American Petroleum Institute v. Environmental Protection Agency
862 F.3d 50
D.C. Cir.2017Background
- RCRA empowers EPA to regulate "solid waste," defined to include "other discarded material," and to subject hazardous waste (a subset) to Subtitle C controls when materials are "discarded." 42 U.S.C. §§ 6903, 6921-6939g (statutory context in opinion).
- EPA promulgated a 2015 Final Rule revising when hazardous secondary materials (spent materials, byproducts, sludges) are "discarded," codifying a four-factor legitimacy test for recycling and replacing the 2008 Transfer-Based Exclusion with a Verified Recycler Exclusion.
- Industry petitioners challenged the legitimacy factors and the Verified Recycler Exclusion as exceeding EPA authority; environmental petitioners challenged that the Verified Recycler Exclusion was too permissive and that EPA unlawfully deferred applying containment and notification to 32 pre-2008 exclusions.
- Factor 3 (managing secondary materials as a valuable commodity / containment) and Factor 4 (product comparability and contaminant levels) are central: Factor 3 governs handling/containment; Factor 4 governs whether recycled products are "comparable" to legitimate analogues or otherwise present no significant risk.
- EPA invoked several studies (a Market Study and a Problems Study) to justify tightening oversight of third‑party reclaimers and replacing the reasonable-efforts path with an administrative variance requirement plus emergency-preparedness and containment rules.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of Factor 3 (containment/commodity handling) | Industry: containment/labeling/logging requirements unlawfully regulate non-discarded recycling | EPA: containment shows intent to recycle and distinguishes sham recycling; alternatives (logs, waivers) mitigate burden | Upheld: Factor 3 reasonable as applied generally; labeling/logging requirement acceptable in substance |
| Validity of Factor 4 (product comparability; "comparable to or lower than" standard) | Industry: the with-analogue contaminant-comparability test improperly treats legitimately recycled products as discarded and imposes draconian notice/recordkeeping burdens | EPA: Factor 4 prevents "along-for-the-ride" sham recycling; exception allows documentation showing no significant human-health/environmental risk | Vacated in part: Factor 4 unreasonable as applied across all hazardous secondary materials (40 C.F.R. § 261.2(g)); exception and recordkeeping are inadequate to cure overbreadth |
| Verified Recycler Exclusion (removing reasonable-efforts option; adding variance and emergency preparedness) | Industry: eliminating reasonable-efforts and requiring administrative variances lacks sufficient record support; sixth variance criterion (cumulative risk) is vague and beyond RCRA's discard inquiry | EPA: studies justify increased oversight of third‑party reclaimers; emergency-preparedness and containment are reasonable safeguards; variance protects environment | Partly vacated: emergency-preparedness and containment provisions upheld; variance/administrative-approval requirement and certain other parts of the Verified Recycler Exclusion vacated; Transfer-Based Exclusion reinstated |
| EPA's deferral of containment & notification for pre‑2008 exclusions (Environmental petition) | Environmental: EPA revoked its earlier position that containment/notification were "minimum" requirements without reasoned explanation | EPA: it expressly deferred action, so no final agency action to review here | Dismissed for lack of jurisdiction: court lacks RCRA reviewability over agency deferral (not a final promulgation or denial) |
Key Cases Cited
- American Mining Congress v. EPA, 824 F.2d 1177 (D.C. Cir. 1987) (reclamation-as-discard rule invalid where material passes in continuous stream between processes)
- American Petroleum Institute v. EPA, 216 F.3d 50 (D.C. Cir. 2000) (API I) (treated reclaimed oil with adulterants as potentially discarded but allowed refiners to rebut presumption)
- American Petroleum Institute v. EPA, 683 F.3d 382 (D.C. Cir. 2012) (API II) (challenge to 2008 Rule found unripe pending new rulemaking)
- Safe Food & Fertilizer v. EPA, 350 F.3d 1263 (D.C. Cir. 2003) (upholding legitimacy approach that treats commodities indistinguishable from virgin products as non-discarded)
- American Chemistry Council v. EPA, 337 F.3d 1060 (D.C. Cir. 2003) (upholding burden-shifting delisting mechanism for mixtures/derivatives as reasonable)
- Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983) (agency must provide reasoned explanation and record support for rulemaking changes)
- FCC v. Fox Television Stations, Inc., 556 U.S. 502 (2009) (when an agency changes policy it must show the new policy is permissible, justified, and that the agency believes it better)
- Auer v. Robbins, 519 U.S. 452 (1997) (deference to agencies' interpretations of their own ambiguous rules, discussed re: open-ended Factor 4 language)