Owen Electric Steel Company of South Carolina, Incorporated v. Carol M. Browner, Administrator of the United States Environmental Protection Agency

Petition denied by published opinion. Judge RUSSELL wrote the opinion, in which Judge WILKINSON and Judge HAMILTON joined.

OPINION

The sole issue in this case is whether the “slag” produced by petitioner Owen Electric Steel Company (“Owen”) at its Cayce, South Carolina, facility as a byproduct of steel production is “discarded,” and therefore constitutes a “solid waste” under 42 U.S.C. § 6903(27).

I

The relevant facts are few and not in dispute. Owen is engaged in the production of steel. The steel is produced in an electric arc furnace. In the course of production, crushed limestone (calcium carbonate) is added to the furnace to remove certain nonferrous constituents from the molten metal. 1 In this process, the non-ferrous constituents bind with the limestone, creating “slag”, which is essentially limestone and dolomite (magnesium carbonate) with trace amounts of metallic oxides. The slag then floats to the surface of the molten metal and is removed.

The slag is continuously processed at the Owen’s plant in Cayce by a third party contractor. Following processing, the slag is placed in holding bays, where the slag lies on bare soil for tempering and weathering. During this process, known as “curing”, the slag is hydrated and undergoes phase changes where its bulk increases volumet-rically. This curing process generally takes six months. After this time, the slag becomes dimensionally stable and, as a result, amenable for use as a construction aggregate. The slag generated at Owen’s Cayce facility is sold to the construction industry for use as a road base material or for other commercial purposes.

II

An operator of a facility that treats, stores, or disposes of hazardous wastes (“TSDF”) is required to comply with various requirements set forth in the Resource and Conservation Recovery Act (“RCRA”), 42 U.S.C. § 6901-6992k, including seeking and obtaining a permit from the Environmental Protection Agency (“EPA”) 2 . See RCRA § 3005, 42 U.S.C. § 6925. RCRA § 3004(u), 42 U.S.C. § 6924(u), requires that any TSDF permit mandate “corrective action for all releases of hazardous waste or constituents from any solid waste management unit” at the TSDF.

Because Owen’s Cayce facility is a TSDF, Owen had to apply for and obtain an EPA permit for the facility. On October 6, 1989, Owen received by mail from the EPA a proposed permit which listed certain conditions pursuant to which the permit was issued, and the specific areas of the Cayce site *148 as to which the permit applied. The permit identified the slag processing area (“SPA”) as a solid waste management unit (“SWMU”).

In numerous administrative filings thereafter, Owen claimed that the SPA is not an SWMU. When, ultimately, the EPA adhered to its original determination and ordered further evaluation of the SPA, Owen filed the instant petition, naming Carol M. Browner, the EPA Administrator, as respondent.

Ill

We must determine whether the EPA properly classified the SPA as an SWMU. In determining the criteria according to which a particular area is classified as an SWMU, the EPA, justifiably, looks to the legislative history underlying RCRA § 3004(u), which unequivocally states: “[T]he term ‘solid waste management unit’ [in amended RCRA § 3004] is used to reaffirm the Administrator’s responsibility to examine all units at [a TSDF] from which hazardous constituents might migrate, irrespective of whether the units were intended for the management of solid and/or hazardous waste.” H.R.Rep. No. 198, 98th Cong., 2d Sess., pt. 1, at 60 (1983), reprinted in 1984 U.S.C.C.A.N. 5576, 5619. Accordingly, in order to conclude that the SPA is an SWMU, the EPA need only find that Owen’s slag is a “solid waste.”

RCRA § 1004 defines the term “solid waste” 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. § 6903(27). 3 At issue is whether Owen’s slag constitutes “other discarded material.” Owen argues that its slag is not a “discarded material” because it is ultimately recycled and used in roadbeds. EPA counters that, because the slag lies dormant, exposed, on the ground for six months before such use, it is discarded even if it is later “picked up” and used in another capacity.

In evaluating these competing arguments, we accord the EPA’s interpretation of statutory definition of “solid waste” substantial deference under Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). Pursuant to Chevron, the Court must first ask whether Congress has spoken directly to the issue in question. If it has, then Congress’ directive displaces any contrary agency interpretation. If, however, as here, Congress has not directly spoken, then the Court will not invalidate the agency interpretation so long as it is reasonable and permissible. Additionally, we review the Administrator’s permit dispositions only for abuse of discretion. See RCRA § 7006(b), 42 U.S.C. § 6976(b) (adopting the standard of review set out in the Administrative Proce *149 dure Act, 5 U.S.C. §§ 701-706); 5 U.S.C. § 706(2)(A) (limiting judicial review of agency action to a determination of whether the action was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law”). In general, moreover, as we have repeatedly emphasized, “ ‘the authority [of the Administrator] to abate waste hazards is expansive.’ ” Feikema v. Texaco, Inc., 16 F.3d 1408, 1415 (4th Cir.1994) (quoting United States v. Waste Indus., Inc., 734 F.2d 159, 166 (4th Cir.1984) (alteration by the court in Feikema)).

A series of eases have addressed the meaning of “discarded material.” In American Mining Congress v. United States EPA, 824 F.2d 1177 (D.C.Cir.1987) (“AMC F), the District of Columbia Circuit was faced with the question of

whether, in light of [Congress’] 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.

Id. at 1185. The court of appeals settled upon the former option, emphasizing that it found the statutory language unambiguous. The court observed that the legislative history and policies underlying RCRA supported its conclusion. In the court’s opinion, only materials that are “disposed of’ or “abandoned” “become part of the waste disposal problem,” id. at 1186, with which RCRA is concerned.

Were AMC I the final ease offering interpretation of the phrase “discarded material,” Owen might be victorious here: because Owen’s slag is eventually recycled, it cannot be said to have been discarded. Subsequent eases, however, have read AMC I narrowly. First, in American Petroleum Institute v. United States EPA, 906 F.2d 729 (D.C.Cir.1990), the EPA asserted that the District of Columbia Circuit’s holding in AMC I precluded it from regulating as waste hazardous slag that was delivered to a plant for metal reclamation. The court of appeals held otherwise, explaining:

... The issue in AMC [I] was whether the EPA could, under the RCRA, treat as “solid wastes” “materials that are recycled and reused in an ongoing manufacturing or industrial process.” [AMC I, 824 F.2d at 1186.] We held that it could not because

[t]hese 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.

Id. Materials subject to such a process were not “discarded” because they were never “disposed of, abandoned, or thrown away.” Id. at 1193.

AMC [I] is by no means dispositive of EPA’s authority to regulate K061 slag. Unlike the materials in question in AMC [I], K061 is indisputably “discarded” before being subject to metals reclamation. Consequently, it has “become part of the waste disposal problem”....

American Petroleum Inst., 906 F.2d at 741 (emphasis provided by the American Petroleum Inst, court).

Next, in American Mining Congress v. United States EPA, 907 F.2d 1179 (D.C.Cir.1990) (“AMC 77”), petitioners, relying on AMC I, claimed that three hazardous wastes were not solid wastes on the basis that “sludges [containing the wastes] from waste-water that are stored in surface impound-ments and that may at some time in the future be reclaimed are not ‘discarded’.” AMC II, 907 F.2d at 1186 (emphasis in original). The court of appeals rejected petitioners’ reading of AMC I, stating:

Petitioners read AMC [I] too broadly. AMC [Ifs holding concerned only materials that are “destined for immediate reuse in another phase of the industry’s ongoing production process,” id. at 1185 (emphasis added), and that “have not yet become part of the waste disposal problem,” id. at 1186. Nothing in AMC [I] prevents the agency from treating as “discarded” the wastes at issue in this case, which are managed in land disposal units that are part of waste- *150 water treatment systems, which have therefore become “part of the waste disposal problem,” and which are not part of the ongoing industrial processes.

907 F.2d at 1186 (emphasis in original).

Finally, in United States v. ILCO, Inc., 996 F.2d 1126 (11th Cir.1993), ILCO, Inc. (“ILCO”) purchased spent batteries from various sources and then recycled them. ILCO contended that, because it recycled the spent batteries, they had not been discarded and, therefore, were not solid waste. The Eleventh Circuit rejected this argument, stating:

ILCO argues that it has never “discarded” the plates and groups [of the batteries] and, therefore, the material it recycles is not “solid waste” as defined in [section] 6903(27). The lead plates and groups are, no doubt, valuable feedstock for a smelting process. Nevertheless, EPA, with congressional authority, promulgated regulations that classify these materials as “discarded solid waste.” Somebody has discarded the battery in which these components are found. This fact does not change just because a reclaimer has purchased or finds value in the components.

Id. at 1131 (emphasis in original). 4

From these cases, we glean that the fundamental inquiry in determining whether a byproduct has been “discarded” is whether the byproduct is immediately recycled for use in the same industry; if not, then the byproduct is justifiably seen as “part of the waste disposal problem,” AMC I, 824 F.2d at 1186, and therefore as a “solid waste.” We think it reasonable and permissible, under Chevron, for the EPA to adhere to this inquiry in determining whether a material is “discarded.”

Moreover, we find no abuse of discretion in EPA’s conclusion that, under this interpretation, Owen’s slag constitutes “discarded material” and therefore “solid waste.” The slag is not immediately used in Owen’s production process; rather, the slag must sit, untouched, for some six months before it is sold to other entities. 5 The EPA is justified in finding that, where a byproduct sits untouched for six months, it cannot be said that the material was “never ‘disposed of, abandoned, or thrown away.’ ” American Petroleum Inst., 906 F.2d at 741 (emphasis added) (quoting AMC I, 824 F.2d at 1193). The EPA is also justified to conclude that, because the slag is sold to others for use in roadbed construction, it is not “destined for beneficial reuse or recycling in a continuous process by the generating industry itself,” AMC I, 824 F.2d at 1186. In short, the EPA did not abuse its discretion in concluding that Owen’s slag is “part of the waste disposal problem.”

IV

We conclude that Owen’s slag is “solid waste” and that, therefore, the SPA was appropriately determined to be an SWMU. Owen’s petition for relief is therefore denied.

PETITION DENIED.