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07/31/87 American Mining Congress v. United States

July 31, 1987







Before: STARR and MIKVA, Circuit Judges, and McGOWAN, Senior Circuit Judge.


Nos. 85-1206, 85-1208 1987.CDC.334

Date Decided: July 31, 1987, Petitioner for Review of Orders of the U.S. Environmental Protection Agency.


STARR, Circuit Judge: These consolidated cases arise out of EPA's regulation of hazardous wastes under the Resource Conservation and Recovery Act of 1976 , as amended, 42 U.S.C. §§ 6901-6933 (1982 & Supp. III 1985). Petitioners, trade associations representing mining and oil refining interests, challenge regulations promulgated by EPA that amend the definition of "solid waste" to establish and define the agency's authority to regulate secondary materials reused within an industry's ongoing production process. In plain English, petitioners maintain that EPA has exceeded its regulatory authority in seeking to bring materials that are not discarded or otherwise disposed or within the compass of "waste." I

RCRA is a comprehensive environmental statute under which EPA is granted authority to regulate solid and hazardous wastes. RCRA was enacted in 1976, and amended in 1978, 1980, and 1984. See The Quiet Communities Act of 1978, Pub. L. No. 95-609, 92 Stat. 3081; The Solid Waste Disposal Act Amendment of 1980, Pub. L. No. 96-482, 94 Stat. 2334; Hazardous and Solid Waste Amendments of 1984, Pub. L. No. 98-616, 98 Stat. 3221.

Congress' "overriding concern" in enacting RCRA was to establish the framework for a national system to insure the safe management of hazardous waste. H.R. Rep. No. 1491, 94th Cong., 2d Sess. 3 (1976). In passing RCRA, Congress expressed concern over the "rising tide" in scrap, discarded, and waste materials. 42 U.S.C. § 6901 (a)(2). As the statute itself puts it, Congress was concerned with the need "to reduce the amount of waste and unsalvageable materials and to provide for proper and economical solid waste disposal practices." Id. § 6901 (a)(4). Congress thus crafted RCRA "to promote the protection of health and the environment and to conserve valuable material and energy resources." Id. § 6902.

RCRA includes two major parts: one deals with non-hazardous solid waste management and the other with hazardous waste management. Under the latter, EPA is directed to promulgate regulations establishing a comprehensive management system. Id. § 6921. EPA's authority, however, extends only to the regulation of "hazardous waste." Because "hazardous waste" is defined as a subset of "solid waste," id § 6903(5), the scope of EPA's jurisdiction is limited to those materials that constitute "solid waste." That pivotal term is defined by RCRA as

any garbage, refuse, sludge from a waste treatment plant, water supply treatment plant, or air pollution control facility and other discarded material, including solid, liquid, semisolid or contained gaseous material, resulting from industrial, commercial, mining, and agricultural operations, and from community activities . . .

42 U.S.C. § 6903(27) (emphasis added). As will become evident, this case turns on the the meaning of the phrase, "and other discarded material," contained in the statute's definitional provisions.

EPA's interpretation of "solid waste" has evolved over time. On May 19, 1980, EPA issued interim regulations defining "solid waste" to include a material that is "a manufacturing or mining by-product and sometimes is discarded." 45 Fed. Reg. 33,119 (1980). This definition contained two terms needing elucidation: "by-product" and "sometimes discarded." In its definition of "a manufacturing or mining by-product," EPA expressly excluded "an intermediate manufacturing or mining product which results from one of the steps in a manufacturing or mining process and is typically processed through the next step of the process within a short time." Id.

In 1983, the agency proposed narrowing amendments to the 1980 interim rule. 48 Fed. Reg. 14,472 (1983). The agency showed especial concern over recycling activities. In the preamble to the amendments, the agency observed that, in light of the interlocking statutory provisions and RCRA's legislative history, it was clear that "Congress indeed intended that materials being recycled or held for recycling can be wastes, and if hazardous, hazardous wastes." Id. at 14,473. The agency also asserted that "not only can materials destined for recycling or being recycled be solid and hazardous wastes, but the Agency clearly has the authority to regulate recycling activities as hazardous management." Id.

While asserting its interest in recycling activities (and materials being held for recycling), EPA's discussion left unclear whether the agency in fact believed its jurisdiction extended to materials recycled in an industry's on-going production processes, or only to materials disposed of and recycled as part of a waste management program. In its preamble, EPA stated that "the revised definition of solid waste sets out the Agency's view of its jurisdiction over the recycling of hazardous waste . . . Proposed section 261.6 then contains exemptions from regulations for those hazardous waste recycling activities that we do not think require regulation." Id. at 14,476. The amended regulatory description of "solid waste" itself, then, did not include materials "used or reused as effective substitutes for raw materials in processes using raw materials as principal feedstocks." Id. at 14,508. EPA explained the exclusion as follows:

[These] materials are being used essentially as raw materials and so ordinarily are not appropriate candidates for regulatory control. Moreover, when these materials are used to manufacture new products, the processes generally are normal manufacturing operations . . . The Agency is reluctant to read the statute as regulating actual manufacturing processes.

Id. at 14,488. This, then, seemed clear: EPA was drawing a line between discarding and ultimate recycling, on the one hand, and a continuous or ongoing manufacturing process with one-site "recycling," on the other. If the activity fell within the latter category, then the materials were not deemed to be "discarded."

After receiving extensive comments, EPA issued its final rule on January 4, 1985. 50 Fed. Reg. 614 (1985). Under the final rule, materials are considered "solid waste" if they are abandoned by being disposed of, burned, or incinerated; or stored, treated, or accumulated before or in lieu of those activities. In addition, certain recycling activities fall within EPA's definition. EPA determines whether a material is a RCRA solid waste when it is recycled by examining both the material or substance itself and the recycling of "secondary materials" (spent materials, sludges, by-products, commercial chemical products, and scrap metal). These "secondary materials" constitute "solid waste" when they are disposed of; burned for energy recovery or used to produce a fuel; reclaimed; or accumulated speculatively. Id. at 618-19, 664. *fn1 Under the final rule, if a material constitutes "solid waste," it is subject to RCRA regulation unless it is directly reused as an ingredient or as an effective substitute for a commercial product, or is returned as a raw material substitute to its original manufacturing process. *fn2 Id. In the jargon of the trade, the latter category is known as the "closed-loop" exception. In either case, the material must not first be "reclaimed" (processed to recover a usable product or regenerated). Id. EPA exempts these activities "because they are like ordinary usage of commercial products." Id. at 619. II

Petitioners, American Mining Congress and American Petroleum Institute , challenge the scope of EPA's final rule. Relying upon the statutory definition of "solid waste," petitioners contend that EPA's authority under RCRA is limited to controlling materials that are discarded or intended for discard. They argue that EPA's reuse and recycle rules, as applied to in-process secondary materials, regulate materials that have not been discarded, and therefore exceed EPA's jurisdiction. *fn3

To understand petitioners' claims, a passing familiarity with the nature of their industrial processes is required.

Petroleum. Petroleum refineries vary greatly both in respect of their products and their processes. Most of their products, however, are complex mixtures of hydrocarbons produced through a number of interdependent and sometimes repetitious processing steps. In general, the refining process starts by "distilling" crude oil into various hydrocarbon streams or "fractions." The "fractions" are then subjected to a number of processing steps. Various hydrocarbon materials derived from virtually all stages of processing are combined or blended in order to produce products such as gasoline, fuel oil, and lubricating oils. Any hydrocarbons that are not usable in a particular form or state are returned to an appropriate stage in the refining process so they can eventually be used. Likewise, the hydrocarbons and materials which escape from a refinery's production vessels are gathered and, by a complex retrieval system, returned to appropriate parts of the refining process. Under EPA's final rule, this reuse and recycling of materials is subject to regulation under RCRA.

Mining. In the mining industry, primary metals production involves the extraction of fractions of a percent of a metal from a complex mineralogical matrix (i.e., the natural material in which minerals are embedded). Extractive metallurgy proceeds incrementally. Rome was not built in a day, and all metal cannot be extracted in one fell swoop. In consequence, materials are reprocessed in order to remove as much of the pure metal as possible from the natural ore. Under EPA's final rule, this reprocessed ore and the metal derived from it constitute "solid waste." What is more, valuable metal-bearing and mineral-bearing dusts are often released in processing and particular metal. The mining facility typically recaptures, recycles, and reuses these dusts, frequently in production processes different from the one from which the dusts were originally emitted. The challenged regulations encompass this reprocessing, to the mining industry's dismay.

Against this factual backdrop, we now examine the legal issues presented by petitioners' challenge. III

We observe at the outset of our inquiry that EPA's interpretation of the scope of its authority under RCRA has been unclear and unsteady. As previously recounted, EPA has shifted from its vague "sometimes discarded" approach of 1980 to a proposed exclusion from regulation of all materials used or reused as effective substitutes for raw materials in 1983, and finally, to a very narrow exclusion of essentially only materials processed within the meaning of the "closed-loop" exception under the final rule. We emphasize, therefore, that we are confronted with neither a consistent nor a long-standing agency interpretation. Under settled doctrine, "[a]n agency interpretation of a relevant provision which conflicts with the agency's earlier interpretation is 'entitled to considerably less deference' than a consistently held agency view." I.N.S. v. Cardoza-Fonseca, 480 U.S. 421, 107 S. Ct. 1207, 1221 n.30, 94 L. Ed. 2d 434 (1987) (quoting Watt v. Alaska, 451 U.S. 259, 273, 68 L. Ed. 2d 80, 101 S. Ct. 1673 (1981)). See also FEC v. Democratic Senatorial Campaign Committee, 454 U.S. 27, 37, 70 L. Ed. 2d 23, 102 S. Ct. 38 (1981); Adamo Wrecking Co. v. United States, 434 U.S. 275, 287 n.5, 54 L. Ed. 2d 538, 98 S. Ct. 566 (1978); Skidmore v. Swift & Co., 323 U.S. 134, 140, 89 L. Ed. 124, 65 S. Ct. 161 (1944); National Fuel Gas Supply Corp. v. FERC, 258 U.S. App. D.C. 374, 811 F.2d 1563 (D.C. Cir. 1987).


Because the issue is one of statutory interpretation, the principles enunciated in Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984), and its progeny guide our inquiry. *fn4 In Chevron, a unanimous Supreme Court laid out a now familiar, general framework for analyzing agency interpretations of statutes. First, the reviewing court is to consider whether Congress "has directly spoken to the precise question at issue." Id. at 842. This inquiry focuses first on the language and structure of the statute itself. If the answer is not yielded by the statute, then the court is to look to secondary indicia of intent, such as the measure's legislative history. As the Chevron Court emphatically declared: "If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress." Id. at 842-43.

In cases where Congress' intent is not clear, the Supreme Court set forth a second analytical step: "If the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute . . . In such a case, a court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of an agency." Id. at 843-44.

We thus begin our inquiry with the first step of Chevron's analysis: did Congress clearly intent to limit EPA's regulatory jurisdiction to materials disposed of or abandoned, as opposed to materials reused within an ongoing production process? Before directly addressing this question, we should not fail to observe that in its very recent decision in Cardoza-Fonseca the Supreme Court reaffirmed that Chevron's first step is by no means an empty formality, but is to the contrary a vital part of the judicial inquiry. Because of its importance in statutory-analysis cases, we pause briefly to examine that latest descendant in the Chevron lineage.

In that case, the Court addressed the question whether the standard of proof under section 208(a) of the Refugee Act, 8 U.S.C. § 1158(a), which authorizes the Attorney General, in his discretion, to grant asylum to an alien who is unable or unwilling to return to his or her home country "because of persecution or a well-founded fear of persecution" is coextensive with the standard employed under section 243(h) of the Immigration and Nationality Act, 8 U.S.C. § 1253(h), which requires the Attorney General to withhold deportation of an alien who demonstrates that is or her "life or freedom would be threatened" if he or she was deported. Using "traditional tools of statutory construction," the Court concluded that "Congress did not intent the two standards to be identical." 107 S. Ct. at 1221. In its analysis of the deference due the agency's interpretation, the Court, citing Chevron, drew a distinction between "pure" questions of statutory construction and questions of interpretation that arise in the application of a statute to a particular set of facts. Id. The "narrower" task of interpreting a statute in the abstract, according to the Cardoza-Fonseca Court, is "well within the province of the judiciary." Id. at 1222.

As we are confronted in this case with a "pure" question of statutory construction, we remain mindful of the fact that "the judiciary is the final authority on issues of statutory construction . . . If a court, employing traditional tools of statutory construction, ascertains that Congress had an intention on the precise question at issue ,that intention is ...

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