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American Petroleum Institute v. Environmental Protection Agency

United States Court of Appeals, District of Columbia Circuit

March 6, 2018

American Petroleum Institute, Petitioner
Environmental Protection Agency, Respondent American Chemistry Council, et al., Intervenors

         On Petitions for Panel Rehearing

          Before: Tatel and Kavanaugh, Circuit Judges, and Williams, Senior Circuit Judge.


          Per Curiam

          In 2015, the Environmental Protection Agency promulgated a final rule that defined when certain hazardous materials were deemed discarded-as opposed to legitimately recycled-and therefore subject to EPA's oversight. Environmental and Industry Petitioners challenged portions of the rule. In our 2017 decision, API v. EPA, 862 F.3d 50 (D.C. Cir. 2017), we upheld some aspects of the rule and vacated others. In so doing, we invited the parties to consider briefing whether one of the vacated components should instead be severed and affirmed. Id. at 72. The parties accepted that invitation, filing petitions for rehearing that address that question and a number of others. Having reviewed the petitions, we now modify our 2017 decision in three ways: (1) we sever and affirm EPA's removal of the spent catalyst bar from the vacated portions of the "Verified Recycler Exclusion"; (2) we vacate Factor 4 in its entirety; and (3) we clarify the regulatory regime that replaces the now-vacated Factor 4. All other aspects of the petitions for rehearing are denied.

         * * *

         Our 2017 opinion provides the relevant statutory and regulatory background. Id. at 55-57. We offer here only what is necessary to make sense of our three modifications to that decision.

         In 2008, pursuant to the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. §§ 6901-6992k, EPA promulgated a rule that excluded certain hazardous secondary materials from the definition of solid waste-and therefore beyond the reach of EPA's RCRA authority-in two circumstances. Revisions to the Definition of Solid Waste, 73 Fed. Reg. 64, 668, 64, 669/3-70/1-2 (Oct. 30, 2008). The exclusion applicable depended on the type of entity undertaking the recycling: the "Generator-Controlled Exclusion" applied when the company producing the material performed the recycling itself and the "Transfer-Based Exclusion" applied when the generator sent the materials to an off-site recycler (which the rules required the generator to audit to ensure that the transferee had in place adequate recycling procedures). Id. As a prerequisite for either exclusion, the materials had to be recycled legitimately, as determined by a set of "legitimacy factors" set by EPA. Id. at 64, 700/2.

         In 2015, while challenges to the 2008 rule were pending in this court after having been held in abeyance in light of EPA's issuance of a notice of proposed rulemaking on the same subject, the agency issued revisions to the rule. Definition of Solid Waste, 80 Fed. Reg. 1, 694 (Jan. 13, 2015). Four of those changes are pertinent to the petitions for rehearing. First, EPA changed the content and application of the four legitimacy factors. Id. at 1, 719/3-20/1. Second, EPA redefined and made more stringent the "containment" standard, a preexisting requirement recyclers had to satisfy to qualify for the Generator-Controlled and Transfer-Based Exclusions. Id. at 1, 704/1-3, 1, 738/1. Third, EPA allowed spent petroleum refinery catalysts to qualify for these solid waste exclusions. Id. at 1, 737/3-38/1. Fourth, EPA replaced the Transfer-Based Exclusion with the Verified Recycler Exclusion. Id. at 1, 695/2.

         Our 2017 decision vacated the Verified Recycler Exclusion and reinstated the Transfer-Based Exclusion. API, 862 F.3d at 75. We explained that, as a result, spent catalysts would once again be disqualified from that exclusion's ambit "subject . . . to such arguments as parties may raise supporting a different outcome." Id. We also vacated the revised Factor 4 "insofar as it applies to all hazardous secondary materials via § 261.2(g)." Id.

         * * * We conclude that three aspects of the petitions for rehearing warrant revision of our 2017 decision.

          Spent Petroleum Catalysts.

         In response to our invitation, id. at 72, 75, API asks us to undo the disqualifier for spent catalysts. We had been persuaded by EPA's response to comments regarding the proposed 2015 rule that, in removing the disqualification, EPA relied in part on the Verified Recycler Exclusion. See id. at 72; see also EPA, Revisions to the Definition of Solid Waste Final Rule Response to Comments Document (Dec. 10, 2014) ("Comments Document"). In that document, EPA had said:

[U]nder the contained standard for both the generator-controlled exclusion and the verified recycler exclusion, any hazardous secondary material that poses a risk of fire or explosion must have that risk addressed in order to ensure that the material is legitimately recycled and not discarded.

Comments Document at 266. We then explained that we accordingly harbored doubts that EPA would have altered its treatment of spent catalysts absent the Verified Recycler Exclusion. API, 862 F.3d at 72. Review of the petitions for rehearing ...

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