On March 6th, the U.S. Court of Appeals for the D.C. Circuit modified its 2017 ruling that struck down portions of EPA’s definition of solid waste (“DSW”) rule. (American Petroleum Institute, et al. v. EPA, No. 09-1038 (D.C. Cir. March 6, 2018)). At issue in the case is a 2015 rule that determined when hazardous secondary materials are recycled and thus not subject to regulation under the Resource Conservation and Recovery Act (“RCRA”) as hazardous waste. The DSW rule scaled back recycling exemptions that were first promulgated as part of a contentious rulemaking in 2008. Among the changes made by this Obama-era rule was the creation of a mandatory four-part test for distinguishing legitimate recycling activities from “sham recycling”:
- Factor 1 – the secondary hazardous material must provide a useful contribution to the recycling process or to a product or intermediate of the recycling process.
- Factor 2 – the recycling process must produce a valuable product or intermediate.
- Factor 3 – the generator and the recycler must manage the hazardous secondary material as a valuable commodity when it is under their control.
- Factor 4 – the product of the recycling process must be comparable to a legitimate product or intermediate.
Of the four factors, Factor 4 has been the source of particular scrutiny. It had been intended to determine when toxics are “along for the ride” to be discarded in a final product rather than being legitimately recycled. However, many in the regulated community had raised concerns about being able to meet that factor or conclusively determine if they had satisfied it. Indeed, the 2008 version of the rule had only required that the entity seeking to claim the recycling exemption “consider” the issues raised in Factor 4, on the basis that there would be situations in which a recycling process did not conform to that factor yet the reclamation activity was nonetheless legitimate.
The 2015 DSW rule was challenged on a number of grounds by industry groups and environmentalists. In July 2017, the federal appeals court largely sided with industry groups and vacated aspects of the DSW rule, including Factor 4 of the legitimacy test. However, questions remained about the intended extent of that vacatur and what test would take its place. As a result, EPA filed a petition for rehearing in October seeking clarification from the court as to the remedy without questioning the merits of the July ruling. Industry and environmental groups also filed petitions for rehearing.
In the March 6th per curiam opinion, the court clarifies that Factor 4 is “vacated in its entirety.” The court further clarifies that the mandatory four-part test for determining legitimate recycling remains in effect with the fourth prong now being replaced with the 2008 version of Factor 4. In other words, entities looking to avail themselves of a recycling exemption under RCRA will now need to meet a mandatory three-prong legitimacy test. Factor 4 is no longer mandatory, but rather must only be considered in light of the unique circumstances confronted by the recycler.