UNITED STATES E-v. ••*
£\TAL PROTECTION AGENCY
9838.1
JUL311987
MEMORANDUM
SUBJECT
FROM:
TO:
Scope of the CERCLA Petroleum Exclusion Under
Sections 101(14) and 104(a)(2)
Francis S. B 1 a k e v
General Counsel (LE-130)
J. Winston Porter
Assistant Administrator
for Solid Waste and Emergency Response (WH-562A)
One critical and recurring issue arising in the context of
Superfund response activities has been the scope of the petroleum
exclusion under CERCLA. Specifically, you have asked whether used
oil which is contaminated by hazardous substances 1s considered
"petroleum" under CERCLA and thus excluded from CERCLA response
authority and liability unless specifically listed under RCRA or
some other statute. For the reasons discussed below, we believe
that the contaminants present in used oil or any other petroleum
substance are not within the petroleum exclusion. "Contaminants",
as discussed below, are substances not normally found in refined
petroleum fractions or present at levels which exceed those
normally found in such fractions. If these contaminants are
CERCLA hazardous substances, they are subject to CERCLA response
authority and liability.
Background
Under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 as amended (CERCLA), governmental
response authority, release notification requirements, and
liability are largely tied to a release of a "hazardous sub-
stance." Section 104 authorizes government response to releases
or threatened releases of hazardous substances, or "pollutants or
contaminants." Similarly, liability for response costs and damages
under Section 107 attaches to persons who generate, transport or
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9838.1
dispose of hazardous substances at a site from which there
Is a release or threatened release of such substances. Under
Section 103, a release of a reportable quantity of a hazardous
substance triggers notification to the National Response
Center.
The term "hazardous substance" 1s defined under CERCLA
Section 101(14) to include approximately 714 toxic substances
listed under four other environmental statutes, Including RCRA.
Both the definition of hazardous substance and the definition
of "pollutant or contaminant" under Section 104(a)(2) exclude
"petroleum, including crude oil or any fraction thereof,
unless specifically listed under those statutes. !_/ Accordingly,
no petroleum substance, including used oil, can be a "hazardous
substance" except to the extent it is listed as a hazardous waste
under RCRA or under one of the other statutes. Thus two critical
issues 1n assessing whether a substance 1s subject to CERCLA Is
whether or not, and to what extent, a substance is "petroleum."
This memorandum discusses the second type of petroleum exclusion
issue. The question, therefore, is not whether used oil is
"petroleum" and thus exempted from CERCLA jurisdiction, but to
what extent substances found in used oil which are not found in
crude oil or refined petroleum fractions are also "petroleum".
If such substances are not "petroleum" then a release of used
oil containing such substances may trigger CERCLA response
actions, not to the release of used oil, but to the contaminants
present in the oil.
!_/ The full texts of these provisions are as follows:
Section 101(14)
• • • •
The term [hazardous substance] does not Include petroleum,
including crude oil or any fraction thereof which is not other-
wise specifically listed or designated as a hazardous substance
under subparagraphs (A) through (F) of this paragraph, and
the term does not Include natural gas, natural gas liquids,
liquefied natural gas, or synthetic gas usable for fuel (or
mixtures of natural gas and such synthetic gas).
Section 104 («)(2)
• • • .•
The term [pollutant or contaminant] does not include
petroleum, including crude oil and any fraction thereof which
is not otherwise specifically listed or designated as hazardous
substances under section 101(14)(A) through (F) of this title,
nor does it Include natural gas, 1iquefled natural gas, or
synthetic gas of pipeline quality (or mixtures of natural gas
and such synthetic gas).
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Although the term "hazardous substance" is defined by statute,
there 1s no CERCLA definition of "petroleum" and very little direct
legislative history explaining the purpose or intended scope of
this exclusion. None of the four early Superfund bills originally
excluded responses to oil, although the apparent precursor to
Section 101(14), found 1n S. 1480, excluded "petroleum" without
explanation in all versions except that introduced. The legisla-
tive debates on the final compromise indicate only that Congress
intended to enact later, separate superfund-type legislation to
cover "oil spills." See generally 126 Cong. Rec. H11793-11802
(December 3, 1980).
Since the enactment of CERCLA, the Agency has provided some
interpretations of the nature and scope of the petroleum exclusion.
In providing guidance in 1981 on the notification required under
Section 103 for non-RCRA hazardous waste sites the Agency stated
that petroleum wastes, including waste oil, which are not speci-
fically listed under RCRA are excluded from the definition of
"hazardous substance" under 101(14). 46 Fed. Reg. 22145
(April 15, 1981). Z/
In 1982 and in 1983, the General Counsel Issued two opinions
on the CERCLA petroleum exclusion. In the first opinion, the
General Counsel distinguished under the petroleum exclusion
between hazardous substances which are Inherent in petroleum,
such as txenzene, and hazardous substances which are added to or
mixed with petroleum products. The General Counsel concluded
that the petroleum exclusion includes those hazardous substances
which are inherent in petroleum but not those added to or mixed
with petroleum products. Thus, the exclusion of diesel oil as
"petroleum" includes its hazardous substance constituents, such
as benzene and toulene, but RGB's mixed with oil would not be
excluded. Moreover, if the petroleum product and an added
hazardous substance are so commingled that, as a practical matter,
they cannot be separated, then the entire oil spill is subject to
CERCLA response authority.
In the second opinion, the General Counsel concluded that
the petroleum exclusion as applied to crude oil "fractions"
includes blended gasoline as well as raw gasoline, even though
refined or blended gasoline contains higher levels of hazardous
2_/ In the notice the Agency used the term "waste oil"
without stating whether it was intended to include all
waste oil or only unadulterated waste oil. The Agency has
subsequently interpreted the reference to "waste oil" in this
notice to include only unadulterated waste oil. 50 Fed. Reg.
13460 (April 4, 1985).
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substances. The Increased level of hazardous substances results
from the blending of raw gasoline with other petroleum fractions
to increase Its octane levels. Because virtually all gasoline
which leaves the refinery is blended gasoline, the petroleum
exclusion would Include virtually none of this fraction if the
increased concentration of hazardous substances due only to its
processing made it subject to CERCLA.
Finally, the Agency has interpreted the petroleum exclusion
in two recent Federal Register notices. In the April 4, 1985
final rule adjusting reportable quantities under Section 102,
the Agency provided its general interpretation of the exclusion:
EPA Interprets the petroleum exclusion to
apply to materials such as crude oil, petro-
leum feedstocks, and refined petroleum
products, even if a specifically listed or
designated hazardous substance 1s present
in such products. However, EPA does not
consider materials such as waste oil to which
listed CERCLA substances have been added to
be within the petroleum exclusion. Similarly,
pesticides are not within the petroleum
exclusion, even though the active ingredients
of the pesticide may be contained in a petro-
leum distillate: when an RQ of a listed
pesticide is released, the release must be
reported.
50 Fed. Reg. 13460 (April 4, 1985).
In March 10, 1986, the Agency published a notice of data
availability and request for comments on the proposed used oil
listing under RCRA. 51 Fed. Reg. 8206. In that notice, the
Agency responded to commenters who had argued that the RCRA
listing would>discourage used oil recycling because it would
subject generators, transporters, processors, and users to
Superfund liability. The Agency stated that used oil which
contains hazardous substances at levels which exceed those
normally found 1n petroleum are currently subject to CERCLA.
51 Fed. Reg. 8206 (March 10, 1986). Although the fact that
the used oil 1s contaminated does not remove 1t from the pro-
tection of the petroleum exclusion, the contaminants in the
used oil are subject to CERCLA response authority 1f they are
hazardous substances. Accordingly, most used oil, even without
a specific listing, would not be fully within the petroleum
exclusion, irrespective of the listing.
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Discussion
Because there Is no .definition of "petroleum" in CERCLA
or any legislative history which clearly expresses the Intended
scope of this exclusion, there are several possible interpre-
tations which could be given to this provision. However, we
believe that our current interpretation, under which "petroleum"
includes hazardous substances normally found in refined petroleum
fractions but does not include either hazardous substances found
at levels which exceed those normally found 1n such fractions
or substances not normally found in such fractions, is most
consistent with the statute and the relevant legislative history.
Under this interpretation, the source of the contamination,
whether intentional addition of hazardous substances to the
petroleum or addition of hazardous substances by use of the
petroleum, is not relevant to the applicability of the petroleum
exclusion. The remainder of this memorandum explains in greater
detail this interpretation and its legal basis, and responds to
arguments raised in opposition to this interpretation.
The following is our interpretation of "petroleum" under
CERCLA 101(14) and 104(a)(2), which we believe to be consistent
with Congressional intent and the position which the Agency has
taken on the scope of the petroleum exclusion thus far. First,
we interpret this provision to exclude from CERCLA response and
liability crude oil and fractions of crude oil, including the
hazardous substances, such as benzene, which are indigenous in
those petroleum substances. Because these hazardous substances
are found naturally in all crude oil and Its fractions, they must
be included in the term "petroleum," for that provision to have
any meaning.
Secondly, "petroleum" under CERCLA also includes hazardous
substances which are normally mixed with or added to crude oil
or crude oil fractions during the refining process. This includes
hazardous substances the levels of which are Increased during
refining. These substances are also part of "petroleum" since
their addition 1s part of the normal oil separation and processing
operations at a refinery 1n order to produce the product commonly
understood to be "petroleum."
Finally, hazardous substances which are added to petroleum
or which Increase 1n concentration solely as a result of con-
tamination of the petroleum during use are not part of the
"petroleum" and thus are not excluded from CERCLA under the
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exclusion. 3/ In such cases, EPA may respond to releases of the
added hazardous substance, but not the oil Itself.
We believe that an Interpretation of "petroleum" to Include
only indigenous, refinery-added hazardous substances Is the
interpretation of this provision which is most consistent with
Congressional Intent. The language of the provision, Its
explanation in the legislative history, and the Congressional
debates on the final Superfund bill clearly Indicate that Congress
had no intention of shielding from Superfund response and liability
hazardous substances merely because they are added, intentionally
or by use, to petroleum products.
The language of the petroleum exclusion describes "petroleum"
principally in terms of crude oil and crude oil fractions. This
language is virtually Identical to the language used in an earlier
Superfund bill to define "oil." £/ There 1s no Indication 1n the
statute or legislative history that the term "petroleum" was to
be given any meaning other than its ordinary, everyday meaning.
See Malat v. Riddel!. 383 U.S. 569, 571 (1966) (words of a statute
should be interpreted where possible in their ordinary, everyday
sense). Petroleum is defined in a standard dictionary as
3/ The mixing of two or more excluded petroleum substances,
such as blending of fuels, would not be considered con-
tamination by use, and the mixture would thus also be an
excluded substance.
£/ See H.R. 85, 96th Cong., 2d Sess. §101(s) (as passsed by
the House, September 1980) (""011" means petroleum,
including crude oil or any fraction or residue therefrom").
H.R. 85 was designed principally to provide compensation and
assess liability for oil tanker spills In navigable waters.
As discussed below, the omission of this "oil spill" coverage
under the petroleua exclusion was believed to be the most
significant omission 1n terms of response to environmental
releases under the final Superfund bill.
Although the bill containing the precursor to Section
101(14), S. 1480, does not have a definition of "petroleum",
its accompanyfng report did explain the term "petroleum oil"
in the context of the taxing provisions:
The term "petroleum oil" as used in subsection 5 means
petroleum, Including crude petroleum and any of its
fractions or residues other than carbon black.
S. Rep. No. 96-848, 96th Cong., 2d Sess. 70 (1980).
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an oily flammable bituminous liquid that
•ay vary from almost colorless to black,
occurs 1n many places 1n the upper strata
of the earth, 1s a complex mixture of
'hydrocarbons with small amounts of other
substances, and Is prepared for use as
gasoline, naphtha, or other products by
various refining processes.
Webster's Ninth New Collegiate Dictionary 880 (1985). Thus, an
Interpretation of the phrase "petroleum, Including crude oil or
any fraction thereof to Include only crude oil, crude oil
fractions, and refined petroleum fractions Is consistent with
the plain language of the statute. J5/
The only legislative history which specifically discusses
this provision states that
petroleum, Including crude oil and Including
fractions of crude oil which are not otherwise
specifically listed or designated as hazardous
substances under subparagraphs (A) through (F)
of the definition, 1s excluded from the defini-
tion of a hazardous substance. The reported
bill does not cover spills or other releases
strictly of oIK
S. Rep. No. 96-848, 96th Cong., 2d Sess. 29-30 (1980) (emphasis
added). Thus, the petroleum exclusion 1s explained as an
exclusion from CERCLA for spills or releases only of oil.
The legislative history clearly contemplates that the petroleum
5_/ This distinction under the exclusion 1n Title I of
CERCLA between petroleum as the substance that leaves
the refinery and the. hazardous substances which are added to
it prior to, during or after use was also made by Congress in
Title II, the revenue provisions or CERCLA. In Title II,
Congress nade a distinction between "chemicals", petrochemical
feedstocks and Inorganic substances, taxed in Subchapter B of
Chapter 38 of Internal Revenue Code, and "petroleum", crude
oil and petroleum products, taxed in Subchapter A. Section
211 of CERCLA. The 11st of taxed chemicals Includes many of
the contaminant hazardous substances typically found in used
oil: arsenic, cadmium, chromium, lead oxide, and mercury.
The term "petroleum products" was explained 1n the legislative
history as Including essentially crude oil and its refined
fractions. H. Rep. No. 96-172, Part III, 96th Cong., 2d
Sess. 5 (1980) (to accompany H.R. 85).
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exclusion will not apply to mixtures of petroleum and other
toxic materials since these would not be releases "strictly
of oil".
The Congressional debates on the final compromise Superfund
legislation provides further clarification of Congressional
intent concerning the scope of the petroleum exclusion, both in
terms of what this provision deleted from the bill and what it
did not. First, the major concern expressed with respect to the
final compromise bill was the omission of its oil spill juris-
diction due to the petroleum exclusion. See e.g. 126 Cong. Rec.
H11787 (Rep. Florio) (daily ed. December TT"!"?^)); j_d. at H11790
(Rep. Broyhill); j_d. at H11792 (Rep. Madigan); j_d. at H11793
(Rep. Studds); jjd. at H11795 (Rep. Biaggi); j^. at H11796 (Rep.
Snyder). This omission was of concern because it was believed
to leave coastal areas and fisheries vunerable to tanker spills
of crude and refined oil, such as the wreck of the Arqg Merchant,
and offshore oil well accidents. 126 Cong. Rec. H11793(Rep.
Studds) (daily ed. December 3, 1980). See also 126 Cong. Rec.
S10578 (proposed amendment to S1480 by Sen. Magnuson) (daily ed..
August 1, 1980); id. at S10845 (proposed amendment to S1480 by
Sen. Gravel) (daily ed. .August 5, 1980). The omitted coverage
of oil spills was believed to include approximately 500 spills
per year, 126 Cong. Rec. H11796 (Rep. Snyder) (daily ed.
December 3, 1980), far less than the number of contaminated oil
releases each year.
However, it was clear that the omission of oil coverage was
intended to include spills of oil only, and there was no intent
to exclude from the bill mixtures of oil and hazardous substances
The remarks of Rep. Mikulski are typical of the general under-
standing of the effect of the petroleum exclusion 1n the final
bil 1 :
The Senate bill 1s substantially similar to the House
measure, with the exception that there is no oil title.
I realize that It is disappointing to see no oil-
related provision 1n the bill, but we must also realize
that this 1s our only chance to get hazardous waste dump
site cleanup legislation enacted. . . .
Moreover, there is already a mechanism in place that
is designed to deal with spills in navigable waterways.
There Is not, however, any provision currently in our law
that addresses the potentially ruinous situation of
abandoned toxic dump sites.
.1, therefore, believe that it is imperative that we
pass the Senate bill as a very important beginning in our
attempt to defuse the ticking environmental time bomb of
abandoned toxic waste sites.
Id. at H11796.
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In addition, several speakers specifically Identified such
mixtures, as releases not only covered by the legislation but
releases to which the bill was addressed.
Mr. Edgar ...
In my State, hazardous substances problems have been
discovered at an alarming rate 1n recent years. In the
summer of 1979, an oil slick appeared on the Susquehanna
River near Plttston, Pa. When EPA officials responded
under section 311 of the Clean Water Act, they learned
that the slick contained a variety of highly poisonous
chemicals in addition to the oil.
Officials estimate that more than 300,000 gallons
of acids, cyanide compounds, industrial solvents, waste
oil and other chemicals remain at this site where they
could be washed to the surface anywhere in a 10-square -
mile surface.
id. at H11798. See also 126 Cong. Rec. S14963 (dally ed.
November 24, 1980) (Sen. Randolph) (contaminated oil slick).
Other petroleum products containing hazardous substance
additives intended to be addressed by the legislation include
PCB's in transformer fluid, 1d. at S14963 (Sen. Randolph) and
S14967 (Sen. Stafford), dioxTn" in motor fuel used as a dust
suppressant, id. at S14974 (Sen. Mitchell), PCB's in waste
oil, id. (Sen. Mitchell) J5/ and contaminated waste oil, id.
at S14980 (Sen. Cohen). Accordingly, Congress understood
the petroleum exclusion to remove from CERCLA jurisdiction
spills only of oil, not releases of hazardous substances
mi xed with the o11.
There are two principal arguments which have been raised
in opposition to this interpretation. First, the argument
has been made that this Interpretation narrows the petroleum
exclusion to the extent that it has became virtually meaning-
less. As we have noted in previous opinions on this issue,
an interpretation which emasculates a provision of a statute
is strongly disfavored. Marsano v. Laird. 412 F.2d 65, 70
(2d Cir. 1969). However, this Interpretation leaves a
significant number of petroleum spills outside the reach of
CERCLA. Spills or releases of gasoline remain excluded from
CERCLA under the petroleum exclusion. As Indicated by the
legislative history for the 1984 underground storage tank
6_/ The illegal disposal of PCB's 1n North Carolina described
by Senator Mitchell was a result of the spraying of 131,000
gallons of PCB-contaminated waste oil along a roadway. See
126 Cong. Rec. H9448 (dally ed. September 23, 1980).
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1 ©g HilateH©fl D leakage of gasoline from underground tanks
appears £® be the greatest source of groundwater contamination
in the United States, 130 Cong, Ree, S2027, 2028 (daily ed,
February if>9 1984) (Sen, Durenberger), In additions, spills
of crude or refined petroleum are not subject to Superfund,
as was frequently noted prior to its passage., See general ly
126 Congo Rec« H11786-H11802 (daily ed, Decembe~Fl>, 1980),
Moreover, under this interpretation not all releases of used
oil will be subject to CERCLA since used oil does not neces-
sarily contain non-indigenous hazardous substances or hazardous
substances in elevated levelSo 7/ Although used oil is
generally "contaminated" by definition, see e0g,, RCRA Section
1005 (36), the impurities added by use may not be CERCLA
hazardous substances,,
A second argument which has been made opposing this
interpretation is that Congress intended to include in the
term "petroleum" all hazardous substances added through
normal use of the petroleum substance. However, even if it
were possible to determine in a response situation whether a
hazardous substance was added intentionally or only through
normal use or to determine what additions are "intentional0,
the legislative history is contrary to such a distinction.,
As noted above, the Senate Report explaining this provision
states that it excludes releases or spills strictly of oil.
This explanation expresses Congressional intent that releases
of mixtures of oil and toxic chemicals, i. e „_ releases which
are not strictly of oil, would be subject to CERCLA response
authority"! Rel eases of contaminated oil even if contaminated
due to "normal use" are not releases strictly of oil.
Furthermore, the Congressional debates prior to passage
clearly indicate an intent that contaminated oil would be
subject to Superfund as several such releases were discussed
as the focus of the legislation., Congress was concerned
with the environmental and health effect of abandoned toxic
waste sites9 nofe whether the presence of such hazards was
intentional OP dye t© normal practices., In fact, one of the
petroleuQ=ln!azi)pd©us substance mixtures most often mentioned
during tfaQ debates was that of PCB contaminated oil, which
is a typio ©? centaai nation arguably resulting from the "normal
use0 of tfao ©11 in transformers- Accordingly, an interpretation
of the petreleura exclusion which includes as °petroleum"
hazardous substances added during use of the petroleum would
not be consistent with Congressional intent.,
]_/ Data submitted to EPA by the Utility Solid Haste
Activities Group _et_ al . in Appendix C of their comments
on the RCRA Used Oil listTng, February 11, 1986,
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9838.1
Finally, although the Superfund Amendments and Reauthori zatlon
Act of 1986 (SARA) contains several provisions related to oil
and oil releases, 1t did not amend the petroleum exclusion under
CERCLA. Moreover, the new provisions concerning oil and oil
releases and their legislative history do not Indicate a
Congressional intent Inconsistent with this opinion.
The only discussion of "petroleum" in the Conference
Report for SARA is in the context of defining the scope of the
new petroleum response fund for leaking underground storage
tanks under Subtitle I of the Resource Conservation and Recovery
Act (RCRA). Subtitle I defines "petroleum" in a manner nearly
identical to CERCLA. The Conference Report specifies that
used oil would be subject to the response fund notwithstanding
its contamination with hazardous substances. H. Rep. No. 99-962,
99th Cong., 2d Sess. 228 (1986). The Conference Report is
not inconsistent with the Agency's position on "petroleum"
under CERCLA since it merely specifies that the leaking under-
ground storage tank (UST) response fund is applicable to tanks
containing certain mixtures of oil and hazardous substances,
as well as to tanks containing uncontaml nated petroleum. In
fact, the Report further states that the UST response fund
must cover releases of used oil from tanks since "releases
from tanks containing used oil would not rise to the priority
necessary. . .for CERCLA response", 1d. (emphasis added), not
because such releases would be entirely excluded from CERCLA
jurisdiction. See also 132 Cong. Rec. S14928 (daily ed. October
3, 1986) (Senator Chaffee) (Nothing in Section 114, pertaining
to liability for releases of recycled oil, "shall affect or
impair the authority of the President to take a response action
pursuant to Section 104 or 106 of CERCLA with respect to any
release. ..of used oil or recycled oil"); 132 Cong. Rec. H9611
(daily ed. October 8, 1986) (Rep. Schneider) ("...the oil
companies are rightfully assessed a significant share of the
Superfund tax. ..Waste oils laced with contaminants have been
identified, at at least 153 Superfund sites in 32 States.").
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