On July 7, 2017, the D.C. Circuit Court of Appeals issued a decision striking down portions of US EPA’s Definition of Solid Waste (DSW) Rule, which defines when certain hazardous secondary materials (i.e. recyclable materials generated as the remainder of industrial processes) become “discarded” and thus subject to regulation as a solid waste. The Rule, issued in 2015, was the latest effort to define “solid waste” under the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. §§6901 et. seq., and was challenged by both industry and environmental groups. Squire Patton Boggs was actively involved in the appeal on behalf of an industrial intervenor-movant.
In a per curiam decision, the Court sided with the industry petitioners in large part, dismissed the environmental groups’ challenges, and vacated two key aspects of the 2015 DSW Rule. First, the Court vacated the fourth prong of the “legitimacy” test to distinguish between “true” and “sham” recycling, which must be met to qualify for exclusion from regulation as a solid waste. Second, the Court vacated most of the “Verified Recycler” Exclusion and reinstated the pre-existing 2008 “Transfer-Based” Exclusion. In so ruling, the Court also severed and retained requirements from the vacated 2015 exclusion relating to emergency preparedness and containment standards.
Legitimacy Factor 4 Rejected
In the 2015 DSW Rule, US EPA established four mandatory “legitimacy” criteria to differentiate legitimate from “sham” recycling. “Because EPA’s waste disposal regulations are acknowledged to be very costly to meet, ‘there is an incentive for some handlers to claim they are recycling when, in fact, they are conducting . . . disposal.’ To prevent such evasion, EPA polices the line ‘between ‘legitimate’ (i.e., true) recycling and ‘sham’ (i.e., fake) recycling.” Opinion at 6 (internal citations omitted).
In order to be deemed legitimate, the 2015 DSW Rule required the recycling activity to meet all four of the following Legitimacy Factors: (1) the hazardous material must provide a useful contribution to the recycling process; (2) the recycling process must produce a valuable product or intermediate; (3) the generator and recycler must manage the hazardous secondary material as a valuable commodity; and (4) the product of the recycling process must be comparable to a legitimate product or intermediate. See 40 CFR §260.43.
Although the Court upheld Legitimacy Factor 3, it ruled that Factor 4 was unreasonable as applied to recyclable materials which have commercial product analogues. If such recyclable materials are even slightly more hazardous than their commercial analogues, they would not meet Legitimacy Factor 4 and therefore would constitute a solid waste under RCRA, even if they posed no significant risk to human health or the environment. Consequently, the Court found that the Factor 4 test is “not a reasonable tool for distinguishing products from wastes” and is unreasonable as applied across the board to all hazardous secondary material recycling.
Verified Recycler Exclusion Vacated
In the 2015 DSW Rule, US EPA established the Verified Recycler Exclusion at 40 CFR §261.4(a)(24), which provided that hazardous secondary materials sent to a third-party recycler were exempt from regulation as solid wastes under RCRA so long as the materials were sent to a “verified recycler” having either a RCRA permit or a RCRA variance from US EPA or an authorized state and certain other operational requirements (such as emergency preparedness and containment standards, discussed below) are met.
The Verified Recycler Exclusion replaced the prior Transfer-Based Exclusion from the 2008 DSW Rule, which exempted hazardous secondary materials sent to a third-party recycler so long as the generator had made “reasonable efforts” to ensure that the recycler met standards for legitimate recycling. Whereas the 2008 Transfer-Based Exclusion exempted materials based on the generator’s reasonable efforts to verify the third-party recycler’s legitimacy, the 2015 Verified Recycler Exclusion transferred this legitimacy confirmation responsibility to US EPA or an authorized state by requiring that the third-party recycler hold either a RCRA permit or variance.
Industry petitioners argued that the more stringent oversight requirement in the Verified Recycler Exclusion was based upon US EPA’s unreasonable presumption that recycling by a third-party inherently carries a greater risk that the hazardous secondary materials will be discarded than in the case of generator-controlled recycling, which does not require a RCRA permit or variance to be exempt under the 2015 DSW Rule. US EPA argued that various studies suggested that the recycling of low-value materials by third-party recyclers does carry a higher risk of discard, but the Court found that these theoretical studies were not a sufficient basis for the Verified Recycler Exclusion’s more stringent oversight requirements: “EPA fails to provide sufficient linkage between theory, reality, and the result reached.” Opinion at 29-32. Consequently, the Court vacated the 2015 Verified Recycler Exclusion and reinstated the 2008 Transfer-Based Exclusion.
To read the full story, visit https://www.natlawreview.com/article/dc-circuit-strikes-down-portions-rcra-definition-solid-waste-rule.