The first Resource Conservation and Recovery Act ( RCRA) solid waste definitional decision, the celebrated American Mining Congress v. EPA case, was decided exactly 30 years ago, and it reverberates to this day.

In American Petroleum Institute v. EPA, decided by the U.S. Court of Appeals for the District of Columbia on July 7, 2017, the Court of Appeals reviews the Environmental Protection Agency’s (EPA) latest effort to regulate the recycling of hazardous secondary materials in a way that is consistent with the RCRA. RCRA provides that only truly discarded materials can be solid wastes and perhaps regulated hazardous wastes. The Court of Appeals has now handed down its opinion, which, as befits RCRA, is very complex.

This is another decision that illustrates the powerful role the federal courts play in the proper interpretation of the environmental laws that apply to many industries, including the real estate and construction industries.

In 2008, EPA issued a rule that would relax certain recycling restrictions as being counterproductive because they subjected legitimate recycling practices to stringent RCRA hazardous waste regulation. One of the stated goals of RCRA is to promote legitimate recycling activities, but this has been a very difficult task for the EPA in view of the statutory definition of solid waste.

With the change of Presidential administrations, the 2008 rule was reviewed by the new officials at EPA and, in 2015, EPA’s revised RCRA recycling rules were issued, which considerably tightened the standards. The revised RCRA recycling rules were published at 80 F.R. 1694 on January 13, 2015. These rules were challenged by industry, and a number of environmental organizations which argued that EPA still went too far in relaxing its rules.

In essentially a 2 to 1 decision, the Court of Appeals (a) upheld most of EPA’s new “legitimate recycling criteria,” set forth at 40 C.F.R. § 260.43(a), except for factor 4 which the Court of Appeals held imposed unacceptably “draconian” conditions on recyclers; (b) vacated the Verified Recycler Exclusion set forth at 40 C.F.R. § 261.1(a)(24) with some exceptions; with some exceptions; (c) reinstated the 2008 “Transfer-based Exclusion” and vacated a recycling bar that affected spent catalysts. The arguments of the environmental petitioners were rejected, as was industry’s argument, mistaken according to the Court of Appeals , that the legitimacy factors should also be vacated as to Used Oil Recycling. The Court of Appeals describes secondary materials as “substances generated as the remainder of industrial processes: they include spent materials, byproducts and sludges.” The EPA’s 2008 rule excluded recyclable hazardous secondary materials from the definition of solid waste if the company that generated the material controlled the recycling processes or if the generating company transferred the materials to a third party off-site recycler it had carefully audited to ensure compliance with appropriate recycling practices.

The replacement rule issued in 2015 made a number of changes to the 2008 rule, but only four were litigated:

  1. the revision and expansion of the ”legitimacy factors” EPA uses to police “sham recycling” operations that are in truth another way to dispose of discarded materials;
  2. making “spent catalysts amenable to its own exclusion from strict RCRA hazardous waste regulation;
  3. deferring for another time whether to subject all previous regulatory exclusions (of which there are more than twenty) to the new 2015 conditions; and
  4. replacing the 2008 Transfer-based exclusion with the “Verified Recycler Exclusion.”

According to the Court of Appeals, all the parties agreed that some form of legitimate third party reclamation would be consistent with the statute, but EPA’s new advance administrative approval requirements were not adequately justified as required by the Administrative Procedure Act and many decisions of the DC Circuit.