On October 7, 2008, U.S. Environmental Protection Agency (EPA) Administrator Stephen L. Johnson signed a final rule under the federal Resource Conservation and Recovery Act (RCRA). The new rule addresses the issue of when and how materials can escape being deemed “solid waste” under RCRA — specifically, when “recycling” a material will keep it outside the RCRA definition of solid waste (DSW).
The issue is critical. Under RCRA, a material must first be solid waste to be deemed hazardous waste. If a material is hazardous waste, RCRA’s full panoply of stringent “cradle-to-grave” regulatory requirements — including the much-feared and extremely expensive facility-wide “corrective action” — can be triggered.
Although a primary purpose of RCRA is to encourage material recycling (read the name of the statute), issues concerning recycling and the DSW have remained in a greatly confused state for years. EPA first attempted to resolve these issues in regulations issued in 1985, but those regulations have spawned thousands of interpretative memoranda providing inconsistent guidance and spin. Those regulations, and subsequent piecemeal amendments to them, also have been subject to judicial review in the United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit), the court with exclusive jurisdiction to review EPA’s RCRA regulations.
In a series of opinions from 1987 to 2003, the D.C. Circuit has disapproved of portions of EPA’s DSW.1 In these opinions, the Court focused on the statutory provision that a material must be “discarded” in order to be a solid waste. (RCRA §1004(27).) The Court held that Congress intended for the term “discarded” to have its common dictionary meaning of being “disposed of,” “abandoned,” or “thrown away,” and ruled that EPA’s 1985 DSW improperly captured recycling practices where materials were not truly being discarded.
Last week’s final rule represents the culmination of EPA’s attempts to conform its DSW to the D.C. Circuit opinions, and to narrow the definition of DSW so that only materials considered discarded will be deemed RCRA solid wastes. The process began with a proposed rule in October 2003, followed by a supplemental proposal in March 2007.2 Like most EPA rules, the process was highly contentious. Environmental groups (and some states) advocated that EPA take the narrowest slice possible out of its current DSW, while many industry groups advocated that EPA exclude a broad range of previously regulated materials from the DSW.
The New Rule
The final package is exceedingly lengthy and complex. The signed version is more than 500 pages. A copy of the signed version, EPA’s own summary, and press release materials are available online at http://www.epa.gov/epawaste/hazard/dsw/rulemaking.htm. (The final rule will probably appear in the Federal Register during the week of October 13, 2008.)
EPA estimates that approximately 5,600 facilities in 280 industries in 21 economic sectors could benefit from the new DSW. Most of the affected facilities would be in the manufacturing sector, but EPA estimates a significant number of facilities in the transportation and wholesale trade sectors also would benefit.
In general, the new rule excludes a great deal of recycled material from the DSW that would have been considered solid waste under the prior rule, but only under numerous complicated and detailed conditions. The new rule includes a mind-boggling array of notification, reporting, certification, recordkeeping, management practice, and, in some cases, even financial assurance requirements that one must meet if a recycled material or practice will remain outside the DSW.
The new rule recognizes three basic types of recycling activities that could now be deemed excluded from the DSW:
As noted above, materials in each category would be deemed to fall outside the DSW only under a series of strict conditions. The scope, breadth, and burdens of the conditions increase significantly when land-based units are involved and increase even more dramatically when a generator transfers materials to a different person or company for reclamation.
“Legitimate” as Opposed to “Sham”
One condition that pervades all three types of potentially excluded activities is that the recycling must be deemed legitimate (i.e., not sham). The new rule contains a detailed set of factors that are to be weighed in making this determination.
The rule sets forth two fundamental “legitimacy” criteria that must be met: (1) the material must “provide a useful contribution to the recycling process or to a product or intermediate of the recycling process,” and (2) the recycling process must produce a “valuable product or intermediate.” The rule specifies numerous factors that must be weighed in determining whether the “useful contribution” and “valuable” criteria are met.
Compliance Requires Extreme Caution
Parties seeking to avail themselves of the benefits of EPA’s new rule would be well advised to dot each i and cross each t of the numerous conditions and restrictions that must be met and to ensure that they have programs in place for continued compliance. The consequences of failure to abide by all of the conditions can be quite dramatic; it is not simply a question of fines, penalties, or injunctions in the traditional enforcement sense.
Rather, a failure to meet a required condition could mean that the otherwise excluded material becomes a RCRA hazardous waste. This means that any recycling activity at any site could suddenly be deemed “treatment” of a RCRA hazardous waste, which triggers the requirement of a RCRA permit. If the requirement to obtain a RCRA permit is triggered, the facility suddenly becomes subject to RCRA corrective action requirements, which often mean years of facility-wide soil and groundwater investigations, followed by multimillion dollar remediations.
In fact, EPA stresses in its preamble that any failure to follow any condition could make a material a hazardous waste “from the time the hazardous secondary materials are generated through the time they are ultimately disposed of or reclaimed.” (Page 62 of the signed version of DSW preamble, emphasis added.) EPA also repeats its longstanding position that a party claiming to be engaging in exempt recycling has the burden of proof.
EPA has included within the new DSW a “voluntary” administrative procedure called the “non-waste determination process” that would be administered on a site-specific, material-specific basis. If such a determination were granted, the particular material would not be subject to the numerous limitations and conditions provided for the new exclusions. EPA does say, however, that in granting such a determination, “the regulatory authority may specify that a hazardous secondary material meet certain conditions and limitations as part of the non-waste determination.” Unless and until EPA amends the rules in the future, the non-waste determination process is available only in two narrow circumstances: (1) where materials are reclaimed in a “continuous industrial process;” and (2) where a material is “indistinguishable in all relevant aspects from a product or intermediate.”
Major Uncertainties for Future
The Rule Is Not Effective in Most States
Ironically, after all the sturm und drang associated with this latest five-year rulemaking, the new DSW will not become effective in any state that is “authorized” under the RCRA “base program” unless and until the state takes some form of affirmative legal action to adopt it. Virtually all states currently have such base program authorization. One should check the state agency or the appropriate EPA regional office to determine the status of a particular state.
If EPA’s new DSW were adding new requirements or making existing requirements more stringent, all states would be required eventually to adopt the new rule or lose their authorization. However, since the new DSW makes existing requirements less stringent, any state may choose not to follow it.
In its preamble, EPA “strongly encourages” states to adopt the DSW rule because it believes the new rule will have the twin beneficial effects of encouraging legitimate recycling and protecting health and the environment. This may encourage some states to follow EPA’s lead. Moreover, some state statutes provide that state environmental requirements cannot be more stringent than federal requirements, so at least some states can be expected to follow EPA’s lead and adopt the DSW rule.
More Judicial Review Is a Certainty
Whenever EPA issues a national rule that is controversial and has high visibility — and the new DSW rule fits this description to a T — multiparty judicial review in the D.C. Circuit is virtually inevitable. Under RCRA, parties will have 90 days from the date the rule appears in the Federal Register to file petitions for review. In complex multiparty suits where environmental groups, industry groups, and state agencies all seek review, it could take more than a year for the judicial review process to unfold.
In recent years, EPA’s batting average in the D.C. Circuit has been quite low. Thus, there is a reasonable chance that EPA will eventually be forced to engage in even more rulemaking on this pivotal RCRA issue, and what started in 1985 may be far from finished in 2008.
Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information to our clients and colleagues.
If you have any questions about this alert or would like to discuss these topics further, please contact your Foley attorney or the following individual:
Richard G. Stoll
1American Mining Congress v. EPA, 824 F.2d 1177 (D.C. Cir. 1987);American Petroleum Institute v. EPA, 906 F.2d 729 (D.C.Cir. 1990); American Mining Congress v. EPA, 907 F. 2d 1179 (D.C. Cir. 1990);Association of Battery Recyclers v. EPA, 208 F.3d 1047 (D.C.Cir. 2000);Safe Food and Fertilizer v. EPA, 350 F.3d 1263 (D.C. Cir. 2003).