
realized by the gasifier that accepts their OBHSM exceed the associated
costs.  We estimate these gasifier benefit and cost values as follows:

Bgas = FSgas + F

Where	Bgas = The benefits realized by a gasification system if it
accepts the OBHSM feedstock

generated by a given refinery;

FSgas = Feedstock savings for the gasification system, and

	F = Tipping fees charged to generators.

Cgas = RMgas

Where	Cgas = The costs incurred by a gasification system if it accepts
the OBHSM feedstock

generated by a given refinery;

RMgas = Residuals management costs incurred by the gasification system.

As indicated above, we assume that a refinery may use the exclusion only
if the exclusion-related benefits realized by the refinery exceed the
related costs and if the benefits realized by the gasification system
accepting the refinery's OBHSM exceed the associated costs.  Relating
these assumptions to the benefit and cost values estimated in Equations
1 through 4, we assume that a generator will use the exclusion only if
the following two conditions are met:

Bgen > Cgen, and

Bgas > Cgas

If either of these two conditions does not hold for the oil-bearing
hazardous secondary material generated by a given refinery, we assume
that the refinery will not use the exclusion.

Third Party Impacts

As outlined above, the final rule will affect refineries that shift
waste from baseline management practices to gasification as well as
refineries that receive diverted OBHSM and use it as gasification
feedstock.  In addition to these two groups, the final rule may also
affect facilities that are not directly involved in gasification.  More
specifically, independent (or commercial) waste management facilities
currently responsible for managing and disposing of these refinery
wastes in the baseline may realize three types of costs as a result of
the rule, as described below.

Increased Energy Costs: Some of the material that refineries send to
offsite facilities (e.g., cement kilns) in the baseline is burned as a
fuel by these facilities.  If less material is sent to these facilities
as a result of the rule, they will lose a source of energy and will
therefore need to purchase replacement fuel.  The magnitude of these
costs will depend on the tonnage and energy content of material that
refineries divert from offsite energy recovery to gasification as a
result of the rule and the energy value of this material.

Reduced Revenues from the Sale of Recovered Materials: A portion of the
secondary material that refineries send offsite in the baseline is
recycled by waste management facilities who then sell the materials that
they recover from refinery waste.  The diversion of OBHSM from offsite
recycling to gasification will lead to a reduction in these revenues.

Reduced Waste Management Revenues: Facilities that receive waste from
refineries in the baseline earn revenues for the management of this
waste.  If refineries send less waste to these facilities as a result of
the rule, these waste management revenues will decline.

Estimation of Social Benefits and Costs

As outlined above, a refinery's decision to use or not use the exclusion
depends on several potential benefit and cost impacts realized by the
refinery itself and the gasification system that would receive the
refinery's OBHSM under the exclusion.  In addition, each refinery's
decision to use or not use the exclusion could affect third parties not
involved in this decision.  While our estimates of the social benefits
and costs of the final rule largely reflect all of these impacts, two
subtle aspects of these impacts are excluded from our estimates of
social benefits and costs: fees paid to gasification systems and changes
in the waste management revenues earned by commercial waste management
facilities.  We describe our rationale for excluding these impacts
below:

Fees Paid to Refineries with Gasification Systems: As outlined above,
refineries that generate material eligible for the exclusion may try to
outbid each other for the right to divert their OBHSM to gasification.
The fees that emerge from this bidding process represent a transfer of
benefits from refineries that generate secondary material eligible for
the exclusion to the limited number of refineries with gasification
systems capable of using such material as feedstock.  In other words,
generating facilities would, in effect, share a portion of their
exclusion-related cost savings with gasification facilities to ensure
that they could use the exclusion.  Because these fees represent a
transfer rather than a real resource cost to the economy (i.e., use of
labor, material, or other resources), we do not include them in our
estimate of the rule's social costs.

Waste Management Revenue Losses for Commercial Waste Management
Facilities: As indicated above, revenues for commercial waste management
firms may decline as a result of the final rule if OBHSM is diverted
away from these firms to gasification systems.  Although such a decline
would represent a loss to facilities that currently receive and manage
waste from refineries, we do not include this decline in our estimate of
the social costs associated with the final rule.  Unlike the energy
value of material diverted away from commercial kilns under the final
rule, a reduction in waste management revenues does not represent a real
resource cost.  For example, if less refinery waste is used for energy
recovery as a result of the rule, resources (e.g., labor, materials, and
capital) will be required to replace the energy value of this material.
In contrast, foregone waste management revenues reflect the value of the
labor, material, and other resources used for waste management in the
baseline.  Because these resources will still be available for other
uses after the final rule is implemented, the reduction in waste
management revenues associated with the final rule does not represent a
resource cost to the economy.  Therefore, we present these revenue
losses as an economic impact separate from the social costs of the rule.

For any given facility that decides to use the exclusion, we estimate
the total social benefits and costs associated with this decision as
follows:

(5)	Benefitssocial = AMgen + ATgen + FSgas

Where	Benefitssocial = The social benefits of the refinery's decision to
use the exclusion;

AMgen = Avoided waste management costs realized by the generating
refinery;

ATgen = Avoided transportation costs realized by the generating refinery
(only applies to material that refineries send offsite in the baseline),
and

FSgas = Feedstock savings for the gasification system accepting the
refinery's OBHSM.

(6)	Costssocial = Tgen + ERtotal + MRtotal + RMgas

Where	Costssocial = The social costs of the refinery's decision to use
the exclusion;

	Tgen = Transportation costs for the generating refinery (applies to the
majority of refineries that do not have onsite gasification systems);

ERtotal = Total energy replacement costs incurred by the refinery
generating the eligible material (if it burns the material for energy
recovery in the baseline) and any offsite waste management facilities
that currently burn a portion of the refinery's OBHSM for energy
recovery;

MRtotal = Total material replacement costs incurred by the refinery
generating the eligible material (if it recycles this waste onsite in
the baseline) and any offsite waste management facilities that may
recycle a portion of the refinery's OBHSM in the baseline, and

RMgas = Residuals management costs incurred by the gasification system
that accepts and gasifies the refinery's OBHSM.

Estimation of Total Net Social Benefits

For each refinery expected to exclude its OBHSM under the final rule, we
estimate the net social benefits of the rule as the difference between
the social benefits and social costs as specified in Equations 5 and 6.
We then estimate the total net social benefits of the rule by
aggregating the net social impacts associated with each refinery that we
expect to use the exclusion, as shown in Equation 7.

Where, TNSB = Total net social benefits of the final rule;

Benefitssocial = The social benefits associated with an individual
refinery's decision

to use the exclusion;

Benefitssocial = The social costs associated with an individual
refinery's decision to

use the exclusion, and

	n = The number of refineries that use the exclusion.

Exhibit 6 demonstrates how our methodology uses the information outlined
above to estimate the net impact of a facility's decision to use or not
use the exclusion.  To simplify the illustration, we present impacts for
two refineries: one that uses the exclusion and one that does not.  As
Exhibit 6 illustrates, the first step in estimating the impacts
associated with a single refinery is determining whether the refinery
would experience net benefits if it were to use the exclusion.  After
analyzing potential impacts for the refinery generating the eligible
material, we then estimate potential impacts for the gasification system
that would receive this material.  If the net impacts for both
facilities are positive, we assume that the generating refinery will use
the exclusion.

In our example shown in Exhibit 6, Refinery 1 would use the exclusion
because the net benefits realized by Refinery 1 and the gasifier that
would receive its OBHSM are both positive.  In contrast, Refinery 2
would not use the exclusion in our example because the costs of doing so
would outweigh the benefits.  After determining whether a refinery
diverts it OBHSM to gasification, we then assess how this change affects
any commercial waste management facilities that currently manage the
refineries' waste in the baseline.  For example, Refinery 1's use of the
exclusion diverts waste away from commercial waste management facilities
that recover valuable materials from this waste in the baseline.  To
estimate the total impact associated with the diversion of a refinery's
OBHSM to gasification, we aggregate the individual impacts included in
Exhibit 6 with the exception of fees charged by gasification systems,
which, as we explain above represent transfers rather than resources
expended or conserved.  We estimate the total impacts of the rule by
aggregating impacts across refineries.

Human Health and Ecological Impacts

EPA's screening analysis of the human health and ecological impacts of
the final rule suggests that the exclusion will not result in
significant human health or ecological impacts.  Therefore, we did not
conduct an in-depth analysis of the changes in human health and
ecological risk associated with the final rule.

Exhibit 6

ILLUSTRATION OF APPROACH FOR ESTIMATING THE NET SOCIAL IMPACTS OF THE
RULE

Impact	Refinery 1	Refinery 2

Potential Impacts Realized by the Refinery that Generates the Material

	A	Savings - Baseline waste management costs	$687,500	$148,600

B	Savings - Baseline cost of transporting waste offsite	$130,900	$18,000

C	Cost - Transportation of OBHSM to gasification systems	-$118,700
-$187,200

D	Cost - Purchasing fuel to replace energy derived from burning OBHSM
onsite in the baseline	$0	$0

E	Cost - Purchasing virgin materials to replace materials recovered
through onsite recycling in the baseline	$0	$0

F	Fee paid to refinery equipped with a gasification system	-$534,300
-$396,900

Subtotal: Potential net impacts realized by a refinery if it diverts its
OBHSM to gasification	$165,400	-$417,500

Impacts Realized by the Gasifier Receiving OBHSM from Refinery 1 or
Refinery 2

	G	Savings - Feedstock savings	$57,400	$0

H	Tipping fee received from each refinery	$534,300	$396,900

I	Costs - Cost of testing and managing gasification residuals	-$64,400
$0

Subtotal: Potential net impacts realized by gasifier receiving OBHSM
from Refinery 1 or Refinery 2	$527,300	$396,900

Decision Point: Does the refinery use the exclusion?  If the potential
impacts realized by both the generating refinery AND the gasifier that
would receive the generating refinery's OBHSM are positive, then yes.
Otherwise, no.	Yes	No

Impacts Realized by Commercial Waste Management Facilities that
Currently Receive and Manage Waste Generated by Refinery 1 and Refinery
2

J	Costs - Purchasing fuel to replace energy derived from burning waste
from each refinery in the baseline	-$2,700	$0 - Refinery 2 does not use
the exclusion so facilities that currently manage its waste in the
baseline experience no impacts.

K	Costs - Revenues no longer earned from selling materials (e.g.,
metals) recovered from each refinery's waste in the baseline	-$5,400

	NET ANNUAL IMPACTS

 (If the refinery uses the exclusion, A+B+C+D+E+G+I+J+K.  Otherwise $0.)
$684,600	$0

Note: All estimates presented in year 2005 dollars.

analytic results

Based on the methodology presented above, we estimated the impacts of
the final rule under two gasification capacity scenarios:  (a) a
low-capacity scenario that reflects the capacity of the three refinery
gasification systems that are known to be operating and (b) a
high-capacity scenario that reflects the capacity of these three systems
plus two additional units that were planned as of 2003 but have not yet
gone online.  As described above, we present results for both of these
scenarios to help account for the uncertainty regarding the future
operational status of planned units not yet operating.

Exhibit 7 summarizes our results.  As the exhibit indicates, we do not
expect the net social benefits of the rule to vary significantly between
the two scenarios, ranging from $46.4 million per year under the
low-capacity scenario to $48.7 million per year under the high-capacity
scenario.  Although benefits are significantly higher when we account
for both existing and planned capacity (i.e., under the high-capacity
scenario) than when we consider existing capacity alone, so too are
costs.  The higher costs under the high-capacity scenario largely
reflect the increase in transport costs under this scenario relative to
the low-capacity scenario.  When we restrict our analysis to existing
capacity, many refineries located relatively far from gasification
systems would not find it economical to use the exclusion.  If we
consider both existing and planned capacity, however, the fee charged by
gasifiers is much lower and these facilities would find the exclusion to
be less expensive than their baseline waste management practices.  The
marginal net benefit per ton for these facilities, however, is much
lower than that associated with facilities that would exclude their
OBHSM under the low-capacity scenario.  Therefore, net social benefits
are not significantly higher under the high-capacity scenario than under
the low-capacity scenario.

Under both scenarios, avoided waste management costs make up the most
significant share of benefits, accounting for more than 80 percent of
the benefits associated with the exclusion.  The remaining benefits are
split fairly evenly between avoided transportation costs and gasifier
feedstock savings.  The cost of transporting OBHSM represents the most
significant portion of costs under both the low-capacity and
high-capacity scenarios, followed by foregone materials recovery.

Our analysis suggests that 123,300 to 177,000 tons of OBHSM may be
diverted to gasification under the final rule, depending on the capacity
of refinery gasification systems to consume the available OBHSM
feedstock.  This represents approximately 38 percent to 55 percent of
the material eligible for the exclusion.  Similarly, between 40 and 48
refineries may exclude their eligible secondary materials, or 26 percent
to 32 percent of eligible refineries.  The significant difference
between the low-capacity and high-capacity scenarios with respect to the
tonnage excluded and number of facilities using the exclusion stands in
stark contrast to the more narrow difference between net social benefits
under the two scenarios.  As suggested above, this reflects the
comparatively low net benefits per ton for OBHSM excluded only under the
high-capacity scenario (i.e., material excluded under the high-capacity
scenario but not under the low-capacity scenario) relative to net
benefits per ton for material excluded under the low-capacity scenario.

Exhibit 7

ANNUAL BENEFITS AND COSTS OF THE FINAL REFINERY GASIFICATION EXCLUSION
RULE

	Low-capacity Scenario: Existing Capacity Only	High-capacity Scenario:
Existing And Planned Capacity

Annual Social Benefits	$67,959,000	$81,134,000

Avoided Transportation Costs	$4,388,000	$6,854,000

Avoided Waste Management Costs	$58,765,000	$67,379,000

Feedstock Savings	$4,806,000	$6,901,000

Annual Social Costs	($21,546,000)	($32,474,000)

Cost of Transporting OBHSM to Gasification Systems	($10,837,000)
($16,640,000)

Energy Replacement Costs	($36,000)	($182,000)

Value of Materials No Longer Recycled	($7,347,000)	($10,579,000)

Residuals Testing and Management	($3,326,000)	($5,073,000)

ANNUAL NET SOCIAL BENEFITS	$46,414,000	$48,661,000

Other Impacts

Annual OBHSM Tonnage Diverted to Gasification	123,294	177,037

Number of Refineries that Use the Exclusion	40	48

Annual Tipping Fee Losses for Commercial Waste Management Facilities
$10,821,000	$15,119,000

Note: Monetary values presented in year 2005 dollars.

The results in Exhibit 7 also indicate that commercial facilities that
manage refinery waste in the baseline may experience revenue losses of
$10.8 million to $15.1 million under the final rule.  This represents
waste sent to commercial recyclers, incinerators, cement kilns, fuel
blenders, and other waste management facilities.  Although we lack
baseline revenue data for all of these waste management facilities, we
estimate that commercial incinerators and commercial kilns earn $281
million and $776 million, respectively, in annual waste management
revenues.  The expected revenue losses for commercial facilities
therefore represent just 1.0 percent to 1.4 percent of this total.
Furthermore, because we lack data on the baseline revenues of commercial
waste management facilities other than commercial incinerators and
commercial kilns, these values likely overstate the magnitude of
commercial waste management revenue losses relative to baseline
revenues.

Sensitivity Analysis

Although the $46.4 million to $48.7 million in annual benefits included
in Exhibit 7 reflect the decision of 40 to 48 refineries to use the
exclusion, nearly $39 million of these benefits are associated with a
single facility in Indiana.  According to the 2003 BRS, this facility
generates approximately 76,600 tons of material per year that would
qualify for the exclusion, which represents approximately 24 percent of
the secondary material eligible for the exclusion.  In addition, the
facility incinerates nearly 75,000 tons of this material.  As indicated
in Appendix B, we assume that the cost of incineration is approximately
$640 per ton, which would suggest that this facility alone could avoid
approximately $48 million in management costs if it uses the exclusion.
The estimated cost of $640 per ton is consistent with the average cost
of incinerating sludge, as reported by the Environmental Technology
Council (ETC).  We chose this value over other cost values reported by
ETC because sludge represents approximately 89 percent of the eligible
material that refineries incinerate in the baseline.  In addition, as an
average estimate, the $640 value is approximately halfway between the
low-end and high-end values reported by ETC.  If refinery sludge is less
viscous and has lower hazardous constituent concentrations than the
typical sludge, however, the per ton cost of incinerating refinery
sludge may be lower than this average value.  To account for this
possibility, we conducted a sensitivity analysis under which the cost of
incineration is approximately $381 per ton, which represents ETC's
low-end estimate for incinerating bulk pumpable sludge.

Exhibit 8 presents the results of this sensitivity analysis.  As the
exhibit indicates, when we reduce the assumed cost of incineration to
$381 per ton, the estimated net social benefits of the final rule fall
significantly relative to our primary analysis.  Under the low-capacity
scenario, our adjusted net social benefit estimates represent just 11
percent of the corresponding benefits associated with our primary
analysis.  Similarly, the estimated net social benefits for the
high-capacity scenario in our sensitivity analysis are slightly more
than half of the net benefits we estimated in our primary assessment of
the rule's impacts.

Exhibit 8

ANNUAL BENEFITS AND COSTS OF THE FINAL REFINERY GASIFICATION EXCLUSION
RULE:

SENSITIVITY ANALYSIS ASSUMING REDUCED COST FOR INCINERATION

	Low-capacity Scenario: Existing Capacity Only	High-capacity Scenario:
Existing And Planned Capacity

Annual Social Benefits	$14,690,000	$57,943,000

Avoided Transportation Costs	$4,546,000	$6,854,000

Avoided Waste Management Costs	$8,234,000	$44,188,000

Feedstock Savings	$1,910,000	$6,901,000

Annual Social Costs	($9,463,000)	($32,474,000)

Cost of Transporting OBHSM to Gasification Systems	($1,317,000)
($16,640,000)

Energy Replacement Costs	($51,000)	($182,000)

Value of Materials No Longer Recycled	($7,341,000)	($10,579,000)

Residuals Testing and Management	($754,000)	($5,073,000)

ANNUAL NET SOCIAL BENEFITS	$5,227,000	$25,470,000

Other Impacts

Annual OBHSM Tonnage Diverted to Gasification	48,983	177,037

Number of Refineries that Use the Exclusion	40	48

Annual Tipping Fee Losses for Commercial Waste Management Facilities
$8,054,000	$12,304,000

Note: Monetary values presented in year 2005 dollars.

An unexpected result of our sensitivity analysis is that, under the
low-capacity scenario, the number of refineries using the exclusion is
the same whether we assume that the cost of incineration is $640 per ton
or $381 per ton while the tonnage of waste excluded is considerably
lower when we assume that the cost is $381 per ton.  This apparent
inconsistency largely reflects the potential impacts realized by
refineries that incinerate significant quantities of OBHSM in the
baseline.  When we change our assumptions with respect to the cost of
incineration, the benefits of exclusion decline significantly for these
facilities.  Based on our analysis, some of these facilities would be
unlikely to use the exclusion under the low-capacity scenario when the
cost of incineration is $381 per ton, including the Indiana facility
described above that incinerates approximately 75,000 tons of OBHSM per
year.  Although the decision  of these facilities not to use the
exclusion would make gasification capacity available for other
refineries that generate OBHSM, the refineries that would find it
economical to use this extra capacity do not generate significant
quantities of OBHSM.  Therefore, although the number of refineries using
the exclusion may not change under the sensitivity analysis relative to
the primary analysis, the tonnage of OBHSM excluded may fall
significantly.

EQUITY CONSIDERATIONS AND OTHER IMPACTS

	As required by applicable statutes and executive orders, the following
section summarizes our analysis of equity considerations and other
regulatory concerns associated with the final rule. This section
assesses potential impacts, with respect to the following issues:

•	Regulatory Planning and Review: requires examination and
quantification of costs and benefits of regulating with and without the
final rule;

Regulatory flexibility: focuses on the potential effects of the final
rule on small entities;

Unfunded mandates: examines the implications of the final rule with
respect to unfunded mandates;

Federalism: considers potential issues related to state sovereignty;

Tribal governments: extends the discussion of federal unfunded mandates
to include impacts on Native American tribal governments and their
communities;

Children's health protection: examines the potential impact of the final
rule on the health of children;

Energy Impacts: examines the impacts of the final rule on energy use,
supply, and distribution;

•	Environmental justice: considers potential issues for minority and
low-income populations;

•	Regulatory takings: discusses the potential for takings to occur
under the final rule;

•	Civil Justice: considers steps taken to minimize litigation,
eliminate ambiguity, and reduce burden associated with the final rule;

•	Facilitation of Cooperative Conservation: discusses implementation
of the final rule in a manner that promotes “cooperative
conservation” among the Departments of the Interior, Agriculture,
Commerce, and Defense and the Environmental Protection Agency; and

•	Joint impacts of other EPA policies and rules: discusses how other
regulatory efforts together with the final rule may affect refineries
that generate or gasify material eligible for the exclusion.

Regulatory Planning and Review

Under Executive Order 12866 [58 FR 51735 (October 4, 1993)], the Agency,
in conjunction with the Office of Management and Budget’s (OMB’s)
Office of Information and Regulatory Affairs (OIRA), must determine
whether a regulatory action is “significant” and, therefore subject
to OMB review and the full requirements of the Executive Order. The
Order defines “significant regulatory action” as one that is likely
to result in a rule that may:

Have an annual effect on the economy of $100 million or more or
adversely affect in a material way the economy, a sector of the economy,
productivity, competition, jobs the environment, public health or
safety, or State, local, or tribal governments or communities;

Create a serious inconsistency or otherwise interfere with an action
taken or planned by another agency;

Materially alter the budgetary impact of entitlements, grants, user
fees, or loan programs or the rights and obligations of recipients
thereof; or

Raise novel legal or policy issues arising out of legal mandates, the
President’s priorities, or the principles set forth in the Executive
Order.

Pursuant to the terms of Executive Order 12866, it has been determined
that this rule is a “significant regulatory action” because it (4)
raises novel legal or policy issues arising out of legal mandates, the
President’s priorities, or the principles set forth in the Executive
Order. As indicated above, the nest benefits (or cost savings) from this
rule are estimated to be $46.4 million to $48.7 million. Because these
savings are less than the $100 million threshold for economic
significance, as established under point (1) above, this rule is not
considered to be an economically significant action.

Assessment of Small Entity Impacts

The Regulatory Flexibility Act (RFA), as amended by the Small Business
Regulatory Enforcement Fairness Act (SBREFA) of 1996, requires federal
agencies to consider impacts on “small entities” when developing
regulations. Small entities include small businesses, small governments,
and small nonprofit organizations. Under these laws, agencies must
analyze regulations to determine if they will have a “significant
economic impact on a substantial number” of small entities. If a
regulation is found to have a significant impact on a substantial number
of small entities, further analysis must be performed to determine what
can be done to lessen the impact. This section summarizes whether the
final rule excluding oil-bearing secondary materials generated by
petroleum refineries from the regulatory definition of solid waste will
adversely impact small entities.

  SEQ CHAPTER \h \r 1 The RFA provides default definitions for each type
of small entity.  Small entities are defined as: (1) a small business as
defined by the Small Business Administration’s (SBA) regulations at 13
CFR 121.201; (2) a small governmental jurisdiction that is a government
of a city, county, town, school district or special district with a
population of less than 50,000; and/or (3) a small organization that is
any not-for-profit enterprise which is independently owned and operated
and is not dominant in its field.

	The final rule is projected to result in benefits/cost savings for
refineries that use the exclusion.  In addition, those refineries that
choose not to take advantage of the subject exclusion would experience
no direct impact from this final rule.  Consequently, the rule is not
expected to adversely affect small entities that generate OBHSM eligible
for the exclusion.  Nevertheless, we developed facility-specific impact
estimates for refineries that may be classified as small entities to
show how they would likely benefit from the final rule. The United
States Small Business Administration considers a petroleum refinery
(NAICS code 32411) to be a small business if it has “no more than
1,500 employees nor more than 125,000 barrels per calendar day total
Operable Atmospheric Crude Oil Distillation capacity.” Based on the
available data, it is not feasible to measure the distillation
capacities of each refinery affected by the rule; therefore, we relied
on facility employment data to determine which refineries are small
entities. Our analysis of employment data suggests that 37 of the 152
refineries affected by the rule are small entities, as shown in Exhibit
9.

The benefits of the final rule on each small business are expected to
range from $0 to $2.0 million per year.  It is further estimated that
aggregate small entity impacts total $2.1 million to $2.5 million per
year, which represents 4.3 to 5.4 percent of the annual impact of the
final rule. Similarly, the quantity of material eligible for the
exclusion that is generated by small businesses, 16,895 tons, accounts
for 5.2 percent of the total OBHSM tonnage eligible for the exclusion.

In addition to refineries characterized as small entities, the final
rule may also impact small commercial waste management facilities that
currently manage refinery waste.  These facilities may indirectly
experience a loss in revenues as the result of the rule if secondary
material is diverted away from these facilities to refineries with
gasification systems. Due to resource constraints, we were unable to
estimate impacts for these facilities.

Exhibit 9

ESTIMATED BENEFITS (COST SAVINGS) FOR SMALL ENTITIES AFFECTED BY THE
FINAL RULE

EPA ID	Number of Employees	Quantity of OBHSM Eligible for the Exclusion
Annual Impacts:

Low-capacity Scenario	Annual Impacts:

High-capacity Scenario

ALD004009320	250 to 499	107.149	$0 	$1,100

ALD982105892	50 to 99	3.435	$5,700 	$7,100

ARD000021998	500 to 999	1,425	$0 	$262,800

ARD990869737	100 to 249	118.038	$0 	$34,300

CAD008253957	250	119.22	$0 	$0

CAD008371098	1,415	130.595	$0 	$21,800

CAD008383291	30	301	$0 	$40,200

CAD990724916	105	48.7625	$0 	$17,600

ILD005109822	20 to 38	45.77	$12,500 	$29,100

ILR000103119	360	2,788	$0 	$266,900

KSD007233422	727	519.95	$1,992,100 	$90,500

KYD089227227	200 to 499	72.5375	$0 	$17,000

LAD000225805	350	69.21	$0 	$15,800

LAD053783353	<1,500	1,588	$0 	$561,400

LAD099393225	<1,500	4.4227004	$3,400 	$5,300

LAD985200930	350	0.75	$4,300 	$4,800

MSD079467536	250 to 499	23.0135	$10,000 	$19,000

MTD000475194	50 to 99	9.448	$32,100 	$35,500

NMD048918817	881	670.5175	$0 	$107,700

NMD360010367	881	4.6085	$6,700 	$8,400

OHR000032151	20 to 38	3,548	$0 	$306,900

OKD000396549	185	260.678	$0 	$42,400

PAD001604693	100 to 249	208.89	$0 	$37,100

TXD008013468	1,415	628.132865	$0 	$85,100

TXD008090409	20 to 38	580.7025	$0 	$49,500

TXD049754047	50 to 99	154.839	$0 	$30,400

TXD054256391	360	176.2595	$0 	$42,400

TXD980877757	50 to 99	55.24	$0 	$6,800

TXR000027979	360	1.28	$7,700 	$8,200

UTD045267127	450	478.4	$0 	$166,700

UTD063314975	40 to 98	14.0085	$4,400 	$9,400

VID980536080	1,200	1,458	$0 	$0

WAD009252719	100 to 249	130.355	$6,500 	$53,800

WYD043705102	10 to 19	36.322	$10,700 	$23,900

WYD051843613	727	1,111	$0 	$124,300

WYD988869269	40 to 98	4	$8,100 	$9,500

WYR000201376	5	0.75	$2,500 	$2,800

Total	11,903 to 17,017	16,895	$2,106,700	$2,545,500

Unfunded Mandates Analysis

Signed into law on March 22, 1995, the Unfunded Mandates Reform Act
(UMRA) calls on federal agencies that issue any significant regulation
containing an unfunded mandate to fulfill certain requirements. These
include the preparation of a statement supporting the need to issue the
regulations and a description of prior consultation with representatives
of affected state, local, and tribal governments. Requirements in the
UMRA apply only to those federal regulations containing a significant
unfunded mandate. The UMRA defines a significant unfunded mandate as a
federal rule that either:

Results in estimated costs to state, local, and tribal governments, in
aggregate, of $100 million or more in any one year; or

Results in estimated annual costs to the private sector of $100 million
or more in any one year.

Federal rules are exempt from the UMRA requirements if:

The rule implements requirements specifically set forth in law; or

Compliance with the rule is voluntary for state and local governmental
entities.

Based on these criteria set forth by the UMRA, the final rule does not
contain a significant unfunded mandate.  As reported in the analytic
results presented above, the rule is not likely to result in annualized
costs of $100 million or more, either for the private sector or for
state and local governments.

Federalism Analysis

	Executive Order 13132, entitled “Federalism” (64 FR 43255, August
10, 1999), requires EPA to develop a process to ensure “meaningful and
timely input by State and local officials in the development of
regulatory policies that have federalism implications.”  Policies that
have federalism implications are defined in the Executive Order to
include regulations that have “substantial direct effects on the
States [in terms of compliance costs], on the relationship between the
national government and the States, or on the distribution of power and
responsibilities among the various levels of government."  In addition,
policies have federalism implications if they preempt State law.

This final rule is not expected to have federalism implications.  We do
not anticipate that it will have substantial direct effects on the
States, on the relationship between the national government and the
States, or on the distribution of power and responsibilities among the
various levels of government, as specified in the Order.  The rule
focuses on the handling of oil-bearing hazardous secondary materials
generated by petroleum refineries without affecting the relationships
between Federal and State governments.  Thus, Executive Order 13132 does
not apply to this rule.

Tribal Government Analysis

Executive Order 13175:  Consultation and Coordination with Indian Tribal
Governments (65 FR 67249, November 9, 2000), requires EPA to develop an
accountable process to ensure “meaningful and timely input by tribal
officials in the development of regulatory policies that have tribal
implications.”  We have determined that the final rule does not have
tribal implications, as specified in the Order.  No Tribal governments
are known to own or operate refineries that generate OBHSM subject to
the final rule.  Thus, Executive Order 13175 does not apply to this
rule.

Children's Health Protection Analysis

Executive Order 13045, “Protection of Children from Environmental
Health Risks and Safety Risks” (April 21, 1997), directs federal
agencies and departments to evaluate the health effects of
health-related or risk-related regulations on children.  For
economically significant rules concerning an environmental health or
safety risk that may disproportionately affect children, Executive Order
13045 also requires an explanation as to why the planned regulation is
preferable to other potentially effective and feasible alternatives.

As discussed above, pursuant to the terms of Executive Order 12866, the
final rule is not expected to have a significant economic impact;
therefore, the preferability of the rule relative to other regulatory
alternatives need not be further evaluated.  To meet the requirements of
the Order, we assessed the demographic characteristics of populations
living within a one-mile radius of refineries with gasification systems
using geo-coded data from the U.S. Census Bureau.  As indicated in
Exhibit 10, we found that children's share of the population living
within one mile of gasification systems is only slightly higher than
children's share of the national population.  Therefore, to the extent
that diverting the processing of excluded materials increases
health-related effects near gasification systems, children near these
facilities may bear a disproportionate share of this risk.  It is
important to note, however, that we did not examine the demographic
characteristics of areas near waste management facilities that manage
excluded OBHSM in the baseline.  The diversion of material away from
such facilities may conversely reduce the incidence of adverse health
effects among children in these areas.  In addition, given our
understanding of the risks associated with the exclusion, and the types
of like transfers of risk anticipated to occur, we do not believe that
children are likely to face significant health effects as a result of
the rule.

Exhibit 10

DEMOGRAPHICS OF AREAS NEAR REFINERIES WITH GASIFICATION SYSTEMS1

Demographic	National Average	Existing and Planned Gasification Systems
(High-capacity scenario)	Planned Gasification Systems Only (Low-capacity
scenario)

Low-income	12.5%	15.8%	16.0%

Minorities	19.6%	28.1%	28.6%

Younger than 18	25.0%	27.4%	27.3%

Source:

1. “USA QuickFacts from the US Census Bureau,” accessed at:
http://quickfacts.census.gov/qfd/states/00000.html.

Energy Impact Analysis

Executive Order 13211, “Actions Concerning Regulations that Affect
Energy Supply, Distribution, or Use” (May 18, 2001), addresses the
need for regulators to more fully consider the potential energy impacts
of the final rule and resulting actions.  Under Executive Order 13211,
agencies are required to prepare a Statement of Energy Effects when a
regulatory action may have significant adverse effects on energy supply,
distribution, or use, including impacts on price and foreign supplies.
Additionally, the requirements obligate agencies to consider reasonable
alternatives to regulatory actions with adverse effects and the impacts
that such alternatives might have on energy supply, distribution, or
use.

As indicated in Exhibit 3, we estimate that 36,735  tons of OBHSM
managed through energy recovery (i.e., waste streams with BRS management
codes H050 or H061) in the baseline qualify for the exclusion.  Based on
the results of our analysis, we estimate that 3,700 to 18,700 tons of
this material will be diverted to gasification as a result of the final
rule. This represents an energy loss of 19,800 to 101,300 MMBtu for
facilities that manage this material in the baseline.  This is the
equivalent of 3,400 to 17,500 barrels of crude oil per year.  The
refineries that gasify this OBHSM under the final rule, however, would
use the resulting synthesis gas as a fuel for the production of gasoline
and other petroleum products, which would (at least partially) offset
the 19,800 to 101,300 MMBtu energy loss mentioned above.  Moreover,
gasification of the 119,600 to 158,300 tons of excluded material not
burned for energy recovery in the baseline would yield additional energy
savings.  Assuming that all of the energy content of this material is
retained in the resulting synthesis gas fuel, the gasification of this
material represents energy savings of 648,300 to 858,000 MMBtu per year.
 Therefore, accounting for the estimated energy loss of 19,800 to
101,300 MMBtu associated with OBHSM currently burned for energy recovery
in the baseline, the rule could yield net energy savings ranging from
628,500 to 756,700 MMBtu per year.

Environmental Justice Analysis

Executive Order 12898, “Federal Actions to Address Environmental
Justice in Minority Populations and Low-Income Populations” (February
11, 1994), requires federal agencies to identify disproportionately
large and adverse human health or environmental effects of their
programs, policies, and activities on minority and low-income
populations.  Among other actions, agencies are directed to improve
research and data collection regarding health and environmental effects
in minority and low-income communities.

To meet the requirements of the Order, we assessed the demographic
characteristics of populations living within a one-mile radius of
refineries with gasification systems using geo-coded data from the U.S.
Census Bureau. Under the final rule, we estimate that 123,300 to 177,000
tons of OBHSM will be diverted to these facilities for gasification.
Although we do not believe that gasification of this material represents
a greater risk than baseline management practices, the final rule will
concentrate the processing of excluded material at the limited number of
refineries that could potentially use this material as a feedstock under
the final rule.  Therefore, human health or environmental effects may be
shifted to these areas.

As shown in Exhibit 10, the areas surrounding gasification systems
affected by the rule have disproportionately high low-income and
minority populations.  Among the individuals living within one mile of
the existing and planned gasification systems included in our analysis,
15.8 percent are low-income individuals, compared to 12.5 percent
nationally.  Similarly, 28.1 percent of the individuals living near
existing and planned gasification systems are minorities, compared to
19.6 percent across the entire U.S.  This disparity is even more
pronounced when we limit our analysis to those individuals living near
planned gasification systems.

The implication of our findings is that low-income and minority
populations may bear a disproportionate share of any human health or
environmental effects associated with shifting the processing of
excluded material to gasification systems.  Low-income and minority
populations living near waste management facilities that manage excluded
material in the baseline, however, would also likely experience a
reduction in risk under the final rule.  Due to resource constraints,
the demographic characteristics of the areas surrounding these
facilities were not examined.  In addition, given our understanding of
the risks associated with this exclusion and the types of like transfers
of risk anticipated to occur, we do not believe that low-income and
minority populations are likely to face significant human health or
environmental effects as a result of the rule.

Regulatory Takings Analysis

	Executive Order 12630, “Government Actions and Interference with
Constitutionally Protected Property Rights” (March 15, 1988), directs
federal agencies to consider the private property takings implications
of regulations.  Under the Fifth Amendment of the U.S. Constitution, the
government may not take private property for public use without
compensating the owner.  Though the exact interpretation of this takings
clause as applied to regulatory action is still subject to an ongoing
debate, a framework for interpretation has been established by legal
precedent through a series of prominent legal cases.

Within the context of mainstream legal precedent, a regulatory taking of
private property is generally deemed to result if the court determines
that the government action satisfies any of the following criteria:

•	Results in a physical invasion of property;

•	Denies the owner all reasonable or economically viable use of
property;

•	Interferes with reasonable investment-backed expectations for
property; or

•	Fails to establish a justifiable connection between the requirements
imposed (e.g., permit conditions) and the underlying purposes of the
regulation.

Even if a regulatory requirement meets any or all of the designated
conditions for a regulatory taking, courts may still find it exempt from
the takings clause if the regulatory action is meant to prevent a
“nuisance” or to provide other benefits to the public.  A nuisance
is defined as an activity or condition that either interferes with
public welfare or with the ability of another private citizen to enjoy
his or her own property.

Based on a review of the relevant case law, the final rule is not likely
to result in any regulatory takings. The final rule does not require
that private property be invaded or taken for public use.

Civil Justice Analysis

The final rule meets applicable standards in sections 3(a) and 3(b)(2)
of Executive Order 12988, “Civil Justice Reform” (February 5, 1996),
to minimize litigation, eliminate ambiguity, and reduce burden.  EPA
actions to meet the requirements of the Order include, but are not
limited to, the following: unambiguous specification of the standards,
and a description of the effect of the standards on existing law.

Facilitation of Cooperative Conservation

Executive Order 13352, “Facilitation of Cooperative Conservation”
(August 26, 2004), directs the Departments of the Interior, Agriculture,
Commerce, and Defense and the Environmental Protection Agency to
implement laws relating to the environment and natural resources in a
manner that promotes “cooperative conservation.”  The Order defines
“cooperative conservation” as “actions that relate to use,
enhancement, and enjoyment of natural resources, protection of the
environment, or both, and that involve collaborative activity among
Federal, State, local, and tribal governments, private for-profit and
nonprofit institutions, other nongovernmental entities and
individuals.”

The final rule is designed to promote cooperation between EPA, state,
and local governments by identifying clear criteria for excluding
refinery waste from the regulatory definition of solid waste.  As
written, this rule is intended to enhance cooperative conservation and
should in no way impede collaborative use, enhancement, or enjoyment of
natural resources and the environment.  Furthermore, in accordance with
the Order, EPA’s development of the final rule reflects any comments
received from State and local governments and private organizations on
the proposed rule published in 2002.

Joint Impacts of Rules

As indicated above, the final rule would exclude oil-bearing secondary
materials generated by petroleum refineries from the regulatory
definition of solid waste if refineries use these materials as a
feedstock for the production of synthesis gas.  Gasification systems
that use this waste, however, would still be required to comply with
other environmental regulations, such as maximum achievable control
technology (MACT) emissions standards established under the Clean Air
Act and National Pollutant Discharge Elimination System (NPDES)
requirements established under the Clean Water Act.  In addition,
residuals generated from the gasification of excluded waste would be
considered a newly generated waste under the final rule.  As such, these
residuals could be subject to RCRA waste management requirements.

APPENDIX A

REFINERIES AFFECTED BY THE FINAL RULE

EPA_ID	NAME	CITY	STATE

AK0000384040	PETROSTAR VALDEZ REFINERY	VALDEZ	AK

AKD000850701	WILLIAMS ALASKA PETROLEUM N POLE REFINER	NORTH POLE	AK

AKD048679682	TESORO ALASKA KENAI REFINERY	KENAI	AK

ALD004009320	HUNT REFINING COMPANY	TUSCALOOSA	AL

ALD020852422	SHELL CHEMICAL LP-MOBILE SITE	SARALAND	AL

ALD982105892	TRIGEANT EP, LTD. CHICKASAW REFINERY	CHICKASAW	AL

ARD000021998	LION OIL COMPANY	EL DORADO	AR

ARD990869737	CROSS OIL REFINING & MARKETING,INC.	SMACKOVER	AR

CAD008237679	CONOCOPHILLIPS LAR, WILMINGTON PLANT	WILMINGTON	CA

CAD008253957	EDGINGTON OIL COMPANY	LONG BEACH	CA

CAD008336901	CHEVRON EL SEGUNDO REFINERY	EL SEGUNDO	CA

CAD008345464	LUNDAY-THAGARD CO	SOUTH GATE	CA

CAD008354052	EXXONMOBIL OIL CORP TORRANCE REFINERY	TORRANCE	CA

CAD008371098	PARAMOUNT PETROLEUM CORPORATION	PARAMOUNT	CA

CAD008383291	CENCO REFINING COMPANY	SANTA FE SPRINGS	CA

CAD009108705	CONOCOPHILLIPS CO SAN FRANCISCO REFINERY	RODEO	CA

CAD009114919	CHEVRON USA INC RICHMOND REFINERY	RICHMOND	CA

CAD009164021	SHELL OIL PRODUCTS US, MARTINEZ REFINERY	MARTINEZ	CA

CAD041520644	EQUILON ENTERPRISES, LA REFINERY	WILMINGTON	CA

CAD063001770	VALERO REFINING COMPANY - CALIFORNIA	BENICIA	CA

CAD066647066	ULTRAMAR INC	WILMINGTON	CA

CAD077227049	BP WEST COAST PRODUCTS-CARSON REFINERY	CARSON	CA

CAD099457087	SHELL OIL PRODUCTS US	BAKERSFIELD	CA

CAD980881676	CONOCOPHILLIPS CO. LAR, CARSON PLANT	CARSON	CA

CAD981373053	VALERO WILMINGTON ASPHALT PLANT	WILMINGTON	CA

CAD982052094	SHELL OIL PRODUCTS US	BAKERSFIELD	CA

CAD990724916	KERN OIL AND REFINING CO	BAKERSFIELD	CA

CAR000091488	GOLDEN EAGLE REFINERY	MARTINEZ	CA

CAT000611228	CONOCOPHILLIPS LAR, MARINE TERMINAL	LOS ANGELES	CA

CAT080010796	CONOCOPHILLIPS CO., SANTA MARIA FACILITY	ARROYO GRANDE	CA

COD000109975	COLORADO REFINING COMPANY	COMMERCE CITY	CO

COD060627189	SUNCOR ENERGY DENVER REFINERY	COMMERCE CITY	CO

DED002329738	MOTIVA ENTERPRISES	DELAWARE CITY	DE

GAD003292877	CITGO ASPHALT REFINING COMPANY	SAVANNAH	GA

HID056786395	TESORO HAWAII CORPORATION REFINERY	KAPOLEI	HI

HIT160010005	CHEVRON PRODUCTS CO HAWAII REFINERY	KAPOLEI	HI

ILD005109822	PREMCOR REFINING GROUP INC	BLUE ISLAND	IL

ILD005476882	MARATHON ASHLAND PETROLEUM LLC	ROBINSON	IL

ILD041550567	CITGO LEMONT REFINERY	LEMONT	IL

ILD064403199	EXXONMOBIL OIL CORP	CHANNAHON	IL

ILR000077115	CONOCOPHILLIPS CO WWR	ROXANA	IL

ILR000103119	AMERICAN WESTERN REFINING LP	LAWRENCEVILLE	IL

IND000810861	BP PRODUCTS NORTH AMERICA INC LAKEFRONT	WHITING	IN

IND074375585	BP PRODUCTS NORTH AMERICA INC	WHITING	IN

KSD000610543	EL PASO MERCHANT ENERGY WICHITA	WICHITA	KS

KSD000829846	EL PASO MERCHANT ENERGY EL DORADO	EL DORADO	KS

KSD007145956	NATIONAL COOPERATIVE REFINERY ASSN	MCPHERSON	KS

KSD007233422	FRONTIER EL DORADO REFINING CO	EL DORADO	KS

KSD087418695	TPI PETROLEUM INC ARK CITY REFINERY	ARKANSAS CITY	KS

KYD041376138	CATLETTSBURG REFINING	CATLETTSBURG	KY

KYD089227227	SOMERSET REFINERY INC, THE	SOMERSET	KY

LAD000225805	CALUMET COTTON VALLEY	COTTON VALLEY	LA

LAD000225862	VALERO ST. CHARLES REFINERY	NORCO	LA

LAD008058471	MURPHY OIL USA, INC. MERAUX REFINERY	MERAUX	LA

LAD008080350	CITGO PETROLEUM CORPORATION	LAKE CHARLES	LA

LAD008179707	CHALMETTE REFINING, L.L.C	CHALMETTE	LA

LAD008186579	MOTIVA ENTERPRISES LLC - NORCO REFINERY	NORCO	LA

LAD053783353	PLACID REFINING COMPANY LLC	PORT ALLEN	LA

LAD056024391	CONOCOPHILLIPS COMPANY	BELLE CHASSE	LA

LAD062662887	EXXONMOBIL BATON ROUGE REFINERY	BATON ROUGE	LA

LAD065485146	MOTIVA ENTERPRISES LLC, CONVENT REFINERY	UNION	LA

LAD081999724	MARATHON ASHLAND PETROLEUM LLC - LRD	GARYVILLE	LA

LAD099393225	CALCASIEU REFINING COMPANY	LAKE CHARLES	LA

LAD985200930	CALUMET LUBRICANTS CO., L.P.	PRINCETON	LA

LAD990683716	CONOCOPHILLIPS INC., LAKE CHARLES	WESTLAKE	LA

MDR000015313	KINDER MORGAN OPERATING LP A	WOODBINE	MD

MID005358130	TPI PETROLEUM INC	ALMA	MI

MID005506357	MARATHON ASHLAND PETROLEUM LLC	DETROIT	MI

MND000686071	FLINT HILLS RESOURCES, L.P.	INVER GROVE HEIGHTS	MN

MSD054179403	CHEVRON PRODUCTS COMPANY	PASCAGOULA	MS

MSD079467536	HUNT SOUTHLAND REFINING - SANDERSVILLE	HEIDELBERG	MS

MSD098595317	ERGON REFINING, INC.	VICKSBURG	MS

MTD000475194	MONTANA REFINING COMPANY	GREAT FALLS	MT

MTD006229405	CONOCOPHILLIPS CO BILLINGS REFINERY	BILLINGS	MT

MTD006238083	CHS INC LAUREL REFINERY	LAUREL	MT

MTD010380574	EXXONMOBIL REFINING AND SUPPLY CO	BILLINGS	MT

NDD006175467	TESORO - MANDAN REFINERY	MANDAN	ND

NJD000768044	CITGO ASPHALT REFINING CO.	PAULSBORO	NJ

NJD002342426	VALERO REFINING COMPANY - NEW JERSEY	PAULSBORO	NJ

NJD045445483	AMERADA HESS PORT READING REFINERY	PORT READING	NJ

NJD986645984	CONOCOPHILLIPS COMPANY - BAYWAY REFINERY	LINDEN	NJ

NJD990753162	COASTAL EAGLE POINT OIL COMPANY	WESTVILLE	NJ

NMD000333211	GIANT REFINING CO. - CINIZA REFINERY	JAMESTOWN	NM

NMD048918817	NAVAJO REFINING COMPANY	ARTESIA	NM

NMD089416416	GIANT REFINING COMPANY - BLOOMFIELD	BLOOMFIELD	NM

NMD360010367	LEA REFINING COMPANY	LOVINGTON	NM

OHD005046511	SUNOCO R&S	OREGON	OH

OHD005057542	BP PRODUCTS NORTH AMERICA - TOLEDO REFIN	OREGON	OH

OHD048107049	MARATHON ASHLAND PETROLEUM LLC	CANTON	OH

OHR000032151	PREMCOR - LIMA REFINERY	LIMA	OH

OKD000396549	WYNNEWOOD REFINING COMPANY	WYNNEWOOD	OK

OKD007233836	CONOCOPHILLIPS REFINERY/TECHNOLOGY SITE	PONCA CITY	OK

OKD057705972	T. P. I.  PETROLEUM, INC. A VALERO CO	ARDMORE	OK

OKD058078775	SUN, INC. (R&M)	TULSA	OK

OKD990750960	SINCLAIR OIL CORPORATION-TULSA REFINERY	TULSA	OK

ORD009031873	CHEVRON PRODUCTS COMPANY WILLBRIDGE	PORTLAND	OR

PAD001604693	AMERICAN REFINING GROUP	BRADFORD	PA

PAD002105179	UNITED REFINING CO	WARREN	PA

PAD002289700	SUNOCO INC (R&S) POINT BREEZE	PHILADELPHIA	PA

PAD049791098	SUNOCO INC (R&S)  GIRARD POINT	PHILADELPHIA	PA

PAD980550594	SUNOCO INC (R&M) MARCUS HOOK REFINERY	MARCUS HOOK	PA

PAR000015768	CONOCOPHILLIPS CO	TRAINER	PA

PRD090074071	SHELL CHEMICAL YABUCOA, INC.	YABUCOA	PR

TXD000782698	EXXON MOBIL CORPORATION	BAYTOWN	TX

TXD000792937	VALERO ENERGY CORP	TEXAS CITY	TX

TXD007333800	LA GLORIA OIL AND GAS COMPANY	TYLER	TX

TXD008013468	ALON USA LP	BIG SPRING	TX

TXD008079501	MARATHON ASHLAND PETROLEUM LLC	TEXAS CITY	TX

TXD008080533	BP PRODUCTS NORTH AMERICA INC	TEXAS CITY	TX

TXD008090409	THE PREMCOR REFINING GROUP INC	PORT ARTHUR	TX

TXD008091290	CROWN CENTRAL PETROLEUM CORPORATION	PASADENA	TX

TXD008097529	MOTIVA ENTERPRISES LLC	PORT ARTHUR	TX

TXD008132268	VALERO ENERGY CORP	CORPUS CHRISTI	TX

TXD048210645	CONOCOPHILLIPS COMPANY	OLD OCEAN	TX

TXD049754047	AGE REFINING INC	SAN ANTONIO	TX

TXD051161990	CITGO PETROLEUM CORPORATION	CORPUS CHRISTI	TX

TXD053624193	VALERO ENERGY CORP	HOUSTON	TX

TXD054256391	WESTERN REFINING COMPANY LP	EL PASO	TX

TXD059685339	DIAMOND SHAMROCK REFINING COMPANY LP	SUNRAY	TX

TXD065099160	ATOFINA PETROCHEMICALS INC	PORT ARTHUR	TX

TXD066447376	FLINT HILLS RESOURCES LP	CORPUS CHRISTI	TX

TXD067285973	SHELL OIL COMPANY	DEER PARK	TX

TXD074604166	VALERO REFINING-TEXAS LP	CORPUS CHRISTI	TX

TXD082688979	LYONDELL CITGO REFINING LP	HOUSTON	TX

TXD088474663	FLINT HILLS RESOURCES LP	CORPUS CHRISTI	TX

TXD980626774	CONOCOPHILLIPS COMPANY	BORGER	TX

TXD980877757	TRIGEANT LTD	CORPUS CHRISTI	TX

TXD981153711	CITGO REFINING AND CHEMICALS COMPANY LP	CORPUS CHRISTI	TX

TXD990709966	DIAMOND SHAMROCK REFINING AND MARKETING	THREE RIVERS	TX

TXD990797714	EXXONMOBIL OIL REFINERY	BEAUMONT	TX

TXR000027979	WESTERN REFINING COMPANY LP	EL PASO	TX

UTD000826362	TESORO REFINING AND MARKETING COMPANY	SALT LAKE CITY	UT

UTD009090580	WOODS CROSS REFINERY	WOODS CROSS	UT

UTD045267127	BIG WEST OIL LLC	NORTH SALT LAKE	UT

UTD063314975	SILVER EAGLE REFINING-WOODS CROSS INC.	WOODS CROSS	UT

UTD092029768	CHEVRON PRODUCTS COMPANY	SALT LAKE CITY	UT

VAD001936301	KINDER MORGAN OPERATING L.P. "A"	RICHMOND	VA

VAD050990357	GIANT YORKTOWN,INC.	GRAFTON	VA

VID980536080	HOVENSA LLC	CHRISTIANSTED	VI

WAD009250366	CONOCOPHILLIPS CO FERNDALE REFINERY	FERNDALE	WA

WAD009252719	US OIL & REFINING CO	TACOMA	WA

WAD009275082	TESORO REFINING & MARKETING COMPANY	ANACORTES	WA

WAD009276197	SHELL OPUS PUGET SOUND REFINERY	ANACORTES	WA

WAD069548154	BP CHERRY POINT REFINERY	BLAINE	WA

WID006194336	MURPHY OIL USA INC	SUPERIOR	WI

WVR000010058	ERGON-WEST VIRGINIA, INC.	NEWELL	WV

WYD043705102	WYOMING REFINING COMPANY	NEWCASTLE	WY

WYD048743009	SINCLAIR OIL CORP - CASPER REFINERY	CASPER	WY

WYD051843613	FRONTIER REFINING INC.	CHEYENNE	WY

WYD079959185	SINCLAIR OIL CORPORATION	SINCLAIR	WY

WYD988869269	SILVER EAGLE REFINING	EVANSTON	WY

WYR000201376	COG REFINING COMPANY, INC.	LA BARGE	WY

APPENDIX B

DETAILED DESCRIPTION OF ANALYTIC METHODS

	This appendix provides a detailed description of our approach for
estimating the various impacts outlined in the main body of this
document.  We summarize these impacts in Exhibit B-1.  As indicated in
the exhibit, the final rule may affect three specific groups: (1)
refineries with oil-bearing hazardous secondary material (OBHSM)
eligible for the exclusion, (2) refineries with gasification systems
capable of using excluded OBHSM as feedstock, and (3) third parties
affected by the decision of refineries to use or not use the exclusion.
The following sections summarize our approach for estimating the various
impacts for these groups.

Exhibit B-1

Potential Impacts Associated with The Final Rule

Impacts for Refineries with Material Eligible for the Exclusion	Impacts
for Refineries with Gasification Systems	Impacts for Third Parties
Affected by the Rule

Benefits

Avoided waste management costs

Avoided transportation costs

Costs

Transportation costs

Energy replacement costs (applies only to material managed through
energy recovery in the baseline)

Raw material replacement costs (applies only to material recycled in the
baseline)

Fees paid to gasification systems	Benefits

Feedstock savings

Fees received from facilities that generate material eligible for the
exclusion

Costs

Residuals management costs	Benefits

None identified

Costs

Energy replacement costs

Raw materials replacement costs

Decline in waste management revenues

Impacts for Refineries that Generate Material Eligible for the Exclusion

	Refineries that generate material eligible for the exclusion could
realize significant benefits and costs, as listed in Exhibit B-1 and
explained in the main body of this document.  In this section, we
describe our methods for estimating these impacts.

Generator Benefit Impacts: Avoided Waste Management Costs

Refineries that divert their OBHSM from baseline waste management
practices to gasification under the final rule will experience savings
associated with avoiding the costs of baseline waste management
practices.  To estimate these potential savings for a refinery, we
estimate its baseline management costs for materials that are eligible
for the exclusion.  We generate these estimates from cost functions
specific to individual waste management methods, as outlined in Exhibit
B-2.  As Exhibit B-2 indicates, most of these cost functions are simply
unit cost values, such as $640 per ton of waste incinerated in the
baseline.  We estimate the total management cost savings for a refinery
by summing the baseline management costs associated with each management
method.

The management methods listed in Exhibit B-2 account for 91 percent of
the material that could potentially be excluded from the regulatory
definition of solid waste under the final rule.  The remaining 9 percent
represents waste for which BRS does not provide management method
information and waste for which we do not have a unit management cost
value (e.g., waste managed through stabilization or chemical fixation
prior to disposal at another site-i.e., BRS management method code
H111).  To estimate avoided management costs for these wastes, we use
the weighted average management cost per ton for the management methods
included in Exhibit B-2, using the volume managed by refineries in the
baseline as weights.  Based on this approach, we apply an average cost
of $268 per ton to waste streams for which BRS provides no management
data and management methods for which we lack cost information.

Exhibit B-2

COST FUNCTIONS FOR INDIVIDUAL WASTE MANAGEMENT METHODS

Management Method	Cost Function

Metals recovery1	Capital costs = $7,736 x (tonnage recovered)0.59

O&M Costs = $2,217 x (tonnage recovered)0.78

Other recovery1	Capital costs = $87 x (tonnage recovered)

O&M costs = $20 x (tonnage recovered)

Combustion for energy recovery2	Total costs = $237 x tonnage combusted

Fuel blending prior to energy recovery3	Total costs = $136 x tonnage
blended

Incineration4	Total costs = $640 x tonnage incinerated

Land treatment or application5	Total costs = $137 x tonnage applied to
land

Landfill or surface impoundment that will be closed as landfill5	Total
costs = $137 x tonnage applied to land

Deep well or underground injection3	Total costs = $206 x tonnage
injected

Weighted average management cost for the above management methods	Total
costs = $268 x tonnage managed

Notes:

Two BRS waste management methods are included in this category:
"solvents recovery" (BRS management method code H020) and "other
recovery or reclamation for reuse including acid regeneration, organics
recovery, etc." (BRS management method code H039).  We use the cost of
acid regeneration as a proxy for this category.  Our cost source for
this category is David Gustafson and Chris Engelmann, "Recycling
Break-Even Analysis for the Economic Analysis Support for OSW’s RCRA
'Definition of Solid Waste' (DSW) Final Rule," DPRA, memorandum to Mark
Eads, U.S. EPA Office of Solid Waste, May 16, 2006.

Environmental Technology Council, Fuel-grade waste combustion prices,
http://www.etc.org/costsurvey8.cfm, accessed September 8, 2006.

DPRA Inc., Unit Cost Compendium, prepared for U.S. EPA Office of Solid
Waste, September 30, 2000.

Environmental Technology Council, Commercial Incinerator Prices,
http://www.etc.org/costsurvey8.cfm, accessed September 8, 2006.  ETC
reports several prices for incineration.  Because approximately 88
percent of the waste that refineries incinerate is sludge, we use the
ETC price for bulk pumpable sludge.

Environmental Technology Council, Commercial Landfill Prices,
http://www.etc.org/costsurvey8.cfm, accessed September 8, 2006.

All unit costs in this exhibit were converted to year 2005 dollars using
the GDP deflator.

Generator Benefits Impacts: Avoided Transportation Costs

When refineries send waste offsite for recycling or disposal, they incur
costs associated with the transportation of their waste.  Baseline
transportation costs associated with materials suitable for gasification
represent potential savings under the final rule (i.e., they are costs
that could be avoided under the final rule).  To estimate the magnitude
of these potential savings, we use the unit transport cost values
presented in Exhibit B-3.  As Exhibit B-3 indicates, transportation
costs differ for wastes shipped in tankers versus waste shipped in dump
trucks.  For the purposes of this analysis, we assume that solid wastes
are transported in dump trucks and that liquids and sludges are
transported in tankers.  In addition, because large-quantity generators
may not store hazardous waste onsite for more than 90 days under current
regulation, we assume that each facility makes at least four tanker
shipments per year (if it sends any liquid or sludge waste offsite) and
four dump truck shipments per year (if it sends any solid waste
offsite).

As suggested by the mileage costs presented in Exhibit B-3, a key input
in our analysis of transportation cost savings is the distance over
which a refinery transports its waste in the baseline.  To account for
distance in our analysis, we estimated an average baseline transport
distance for each refinery affected by the final rule using data in the
2003 BRS.  Based on BRS data describing the location of each facility
where a refinery sends its waste and the tonnage of waste sent to each
facility, we estimated the weighted average distance that each refinery
sends its waste in the baseline.

Exhibit B-3

UNIT TRANSPORATION COSTS

Cost Item	Inputs for Estimating Tanker Transport Costs	Inputs for
Estimating Dump Truck Transport Costs

Mileage costs per load	<300 miles: $2.86 per mile

300-399 miles: $2.82 per mile

400-499 miles: $2.76 per mile

500-599 miles: $2.71 per mile

600-699 miles: $2.68 per mile

700-799 miles: $2.64 per mile

800-899 miles: $2.61 per mile

900+ miles: $2.59 per mile 	<300 miles: $2.67 per mile

300-399 miles: $2.27 per mile

400-499 miles: $2.12 per mile

500-599 miles: $2.03 per mile

600-699 miles: $2.00 per mile

700-799 miles: $1.96 per mile

800-899 miles: $1.94 per mile

900+ miles: $1.91 per mile

Tanker/Truck Loading	$335 per tanker load	$393 per truck load

Tanker/Truck Unloading	$335 per tanker load	$7 per truck load

Manifest Completion and Filing	$46 per tanker load	$46 per truck load

Tanker/Truck Washout and Decontamination	$173 per tanker load	$173 per
truck load

Notes:

1.  All figures reported in year 2005 dollars.

Source: DPRA Inc., Unit Cost Compendium, prepared for U.S. EPA Office of
Solid Waste, September 30, 2000.  Cost values from this report were
converted to year 2005 dollars using the GDP deflator.

Generator Cost Impacts: Transportation Costs

	In addition to realizing the benefits outlined above, refineries will
also incur costs if they use the exclusion.  For refineries without
gasification systems onsite, these costs include the cost of
transporting OBHSM to a refinery that has a gasification system.  These
costs are estimated using the same approach outlined above for
transportation cost savings, with two exceptions.  First, in accordance
with the requirements set forth in the final rule, we assume that
refineries that use the exclusion will incur no manifest costs if they
send their OBHSM to another refinery for gasification.  Under the final
rule, such material is excluded from the regulatory definition of solid
waste; therefore, manifest requirements will not apply.  Second, it is
not assumed that each refinery will make a minimum of four offsite waste
shipments per year.  Because refinery OBHSM used as gasification
feedstock will be excluded from the RCRA definition of solid waste under
the final rule, the 90-day storage limit described above will not apply.
 Therefore, it is not necessary to assume that each refinery must make
at least four waste shipments per year.

To estimate the distance that refineries would transport their OBHSM
under the final rule, we use the distance to the closest refinery
equipped with such a system as a proxy for the distance that each
refinery would actually ship its OBHSM.  Due to gasifier capacity
constraints and other factors affecting refinery decision-making, it is
unclear exactly where each refinery would ultimately send its OBHSM if
it were to use the exclusion.

Generator Cost Impacts: Energy Replacement Costs

As indicated in the main body of this document, refineries use much of
the waste that would qualify for the exclusion as a fuel in the
baseline, which yields significant energy cost savings for facilities
that engage in this practice.  If refineries divert OBHSM from energy
recovery to gasification under the final rule, they will no longer
realize these savings.  To estimate the cost of replacing energy derived
from this waste, we follow the three steps outlined below.

First, we use the 2003 BRS to estimate the tonnage of OBHSM that each
refinery burns onsite for energy recovery in the baseline.  In
conducting this analysis, we assume that waste streams with BRS
management method codes H050 and H061 represent waste burned for energy
recovery.

Second, we estimate the thermal value of waste used as fuel in the
baseline.  In developing these estimates, we assume that OBHSM burned by
refineries for energy recovery has an average thermal value of 2,709 Btu
per pound, which represents the average fuel value of waste streams
described in EPA Best Demonstrated Available Technology (BDAT) documents
for listed wastes affected by the rule.

For each refinery, we then estimate the cost of replacing fuel diverted
to gasification by multiplying the energy content estimated in step 2 by
the unit cost of replacement fuel.  It is further assumed that
refineries would use coal as their replacement fuel, which costs
approximately $1.80 per million Btu.

Generator Cost Impacts: Material Replacement Costs

In addition to burning waste to reduce baseline energy costs, some
refineries also recycle their waste onsite to recover valuable materials
such as metals used in refinery catalysts.  For refineries that shift
OBHSM from onsite recycling to gasification as a result of the final
rule, the value of these materials represents a cost of using the
exclusion.  We estimate this cost based on the type of recycling
associated with each waste stream.  For waste streams recycled through
metals recovery, (as indicated by BRS management method code H010), we
assume that the materials recovered by refineries include molybdenum,
vanadium, nickel, carbon, and alumina, as indicated in Exhibit B-4.
Based on the tonnage of each material recovered and the per ton value of
each material, the cost associated with diverting OBHSM from metals
recycling to gasification is then estimated.

BRS describes the management of other wastes recycled by refineries as
"other recovery or reclamation for reuse including acid regeneration,
organics recovery, etc."  In the absence of more specific information,
it is assumed that the primary material recovered from this material is
sulfuric acid, which refineries use as a chemical catalyst in the
refining process.  Similar to metals recovery, we estimate the cost of
diverting this material from recycling to gasification based on the
volume of acid recovered and the per ton value of the acid.  As
indicated in Exhibit B-4, we assume a recovery quotient of 74 percent
for this waste and that each ton of sulfuric acid recovered is worth
approximately $46.

Exhibit B-4

SUMMARY OF MATERIALS RECOVERED FROM REFINERY WASTE

Management Method	Recovery Quotient (tons of material recovered/ton
recycled)1	Composition of Recovered Material2	Unit cost of Recovered
Materials (2005$)

Metals recovery (BRS mgt. code H039)	5%6	Molybdenum: 4.5%

Vanadium: 7%

Nickel: 2%

Carbon: 20%

Alumina: 25%	Molybdenum: $56,400/ton3

Vanadium: $34,000/ton3

Nickel: $29,400/ton4

Carbon: $4,500/ton5

Alumina: $2,200/ton6

Other recovery (BRS mgt. code H020)	74%6	Sulfuric Acid: 100%	$46/ton5

Notes:

David Gustafson and Chris Engelmann, "Recycling Break-Even Analysis for
the Economic Analysis Support for OSW’s RCRA 'Definition of Solid
Waste' (DSW) Final Rule," DPRA, memorandum to Mark Eads, U.S. EPA Office
of Solid Waste, May 16, 2006.

Values for molybdenum, vanadium, nickel, carbon, and alumina were
derived from I. Wernick and N.J. Themelis, "Recycling Metals for the
Environment", Annual Reviews Energy and Environment, Vol. 23, p.465-97,
1998.  The value for sulfuric acid is from David Gustafson and Chris
Engelmann, op cit.

Metals Place, http://metalsplace.com/metalsnews/?a=6780, accessed
September 1, 2006.

London Metals Exchange, http://www.lme.co.uk/nickel.asp, accessed
September 7, 2006.

David Gustafson and Chris Engelmann, op cit.

London Metal Exchange, http://www.lme.co.uk/aluminiumalloy.asp, accessed
September 7, 2006.

Generator Cost Impacts: Fees Paid to Gasification Systems

Under the final rule, refineries that generate OBHSM eligible for the
exclusion may pay a fee to gasification facilities that would accept
this material and use it as feedstock.  For each refinery generating
OBHSM eligible for the exclusion, we estimate the potential sum paid to
gasification systems based on the tonnage of eligible material generated
by the refinery and the per ton fee charged by gasification systems.

As suggested above, an important element of these costs is the fee
charged by gasification systems.  We estimate this fee based on  the
capacity of eligible gasification systems to consume OBHSM feedstock
relative to the tonnage of material that qualifies for the exclusion.
If the volume of OBHSM qualifying for the exclusion is less than
available gasification system capacity, we assume that the fee is zero.
Otherwise, we assume that refineries with eligible OBHSM would bid the
fee upward by an incremental amount of $1 per ton until only those
refineries that would benefit the most from gasification would find the
cost of gasification (including the fee) to be less than the cost of
their baseline waste management practices.  We estimate the extent to
which refineries bid this fee upward based on the algorithm outlined in
Exhibit B-5.

Impacts for Gasification Systems

In addition to the impacts outlined above for refineries that divert
OBHSM to gasification, the final rule will also affect refineries that
receive this material.  We summarize our estimation of these impacts
below.

Gasifier Benefit: Feedstock Savings

Refineries with their own onsite gasification system may receive
significant quantities of OBHSM feedstock from other refineries under
the final rule.  This material would replace some of the feedstock used
by these refineries in the baseline, allowing them to sell the displaced
feedstock if it is produced onsite or buy less of it if they currently
procure it from another facility.  Feedstock consumption data included
in a 2003 Department of Energy report suggest that each ton of OBHSM
diverted to gasification would displace 0.63 tons of petroleum coke and
0.37 tons of oily residuals, such as vacuum residue, visbreaker tar, and
deasphalter pitch.  Ideally, we would use this distribution in
estimating the feedstock savings realized by refineries that gasify
OBHSM as a result of the final rule, but we were unable to identify
pricing information for oily residuals.  Therefore, we use the per ton
spot price of petroleum coke as a proxy for the feedstock savings
associated with diverting OBHSM to gasification.  Based on market data
released by Platts, we estimate an average petroleum coke price of $39
per ton.

Gasifier Benefit: Fees Received from Refineries that Use the Exclusion

	As indicated above, refineries that exclude their eligible waste under
the final rule may pay a fee to the few refineries equipped with
gasification systems that could use this material as feedstock.  We
estimate the total fees received by gasification systems based on the
tonnage of OBHSM excluded by refineries that do not have their own
gasification systems onsite and the fee charged by the three to five
refineries that have onsite gasification systems.  We estimate the
quantity of material excluded by refineries without gasification systems
based on the decision simulation process described in the main body of
this document.  Exhibit B-5 outlines our approach for estimating the fee
charged by refineries equipped with gasification systems.

Gasifier Cost: Residual Management Costs

Refineries that gasify OBHSM to produce synthesis gas will incur costs
associated with the management of residuals left over from the
gasification process.  As indicated in the preamble to the final rule,
residuals produced from the gasification of OBHSM would need to be
tested to determine whether they exhibit the characteristics of
hazardous waste.  We estimate these laboratory costs based on the number
of TCLP tests conducted and the average cost of a test.  For secondary
materials that gasifiers receive from other refineries, we assume that
one test will be required for every shipment received (i.e., per tanker
or truck load received), excluding re-tests for samples that test
positive.  For OBHSM feedstocks generated onsite, we assume one test per
waste stream, excluding re-tests.  To estimate the total costs of these
tests, we assume a cost of approximately $674 per test.  In the absence
of test data, we do not know ex ante what a TCLP of gasification
residuals would indicate.  As outlined in our discussion of key
assumptions in the main body of this document, it is assumed that 5
percent of the residuals associated with the exclusion may initially
test positive as hazardous and that half of these may yet again test
positive after a re-test.  Therefore, a total of 2.5 percent of the
overall amount of residuals generated are assumed to require treatment
prior to disposal.

If a residual tests positive for a hazardous waste characteristic, the
final rule indicates that it must be treated for that characteristic
prior to disposal.  To estimate these treatment costs (excluding