D.C. Circuit Revises Its 2017 Ruling on the RCRA Definition of Solid Waste, Clarifying When Recyclable Materials May Be Classified as Non-Wastes

On March 6, 2018, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) issued a ruling that revises its 2017 decision on the definition of solid waste under the Resource Conservation and Recovery Act (“RCRA”), which specifies when recyclable materials may be classified as solid wastes and thus potentially hazardous wastes subject to the hazardous waste regulatory program promulgated by the U.S. Environmental Protection Agency (“EPA”).   See American Petroleum Institute v. EPA, No. 09-1038 (D.C. Cir., decision of March 6, 2018); Beveridge & Diamond, P.C.,  “D.C. Circuit Invalidates Part of the RCRA Definition of ‘Solid Waste,’ Altering the Regulatory Framework for Recycling of Hazardous Secondary Materials” (July 14, 2017) (summary and analysis of the 2017 decision).

The only changes relevant for most companies relate to one of the four “legitimacy factors” that EPA previously promulgated to determine when a material is being legitimately recycled and thus possibly eligible for exclusion from the definition of solid waste (as opposed to being sham recycled, such that the material would be deemed disposed and thus a waste).  That factor, commonly referred to as “Factor 4,” stated that for recycling to be legitimate, the product of the recycling process must be “comparable” to a legitimate product or intermediate, in terms of composition and hazardous characteristics.  EPA justified this factor as necessary to prevent “toxics along for the ride,” a shorthand for a situation in which a recycler incorporates hazardous constituents from a secondary material into a recycled product simply as a way to avoid proper disposal.  The Agency first codified the factor in 2008, but significantly modified it in 2015.  See 73 Fed. Reg. 64,668, 64,759 (October 30, 2008) (codifying Factor 4 in 40 C.F.R. § 260.43(c)(2)); 80 Fed. Reg. 1694, 1773 (January 13, 2015) (recodifying the revised Factor 4 in 40 C.F.R. § 260.43(a)(4)). 

In the 2017 decision, the D.C. Circuit vacated Factor 4 as it applied to most exclusions from the definition of solid waste, but not as it might have applied to two exclusions: (1) the “Generator-Control Exclusion” for materials recycled by the company that produced the material (originally established in 2008 and revised in 2015), and (2) the “Transfer-Based Exclusion” for material sent by the generator to an offsite recycling facility (originally established in 2008, replaced by EPA in 2015, but reinstated by the D.C. Circuit (with certain changes) in its 2017 decision).  The 2017 decision left considerable uncertainty and confusion about the fate of Factor 4, since it suggested that Factor 4 might continue to apply to some exclusions but not others, and perhaps that different versions of Factor 4 (i.e., the 2008 version or the 2015 version) might apply to different exclusions.  It is primarily for this reason that the parties petitioned the Court for clarification of the 2017 decision.

In the new 2018 ruling, the D.C. Circuit made two changes related to Factor 4.  First, the Court ruled that the 2015 version of Factor 4 was vacated with respect to all RCRA exclusions, including the Generator-Control Exclusion and the reinstated Transfer-Based Exclusion.  Second, the Court ruled that the 2008 version of Factor 4 replaced the 2015 version of Factor 4 for all exclusions, with the result that Factor 4 (as originally promulgated in 2008) now requires that the presence of toxics along for the ride only has to be “considered” in determining whether a recyclable material is a solid waste.

The other major change to the 2017 decision announced in the new D.C. Circuit ruling related to spent hydrotreating catalysts and spent hydrorefining catalysts from the petroleum refining industry (EPA Hazardous Waste Nos. K171 and K172, respectively).  These catalysts were not eligible for original 2008 Generator-Control Exclusion and Transfer-Based Exclusion, but EPA in 2015 allowed the catalysts to be eligible for the revised Generator-Control Exclusion and the “Verified Recycler Exclusion” that then replaced the Transfer-Based Exclusion.  In the 2017 decision of the D.C. Circuit, the Court vacated the Verified Recycler Exclusion and reinstated the Transfer-Based Exclusion, raising the question whether the spent petroleum refining catalysts would once again be ineligible for exclusion.  The Court in 2017 concluded that the catalysts could not qualify for the revived Transfer-Based Exclusion, but it also invited further briefing on this issue.  In the latest ruling, the Court reversed course and declared that the spent petroleum refining catalysts are eligible for the Transfer-Based Exclusion.       

The mandate of the Court is scheduled to be issued on March 13, 2018.  EPA is likely to issue a rule later in the year to conform the RCRA regulations to the 2017 D.C. Circuit decision, as modified by the latest Court ruling.  It is also important to note that the effect of the Court decision – and any rule changes issued by EPA – will vary from state to state, due to the fact that almost all states have their own hazardous waste regulatory programs and have been authorized by EPA to implement most or all parts of those programs in lieu of the corresponding parts of the federal RCRA program.  This is especially true since some authorized states previously adopted some or all of the 2008 rule (which, as noted above, was substantially changed by EPA in 2015 but has partially been reinstated by the D.C. Circuit) and/or some or all of the 2015 rule (parts of which have been vacated by the Court).

Beveridge & Diamond assists clients in a wide range of industrial sectors with solid and hazardous waste regulatory issues under RCRA, its state counterparts, international treaties, and the laws and regulations of countries around the world.  One of the authors of this summary and analysis, Don Patterson, presented oral argument on behalf of the National Mining Association and other Industry Intervenors in the API v. EPA case.  The firm has been lead counsel in many of the seminal cases challenging prior iterations of the RCRA definition of solid waste, routinely advises clients on when specific recyclable materials may be classified as wastes, and defends companies in related enforcement actions. For more information about the Court decision and its potential implications, please contact Don Patterson, Aaron Goldberg, or any other members of our Hazardous Waste/RCRA practice group.