Natural Resources Defense Council v. Environmental Protection Agency, 755 F.3d 1010

Background

EPA issued a 1998 rule (the "Comparable Fuels Exclusion") excluding certain fuels produced from listed hazardous wastes from RCRA § 3004(q) regulation if they met specifications making them "comparable" to fossil fuels.
Section 3004(q) (42 U.S.C. § 6924(q)) mandates that EPA "shall promulgate regulations" establishing standards for: producers of fuels from any listed hazardous waste; burners of such fuels for energy recovery; and distributors/marketers of such fuels.
EPA justified the exclusion by reasoning that fuels meeting its specifications were not "discarded" and thus not "solid waste" subject to RCRA; it also relied on a benchmark comparison to fossil fuels and imposed notice and other limits on use.
Environmental groups (NRDC, Sierra Club) challenged the exclusion; the Environmental Technology Council also petitioned but was later held not to have standing.
The D.C. Circuit considered jurisdiction/standing (association representational standing based on members’ proximity and health concerns) and then reviewed the rule under Chevron step one (statutory interpretation).
The court concluded the exclusion conflicted with RCRA § 3004(q)’s mandatory language and vacated the Comparable Fuels Exclusion.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether EPA permissibly excluded certain hazardous-waste-derived fuels from § 3004(q) regulation	EPA lacks authority; § 3004(q) unambiguously requires EPA to regulate all fuels produced from listed hazardous wastes	EPA says it has discretion: comparable fuels are not "waste" or the exclusion itself constitutes a permissible "standard" under § 3004(q)	Court: Held for Plaintiffs — statute unambiguously requires regulation of any fuel from listed hazardous waste; EPA exceeded authority and cannot exclude comparable fuels
Standing of environmental petitioners	Associations’ members suffer concrete injuries from nearby burning of comparable fuels and therefore have representational standing	EPA/Intervenor contended petitioners lacked a substantial-probability injury because facilities had not yet provided required notice when suit filed	Court: Held for Petitioners — members’ affidavits plus the rule’s authorizing effect suffice to establish standing
Standing of Environmental Technology Council (industry petitioner)	Council argued it could protect members’ interests	EPA argued Council’s interest was purely competitive and outside RCRA’s zone of interests	Court: Held for EPA — Council lacks Article III/zone-of-interests standing; petition denied
Whether EPA’s post-hoc rationale (that the exclusion is a § 3004(q) "standard") can justify the rule	Petitioners: EPA did not rely on that rationale in rulemaking; post-hoc defense is impermissible	EPA: The exclusion’s specifications function as the "standards" § 3004(q) requires	Court: Held for Petitioners — post-hoc rationale rejected; rule characterized as an exclusion in the rulemaking and is inconsistent with the statute

Key Cases Cited

Am. Mining Cong. v. EPA, 824 F.2d 1177 (D.C. Cir.) (discusses scope of "solid waste" and limitations on EPA regulation of in-process recycling)
Horsehead Res. Dev. Co. v. Browner, 16 F.3d 1246 (D.C. Cir.) (Congress enacted § 3004(q) to close EPA’s energy-recovery regulatory loophole)
Cement Kiln Recycling Coal. v. EPA, 493 F.3d 207 (D.C. Cir.) (overview of RCRA Subtitle C and hazardous waste regulatory regime)
Nat’l Ass’n of Clean Water Agencies v. EPA, 734 F.3d 1115 (D.C. Cir.) (statutory "any" is generally all-inclusive; agency cannot create unlisted exceptions)
Chevron U.S.A. Inc. v. Natural Resources Def. Council, Inc., 467 U.S. 837 (Sup. Ct.) (framework for reviewing agency statutory interpretation)
Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (Sup. Ct.) (post-hoc rationalizations for agency action are impermissible)
SEC v. Chenery Corp., 318 U.S. 80 (Sup. Ct.) (agency action must be upheld on the grounds the agency actually relied upon)