Written By: Bick Law LLP
On May 30, 2018 the United States Environmental Protection Agency (EPA) enacted a final rule updating the definition of solid waste under the Resource Conservation and Recovery Act (RCRA). The change comes as a result of a series of court orders issued by the U.S. Court of Appeals for the D.C. Circuit in the matter of American Petroleum Institute v. EPA (D.C. Cir. No. 09-1038). The case arose when numerous environmental and industry groups petitioned a 2015 rule governing when certain hazardous materials must be qualified as “discarded” and therefore subject to EPA’s regulatory authority.
In order to understand the impact of EPA’s recent update to the definition of solid waste, one must first understand the complex legislative and judicial history that has led to this change. The Resource Conservation and Recovery Act gives EPA the authority to regulate the discharge of solid and hazardous waste. In accordance with their RCRA authority, EPA has defined solid waste as “discarded material” that does not otherwise fall outside the agency’s regulations. In 2015, EPA sought to exclude certain hazardous secondary materials generated during industrial processes from the definition of solid waste if the company responsible for generating the materials either controlled their recycling or transferred the materials to an audited off-site recycler. These instances were known as the “Generator-Controlled Exclusion” and the “Verified Recycler Exclusion,” respectively. In order to qualify for these exclusions, a company has to pass a four-pronged legitimacy test to distinguish “true” recycling from “sham” recycling.
In order to pass the legitimacy test for the recycling of a particular material, companies must satisfy all four factors. First, the company must show that the hazardous secondary material provides a useful contribution to the recycling process. Second, the company must demonstrate that the recycling process produces a valuable product or intermediate. Third, the generator and the recycler must manage the hazardous secondary material as a valuable commodity when it is under their control. Fourth, and finally, the product of the recycling process must be comparable to a legitimate product or intermediate.
Shortly after this rule was promulgated, several industry groups challenged it, arguing that certain aspects of the legitimacy test and the Verified Recycler Exclusion exceed EPA’s authority under RCRA. Central to the issue before the court was the way in which EPA considered certain materials that were destined to be recycled as “discarded” and therefore subject to regulation. Industry petitioners, however, argued that by mandating factors 3 and 4 of the legitimacy test across all recycling EPA was unlawfully regulating non-discarded materials.
The court decided to uphold the legitimacy of factor 3 while vacating factor 4 insofar as it applies to all secondary materials. Furthermore, the court vacated the Verified Recycler Exclusion and instead reinstated a 2008 exclusion known as the “Transfer-Based Exclusion.” As a result, the generator of a hazardous secondary material no longer has to meet special emergency preparedness standards in its custody of the materials before shipment. Furthermore, the rule allows the generator to send hazardous secondary materials to a recycler that either possesses an RCRA permit or, if they do not have a permit, has been vetted by the generator to ensure the chosen recycler intends to legitimately reclaim the hazardous secondary material and not discard it.
Following the court’s decision and subsequent orders, EPA promulgated a final rule responding to the vacatur of certain provisions of the definition of solid waste. Under EPA’s updated rule, factor 4 of the legitimacy test is no longer mandatory and, instead, must only be considered. Furthermore, EPA’s final rule reinstates the Transfer-Based Exclusion in lieu of the Verified Recycler Exclusion.
The California Environmental Attorneys at Bick Law LLP will continue to monitor the definition of solid waste under RCRA as well as any future updates EPA may make to the rule.