American Petroleum Institute v. EPA , 683 F.3d 382 ( 2012 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued December 12, 2011 Decided June 8, 2012
No. 09-1038
AMERICAN PETROLEUM INSTITUTE,
PETITIONER
v.
ENVIRONMENTAL PROTECTION AGENCY,
RESPONDENT
AMERICAN CHEMISTRY COUNCIL, ET AL.,
INTERVENORS
On Petition for Review of a Final Action of
the United States Environmental Protection Agency
Thomas Sayre Llewellyn argued the cause for petitioner.
With him on the briefs were Harry M. Ng, Michael R. See, and
Wayne J. D'Angelo.
Daniel R. Dertke, Attorney, U.S. Department of Justice,
argued the cause and filed the brief for respondent.
Vincent Atriano argued the cause for movant-intervenor
Gulf Chemical Metallurgical Corporation. With him on the
brief was Rebekah M. VanDrake.
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Before: SENTELLE, Chief Judge, BROWN and GRIFFITH,
Circuit Judges.
Opinion for the Court filed by Chief Judge SENTELLE.
SENTELLE, Chief Judge: American Petroleum Institute
(API) petitions for review of a 2008 EPA regulation
deregulating many “hazardous secondary materials” under the
Resource Conservation and Recovery Act (RCRA), 42 U.S.C.
§§ 6901-6992k. Petitioner contends that EPA erred in not
including in the deregulation a category of hazardous secondary
material called spent refinery catalysts, which API’s members
generate during the petroleum refining process. After the parties
completed briefing, EPA issued a notice of proposed rulemaking
that, if made final, would significantly amend EPA’s 2008
decision. As a result, we deem this controversy unripe as a
prudential matter and order the case held in abeyance, subject to
regular reports on the status of the proposed rulemaking.
I.
A. Statutory and Regulatory Framework
Congress enacted RCRA in response to the “rising tide in
scrap, discarded, and waste materials.” Am. Mining Congress v.
EPA, 824 F.2d 1177, 1179 (D.C. Cir. 1987) (internal quotations
omitted). Primary in RCRA, Congress empowered the EPA to
regulate solid and hazardous waste. The statute defines “solid
waste” as including “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). EPA’s
authority to regulate hazardous waste under Subtitle C of
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RCRA, 42 U.S.C. §§ 6921-6939f, extends to a subset of solid
waste as defined in the Act. Specifically,
(5) The term “hazardous waste” means a solid waste, or
combination of solid wastes, which because of its quantity,
concentration, or physical, chemical, or infectious
characteristics may—
(A) cause, or significantly contribute to an increase
in mortality or an increase in serious irreversible, or
incapacitating reversible, illness; or
(B) pose a substantial present or potential hazard to
human health or the environment when improperly
treated, stored, transported, or disposed of, or
otherwise managed.
Id. § 6903(5). In furtherance of its regulatory duties under the
Act, EPA has adopted regulations interpreting the statutory
definitions. The regulations define a solid waste as “any
discarded material” that is not excluded by variance granted
under other cited sections of the regulations. 40 C.F.R.
261.2(a)(1). The regulations define “discarded material” as “any
material” that is abandoned, recycled, “inherently waste-like,”
or a specifically identified military munition. 40 C.F.R.
§ 261.2(a)(2)(i). If a material fits any one of these descriptions,
it is “discarded material” and therefore “solid waste” (unless
EPA or Congress specifically excludes the material from that
definition), and EPA has authority to regulate it under RCRA.
B. The Regulated Materials: Spent Petroleum Refinery
Catalysts
The materials at issue in this case are catalysts used in the
petroleum refining process called hydrotreating and
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hydrorefining catalysts. These catalysts, generally nickel,
cobalt, and/or molybdenum on an alumina base, remove sulfur
and nitrogen compounds from petroleum by “cracking” the
hydrocarbons that make up petroleum into smaller molecules
under high-temperature, high-pressure conditions. Over time,
these catalysts degrade as carbon deposits or metals—in
particular, vanadium—attach to them. Once fully degraded, or
“spent,” the catalysts are usually sent to a third party, which can
either regenerate them for reuse or extract the valuable metals
that have attached to the catalysts.
While useful, these catalysts carry risks. In particular, they
have pyrophoric properties, i.e., a tendency to spontaneously
heat and ignite in air, causing fires and release of toxic
chemicals. EPA therefore proposed to list hydrotreating and
hydrorefining catalysts as hazardous waste in 1995. Citing the
need to encourage recycling of these catalysts, API—an
association whose members own or operate refineries that
generate spent refinery catalysts—urged EPA in comments
responding to this proposal to list the catalysts only
conditionally so that spent catalysts destined for recycling would
not be listed as hazardous waste. EPA declined, listing the
catalysts unconditionally as hazardous waste in a final rule in
1998. Since that time, all spent catalysts, whether destined for
reclamation or not, have been classified as hazardous waste
subject to stringent regulations.
C. The 2008 Rule
In 2007, EPA proposed a new rule that would change the
classification of “hazardous secondary materials,” which include
recycled or reclaimed spent refinery catalysts. Reasoning that
materials recycled under specified circumstances are not
“discarded” and are therefore not “solid waste,” EPA proposed
to exclude hazardous secondary materials from the definition of
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solid waste in two situations. First, hazardous secondary
materials legitimately reclaimed under the control of their
generator would be excluded from “solid waste” because EPA
determined that the generator under those circumstances is
treating such material as a valuable commodity rather than as a
waste (the “generator-controlled exclusion”). 72 Fed. Reg.
14,172, 14,184-88. Second, hazardous secondary materials
would be excluded from “solid waste” if the generator
transferred the materials to a third party for legitimate
reclamation under specific conditions including recordkeeping,
reasonable efforts on the part of the generator to ensure
legitimate reclamation by the reclaimer, financial assurances by
the reclaimer, and, importantly, containment of the materials.
72 Fed. Reg. at 14,188-97. This “transfer-based exclusion” was
likewise based on the idea that third-party reclamation properly
carried out was not consistent with the concept of “discard.”
The proposed rule would have excluded spent refinery
catalysts from the definition of solid waste if they were sent to
a third party for reclamation under the specific conditions set out
in the proposed rule. Exclusion from “solid waste” would mean
exclusion from costly Subtitle C regulation as hazardous waste.
EPA issued a final rule in 2008 adopting generator-controlled
and transfer-based exclusions from the definition of solid waste
(the “2008 Rule”). But the final rule specifically omits spent
refinery catalysts from those exclusions. EPA explained that it
chose to make the catalysts ineligible for the deregulatory
exclusions because of their pyrophoric properties. According to
EPA, it would instead address the catalysts in a separate
proposed rulemaking after seeking and considering “comment
on specific conditions to address the pyrophoric properties of
these hazardous secondary materials, particularly during
transportation and storage prior to reclamation, in order for the
Agency to determine that they are not being discarded.” 73 Fed.
Reg. 64,668, 64,714 (October 30, 2008). That proposed
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rulemaking would either finalize a spent-catalyst-specific
exclusion or make the spent catalysts eligible for the general
exclusions. Id.D. Procedural History and a Recent Proposed
Rulemaking
API filed a petition for review of the 2008 Rule on January
27, 2009. The Sierra Club also petitioned for review of the 2008
Rule. On September 10, 2010, EPA entered into a settlement
agreement with the Sierra Club. EPA agreed to propose, by
June 30, 2011, a new rule addressing certain issues raised by the
Sierra Club and to take final action on that rule by December 31,
2012.
In July 2011, soon after the close of briefing in this case,
EPA published a new notice of proposed rulemaking in
accordance with the settlement agreement to address the issues
raised by the Sierra Club. In the proposed rule, EPA effectively
revised the 2008 Rule in two relevant ways. First, spent
hydrotreating and hydrorefining catalysts would now also be
eligible for the generator-controlled exclusion from the
definition of solid waste. 76 Fed. Reg. 44,094, 44,152 (July 22,
2011). Second, EPA proposed to eliminate altogether the
transfer-based exclusion for hazardous secondary materials;
those materials would again be considered solid waste—and
thus hazardous waste—even if transferred to third parties for
recycling and would be subject to an alternative Subtitle C
standard. 76 Fed. Reg. at 44,108-10, 44,151. If this proposed
rule were to become final without revision, then, spent refinery
catalysts would be treated the same as other hazardous
secondary materials: eligible for the generator-controlled
exclusion from the definition of solid waste, but not eligible for
a transfer-based exclusion, which would cease to exist.
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Because EPA published the 2011 proposed rule after the
parties had submitted their merits briefs, we asked the parties to
address at oral argument the impact of that rule on justiciability.
We now conclude that API’s petition is not ripe for review.
II.
The ripeness doctrine generally deals with when a federal
court can or should decide a case. Part of the doctrine is
subsumed into the Article III requirement of standing, which
requires a petitioner to allege inter alia an injury-in-fact that is
“imminent” or “certainly impending.” See Nat’l Treasury Emps.
Union v. United States, 101 F.3d 1423, 1427-28 (D.C. Cir.
1996). Even if a case is “constitutionally ripe,” though, there
may also be “prudential reasons for refusing to exercise
jurisdiction.” Nat’l Park Hospitality Ass’n v. Dep’t of Interior,
538 U.S. 803, 808 (2003). In the context of agency decision
making, letting the administrative process run its course before
binding parties to a judicial decision prevents courts from
“entangling themselves in abstract disagreements over
administrative policies, and . . . protect[s] the agencies from
judicial interference” in an ongoing decision-making process.
See Abbott Labs. v. Gardner, 387 U.S. 136, 148 (1967).
Postponing review can also conserve judicial resources, and it
“comports with our theoretical role as the governmental branch
of last resort.” Nat’l Treasury Emps. Union, 101 F.3d at 1431.
For instance, declining jurisdiction over a dispute while
there is still time for the challenging party to “convince the
agency to alter a tentative position” provides the agency “an
opportunity to correct its own mistakes and to apply its
expertise,” potentially eliminating the need for (and costs of)
judicial review. Pub. Citizen Health Research Grp. v. FDA, 740
F.2d 21, 30-31 (D.C. Cir. 1984) (citation and internal quotation
mark omitted). Even if the challenger fails to persuade the
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agency, permitting the administrative process to reach its end
can at least solidify or simplify the factual context and narrow
the legal issues at play, allowing for more intelligent resolution
of any remaining claims and avoiding inefficient and
unnecessary “piecemeal review.” Id. at 30 (internal quotation
marks omitted). Put simply, the doctrine of prudential ripeness
ensures that Article III courts make decisions only when they
have to, and then, only once. See Devia v. NRC, 492 F.3d 421,
424 (D.C. Cir. 2007); Pub. Citizen Health Research Grp., 740
F.2d at 30-31.
In assessing the prudential ripeness of a case, we focus on
two aspects: the “fitness of the issues for judicial decision” and
the extent to which withholding a decision will cause “hardship
to the parties.” Abbott Labs., 387 U.S. at 149. We address each
aspect in turn.
A.
The fitness requirement is primarily meant to protect “the
agency’s interest in crystallizing its policy before that policy is
subjected to judicial review and the court's interests in avoiding
unnecessary adjudication and in deciding issues in a concrete
setting.” Wyo. Outdoor Council v. U. S. Forest Serv., 165 F.3d
43, 49 (D.C. Cir. 1999) (internal quotation mark omitted).
Among other things, then, the fitness of an issue “depends on
whether it is purely legal, whether consideration of the issue
would benefit from a more concrete setting, and whether the
agency’s action is sufficiently final.” Atl. States Legal Found.
v. EPA, 325 F.3d 281, 284 (2003) (internal quotation marks
omitted). Courts decline to review “tentative” agency positions
because doing so “severely compromises the interests” the
ripeness doctrine protects: “The agency is denied full
opportunity to apply its expertise and to correct errors or modify
positions in the course of a proceeding, the integrity of the
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administrative process is threatened by piecemeal review of the
substantive underpinnings of a rule, and judicial economy is
disserved because judicial review might prove unnecessary if
persons seeking such review are able to convince the agency to
alter a tentative position.” See Pub. Citizen Health Research,
740 F.2d at 31.
We would risk causing all of these problems by reviewing
API’s petition for review of the 2008 Rule at this time. At
bottom, API argues that the spent refinery catalysts its members
generate and send to reclaimers should be eligible for the 2008
Rule’s transfer-based exclusion from the definition of solid
waste like other hazardous secondary materials the exclusion
covers. EPA responds that the pyrophoric properties of the
catalysts warrant further consideration to make sure they will
not be discarded during transfer. In light of the July 2011
proposed rule, though, “[i]f we do not decide [the issue] now,
we may never need to.” Nat’l Treasury Emps. Union, 101 F.3d
at 1431. The proposed rule would wholly eliminate the very
transfer-based exclusion of which API’s members wish to take
advantage. EPA’s position on the advisability of a transfer-
based exclusion at all is thus plainly a tentative one; it is
proposing to eliminate the same exclusion it just created in the
2008 Rule. Also important, the new proposed rulemaking gives
API a chance to convince EPA to change its mind—it provides
a relevant context in which API may persuade EPA that it would
be a mistake not to provide some sort of transfer-based
exclusion, either for all hazardous secondary materials or at least
for spent refinery catalysts. If API succeeds, this case goes
away without the need for judicial review.
If the July 2011 proposed rule is enacted as proposed, it will
narrow the legal issues involved in this dispute and provide a
more final and concrete setting for deciding any issues left on
the table. First, because the proposed rule would lump spent
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refinery catalysts in with the rest of the hazardous secondary
materials it covers, even API concedes that its current objection
to the disparate treatment of spent refinery catalysts (and to
EPA’s alleged failure to allow for comment on its decision to
treat the catalysts differently) would disappear along with the
disparate treatment itself. It would hardly be sound stewardship
of judicial resources to decide this case now on the basis of the
disparate-treatment argument given that an already published
proposed rule, if enacted, would dispense with the need for such
an opinion in a matter of months.
Second, to the extent API and EPA dispute whether some
sort of transfer-based exclusion for hazardous secondary
materials is necessary to comport with the concept of “discard,”
that issue also is best addressed once EPA finally decides
whether to eliminate the transfer-based exclusion it adopted in
the 2008 Rule. Indeed, in the only rule before us now, the 2008
Rule, EPA actually adopted a transfer-based exclusion (and then
“deferred” until a later date the question whether spent catalysts
should be eligible for that exclusion or a different one). In this
context, it makes little sense to nevertheless pigeonhole EPA
into rebutting API by arguing that a transfer-based exclusion is
not required. If we withhold review of this petition as
prudentially unripe, we need not address the issue in its current
indeterminate form. In the ongoing rulemaking, EPA could
change its mind and keep the transfer-based exclusion, in which
case the issue goes away; or, if EPA stays the course and
abolishes the transfer-based exclusion, the dispute will become
concrete and straightforward. API can then argue that a
transfer-based exclusion is required, and EPA can
respond—based on whatever explanation it provides in the
record of the then-final rule—that treating hazardous secondary
materials sent for reclamation as “discarded” is a permissible
interpretation of its authority to regulate “solid waste” under
RCRA. Either way, waiting to resolve this case allows EPA to
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apply its expertise and correct any errors, preserves the integrity
of the administrative process, and prevents piecemeal and
unnecessary judicial review.
All of this is not to say an agency can stave off judicial
review of a challenged rule simply by initiating a new proposed
rulemaking that would amend the rule in a significant way. If
that were true, a savvy agency could perpetually dodge review.
Cf. Am. Petroleum Institute, 906 F.2d at 739-40 (“If the
possibility of unforeseen amendments were sufficient to render
an otherwise fit challenge unripe, review could be deferred
indefinitely.”).
That risk of agency abuse is not present here. To begin
with, the 2011 proposed rule is clearly not some non-
substantive, thinly veiled attempt to evade review; it is a
complete reversal of course on EPA’s part that, if adopted,
would necessitate substantively different legal analysis and
would likely moot the analysis we could undertake if deciding
the case now. Moreover, the happening or timing of the future
event we are awaiting to ripen (or solve) this dispute—final
action on the 2011 proposed rule—is not within the discretion
of or controlled by the agency as would usually be the case.
EPA did not issue a notice of proposed rulemaking on its own
volition or set its own deadline for final action. Rather, EPA
agreed to issue the 2011 proposed rule as part of its settlement
with the Sierra Club, which had sought repeal of the 2008 Rule
based on allegations that it was not sufficiently protective of
human health and the environment. That settlement requires
EPA to take final action concerning the proposed rulemaking by
December 31, 2012. This definite end date to the delay we
would effectively impose by deeming this case unripe further
alleviates any concern that EPA is using a new rulemaking to
elude review.
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Also, when we consider the fitness of an issue for review,
we ask whether it is “purely legal.” Atl. States Legal Found.,
325 F.3d at 284. This issue does involve the interpretation of a
statute; that statute is entrusted for its administration to EPA.
Under Chevron, U.S.A., Inc. v. NRDC, Inc., 467 U.S. 837(1984), we will afford the agency’s interpretation significant
deference. It is more consistent with the conservation of judicial
resources to make that deference-bound review after the agency
has finalized its application of the relevant statutory text.
Lastly, to protect against the unlikely and the unpredictable,
we can hold the case in abeyance pending resolution of the
proposed rulemaking, subject to regular reports from EPA on its
status. See, e.g., Devia, 492 F.3d at 426; Stratford v. FAA, 285
F.3d 84 (D.C. Cir. 2002), reh’g denied, 292 F.3d 251 (D.C. Cir.
2002); Blumenthal v. FERC, 2003 WL 21803316 (D.C. Cir.
2003). If the rulemaking takes an unforeseen turn, we can
reassess whether the dispute has ripened at that time.
B.
To outweigh these “institutional interests in the deferral of
review,” any hardship caused by that deferral must be
“immediate and significant.” Devia, 492 F.3d at 427 (internal
quotation marks omitted). Considerations of hardship that might
result from delaying review “will rarely overcome the finality
and fitness problems inherent in attempts to review tentative
positions.” Pub. Citizen Health Research, 740 F.2d at 31. So
here.
API asserts that deferring review of the 2008 Rule would
cause hardship by increasing the time during which its members
are precluded from taking advantage of cost savings that would
come from deregulation of the spent refinery catalysts they
generate and send for reclamation. API suggests that if the
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catalysts were no longer considered hazardous waste,
transporting the catalysts to reclaimers would be less expensive
and market prices for recycling them would decrease because
facilities without hazardous-waste permits could enter the
market.
But even assuming API’s members would eventually realize
cost savings from deregulation of the catalysts, it is not at all
clear that they could take advantage now if we decided this
petition in their favor. New federal requirements under RCRA
do not take effect in any State that manages its own RCRA
program until that State adopts those requirements. States are
only required to adopt new federal requirements that are more
stringent than existing requirements. If EPA takes action that is
deregulatory in nature, States may, but are not required to, adopt
the resulting less stringent rule. Because the 2008 Rule’s
transfer-based exclusion is deregulatory, it only goes into effect
in those States that choose to adopt it. So far, only four States
have done so, and the exclusion is effective in two other States
where EPA administers the hazardous waste program. Refinery
catalysts are apparently generated in only three of these States,
and even as to those States, API has not shown that any of the
three States have reclamation facilities where the spent refinery
catalysts could be sent at a lower cost for its members. While
we do not discount the possibility of some financial hardship,
API has not shown such a burden as to warrant a potentially
improvident decision of an otherwise unripe issue by this court.
III.
For the above reasons, we hold that API’s petition is not
ripe for review. We will hold this case in abeyance subject to
status reports in accordance with the terms of the order
accompanying this opinion.