The District of Columbia Circuit Court of Appeals recently granted, in part, industry parties’ challenge to the Environmental Protection Agency (EPA)’s final rule defining “solid waste” under the Resource Conservation and Recovery Act (RCRA). The rule defined when certain secondary materials such as excess process chemicals, process by-products and sludge would be deemed “discarded” and thus reckoned “solid waste” under RCRA and its several requirements. American Petroleum Institute v Environmental Protection Agency (D.C. Cir. 2017) 862 F.3d 50.

The EPA promulgated the challenged rule in January 2015, after a similar 2008 rule was withdrawn when it, too, had been contested in court. Under the 2015 rule, a person using certain identified materials was provided means to generally except such materials from the solid waste requirements. Prior to 2008, the EPA had afforded 32 materials with specific exceptions to the “discarded”/“solid waste” definition. Those items under the 2015 rule would also need to meet the new general requirements as well as that material’s individual requirements.

The EPA’s intent with the 2015 rule was to subject to RCRA regulations those materials slated for what it deemed “sham recycling.” Among other things to meet its goal, the EPA (1) applied what it termed “legitimacy factors” to all materials to be recycled and (2) established a “Verified Recycler Exclusion.” The industry parties challenged both of these aspects of the rule.

Under the “legitimacy test,” (1) the material must “provide a useful contribution to the recycling process;” (2) “the recycling process must produce a valuable product or intermediate;” (3) “the persons controlling the secondary material must manage the [material] as a valuable commodity;” and (4) “the product of the recycling process must be comparable to a legitimate product or intermediate.” The petitioners did not challenge the EPA’s authority to establish and apply this test but rather they challenged the required means to satisfy the test. In particular industry parties challenged Factors 3 and 4. The Court of Appeals found that Factor 3 was reasonable.

Through Factor 4, the EPA sought to “prevent recyclers from loading products with hazardous secondary materials that provide no recognizable benefit to the product.” In other words, the EPA did not want recyclers to add a hazardous secondary material to the recycling process just to avoid proper disposal of that material. The EPA’s test provided (1) for materials that had an “analogue of undoubted legitimacy” and (2) for materials that had no analogue of legitimacy.

The Circuit Court found that the “no analogue” track was acceptable. The court summed up that option as follows: “[I]f a recycled product, lacking an analogue, fails to satisfy customer specifications, falls short of relevant commodity standards, and is not derived from a closed-loop type process, the EPA treats it as discarded (subject to the ultimate exception). These tests focus largely on the utility of the recycling in question, a reasonable inquiry when deciding legitimacy.” Factor 4, however, did not fare so well. According to the court this track lost its attention to health and environmental risks and ultimately found this track unreasonable. After a thorough explanation and discussion, the Court of Appeals ultimately found that the “Verified Recycler Exclusion” too was not a reasonable means to carry out the rule. The exclusion was too broad and would snare otherwise legitimate materials. The court also reinstated certain aspects of the 2008 rule.

This opinion suggests that the EPA should look more to objective health and environmental risk factors and less to the subjective intent of the parties.