Does EPA's 2015 Definition of Solid Waste rule lawfully define 'discarded' hazardous secondary materials, including its Factor 3 and Factor 4 legitimacy requirements and its Verified Recycler Exclusion, and may the court review EPA's decision to defer applying containment and notification conditions to the pre-2008 exclusions?

In January 2015, EPA promulgated a final rule under the Resource Conservation and Recovery Act (RCRA) defining when hazardous secondary materials destined for recycling are 'discarded' and therefore regulable as solid and hazardous waste. The rule traced to a 2008 rule that excluded hazardous secondary materials from the definition of solid waste if the generator controlled the recycling (the Generator-Controlled Exclusion) or transferred the materials to an off-site recycler it had audited through 'reasonable efforts' (the Transfer-Based Exclusion). A settlement between EPA and the Sierra Club led to a new rulemaking. The 2015 Final Rule extended four legitimacy factors to all recycling to separate true recycling from sham recycling. It replaced the Transfer-Based Exclusion with the Verified Recycler Exclusion, which added emergency preparedness requirements and replaced the reasonable-efforts option with a requirement that off-site reclaimers hold a RCRA permit, interim status, or a regulatory variance. It also removed the bar on spent catalysts and deferred a decision on whether to impose containment and notification conditions on 32 pre-2008 exclusions. Industry Petitioners challenged the legitimacy factors, the Verified Recycler Exclusion, and EPA's treatment of spent catalysts and off-specification commercial chemical products. Environmental Petitioners challenged the Verified Recycler Exclusion as too permissive and EPA's deferral of conditions on the pre-2008 exclusions.

EPA issued the 2008 Rule, which several parties challenged in this court, including the American Petroleum Institute and the Sierra Club. Before argument, EPA settled with the Sierra Club, which withdrew its petition, and EPA agreed to propose a new rule. EPA published its Proposed Rule in July 2011. In 2012, the court held API's challenge to the 2008 rule unripe given the forthcoming rule. EPA promulgated the Final Rule in January 2015. Industry and Environmental Petitioners filed petitions for review in the D.C. Circuit, which were consolidated. The court granted the Industry petition in part and dismissed the Environmental petition.

(Per Curiam)

No. The Final Rule is upheld in part and vacated in part, and the Environmental petition is dismissed for lack of jurisdiction.

Factor 3 is upheld. EPA may impose a containment requirement as part of the legitimacy test so long as non-compliance supports an inference of sham recycling. American Mining Congress v. EPA, 824 F.2d 1177 (D.C. Cir. 1987), and Association of Battery Recyclers v. EPA, 208 F.3d 1047 (D.C. Cir. 2000), do not bar all containment rules. Under EPA's definition, 'contained' includes simple piles on the ground, and the labeling requirement may be met by a log or other identification system, so the standard asks no more than legitimate recyclers could be expected to do.

Factor 4 is vacated as applied to all hazardous secondary material recycling through 40 C.F.R. § 261.2(g). The no-analogue track and the hazardous-characteristic criterion are reasonable. The 'comparable to or lower than' test for products with analogues is not, because it sets the bar at the analogue's contaminant level without regard to whether incremental contaminants pose significant health or environmental risk. Safe Food & Fertilizer v. EPA, 350 F.3d 1263 (D.C. Cir. 2003), requires a risk-based perspective. The exception cannot cure this defect because failing to file the required documentation turns an otherwise legitimate product into a sham, and a burden-shifting presumption requires a rational basis showing why failing products are likely discarded. EPA's Problems Study did not supply one, as only about a dozen of 250 cases arguably involved products failing the technical provisions.

The Verified Recycler Exclusion's emergency preparedness requirements are reasonable as a test of intent, given EPA's findings that these materials are often of negative value to generators. The variance requirement is arbitrary because EPA lacked data linking its theory about low-value materials and third-party transfer to actual discard. The Market Study disclaimed any empirical testing, and the Problems Study's 94% statistic says nothing about relative risk without knowing the distribution of on-site and off-site recycling. State Farm requires a rational connection between the facts found and the choice made. The sixth variance criterion, addressing cumulative environmental stressors, assumes discard rather than testing for it and cannot stand.

Severance is limited to the emergency preparedness and expanded containment provisions, because doubt remains whether EPA would have removed the spent catalyst bar independently. The Transfer-Based Exclusion is reinstated and the spent catalyst challenge is moot. The claim about off-specification commercial chemical products falls outside the court's original RCRA jurisdiction under 42 U.S.C. § 6976(a)(1) because it concerns unamended regulations and guidance. The challenge to EPA's deferral on containment and notification conditions is likewise unreviewable, since a decision to defer is not final action under American Petroleum Institute v. EPA, 216 F.3d 50 (D.C. Cir. 2000), and the reopener doctrine does not apply.

Dissent in part (Tatel, J.) The majority's scrutiny conflicts with the APA's highly deferential arbitrary-and-capricious standard and with the rule that facial challenges require assessing a rule across typical applications, not hypothetical ones. Factor 4's subparagraph (i) reasonably targets products with significantly more hazardous constituents than raw analogues, consistent with Safe Food, and whether such levels indicate sham recycling is a technical judgment for EPA. Subparagraph (iii)'s documentation requirement parallels the burden-shifting rule upheld in American Chemistry Council v. EPA, 337 F.3d 1060 (D.C. Cir. 2003), and is not draconian. The Verified Recycler Exclusion is supported by the Market Study and the Problems Study, and agencies may rely on economic models. The relevant question is what share of serious environmental damage off-site recyclers cause, not what share of off-site recycling goes wrong; if 94% of plane crashes involved one carrier, regulating that carrier would be reasonable. The majority decides a policy question Congress left to the Administrator. The majority answers that the Problems Study says nothing about overall likelihood without knowing how common each type of recycling is.