On July 7, 2017, the D.C. Circuit Court of Appeals issued a听decision striking down portions of US EPA鈥檚 Definition of Solid 黑料网 (DSW) Rule, which defines when certain hazardous secondary materials (i.e. recyclable materials generated as the remainder of industrial processes) become 鈥渄iscarded鈥� and thus subject to regulation as a solid waste.听 The Rule,听issued in 2015, was the latest effort to define 鈥渟olid waste鈥� under the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. 搂搂6901 et. seq., and was challenged by both industry and environmental groups.听 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鈥� challenges, and vacated two key aspects of the 2015 DSW Rule.听 First, the Court vacated the fourth prong of the 鈥渓egitimacy鈥� test to distinguish between 鈥渢rue鈥� and 鈥渟ham鈥� recycling, which must be met to qualify for exclusion from regulation as a solid waste.听 Second, the Court vacated most of the听鈥淰erified Recycler鈥� Exclusion and reinstated the pre-existing 2008 鈥淭ransfer-Based鈥� Exclusion.听 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 鈥渓egitimacy鈥� criteria to differentiate legitimate from 鈥渟ham鈥� recycling.听 鈥淏ecause EPA鈥檚 waste disposal regulations are acknowledged to be very costly to meet, 鈥榯here is an incentive for some handlers to claim they are recycling when, in fact, they are conducting . . . disposal.鈥櫶� To prevent such evasion, EPA polices the line 鈥榖etween 鈥榣egitimate鈥� (i.e., true) recycling and 鈥榮ham鈥� (i.e., fake) recycling.鈥澨� 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:听 (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听
Although the Court upheld Legitimacy Factor 3, it ruled that Factor 4 was unreasonable as applied to recyclable materials which have commercial product analogues.听 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.听 Consequently, the Court found that the Factor 4 test is 鈥渘ot a reasonable tool for distinguishing products from wastes鈥� 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 搂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 鈥渧erified recycler鈥� having either a RCRA permit or 听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听, which exempted hazardous secondary materials sent to a third-party recycler so long as the generator had made 鈥渞easonable efforts鈥� to ensure that the recycler met standards for legitimate recycling.听 Whereas the 2008 Transfer-Based Exclusion exempted materials based on the generator鈥檚 reasonable efforts to verify the third-party recycler鈥檚 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鈥檚 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.听 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鈥檚 more stringent oversight requirements: 鈥淓PA fails to provide sufficient linkage between theory, reality, and the result reached.鈥� 听Opinion at 29-32.听 Consequently, the Court vacated the 2015 Verified Recycler Exclusion and reinstated the 2008 Transfer-Based Exclusion.
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