AMERICAN PETROLEUM INSTITUTE, Petitioner v. ENVIRONMENTAL PROTECTION AGENCY, Respondent American Chemistry Council, et al., Intervenors
No. 09-1038 Consolidated with 15-1083, 15-1085, 15-1088, 15-1089, 15-1094
United States Court of Appeals, District of Columbia Circuit.
Argued November 3, 2016 Decided July 7, 2017
In fact, the CCJA made clear that increased fees would be unacceptable. The CCJA informed the arbitrators at least five times that its fee schedule was binding, and the Secretary General “formally prohibited” the arbitrators “from seeking payment of fees directly from the parties.” J.A. 828. In his final formal letter, the Secretary warned the parties that, “if the final award includes the payment of the amount of €450,000 to the arbitrators, in accordance with the invalid arrangement, the award will potentially be subject to invalidation by [the CCJA].” J.A. 839. Although the final award did not expressly demand increased arbitral fees, the arbitrators pursued (and eventually collected from Getma) their requested €450,000 fee. In that light, although the CCJA‘s decision to set aside Getma‘s entire award might seem to be a harsh penalty, the parties had fair notice that the arbitrators’ insistence on increased fees could jeopardize the award.
Finally, Getma claims that the CCJA misinterpreted its own law in annulling the award. Getma does not argue, however, that “erroneous legal reasoning” alone could constitute a violation of public policy under the New York Convention. See Appellant Br. 45-46. It alleges only that the CCJA‘s flawed legal analysis, together with other evidence of taint and corruption, justify enforcing the annulled award. As explained, however, there is scant evidence of taint in the CCJA proceedings, and we see no infirmities that prejudiced Getma in a manner so offensive to “basic notions of morality and justice” as to justify disregarding the CCJA‘s decision. See TermoRio, 487 F.3d at 938. We therefore decline to enforce the annulled award.
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For the foregoing reasons, we affirm the judgment of the district court.
So ordered.
Kenneth M. Kastner, Washington, DC, was on the brief for amici curiae Eastman Chemical Company and Solvay USA Inc. in support of Industry Petitioners.
James S. Pew argued the cause for Environmental Petitioners. With him on the briefs was Khushi K. Desai, Washington, DC.
Daniel R. Dertke, Attorney, U.S. Department of Justice, argued the cause for respondents. With him on the brief were John C. Cruden, Assistant Attorney General, Douglas M. Bushey, Attorney, U.S. Department of Justice, and Alan Carpien, Attorney, U.S. Environmental Protection Agency.
Donald J. Patterson, Jr., Washington, DC, argued the cause for Industry Intervenor-Respondents. With him on the brief were Eric L. Klein, Aaron J. Wallisch, Washington, DC, Laura E. Boorman, Raleigh, NC, John L. Wittenborn, Wayne D‘Angelo, Kevin A. Gaynor, John P. Elwood, Jeremy C. Marwell, Leslie A. Hulse, Washington, DC, Linda E. Kelly, Houston, TX, Quentin Riegel, Roger R. Martella, Jr., Joel Visser, James W. Conrad, Jr., Thomas Sayre Llewellyn, Washington, DC, Stacy R. Linden, and Matthew A. Haynie, Dallas, TX. Douglas H. Green, Washington, DC, entered an appearance.
David R. Case, James S. Pew, Khushi K. Desai, Washington, DC, and Vincent Atriano, Columbus, OH, were on the joint brief for respondent-intervenors and movant-intervenor Gulf Chemical and Metallurgical Corp.
Opinion dissenting in part filed by Circuit Judge TATEL.
PER CURIAM:
This case arises from the Environmental Protection Agency‘s latest effort to define the term “solid waste” under the Resource Conservation and Recovery Act. In 2015, EPA promulgated a final rule governing when certain hazardous materials qualify as “discarded” and hence are subject to the agency‘s regulatory authority. Environmental and Industry Petitioners have each petitioned for review of that rule, arguing that numerous aspects of it are unlawful and arbitrary and capricious. For the reasons explained, we grant the Industry petition for review with respect to Factor 4 of the legitimacy test and to the Verified Recycler Exclusion and we dismiss the Environmental petition for review.
I. Introduction
The Resource Conservation and Recovery Act (“RCRA“),
Pursuant to its RCRA authority, EPA has promulgated a rule defining solid waste as “discarded material” not otherwise excluded from the agency‘s regulations.
For our purposes, the relevant history begins in 2007, when EPA proposed a rule deregulating many hazardous secondary materials. See American Petroleum Institute v. EPA, 683 F.3d 382, 385 (D.C. Cir. 2012) (“API II“). Secondary materials are substances generated as the remainder of industrial processes; they include spent materials, byproducts, and sludges. See
Before this court heard oral argument, EPA entered a settlement agreement with the Sierra Club. Id. Pursuant to that agreement, the Sierra Club withdrew its petition, and EPA agreed to propose a new solid waste rule. Id. As promised, EPA published a notice of proposed rulemaking in July 2011. Definition of Solid Waste, 76 Fed. Reg. 44,094 (July 22, 2011) (the “Proposed Rule“). A year later, we held that API‘s challenge to the 2008 rule was unripe given the forthcoming final rule. API II, 683 F.3d at 384. We deferred any action on Gulf‘s motion to intervene, which is dealt with in a separate order published today.
EPA promulgated the Final Rule on solid waste—the one before us now—in January 2015. 80 Fed. Reg. at 1,694/1. The 2015 Final Rule differs from the 2008 Rule in several ways, four of which are relevant here. First, the Final Rule revises the definition of “legitimate” recycling and expands the scope of the legitimacy factors to cover all recycling. Id. at 1,719/3-20/1. Second, it establishes that spent catalysts—which were ineligible for exclusions under the 2008 Rule—could qualify for the exemptions in the 2015 regulation. Id. at 1,738/1. Third, the rule defers a decision on whether to add conditions to 32 previously promulgated exclusions from the definition of solid waste, which EPA calls the “pre-2008” exclusions. Id. at 1,741/2. Fourth and finally, the rule replaces the transfer-based exclusion with the “Verified Recycler Exclusion,” a new standard governing when transferred materials qualify as solid waste. Id. at 1,695/2. We provide additional detail on each of these provisions later in this opinion.
Multiple organizations petitioned for review of the 2015 rule. Their petitions, which are consolidated in this case, challenge the regulation on multiple fronts. 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.
II. Legitimacy Factors
Industry Petitioners first attack EPA‘s new legitimacy test. Before EPA can regulate a hazardous secondary material as hazardous waste, it must determine that the material has been “discarded” under
Until recently, EPA‘s policy on sham recycling existed chiefly in uncodified guidance, notably a memo issued in 1989 by Sylvia K. Lowrance, Director, EPA Office of Solid Waste (Apr. 26, 1989) (the “Lowrance Memo“). The memo discussed over a dozen factors for evaluating recycling, all aimed at determining “whether the secondary material is ‘commodity-like,‘” i.e., is it being handled like a valuable industrial input or like a worthless industrial byproduct. See id. at 2 & attachment.
The Final Rule updates and codifies this effort to draw the distinction between legitimate and sham recycling. It requires that all recycling of hazardous secondary materials meet a legitimacy test set forth in
To satisfy the legitimacy test for recycling of a particular material, firms must prevail on all of four factors,
Industry Petitioners do not attack EPA‘s authority to formulate and apply a legitimacy test, nor do they fault EPA‘s premise that legitimate recycling involves “valuable” materials being used for a “recognizable benefit.” Final Rule, 80 Fed. Reg. at 1,697/3, 1,722/1. At that level of generality, EPA‘s policy seems to be a reasonable method for identifying materials that are “part of the waste disposal problem” and thus subject to EPA‘s RCRA authority over discarded materials. Safe Food & Fertilizer v. EPA, 350 F.3d 1263, 1268 (D.C. Cir. 2003). Industry Petitioners instead attack EPA‘s planned means to implement that policy. They complain that mandating Factors 3 and 4 across all recycling results in EPA‘s “unlawfully regulat[ing] non-discarded materials.” Industry Pet‘rs’ Br. 16 (capitalization omitted).
A. Factor 3
We begin with Factor 3, which requires secondary materials to be handled as “valuable commodit[ies].”
EPA previously claimed that any “interdiction in time” during a secondary material‘s trajectory from initial output to recycling, e.g., for storage, could be considered discard and thus trip the material into EPA‘s RCRA authority. Battery Recyclers, 208 F.3d at 1052 (internal quotation marks omitted). We rejected that rule. “To say that when something is saved it is thrown away is an extraordinary distortion of the English language.” Id. at 1053. Industry Petitioners read that holding to bar EPA from ever regulating how recycled materials are contained. Their reading goes too far. EPA can impose a containment requirement so long as it is such that an inference of “sham” or illegitimacy would logically flow from a firm‘s noncompliance. And given EPA‘s explanation that a material may be “contained” if it is simply piled on the ground, Final Rule, 80 Fed. Reg. at 1,721/3, 1,736/2, and meets specific requirements that petitioners do not challenge as unreasonable (with one exception, the “labelling” requirement discussed below), the standard does not on its face appear to ask for anything beyond what could be expected of firms engaged in legitimate recycling.
Industry Petitioners express concern about having to label or log unwieldy molten metals and acidic sludges to satisfy EPA‘s insistence on material being “contained.” But EPA offers an alternative to labelling in the conventional sense—provision of “a system (such as a log) to immediately identify the hazardous secondary materials in the unit.”
B. Factor 4
Factor 4 presents more difficulty. EPA explains this factor as an effort to prevent recyclers from loading products with hazardous secondary materials that “provide[ ] no recognizable benefit to the product,” Final Rule, 80 Fed. Reg. at 1,722/1, and are simply “along for the ride,” id. at 1,726/2. Although EPA does not require a material‘s “hazardous component[s]” themselves to provide a “useful contribution” to the product, see id. at 1,723/3 (discussing Factor 1), the agency is concerned that a purported recycler might “incorporate[ ] hazardous constituents into the final product when they were not needed to make that product effective as a way to avoid proper disposal of that material, which would be sham recycling,” id. at 1,726/1-2.
The factor sets up two tracks,
The second track is the more reasonable of the two. When there is no analogue, the recycled product will pass if it was created by looping secondary materials back “to the original process ... from which they were generated” or if it meets “widely recognized commodity standards and specifications.”
The other track in Factor 4‘s technical provisions, applying where the recycled product has an analogue, is more explicitly tuned to the “along for the ride” metaphor. It requires that the recycled product exhibit no hazardous “characteristic” that is absent from the product‘s analogue.
We have left EPA some leeway in applying the idea that genuine recyclers cannot include hazardous material just “along for the ride” in their products. Thus in American Petroleum Institute v. EPA, 216 F.3d 50 (D.C. Cir. 2000) (“API I“), we rejected a challenge under “Chevron step one” to a rule that treated “recovered oil” as discarded if it included “extra materials ... that provide no benefit to the industrial process.” Id. at 58-59 (emphasis added). But we hinted that such a rule should reasonably avoid “incidentally regulat[ing] oil containing chemicals [whose presence in the recycled oil was] not caused by sham recycling (and therefore not discarded).” See id. at 59.
Judged by that perhaps opaque standard, EPA‘s “along for the ride” metaphor suffers at least one of the usual dangers of metaphors—imprecision. The record contains examples of hazardous secondary
EPA made this very point in Safe Food to defend its exclusion for recycled zinc fertilizers even though those fertilizers could have “considerably higher” contaminant levels than the corresponding “virgin commercial fertilizer.” 350 F.3d at 1269. After reviewing EPA‘s data on the threat posed by the additional contaminants, we agreed that the excesses of the contaminant levels that EPA allowed (as consistent with legitimate recycling) over those in virgin fertilizer samples “lose their significance when put in proper perspective—namely, a perspective based on health and environmental risks.” Id. at 1270.
No such perspective is allowed by the “comparable to or lower than” standard for products with analogues. That standard sets the bar at the contaminant level of the analogue without regard to whether any incremental contaminants are significant in terms of health and environmental risks. This problem is reduced, but not eliminated, by firms’ option to meet “widely-recognized commodity standards and specifications,”
EPA, having recognized some of the shortcomings in these provisions, created an exception purporting to account for them. See Final Rule, 80 Fed. Reg. at 1,729/1. A recycler may avoid the sham label if it “prepare[s] documentation showing why the recycling is, in fact, still legitimate” and notifies regulators.
In explaining this exception, EPA has indicated that the question is whether the recycled product will be used beneficially in a manner that reasonably protects
Contrary to Industry Petitioners’ claims, the general criteria embodied in the Factor 4 exception seem permissible, indeed consistent with our ruling in Safe Food. Industry Petitioners also argue that the exception affords EPA unlimited discretion to find discard. The language of Factor 4 and its exception is rather open-ended, so judicial review of EPA‘s subsequent interpretations would normally be highly deferential, Auer v. Robbins, 519 U.S. 452, 461-62 (1997), potentially leaving petitioners at the mercy of a different reading in the future. But we note that Factor 4‘s exception is tuned specifically to “significant human health or environmental risk[s].”
The exception nonetheless falls short of saving the rule, due to the draconian character of the procedures it imposes on recyclers. See Industry Pet‘rs’ Br. 29, 33. To qualify for the exception just described, a firm must contemporaneously document how its recycling is “still legitimate,” notify regulators of that finding, and keep the documents “on-site for three years after the recycling operation has ceased.”
EPA is correct that these notice and recordkeeping mandates will create useful “oversight” and may be correct that they constitute only a “minimal burden” on recyclers. Id. at 1,730/1, 1,732/1. But paperwork is not alchemy; a legitimate product will not morph into waste if its producer fails to file a form (or loses a copy two years later). EPA insists that it can impose burden-shifting rules even in drawing the line between what it may and may not regulate. Respondent‘s Br. 58. True enough; but the generality is applicable only if the products subjected to the burden-shifting are such that it would normal-
Never in the rulemaking does EPA make out why a product that fails those criteria is likely to be discarded in any legitimate sense of the term. See Motor Vehicle Mfrs. Ass‘n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 42 (1983) (agency rules must be “justified by the rulemaking record“).
Environmental Intervenors argue that the necessary backing for Factor 4 lies in EPA‘s report, An Assessment of Environmental Problems Associated with Recycling of Hazardous Secondary Materials (Dec. 10, 2014) (the “Problems Study“). See Respondent-Intv‘rs’ Joint Br. 13-14, 16. By its own account, the report was “not exhaustive“; it restricted itself to 250 “easy to find” instances of environmental damage associated with recycling. Problems Study at 4 (identifying sources of “potentially relevant” data that the study did not exhaust). Compare Dissent at 11. The study seems to support a proposition, surely indisputable, that recycling can go awry. Further, the authors claim to have identified various causal factors, characterized rather vaguely and clearly overlapping, such as “Improper Disposal of Residuals,” “Abandoned Materials,” and “Improper Management of Hazardous Secondary Materials.” Problems Study at 6-8. But none of these bears any obvious relation to the “comparable to or lower than” standard of the with-analogue track. Reading the report liberally, we see around a dozen instances (out of the 250) involving recycled products that possibly would have flunked the technical provisions. See id. app‘x 1 at 22-23; 26-27; 45-47; 114-15, 121-22; 128-30, 247-48, 258-59, 298-300, 304, 319-320, 339-40, 404-05, 443-44. And some of these products could have already been considered hazardous waste for failing other legitimacy criteria or for being “placed on the land in a manner that constitutes disposal,”
Thus the study in no way purports to establish that there is any particular probability, much less a reasonable probability, that the recycled products exceeding the “comparable to or lower than” standard will cause damage to health or the environment. But the quality or relevance of the study makes no difference in this context, as EPA did not rely on it to justify its assumption that materials which fail the technical provisions are “discarded.” The study appears to enter EPA‘s Factor 4 discussion only implicitly via the foundry sand example, and the most EPA inferred
In API I, we were satisfied by EPA‘s mere “concern[ ]” that some test samples had “unexpected” levels of contaminants (EPA had no evidence that those results were due to adulteration). 216 F.3d at 58. We stressed, though, that “a refiner in a specific case” could show that the product was not adulterated and not discarded. Id. at 59. Thus, the rule involved at most a rebuttable presumption, which we have said can “be sustained without an evidentiary showing ... so long as the agency articulates a rational basis.” Sec. of Labor v. Keystone Coal Mining Corp., 151 F.3d 1096, 1101 (D.C. Cir. 1998). But our cases show that here a “rational basis,” id., means a reason, grounded in common sense or logic, to suppose the inference “so probable that it is sensible and timesaving to assume [its] truth ... until the adversary disproves it,” Nat‘l Mining Ass‘n v. Babbitt, 172 F.3d 906, 912 (D.C. Cir. 1999) (quoting Keystone, 151 F.3d at 1100-01) (rejecting presumption for which the agency had “not offered any support, scientific or otherwise“).
EPA has not offered a sufficient “rational basis.” Because a recycler “in a specific case” won‘t be able to recover from failing to file paperwork and failing the technical provisions, see API I, 216 F.3d at 59, EPA must offer more than timorous assertions such as “could indicate” and “may or may not be legitimate,” Final Rule, 80 Fed. Reg. at 1,726/1, 1,729/2-3.
The dissent sees nothing wrong with EPA‘s exception procedure. But our colleague‘s view is significantly colored by an assumption, not made by EPA, that the “comparable to or lower than” standard is inherently reasonable and may not even require an exception. Compare Dissent at 76-77, 79-80, with Final Rule, 80 Fed. Reg. at 1,729/1. The dissent argues that the standard is reasonably limited to situations where constituent levels are “significantly” higher or exceed a “small acceptable range.” Dissent at 77-78 (citing Final Rule, 80 Fed. Reg. at 1,727/2). But significant as to what? Acceptable against what measure? The rulemaking gives no answer, certainly none linking directly to the “significant human health or environmental risk” criterion used in the exception.
For these reasons Factor 4 is unreasonable as a requirement applied, through
Industry Petitioners also ask us to invalidate EPA‘s legitimacy factors as applied to used oil recycling. This request misreads EPA‘s rules, which exempt used oil from the legitimacy factors along with all the other “requirements of [40 C.F.R.] parts 260 through 268.”
III. Verified Recycler Exclusion
The Final Rule also amended EPA‘s stance on “reclamation,” a type of recycling that occurs when secondary materials are “processed to recover a usable product, or ... regenerated.”
EPA nonetheless kept the reclamation-equals-discard rule, apparently on the reasoning that AMC merely “granted the petition for review” without ordering vacatur. See Revisions to the Definition of Solid Waste, 72 Fed. Reg. 14,172, 14,176/3-77/1 (Mar. 26, 2007). Instead EPA sought to “implement the AMC I opinion” by adding exclusions for specific materials or processes. See, e.g., Identification and Listing of Hazardous Waste, 59 Fed. Reg. 38,536, 38,537/1 (July 28, 1994) (adding exclusion for petroleum-refining secondary materials), codified as amended at
Under the Transfer-Based Exclusion, the party offloading the materials (the “generator“) could send them to a reclaimer that possessed a RCRA permit (or in-
The Verified Recycler Exclusion is quite similar to its predecessor but makes two changes that Industry Petitioners challenge. First, the new exclusion requires the generator to meet special “emergency preparedness” standards in its custody of the materials before shipment. See
Second, the Verified Recycler Exclusion eliminates the “reasonable efforts” option afforded by the Transfer-Based Exclusion and requires that generators send their secondary materials to reclaimers who either have a RCRA permit (or interim status), as in the Transfer-Based Exclusion, or a RCRA variance—in effect an EPA (or state-level) approval of a firm to operate a third-party “reclamation facility.” See
The separate Generator-Controlled Exclusion carries the same emergency preparedness requirements,
Industry Petitioners insist that EPA had no reason, in its 2015 shift to a Verified Recycler Exclusion, to tighten the conditions of its predecessor. Though EPA disagrees, it concedes that “withdrawing the transfer-based exclusion” entirely “would result in hazardous secondary material that is currently being legitimately recycled and not discarded being regulated as hazardous waste,” Final Rule, 80 Fed. Reg. at 1,708/3, in effect, regulation in excess of EPA‘s authority as defined in AMC. In this perhaps topsy-turvy universe, all spent materials, listed byproducts, and listed sludges being reclaimed are subject to full RCRA control unless affirmatively excluded. Because EPA chose to retain a rule that improperly treats as discarded materials that are “no longer useful in their original capacity though destined for immediate reuse,” AMC, 824 F.2d at 1185, it has obliged itself to creating sufficient exceptions to counter that rule‘s overbreadth.
Given the parties’ agreement that some general exclusion for third-party reclamation is necessary, the question before us is whether EPA acted reasonably in adding emergency preparedness requirements and in supplanting the reasonable efforts option with the variance procedure. Specifically, EPA must show that “the new policy is permissible under the statute,
Although no party challenged the Industry Petitioners’ standing on this issue, we noted EPA‘s assertion in the record that in the almost seven years under the Transfer-Based Exclusion no entity had taken advantage of the reasonable efforts option. See Final Rule, 80 Fed. Reg. at 1,708/1-2, 1,709/1. If in the real world the option drew no takers for seven years, could its removal really inflict an injury? Wondering if petitioners’ claim of injury was truly plausible, as required by our cases, see, e.g., Food & Water Watch, Inc. v. Vilsack, 808 F.3d 905, 913 (D.C. Cir. 2015), we ordered briefing on the issue.
In their supplemental brief, Industry Petitioners supplied the explanation: not long after the Transfer-Based Exclusion was promulgated, “EPA announced that it was seriously considering repeal,” which “placed the [ ] exclusion under a cloud of uncertainty.” Industry Pet‘rs’ Supp. Br. 2. Unpermitted entities chose to wait and see if the reports of the rule‘s imminent demise were true. See id. Accordingly, there is no apparent reason to doubt that, as Industry Petitioners insist, EPA‘s retention of the reasonable efforts option would have led some entities to make use of it.
As to Fox‘s required justifications for a change in policy, EPA is quite clear which rule, 2008 or 2015, it “believes [ ] to be better.” 556 U.S. at 515. EPA bemoaned that the Transfer-Based Exclusion allowed third-party reclaimers to operate without as much oversight as Subtitle C regulation would require. Final Rule, 80 Fed. Reg. at 1,707/3. This lack of oversight, EPA believes, “could lead to the potential for an increased likelihood of environmental” damage, thus justifying the Final Rule‘s changes. Id. at 1,708/1; see id. at 1,711/2 (describing 2008 Rule‘s “major regulatory gap” from “lack of oversight and public participation“).
For the remainder of the Fox analysis we address the two challenged provisions separately.
A. Emergency Preparedness Requirements
First up are the emergency preparedness requirements and whether their promulgation meets the requirements of showing consistency with the statute and good reasons for the new rule. Fox, 556 U.S. at 515. For reasons to qualify as “good” under Fox, they must be “justified by the rulemaking record.” State Farm, 463 U.S. at 42. Here EPA‘s reasons for its changes overlap with its statutory justification—to “identif[y] hazardous secondary materials that are legitimately recycled and not discarded,” Final Rule, 80 Fed. Reg. at 1,709/2—so we analyze the two together.
With the emergency preparedness provisions, EPA‘s reasoning is mostly a retread of what we encountered with Factor 3. As with the handling requirements, it advances the mandated precautions as an effort to reduce the risk of discard and to test the generator‘s intent to recycle. See id. at 1,710/2. Here, to be sure, these prophylactic duties go beyond Factor 3‘s in specificity. Compare
But EPA made findings (unchallenged here) that fires and explosions are a common cause of environmental damage and that planning against such mischance reflects a generator‘s intent to reduce losses
Petitioners do not claim that the preparation requirements are an unreasonable test of intent, other than to say that they are “highly prescriptive,” Industry Pet‘rs’ Br. 53-54, an epithet that most readers of the Code of Federal Regulations would likely apply to every paragraph. In fact the mandated preparations seem rather basic. If an entity balks at the prospect of keeping a “telephone” and “[p]ortable fire extinguisher[ ]” on site,
As we said of the containment requirements, there is some risk that these mandatory precautions might be read unreasonably. For example, the obligation “to minimize the possibility of” accidents might be taken, standing alone, to require all preventive measures no matter the cost.
B. Administrative Approval Requirements and Remedy
Petitioners focus more persuasively on EPA‘s abolition of the reasonable efforts option and its replacement with a requirement of a variance for third-party reclamation. Under the Transfer-Based Exclusion, a generator could send materials to any reclaimer it chose, provided that, after making a reasonable investigation, it “affirmatively answered” five questions about the reclaimer.
Recall that EPA has a Generator-Controlled Exclusion which is targeted at the same types of material as the Verified Recycler Exclusion: hazardous secondary materials reclaimed in a manner that doesn‘t qualify for pre-2008 exclusions. EPA insists that these materials generally have little value as recycling inputs, a trait from which one can reasonably infer a greater susceptibility to illegitimate or improper recycling. See id. at 1,707/1-2; see also EPA, Revisions to the Definition of Solid Waste Final Rule Response to Comments Document, at 77 (Dec. 10, 2014) (the “Comments Document“) (acknowledging that “high value” secondary materials are less likely to be discarded but arguing that EPA has “already promulgated exclusions for such materials“).
But this risk of discarding low-value materials would apply whether the reclamation occurs in-house or externally. And yet while the Generator-Controlled Exclusion and Verified Recycler Exclusion share some conditions, only the latter requires an administrative approval. Industry Petitioners charge that EPA has acted on the basis of an unreasonable presumption that transfer carries an undue risk of discard. Such a presumption would contradict our holding in Safe Food that “[a]s firms have ample reasons to avoid complete vertical integration, firm-to-firm transfers are hardly good indicia of a ‘discard‘” under RCRA. 350 F.3d at 1268 (citation omitted).
EPA counters that its reasoning is more nuanced, that it rests not on transfer alone, but on the confluence of low-value materials and transfer. These factors combine to form “perverse incentives ... to over-accumulate [ ] hazardous secondary materials” without recycling them. Final Rule, 80 Fed. Reg. at 1,708/2; see also id. at 1,716/1 (justifying separate exclusion for transferred “spent solvents” because third-party reclaimers have “little economic reason to accumulate” these “higher-value” materials). EPA‘s theory is certainly more clever than Industry Petitioners give it credit for, but EPA fails to provide sufficient linkage between theory, reality, and the result reached. See State Farm, 463 U.S. at 43 (“[T]he agency must examine the relevant data and articulate a satisfactory explanation for its action including a ‘rational connection between the facts found and the choice made.‘” (quoting Burlington Truck Lines v. United States, 371 U.S. 156, 168 (1962))).
EPA‘s reasoning relies heavily on a theoretical study predicting that when the value of a recycled product is low, or the market for it “weak or unstable,” the “acceptance fee” generators pay when off-loading materials “may be an important component of the [reclaimer‘s] overall rev-
EPA is free to rely on theoretical or model-based approaches, as long as that reliance is reasonable in context. As our dissenting colleague points out, Dissent at 10-11, we long ago recognized that “[r]easoned decisionmaking can use an economic model to provide useful information about economic realities, provided there is a conscientious effort to take into account what is known as to past experience and what is reasonably predictable about the future.” American Public Gas Ass‘n v. FPC, 567 F.2d 1016, 1037 (D.C. Cir. 1977). And more recently, as our colleague also points out, Dissent at 11, we deferred to EPA‘s use of particle-trajectory modeling when the agency found it to be “particularly illuminating,” noted that it was “more precise” in some cases than historical data, and “took reasonable steps to account for [its] limitations,” Mississippi Comm‘n on Environmental Quality v. EPA, 790 F.3d 138, 166-71 (D.C. Cir. 2015). Thus what we seek is some indication of a reasonable concurrence between model and reality. Here the Market Study cautions that its hypothesized “sources of market failure,” e.g., skewed incentives leading to discard and environmental damage, “do not neces-sarily correlate directly to observable characteristics of the firm or market.” Market Study at 48-49. Thus, the study offers EPA reasons (based on seemingly sensible notions of market actors’ incentives) to think that the incidence of discard might be somewhat higher in the presence of specific characteristics (e.g., low-value materials and third-party transfer) than in their absence. But it offers no data to support the view that the increased incidence actually exists nor to show how great the increase is. That type of information (or a sufficient explanation for its absence) is quite important in cases such as this, where EPA is determining that an activity nominally outside of its jurisdiction should be banned absent regulatory pre-approval. Thus EPA‘s reliance on the study, standing alone, does not provide a sufficient basis for the administrative approval provisions.
EPA claims to have the necessary support in its Problems Study, a document whose faults we‘ve already discussed. Of the study‘s 250 instances of recycling gone awry, 238 involved third-party recycling as opposed to on-site recycling. Problems Study at 8. Based on these “easy to find” cases, id. at 4, EPA inferred that discard could occur under the old Transfer-Based Exclusion unless “additional oversight” was imposed, Final Rule, 80 Fed. Reg. at 1,708/2. But far from confirming the Market Study‘s assumptions, the Problems Study is even more tentative in its treatment of third-party recycling. It cautions that the greater proportion of problems at off-site recyclers might be because “on-site recycling is simply a less common practice.” Problems Study at 8. (The study made no effort to explain how the proportions of on-site and off-site reclamation in the examples reviewed matched those of the real world.)
After commenters attacked EPA‘s interpretation of this study, EPA responded that because most recyclers lack any duty to notify regulators, the agency does not have access to better data about recycling practices. Final Rule, 80 Fed. Reg. at 1,740/3-41/1-2. Indeed, we commonly “defer to an agency‘s decision to proceed on the basis of imperfect scientific information, rather than to invest the resources to conduct the perfect study.” Cablevision Sys. Corp. v. FCC, 649 F.3d 695, 717 (D.C. Cir. 2011) (internal quotation marks omitted). But limited data do not justify unlimited inferences. Agency reliance on imperfect information makes sense only where that information supports the agency action.
The Market Study and Problems Study at most support a belief, carried over from the Transfer-Based Exclusion, that third-party reclaimers present distinct risks compared to on-site reclaimers. These risks would accordingly justify special conditions, such as the variance criteria for which the Generator-Controlled Exclusion has no analogue. The first five of these criteria, which petitioners do not challenge, seem properly focused on whether the third-party reclaimer has the inclination and ability to recycle legitimately. See
But the imposition of a requirement of advance administrative approval cannot be justified merely on the differences that EPA has identified between on-site and third-party reclamation. EPA must explain why the risk that purported third-party recyclers will in reality “discard” the materials is so high that reclamation under the Verified Recycler Exclusion may only proceed on the basis of prior agency approval. On this key aspect of third-party reclamation, EPA‘s Problems and Market studies say nothing useful.
EPA invokes yet another study, An Assessment of Good Current Practices for Recycling of Hazardous Secondary Materials (Nov. 22, 2006). This analysis, performed before adoption of the Transfer-Based Exclusion, discussed the extent to which generators voluntarily audited their third-party recyclers to ensure that “their materials are not mishandled.” Id. at 7. The study found that “auditing is being practiced by many responsible companies” but that “small generators do not audit as regularly as larger customers” and that smaller generators’ audits may not be as thorough. Id. at 20. In 2008, EPA evidently did not find much alarm in this data; it made the reasonable efforts option available for small and large generators alike. By 2015, EPA was less sanguine about the study‘s results, warning that “many
Along with their challenge to the variance procedure, Industry Petitioners also claim that the sixth variance criterion is, in substance, vague and unreasonable. This criterion involves something of a “cumulative” nuisance standard; it requires third-party reclaimers to account for how any “unpermitted releases” from their facilities might combine with “other nearby potential stressors” to create “risk[s] to proximate populations.”
Thus the criterion assumes discard, i.e., behavior regulable under RCRA, and seeks to constrain its environmental impact, rather than testing for discard‘s existence. It identifies one of the many problems related to waste disposal, but not whether the reclaimer is actually contributing to the waste disposal problem. Were we dealing with materials that were lawfully identified as hazardous waste, this test might be valid for some purposes. But the Verified Recycler Exclusion covers materials that might be labeled waste only because of a reclamation-equals-discard rule that EPA has all but conceded is overbroad. Id. at 1,708/3. This criterion therefore cannot stand as a means of identifying discard.
As for remedy, Industry Petitioners ask that we keep the Verified Recycler Exclusion in place while removing its objectionable provisions. They seek this remedy because not all of the Final Rule‘s changes were to their detriment. Whereas the Transfer-Based Exclusion disqualified spent catalyst generators from relying on it,
We will “sever[] and affirm[] a portion of an administrative regulation” only when we can say without any “substantial doubt” that the agency would have adopted the severed portion on its own.” New Jersey v. EPA, 517 F.3d 574, 584 (D.C. Cir. 2008) (internal quotation marks omitted). Thus we have severed provisions when “they operate[d] entirely independently of one another.” Davis Cty. Solid Waste Mgmt. v. EPA, 108 F.3d 1454, 1459 (D.C. Cir. 1997). Here, though, we are not sure that EPA‘s regulatory and deregulatory efforts were wholly independent. The rulemaking shows that EPA entertained two different options for removing the spent catalyst bar: first as part of the plan to repeal the Transfer-Based Exclusion entirely and replace it with “alternative Subtitle C regulat[ions]” for which “spent catalysts would be eligible,” Proposed Rule, 76 Fed. Reg. at 44,141/3 & n.54; second as part of the Verified Recycler
Would EPA have so proposed had it known the Verified Recycler Exclusion would be vacated? There is some evidence pointing in that direction, but doubts remain. EPA explained that its spent catalyst decision was due in large part to changes to the “contained” standard at
The only changes in the Verified Recycler Exclusion that we can sever without any “substantial doubt” are the emergency preparedness requirements,
EPA has not commented on the requested remedy, probably because the remedy section in Industry Petitioners’ opening brief was quite confusing, and their desire to sever and affirm was made evident only in their reply. If EPA, or any party, wishes to disabuse us of our substantial doubt with a petition for rehearing, we will of course reconsider as necessary. See MD/DC/DE Broadcasters Ass‘n v. FCC, 253 F.3d 732, 740 (D.C. Cir. 2001) (citing Virginia v. EPA, 116 F.3d 499, 500-01 (D.C. Cir. 1997)).
Having concluded that the Verified Recycler Exclusion is unreasonable, we need not address Environmental Petitioners’ argument that the exclusion is too lenient.
IV. Remaining Challenges by Industry Petitioners
Industry Petitioners have two remaining challenges. The first is that EPA cannot subject spent catalysts to the Verified Recycler Exclusion. The second is that EPA cannot treat off-specification commercial chemical products as secondary materials. The first is rendered moot by our restoration of the Transfer-Based Exclusion, and no more needs to be said about it here. The second is also outside our jurisdiction, but for reasons requiring more explanation.
During the rulemaking, a commenter asked EPA to confirm that commercial chemical products are not “hazardous secondary material[s]” as that class is defined in
Tellingly, the comment and EPA‘s response are interpreting provisions in
V. Challenges by Environmental Petitioners
Environmental Petitioners challenge EPA‘s approach to the pre-2008 exclusions. As noted above, before 2008, EPA had promulgated 32 exclusions from the definition of solid waste—that is, it had exempted 32 different materials, products, or processes from Subtitle C regulation. In its Proposed Rule, EPA proposed subjecting facilities that qualified for these exclusions to four new requirements, three of which are relevant here: legitimacy, containment, and notification. 76 Fed. Reg. at 44,138/3-39/1-2. The proposed legitimacy condition set forth the factors that facilities had to satisfy in order to prove they are engaged in legitimate, rather than sham, recycling. Under the proposed containment condition, facilities had to store all hazardous secondary materials in units that meet certain safety, quality, and labeling criteria. Id. at 44,140/1. And the proposed notification condition obligated regulated parties periodically to submit information to EPA so that the agency could monitor compliance. Id. at 44,140/1-2. EPA based these conditions on a study of environmental damage cases involving hazardous waste (an earlier version of the Problems Study) and EPA‘s finding that most of cases in that study were associated with secondary materials exempted under a pre-2008 exclusion. Id. at 44,138/1-2.
In the final rule, however, EPA opted to apply only the legitimacy condition to all pre-2008 exclusions and deferred a decision about whether to do the same with containment and notification. Specifically, EPA stated that it was “deferring action on applying the contain[ment] [and notification] standard[s] to the pre-2008 exclusions and exemptions until [it could] more adequately address commenters’ concerns.” Final Rule, 80 Fed. Reg. at 1,766/2-3. Commenters had raised unan
Environmental Petitioners take issue with EPA‘s decision to defer action on containment and notification. Drawing on language from the Proposed Rule, they argue that EPA fundamentally changed its position without explanation: whereas the agency originally viewed containment and notification as “minimum requirements necessary to define when recycled hazardous secondary materials are not discarded,” 76 Fed. Reg. at 44,138/3-39/1, it ultimately determined that containment and notification conditions were expendable. This unexplained reversal, Environmental Petitioners contend, was arbitrary and capricious.
We need not—indeed cannot—reach the merits of this challenge. RCRA‘s judicial review provision vests this court with exclusive power to review “action[s] of the Administrator in promulgating any regulation, or requirement under this chapter or denying any petition for the promulgation, amendment or repeal of any regulation under this chapter.”
Environmental Petitioners resist this straightforward jurisdictional analysis. Citing Montana v. Clark, 749 F.2d 740 (D.C. Cir. 1984), and Appalachian Power Co. v. EPA, 208 F.3d 1015 (D.C. Cir. 2000), they argue that we may review EPA‘s decision to defer. But neither of these cases construes RCRA‘s judicial review provision. See Appalachian Power Co., 208 F.3d at 1020-22 (interpreting the Clean Air Act‘s judicial review provision); Clark, 749 F.2d at 744 (interpreting the Administrative Procedure Act). And even if they did, those cases are easily distinguished. Whether we have authority to review an agency‘s express rejection of a request to amend longstanding regulations, Clark, 749 F.2d at 744, is irrelevant where, as here, EPA has merely deferred—rather than rejected—a particular action. Moreover, although “[t]he fact that a law may be altered in the future has nothing to do with whether it is subject to judicial review at the moment,” Appalachian Power Co., 208 F.3d at 1022, we lack jurisdiction to review EPA‘s deferred action not because EPA could change its mind down the road, but because it has yet to make up its mind in the first place.
Alternatively, Environmental Petitioners contend that we have jurisdiction over their challenge because EPA “reopened” comment on the pre-2008 exclusions and then declined to revise them. Environmental Pet‘rs’ Br. 43. The reopener doctrine “permits a plaintiff to bring an otherwise-stale challenge . . . when an agency has considered substantively changing a rule but ultimately declined to do so.” Mendoza v. Perez, 754 F.3d 1002, 1019 n.12 (D.C. Cir. 2014). Environmental
Of course, nothing in our conclusion forecloses judicial review of EPA‘s inaction once and for all. Environmental Petitioners may petition EPA to promulgate a rule imposing containment and notification conditions and, if their petition is denied, seek review in this court. See
VI. Conclusion
The Final Rule is upheld in part and vacated in part as consistent with this opinion. Briefly put: Factor 3 is upheld; Factor 4 is vacated insofar as it applies to all hazardous secondary materials via
So ordered.
TATEL, Circuit Judge, dissenting from Parts II.B and III.B:
In the mid-1970s, as industrial and technological developments spurred the national economy, the United States faced “a rising tide of scrap, discarded, and waste materials.”
Congress gave the Administrator of the Environmental Protection Agency (EPA) broad authority to effectuate this goal. See id.
First, because RCRA provides for review “in accordance with” the Administrative Procedure Act, id.
Second, when reviewing facial challenges to a rule—again as here—courts are required to assess the rule‘s validity across a broad spectrum of applications; they are not to imagine whether the rule might be arbitrary in “uncommon particular applications,” which, of course, can be challenged later should they arise. EPA v. EME Homer City Generation, L.P., — U.S. —, 134 S.Ct. 1584, 1609, 188 L.Ed.2d 775 (2014). As Congress well knew when it authorized pre-enforcement facial review of RCRA rules, see
In this case, EPA promulgated a rule defining when hazardous materials qualify as “discarded” and thus may be subjected to RCRA‘s rigorous protections. The court never questions the Administrator‘s statutory authority to issue the Final Rule, but nonetheless invalidates two of its critical features: Factor 4 of the legitimacy test, which distinguishes genuine from sham recycling; and the verified recycler exclusion, which ensures that companies claiming to recycle hazardous waste in fact do so. In reaching this result, the court displays a level of scrutiny that I believe conflicts with the APA‘s highly deferential standard of review and with the principles governing judicial review of facial challenges to rules. As a result, the court has deprived the public of two safeguards that the Administrator, exercising her statutory authority under RCRA, reasonably believed were needed to protect “human health and the environment.”
Factor 4 of the legitimacy test targets sham recyclers that incorporate hazardous materials into recycled products in order to avoid proper recycling or disposal. It does so by requiring that the product of a recycling process “be comparable to a legitimate product or intermediate.”
First, subparagraph (i) addresses recycled products that have raw analogues. Such products satisfy Factor 4 if they (A) “do[] not exhibit a hazardous characteristic . . . that analogous products do not exhibit” and (B) contain comparable concentrations of hazardous constituents or hazardous-constituent levels that meet widely used commodity standards.
We validated an almost identical technical judgment by the Administrator in Safe Food and Fertilizer v. EPA, 350 F.3d 1263 (D.C. Cir. 2003). Under the rule in that case, certain recycled materials were deemed non-discarded when (1) market participants treated them “more like valuable products than like negatively-valued wastes” and (2) “the [products] derived from the recycled [materials were] chemically indistinguishable from analogous commercial products made from virgin materials.” Id. at 1269. In essence, this rule exempted materials from regulation based on their compliance with criteria that, like Factors 3 and 4, assess whether recyclers treat materials as valuable commodities and generate products chemically indistinguishable from analogous products. We held that these two factors, in conjunction, represented a “reasonable tool for distinguishing products from wastes.” Id. As to the “identity principle“—subparagraph (i)‘s counterpart—the court reasoned that where a recycled product is “indistinguishable in the relevant respects” from the analogous “virgin” product, it is “eminently reasonable” to treat both as “products rather than wastes.” Id.
In spite of Safe Food, this court concludes that subparagraph (i) is too “impre-cis[e]” to be reasonable. Maj. Op. at 59-60. In its view, some legitimately recycled products may contain “some small excess of hazardous constituents,” and the presence of those hazardous materials “would not constitute a reasonable basis for dubbing the product or the process a sham.” Id. But subparagraph (i) does not simply target products with “some small excess of hazardous constituents.” Rather, it targets products with significantly more hazardous constituents or properties than an analogous raw product, i.e., beyond “a small acceptable range” of difference. 80 Fed. Reg. 1,727. The Administrator explained:
Perhaps the presumption underlying subparagraph (i) does suffer from some “imprecision.” Maj. Op. at 59-60. Yet because Industry Petitioners have mounted a facial attack on the Final Rule, this court has no authority to conjure up “hypothetical case[s] in which the rule might lead to an arbitrary result.” American Hospital Association, 499 U.S. at 619. Where, as here, the Administrator‘s presumption of sham recycling based on elevated levels of hazardous constituents is reasonable across most applications, we must uphold it. Id. If someday the Administrator applies the rule to a recycler in an arbitrary and capricious manner—for instance, as the court fears, by selecting an unreasonably “small acceptable range of difference,” see Maj. Op. at 63—that recycler “may bring a particularized, as-applied challenge to the [rule],” EME Homer City Generation, 134 S.Ct. at 1609.
The court‘s analysis of subparagraph (i) suffers from a second defect. Whether the presence of hazardous constituents provides sufficient evidence of sham recycling is exactly the type of technical judgment that RCRA delegates to the Administrator. Of course, the Administrator “must examine the relevant data and articulate a satisfactory explanation for its action.” State Farm, 463 U.S. at 43. The court, however, never questions the Administrator‘s compliance with these two requirements. Instead, it second-guesses the Administrator‘s “predictive judgments,” BNSF Railway Co., 526 F.3d at 781, about a matter—the precise level of hazardous constituents needed to demonstrate sham recycling—that “requires a high level of technical expertise” to which “we must defer,” Marsh, 490 U.S. at 377.
Subparagraph (ii), which applies when a recycled product has no raw analogue, offers recyclers a second way to show compliance with Factor 4. These products qualify as legitimate if they “meet[] widely recognized commodity standards and specifications” or if “[t]he hazardous secondary materials being recycled are returned to the original process . . . from which they were generated.”
The court concedes that subparagraph (ii) is reasonable, see Maj. Op. at 58-59, and for good reason. The Final Rule describes the agency‘s efforts to address commenters’ concerns that in many cases of legitimate recycling “there may not be an analogous product with which a facility can compare the product of the recycling process.” 80 Fed. Reg. 1,728. In response to these concerns, as well as other comments supporting an approach focused on commodity standards and closed-loop recycling, the Administrator carved out “recycling processes that [are] designed to use a specific hazardous secondary material to make a useful product and processes that always incorporate[] a hazardous secondary material back into the generating process during manufacturing.” Id.
Finally, subparagraph (iii)—a catchall for recyclers unable to comply with subparagraphs (i) or (ii)—allows recyclers to demonstrate legitimacy by showing either a “lack of exposure from . . . or bioavailability of . . . toxics” in the product.
Although the court acknowledges that subparagraph (iii) reasonably draws the line between recycling and discard through a perspective based on health and environmental risks, Maj. Op. at 61 (citing Safe Food, 350 F.3d at 1269-70), it nonetheless concludes that subparagraph (iii) “falls short of saving the rule, due to the draconian character of the procedures it imposes on recyclers,” namely, the requirement to prove legitimacy by preparing and maintaining “paperwork,” id. at 61-62.
For their part, however, Industry Petitioners never argue that the rule‘s paperwork obligations are too rigorous. This is understandable. If subparagraph (iii) qualifies as draconian, then so too would countless other run-of-the-mill requirements that entities file applications and keep certificates on hand: like those for pilots, see
In any event, the court‘s conclusion runs headlong into precedent. In American Chemistry Council v. EPA, 337 F.3d 1060 (D.C. Cir. 2003), we considered a challenge to an EPA rule that presumed certain mixtures and derivatives of waste were “hazardous” and thus subject to regulation, yet permitted regulated entities to show otherwise. Upholding this rule, we concluded that the Administrator acted reasonably in “[p]lacing the burden upon the regulated entity to show the lack of a hazardous characteristic.” Id. at 1065. This burden-shifting approach, we determined, alleviated unmanageable administrative obligations for the agency and comported with RCRA‘s command to “err on the side of caution.” Id. at 1065-66.
Subparagraph (iii) works just like the rule we approved in American Chemistry Council. If a recycler is unable to satisfy subparagraph (i) or (ii), it is a presumptive sham recycler. Subparagraph (iii) then allows the recycler to prove otherwise by making the requisite showings through documentation. If anything, the rule here is more lenient than the one in American Chemistry Council because subparagraph (iii) provides for a “self-implementing certification process,” 80 Fed. Reg. 1,730, rather than a “cumbersome . . . delisting process,” American Chemistry Council, 337 F.3d at 1065.
According to the court, the Final Rule is unlike the one in American Chemistry Council because the Administrator never demonstrated that recyclers failing to meet subparagraph (i) are presumptively discarding. Maj. Op. at 61-62. At bottom, then, the court‘s critique of subparagraph (iii) traces back to its conclusion that subparagraph (i) (and only subparagraph (i)) does not reasonably distinguish legitimate from sham recycling. But contrary to the court‘s view, EPA cogently explained why subparagraph (i) is reasonable across most applications, adding subparagraph (iii) only given the possibility that “there may still
II.
The key difference between the verified recycler exclusion and its predecessor—the transfer-based exclusion—is that the new rule shifts oversight of off-site recyclers from the industry to the Administrator. 80 Fed. Reg. 1,709. Whereas before waste generators audited off-site recyclers to ensure their legitimacy, now the Administrator or a state authority issues a variance confirming that a recycler‘s practices are sound. Id. at 1,695.
The court never questions the Administrator‘s authority to promulgate this rule. Instead, invoking a single line from Safe Food—“firm-to-firm transfers are hardly good indicia of a ‘discard,‘” 350 F.3d at 1268—the court concludes that the Administrator had no basis for finding that transferred hazardous materials “carr[y] an undue risk of discard,” Maj. Op. at 68.
Safe Food, however, held only that transferred materials are not automatically discarded simply because they are sent off-site. As we explained, although “we have never said that RCRA compels the conclusion that material destined for recycling in another industry is necessarily ‘discarded,‘” the statute “does not preclude application of RCRA to such materials if they can reasonably be considered part of the waste disposal problem.” Safe Food, 350 F.3d at 1268. The verified recycler exclusion is consistent with Safe Food: it defines transferred materials as discarded if—and only if—the off-site recycler receiving the materials fails to meet certain criteria, which carefully discern whether allegedly recycled materials “can reasonably be considered part of the waste disposal problem.” Id.
This approach finds ample support in the administrative record. When designing the verified recycler exclusion, the Administrator relied on multiple sources, including a report on market forces in the recycling industry and a study of the environmental problems associated with recycling hazardous secondary materials. 80 Fed. Reg. 1,707. The first of these, the market study, concluded that off-site commercial recyclers, which generate revenue primarily by receiving hazardous materials, have “economic incentives to accumulate waste beyond their ability to deal with it.” Id. The second report, the problems study, found that of 208 cases in which hazardous waste recycling led to serious environmental damage, 94 percent were attributable to “off-site third-party recyclers.” Id.
In the court‘s view, neither study justifies the rule. Although not impugning the market study on its merits, the court rejects it as lacking empirical analysis. But no rule of administrative law bars agencies from relying on studies that use economic models to assess market incentives. In fact, EPA often relies on theoretical models—that is, studies without corroborating “data,” Maj. Op. at 69—and our court has long held that “[r]easoned decisionmaking can use an economic model to provide useful information about economic realities.” American Public Gas Association v. FPC, 567 F.2d 1016, 1037 (D.C. Cir. 1977); see also Mississippi Commission on Environmental Quality v. EPA, 790 F.3d 138, 171 (D.C. Cir. 2015) (“EPA‘s application, interpretation and modification of [predictive] modeling [to set emissions standards] plainly fall ‘within its technical expertise’ and thus we owe it ‘an extreme degree of deference.‘” (quoting ATK Launch Systems, Inc. v. EPA, 669 F.3d 330, 338 (D.C. Cir. 2012))).
At any rate, the problems study provides plenty of empirical support for the conclusion that off-site recycling leads to discard. It surveyed cases since 1982 in which recyclers contaminated the environment by discarding hazardous waste, poisoning soil and groundwater “with remediation costs in some instances in the tens of millions of dollars.” 80 Fed. Reg. 1,707. To identify these cases, EPA reviewed scores of sources, including the Superfund National Priorities List, national and state databases, comments from at least three different rulemakings, media reports, and information gleaned from contacts in EPA regional offices and state agencies. See EPA OFFICE OF RESOURCE CONSERVATION AND RECOVERY, AN ASSESSMENT OF ENVIRONMENTAL PROBLEMS ASSOCIATED WITH RECYCLING OF HAZARDOUS SECONDARY MATERIALS 4 (2014). This thorough canvassing revealed that a full 94 percent of cases involving serious environmental damage could be attributed to off-site recycling.
The court condemns the problems study for “focus[ing] only on recycling gone wrong.” Maj. Op. at 69-70. As a result, the court reasons, the study “tells us nothing” about the relative risks of off-site recycling or the total damage caused by off-site recyclers. Id. But this focuses on the wrong question. As the Administrator recognized, the salient question is not what percentage of all off-site recycling damages the environment, but rather what portion of serious damage from hazardous waste disposal is caused by off-site recyclers. The core issue here is whether EPA may target the very companies (off-site recyclers) most responsible for environmental damage. Given the agency‘s statutory obligation to prevent environmental harm from discarded hazardous waste, I see no reason why it cannot. Accordingly, that some off-site recycling is safe or that serious environmental damage is relatively unusual is beside the point.
Consider this issue in a different context. If there were 208 plane crashes and 94 percent were linked to one carrier, it would be eminently reasonable for an agency tasked with preventing plane crashes to require that carrier to demonstrate that its practices were safe, no matter how many flights the carrier completed or what percentage of total flights it performed. Contra Maj. Op. at 69-70. No one would argue that it was unreasonable to regulate the carrier because only a small percentage of its total flights crashed. Yet this court‘s approach would yield just that result.
In the end, the fundamental problem with the court‘s conclusion—that the Administrator needs more proof that off-site recycling is unsafe before requiring a variance—is that the court decides for itself a policy question Congress left to the Administrator. RCRA envisions a careful balance of authority between EPA and this court. Today the court upsets that balance.