American Mining Congress and Engelhard Corporation v. United States Environmental Protection Agency, Edison Electric Institute, American Paper Institute, Hazardous Waste Treatment Council, Intervenors. American Petroleum Institute v. United States Environmental Protection Agency, Edison Electric Institute, American Paper Institute, Hazardous Waste Treatment Council, Intervenors

These consolidated cases arise out of EPA's regulation of hazardous wastes under the Resource Conservation and Recovery Act of 1976 ("RCRA"), as amended, 42 U.S.C. Secs. 6901-6933 (1982 & Supp. III 1985). Petitioners, trade associations representing mining and oil refining interests, challenge regulations promulgated by EPA that amend the definition of "solid waste" to establish and define the agency's authority to regulate secondary materials reused within an industry's ongoing production process. In plain English, petitioners maintain that EPA has exceeded its regulatory authority in seeking to bring materials that are not discarded or otherwise disposed of within the compass of "waste."

* RCRA is a comprehensive environmental statute under which EPA is granted authority to regulate solid and hazardous wastes. RCRA was enacted in 1976, and amended in 1978, 1980, and 1984. See The Quiet Communities Act of 1978, Pub.L. No. 95-609, 92 Stat. 3081; The Solid Waste Disposal Act Amendment of 1980, Pub.L. No. 96-482, 94 Stat. 2334; Hazardous and Solid Waste Amendments of 1984, Pub.L. No. 98-616, 98 Stat. 3221.

Congress' "overriding concern" in enacting RCRA was to establish the framework for a national system to insure the safe management of hazardous waste. H.R.Rep. No. 1491, 94th Cong., 2d Sess. 3 (1976), U.S.Code Cong. & Admin.News 1976, pp. 6238, 6240, 6241. In passing RCRA, Congress expressed concern over the "rising tide" in scrap, discarded, and waste materials. 42 U.S.C. Sec. 6901 (a)(2). As the statute itself puts it, Congress was concerned with the need "to reduce the amount of waste and unsalvageable materials and to provide for proper and economical solid waste disposal practices." Id. Sec. 6901(a)(4). Congress thus crafted RCRA "to promote the protection of health and the environment and to conserve valuable material and energy resources." Id. Sec. 6902.

RCRA includes two major parts: one deals with non-hazardous solid waste management and the other with hazardous waste management. Under the latter, EPA is directed to promulgate regulations establishing a comprehensive management system. Id. Sec. 6921. EPA's authority, however, extends only to the regulation of "hazardous waste." Because "hazardous waste" is defined as a subset of "solid waste," id Sec. 6903(5), the scope of EPA's jurisdiction is limited to those materials that constitute "solid waste." That pivotal term is defined by RCRA as

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. Sec. 6903(27) (emphasis added). As will become evident, this case turns on the meaning of the phrase, "and other discarded material," contained in the statute's definitional provisions.

EPA's interpretation of "solid waste" has evolved over time. On May 19, 1980, EPA issued interim regulations defining "solid waste" to include a material that is "a manufacturing or mining by-product and sometimes is discarded." 45 Fed.Reg. 33,119 (1980). This definition contained two terms needing elucidation: "by-product" and "sometimes discarded." In its definition of "a manufacturing or mining by-product," EPA expressly excluded "an intermediate manufacturing or mining product which results from one of the steps in a manufacturing or mining process and is typically processed through the next step of the process within a short time." Id.

In 1983, the agency proposed narrowing amendments to the 1980 interim rule. 48 Fed.Reg. 14,472 (1983). The agency showed especial concern over recycling activities. In the preamble to the amendments, the agency observed that, in light of the interlocking statutory provisions and RCRA's legislative history, it was clear that "Congress indeed intended that materials being recycled or held for recycling can be wastes, and if hazardous, hazardous wastes." Id. at 14,473. The agency also asserted that "not only can materials destined for recycling or being recycled be solid and hazardous wastes, but the Agency clearly has the authority to regulate recycling activities as hazardous management." Id.

While asserting its interest in recycling activities (and materials being held for recycling), EPA's discussion left unclear whether the agency in fact believed its jurisdiction extended to materials recycled in an industry's on-going production processes, or only to materials disposed of and recycled as part of a waste management program. In its preamble, EPA stated that "the revised definition of solid waste sets out the Agency's view of its jurisdiction over the recycling of hazardous waste ... Proposed section 261.6 then contains exemptions from regulations for those hazardous waste recycling activities that we do not think require regulation." Id. at 14,476. The amended regulatory description of "solid waste" itself, then, did not include materials "used or reused as effective substitutes for raw materials in processes using raw materials as principal feedstocks." Id. at 14,508. EPA explained the exclusion as follows:

[These] materials are being used essentially as raw materials and so ordinarily are not appropriate candidates for regulatory control. Moreover, when these materials are used to manufacture new products, the processes generally are normal manufacturing operations.... The Agency is reluctant to read the statute as regulating actual manufacturing processes.

Id. at 14,488. This, then, seemed clear: EPA was drawing a line between discarding and ultimate recycling, on the one hand, and a continuous or ongoing manufacturing process with one-site "recycling," on the other. If the activity fell within the latter category, then the materials were not deemed to be "discarded."

After receiving extensive comments, EPA issued its final rule on January 4, 1985. 50 Fed.Reg. 614 (1985). Under the final rule, materials are considered "solid waste" if they are abandoned by being disposed of, burned, or incinerated; or stored, treated, or accumulated before or in lieu of those activities. In addition, certain recycling activities fall within EPA's definition. EPA determines whether a material is a RCRA solid waste when it is recycled by examining both the material or substance itself and the recycling activity involved. The final rule identifies five categories of "secondary materials" (spent materials, sludges, by-products, commercial chemical products, and scrap metal). These "secondary materials" constitute "solid waste" when they are disposed of; burned for energy recovery or used to produce a fuel; reclaimed; or accumulated speculatively. Id. at 618-19, 664.1 Under the final rule, if a material constitutes "solid waste," it is subject to RCRA regulation unless it is directly reused as an ingredient or as an effective substitute for a commercial product, or is returned as a raw material substitute to its original manufacturing process.2 Id. In the jargon of the trade, the latter category is known as the "closed-loop" exception. In either case, the material must not first be "reclaimed" (processed to recover a usable product or regenerated). Id. EPA exempts these activities "because they are like ordinary usage of commercial products." Id. at 619.

Petitioners, American Mining Congress ("AMC") and American Petroleum Institute ("API"), challenge the scope of EPA's final rule. Relying upon the statutory definition of "solid waste," petitioners contend that EPA's authority under RCRA is limited to controlling materials that are discarded or intended for discard. They argue that EPA's reuse and recycle rules, as applied to inprocess secondary materials, regulate materials that have not been discarded, and therefore exceed EPA's jurisdiction.3

To understand petitioners' claims, a passing familiarity with the nature of their industral processes is required.

Petroleum. Petroleum refineries vary greatly both in respect of their products and their processes. Most of their products, however, are complex mixtures of hydrocarbons produced through a number of interdependent and sometimes repetitious processing steps. In general, the refining process starts by "distilling" crude oil into various hydrocarbon streams or "fractions." The "fractions" are then subjected to a number of processing steps. Various hydrocarbon materials derived from virtually all stages of processing are combined or blended in order to produce products such as gasoline, fuel oil, and lubricating oils. Any hydrocarbons that are not usable in a particular form or state are returned to an appropriate stage in the refining process so they can eventually be used. Likewise, the hydrocarbons and materials which escape from a refinery's production vessels are gathered and, by a complex retrieval system, returned to appropriate parts of the refining process. Under EPA's final rule, this reuse and recycling of materials is subject to regulation under RCRA.

Mining. In the mining industry, primary metals production involves the extraction of fractions of a percent of a metal from a complex mineralogical matrix (i.e., the natural material in which minerals are embedded). Extractive metallurgy proceeds incrementally. Rome was not built in a day, and all metal cannot be extracted in one fell swoop. In consequence, materials are reprocessed in order to remove as much of the pure metal as possible from the natural ore. Under EPA's final rule, this reprocessed ore and the metal derived from it constitute "solid waste." What is more, valuable metal-bearing and mineral-bearing dusts are often released in processing a particular metal. The mining facility typically recaptures, recycles, and reuses these dusts, frequently in production processes different from the one from which the dusts were originally emitted. The challenged regulations encompass this reprocessing, to the mining industry's dismay.

Against this factual backdrop, we now examine the legal issues presented by petitioners' challenge.

We observe at the outset of our inquiry that EPA's interpretation of the scope of its authority under RCRA has been unclear and unsteady. As previously recounted, EPA has shifted from its vague "sometimes discarded" approach of 1980 to a proposed exclusion from regulation of all materials used or reused as effective substitutes for raw materials in 1983, and finally, to a very narrow exclusion of essentially only materials processed within the meaning of the "closed-loop" exception under the final rule. We emphasize, therefore, that we are confronted with neither a consistent nor a longstanding agency interpretation. Under settled doctrine, "[a]n agency interpretation of a relevant provision which conflicts with the agency's earlier interpretation is 'entitled to considerably less deference' than a consistently held agency view." I.N.S. v. Cardoza-Fonseca, --- U.S. ----, 107 S.Ct. 1207, 1221 n. 30, 94 L.Ed.2d 434 (1987) (quoting Watt v. Alaska, 451 U.S. 259, 273, 101 S.Ct. 1673, 1681, 68 L.Ed.2d 80 (1981)). See also FEC v. Democratic Senatorial Campaign Committee, 454 U.S. 27, 37, 102 S.Ct. 38, 44, 70 L.Ed.2d 23 (1981); Adamo Wrecking Co. v. United States, 434 U.S. 275, 287 n. 5, 98 S.Ct. 566, 574 n. 5, 54 L.Ed.2d 538 (1978); Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 164, 89 L.Ed. 124 (1944); National Fuel Gas Supply Corp. v. FERC, 811 F.2d 1563 (D.C.Cir.1987).

* Because the issue is one of statutory interpretation, the principles enunciated in Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), and its progeny guide our inquiry.4 In Chevron, a unanimous Supreme Court laid out a now familiar, general framework for analyzing agency interpretations of statutes. First, the reviewing court is to consider whether Congress "has directly spoken to the precise question at issue." Id. at 842. This inquiry focuses first on the language and structure of the statute itself. If the answer is not yielded by the statute, then the court is to look to secondary indicia of intent, such as the measure's legislative history. As the Chevron Court emphatically declared: "[I]f the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress." Id. at 842-43.

In cases where Congress' intent is not clear, the Supreme Court set forth a second analytical step: "[I]f the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute.... In such a case, a court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of an agency." Id. at 843-44.

We thus begin our inquiry with the first step of Chevron's analysis: did Congress clearly intend to limit EPA's regulatory jurisdiction to materials disposed of or abandoned, as opposed to materials reused within an ongoing production process? Before directly addressing this question, we should not fail to observe that in its very recent decision in Cardoza-Fonseca the Supreme Court reaffirmed that Chevron's first step is by no means an empty formality, but is to the contrary a vital part of the judicial inquiry. Because of its importance in statutory-analysis cases, we pause briefly to examine that latest descendent in the Chevron lineage.

In that case, the Court addressed the question whether the standard of proof under section 208(a) of the Refugee Act, 8 U.S.C. Sec. 1158(a), which authorizes the Attorney General, in his discretion, to grant asylum to an alien who is unable or unwilling to return to his or her home country "because of persecution or a well-founded fear of persecution" is coextensive with the standard employed under section 243(h) of the Immigration and Nationality Act, 8 U.S.C. Sec. 1253(h), which requires the Attorney General to withhold deportation of an alien who demonstrates that his or her "life or freedom would be threatened" if he or she was deported. Using "traditional tools of statutory construction," the Court concluded that "Congress did not intend the two standards to be identical." 107 S.Ct. at 1221. In its analysis of the deference due the agency's interpretation, the Court, citing Chevron, drew a distinction between "pure" questions of statutory construction and questions of interpretation that arise in the application of a statute to a particular set of facts. Id. The "narrower" task of interpreting a statute in the abstract, according to the Cardoza-Fonseca Court, is "well within the province of the judiciary." Id. at 1222.

As we are confronted in this case with a "pure" question of statutory construction, we remain mindful of the fact that "[t]he judiciary is the final authority on issues of statutory construction.... If a court, employing traditional tools of statutory construction, ascertains that Congress had an intention on the precise question at issue, that intention is the law and must be given effect." Id. at 1221 (quoting Chevron, 467 U.S. at 843 n. 9, 104 S.Ct. at 2781 n. 9).5

Guided by these principles, we turn to the statutory provision at issue here. Congress, it will be recalled, granted EPA power to regulate "solid waste." Congress specifically defined "solid waste" as "discarded material." EPA then defined "discarded material" to include materials destined for reuse in an industry's ongoing production processes. The challenge to EPA's jurisdictional reach is founded, again, on the proposition that in-process secondary materials are outside the bounds of EPA's lawful authority. Nothing has been discarded, the argument goes, and thus RCRA jurisdiction remains untriggered.

* The first step in statutory interpretation is, of course, an analysis of the language itself. As the Supreme Court has often observed, "the starting point in every case involving statutory construction is 'the language employed by Congress.' " CBS v. FCC, 453 U.S. 367, 377, 101 S.Ct. 2813, 2820, 69 L.Ed.2d 706 (1981), (quoting Reiter v. Sonotone Corp., 442 U.S. 330, 337, 99 S.Ct. 2326, 2330, 60 L.Ed.2d 931 (1979)).6 In pursuit of Congress' intent, we "start with the assumption that the legislative purpose is expressed by the ordinary meaning of the words used." Securities Industry Ass'n v. Board of Governors, 468 U.S. 137, 149, 104 S.Ct. 2979, 2986, 82 L.Ed.2d 107 (1984) (quoting Richards v. United States, 369 U.S. 1, 9, 82 S.Ct. 585, 591, 7 L.Ed.2d 492 (1962)). These sound principles governing the reading of statutes seem especially forceful in the context of the present case. Here, Congress defined "solid waste" as "discarded material." The ordinary, plain-English meaning of the word "discarded" is "disposed of," "thrown away" or "abandoned."7 Encompassing materials retained for immediate reuse within the scope of "discarded material" strains, to say the least, the everyday usage of that term.

Although the "ordinary and obvious meaning of the [statutory] phrase is not to be lightly discounted," Cardoza-Fonseca, 107 S.Ct. at 1213, we are hesitant to attribute decisive significance to the ordinary meaning of statutory language. To be sure, our inquiry might well and wisely stop with the plain language of the statute, since it is the statute itself that Congress enacts and the President signs into law. But as the Supreme Court recently observed, the "more natural interpretation" (or plain meaning) is not necessarily determinative.8 Young v. Community Nutrition Institute, 477 U.S. 974, 106 S.Ct. 2360, 2364, 90 L.Ed.2d 959 (1986). And it is not infrequently said, odd as it may seem in a society governed by codified and thus knowable rules, that a matter may be within the letter of a statute but not within its spirit. See, e.g., California Federal Savings & Loan Association v. Guerra, --- U.S. ----, 107 S.Ct. 683, 93 L.Ed.2d 613 (1987); Steelworkers v. Weber, 443 U.S. 193, 99 S.Ct. 2721, 61 L.Ed.2d 480 (1979); Holy Trinity Church v. United States, 143 U.S. 457, 12 S.Ct. 511, 36 L.Ed. 226 (1892).

We hasten to add that this is by no means to say that language employed by a legislative body in that which we call law is doomed to remain inherently unclear and ambiguous. The Supreme Court has held, in a variety of contexts, that the statutory terms themselves can and do clearly express Congress' intent. See, e.g., Cardoza-Fonseca, 107 S.Ct. at 1212-13 ("well-founded fear" standard obviously focuses on subjective belief); Board of Governors v. Dimension Financial Corp., 474 U.S. 361, 106 S.Ct. 681, 686, 88 L.Ed.2d 691 (statutory language "legal right" means "just that"); Sorenson v. Secretary of Treasury, 475 U.S. 851, 106 S.Ct. 1600, 89 L.Ed.2d 855 (1986) (phrasing of statute revealed clear Congressional directive); Securities Industry, 104 S.Ct. at 2988 (literal meaning of "notes" sufficiently clear, rendering "functional analysis" impermissible);9 Library of Congress v. Shaw, --- U.S. ----, ---- 106 S.Ct. 2957, 2963, 92 L.Ed.2d 250 (U.S.1986) (recognizing that statutory language can clearly express Congress' intent to waive immunity); International Union, 816 F.2d 761, 765 (ordinary meaning of "employment" is "powerful evidence" of Congressional intent); see also Westmoreland v. CBS, 770 F.2d 1168, 1173-75 (D.C.Cir.1985) (language of Rule 11, Fed.R.Civ.P., requires court to impose sanctions if violation is found). But see Chemical Manufacturers Association v. NRDC, 470 U.S. 116, 105 S.Ct. 1102, 1108, 84 L.Ed.2d 90 (1985) (where literalistic reading of statutory language would lead to absurd results, language has no plain meaning). In view of this considerable body of learning with respect to the reading of statutes, pointing in quite different directions, we are frank to admit that in our analysis we dare accord the ordinary meaning of "discarded"--i.e., disposed of--considerable, but by no means conclusive, weight in our interpretive task.

In short, a complete analysis of the statutory term "discarded" calls for more than resort to the ordinary, everyday meaning of the specific language at hand. For, "the sense in which [a term] is used in a statute must be determined by reference to the purpose of the particular legislation." Burnet v. Chicago Portrait Co., 285 U.S. 1, 6, 52 S.Ct. 275, 277, 76 L.Ed. 587 (1932).10 The statutory provision cannot properly be torn from the law of which it is a part; context and structure are, as in examining any legal instrument, of substantial import in the interpretive exercise. See, e.g., Stafford v. Briggs, 444 U.S. 527, 535, 100 S.Ct. 774, 780, 63 L.Ed.2d 1 (1980); Offshore Logistics, Inc. v. Tallentire, 477 U.S. 207, 106 S.Ct. 2485, 2494, 91 L.Ed.2d 174 (1986); Pennhurst State School v. Halderman, 451 U.S. 1, 18-19, 101 S.Ct. 1531, 1540, 67 L.Ed.2d 694 (1981).

As we previously recounted, the broad objectives of RCRA are "to promote the protection of health and the environment and to conserve valuable material and energy resources...." 42 U.S.C. Sec. 6902. But that goal is of majestic breadth, and it is difficult, as Dimension Financial taught us, to pour meaning into a highly specific term by resort to grand purposes. Somewhat more specifically, we have seen that RCRA was enacted in response to Congressional findings that the "rising tide of scrap, discarded, and waste materials" generated by consumers and increased industrial production had presented heavily populated urban communities with "serious financial, management, intergovernmental, and technical problems in the disposal of solid wastes." Id. Sec. 6901(a). In light of this problem, Congress determined that "[f]ederal action through financial and technical assistance and leadership in the development, demonstration, and application of new and improved methods and processes to reduce the amount of waste and unsalvageable materials and to provide for proper and economical solid waste disposal practices was necessary." Id. Also animating Congress were its findings that "disposal of solid and hazardouse waste" without careful planning and management presents a danger to human health and the environment; that methods to "separate usable materials from solid waste" should be employed; and that usable energy can be produced from solid waste. Id. Sec. 6901(b), (c), (d).

The question we face, then, is whether, in light of the National Legislature's expressly stated objectives and the underlying problems that motivated it to enact RCRA in the first instance, Congress was using the term "discarded" in its ordinary sense--"disposed of" or "abandoned"--or whether Congress was using it in a much more open-ended way, so as to encompass materials no longer useful in their original capacity though destined for immediate reuse in another phase of the industry's ongoing production process.

For the following reasons, we believe the former to be the case. RCRA was enacted, as the Congressional objectives and findings make clear, in an effort to help States deal with the ever-increasing problem of solid waste disposal by encouraging the search for and use of alternatives to existing methods of disposal (including recycling) and protecting health and the environment by regulating hazardous wastes. To fulfill these purposes, it seems clear that EPA need not regulate "spent" materials that are recycled and reused in an ongoing manufacturing or industrial process.11 These materials have not yet become part of the waste disposal problem; rather, they are destined for beneficial reuse or recycling in a continuous process by the generating industry itself.

The situation in this case thus stands in sharp contrast to that in Riverside Bayview, another post-Chevron case. There, the Corps of Engineers had defined "the waters of the United States" within the meaning of the Clean Water Act, 33 U.S.C. Secs. 1311, 1362 (1972), to include "wetlands." Recognizing that it strained common sense to conclude that "Congress intended to abandon traditional notions of 'waters' and include in that term 'wetlands' as well," the Court performed a close and searching analysis of Congress' intent to determine if this counterintuitive result was nonetheless what Congress had in mind. Id. at 461-65. The Court based its holding (that the agency's expansive definition of "waters of the United States" was reasonable) on several factors: Congress' acquiescence in the agency's interpretation; provisions of the statute expressly including "wetlands" in the definition of "waters"; and, importantly, the danger that forbidding the Corps to regulate "wetlands" would defeat Congress' purpose since pollutants in "wetlands" water might well flow into "waters" that were indisputably jurisdictional. Id. at 465. Thus, due to the nature of the water system, the very evil that Congress sought to interdict--the befouling of the "waters of the United States"--would likely occur were the Corps of Engineers' jurisdiction to stop short of wetlands. Riverside Bayview, 106 S.Ct. at 463.

The present case, on the other hand, seems to us more analogous to Dimension Financial, in which a unanimous Court rebuffed the attempt of the Federal Reserve Board to extend its jurisdiction to so-called "non-bank" banks, financial services institutions that were, in the Fed's view, functional equivalents of banks. The Court looked to the language and purpose of the governing statute and concluded that Congress' intent was clear: its definition of "bank" did not confer regulatory power over "non-bank banks." 106 S.Ct. at 686-89.12 In Dimension Financial, no serious c