Opinion ID: 599244
Heading Depth: 2
Heading Rank: 1

Heading: The Incidental Purchases Exception

Text: 34 The NRC mounts a two-fold attack on the incidental purchases exception, arguing that it is invalid both under RCRA and the APA. We consider the two arguments in turn.
35 In assessing the validity of the EPA's interpretation of RCRA, we apply the principles set forth in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-44, 104 S.Ct. 2778, 2781-83, 81 L.Ed.2d 694 (1984). Under the Chevron analysis, judicial review of an agency's interpretation of a statute committed to its administration is limited to a two-step inquiry. At the first step, we inquire whether Congress has directly spoken to the precise question at issue. Id. at 842, 104 S.Ct. at 2781. If we then reach the unmistakable conclusion that Congress had an intention on the precise question at issue, our inquiry ends there, Ohio v. United States Dep't of the Interior, 880 F.2d 432, 441 (D.C.Cir.1989). Courts must give effect to the unambiguously expressed intent of Congress. Chevron, 467 U.S. at 843, 104 S.Ct. at 2781. 36 However, if the statute is silent or ambiguous with respect to the specific issue, we proceed to the second step of the Chevron analysis. Id. At that step, we defer to the agency's interpretation of the statute if it is reasonable and consistent with the statute's purpose. Chemical Mfrs. Ass'n v. United States EPA, 919 F.2d 158, 162-63 (D.C.Cir.1990). [W]e are not free to 'impose our own construction on the statute, as would be necessary in the absence of an administrative interpretation.'  Nuclear Info. Resource Serv. v. Nuclear Regulatory Comm'n, 969 F.2d 1169, 1173 (D.C.Cir.1992) (quoting Chevron, 467 U.S. at 843, 104 S.Ct. at 2782) (internal brackets omitted). Applying that test to the EPA's interpretation of section 6002 to permit an incidental purchase exception, we conclude that the Agency's interpretation survives both steps of the Chevron analysis. 37
38 The NRC argues first that Congress has clearly spoken on the question at issue and that the incidental purchases exception is contrary to Congress's clear mandate. Section 6002 of RCRA provides: 39 [A] procuring agency shall comply with the requirements set forth in this section and any regulations issued under this section, with respect to any purchase or acquisition of a procurement item where the purchase price of the item exceeds $10,000 or where the quantity of such items or of functionally equivalent items purchased or acquired in the course of the preceding fiscal year was $10,000 or more. 40 42 U.S.C. § 6962(a) (emphasis added). The NRC argues that the text of the Act is clear: There is no limiting language in the statute regarding the purpose for which the funds were appropriated or the goal of the contract. The NRC points out that the statute uses the inclusive term any to describe the universe of purchases or acquisitions that fall within the statute's ambit. The NRC further notes that the incidental purchases exception does not appear in the Act. 41 We, however, agree with the EPA that the statutory language does not clearly preclude the interpretation allowing the incidental purchases exception. Section 6002 incorporates the term procuring agency, which the Act defines as 42 any Federal agency, or any State agency or agency of a political subdivision of a State which is using appropriated Federal funds for such procurement, or any person contracting with any such agency with respect to work performed under such contract. 43 42 U.S.C. § 6903(17) (emphasis added). We agree with the EPA that this statutory language permits, if not compels, the conclusion that while every federal agency is a procuring agency subject to the guidelines, state and local agencies, and government contractors, are procuring agencies within the meaning of the statute only to the extent that they expend appropriated funds for ... procurement under the contract or act with respect to work performed under such contract. Id. At the very least, there is sufficient ambiguity in the language of the statute that it cannot be said that Congress has directly spoken to the propriety of an incidental purchases exception to RCRA. Thus we find no merit in the NRC's claim that the Administrator's interpretation is without authorization and contrary to the clear intent of Congress. Petitioner's Br. at 28. 44
45 The NRC argues that even if we find that Congress's intent is not clear, the Administrator's incidental purchases exception is unreasonable in light of the statutory language, the legislative history, and the administrative record. See NRDC v. EPA, 822 F.2d 104, 111 (D.C.Cir.1987) (citing Chevron, 467 U.S. at 842-45, 104 S.Ct. at 2781-83 (agency interpretation must be reasonable in light of the language, legislative history, and policies of the statute)). The NRC maintains that the legislative history of RCRA evidences a congressional purpose inconsistent with the incidental purchases exceptions. The NRC cites a House Report in which the House of Representatives expresses its intent to use federal purchasing power to provide a stimulus which has the potential for motivating other levels of government and private industry to use greater amounts of recovered materials. H.R.Rep. No. 1491, 94th Cong., 2d Sess. 51 (1976), reprinted in1976 U.S.C.C.A.N. 6238, 6289, and a conference report to the 1984 amendments stating that the influence which the Federal government can exert through its purchasing power to stimulate demand of and use of recovered materials should be exercised more vigorously. H.R.Rep. No. 1133, 98th Cong., 2d Sess. 121 (1984), reprinted in 1984 U.S.C.C.A.N. 5576, 5692. 46 These general statements do not do the work the NRC wishes them to do. Nothing in the legislative history indicates a congressional purpose as to the scope of applicability of these regulations, let alone the permissibility of an incidental purchases exception under the Act. In addition, there is nothing in the reports to suggest that Congress intended no exceptions other than the $10,000 floor. 47 The EPA argues the incidental purchases exception is permissible under step two Chevron analysis. The EPA reminds us that the statutory definition of procuring agency makes clear that a nexus must exist between an item purchased by a contractor or non-federal agency and the contract or other federal funding agreement. Respondent's Br. at 14. We agree. Further, the legislative history, by distinguishing between the direct effects of section 6002, and its indirect effects, supports the EPA's position that its interpretation is consistent with congressional purpose. Relevant portions of the House Report state: 48 The Committee believes that the use of federal purchasing power to provide this stimulus [referring to the establishment of adequate markets for the ... recovered materials] represents a constructive use of government power which has potential for motivating other levels of government and private industry to use greater amounts of recovered materials.... 49 ... Federal guidelines, standards and specifications used in connection with Federal grants and other Federal assistance to State and local governments can be an important stimulus for those governments and for private industry to adopt a pro-recovered materials policy. 50 H.R.Rep. No. 1491, 94th Cong., 2d Sess. 51 (1976) (emphasis added), reprinted in 1976 U.S.C.C.A.N. 6238, 6289. Thus, the legislative history, for what it is worth, is consistent with the EPA's position that the primary impact of its guidelines on nonfederal entities is through a stimulus, and that the guidelines apply with binding force to state and local governments and private industry only when they purchase items with federal funds directly for use by the federal government or in federally funded contracts. 51 The EPA's interpretation thus reasonably furthers purposes addressed in the legislative history. While petitioner's interpretation may present a permissible alternative construction of the statute, it is not our task to weigh alternative understandings. As the Supreme Court noted in Chemical Mfrs. Ass'n v. Natural Resources Defense Council, 470 U.S. 116, 105 S.Ct. 1102, 84 L.Ed.2d 90 (1985), in a decision upholding the EPA's interpretation of the Clean Water Act, 33 U.S.C. § 1251 et seq. (1988): 52 We need not find that [the EPA's] is the only permissible construction that EPA might have adopted but only that EPA's understanding of this very complex statute is a sufficiently rational one to preclude a court from substituting its judgment for that of the EPA. 53 Id. at 125, 105 S.Ct. at 1107 (internal citation omitted). As with the Clean Water Act, so with RCRA. We conclude that EPA's interpretation of RCRA is a rational one, and we will not substitute either our judgment or NRC's.
54 The NRC argues that even if the EPA's interpretation of RCRA to permit an incidental purchases exception survives Chevron review, the Administrator's decision to promulgate a rule encompassing the exception is nonetheless invalid under the APA. Petitioner asserts that the Administrator failed to provide a reasoned justification for the exception, thus rendering the exception and all three guidelines arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. 5 U.S.C. § 706(2)(A) (1988). We disagree. 55 It is true, as we have frequently stated, that a rule without a stated reason is necessarily arbitrary and capricious. Small Refiner Lead Phase-Down Task Force v. EPA, 705 F.2d 506, 551 (D.C.Cir.1983). However, this is not a case for application of that rule. The requirement of the APA is that after consideration of the relevant matter presented [during the comment period], the agency shall incorporate in the rules adopted a concise general statement of their basis and purposes. 5 U.S.C. § 553(c) (1988). The Supreme Court has explained that it will  'uphold a decision of less than ideal clarity if the agency's path may reasonably be discerned.'  Motor Vehicle Mfrs. Ass'n of the United States, Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 2867, 77 L.Ed.2d 443 (1983) (quoting Bowman Transp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 286, 95 S.Ct. 438, 442, 42 L.Ed.2d 447 (1974)); see also Global Van Lines v. ICC, 714 F.2d 1290, 1298 (5th Cir.1983) (holding that the APA requires that the legal grounds upon which the agency thought it was proceeding appear somewhere in the administrative record). 56 EPA's interpretation of RCRA section 6002(a), explained in five different sets of guidelines, meets that standard. For the tire, insulation and oil guidelines, EPA first explained the basis for its legal interpretation in its proposals. For example, the preamble to the proposed insulation guideline, under the heading Applicability, discusses the definition of procuring agency set forth in section 1004(17), 42 U.S.C. § 6903(17), as it relates to section 6002 of the Act. See 53 Fed.Reg. at 29,177. In the proposal EPA also distinguished between purchases that directly result from a contract with a procuring agency and those that do not, explained that the basis for this distinction is found in sections 1004(17) and 6002, and provided examples to illustrate how its interpretation might apply to specific situations. See 53 Fed.Reg. at 29,177. The proposed tire and oil guidelines provide similar explanations of EPA's interpretation. See 53 Fed.Reg. at 15,626-27; 52 Fed.Reg. at 38,842. 57 In the final guidelines, EPA adopted the interpretation in the proposals and further explained the basis for its decision. For example, in the preamble to the oil guideline EPA again described the statutory sections upon which its interpretation is based and the distinction it drew from those statutory provisions, and provided an additional example to illustrate the interpretation. See 53 Fed.Reg. at 24,704-05. In a similar manner, EPA explained in the preamble to the final tire and insulation guidelines that it adopted the approach and bases for its interpretation set forth in the proposals, even though EPA intended to consider the issue further and provide additional guidance in the future. See 54 Fed.Reg. at 7,341; 53 Fed.Reg. at 46,562. 58 These explanations in the preamble and final guidelines satisfy the APA's requirement of a concise general statement of [the rules'] basis and purposes. 5 U.S.C. § 553(c). This is hardly a case where EPA has failed to explain the legal basis for its actions, nor is judicial review frustrated in this case. In these actions, the agency's path may reasonably be discerned, Motor Vehicle Mfrs. Ass'n, 463 U.S. at 43, 103 S.Ct. at 2867 (citations omitted), and the guidelines will therefore be upheld. 59