Court Opinion

ID: 4252019
Source: CourtListenerOpinion
Date Created: 2018-03-06 16:00:39.627876+00
Date Added: 2024-06-11T14:43:55.134198
License: Public Domain

United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT

                   FILED: March 6, 2018

                       No. 09-1038

            AMERICAN PETROLEUM INSTITUTE,
                     PETITIONER

                            v.

          ENVIRONMENTAL PROTECTION AGENCY,
                    RESPONDENT

          AMERICAN CHEMISTRY COUNCIL, ET AL.,
                    INTERVENORS

  Consolidated with 15-1083, 15-1085, 15-1088, 15-1089,
                         15-1094

             On Petitions for Panel Rehearing

   Before: TATEL and KAVANAUGH, Circuit Judges, and
WILLIAMS, Senior Circuit Judge.

    Opinion for the Court filed PER CURIAM.

    PER CURIAM: In 2015, the Environmental Protection
Agency promulgated a final rule that defined when certain
hazardous materials were deemed discarded—as opposed to
                               2

legitimately recycled—and therefore subject to EPA’s
oversight. Environmental and Industry Petitioners challenged
portions of the rule. In our 2017 decision, API v. EPA, 862 F.3d
50 (D.C. Cir. 2017), we upheld some aspects of the rule and
vacated others. In so doing, we invited the parties to consider
briefing whether one of the vacated components should instead
be severed and affirmed. Id. at 72. The parties accepted that
invitation, filing petitions for rehearing that address that
question and a number of others. Having reviewed the
petitions, we now modify our 2017 decision in three ways:
(1) we sever and affirm EPA’s removal of the spent catalyst bar
from the vacated portions of the “Verified Recycler
Exclusion”; (2) we vacate Factor 4 in its entirety; and (3) we
clarify the regulatory regime that replaces the now-vacated
Factor 4. All other aspects of the petitions for rehearing are
denied.

                            * * *

     Our 2017 opinion provides the relevant statutory and
regulatory background. Id. at 55–57. We offer here only what
is necessary to make sense of our three modifications to that
decision.

     In 2008, pursuant to the Resource Conservation and
Recovery Act (“RCRA”), 42 U.S.C. §§ 6901–6992k, EPA
promulgated a rule that excluded certain hazardous secondary
materials from the definition of solid waste—and therefore
beyond the reach of EPA’s RCRA authority—in two
circumstances. Revisions to the Definition of Solid Waste, 73
Fed. Reg. 64,668, 64,669/3–70/1–2 (Oct. 30, 2008). The
exclusion applicable depended on the type of entity
undertaking the recycling:       the “Generator-Controlled
Exclusion” applied when the company producing the material
performed the recycling itself and the “Transfer-Based
Exclusion” applied when the generator sent the materials to an
                                3

off-site recycler (which the rules required the generator to audit
to ensure that the transferee had in place adequate recycling
procedures). Id. As a prerequisite for either exclusion, the
materials had to be recycled legitimately, as determined by a
set of “legitimacy factors” set by EPA. Id. at 64,700/2.

     In 2015, while challenges to the 2008 rule were pending in
this court after having been held in abeyance in light of EPA’s
issuance of a notice of proposed rulemaking on the same
subject, the agency issued revisions to the rule. Definition of
Solid Waste, 80 Fed. Reg. 1,694 (Jan. 13, 2015). Four of those
changes are pertinent to the petitions for rehearing. First, EPA
changed the content and application of the four legitimacy
factors. Id. at 1,719/3–20/1. Second, EPA redefined and made
more stringent the “containment” standard, a preexisting
requirement recyclers had to satisfy to qualify for the
Generator-Controlled and Transfer-Based Exclusions. Id. at
1,704/1–3, 1,738/1. Third, EPA allowed spent petroleum
refinery catalysts to qualify for these solid waste exclusions.
Id. at 1,737/3–38/1. Fourth, EPA replaced the Transfer-Based
Exclusion with the Verified Recycler Exclusion. Id. at 1,695/2.

     Our 2017 decision vacated the Verified Recycler
Exclusion and reinstated the Transfer-Based Exclusion. API,
862 F.3d at 75. We explained that, as a result, spent catalysts
would once again be disqualified from that exclusion’s ambit
“subject . . . to such arguments as parties may raise supporting
a different outcome.” Id. We also vacated the revised Factor 4
“insofar as it applies to all hazardous secondary materials via
§ 261.2(g).” Id.

                             * * *

    We conclude that three aspects of the petitions for
rehearing warrant revision of our 2017 decision.
                               4

     Spent Petroleum Catalysts. In response to our invitation,
id. at 72, 75, API asks us to undo the disqualifier for spent
catalysts. We had been persuaded by EPA’s response to
comments regarding the proposed 2015 rule that, in removing
the disqualification, EPA relied in part on the Verified Recycler
Exclusion. See id. at 72; see also EPA, Revisions to the
Definition of Solid Waste Final Rule Response to Comments
Document (Dec. 10, 2014) (“Comments Document”). In that
document, EPA had said:

    [U]nder the contained standard for both the generator-
    controlled exclusion and the verified recycler exclusion,
    any hazardous secondary material that poses a risk of fire
    or explosion must have that risk addressed in order to
    ensure that the material is legitimately recycled and not
    discarded.

Comments Document at 266. We then explained that we
accordingly harbored doubts that EPA would have altered its
treatment of spent catalysts absent the Verified Recycler
Exclusion. API, 862 F.3d at 72. Review of the petitions for
rehearing and the Comments Document dissipates such doubts.

     The commenters in the rulemaking were split on spent
catalysts, but among those arguing for relaxation of the ban was
one asserting that, as a factual matter, catalysts simply are not
as dangerous as EPA thought: “The commenter stated that in
the experience of their members, the catalysts sometimes have
self-heating properties, but rarely are pyrophoric or otherwise
exhibit the RCRA characteristic of ignitability.” Comments
Document at 263.

    EPA did not agree:

    However, EPA does not support commenters’ claim that
    spent petroleum catalysts are ‘rarely’ pyrophoric as a
                                5

    reason for the exclusion; under the contained standard for
    both the generator-controlled exclusion and the verified
    recycler exclusion, any hazardous secondary material that
    poses a risk of fire or explosion must have that risk
    addressed in order to ensure that the material is
    legitimately recycled and not discarded.

Id. at 266. The clause following the semi-colon in that
marathon sentence is, of course, the language quoted above that
originally gave us pause.

     But EPA agreed with those commenters who thought a
unitary regulatory scheme should govern spent catalysts and
that “spent petroleum catalysts sent for recycling should be
eligible” for the Generator-Controlled and Verified Recycler
Exclusions. Id. at 265. As justification, EPA pointed to the
fact that the “proposed contained standard” sufficiently
“addresses the risk of fires and explosions” and therefore “the
pyrophoric properties of the spent petroleum catalysts.” Id. at
266. One additional virtue of EPA’s approach, it said, was that
the containment standard gets at the risk of fire for any
hazardous secondary material instead of singling out catalysts
for unique treatment. Id.; see also id. at 268 (“EPA is finalizing,
as proposed, a contained standard that ‘addresses any potential
risks of fires and explosions.’ This performance-based
standard addresses the potential for discard of all hazardous
secondary materials, including spent petroleum catalysts, via
fires and explosions.”).

     Accordingly, EPA did not believe that it was “necessary to
promulgate a separate exclusion” for catalysts or that
“additional conditions” were needed to ensure proper treatment
of catalysts. Id. EPA defended its approach as one that “avoids
the potential dual system of regulation” that would result from
a catalyst-specific rule. Id.
                               6

     Taken together, here is how we read EPA’s various
statements regarding spent catalysts: Despite what some
commenters said, spent catalysts present a pyrophoric risk that
needs to be addressed. The revised containment standard of the
2015 rule addresses that risk. It locates the new containment
standard definition at § 260.10 and incorporates it by reference
into Factor 3, see 862 F.3d at 57–58, and into both the
Generator-Controlled and Verified Recycler Exclusions, see 80
Fed. Reg. at 1,738/1 (explaining that, because EPA “added a
regulatory definition of the ‘contained’ standard” that applied
to both exclusions, EPA revised both exclusions so that spent
petroleum catalysts were now eligible).

     Because we held that the revised containment standard
survives our vacating other aspects of the Verified Recycler
Exclusion, API, 862 F.3d at 72 (explaining that the “expanded
containment requirement” does “not depend on any vacated
portions of the Verified Recycler Exclusion”); see also id. at 75
(excepting the “expanded containment requirement” from
vacatur of the Verified Recycler Exclusion), it will continue to
apply to the Generator-Controlled Exclusion and the now-
revived Transfer-Based Exclusion (as well as in Factor 3,
where applicable).

     EPA informs us that it has no objections to API’s request,
explaining that the provisions that survived the demise of the
Verified Recycler Exclusion—the additional emergency
preparedness requirement and the more muscular “contained”
definition—independently resolve what had previously been
the reason for separate catalyst treatment. See EPA’s Resp. to
Pets. Panel Reh’g at 12–13. As EPA’s current position is fully
supported by the rulemaking record, we are confident that it
reflects EPA’s view at the time of the rulemaking. See Verizon
v. FCC, 740 F.3d 623, 659 (D.C. Cir. 2014); cf. Davis Cnty.
Solid Waste Mgmt. v. EPA, 108 F.3d 1454, 1457–59 (D.C. Cir.
                                7

1997) (accepting EPA’s position on rehearing even in the face
of its contrary position at oral argument).

     Environmental Petitioners claim that our 2017 decision left
intact the containment requirement as applied to generators, but
not to third-party recyclers. On this premise they argue that
because of this supposed gap, EPA would not have undone the
bar on eligibility for spent catalysts. See Envtl. Pet’rs’ Opp’n
to Panel Reh’g 2–3 (comparing 40 C.F.R. § 261.4(a)(24)(v)
with 40 C.F.R. § 261.4(a)(24)(vi)).

     But the Environmental Petitioners’ premise is mistaken.
The revised containment standard is found in two places in the
Verified Recycler Exclusion, one specifying the obligations of
generators, 40 C.F.R. § 261.4(a)(24)(v), and the other
specifying the obligations of the reclaimers (i.e., third-party
recyclers), 40 C.F.R. § 261.4(a)(24)(vi). Section 261.4(a)(24)
introduces the subject by providing that “[h]azardous
secondary material that is generated and then transferred to a
verified reclamation facility . . . is not a solid waste provided
that . . . (v) [t]he hazardous secondary material generator
satisfies all of the following conditions . . . (A) [t]he material
must be contained as defined in § 260.10.” (emphasis added).
Subsection (vi) requires that “[r]eclaimers of hazardous
secondary material excluded from regulation under this
exclusion and intermediate facilities as defined in § 260.10 of
this chapter satisfy all of the following conditions,” including
“(D) [t]he reclaimer and intermediate facility must manage the
hazardous secondary material in a manner that is at least as
protective as that employed for analogous raw material and
must be contained.” (emphasis added).

    We severed and affirmed the former (the revised
containment standard as it applied to generators), see API, 862
F.3d at 72, but said nothing of the latter (the containment
requirement applied to third-party recyclers). Accordingly, that
                               8

third-party recycler provision referring to containment was
vacated. But that same provision, which the Environmental
Petitioners point to as being critical to EPA’s decision to
remove the spent catalyst disqualifier, is now-resuscitated
because it also appears, word for word, in the now-revived
Transfer-Based Exclusion. And it requires that the third-party
recyclers—the reclaimers and intermediate facilities—contain
hazardous secondary materials.             See 40 C.F.R.
§ 261.4(a)(24)(vi)(D) (2009).

     It is, of course, true that the provision in subsection
(a)(24)(v) (applying to generators) expressly refers to § 260.10
while subsection (a)(24)(vi) (applying to third-party recyclers)
does not. There being no extant definition of “contained” other
than the one found at § 260.10, that is necessarily the one
applied to third-party recyclers. We therefore conclude that
both generators and third-party recyclers will be bound by the
revised (and unvacated) containment standard found in the
definitions at § 260.10.

    Accordingly, we sever and affirm EPA’s decision in the
2015 rule to eliminate the provision in the 2008 rule that had
barred spent catalysts from qualifying for the Transfer-Based
Exclusion.

     Scope of Factor 4 Vacatur. In our 2017 decision, we wrote
that because Factor 4’s “comparable to or lower than” standard
“is not reasonably focused on items that are ‘part of the waste
disposal problem,’” “the exception process must be adequate to
offset that fault.” API, 862 F.3d at 63. Finding that the
exception process imposed “draconian” procedures on
recyclers, id. at 61, we found the exception inadequate and
vacated Factor 4 “insofar as it applies to all hazardous
secondary materials via § 261.2(g).” Id. at 75. We explained
that EPA had “also written [Factor 4] into specific exclusions,”
such as the Generator-Controlled Exclusion. Id. at 63. We did
                                9

not vacate those applications of Factor 4, taking the view that
petitioners did “not challenge Factor 4 as applied to those
individual exclusions.” Id.

     Industry Petitioners dispute that view, asserting that they
challenged Factor 4 in its entirety. Upon revisiting their earlier
briefing, we now agree, as does EPA. See EPA’s Resp. to Pets.
Panel Reh’g at 6. If anything, Industry Petitioners’ attack on
the legitimacy factors was broader—not narrower—than what
we entertained. See, e.g., Industry Pet’rs’ Br. at 20–25 (arguing
that Factor 4 impermissibly reaches materials that are not
discarded); id. at 65 (requesting that we vacate the legitimacy
factors). We also find that nothing about the reasons we gave
for vacating Factor 4 would not equally apply in situations
where it is expressly incorporated into an exclusion (e.g., the
Generator-Based Exclusion, 40 C.F.R. § 261.4(a)(23)(ii)(E)).

    Factor 4 is therefore vacated in its entirety.

     Effect of Factor 4 Vacatur. At EPA’s request, EPA’s
Resp. to Pets. Panel Reh’g at 6–10, we clarify the effect of our
vacating Factor 4. (We note that a subset of the Industry
Petitioners appear to assume results different from our
clarification. Freeport-McMoRan Inc. & Am. Chemistry
Council Pet. Panel Reh’g at 10.)

     In 2015, a few changes were made to the four legitimacy
factors: (1) all four factors were made to apply to all excluded
recycling including recycling invoking exclusions that predated
the 2008 rule (in the 2008 rule, the legitimacy factors applied
only to the then-new Generator-Controlled and Transfer-Based
Exclusions), see 80 Fed. Reg. at 1,720/2–22/3; (2) Factors 3
and 4 became mandatory factors (in the 2008 rule, they were
merely factors to be “considered”), see id. at 1,722/3–23/2; and
(3) the substance of Factors 3 and 4 changed somewhat, see id.
at 1,724/3–32/1.
                               10

     We vacated Factor 4 on account of its substantive
requirements, but left in place all other changes to the
legitimacy factors. The net result is as follows: (1) the 2015
version of Factor 4 is vacated (in its entirety, as discussed
above); (2) the 2015 change making the legitimacy factors
applicable to all exclusions remains; (3) Factor 3 remains
mandatory per the 2015 changes; and (4) the 2008 version of
Factor 4 (which requires only that the factor be “considered”)
replaces the now-vacated 2015 version.

                             * * *

    In sum, we grant the petitions for panel rehearing in three
respects: (1) we sever and affirm EPA’s decision to remove the
spent catalyst disqualifier; (2) we vacate the 2015 rule’s version
of Factor 4 in its entirety; and (3) we clarify the effect of that
vacatur. The petitions for rehearing are denied in all other
respects.