Court Opinion

ID: 4413199
Source: CourtListenerOpinion
Date Created: 2019-07-02 15:00:47.588577+00
Date Added: 2024-06-11T14:52:32.847907
License: Public Domain

United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 9, 2019                   Decided July 2, 2019

                       No. 18-1163

    CALIFORNIA COMMUNITIES AGAINST TOXICS, ET AL.,
                   PETITIONERS

                             v.

    ENVIRONMENTAL PROTECTION AGENCY AND ANDREW
     WHEELER, ADMINISTRATOR, U.S. ENVIRONMENTAL
                PROTECTION AGENCY,
                    RESPONDENTS

          AMERICAN CHEMISTRY COUNCIL, ET AL.,
                    INTERVENORS

      On Petition for Review of Administrative Action
   of the United States Environmental Protection Agency

     Khushi Desai argued the cause for petitioners. With her
on the briefs was James S. Pew.

     Perry M. Rosen, Attorney, U.S. Department of Justice,
argued the cause for respondents. With him on the brief were
Jeffrey Bossert Clark, Assistant Attorney General, and
Jonathan Brightbill, Deputy Assistant Attorney General.
                              2
    Thomas Sayre Llewellyn argued the cause for intervenor-
respondents. With him on the brief were Stacy R. Linden,
Matthew A. Haynie, Richard S. Moskowitz, Wayne J. D'Angelo,
Peter C. Tolsdorf, Timothy K. Webster, Leslie A. Hulse, Aaron
J. Wallisch, Kevin A. Gaynor, John P. Elwood, and Jeremy C.
Marwell. Joshua S. Johnson entered an appearance.

   Before: HENDERSON and ROGERS, Circuit Judges, and
SENTELLE, Senior Circuit Judge.

    Opinion for the court by Circuit Judge ROGERS.

     ROGERS, Circuit Judge: In 1976, Congress enacted the
Resource Conservation and Recovery Act of 1976 (“RCRA”),
as amended, 42 U.S.C. §§ 6901–6992k, to address the
environmental and health risks associated with hazardous solid
waste. Subtitle C of RCRA required the Environmental
Protection Agency to issue regulations governing the storage,
treatment, and disposal of “solid waste,” which was defined as
“discarded” material, 42 U.S.C. § 6903(27). Among RCRA’s
stated objectives was “minimizing the generation of hazardous
waste . . . by encouraging process substitution, materials
recovery, properly conducted recycling and reuse, and
treatment.” Id. § 6902(a)(6) (emphasis added). In 2008, EPA
promulgated a final rule that treated material transferred from
a waste generator to a third-party reclaimer as legitimately
recycled, rather than “discarded” and subject to Subtitle C
regulation, if several conditions were met. This Transfer-
Based Exclusion was replaced by another exclusion in 2015,
reinstated by the court in 2017, and reissued by EPA as
modified in 2018.

     Environmental petitioners consider the Transfer-Based
Exclusion to be insufficiently protective of human health and
the environment and bring two challenges: First, they contend
                                3
the Transfer-Based Exclusion exceeds EPA’s statutory
authority under RCRA. In their view, a generator “discards”
hazardous material whenever it pays a reclaimer to accept the
material. Second, they contend the Transfer-Based Exclusion
fails arbitrary and capricious review because EPA has not
provided a reasoned explanation for treating hazardous
material differently based on whether it is sent to a reclaimer
instead of a storage, treatment, or disposal facility, and because
EPA has already identified deficiencies in the Transfer-Based
Exclusion.

      EPA initially raises a host of threshold objections to
petitioners’ contentions, some of which industry intervenors
join. Upon examination, we conclude none is persuasive. On
the merits, EPA responds that neither the statutory text, case
law, nor empirical data supports petitioners’ contentions. We
conclude, in view of this court’s precedent, that EPA did not
act contrary to RCRA in adopting the Transfer-Based
Exclusion because hazardous secondary materials are not
necessarily “discarded” each time they are transferred from a
generator to a reclaimer along with payment. Further we
conclude that EPA has provided a reasoned explanation for
applying different standards to materials that are not yet part of
the waste disposal problem RCRA addresses where they meet
conditions EPA concluded were adequate for safe transfer and
legitimate recycling. The Transfer-Based Exclusion therefore
survives arbitrary and capricious review. Accordingly, we
deny the petition for review.

                                I.

     Some background is necessary before addressing the
threshold objections to petitioners’ challenge.
                               4
                                A.
     In 2008, EPA promulgated a final rule intended to
“encourage and expand the safe, beneficial recycling of
additional hazardous secondary materials,” adopting the
Generator-Controlled Exclusion and the Transfer-Based
Exclusion. The Exclusions deal with “reclamation,” a type
of recycling that occurs when secondary material is
processed to recover a usable product or is regenerated. 40
C.F.R. § 261.1(c)(4), (7). Secondary materials can include
byproducts, spent materials, and sludges. Id. § 261.1(c)(1)–
(3). The final rule allowed generators of hazardous secondary
materials to avoid Subtitle C regulation of those materials
where the generator controls the recycling or where the
generator transfers the materials to an off-site reclaimer.
Revisions to the Definition of Solid Waste, 73 Fed. Reg. 64,668,
64,669 (Oct. 30, 2008) (“2008 Rule”). Under the Transfer-
Based Exclusion, generators, transporters, and reclaimers must
meet “Transfer Conditions” to ensure hazardous materials are
transferred securely and are actually recycled. Id. at 64,669–
70. For example, a generator must audit the reclaimer for
compliance with proper recycling practices. Id. at 64,683.
“Legitimacy Factors” must also be satisfied so recycling is
legitimate and not a “sham.” Id. at 64,670. The history of the
Rule is described in American Petroleum Institute v. EPA
(“API III”), 862 F.3d 50 (D.C. Cir. 2017).

    Suffice it to say, environmental groups challenged the
2008 Rule as too lenient, and industry groups challenged the
Rule as too strict. EPA eventually replaced the Transfer-Based
Exclusion in 2015 with a similar but more restrictive Verified
Recycler Exclusion, allowing generators to avoid Subtitle C
requirements only when they transfer materials to verified
recyclers that had obtained either permits or variances.
Definition of Solid Waste, 80 Fed. Reg. 1694, 1695 (Jan. 13,
2015) (“2015 Rule”). Environmental and industry groups
                                5
challenged this Exclusion, and in API III, the court vacated the
permit and variance provisions, reinstated the 2008 Transfer-
Based Exclusion, and upheld other requirements regarding
emergency preparedness and containment added in 2015. On
rehearing, the court expanded the Transfer-Based Exclusion to
cover spent refinery catalysts. American Petroleum Institute v.
EPA (“API IV”), 883 F.3d 918 (D.C. Cir. 2018). Without
further notice and comment, EPA then published in 2018 the
Transfer-Based Exclusion as modified by this court, which
petitioners now challenge. Response to Vacatur of Certain
Provisions of the Definition of Solid Waste Rule, 83 Fed. Reg.
24,664 (May 30, 2018) (“2018 Rule”). The court is presented
with an unusual time warp in considering petitioners’
challenges to the Transfer-Based Exclusion given the passage
of 10 years during which EPA considered policy concerns and
the court addressed legal challenges.

                              B.
    The court first must address the threshold objections raised
by EPA and joined in part by industry intervenors.

     1. Standing. To satisfy “the irreducible constitutional
minimum of standing,” a party must establish (1) that it has
“suffered an injury in fact” that is both “concrete and
particularized” and “actual or imminent,” (2) that the injury is
“fairly trace[able] to the challenged action of the defendant,”
and (3) that the injury is “likely . . . [to] be redressed by a
favorable decision.” Lujan v. Defs. of Wildlife, 504 U.S. 555,
560–61 (1992) (first alteration in original). Contrary to EPA’s
objection, petitioners have established standing.

     For an organization to bring suit on behalf of its members,
it must show (1) at least one of “its members would otherwise
have standing to sue in [his or her] own right,” (2) “the interests
it seeks to protect are germane to the organization’s purpose,”
                               6
and (3) “neither the claim asserted nor the relief requested
requires the participation of individual members.” Defs. of
Wildlife v. Perciasepe, 714 F.3d 1317, 1323 (D.C. Cir. 2013).
Petitioners’ members live, commute, work, and recreate near
generators of hazardous materials that used the Transfer-Based
Exclusion before 2015 or that are likely to use it now. See
Feldman Decl. ¶¶ 3–4; Ford Decl. ¶ 3; Kilgour Decl. ¶¶ 5–7;
Rhodes Decl. ¶¶ 2–3. By parity of reasoning, just as the court
has recognized industry groups’ standing based on injury
caused by elimination of parts of the Exclusion, e.g., API III,
862 F.3d at 66, the Transfer-Based Exclusion deprives
petitioners’ members of Subtitle C protections that Congress
deemed necessary to address health or environmental risks.
Congress acknowledged the potential threat to human health
and the environment associated with hazardous wastes when it
required EPA to promulgate regulations governing their
storage, treatment, and disposal. 42 U.S.C. § 6903(5)(B). By
definition, the existing Subtitle C regulations are those EPA has
determined to be “necessary to protect human health and the
environment.” Id. §§ 6922(a), 6923(a), 6924(a). In their
declarations, petitioners’ members describe how their
reasonable fear of those same health or environmental risks
impairs their ability to feel safe and to enjoy the outdoors.
Several declarants state that they spend less time outdoors
exercising, gardening, walking their dogs, or fishing, or do not
enjoy these outdoor activities as much, due to their worries
about health and environmental harms. Cheung Decl. ¶¶ 10–
11; Feldman Decl. ¶¶ 6–9; Ford Decl. ¶¶ 6–8; Kilgour Decl.
¶ 10.

    This court has concluded in similar circumstances that
environmental petitioners have standing to challenge
regulatory actions under RCRA. In Sierra Club v. EPA, 755
F.3d 968 (D.C. Cir. 2014), the court held that similar
declarations explaining “individuals’ particularized fears of
                                7
serious health and environmental consequences” and “their
individual behavioral changes” resulting from the regulatory
change established injury in fact for Article III standing. Id. at
974–75. Similarly, in NRDC v. EPA, 755 F.3d 1010 (D.C. Cir.
2014), the court deemed sufficient “declarations of long-time
members who spend time near facilities which, as a result of
the [challenged] Exclusion, now burn comparable fuels” and
who “spend less time outdoors” due to their “concern[] about
the emissions’ effects on their health.” Id. at 1016–17. If a
challenged regulation causes individuals to reasonably fear
health or environmental harms and thus prevents them from
using or enjoying the aesthetic or recreational value of their
area, their injury suffices for Article III standing. See Friends
of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S.
167, 182–83 (2000); Ass’n of Battery Recyclers, Inc. v. EPA,
716 F.3d 667, 672–73 (D.C. Cir. 2013).

      The seven years the Transfer-Based Exclusion was in
effect have not, as EPA suggests, rendered petitioners’
concerns speculative. During that time, only a small subset of
the industry facilities eligible for the Exclusion took advantage
of it. See API III, 862 F.3d at 66; compare 2008 Rule, 73 Fed.
Reg. at 64,668 (5,600 facilities eligible for 2008 Exclusion),
with 2015 Rule, 80 Fed. Reg. at 1,708 (65 facilities utilizing
Exclusion in April 2014). Industry intervenors acknowledge
that most states refrained from adopting the Transfer-Based
Exclusion “due to uncertainty over the long-term status of the
exclusion.” Intervenor-Respondents’ Br. 12–13. But facilities
now qualifying for the Exclusion are likely to “take advantage
of the Exclusion for which they lobbied” EPA, Sierra Club,
755 F.3d at 975, as indicated by industry intervenors’ claim of
standing on this basis. See Intervenor-Respondents’ Br. 3.

   2. Waiver. Generally, “a party must initially present its
comments to the agency during the rulemaking in order for the
                               8
court to consider the issue.” Tex Tin Corp. v. EPA, 935 F.2d
1321, 1323 (D.C. Cir. 1991). Its objections must be stated
“with sufficient specificity reasonably to alert the agency.”
Appalachian Power Co. v. EPA, 251 F.3d 1026, 1036 (D.C.
Cir. 2001) (quoting Tex Tin Corp., 935 F.2d at 1323). There is
no waiver here.

     The waiver rule exists to “ensure an agency has had ‘an
opportunity to consider the matter, make its ruling, and state
the reasons for its action.’” Okla. Dep’t of Envtl. Quality v.
EPA, 740 F.3d 185, 192 (D.C. Cir. 2014) (quoting
Unemployment Comp. Comm’n of Alaska v. Aragon, 329 U.S.
143, 155 (1946)). EPA had an opportunity to and did address
petitioners’ contentions during the notice-and-comment period
for the 2008 Rule. Although EPA attempts to recast
petitioners’ current contentions as new, Sierra Club raised the
same concerns in 2007 as petitioners here about the relevance
of generators’ payment to recyclers and the insufficiency of the
Transfer Conditions. EPA’s Response to Comments shows it
was aware of these objections to the proposed rule. See NRDC,
755 F.3d at 1022–23.

     Regarding the payment issue, EPA quoted Sierra Club’s
concerns, see Revisions to the Definition of Solid Waste,
Response to Comments Document, 88 (Oct. 1, 2008), and
explained that although it would not “mak[e] its finding on
discard solely based on the ‘value’ of the recycled material[,]
‘[v]alue’ is one aspect of the Agency’s findings and[]
contributes to the ultimate determination that materials
complying with the conditions and restrictions of this
regulation are not discarded,” id. at 91.

     Regarding the sufficiency of the Transfer Conditions, EPA
noted commenters’ views that “before EPA can lawfully claim
that excluded materials are not discarded, the Agency would
                                9
need to strengthen the conditions to protect human health and
the environment” and that “the minimal conditions in the
proposal are not sufficient to protect against discard.” Id. at 86.
EPA disagreed that the Transfer Conditions were inadequate,
stating that “[e]ach of the restrictions and/or conditions is
specifically linked to defining when the hazardous secondary
materials are not discarded.” Id. at 91–95.

     3. Timeliness. RCRA provides that parties may seek
review in this court of EPA regulations “within ninety days
from the date of such promulgation . . . or after such date if
such petition for review is based solely on grounds arising after
such ninetieth day.” 42 U.S.C. § 6976(a)(1) (emphasis added).
The circumstances leading to the instant petition are a classic
example of the “after-arising grounds” exception. Petitioners
timely raised their challenges to the Transfer-Based Exclusions
of 2008 and 2018.

     Petitioners filed the instant challenge to the 2008 Rule and
the Transfer-Based Exclusion reissued in 2018 on June 12,
2018 (within 90 days of the 2018 issuance but not within 90
days of the 2008 Rule). The after-arising grounds exception to
the 90-day time limit “encompasses the occurrence of an event
that ripens a claim.” Coal. for Responsible Regulation, Inc. v.
EPA, 684 F.3d 102, 129–30 (D.C. Cir. 2012). In January 2009,
Sierra Club petitioned for review of the 2008 Rule and sought
reconsideration by EPA. Within a month EPA indicated it
would consider withdrawing the rule and proposing a new one
to address Sierra Club’s concerns. The court granted the joint
motion of Sierra Club and EPA to hold the petition in abeyance.
EPA promulgated a new rule in 2015, at which point Sierra
Club dismissed its petition for review without prejudice to
challenges to future rules, in accordance with its 2010
settlement agreement with EPA. See API III, 862 F.3d at 56.
                               10
     Sierra Club’s challenge to the 2008 Rule would have been
unripe in view of EPA’s expressed intention to withdraw the
Transfer-Based Exclusion. The court so held with regard to
industry groups’ petition challenging the 2008 Rule. See Am.
Petroleum Inst. v. EPA (“API II”), 683 F.3d 382, 384, 387–88
(D.C. Cir. 2012). The court’s decisions in 2017 and 2018 and
EPA’s reissuance in 2018 of a Transfer-Based Exclusion had
the effect of re-ripening Sierra Club’s challenge. See Coal. for
Responsible Regulation, 684 F.3d at 131. The court’s “‘finding
of unripeness gives petitioners the needed assurance’ that they
will not be foreclosed from judicial review when the
appropriate time comes.” Grand Canyon Air Tour Coal. v.
FAA, 154 F.3d 455, 473 (D.C. Cir. 1998) (quoting Public
Citizen v. Nuclear Regulatory Comm’n, 940 F.2d 679, 683
(D.C. Cir. 1991)).

     The court’s decision in Alaska v. Department of
Agriculture, 772 F.3d 899 (D.C. Cir. 2014), is to similar effect.
A 2001 Forest Service rule prohibited road construction on
national forest lands. The Forest Service repealed the rule in
2005, but a district court reinstated it in 2006. Id. at 900. This
court rejected the Forest Service’s timeliness objection,
holding that when the rule was reinstated in 2006 after its prior
repeal, a new right of action accrued under the reopening
doctrine “even though the regulation challenged is no
different.” Id. (citing Ohio v. EPA, 838 F.2d 1325, 1328 (D.C.
Cir. 1988)). The case for timeliness here is stronger than in
Alaska because the 2018 Transfer-Based Exclusion differs
from the 2008 version of the Transfer-Based Exclusion. For
example, the 2018 version includes emergency preparedness
and containment requirements first added in 2015 and also now
applies to spent refinery catalysts. See API III, 862 F.3d at 66–
67, 75; API IV, 883 F.3d at 923.
                               11
     4. Claim Preclusion. Under the doctrine of claim
preclusion, “a final judgment on the merits of an action
precludes the parties or their privies from relitigating issues
that were or could have been raised in that action.” Allen v.
McCurry, 449 U.S. 90, 94 (1980). “A subsequent lawsuit is
barred by claim preclusion ‘if there has been prior litigation
(1) involving the same claims or cause of action, (2) between
the same parties or their privies, and (3) there has been a final,
valid judgment on the merits, (4) by a court of competent
jurisdiction.’” NRDC v. EPA, 513 F.3d 257, 260 (D.C. Cir.
2008) (quoting Smalls v. United States, 471 F.3d 186, 192
(D.C. Cir. 2006)). Because the instant petition involves a
different Transfer-Based Exclusion, claim preclusion does not
bar petitioners’ contentions.

      Petitioners do not raise the same claims as they raised or
could have raised in 2015 because the Verified Recycler
Exclusion and the 2018 Transfer-Based Exclusion are
different. See API III, 862 F.3d at 64–65, 75. A judgment “bars
any further claim based on the same ‘nucleus of facts,’” but
where an earlier action “could not have asserted claims based
on facts that were not yet in existence,” dismissal based on
claim preclusion is not allowed. Page v. United States, 729
F.2d 818, 820 (D.C. Cir. 1984); see also Drake v. FAA, 291
F.3d 59, 66 (D.C. Cir. 2002). Claim preclusion “does not
preclude a suit arising from a completely different event, no
matter how similar the defendant’s []conduct.” Russian Media
Grp., LLC v. Cable Am., Inc., 598 F.3d 302, 311 (7th Cir. 2010)
(citing Lawlor v. Nat’l Screen Serv. Corp., 349 U.S. 322, 328
(1955)). As petitioners note, the Transfer-Based Exclusion did
not exist in its current form when they challenged the 2015
Rule in API III & IV; therefore, the causes of action here and
there are not the same.
                               12
      5. Issue Preclusion. Under the doctrine of issue
preclusion, “once a court has decided an issue of fact or law
necessary to its judgment, that decision may preclude
relitigation of the issue in a suit on a different cause of action
involving a party to the first case.” Allen, 449 U.S. at 94. A
prior holding has preclusive effect if three requirements are
met: (1) “the same issue now being raised must have been
contested by the parties and submitted for judicial
determination in the prior case;” (2) “the issue must have been
actually and necessarily determined by a court of competent
jurisdiction in that prior case;” and (3) “preclusion in the
second case must not work a basic unfairness to the party
bound by the first determination.” Yamaha Corp. of Am. v.
United States, 961 F.2d 245, 254 (D.C. Cir. 1992). For an issue
to be actually and necessarily decided by a prior court, the
determination must be essential to the court’s judgment. Id.
That is not the case here.

     Although petitioners raised the same issues in API III, the
court did not actually and necessarily decide them. In API III,
the court identified the issues before it:

       Industry Petitioners argue that both the legitimacy test
       and the Verified Recycler Exclusion exceed EPA’s
       RCRA authority. Industry Petitioners also challenge
       EPA’s treatment of two specific materials: spent
       catalysts and off-specification commercial chemical
       products. Environmental Petitioners argue that the
       Verified Recycler Exclusion is too permissive and that
       EPA should have added containment and notification
       conditions to the 32 pre-2008 exclusions. We consider
       these challenges in turn.
862 F.3d at 56. The court also was careful to identify that it
resolved only the issues raised by industry petitioners. The
                               13
court agreed that EPA had not sufficiently justified its decision
to tighten the conditions to require administrative approval
through a permit or variance, id. at 65, and therefore vacated
the Verified Recycler Exclusion, id. at 71. As a result, the court
stated it “need not address Environmental Petitioners’
argument that the exclusion is too lenient.” Id. at 72.

    Nothing in the opinions in API III or API IV indicates the
court rejected petitioners’ contention that generators discard
such materials by paying to get rid of them. This makes sense
because the court had no need to consider petitioners’
challenges once it decided to vacate the Exclusion based on
industry groups’ challenge. See Cement Kiln Recycling Coal.
v. EPA, 255 F.3d 855, 872 (D.C. Cir. 2001).

      6. Stare Decisis. Stare decisis means that “the same issue
presented in a later case in the same court should lead to the
same result.” In re Grant, 635 F.3d 1227, 1232 (D.C. Cir.
2011) (emphasis omitted) (quoting LaShawn A. v. Barry, 87
F.3d 1389, 1393 (D.C. Cir. 1996)). “Stare decisis compels
adherence” only if the prior court reached a “factually
indistinguishable decision.” Brewster v. Comm’r, 607 F.2d
1369, 1373 (D.C. Cir. 1979). No court has expressly decided
whether hazardous materials that a generator pays a reclaimer
to accept are necessarily “discarded” under RCRA.
Petitioners’ challenges are not barred by stare decisis.

     In API III, 862 F.3d 50, the court discussed the confluence
of transfer and low-value materials, but it did so only in the
context of the industry groups’ arbitrary-and-capricious
challenge to the 2015 Verified Recycler Exclusion. See id. at
67–71. The court held that, in the absence of supporting data,
EPA’s theory was insufficient to justify the administrative
approval requirements. The court did not address petitioners’
contention that payment from a generator to a recycler
                                14
necessarily makes material “discarded” as a matter of statutory
interpretation. See generally id. No party has identified an
opinion that has decided that issue. The court in API III also
did not address petitioners’ contention that the Transfer
Conditions are insufficient to protect human health and the
environment because they are less stringent than Subtitle C
requirements. See generally id.

                                II.

     On the merits, petitioners seek vacatur of the Transfer-
Based Exclusion, 40 C.F.R. § 261.4(a)(24)–(25), as contrary to
RCRA. The court may set aside the Transfer-Based Exclusion
if it is “arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law,” 5 U.S.C. § 706(2)(A),
or “in excess of statutory jurisdiction, authority, or limitations,”
id. § 706(2)(C). See 42 U.S.C. §§ 6903(27), 6922–6924. In
reviewing an agency’s interpretation of a statute it administers,
the court applies the familiar two-step test of Chevron, U.S.A.,
Inc. v. NRDC, 467 U.S. 837 (1984): If Congress has “directly
spoken to the precise question at issue,” then the court must
“give effect to the unambiguously expressed intent of
Congress”; otherwise the court defers to the agency’s
reasonable interpretation of a statute it administers, id. at 842–
43.

     In RCRA, Congress required EPA to regulate both
hazardous and non-hazardous “solid waste,” with more
stringent requirements applying to hazardous waste. Subtitle
C of RCRA establishes a “cradle-to-grave” regulatory structure
for handling hazardous solid waste. 42 U.S.C. §§ 6921–6939g;
Shell Oil Co. v. EPA, 950 F.2d 741, 745 (D.C. Cir. 1991). These
provisions apply only to materials first qualifying as “solid
waste,” and hence the statutory definition of “solid waste”
underlies the EPA regulations at issue here. RCRA defines
                               15
“solid waste” as “any garbage, refuse, sludge from a waste
treatment plant, water supply treatment plant, or air pollution
control facility and other discarded material.” 42 U.S.C.
§ 6903(27) (emphasis added). If a material is “discarded,” it is
a solid waste and “falls within the jurisdiction of [] EPA.” Shell
Oil, 950 F.2d at 754. RCRA does not define “discarded
material” as used in the statutory definition of “solid waste,”
but by regulation EPA has clarified that the term includes
recycled material in certain circumstances, 40 C.F.R.
§ 261.2(a)(2), (c). In 2008, EPA interpreted the term
“discarded material” not to include hazardous secondary
materials that are transferred to a reclaimer if they meet
Transfer Conditions to ensure the materials are actually and
properly recycled. See 2008 Rule, 73 Fed. Reg. at 64,675.

     Petitioners challenge the Transfer-Based Exclusion in the
2008 Rule and as issued in 2018 following this court’s remand,
40 C.F.R. §§ 261.2(a)(1), 261.4(a)(24), on the principal ground
that material a generator pays to get rid of is “discarded” under
the ordinary meaning of that term and thus constitutes “solid
waste” that EPA lacks authority to exclude from Subtitle C
requirements. See Pet’rs’ Br. 22. In their view, any ambiguity
about the meaning of “discard” does not extend to materials
generators pay to get rid of, which “fall so easily into the
ordinary meaning of discarded.” Id. Petitioners consider
EPA’s focus on the Transfer Conditions to prevent secondary
spills and leaks during transport to be irrelevant to the question
of “discard,” noting EPA’s acknowledgement that generators
“often ship these materials . . . to avoid the costs of disposing
of the material” and “typically pay the reclamation facility to
accept [them].” Id. at 30 (alterations in original) (quoting 2015
Rule, 80 Fed. Reg. at 1707).

     Petitioners do not contend that either transfer or
reclamation necessarily constitutes “discard.” They also do not
                               16
contend that hazardous secondary materials must always be
treated as hazardous waste under RCRA. Instead, they contend
that a generator’s payment to a reclaimer to accept such
material necessarily indicates the material has negative value
to the generator and the transfer is a means of getting rid of, or
“discarding,” the material. See id. at 31–32.

      Congress has not directly answered the question whether
“discarded material” under RCRA includes hazardous
secondary material that a generator has paid a reclaimer to
accept. The parties do not point to anything in the statutory
text, structure, or legislative history of RCRA that clearly
answers whether “discarded” includes or excludes materials
that a generator pays to transfer to a reclamation facility and
that meet the Transfer Conditions. But this court’s precedent
effectively forecloses petitioners’ plain-meaning contention
that payment is determinative of “discard.”

      In American Mining Congress v. EPA (“AMC I”), 824
F.2d 1177 (D.C. Cir. 1987), the court agreed with industry
groups challenging EPA’s authority under RCRA to regulate
materials destined for immediate recycling or reuse within an
ongoing production process. The court concluded these
materials were not “discarded” because they “ha[d] not yet
become part of the waste disposal problem.” Id. at 1186. The
court recognized that the “ordinary, plain-English meaning of
the word ‘discarded’ is ‘disposed of,’ ‘thrown away,’ or
‘abandoned.’” Id. at 1184. Notably, the court declined to
“attribute decisive significance to the ordinary meaning of [the]
statutory language” because the court viewed EPA’s expansive
plain-meaning interpretation not to comport with Congress’s
objectives. Id. In particular, the court was of the opinion that
Congress’s likely intent was that the term “discarded” be read
consistent with “everyday parlance” rather than “in its broadest
sense.” Id. at 1187. That is, in RCRA Congress sought to
                               17
address the “ever-increasing problem of solid waste disposal
by encouraging the search for and use of alternatives to existing
methods of disposal (including recycling).” Id. at 1185–86
(emphasis omitted). Critically for the instant case, the court
held that EPA lacked authority under Subtitle C to regulate
materials “destined for beneficial reuse or recycling in a
continuous process by the generating industry itself.” Id.

     In response to industry and environmental challenges, the
court has since clarified how AMC I is properly understood,
explaining that “discarded” is, in some circumstances,
ambiguous with respect to EPA’s regulatory authority. See
Am. Petroleum Inst. v. EPA (“API I”), 906 F.2d 729, 740 (D.C.
Cir. 1990); Am. Mining Cong. v. EPA (“AMC II”), 907 F.2d
1179, 1186 (D.C. Cir. 1990); cf. Ass’n of Battery Recyclers,
Inc. v. EPA, 208 F.3d 1047, 1056 (D.C. Cir. 2000). In API I,
906 F.2d 729, the court acknowledged the ambiguity about
EPA’s authority to regulate K061 slag, which is a “sludge” and
therefore a “solid waste” when it leaves the electric furnace that
generated it. Id. at 740. There, EPA had promulgated a rule
declining to regulate K061 slag once it reached a metal
reclamation facility because it was no longer “discarded.” Id.
The court held EPA had overread AMC I and vacated the rule.
An “equally plausible reading” of RCRA’s definition of “solid
waste,” the court stated, “is that K061 remains ‘discarded’
throughout the ‘waste treatment’ process dictated by the
agency.” Id. Therefore EPA’s contrary interpretation would
be inconsistent with “RCRA’s acknowledged objective to
‘establish[] a cradle-to-grave regulatory structure’ for the safe
handling of hazardous wastes.” Id. at 741 (alteration in
original) (quoting United Techs. Corp. v. EPA, 821 F.2d 714,
716 (D.C. Cir. 1987)).

     In Shell Oil, 950 F.2d 741, the court confirmed that AMC
I does not affect “EPA’s ability to regulate hazardous materials
                                18
after they have been discarded.” Id. at 756. It upheld EPA’s
interpretation that “[i]f a hazardous material has been
discarded, it becomes subject to Subtitle C regulation even if it
is sent to a resource recovery facility.” Id.

     But in Association of Battery Recyclers, 208 F.3d 1047,
the court rejected EPA’s interpretation that materials are
“discarded” if they are not immediately reused where they are
destined for reclamation within an ongoing production process.
Id. at 1052. The court held EPA had “misread[] passages [in
AMC I] to mean that it may treat secondary materials as
‘discarded’ whenever they leave the production process and are
stored for any length of time.” Id. The court explained:
“Congress clearly and unambiguously expressed its intent that
‘solid waste’ . . . be limited to materials that are ‘discarded’ by
virtue of being disposed of, abandoned, or thrown away,” id. at
1051 (quoting AMC I, 824 F.2d at 1193), and “material stored
for recycling is plainly not in that category,” id. at 1053. The
court reiterated AMC I’s conclusion that “secondary materials
which are treated prior to recycling cannot be considered
discarded if they are ‘reused within an ongoing industrial
process.’” Id. at 1054 (quoting AMC I, 824 F.2d at 1182)).

     Similarly, in Safe Food & Fertilizer v. EPA, 350 F.3d 1263
(D.C. Cir. 2003), the court rejected environmental petitioners’
contention, relying on AMC I, that transfer to another firm or
industry for recycling necessarily means materials are
“discarded.” Id. at 1268. As the court explained, “we have
never said that RCRA compels the conclusion that material
destined for recycling in another industry is necessarily
‘discarded.’” Id. The court pointed out that because “firms
have ample reasons to avoid complete vertical integration,
firm-to-firm transfers are hardly good indicia of a ‘discard’ as
the term is ordinarily understood.” Id. (citation omitted). The
court accepted EPA’s exclusion of certain materials from
                              19
Subtitle C regulation if they met certain conditions under which
“market participants treat the exempted materials more like
valuable products than like negatively-valued wastes,
managing them in ways inconsistent with discard.” Id. at 1269.

     Finally, in API III, 862 F.3d 50, the court rejected EPA’s
theory that additional stringency in the 2015 Verified Recycler
Exclusion requiring a permit or variance was justified because
the confluence of transfer and low-value materials creates
perverse incentives for facilities to over-accumulate hazardous
secondary materials without recycling them, resulting in
“discard.” Id. at 68–69. Because EPA “fail[ed] to provide
sufficient linkage between theory, reality, and the result
reached,” as required under State Farm, id. at 68, EPA lacked
a sufficient basis to issue a blanket rule finding “discard” and
applying Subtitle C when the recycled material is transferred
and of low value. Id. at 65.

     The court’s precedent thus leaves no room to conclude that
Congress directly resolved that “discarded material” must
include hazardous secondary materials that a generator has paid
a reclaimer to accept. Under the second part of the Chevron
test, 467 U.S. at 843, the question is whether EPA’s
interpretation is “based on a permissible construction of the
statute.” It need not be “the only permissible construction, nor
‘the reading the court would have reached if the question
initially had arisen in a judicial proceeding.’” Northpoint
Techn., Ltd. v. FCC, 414 F.3d 61, 69 (D.C. Cir. 2005) (quoting
Chevron, 467 U.S. at 843 n.11). Deference is due to the
agency’s permissible interpretation “if the agency has offered
a reasoned explanation for why it chose that interpretation.”
Vill. of Barrington, Ill. v. Surface Transp. Bd., 636 F.3d 650,
660 (D.C. Cir. 2011).
                              20
     Petitioners contend EPA is not entitled to Chevron
deference because it did not give a reasoned explanation for its
interpretation of “discarded.” We disagree.

     EPA stated in the Preamble to the 2008 Rule that its
interpretation of “discarded” “reflects the fundamental logic of
the RCRA statute” and accords with this court’s “plain
language definition of discard.” 2008 Rule, 73 Fed. Reg. at
64,675–76. Although Congress’s “overriding concern” in
enacting RCRA was to ensure proper waste management, H.R.
REP. NO. 94-1491, at 3 (1976), it also aimed to encourage
proper recycling and recovery of hazardous materials as an
alternative to disposal, see 42 U.S.C. § 6902(a)(6). The House
Committee’s Report concludes that properly conducted reuse,
recycling, and reclamation are inconsistent with “discard,”
stating that “[m]uch industrial and agricultural waste is
reclaimed or put to new use and is therefore not a part of the
discarded materials disposal problem the committee
addresses.” H.R. REP. NO. 94-1491, at 2. In promulgating the
2008 Rule, EPA acknowledged that Congress intended certain
hazardous materials destined for recycling to be regulated.
Excluding all hazardous secondary materials destined for
recycling, EPA stated, “seems inconsistent with the mandate to
track hazardous wastes and control them from ‘cradle to
grave.’” 2008 Rule, 73 Fed. Reg. at 64,671. This court has
embraced the view that if materials never become part of the
waste disposal problem, then they are not “discarded” and need
not be regulated under Subtitle C. E.g., AMC I, 824 F.2d at
1179, 1186.

     In these circumstances, EPA has reasonably equated
legitimate recycling with lack of “discard.” If the Transfer
Conditions and Legitimacy Factors adequately ensure
legitimate recycling, as EPA has determined, see 2018 Rule, 83
Fed. Reg. at 24,665; 2008 Rule, 73 Fed. Reg. at 64,677–79,
                               21
then materials conforming to them are not “discarded.” The
fact that generators pay reclaimers to accept certain materials
may indicate the material has negative value and the generator
is “getting rid of” it, as petitioners contend. On the other hand,
EPA explained that payment may indicate only that a generator
seeks alternatives to costly Subtitle C requirements and is
willing to pay anything less than the compliance costs in order
to recycle materials. See 2008 Rule, 73 Fed. Reg. at 64,675,
64,677, 64,707. EPA relied on its market forces study to
conclude that reclaimers may charge such a fee not because
they must, but rather because they can as a result of a lack of
competition in certain recycling markets. Id. at 64,707. EPA
also explained that generators may have to pay reclaimers to
offset the reclaimers’ upfront capital costs to develop and
implement the necessary recycling infrastructure and market.
Id. Moreover, EPA’s Transfer-Based Exclusion does not
ignore the potential relevance of payment as an indicator of
“discard.” Instead these economic issues are part of its
Legitimacy Factors analysis, see id. at 64,706–07, which
require that hazardous secondary material “provide[] a useful
contribution to the recycling process,” that the recycling
process “produce a valuable product or intermediate,” and that
the generator and recycler manage the material “as a valuable
commodity when it is under their control.” 40 C.F.R. § 260.43.

     Consequently, EPA’s decision in adopting the Transfer-
Based Exclusion not to make payment from a generator to a
reclaimer dispositive in assessing whether material is
“discarded” is a permissible interpretation of “discard.”

                               III.

     Agency action is arbitrary and capricious if it “has relied
on factors which Congress has not intended it to consider,
entirely failed to consider an important aspect of the problem,
                                22
offered an explanation for its decision that runs counter to the
evidence before the agency, or is so implausible that it could
not be ascribed to a difference in view or the product of agency
expertise.” Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto.
Ins. Co., 463 U.S. 29, 43 (1983). An agency must “articulate a
satisfactory explanation for its action including a rational
connection between the facts found and the choice made.” Id.
Agency action is also arbitrary and capricious if it “offered
insufficient reasons for treating similar situations differently.”
Transactive Corp. v. United States, 91 F.3d 232, 237 (D.C. Cir.
1996).

     Petitioners contend the Transfer-Based Exclusion is
arbitrary and capricious because EPA failed to provide a
reasoned basis for treating the same hazardous materials
differently and to account for its prior findings that the Transfer
Conditions are inadequate. Given EPA’s reasoned explanation
of the Transfer-Based Exclusion, we conclude these
contentions are unpersuasive.

                                A.
     EPA has sufficiently explained its different treatment of
similar materials. Hazardous secondary materials destined for
legitimate recycling are dissimilar in one key respect.
Application of RCRA’s Subtitle C cradle-to-grave regulatory
scheme depends on whether materials first qualify as “solid
waste” because they are “discarded.”            See 42 U.S.C.
§ 6903(27). Materials that are not “discarded” are not subject
to Subtitle C. Shell Oil, 950 F.2d at 754. Subtitle C regulations
aim to ensure that hazardous waste, once “discarded,” is
transported, treated, and stored safely. See 42 U.S.C. §§ 6921–
6939g. These regulations focus on waste that has made its way
to a landfill, an incinerator, or a similar waste storage or
treatment facility, in order to ensure that such waste does not
contaminate local water supplies, generate toxic gases and
                               23
cause air pollution, combust, etc. See id. § 6901(b). The
Transfer Conditions, by contrast, seek to ensure that hazardous
secondary materials do not end up in a landfill, incinerator, or
similar facility but instead remain in a continuous stream or
flow of production within industry processes. See AMC I, 824
F.2d at 1190. They address potential risks by requiring the
third-party reclaimers that accept such materials to handle them
properly and safely and not to discard them. See 2008 Rule, 73
Fed. Reg. at 64,673.

     EPA’s adoption of the Transfer-Based Exclusion and its
conditions rests on the premise that materials sent to a
reclamation facility to be stripped and reused or recycled are
not part of the waste disposal problem targeted by Subtitle C
regulations. Although “[h]azardous secondary materials stored
or transported prior to recycling have the potential to present
the same types of threats to human health and the environment
as hazardous wastes stored or transported prior to disposal,” id.
at 64,671, EPA explained that “recycling of these materials
often closely resembles industrial manufacturing rather than
waste management,” id. at 64,670. EPA also acknowledged
that when hazardous secondary materials have negative rather
than positive value (e.g., raw materials), reclaimers may
respond differently than traditional manufacturers “to
economic forces and incentives,” causing them to
“accumulat[e] more inputs.” Id. at 64,678.

     Responding to that concern, EPA adopted Transfer
Conditions and Legitimacy Factors to ensure that, under the
Transfer-Based Exclusion, materials may be sent only to
reclaimers that have economic incentives to responsibly
manage and recycle them. See id. at 64,671; 40 C.F.R.
§ 261.4(a)(24)(iv). Specifically, EPA addressed possible
points of “discard,” whether unintended or surreptitious, during
the transfer process. Although materials falling under the
                               24
Transfer-Based Exclusion need not comply with RCRA’s
prescriptive containment requirements, see 40 C.F.R. § 262.17,
the Transfer Conditions prohibit intermediate facilities from
holding any material in storage for longer than 10 days, id.
§ 261.4(a)(24)(ii), and therefore prohibit reclaimers from
abandoning materials in warehouses or other facilities, see
2008 Rule, 73 Fed. Reg. at 64,673. Generators, intermediate
facilities, and reclaimers are required to maintain records of
shipments and receipts of hazardous secondary materials, 40
C.F.R. § 261.4(a)(24)(v)(D)–(E), (vi)(A)–(C), in order to
enable EPA and the states to determine that materials “arrived
at the intended facility and were not discarded in transit,” 2008
Rule, 73 Fed. Reg. at 64,679. The Transfer Conditions also
require a reclamation facility to reclaim at least 75% of
hazardous secondary materials it obtains over a calendar year,
see 40 C.F.R. § 261.4(a)(24)(i); id. § 261.1(c)(8), as a means of
ensuring reclaimers fulfill their role of facilitating resource
conservation and preventing hazardous materials from entering
landfills or other facilities, see 2008 Rule, 73 Fed. Reg. at
64,685. The reclaimer must manage the material in a manner
at least as protective as it handles analogous raw material. 40
C.F.R. § 261.4(a)(24)(vi)(D).         Any residual materials
generated by reclamation operations must be regulated under
RCRA, including under Subtitle C if they are “discarded,” id.
§ 261.4(a)(24)(vi)(E), so reclamation does not become a means
of “discard” of unwanted material without complying with
Subtitle C regulations, see 2008 Rule, 73 Fed. Reg. at 64,691.
Enforcement mechanisms can also include imposition of
Subtitle C requirements upon noncompliance with these
conditions. See id. at 64,690, 64,699–700.

     The Transfer Conditions thereby advance RCRA’s
objectives by encouraging properly conducted recycling and
promoting preservation of limited material resources and space
for storing “solid waste.” Absent a statutory requirement that
                              25
these conditions be identical to Subtitle C requirements, EPA’s
response was not arbitrary and capricious.

                              B.
     EPA has also adequately addressed why it considers the
Transfer-Based Exclusion’s conditions sufficient when it had
expressed concern they might not be implemented as expected.
Pet’rs’ Br. 44 (citing 2015 Rule, 80 Fed. Reg. at 1707–08).

     Although EPA had previously questioned the adequacy of
the Transfer Conditions, the circumstances of recycling by the
time EPA issued the Transfer-Based Exclusion in 2008 were
different than the recycling landscape dating back to the 1980s
that EPA’s environmental problems study had examined. See
2015 Rule, 80 Fed. Reg. at 1708–09. Industry pointed to
evidence of improved recycling management and controls over
time in response to the rigor of enforcement efforts and
industry’s interest in avoiding costly Subtitle C requirements
by properly recycling or reusing materials. See 2008 Rule, 73
Fed. Reg. at 64,673.

     Agreeing the environmental problems highlighted in the
study “demonstrate[d] the need” for “restrictions and
conditions for the exclusions,” id. at 64,722–23, EPA proposed
requirements for financial assurance, reasonable efforts,
shipping documentation, hazardous secondary materials
management, legitimate recycling, and speculative
accumulation that became part of the Transfer Conditions.
EPA’s study of successful recycling had shown that
“generators who could otherwise bear a large liability from
poorly-managed recycling at other companies have addressed
[these] issue[s] by carefully examining the recyclers to which
they send their hazardous secondary materials, such as through
audits to ensure that they are technically and financially
capable of performing the recycling.” 2015 Rule, 80 Fed. Reg.
                              26
at 1699. Based on best practices many industry facilities were
already implementing with success in preventing discard and
curbing environmental and health risks, 2008 Rule, 73 Fed.
Reg. at 64,673–74, 64,683, EPA adopted restrictions and
conditions that it determined were “sufficient to ensure safe
recycling activities,” id. at 64,722.

     Accordingly, we deny the petition. Under this court’s
precedent EPA did not exceed its authority under RCRA in
adopting the Transfer-Based Exclusion because hazardous
secondary materials are not necessarily “discarded” each time
they are transferred from a generator to a reclaimer along with
payment. EPA has also adequately explained why such
materials may be subject to the Transfer Conditions rather than
full Subtitle C requirements.