On July 7, 2017 the U.S. Court of Appeals for the District of Columbia struck down provisions of the the EPA’s 2015 update to the Definition of Solid Waste (“DSW”). In 2015, EPA enacted a final rule governing when certain hazardous materials qualify as “discarded”, thus subjecting the materials to EPA’s regulatory authority. In this ruling, the court addressed industry concerns about Legitimacy Criteria of 40 CFR 260.43(a)(1)-(4), and the Verified Recycler Exclusion.
Legitimacy Criteria:
The court struck down the fourth part of a 4 part legitimacy test. The referenced legitimacy test, under 40 CFR 260.43(a)(1)-(4), meant that a generator must prevail on the following:
- The hazardous secondary material must “provide a useful contribution to the recycling process.”
- The “recycling process must produce a valuable product or intermediate.”
- The persons controlling the secondary material must “manage the hazardous secondary material as a valuable commodity.”
- The “product of the recycling process must be comparable to a legitimate product or intermediate.”
Factors 1 and 3 address the process, Factors 2 and 4 the product.
Industry petitioners took issue with Factors 3 and 4. On Factor 3, petitioners argued against EPA regulation of how materials are stored based on a prior ruling of the court. However, the court agreed with EPA on this point and held that
“EPA can impose a containment requirement so long as it is such that an inference of “sham” or illegitimacy would logically flow from a firm’s non-compliance. And given EPA’s explanation that a material may be “contained” if it is simply piled on the ground, [the Final Rule] meets specific requirements that petitioners do not challenge as unreasonable…”
Factor 4 was more of a challenge for the court. In considering the details of this rule, industry made many arguments against the rule. The court sided with EPA on many of these arguments, but the court ultimately rejected the rule because, when considered with the rest of the rules, it meant that failure to follow EPA prescribed procedures would mean that a non-waste would become a waste, stating:
“But paperwork is not alchemy; a legitimate product will not morph into waste if its producer fails to file a form (or loses a copy two years later). EPA insists that it can impose burden-shifting rules even in drawing the line between what it may and may not regulate.”
and ultimately, the court states…
“For these reasons Factor 4 is unreasonable as a requirement applied, through 40 C.F.R. § 261.2(g), to all hazardous secondary material recycling.”
Verified Recycler Exclusion
The 2015 Final Rule amended EPA’s stand on “reclamation”. EPA defines reclamation as a type of recycling that occurs when secondary materials are “processed to recover a usable product, or . . .regenerated.” The other modes of recycling are “use” or “reuse” which occur when materials are used as effective substitutes for commercial products or when they are employed as ingredients in industrial processes to make products.
In its 2015 final rule, EPA adopted two general exclusions that depend on whether the recycling is performed by a third-party. The so-called “Generator-Controlled Exclusion” governs reclamation “under the control of the generator.” [§ 261.4(a)(23)]. That exclusion was not challenged in the current court case. The second exclusion, called the “Verified Recycler Exclusion” replaced a prior rule known as the “Transfer-Based Exclusion”. With the earlier Transfer Based Exclusion, generators were required to evaluate prospective reclamation company by asking and evaluating the following 5 questions:
- is the reclamation company employing a legitimate recycling process;
- had the reclamation company notified regulators of its operations and its financial stability;
- has the reclamation company been the subject of recent enforcement actions;
- does the reclamation company have adequate skill and equipment to perform the recycling safely; and
- does the reclamation company have adequate processes for disposing of any residual wastes generated during the recycling.
Once the generator satisfactorily evaluated these questions, they could proceed with the reclamation of the hazardous secondary material. However, the new Verified Recycler Exclusion rule added other burdens, including registration with EPA. Opponents to the new rule argued that the EPA had no basis for making the change. Ultimately, the court agreed. The court did rule that two parts of the new requirements could stand – a requirement for emergency preparedness planning and a requirement for containment. However, the rest of the rule was thrown out by the court, meaning the rule would defer back to the Transfer-Based Exclusion.
Conclusion:
The court summarized its ruling with the following statement:
“The Final Rule is upheld in part and vacated in part as consistent with this opinion. Briefly put: Factor 3 is upheld; Factor 4 is vacated insofar as it applies to all hazardous secondary materials via § 261.2(g); the Verified Recycler Exclusion is vacated except for its emergency preparedness provisions and its expanded containment requirement; and the Transfer-Based Exclusion is reinstated. As a consequence of the latter, the removal of that exclusion’s bar on spent catalysts is vacated, subject, as we noted above, to such arguments as parties may raise supporting a different outcome.
Altiras offers various recycling services in compliance with EPA and state regulations.