Natural Resources Defense Council v. Environmental Protection Agency

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 12, 2014 Decided June 27, 2014.

No. 98-1379

NATURAL RESOURCES DEFENSE COUNCIL AND SIERRA CLUB,

PETITIONERS

v.

ENVIRONMENTAL PROTECTION AGENCY AND GINA

MCCARTHY,

RESPONDENTS

AMERICAN CHEMISTRY COUNCIL,

INTERVENOR

Consolidated with 98-1429, 98-1431

On Petitions for Review of Final Action of the

United States Environmental Protection Agency

James S. Pew argued the cause for the petitioners.

Khushi K. Desai and David R. Case were on brief.

Norman L. Rave, Jr., Attorney, United States Department

of Justice, argued the cause for the respondents. Robert G.

Dreher, Acting Assistant Attorney General, and Steven

Silverman and Alan H. Carpien, Attorneys, United States

Environmental Protection Agency, were on brief. Cynthia J.

2

Morris, and Christopher S. Vaden, Attorneys, United States

Department of Justice, and Lois J. Schiffer, Attorney, National

Capital Planning Commission, entered appearances.

Michael W. Steinberg argued the cause for the intervenor.

David M. Kerr and Leslie A. Hulse were on brief.

Thomas Sayre Llewellyn, Harry M. Ng and Deanne M.

Ottaviano were on brief for amici curiae American Petroleum

Institute et al. in support of the respondents.

Before: HENDERSON and MILLETT, Circuit Judges, and

SENTELLE, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge HENDERSON.

KAREN LECRAFT HENDERSON, Circuit Judge: Petitioners

Natural Resources Defense Council, Sierra Club and

Environmental Technology Council (collectively, Petitioners)

seek review of a portion of a 1998 rule of the Environmental

Protection Agency (EPA) creating a “Comparable Fuels

Exclusion” from regulation under section 3004(q) of the

Resource Conservation and Recovery Act of 1976 (RCRA), 42

U.S.C. § 6924(q). See Hazardous Waste Combustors;

Revised Standards, 63 Fed. Reg. 33,782, 33,783-801,

33,823-35 (June 19, 1998) (1998 Rule) (codified at 40 C.F.R.

§§ 261.4(a)(16) and 261.38). Section 6924(q) directs EPA to

establish standards applicable to all facilities that produce,

burn for energy recovery or distribute/market fuels derived

from specific listed hazardous wastes. The Comparable Fuels

Exclusion exempts from section 6924(q)’s mandate all fuels

deemed comparable to non-hazardous-waste-derived fossil

fuels because they satisfy EPA’s specifications. See 40

C.F.R. §§ 261.4(a)(16), 261.38. We conclude the

Comparable Fuels Exclusion is inconsistent with the plain

language of section 6924(q), which requires that EPA establish

standards applicable to all fuel derived from hazardous waste.

3

Accordingly, we grant the petitions for review filed by the

Natural Resources Defense Council (NRDC) and the Sierra

Club (collectively, Environmental Petitioners) and vacate the

Comparable Fuels Exclusion.

I.

RCRA, codified at 42 U.S.C. §§ 6901 et seq., is “a

comprehensive environmental statute under which EPA is

granted authority to regulate solid and hazardous wastes.”

Am. Mining Cong. v. EPA (AMC I), 824 F.2d 1177, 1179 (D.C.

Cir. 1987). Subtitle C of RCRA, 42 U.S.C. §§ 6921-39g,

governs “Hazardous Waste Management” and “establishes a

‘cradle to grave’ federal regulatory system for the treatment,

storage, and disposal of hazardous wastes.” Cement Kiln

Recycling Coal. v. EPA, 493 F.3d 207, 211 (D.C. Cir. 2007)

(quotation marks and citation omitted). RCRA defines

“hazardous waste” as “a solid waste, or combination of solid

wastes” which, because of its characteristics, may “cause, or

significantly contribute to an increase in mortality or . . .

serious . . . illness [or] pose a substantial present or potential

hazard to human health or the environment when improperly

. . . managed.” 42 U.S.C. § 6903(5). A “solid waste,” in

turn, is defined as “any garbage, refuse, sludge from a waste

treatment plant, water supply treatment plant, or air pollution

control facility and other discarded material.” Id. § 6903(27)

(emphasis added). Section 6924 provides generally that EPA

“shall promulgate regulations establishing such performance

standards, applicable to owners and operators of facilities for

the treatment, storage, or disposal of hazardous waste

identified or listed under this subchapter, as may be necessary

to protect human health and the environment.” Id. § 6924(a).

Until 1985, EPA regulations expressly exempted from

section 6924’s hazardous waste standards “material . . . being

burned as a fuel for the purpose of recovering usable energy,”

4

under the theory that such material was not “discarded,” 40

C.F.R. § 261.2(c)(2) (1984), and therefore not “solid waste,” as

defined in 42 U.S.C. § 6903(27), or, consequently, “hazardous

waste,” which is defined in section 6903(5) “as a subset of

‘solid waste,’ ” Horsehead Res. Dev. Co. v. Browner, 16 F.3d

1246, 1263 (D.C. Cir. 1994); see AMC I, 824 F.2d at 1189

(noting regulations existing in November 1984 had “provided

that unused commercial chemical products were solid wastes

only when ‘discarded’ [and] ‘[d]iscarded’ was at that time

defined as abandoned (and not recycled) by being disposed,

burned, or incinerated (but not burned for energy recovery)”

(citing 40 C.F.R. §§ 261.33, 261.2(c) (1983))). In 1984, the

Congress attempted to eliminate EPA’s regulatory energy

recovery exemption when it enacted section 6924(q) as part of

“The Hazardous and Solid Waste Amendments of 1984,” Pub.

L. No., 98-616, § 204(b)(1), 98 Stat. 3221, 3236-37 (Nov. 8,

1984). See AMC I, 824 F.2d at 1189 (noting Congress

“apparently added [section 6924(q)(1)] to override” 40 C.F.R.

§ 261.33 (1983)); Horsehead Res. Dev. Co., 16 F.3d at 1253

(“Exempting facilities that burned hazardous waste for energy

recovery from Subtitle C’s requirements created a regulatory

‘loophole’ by means of which over half of the hazardous waste

generated in the United States came to be burned in [boilers

and industrial furnaces] not subject to RCRA. Congress

closed this loophole by enacting RCRA section 3004(q)[,

which] set a deadline of November 8, 1986 for the EPA to

promulgate regulations governing the burning of hazardous

waste for energy recovery.” (citation omitted)).

Section 6924(q) governs “[h]azardous waste used as fuel”

and mandates that EPA regulate entities that produce, burn for

energy recovery or distribute/market hazardous-waste-derived

fuel. In particular, it provides that EPA “shall promulgate

regulations establishing . . . as may be necessary to protect

human health and the environment”: “(A) standards applicable

to the owners and operators of facilities which produce a fuel

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. . . from any hazardous waste identified or listed under [42

U.S.C. § 6921], . . . (B) standards applicable to the owners and

operators of facilities which burn, for purposes of energy

recovery, any [such] fuel . . . or any fuel which otherwise

contains any hazardous waste . . . and (C) standards applicable

to any person who distributes or markets any [such] fuel . . . or

any fuel which otherwise contains any hazardous waste.” 42

U.S.C. § 6924(q)(1)(A)-(C). 1 In January 1985, pursuant to

1

Section 6924(q)(1) provides in full:

(q) Hazardous waste used as fuel

(1) Not later than two years after November 8, 1984,

and after notice and opportunity for public hearing,

the Administrator shall promulgate regulations

establishing such—

(A) standards applicable to the owners and

operators of facilities which produce a fuel—

(i) from any hazardous waste identified or

listed under section 6921 of this title, or

(ii) from any hazardous waste identified or

listed under section 6921 of this title and

any other material;

(B) standards applicable to the owners and

operators of facilities which burn, for purposes

of energy recovery, any fuel produced as

provided in subparagraph (A) or any fuel which

otherwise contains any hazardous waste

identified or listed under section 6921 of this

title; and

(C) standards applicable to any person who

distributes or markets any fuel which is produced

as provided in subparagraph (A) or any fuel

which otherwise contains any hazardous waste

identified or listed under section 6921 of this

title;

as may be necessary to protect human health and the

environment. Such standards may include any of the

6

section 6924(q), EPA eliminated the energy recovery

exclusion. See Hazardous Waste Management System;

Definition of Solid Waste, 50 Fed. Reg. 614, 664 (Jan. 4, 1985)

(amending definition of “solid waste” to provide that

“[m]aterials are solid wastes if they are recycled” by, inter alia,

“[b]urning for energy recovery”).

EPA proposed the Comparable Fuels Exclusion in 1996.

See Revised Standards for Hazardous Waste Combustors, 61

Fed. Reg. 17,358, 17,529-30 (Apr. 19, 1996). Following

notice and comment, the final version was published in the

1998 Rule. See 63 Fed. Reg. at 33,823-29. The Comparable

Fuels Exclusion exempts from the section 6924(q) hazardous

waste fuel standard requirement all “comparable fuels,” which

are “fuels which are produced from a hazardous waste, but

which are comparable to some currently used fossil fuels.”2

Id. at 33,782; see id. at 33,783-801. To be comparable, the

fuel must “meet specification levels comparable to fossil fuels

for concentrations of hazardous constituents and for physical

properties that affect burning,” such as heating value and

requirements set forth in paragraphs (1) through (7) of

subsection (a) of this section as may be appropriate.

Nothing in this subsection shall be construed to affect

or impair the provisions of section 6921(b)(3) of this

title. For purposes of this subsection, the term

“hazardous waste listed under section 6921 of this

title” includes any commercial chemical product

which is listed under section 6921 of this title and

which, in lieu of its original intended use, is (i)

produced for use as (or as a component of) a fuel, (ii)

distributed for use as a fuel, or (iii) burned as a fuel.

2

The Comparable Fuels Exclusion includes “an exclusion for a

particular type of hazardous waste-derived fuel, namely a type of

synthesis gas (‘syngas’) meeting particular specifications.” 63 Fed.

Reg. at 33,785.

7

viscosity. 63 Fed. Reg. at 33,783; see 40 C.F.R.

§§ 261.4(a)(16) (“The following materials are not solid wastes

for the purpose of this part: . . . [c]omparable fuels or

comparable syngas fuels that meet the requirements of

§ 261.38.”), 261.38 (setting out “[s]pecifications for excluded

fuels” as well as other conditions and limitations). The

Comparable Fuels Exclusion also imposes notification

requirements, including (1) that the generator of a comparable

fuel provide to the appropriate State or to EPA notice of, inter

alia, the hazardous waste content and the location where it will

be burned and (2) that the burner of such fuel publish in a local

newspaper notice of the fact, location and estimated extent of

the burning. 63 Fed. Reg. at 33,784, 33,797-98 (codified at 40

C.F.R. § 261.38(b)(2)).3

EPA’s stated rationale for the Comparable Fuels

Exclusion was that EPA “has discretion to classify . . . as a fuel

product, not as a waste” a “hazardous waste-derived fuel [that]

is comparable to a fossil fuel in terms of hazardous and other

key constituents and has a heating value indicative of a fuel.”

Id. at 33,783. Under this rationale, EPA explained, it “can

reasonably determine that a material which is a legitimate fuel

and which contains hazardous constituents at levels

comparable to fossil fuels is not being ‘discarded’ within the

meaning of RCRA section 1004(27) [42 U.S.C. § 6903(27)

(defining “solid waste)”], and therefore is not “waste.” 63

Fed. Reg. at 33,783. Such a determination, EPA continued,

“promotes RCRA’s resource recovery goals without creating

3

The Comparable Fuels Exclusion imposes additional

conditions “to assure that burning of comparable fuels will not

become part of the waste management problem”—notably, it limits

comparable fuels combustion to industrial furnaces, industrial and

utility boilers and hazardous waste incinerators and it prohibits

meeting specification limits through dilution. 63 Fed. Reg. at

33,784.

8

any risk greater than those posed by the commonly used

commercial fuels.” Id. In setting its comparable fuel

specifications, EPA used a “benchmark” approach “based on

the level of hazardous and other constituents normally found in

fossil fuels” so that “concentrations of hazardous constituents

in the comparable fuel could be no greater than the

concentration of hazardous constituents normally occurring in

commercial fossil fuels.” Id. at 33,784. Under the

benchmark specifications, EPA stated, it “reasonably

expect[ed]—based on the methodology used to establish the

specification—that the comparable fuel will pose no greater

risk when burned than a fossil fuel and concomitant energy

recovery benefits will be realized from reusing the waste to

displace fossil fuels.” Id. EPA further explained that it

“conclude[d] it has discretion in exercising jurisdiction over

hazardous waste-derived fuels that are essentially the same as

fossil fuel, since there would likely not be environmental

benefits from regulating those hazardous waste-derived fuels

(i.e., burners would likely just choose to burn fossil fuels).”

Id. In fact, EPA asserted, many of the commercial fossil fuels

already being burned “could be less ‘clean’ than the

comparable fuels, so that substitution of some commercial

fuels could be a net deterrent.” Id. In sum, EPA “expect[ed]

that the comparable fuel would pose no greater risk when

burned than a fossil fuel and would at the same time be

physically comparable to a fossil fuel, leading to the

conclusion that EPA may classify these materials as products,

not wastes.” Id.

Multiple petitioners—representing both environmental

and industry groups—filed timely petitions for review of the

Comparable Fuels Exclusion, which petitions were held in

abeyance pending, initially, settlement negotiations and,

subsequently, an administrative appeal of the related challenge

to EPA’s “Gasification Exclusion Rule” in Sierra Club v. EPA,

No. 08-1144 (D.C. Cir. June 27, 2014). The Comparable

9

Fuels Exclusion case was removed from abeyance in March

2013.

II.

We have subject matter jurisdiction to review the petitions

under 42 U.S.C. § 6976(a)(1), “which gives this court

exclusive jurisdiction over ‘petitions for review of action of the

EPA in promulgating any regulation, or requirement under

RCRA.’ ” Cement Kiln Recycling Coal. v. EPA, 493 F.3d

207, 214 (D.C. Cir. 2007) (brackets omitted). Before

reaching the merits, we consider the Petitioners’ standing vel

non under Article III of the United States Constitution. See

Bancoult v. McNamara, 445 F.3d 427, 432 (D.C. Cir. 2006)

(“The ‘first and fundamental question’ that we are ‘bound to

ask and answer’ is whether the court has jurisdiction to decide

the case.” (quoting Steel Co. v. Citizens for a Better Env’t, 523

U.S. 83, 94 (1998))).

A. Standing

“Because Article III limits the constitutional role of the

federal judiciary to resolving cases and controversies, a

showing of standing ‘is an essential and unchanging’ predicate

to any exercise of our jurisdiction.” Fla. Audubon Soc’y v.

Bentsen, 94 F.3d 658, 663 (D.C. Cir. 1996) (en banc) (quoting

Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)

(citation omitted)). Moreover, “the party invoking the court’s

jurisdiction . . . bears the burden of demonstrating that it

satisfies the ‘irreducible constitutional minimum’ of standing:

(1) an ‘injury in fact’ that is ‘concrete and particularized’ as

well as ‘actual or imminent’; (2) a ‘causal connection’ between

the injury and the challenged conduct; and (3) a likelihood, as

opposed to mere speculation, ‘that the injury will be redressed

by a favorable decision.’ ” Ark Initiative v. Tidwell, 749 F.3d

1071, 1075 (D.C. Cir. 2014) (quoting Lujan, 504 U.S. at 560–

61 (1992) (quotation marks and brackets omitted)). The

10

Environmental Petitioners claim representational standing on

behalf of their members. Accordingly, each must demonstrate

that “[1] its members would otherwise have standing to sue in

their own right, [2] the interests it seeks to protect are germane

to the organization’s purpose, and [3] neither the claim asserted

nor the relief requested requires the participation of individual

members.” Defenders of Wildlife v. Perciasepe, 714 F.3d

1317, 1323 (D.C. Cir. 2013).

The Environmental Petitioners have met their burden of

demonstrating standing on behalf of their members. They

have submitted declarations of long-time members who spend

time near facilities which, as a result of the Comparable Fuels

Exclusion, now burn comparable fuels, and who are concerned

about the emissions’ effects on their health and, in some cases,

spend less time outdoors on that account. See, e.g., Br. for

Pet’rs, Decls. Add. 6 (declaration of NRDC member Doris

Falkenheiner), 12-14 (Sierra Club member Glen Besa), 22-23

(Sierra Club member William Fontenot), 34-35 (Sierra Club

member Kristina Moazed). The declarations’ averments

satisfy the Environmental Petitioners’ evidentiary burdens to

demonstrate injury, causation and redressability. See Ass’n of

Battery Recyclers v. EPA, 716 F.3d 667, 672 (D.C. Cir. 2013)

(finding association had Article III standing based on

members’ averments that “they live or work in close proximity

to [challenged] smelters and have reduced their time outdoors

in response to concerns about pollution—precisely the kinds of

harms the Supreme Court has deemed sufficient to show injury

in fact”).

Intervenor American Chemistry Council challenges the

Environmental Petitioners’ standing, asserting they did not

demonstrate that as of the time the petitions were filed, there

was a “substantial probability” that a facility located near one

of their members would burn comparable fuels, thereby

causing the alleged injury—largely because they do not aver

11

any facility had then provided notice of such burning—either

to the applicable RCRA director or through newspaper

publication—prerequisites under the 1998 Rule to burning

comparable fuels.4 See Br. for Intervenor 14-15; 40 C.F.R.

§ 261.38(b)(2); see also Chamber of Commerce v. EPA, 642

F.3d 192, 199-200 (D.C. Cir. 2011) (petitioner bears burden to

“show a ‘substantial probability’ that it has been or will be

injured, that the defendant caused its injury, and that the court

could redress that injury”; “standing is assessed as of the time a

suit commences” (brackets, capitalization and quotation marks

omitted)). We disagree.

It is “well-established . . . that standing will lie where ‘a

plaintiff demonstrates that the challenged agency action

authorizes the conduct that allegedly caused the plaintiff’s

injuries, if that conduct would allegedly be illegal otherwise.’ ”

Am. Trucking Ass’n v. Fed. Motor Carrier Safety Admin., 724

F.3d 243, 248 (D.C. Cir. 2013) (quoting Animal Legal Def.

Fund, Inc. v. Glickman, 154 F.3d 426, 440 (D.C. Cir. 1998) (en

banc)). This is precisely the case here. Once EPA

promulgated the Comparable Fuels Exclusion, it was “ ‘a

hardly-speculative exercise in naked capitalism’ ” to predict

that facilities would take advantage of it to burn

hazardous-waste-derived fuels rather than more expensive

fossil fuels. Id. (inferring that “motor carriers would respond

to the hours-increasing provisions by requiring their drivers to

use them and work longer days” (quoting Abigail Alliance for

Better Access to Developmental Drugs v. Eschenbach, 469

F.3d 129, 135 (D.C. Cir. 2006))). And the Intervenor does not

dispute that, as it turned out, many facilities did just that. In

fact, one facility in proximity to the Environmental Petitioners’

members—the Chemical Co. Baton Rouge Plastics Plant—had

4

The Intervenor does not question that the Environmental

Petitioners meet the second and third representational standing

requirements. Nor do we.

12

pending RCRA applications to combust hazardous waste in its

boilers (subject to RCRA regulation) before the 1998 Rule

issued—which applications it promptly withdrew in May 1999

when it achieved compliance with the Comparable Fuels

Exclusion and could therefore burn such fuels free from RCRA

regulatory constraints. See Br. for Pet’rs, Decls. Add. 37

(May 17, 1999 Letter from Exxon Chemical Co. Baton Rouge

Plastics Plant manager to Louisiana Department of

Environmental Quality Office of Waste Services).

The Intervenor also asserts that the Environmental

Petitioners have not shown that burning comparable fuels is

any more dangerous than burning fossil fuels and therefore

they have not demonstrated the possibility of any injury from

the Comparable Fuels Exclusion. “In EPA’s expert

judgment,” they note, “burning these comparable fuels will

have roughly the same risks, and the same affect [sic] on air

quality, as burning commercially available virgin fuels.” Br.

for Intervenor 21. The Environmental Petitioners, however,

are challenging EPA’s assessment of the Comparable Fuels

Exclusion’s risks—and we “assume for standing purposes”

that the Environmental Petitioners are “correct on the merits.”

See Sierra Club v EPA, 699 F.3d. 530, 533 (D.C. Cir. 2012).5

In addition, both EPA and the Intervenor challenge the

standing of petitioner Environmental Technology Council, “a

national non-profit trade association of commercial firms that

provide technologies and services for recycling, treatment, and

secure disposal of industrial and hazardous wastes.”

Petitioners’ Rule 26.1 Disclosure Statement at 2 (Feb. 7, 2014).

5

Given our conclusion that NRDC and Sierra Club have

demonstrated standing based on their members’ asserted injuries

from facilities burning hazardous-waste-derived fuels, we need not

consider the Environmental Petitioners’ alternative claims of

informational and procedural injury.

13

We agree with EPA that under our precedent, the

Environmental Technology Council’s interest in the

litigation—“to protect its members’ competitive position in

selling greater quantities of waste treatment and disposal

services,”—“does not fall within the zone of interests” that

RCRA is intended to protect. Br. for Resp. 18 (citing

Hazardous Waste Treatment Council v. Thomas, 885 F.2d 918,

922-23 (D.C. Cir. 1989)); see also Sierra Club v. EPA, 292

F.3d 895, 902-903 (D.C. Cir. 2002); Cement Kiln Recycling

Coal. v. EPA, 255 F.3d 855, 871 (D.C. Cir. 2001).

Environmental Technology Council therefore lacks a cause of

action and we deny its petition for review. See Lexmark, Int’l,

Inc. v. Static Control Components, Inc., 134 S. Ct. 1377, 1388

(2014).

B. Statutory Construction

On the merits, the Petitioners first contend the Comparable

Fuels Exclusion is inconsistent with the language of section

6924(q). We review EPA’s interpretation of RCRA—a

statute it is charged with administering—under the familiar

two-step analysis of Chevron U.S.A. Inc. v. Natural Resources

Defense Council, Inc., 467 U.S. 837 (1984). See Am. Chem.

Council v. EPA, 337 F.3d 1060, 1063 (D.C. Cir. 2003).

Under Chevron:

We first ask “whether Congress has directly spoken to

the precise question at issue,” in which case we “must

give effect to the unambiguously expressed intent of

Congress.” If the “statute is silent or ambiguous with

respect to the specific issue,” however, we move to

the second step and defer to the agency’s

interpretation as long as it is “based on a permissible

construction of the statute.”

Natural Res. Def. Council v. EPA, 706 F.3d 428, 431 (D.C. Cir.

2013) (quoting Chevron, 467 U.S. at 842–43 (quotation marks

14

omitted)). We stop on Chevron step 1 because we agree with

the Petitioners that the Congress spoke directly to the question

whether EPA may exclude what it calls “comparable

fuels”—and foreclosed their exclusion.

Section 6924(q) unequivocally provides that EPA “shall

promulgate regulations establishing . . . standards” such “as

may be necessary to protect human health and the

environment”—applicable to three categories of entities: (1)

“owners and operators of facilities which produce a fuel . . .

from any hazardous waste identified or listed under [42 U.S.C.

§] 6921,” (2) “owners and operators of facilities which burn,

for purposes of energy recovery, any [such] fuel” and (3) “any

person who distributes or markets any [such] fuel.” 42 U.S.C.

§ 6924(q)(1)(A)-(C) (emphases added). The word “shall”

makes the directive to regulate hazardous-waste-derived fuels

mandatory. See Miller v. French, 530 U.S. 327, 337 (2000)

(referring to “mandatory term ‘shall’ ”); Ass’n of Civilian

Technicians, Mont. Air Ch. No. 29 v. FLRA, 22 F.3d 1150,

1153 (D.C. Cir. 1994) (“The word ‘shall’ generally indicates a

command that admits of no discretion on the part of the person

instructed to carry out the directive.”). And the repeated use

of “any” makes the mandate broadly inclusive—reaching all

fuels produced from all listed hazardous wastes. See Nat’l

Ass’n of Clean Water Agencies v. EPA, 734 F.3d 1115, 1128

(D.C. Cir. 2013) (“The word ‘any’ is usually understood to be

all inclusive, and EPA presented no compelling reason why

‘any’ should not mean ‘any.’ ” (quotation marks and citation

omitted)); United States v. Gonzales, 520 U.S. 1, 5 (1997)

(“Read naturally, the word ‘any’ has an expansive meaning,

that is, one or some indiscriminately of whatever kind.”

(quotation marks omitted)); cf. Massachusetts v. EPA, 549

U.S. 497, 528-29 (2007) (Clean Air Act definition of “air

pollutant” as “ ‘any air pollution agent or combination of such

agents, including any physical, chemical . . . substance or

matter which is emitted into or otherwise enters the ambient

15

air’ . . . embraces all airborne compounds of whatever stripe,

and underscores that intent through the repeated use of the

word ‘any’ ”) (emphases in original).6

From the statute’s mandatory and inclusive language we

can only conclude the Congress intended to require that EPA

regulate the production, burning for energy recovery and

distributing/marketing of all such fuels derived from all listed

hazardous wastes—with the sole express exclusions of (1)

certain oil-containing petroleum refinery wastes that are

converted into petroleum coke and (2) facilities that burn only

de minimis quantities of hazardous waste, see 42 U.S.C.

§ 6924(q)(2)(A)-(B). Given the plain intent of the Congress,

EPA had no discretion, as it claimed, to create its own

Comparable Fuels Exclusion to exempt from regulation fuels

that are derived from a listed hazardous waste and therefore

subject to mandatory regulation under section 6924(q). Cf.

Nat’l Ass’n of Clean Water Agencies, 734 F.3d at 1128

(“Congress’s use of the word ‘any’ in the definitional phrase

‘any facility which combusts any solid waste from commercial

or industrial establishments’ rendered the phrase clear and

unambiguous, and EPA had no authority to create exceptions

not explicitly listed in the statute through its definition of

‘commercial or industrial waste.’ ” (citing Natural Res.

Defense Council v. EPA, 489 F.3d 1250 (D.C. Cir. 2007))

(emphases in original)).

6

The intended breadth of coverage is further illustrated by the

express inclusion of “any commercial chemical product which is

listed under section 6921 of this title and which, in lieu of its original

intended use, is (i) produced for use as (or as a component of) a fuel,

(ii) distributed for use as a fuel, or (iii) burned as a fuel.” 42 U.S.C.

§ 6924(q)(1) (emphasis added). During oral argument, EPA

conceded that this language makes all commercial chemical products

subject to section 6924(q). See Recording of Oral Argument at

16:44 (May 12, 2014).

16

In particular, contrary to its stated rationale, EPA had no

discretion to “reasonably determine that a material which is a

legitimate fuel and which contains hazardous constituents at

levels comparable to fossil fuels is not being ‘discarded’ within

the meaning of [42 U.S.C. § 6903(27)].” 63 Fed. Reg. at

33,783. This is the very reasoning that the Congress rejected

when it enacted section 6924(q) to close EPA’s “regulatory

loophole” for energy recovery. Horsehead Res. Dev. Co., 16

F.3d at 1253. As we explained in AMC I, the Congress added

section 6924(q) in response to EPA’s regulations that excluded

from the definition of “solid waste” (and thereby of “hazardous

waste”) hazardous materials that are—or will be—burned for

energy recovery as not “discarded”; and the Congress

“addressed this problem by deeming the offending materials to

be ‘discarded’ and therefore within the statutory definition of

‘solid waste.’ ” AMC I, 824 F.2d at 1189 (emphasis added).7

Thus, for the purpose of interpreting section 6924(q),

“discarded” is not, as EPA claims in the 1998 Rule, “an

ambiguous term.” 63 Fed. Reg. at 33,783. And EPA

therefore has no discretion to “reasonably” construe the term to

exclude hazardous-waste-derived fuels from regulation.

EPA argues in its brief that the Comparable Fuels

Exclusion is itself a “standard” within the meaning of section

7

AMC I focused on “the burning of commercial chemicals as

fuels, contrary to their original intended use”—a specific instance of

energy recovery burning that section 6924(q) identifies. See supra

note 8. Section 6924(q)’s compass is, as we explained supra, far

broader than that. See AMC I, 824 F.2d at 1189 (“ ‘Hazardous

waste, as used in this provision [6924(q)], includes not only wastes

identified or listed as hazardous under EPA’s regulations, but also

includes any commercial chemical product (and related materials)

listed pursuant to 40 C.F.R. § 261.33, which is not used for its

original intended purpose but instead is burned or processed as

fuel.’ ” (quoting H.R. Rep. No. 98-198, at 40 (1983) (emphasis

added))).

17

6924(q), which requires only that EPA establish “standards . . .

as may be necessary to protect human health and the

environment,” 42 U.S.C. § 6924(q)(1). Br. for Resp’t 28-29,

33. EPA asserts that the Comparable Fuel Exclusion’s

specifications and restrictions—in conjunction with existing

Clean Air Act, Occupational Safety and Health Administration

and Department of Transportation regulations—constitute

EPA’s determination of “the level of regulation ‘necessary’ for

the management, i.e., the storage, transportation, and burning,

of comparable fuels that is protective of human health and the

environment, as required by section 6924(q).” Id. at 29. But

this theory was not part of EPA’s rationale as expressed in the

1998 Rule. There, EPA concluded it need not establish any

standards applicable to qualifying comparable fuels because a

comparable fuel is not a “waste” but rather a “fuel product” and

therefore excluded from the statute’s reach. See 63 Fed. Reg.

at 33,783 (“The rationale for the Agency’s approach is that if a

hazardous waste derived fuel is comparable to a fossil fuel in

terms of hazardous and other key constituents and has a heating

value indicative of a fuel, EPA has discretion to classify such

material as a fuel product, not as a waste.”); id (“Under this

final rule, EPA is excluding from the regulatory definition of

solid waste hazardous waste-derived fuels that meet

specification levels comparable to fossil fuels for

concentrations of hazardous constituents and for physical

properties that affect burning.”).

The rationale EPA now offers—that by setting criteria for

exclusion from section 6924 regulation, it was in fact

“establishing standards” under section 6924 specifications—is

entirely post hoc. Accordingly, we may not sustain the 1998

rule thereunder. See Nat’l Ass’n of Clean Water Agencies,

734 F.3d at 1138 (“EPA did not state this rationale in the

rulemaking, and we cannot ‘accept appellate counsel’s post

hoc rationalizations for agency action.’ ” (quoting Motor

Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S.

18

29, 50 (1983))); see also SEC v. Chenery Corp., 318 U.S. 80,

95 (1943) (“[A]n administrative order cannot be upheld unless

the grounds upon which the agency acted in exercising its

powers were those upon which its action can be sustained.”).

EPA’s new rationale is also flatly inconsistent with the 1998

Rule, which expressly and repeatedly characterized its action

as an “exclusion.” See, e.g., 63 Fed. Reg. at 33,782-84.

Finally, the 1998 Rule did not even purport to apply the RCRA

protection standard EPA now cites—that the regulatory

standards be sufficient “to protect human health and the

environment.” 42 U.S.C. § 6924(a), (q)(1). Instead, EPA

considered only whether a fuel complying with the

Comparable Fuels Exclusion’s specifications presents a

“greater risk than burning fossil fuel”—which is quite a

different level of protection—and EPA’s answer was merely

that it “expects” not. See 63 Fed. Reg. at 33,783-84.

In support of its rationale as expressed in the 1998

Rule—that hazardous wastes recycled for energy recovery are

excluded from section 6924(q)’s “standard” mandate—EPA

relies on Circuit precedent that has upheld EPA’s

characterization of recycled materials as not “discarded” and

therefore not “waste” subject to RCRA hazardous waste

regulation. In AMC I, for example, we concluded at Chevron

step 1 that RCRA’s “solid waste” definition precludes EPA

from regulating materials produced in the oil refining

process—to be recycled through reintroduction at the

appropriate stage of the refining process—because the

Congress “clearly and unambiguously expressed its intent that

‘solid waste’ (and therefore EPA’s regulatory authority) be

limited to materials that are ‘discarded’ by virtue of being

disposed of, abandoned, or thrown away.” 824 F.2d at 1193.

Accordingly, the term’s plain meaning excludes materials that

“are destined for beneficial reuse or recycling in a continuous

process by the generating industry itself,” such as the recycled

materials there. Id. at 1186 (emphasis omitted); accord Ass’n

19

of Battery Recyclers, Inc. v. EPA, 208 F.3d 1047, 1056 (D.C.

Cir. 2000) (“[A]t least some of the secondary material EPA

seeks to regulate as solid waste is destined for reuse as part of a

continuous industrial process and thus is not abandoned or

thrown away. Once again, ‘by regulating in-process

secondary materials, EPA has acted in contravention of

Congress’ intent’ because it has based its regulation on an

improper interpretation of ‘discarded’ and an incorrect reading

of our AMC I decision.” (quoting AMC I, 824 F.2d at 1193)).

On the flip side, in Safe Food & Fertilizer v. EPA, 350

F.3d 1263 (D.C. Cir. 2003), we upheld as permissible under

Chevron step 2 EPA’s interpretation of the “solid waste”

definition to exclude as not “discarded” industrial process

byproducts recycled to produce zinc fertilizers as well as the

fertilizers themselves. Id. at 1269-71; see also Am. Mining

Cong. v. EPA, 907 F.2d 1179, 1186 (D.C. Cir. 1990) (“Nothing

in AMC [I] prevents the agency from treating as ‘discarded’ the

wastes at issue in this case, which are managed in land disposal

units that are part of wastewater treatment systems.”)

(emphases omitted). None of the cited cases, however,

involved fuels burned for energy recovery so as to come under

section 6924(q), which, as we explained in AMC I, “deem[s]”

the materials burned for energy recovery to be “ ‘discarded’

and therefore within the statutory definition of ‘solid waste.’ ”

AMC I, 824 F.2d at 1189; see Horsehead Res. Dev. Co., 16

F.3d at 1263 (“AMC I involved an altogether different facet of

waste disposal governed by a different statutory section, i.e.,

the scope of the RCRA term ‘solid waste’ . . . .”). Outside the

section 6924(q) energy recovery context—as the cited cases

demonstrate—materials to be reused may be reasonably—or

even necessarily—characterized as not “waste” because they

are not “discarded.” See AMC I, 824 F.2d at 1189 (“This

specific measure did not, however, revamp the basic

definitional section of the statute.”). But not under section

6924(q), which provides that EPA “shall promulgate

20

regulations establishing . . . standards” applicable to producers,

burners and distributors/marketers of a fuel produced from

“any hazardous waste identified or listed under [42 U.S.C.

§ 6921]” and deems the listed component hazardous materials

to be “discarded” waste. 42 U.S.C. § 6924(q)(1)(A)-(C)

(emphasis added).

Finally, EPA contends that the “Petitioners’ claim that the

Comparable Fuels Rule is inconsistent with section 6924(q)

has been waived because it was not raised in comments during

the rulemaking.” Br. for Resp’t 21; see Natural Res. Def.

Council v. EPA, 25 F.3d 1063, 1073–74 (D.C. Cir. 1994) (“We

do not reach the merits of this challenge because petitioners

failed to raise this question . . . before the agency during the

notice and comment period. They have therefore waived their

opportunity to press this argument in court.”); see also Military

Toxics Project v. EPA, 146 F.3d 948, 956-57 (D.C. Cir. 1998).

In response, the Petitioners point to two comments they claim

raised their statutory argument. See Reply Br. 9-10. First,

petitioner Environmental Technology Council submitted a

comment criticizing EPA’s “implementing approach” as

an attempt to defer RCRA § 3004(q)-(s) regulation of

. . . hazardous wastes to the CAA in accordance with

RCRA § 1006(a) to avoid duplication, but without

making the essential finding that such a deferral

satisfies the objectives of RCRA. For example, EPA

has not conducted any kind of technical or risk

analysis showing how a blanket exemption from all

RCRA Subtitle C controls for hazardous wastes that

meet the comparable fuel spec somehow adequately

protects human health and the environment. Thus, the

proposal is legally deficient.

Joint Appendix (JA) 387. Second, citing an EPA background

document’s explanation for rejecting a “risk” approach in

21

setting the comparable fuel specifications in favor of a

benchmark approach, commenter Molten Metal Technology

Inc. (Molten Metal) asserted:

Therefore, the Agency’s comparable fuels proposal

will likely result in higher exemption concentrations

than levels that would normally be derived using a

risk-based approach. Such an approach would

violate the clear Congressional mandate in Section

3004(q) of RCRA to regulate the burning of

hazardous waste for energy recovery “as may be

necessary to protect human health and the

environment.”

JA 374.

We agree with EPA that both comments seem to focus

more on the way EPA implemented the Comparable Fuels

Exclusion than on its statutory authority vel non to create any

such exclusion. Nonetheless, EPA’s response to Molten

Metal’s comment suggests that EPA understood Molten Metal

to challenge EPA’s statutory authority to exclude comparable

fuels in the first place and affirms its authority to do so:

“Section 3004(q) applies to hazardous wastes which are burned

for energy recovery. The provision does not speak to EPA’s

authority to determine whether particular fuels produced from

secondary materials are or are not, products rather than

wastes.” JA 547. Thus, the issue was expressly addressed by

EPA and is properly before the court. See Appalachian Power

Co. v. EPA, 135 F.3d 791, 818 (D.C. Cir. 1998) (“The purpose

of the exhaustion requirement is to ensure that the agency is

given the first opportunity to bring its expertise to bear on the

resolution of a challenge to a rule.”). Moreover, even if a

party may be deemed not to have raised a particular argument

before the agency, “EPA ‘retains a duty to examine key

assumptions as part of its affirmative burden of promulgating

22

and explaining a nonarbitrary, non-capricious rule”’ and

therefore . . . ‘EPA must justify that assumption even if no one

objects to it during the comment period.’ ” Id. (quoting Small

Refiner Lead Phase-Down Task Force v. EPA, 705 F.2d 506,

534-35 (D.C. Cir. 1983); see also Okla. Dep’t of Envtl. Control

v. EPA, 740 F.3d 185, 192 (D.C. Cir. 2014); Ne. Md. Waste

Disposal Auth. v. EPA, 358 F.3d 936, 948 (D.C. Cir. 2004) (per

curiam). As EPA’s response to Molten Metal’s comment

demonstrates, that EPA had statutory authority under section

6924(q) to exempt some hazardous-waste-derived fuels from

regulation was a “key assumption” underlying EPA’s exercise

of its “discretion to classify such material as a fuel product, not

as a waste,” 63 Fed. Reg. at 33,783, and thereby “exclude” it

from section 6924(q)’s ambit. Accordingly, we reject EPA’s

“waiver” argument.

For the foregoing reasons, we grant the Environmental

Petitioners’ petitions for review and vacate the Comparable

Fuels Exclusion codified at 40 C.F.R. §§ 261.4(a)(16) and

261.38. We deny Environmental Technology Council’s

petition for review.

So ordered.