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Howmet Corp. v. United States Environmental Protection Agency

September 23, 2009


The opinion of the court was delivered by: Emmet G. Sullivan United States District Judge


Plaintiff Howmet Corporation ("Howmet") appeals a final decision by Defendant United States Environmental Protection Agency ("EPA") penalizing Howmet $309,091 for violations of the Resource Conservation and Recovery Act and the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et seq. (collectively "RCRA"). Howmet claims the penalty is arbitrary and capricious under the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 701-706. The EPA assessed the penalty against Howmet based on the agency's determination that Howmet shipped certain used materials to a fertilizer company without following the proper procedures under RCRA. The parties have stipulated to the facts and to the penalty amount. The only issues on review are whether the materials Howmet shipped fall within the definition of "spent materials" according to RCRA regulations and, if so, whether Howmet had fair notice of the EPA's interpretation of those regulations. Each party has moved for summary judgment. Upon consideration of the motions, responses and replies thereto, applicable law, and the entire record, the Court DENIES Plaintiff's motion for summary judgment and GRANTS Defendant's motion for summary judgment.


The parties have stipulated to the following facts. Howmet is a wholly owned subsidiary of Alcoa Inc. and is a Delaware corporation, with facilities (as relevant here) in Dover, New Jersey and Wichita Falls, Texas. Howmet manufactures precision investment casings for aerospace and industrial gas turbines. At both its New Jersey and Texas facilities, Howmet used a solution of liquid potassium hydroxide ("KOH") to clean the metal casings. After use, the KOH was hazardous in that it was "corrosive" under EPA regulations. When the used KOH became too contaminated for continued use as a cleaner, Howmet either: a) shipped the used KOH to a permitted hazardous waste facility per RCRA hazardous waste requirements; or b) shipped the used KOH to Royster-Clark, Inc. ("Royster"), a fertilizer manufacturer, without adhering to RCRA hazardous waste requirements. The decision to ship to the hazardous waste facility or to Royster "depended solely on Royster's demand for KOH." Compl. ¶ 21. Royster, without further processing, treatment, or reclamation, added the used KOH as an ingredient to its fertilizer mixture. Howmet did not believe that the used KOH shipped to Royster was "waste" under RCRA regulations.

Regions 2 (covering New Jersey) and 6 (covering Texas) of EPA brought RCRA administrative enforcement actions against Howmet in 2003 alleging that Howmet's shipment of used KOH to Royster did not comply with RCRA and its implementing regulations. The two cases were consolidated for purposes of litigation before an administrative law judge ("ALJ"). The ALJ assessed a $309,091 civil penalty for violations of RCRA, rejecting Howmet's argument that the used KOH shipped to Royster was not "waste" because it was not a "spent material." See ALJ Order on Motions at 21. The ALJ also ruled that Howmet had fair notice of EPA's interpretation of the applicable regulations. Id.

Howmet appealed the ALJ's ruling to EPA's Environmental Appeals Board ("EAB"). The EAB, in a comprehensive opinion laying out the relevant statutory and regulatory text and history, upheld the ALJ's decision. See EAB Decision at 4. The EAB determined that the used KOH Howmet shipped to Royster was indeed a "spent material" under RCRA, and that Howmet violated RCRA by failing to transport the used KOH according to the applicable hazardous waste procedures. Id. at 14, 39-40. The EAB also upheld the ALJ's decision that Howmet was not denied due process because Howmet could have determined, with "ascertainable certainty," that the used KOH it shipped to Royster was a "spent material" under RCRA and its implementing regulations. Id. at 44. Howmet, though continuing to stipulate to the facts and the penalty, appeals to this Court on both the issues of liability and fair notice.


Pursuant to Federal Rule of Civil Procedure 56, summary judgment should be granted if the moving party has shown that there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56; Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986); Waterhouse v. District of Columbia, 298 F.3d 989, 991 (D.C. Cir. 2002). In determining whether a genuine issue of material fact exists, the court must view all facts in the light most favorable to the non-moving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). Likewise, in ruling on cross-motions for summary judgment, the court shall grant summary judgment only if one of the moving parties is entitled to judgment as a matter of law upon material facts that are not genuinely disputed. See Rhoads v. McFerran, 517 F.2d 66, 67 (2d Cir. 1975).

Review of final agency action under the APA is highly deferential, as the court may only set aside agency action that is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law. 5 U.S.C. § 706(2)(A). Moreover, an agency's interpretation of its own regulation is "controlling unless 'plainly erroneous or inconsistent with the regulation.'" Auer v. Robbins, 519 U.S. 452, 461 (1997). If the text of the agency's regulation is ambiguous, the court accords the agency's interpretation broad deference. Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994).


With the facts and penalty amount stipulated, both parties agree that the case is appropriate for resolution on summary judgment. There are two legal issues to resolve, the same two legal issues extensively analyzed by both the ALJ and EAB in the administrative proceedings. The first is whether Howmet is liable for shipping hazardous waste, the used KOH, without complying with the applicable RCRA regulations. The answer to this first question depends on whether the used KOH is a "spent material" under RCRA. The second issue is whether Howmet had fair notice, as required by due process, of EPA's interpretation that the used KOH was "spent material." Agreeing with the EAB's persuasive and comprehensive analysis of both issues, the Court finds that Howmet violated RCRA and its implementing regulations and that Howmet had fair warning that the used KOH was "spent material."

A. Whether Howmet is Liable Because it did not Follow Applicable RCRA Regulations in Shipping the used KOH, which was "Spent Material" under RCRA

RCRA has been aptly described as a statute that "empowers EPA to regulate hazardous wastes from cradle-to-grave." Meghrig v. KFC Western Inc., 516 U.S. 479 483 (1996). Under RCRA and its regulations, "hazardous waste" is a subset of materials deemed "solid waste," thus a material cannot be "hazardous waste" unless it is first determined "solid waste." 42 U.S.C. § 6903; 40 C.F.R. § 261.3(a).*fn1 In general, "solid waste" is broadly defined as any "discarded material," including "secondary materials" when they are recycled. 40 C.F.R. § 261.2(c). Under EPA regulations, "discarded material" also includes certain secondary materials that are "recycled -- or accumulated, stored, or treated before recycling." Id. A "spent material" is one sort of secondary material when it is recycled, "used in a manner constituting disposal," or "used to produce products that are applied to or placed on the land or otherwise contained in products that are applied to or placed on land." 40 C.F.R. § 261.2(c). A "spent material" is defined as "any material that has been used and as a result of contamination can no longer serve the purpose for which it was produced without processing." 40 C.F.R. § 261.1(c)(1).

The primary issue before the Court is whether the used KOH Howmet shipped to Royster, for its fertilizer mixture, falls within the "spent material" definition. EPA argues that the proper reading of the regulation centers on the initial use of a material. In other words, the KOH was initially used as a cleansing agent, and though used KOH may not be "spent material" if it is later used for a similar purpose (i.e., as a cleanser), the used KOH was a "spent material" when later used for a different purpose as a fertilizer ingredient applied to land. Howmet responds that a text-focused reading of the regulation demands inquiry into the "purpose for which it [the KOH] was produced," and that KOH is produced with multiple uses in mind, namely as a cleansing agent and as a fertilizer ingredient. Specifically, Howmet proffers this definition: "The purpose of KOH is to provide a high concentration of hydroxide ions and a concentrated source of potassium, which in turn results in KOH being effective in various ...

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