Two types of oily waste sludges generated by a railroad maintenance facility were studied to reduce the volume of hydrocarbon waste. The specific goals of this laboratory study were to evaluate rate and extent of microbial degradation, benefits of organism addition, role of biosurfactant, and dewatering properties. The oily waste sludges differed in characteristics and contained a mixture of water, motor oil, lubricating oil, and other petroleum products. Degradation was measured using COD, suspended solids, GC measurements of extractable material, and nonextractable material concentration. Biosurfactant production was characterized using surface tension and polysaccharide measurements. Degradation of ten percent waste oil showed that the removal in a 91 day experiment was 75 percent for COD and suspended solids, 98 percent for extractable oil, and negligible for non-extractable material. It was concluded that methylene chloride extraction could be used to estimate degradation potential of a hydrocarbon waste. Addition of organisms increased the rate and extent of degradation over 22 days, but did not provide any benefits over 91 days. Data suggested that microorganisms degraded simple compounds first, then produced biosurfactants. It was thought that the biosurfactants remained attached to the organism membrane and increased solubility, stimulating the degradation of difficult to degrade waste oil. After oil was degraded the biosurfactants became ineffective. The dewatering properties of 10 percent oily sludge deteriorated with the production of biosurfactant and improved after the surfactant was degraded due to changes in oil solubility. / Master of Science