California Communities Against Toxics v. Envtl. Prot. Agency

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 9, 2019 Decided July 2, 2019

No. 18-1163

CALIFORNIA COMMUNITIES AGAINST TOXICS, ET AL.,

PETITIONERS

v.

ENVIRONMENTAL PROTECTION AGENCY AND ANDREW

WHEELER, ADMINISTRATOR, U.S. ENVIRONMENTAL

PROTECTION AGENCY,

RESPONDENTS

AMERICAN CHEMISTRY COUNCIL, ET AL.,

INTERVENORS

On Petition for Review of Administrative Action

of the United States Environmental Protection Agency

Khushi Desai argued the cause for petitioners. With her

on the briefs was James S. Pew.

Perry M. Rosen, Attorney, U.S. Department of Justice,

argued the cause for respondents. With him on the brief were

Jeffrey Bossert Clark, Assistant Attorney General, and

Jonathan Brightbill, Deputy Assistant Attorney General.

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Thomas Sayre Llewellyn argued the cause for intervenor-

respondents. With him on the brief were Stacy R. Linden,

Matthew A. Haynie, Richard S. Moskowitz, Wayne J. D'Angelo,

Peter C. Tolsdorf, Timothy K. Webster, Leslie A. Hulse, Aaron

J. Wallisch, Kevin A. Gaynor, John P. Elwood, and Jeremy C.

Marwell. Joshua S. Johnson entered an appearance.

Before: HENDERSON and ROGERS, Circuit Judges, and

SENTELLE, Senior Circuit Judge.

Opinion for the court by Circuit Judge ROGERS.

ROGERS, Circuit Judge: In 1976, Congress enacted the

Resource Conservation and Recovery Act of 1976 (“RCRA”),

as amended, 42 U.S.C. §§ 6901–6992k, to address the

environmental and health risks associated with hazardous solid

waste. Subtitle C of RCRA required the Environmental

Protection Agency to issue regulations governing the storage,

treatment, and disposal of “solid waste,” which was defined as

“discarded” material, 42 U.S.C. § 6903(27). Among RCRA’s

stated objectives was “minimizing the generation of hazardous

waste . . . by encouraging process substitution, materials

recovery, properly conducted recycling and reuse, and

treatment.” Id. § 6902(a)(6) (emphasis added). In 2008, EPA

promulgated a final rule that treated material transferred from

a waste generator to a third-party reclaimer as legitimately

recycled, rather than “discarded” and subject to Subtitle C

regulation, if several conditions were met. This Transfer-

Based Exclusion was replaced by another exclusion in 2015,

reinstated by the court in 2017, and reissued by EPA as

modified in 2018.

Environmental petitioners consider the Transfer-Based

Exclusion to be insufficiently protective of human health and

the environment and bring two challenges: First, they contend

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the Transfer-Based Exclusion exceeds EPA’s statutory

authority under RCRA. In their view, a generator “discards”

hazardous material whenever it pays a reclaimer to accept the

material. Second, they contend the Transfer-Based Exclusion

fails arbitrary and capricious review because EPA has not

provided a reasoned explanation for treating hazardous

material differently based on whether it is sent to a reclaimer

instead of a storage, treatment, or disposal facility, and because

EPA has already identified deficiencies in the Transfer-Based

Exclusion.

EPA initially raises a host of threshold objections to

petitioners’ contentions, some of which industry intervenors

join. Upon examination, we conclude none is persuasive. On

the merits, EPA responds that neither the statutory text, case

law, nor empirical data supports petitioners’ contentions. We

conclude, in view of this court’s precedent, that EPA did not

act contrary to RCRA in adopting the Transfer-Based

Exclusion because hazardous secondary materials are not

necessarily “discarded” each time they are transferred from a

generator to a reclaimer along with payment. Further we

conclude that EPA has provided a reasoned explanation for

applying different standards to materials that are not yet part of

the waste disposal problem RCRA addresses where they meet

conditions EPA concluded were adequate for safe transfer and

legitimate recycling. The Transfer-Based Exclusion therefore

survives arbitrary and capricious review. Accordingly, we

deny the petition for review.

I.

Some background is necessary before addressing the

threshold objections to petitioners’ challenge.

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A.

In 2008, EPA promulgated a final rule intended to

“encourage and expand the safe, beneficial recycling of

additional hazardous secondary materials,” adopting the

Generator-Controlled Exclusion and the Transfer-Based

Exclusion. The Exclusions deal with “reclamation,” a type

of recycling that occurs when secondary material is

processed to recover a usable product or is regenerated. 40

C.F.R. § 261.1(c)(4), (7). Secondary materials can include

byproducts, spent materials, and sludges. Id. § 261.1(c)(1)–

(3). The final rule allowed generators of hazardous secondary

materials to avoid Subtitle C regulation of those materials

where the generator controls the recycling or where the

generator transfers the materials to an off-site reclaimer.

Revisions to the Definition of Solid Waste, 73 Fed. Reg. 64,668,

64,669 (Oct. 30, 2008) (“2008 Rule”). Under the Transfer-

Based Exclusion, generators, transporters, and reclaimers must

meet “Transfer Conditions” to ensure hazardous materials are

transferred securely and are actually recycled. Id. at 64,669–

70. For example, a generator must audit the reclaimer for

compliance with proper recycling practices. Id. at 64,683.

“Legitimacy Factors” must also be satisfied so recycling is

legitimate and not a “sham.” Id. at 64,670. The history of the

Rule is described in American Petroleum Institute v. EPA

(“API III”), 862 F.3d 50 (D.C. Cir. 2017).

Suffice it to say, environmental groups challenged the

2008 Rule as too lenient, and industry groups challenged the

Rule as too strict. EPA eventually replaced the Transfer-Based

Exclusion in 2015 with a similar but more restrictive Verified

Recycler Exclusion, allowing generators to avoid Subtitle C

requirements only when they transfer materials to verified

recyclers that had obtained either permits or variances.

Definition of Solid Waste, 80 Fed. Reg. 1694, 1695 (Jan. 13,

2015) (“2015 Rule”). Environmental and industry groups

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challenged this Exclusion, and in API III, the court vacated the

permit and variance provisions, reinstated the 2008 Transfer-

Based Exclusion, and upheld other requirements regarding

emergency preparedness and containment added in 2015. On

rehearing, the court expanded the Transfer-Based Exclusion to

cover spent refinery catalysts. American Petroleum Institute v.

EPA (“API IV”), 883 F.3d 918 (D.C. Cir. 2018). Without

further notice and comment, EPA then published in 2018 the

Transfer-Based Exclusion as modified by this court, which

petitioners now challenge. Response to Vacatur of Certain

Provisions of the Definition of Solid Waste Rule, 83 Fed. Reg.

24,664 (May 30, 2018) (“2018 Rule”). The court is presented

with an unusual time warp in considering petitioners’

challenges to the Transfer-Based Exclusion given the passage

of 10 years during which EPA considered policy concerns and

the court addressed legal challenges.

B.

The court first must address the threshold objections raised

by EPA and joined in part by industry intervenors.

1. Standing. To satisfy “the irreducible constitutional

minimum of standing,” a party must establish (1) that it has

“suffered an injury in fact” that is both “concrete and

particularized” and “actual or imminent,” (2) that the injury is

“fairly trace[able] to the challenged action of the defendant,”

and (3) that the injury is “likely . . . [to] be redressed by a

favorable decision.” Lujan v. Defs. of Wildlife, 504 U.S. 555,

560–61 (1992) (first alteration in original). Contrary to EPA’s

objection, petitioners have established standing.

For an organization to bring suit on behalf of its members,

it must show (1) at least one of “its members would otherwise

have standing to sue in [his or her] own right,” (2) “the interests

it seeks to protect are germane to the organization’s purpose,”

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and (3) “neither the claim asserted nor the relief requested

requires the participation of individual members.” Defs. of

Wildlife v. Perciasepe, 714 F.3d 1317, 1323 (D.C. Cir. 2013).

Petitioners’ members live, commute, work, and recreate near

generators of hazardous materials that used the Transfer-Based

Exclusion before 2015 or that are likely to use it now. See

Feldman Decl. ¶¶ 3–4; Ford Decl. ¶ 3; Kilgour Decl. ¶¶ 5–7;

Rhodes Decl. ¶¶ 2–3. By parity of reasoning, just as the court

has recognized industry groups’ standing based on injury

caused by elimination of parts of the Exclusion, e.g., API III,

862 F.3d at 66, the Transfer-Based Exclusion deprives

petitioners’ members of Subtitle C protections that Congress

deemed necessary to address health or environmental risks.

Congress acknowledged the potential threat to human health

and the environment associated with hazardous wastes when it

required EPA to promulgate regulations governing their

storage, treatment, and disposal. 42 U.S.C. § 6903(5)(B). By

definition, the existing Subtitle C regulations are those EPA has

determined to be “necessary to protect human health and the

environment.” Id. §§ 6922(a), 6923(a), 6924(a). In their

declarations, petitioners’ members describe how their

reasonable fear of those same health or environmental risks

impairs their ability to feel safe and to enjoy the outdoors.

Several declarants state that they spend less time outdoors

exercising, gardening, walking their dogs, or fishing, or do not

enjoy these outdoor activities as much, due to their worries

about health and environmental harms. Cheung Decl. ¶¶ 10–

11; Feldman Decl. ¶¶ 6–9; Ford Decl. ¶¶ 6–8; Kilgour Decl.

¶ 10.

This court has concluded in similar circumstances that

environmental petitioners have standing to challenge

regulatory actions under RCRA. In Sierra Club v. EPA, 755

F.3d 968 (D.C. Cir. 2014), the court held that similar

declarations explaining “individuals’ particularized fears of

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serious health and environmental consequences” and “their

individual behavioral changes” resulting from the regulatory

change established injury in fact for Article III standing. Id. at

974–75. Similarly, in NRDC v. EPA, 755 F.3d 1010 (D.C. Cir.

2014), the court deemed sufficient “declarations of long-time

members who spend time near facilities which, as a result of

the [challenged] Exclusion, now burn comparable fuels” and

who “spend less time outdoors” due to their “concern[] about

the emissions’ effects on their health.” Id. at 1016–17. If a

challenged regulation causes individuals to reasonably fear

health or environmental harms and thus prevents them from

using or enjoying the aesthetic or recreational value of their

area, their injury suffices for Article III standing. See Friends

of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S.

167, 182–83 (2000); Ass’n of Battery Recyclers, Inc. v. EPA,

716 F.3d 667, 672–73 (D.C. Cir. 2013).

The seven years the Transfer-Based Exclusion was in

effect have not, as EPA suggests, rendered petitioners’

concerns speculative. During that time, only a small subset of

the industry facilities eligible for the Exclusion took advantage

of it. See API III, 862 F.3d at 66; compare 2008 Rule, 73 Fed.

Reg. at 64,668 (5,600 facilities eligible for 2008 Exclusion),

with 2015 Rule, 80 Fed. Reg. at 1,708 (65 facilities utilizing

Exclusion in April 2014). Industry intervenors acknowledge

that most states refrained from adopting the Transfer-Based

Exclusion “due to uncertainty over the long-term status of the

exclusion.” Intervenor-Respondents’ Br. 12–13. But facilities

now qualifying for the Exclusion are likely to “take advantage

of the Exclusion for which they lobbied” EPA, Sierra Club,

755 F.3d at 975, as indicated by industry intervenors’ claim of

standing on this basis. See Intervenor-Respondents’ Br. 3.

2. Waiver. Generally, “a party must initially present its

comments to the agency during the rulemaking in order for the

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court to consider the issue.” Tex Tin Corp. v. EPA, 935 F.2d

1321, 1323 (D.C. Cir. 1991). Its objections must be stated

“with sufficient specificity reasonably to alert the agency.”

Appalachian Power Co. v. EPA, 251 F.3d 1026, 1036 (D.C.

Cir. 2001) (quoting Tex Tin Corp., 935 F.2d at 1323). There is

no waiver here.

The waiver rule exists to “ensure an agency has had ‘an

opportunity to consider the matter, make its ruling, and state

the reasons for its action.’” Okla. Dep’t of Envtl. Quality v.

EPA, 740 F.3d 185, 192 (D.C. Cir. 2014) (quoting

Unemployment Comp. Comm’n of Alaska v. Aragon, 329 U.S.

143, 155 (1946)). EPA had an opportunity to and did address

petitioners’ contentions during the notice-and-comment period

for the 2008 Rule. Although EPA attempts to recast

petitioners’ current contentions as new, Sierra Club raised the

same concerns in 2007 as petitioners here about the relevance

of generators’ payment to recyclers and the insufficiency of the

Transfer Conditions. EPA’s Response to Comments shows it

was aware of these objections to the proposed rule. See NRDC,

755 F.3d at 1022–23.

Regarding the payment issue, EPA quoted Sierra Club’s

concerns, see Revisions to the Definition of Solid Waste,

Response to Comments Document, 88 (Oct. 1, 2008), and

explained that although it would not “mak[e] its finding on

discard solely based on the ‘value’ of the recycled material[,]

‘[v]alue’ is one aspect of the Agency’s findings and[]

contributes to the ultimate determination that materials

complying with the conditions and restrictions of this

regulation are not discarded,” id. at 91.

Regarding the sufficiency of the Transfer Conditions, EPA

noted commenters’ views that “before EPA can lawfully claim

that excluded materials are not discarded, the Agency would

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need to strengthen the conditions to protect human health and

the environment” and that “the minimal conditions in the

proposal are not sufficient to protect against discard.” Id. at 86.

EPA disagreed that the Transfer Conditions were inadequate,

stating that “[e]ach of the restrictions and/or conditions is

specifically linked to defining when the hazardous secondary

materials are not discarded.” Id. at 91–95.

3. Timeliness. RCRA provides that parties may seek

review in this court of EPA regulations “within ninety days

from the date of such promulgation . . . or after such date if

such petition for review is based solely on grounds arising after

such ninetieth day.” 42 U.S.C. § 6976(a)(1) (emphasis added).

The circumstances leading to the instant petition are a classic

example of the “after-arising grounds” exception. Petitioners

timely raised their challenges to the Transfer-Based Exclusions

of 2008 and 2018.

Petitioners filed the instant challenge to the 2008 Rule and

the Transfer-Based Exclusion reissued in 2018 on June 12,

2018 (within 90 days of the 2018 issuance but not within 90

days of the 2008 Rule). The after-arising grounds exception to

the 90-day time limit “encompasses the occurrence of an event

that ripens a claim.” Coal. for Responsible Regulation, Inc. v.

EPA, 684 F.3d 102, 129–30 (D.C. Cir. 2012). In January 2009,

Sierra Club petitioned for review of the 2008 Rule and sought

reconsideration by EPA. Within a month EPA indicated it

would consider withdrawing the rule and proposing a new one

to address Sierra Club’s concerns. The court granted the joint

motion of Sierra Club and EPA to hold the petition in abeyance.

EPA promulgated a new rule in 2015, at which point Sierra

Club dismissed its petition for review without prejudice to

challenges to future rules, in accordance with its 2010

settlement agreement with EPA. See API III, 862 F.3d at 56.

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Sierra Club’s challenge to the 2008 Rule would have been

unripe in view of EPA’s expressed intention to withdraw the

Transfer-Based Exclusion. The court so held with regard to

industry groups’ petition challenging the 2008 Rule. See Am.

Petroleum Inst. v. EPA (“API II”), 683 F.3d 382, 384, 387–88

(D.C. Cir. 2012). The court’s decisions in 2017 and 2018 and

EPA’s reissuance in 2018 of a Transfer-Based Exclusion had

the effect of re-ripening Sierra Club’s challenge. See Coal. for

Responsible Regulation, 684 F.3d at 131. The court’s “‘finding

of unripeness gives petitioners the needed assurance’ that they

will not be foreclosed from judicial review when the

appropriate time comes.” Grand Canyon Air Tour Coal. v.

FAA, 154 F.3d 455, 473 (D.C. Cir. 1998) (quoting Public

Citizen v. Nuclear Regulatory Comm’n, 940 F.2d 679, 683

(D.C. Cir. 1991)).

The court’s decision in Alaska v. Department of

Agriculture, 772 F.3d 899 (D.C. Cir. 2014), is to similar effect.

A 2001 Forest Service rule prohibited road construction on

national forest lands. The Forest Service repealed the rule in

2005, but a district court reinstated it in 2006. Id. at 900. This

court rejected the Forest Service’s timeliness objection,

holding that when the rule was reinstated in 2006 after its prior

repeal, a new right of action accrued under the reopening

doctrine “even though the regulation challenged is no

different.” Id. (citing Ohio v. EPA, 838 F.2d 1325, 1328 (D.C.

Cir. 1988)). The case for timeliness here is stronger than in

Alaska because the 2018 Transfer-Based Exclusion differs

from the 2008 version of the Transfer-Based Exclusion. For

example, the 2018 version includes emergency preparedness

and containment requirements first added in 2015 and also now

applies to spent refinery catalysts. See API III, 862 F.3d at 66–

67, 75; API IV, 883 F.3d at 923.

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4. Claim Preclusion. Under the doctrine of claim

preclusion, “a final judgment on the merits of an action

precludes the parties or their privies from relitigating issues

that were or could have been raised in that action.” Allen v.

McCurry, 449 U.S. 90, 94 (1980). “A subsequent lawsuit is

barred by claim preclusion ‘if there has been prior litigation

(1) involving the same claims or cause of action, (2) between

the same parties or their privies, and (3) there has been a final,

valid judgment on the merits, (4) by a court of competent

jurisdiction.’” NRDC v. EPA, 513 F.3d 257, 260 (D.C. Cir.

2008) (quoting Smalls v. United States, 471 F.3d 186, 192

(D.C. Cir. 2006)). Because the instant petition involves a

different Transfer-Based Exclusion, claim preclusion does not

bar petitioners’ contentions.

Petitioners do not raise the same claims as they raised or

could have raised in 2015 because the Verified Recycler

Exclusion and the 2018 Transfer-Based Exclusion are

different. See API III, 862 F.3d at 64–65, 75. A judgment “bars

any further claim based on the same ‘nucleus of facts,’” but

where an earlier action “could not have asserted claims based

on facts that were not yet in existence,” dismissal based on

claim preclusion is not allowed. Page v. United States, 729

F.2d 818, 820 (D.C. Cir. 1984); see also Drake v. FAA, 291

F.3d 59, 66 (D.C. Cir. 2002). Claim preclusion “does not

preclude a suit arising from a completely different event, no

matter how similar the defendant’s []conduct.” Russian Media

Grp., LLC v. Cable Am., Inc., 598 F.3d 302, 311 (7th Cir. 2010)

(citing Lawlor v. Nat’l Screen Serv. Corp., 349 U.S. 322, 328

(1955)). As petitioners note, the Transfer-Based Exclusion did

not exist in its current form when they challenged the 2015

Rule in API III & IV; therefore, the causes of action here and

there are not the same.

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5. Issue Preclusion. Under the doctrine of issue

preclusion, “once a court has decided an issue of fact or law

necessary to its judgment, that decision may preclude

relitigation of the issue in a suit on a different cause of action

involving a party to the first case.” Allen, 449 U.S. at 94. A

prior holding has preclusive effect if three requirements are

met: (1) “the same issue now being raised must have been

contested by the parties and submitted for judicial

determination in the prior case;” (2) “the issue must have been

actually and necessarily determined by a court of competent

jurisdiction in that prior case;” and (3) “preclusion in the

second case must not work a basic unfairness to the party

bound by the first determination.” Yamaha Corp. of Am. v.

United States, 961 F.2d 245, 254 (D.C. Cir. 1992). For an issue

to be actually and necessarily decided by a prior court, the

determination must be essential to the court’s judgment. Id.

That is not the case here.

Although petitioners raised the same issues in API III, the

court did not actually and necessarily decide them. In API III,

the court identified the issues before it:

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.

862 F.3d at 56. The court also was careful to identify that it

resolved only the issues raised by industry petitioners. The

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court agreed that EPA had not sufficiently justified its decision

to tighten the conditions to require administrative approval

through a permit or variance, id. at 65, and therefore vacated

the Verified Recycler Exclusion, id. at 71. As a result, the court

stated it “need not address Environmental Petitioners’

argument that the exclusion is too lenient.” Id. at 72.

Nothing in the opinions in API III or API IV indicates the

court rejected petitioners’ contention that generators discard

such materials by paying to get rid of them. This makes sense

because the court had no need to consider petitioners’

challenges once it decided to vacate the Exclusion based on

industry groups’ challenge. See Cement Kiln Recycling Coal.

v. EPA, 255 F.3d 855, 872 (D.C. Cir. 2001).

6. Stare Decisis. Stare decisis means that “the same issue

presented in a later case in the same court should lead to the

same result.” In re Grant, 635 F.3d 1227, 1232 (D.C. Cir.

2011) (emphasis omitted) (quoting LaShawn A. v. Barry, 87

F.3d 1389, 1393 (D.C. Cir. 1996)). “Stare decisis compels

adherence” only if the prior court reached a “factually

indistinguishable decision.” Brewster v. Comm’r, 607 F.2d

1369, 1373 (D.C. Cir. 1979). No court has expressly decided

whether hazardous materials that a generator pays a reclaimer

to accept are necessarily “discarded” under RCRA.

Petitioners’ challenges are not barred by stare decisis.

In API III, 862 F.3d 50, the court discussed the confluence

of transfer and low-value materials, but it did so only in the

context of the industry groups’ arbitrary-and-capricious

challenge to the 2015 Verified Recycler Exclusion. See id. at

67–71. The court held that, in the absence of supporting data,

EPA’s theory was insufficient to justify the administrative

approval requirements. The court did not address petitioners’

contention that payment from a generator to a recycler

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necessarily makes material “discarded” as a matter of statutory

interpretation. See generally id. No party has identified an

opinion that has decided that issue. The court in API III also

did not address petitioners’ contention that the Transfer

Conditions are insufficient to protect human health and the

environment because they are less stringent than Subtitle C

requirements. See generally id.

II.

On the merits, petitioners seek vacatur of the Transfer-

Based Exclusion, 40 C.F.R. § 261.4(a)(24)–(25), as contrary to

RCRA. The court may set aside the Transfer-Based Exclusion

if it is “arbitrary, capricious, an abuse of discretion, or

otherwise not in accordance with law,” 5 U.S.C. § 706(2)(A),

or “in excess of statutory jurisdiction, authority, or limitations,”

id. § 706(2)(C). See 42 U.S.C. §§ 6903(27), 6922–6924. In

reviewing an agency’s interpretation of a statute it administers,

the court applies the familiar two-step test of Chevron, U.S.A.,

Inc. v. NRDC, 467 U.S. 837 (1984): If Congress has “directly

spoken to the precise question at issue,” then the court must

“give effect to the unambiguously expressed intent of

Congress”; otherwise the court defers to the agency’s

reasonable interpretation of a statute it administers, id. at 842–

43.

In RCRA, Congress required EPA to regulate both

hazardous and non-hazardous “solid waste,” with more

stringent requirements applying to hazardous waste. Subtitle

C of RCRA establishes a “cradle-to-grave” regulatory structure

for handling hazardous solid waste. 42 U.S.C. §§ 6921–6939g;

Shell Oil Co. v. EPA, 950 F.2d 741, 745 (D.C. Cir. 1991). These

provisions apply only to materials first qualifying as “solid

waste,” and hence the statutory definition of “solid waste”

underlies the EPA regulations at issue here. RCRA defines

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“solid waste” as “any garbage, refuse, sludge from a waste

treatment plant, water supply treatment plant, or air pollution

control facility and other discarded material.” 42 U.S.C.

§ 6903(27) (emphasis added). If a material is “discarded,” it is

a solid waste and “falls within the jurisdiction of [] EPA.” Shell

Oil, 950 F.2d at 754. RCRA does not define “discarded

material” as used in the statutory definition of “solid waste,”

but by regulation EPA has clarified that the term includes

recycled material in certain circumstances, 40 C.F.R.

§ 261.2(a)(2), (c). In 2008, EPA interpreted the term

“discarded material” not to include hazardous secondary

materials that are transferred to a reclaimer if they meet

Transfer Conditions to ensure the materials are actually and

properly recycled. See 2008 Rule, 73 Fed. Reg. at 64,675.

Petitioners challenge the Transfer-Based Exclusion in the

2008 Rule and as issued in 2018 following this court’s remand,

40 C.F.R. §§ 261.2(a)(1), 261.4(a)(24), on the principal ground

that material a generator pays to get rid of is “discarded” under

the ordinary meaning of that term and thus constitutes “solid

waste” that EPA lacks authority to exclude from Subtitle C

requirements. See Pet’rs’ Br. 22. In their view, any ambiguity

about the meaning of “discard” does not extend to materials

generators pay to get rid of, which “fall so easily into the

ordinary meaning of discarded.” Id. Petitioners consider

EPA’s focus on the Transfer Conditions to prevent secondary

spills and leaks during transport to be irrelevant to the question

of “discard,” noting EPA’s acknowledgement that generators

“often ship these materials . . . to avoid the costs of disposing

of the material” and “typically pay the reclamation facility to

accept [them].” Id. at 30 (alterations in original) (quoting 2015

Rule, 80 Fed. Reg. at 1707).

Petitioners do not contend that either transfer or

reclamation necessarily constitutes “discard.” They also do not

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contend that hazardous secondary materials must always be

treated as hazardous waste under RCRA. Instead, they contend

that a generator’s payment to a reclaimer to accept such

material necessarily indicates the material has negative value

to the generator and the transfer is a means of getting rid of, or

“discarding,” the material. See id. at 31–32.

Congress has not directly answered the question whether

“discarded material” under RCRA includes hazardous

secondary material that a generator has paid a reclaimer to

accept. The parties do not point to anything in the statutory

text, structure, or legislative history of RCRA that clearly

answers whether “discarded” includes or excludes materials

that a generator pays to transfer to a reclamation facility and

that meet the Transfer Conditions. But this court’s precedent

effectively forecloses petitioners’ plain-meaning contention

that payment is determinative of “discard.”

In American Mining Congress v. EPA (“AMC I”), 824

F.2d 1177 (D.C. Cir. 1987), the court agreed with industry

groups challenging EPA’s authority under RCRA to regulate

materials destined for immediate recycling or reuse within an

ongoing production process. The court concluded these

materials were not “discarded” because they “ha[d] not yet

become part of the waste disposal problem.” Id. at 1186. The

court recognized that the “ordinary, plain-English meaning of

the word ‘discarded’ is ‘disposed of,’ ‘thrown away,’ or

‘abandoned.’” Id. at 1184. Notably, the court declined to

“attribute decisive significance to the ordinary meaning of [the]

statutory language” because the court viewed EPA’s expansive

plain-meaning interpretation not to comport with Congress’s

objectives. Id. In particular, the court was of the opinion that

Congress’s likely intent was that the term “discarded” be read

consistent with “everyday parlance” rather than “in its broadest

sense.” Id. at 1187. That is, in RCRA Congress sought to

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address the “ever-increasing problem of solid waste disposal

by encouraging the search for and use of alternatives to existing

methods of disposal (including recycling).” Id. at 1185–86

(emphasis omitted). Critically for the instant case, the court

held that EPA lacked authority under Subtitle C to regulate

materials “destined for beneficial reuse or recycling in a

continuous process by the generating industry itself.” Id.

In response to industry and environmental challenges, the

court has since clarified how AMC I is properly understood,

explaining that “discarded” is, in some circumstances,

ambiguous with respect to EPA’s regulatory authority. See

Am. Petroleum Inst. v. EPA (“API I”), 906 F.2d 729, 740 (D.C.

Cir. 1990); Am. Mining Cong. v. EPA (“AMC II”), 907 F.2d

1179, 1186 (D.C. Cir. 1990); cf. Ass’n of Battery Recyclers,

Inc. v. EPA, 208 F.3d 1047, 1056 (D.C. Cir. 2000). In API I,

906 F.2d 729, the court acknowledged the ambiguity about

EPA’s authority to regulate K061 slag, which is a “sludge” and

therefore a “solid waste” when it leaves the electric furnace that

generated it. Id. at 740. There, EPA had promulgated a rule

declining to regulate K061 slag once it reached a metal

reclamation facility because it was no longer “discarded.” Id.

The court held EPA had overread AMC I and vacated the rule.

An “equally plausible reading” of RCRA’s definition of “solid

waste,” the court stated, “is that K061 remains ‘discarded’

throughout the ‘waste treatment’ process dictated by the

agency.” Id. Therefore EPA’s contrary interpretation would

be inconsistent with “RCRA’s acknowledged objective to

‘establish[] a cradle-to-grave regulatory structure’ for the safe

handling of hazardous wastes.” Id. at 741 (alteration in

original) (quoting United Techs. Corp. v. EPA, 821 F.2d 714,

716 (D.C. Cir. 1987)).

In Shell Oil, 950 F.2d 741, the court confirmed that AMC

I does not affect “EPA’s ability to regulate hazardous materials

18

after they have been discarded.” Id. at 756. It upheld EPA’s

interpretation that “[i]f a hazardous material has been

discarded, it becomes subject to Subtitle C regulation even if it

is sent to a resource recovery facility.” Id.

But in Association of Battery Recyclers, 208 F.3d 1047,

the court rejected EPA’s interpretation that materials are

“discarded” if they are not immediately reused where they are

destined for reclamation within an ongoing production process.

Id. at 1052. The court held EPA had “misread[] passages [in

AMC I] to mean that it may treat secondary materials as

‘discarded’ whenever they leave the production process and are

stored for any length of time.” Id. The court explained:

“Congress clearly and unambiguously expressed its intent that

‘solid waste’ . . . be limited to materials that are ‘discarded’ by

virtue of being disposed of, abandoned, or thrown away,” id. at

1051 (quoting AMC I, 824 F.2d at 1193), and “material stored

for recycling is plainly not in that category,” id. at 1053. The

court reiterated AMC I’s conclusion that “secondary materials

which are treated prior to recycling cannot be considered

discarded if they are ‘reused within an ongoing industrial

process.’” Id. at 1054 (quoting AMC I, 824 F.2d at 1182)).

Similarly, in Safe Food & Fertilizer v. EPA, 350 F.3d 1263

(D.C. Cir. 2003), the court rejected environmental petitioners’

contention, relying on AMC I, that transfer to another firm or

industry for recycling necessarily means materials are

“discarded.” Id. at 1268. As the court explained, “we have

never said that RCRA compels the conclusion that material

destined for recycling in another industry is necessarily

‘discarded.’” Id. The court pointed out that because “firms

have ample reasons to avoid complete vertical integration,

firm-to-firm transfers are hardly good indicia of a ‘discard’ as

the term is ordinarily understood.” Id. (citation omitted). The

court accepted EPA’s exclusion of certain materials from

19

Subtitle C regulation if they met certain conditions under which

“market participants treat the exempted materials more like

valuable products than like negatively-valued wastes,

managing them in ways inconsistent with discard.” Id. at 1269.

Finally, in API III, 862 F.3d 50, the court rejected EPA’s

theory that additional stringency in the 2015 Verified Recycler

Exclusion requiring a permit or variance was justified because

the confluence of transfer and low-value materials creates

perverse incentives for facilities to over-accumulate hazardous

secondary materials without recycling them, resulting in

“discard.” Id. at 68–69. Because EPA “fail[ed] to provide

sufficient linkage between theory, reality, and the result

reached,” as required under State Farm, id. at 68, EPA lacked

a sufficient basis to issue a blanket rule finding “discard” and

applying Subtitle C when the recycled material is transferred

and of low value. Id. at 65.

The court’s precedent thus leaves no room to conclude that

Congress directly resolved that “discarded material” must

include hazardous secondary materials that a generator has paid

a reclaimer to accept. Under the second part of the Chevron

test, 467 U.S. at 843, the question is whether EPA’s

interpretation is “based on a permissible construction of the

statute.” It need not be “the only permissible construction, nor

‘the reading the court would have reached if the question

initially had arisen in a judicial proceeding.’” Northpoint

Techn., Ltd. v. FCC, 414 F.3d 61, 69 (D.C. Cir. 2005) (quoting

Chevron, 467 U.S. at 843 n.11). Deference is due to the

agency’s permissible interpretation “if the agency has offered

a reasoned explanation for why it chose that interpretation.”

Vill. of Barrington, Ill. v. Surface Transp. Bd., 636 F.3d 650,

660 (D.C. Cir. 2011).

20

Petitioners contend EPA is not entitled to Chevron

deference because it did not give a reasoned explanation for its

interpretation of “discarded.” We disagree.

EPA stated in the Preamble to the 2008 Rule that its

interpretation of “discarded” “reflects the fundamental logic of

the RCRA statute” and accords with this court’s “plain

language definition of discard.” 2008 Rule, 73 Fed. Reg. at

64,675–76. Although Congress’s “overriding concern” in

enacting RCRA was to ensure proper waste management, H.R.

REP. NO. 94-1491, at 3 (1976), it also aimed to encourage

proper recycling and recovery of hazardous materials as an

alternative to disposal, see 42 U.S.C. § 6902(a)(6). The House

Committee’s Report concludes that properly conducted reuse,

recycling, and reclamation are inconsistent with “discard,”

stating that “[m]uch industrial and agricultural waste is

reclaimed or put to new use and is therefore not a part of the

discarded materials disposal problem the committee

addresses.” H.R. REP. NO. 94-1491, at 2. In promulgating the

2008 Rule, EPA acknowledged that Congress intended certain

hazardous materials destined for recycling to be regulated.

Excluding all hazardous secondary materials destined for

recycling, EPA stated, “seems inconsistent with the mandate to

track hazardous wastes and control them from ‘cradle to

grave.’” 2008 Rule, 73 Fed. Reg. at 64,671. This court has

embraced the view that if materials never become part of the

waste disposal problem, then they are not “discarded” and need

not be regulated under Subtitle C. E.g., AMC I, 824 F.2d at

1179, 1186.

In these circumstances, EPA has reasonably equated

legitimate recycling with lack of “discard.” If the Transfer

Conditions and Legitimacy Factors adequately ensure

legitimate recycling, as EPA has determined, see 2018 Rule, 83

Fed. Reg. at 24,665; 2008 Rule, 73 Fed. Reg. at 64,677–79,

21

then materials conforming to them are not “discarded.” The

fact that generators pay reclaimers to accept certain materials

may indicate the material has negative value and the generator

is “getting rid of” it, as petitioners contend. On the other hand,

EPA explained that payment may indicate only that a generator

seeks alternatives to costly Subtitle C requirements and is

willing to pay anything less than the compliance costs in order

to recycle materials. See 2008 Rule, 73 Fed. Reg. at 64,675,

64,677, 64,707. EPA relied on its market forces study to

conclude that reclaimers may charge such a fee not because

they must, but rather because they can as a result of a lack of

competition in certain recycling markets. Id. at 64,707. EPA

also explained that generators may have to pay reclaimers to

offset the reclaimers’ upfront capital costs to develop and

implement the necessary recycling infrastructure and market.

Id. Moreover, EPA’s Transfer-Based Exclusion does not

ignore the potential relevance of payment as an indicator of

“discard.” Instead these economic issues are part of its

Legitimacy Factors analysis, see id. at 64,706–07, which

require that hazardous secondary material “provide[] a useful

contribution to the recycling process,” that the recycling

process “produce a valuable product or intermediate,” and that

the generator and recycler manage the material “as a valuable

commodity when it is under their control.” 40 C.F.R. § 260.43.

Consequently, EPA’s decision in adopting the Transfer-

Based Exclusion not to make payment from a generator to a

reclaimer dispositive in assessing whether material is

“discarded” is a permissible interpretation of “discard.”

III.

Agency action is arbitrary and capricious if it “has relied

on factors which Congress has not intended it to consider,

entirely failed to consider an important aspect of the problem,

22

offered an explanation for its decision that runs counter to the

evidence before the agency, or is so implausible that it could

not be ascribed to a difference in view or the product of agency

expertise.” Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto.

Ins. Co., 463 U.S. 29, 43 (1983). An agency must “articulate a

satisfactory explanation for its action including a rational

connection between the facts found and the choice made.” Id.

Agency action is also arbitrary and capricious if it “offered

insufficient reasons for treating similar situations differently.”

Transactive Corp. v. United States, 91 F.3d 232, 237 (D.C. Cir.

1996).

Petitioners contend the Transfer-Based Exclusion is

arbitrary and capricious because EPA failed to provide a

reasoned basis for treating the same hazardous materials

differently and to account for its prior findings that the Transfer

Conditions are inadequate. Given EPA’s reasoned explanation

of the Transfer-Based Exclusion, we conclude these

contentions are unpersuasive.

A.

EPA has sufficiently explained its different treatment of

similar materials. Hazardous secondary materials destined for

legitimate recycling are dissimilar in one key respect.

Application of RCRA’s Subtitle C cradle-to-grave regulatory

scheme depends on whether materials first qualify as “solid

waste” because they are “discarded.” See 42 U.S.C.

§ 6903(27). Materials that are not “discarded” are not subject

to Subtitle C. Shell Oil, 950 F.2d at 754. Subtitle C regulations

aim to ensure that hazardous waste, once “discarded,” is

transported, treated, and stored safely. See 42 U.S.C. §§ 6921–

6939g. These regulations focus on waste that has made its way

to a landfill, an incinerator, or a similar waste storage or

treatment facility, in order to ensure that such waste does not

contaminate local water supplies, generate toxic gases and

23

cause air pollution, combust, etc. See id. § 6901(b). The

Transfer Conditions, by contrast, seek to ensure that hazardous

secondary materials do not end up in a landfill, incinerator, or

similar facility but instead remain in a continuous stream or

flow of production within industry processes. See AMC I, 824

F.2d at 1190. They address potential risks by requiring the

third-party reclaimers that accept such materials to handle them

properly and safely and not to discard them. See 2008 Rule, 73

Fed. Reg. at 64,673.

EPA’s adoption of the Transfer-Based Exclusion and its

conditions rests on the premise that materials sent to a

reclamation facility to be stripped and reused or recycled are

not part of the waste disposal problem targeted by Subtitle C

regulations. Although “[h]azardous secondary materials stored

or transported prior to recycling have the potential to present

the same types of threats to human health and the environment

as hazardous wastes stored or transported prior to disposal,” id.

at 64,671, EPA explained that “recycling of these materials

often closely resembles industrial manufacturing rather than

waste management,” id. at 64,670. EPA also acknowledged

that when hazardous secondary materials have negative rather

than positive value (e.g., raw materials), reclaimers may

respond differently than traditional manufacturers “to

economic forces and incentives,” causing them to

“accumulat[e] more inputs.” Id. at 64,678.

Responding to that concern, EPA adopted Transfer

Conditions and Legitimacy Factors to ensure that, under the

Transfer-Based Exclusion, materials may be sent only to

reclaimers that have economic incentives to responsibly

manage and recycle them. See id. at 64,671; 40 C.F.R.

§ 261.4(a)(24)(iv). Specifically, EPA addressed possible

points of “discard,” whether unintended or surreptitious, during

the transfer process. Although materials falling under the

24

Transfer-Based Exclusion need not comply with RCRA’s

prescriptive containment requirements, see 40 C.F.R. § 262.17,

the Transfer Conditions prohibit intermediate facilities from

holding any material in storage for longer than 10 days, id.

§ 261.4(a)(24)(ii), and therefore prohibit reclaimers from

abandoning materials in warehouses or other facilities, see

2008 Rule, 73 Fed. Reg. at 64,673. Generators, intermediate

facilities, and reclaimers are required to maintain records of

shipments and receipts of hazardous secondary materials, 40

C.F.R. § 261.4(a)(24)(v)(D)–(E), (vi)(A)–(C), in order to

enable EPA and the states to determine that materials “arrived

at the intended facility and were not discarded in transit,” 2008

Rule, 73 Fed. Reg. at 64,679. The Transfer Conditions also

require a reclamation facility to reclaim at least 75% of

hazardous secondary materials it obtains over a calendar year,

see 40 C.F.R. § 261.4(a)(24)(i); id. § 261.1(c)(8), as a means of

ensuring reclaimers fulfill their role of facilitating resource

conservation and preventing hazardous materials from entering

landfills or other facilities, see 2008 Rule, 73 Fed. Reg. at

64,685. The reclaimer must manage the material in a manner

at least as protective as it handles analogous raw material. 40

C.F.R. § 261.4(a)(24)(vi)(D). Any residual materials

generated by reclamation operations must be regulated under

RCRA, including under Subtitle C if they are “discarded,” id.

§ 261.4(a)(24)(vi)(E), so reclamation does not become a means

of “discard” of unwanted material without complying with

Subtitle C regulations, see 2008 Rule, 73 Fed. Reg. at 64,691.

Enforcement mechanisms can also include imposition of

Subtitle C requirements upon noncompliance with these

conditions. See id. at 64,690, 64,699–700.

The Transfer Conditions thereby advance RCRA’s

objectives by encouraging properly conducted recycling and

promoting preservation of limited material resources and space

for storing “solid waste.” Absent a statutory requirement that

25

these conditions be identical to Subtitle C requirements, EPA’s

response was not arbitrary and capricious.

B.

EPA has also adequately addressed why it considers the

Transfer-Based Exclusion’s conditions sufficient when it had

expressed concern they might not be implemented as expected.

Pet’rs’ Br. 44 (citing 2015 Rule, 80 Fed. Reg. at 1707–08).

Although EPA had previously questioned the adequacy of

the Transfer Conditions, the circumstances of recycling by the

time EPA issued the Transfer-Based Exclusion in 2008 were

different than the recycling landscape dating back to the 1980s

that EPA’s environmental problems study had examined. See

2015 Rule, 80 Fed. Reg. at 1708–09. Industry pointed to

evidence of improved recycling management and controls over

time in response to the rigor of enforcement efforts and

industry’s interest in avoiding costly Subtitle C requirements

by properly recycling or reusing materials. See 2008 Rule, 73

Fed. Reg. at 64,673.

Agreeing the environmental problems highlighted in the

study “demonstrate[d] the need” for “restrictions and

conditions for the exclusions,” id. at 64,722–23, EPA proposed

requirements for financial assurance, reasonable efforts,

shipping documentation, hazardous secondary materials

management, legitimate recycling, and speculative

accumulation that became part of the Transfer Conditions.

EPA’s study of successful recycling had shown that

“generators who could otherwise bear a large liability from

poorly-managed recycling at other companies have addressed

[these] issue[s] by carefully examining the recyclers to which

they send their hazardous secondary materials, such as through

audits to ensure that they are technically and financially

capable of performing the recycling.” 2015 Rule, 80 Fed. Reg.

26

at 1699. Based on best practices many industry facilities were

already implementing with success in preventing discard and

curbing environmental and health risks, 2008 Rule, 73 Fed.

Reg. at 64,673–74, 64,683, EPA adopted restrictions and

conditions that it determined were “sufficient to ensure safe

recycling activities,” id. at 64,722.

Accordingly, we deny the petition. Under this court’s

precedent EPA did not exceed its authority under RCRA in

adopting the Transfer-Based Exclusion because hazardous

secondary materials are not necessarily “discarded” each time

they are transferred from a generator to a reclaimer along with

payment. EPA has also adequately explained why such

materials may be subject to the Transfer Conditions rather than

full Subtitle C requirements.