Monday, August 9, 2010

Howmet Corporation v. U.S. EPA

Aug 6: In the U.S. Court of Appeals, D.C. Circuit, Case No. 09-5360. U.S. EPA said Howmet Corporation (Howmet) violated the Resource Conservation and Recovery Act and the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et seq. (collectively RCRA), and its implementing regulations. Howmet argued instead that its actions were permitted by the regulations. The Appeals Court said, "Whether viewed as a syntactical ambiguity or a semantic squabble, the dispute focuses on one question: when is a material no longer serving 'the purpose for which it was produced?' The EPA insists the initial use of the material is determinative; Howmet contends the initial use is irrelevant. The question matters because 'spent material' is subject to RCRA's hazardous waste regulations, but material that has not been spent is not."
    Howmet insisted that used KOH (liquid potassium hydroxide) sent to a fertilizer manufacturer [Royster] for use as a fertilizer ingredient was not "spent material" and thus not subject to RCRA regulations. After Howmet lost this argument before an administrative law judge (ALJ) and the Environmental Appeals Board (EAB), the district court rejected Howmet's Administrative Procedure Act claim and granted the EPA's cross-motion for summary judgment, holding that EPA's interpretation of its "spent material" regulation was not arbitrary and capricious and that Howmet had fair notice of the Agency's interpretation. See  Howmet Corp. v. EPA, 656 F. Supp. 2d 167 (D.D.C. 2009).
    In a 2-1 split decision, the majority Appeals Court affirmed the district court decision upholding EPA's interpretation. The majority said, "The EPA's explanation of the definition of spent material in the Guidance Manual should have put Howmet on notice of the EPA's interpretation of its 'spent material' definition, and Howmet should have been able to determine that, based on the EPA's interpretation, the used KOH it transferred to Royster was a spent material. Use as a fertilizer ingredient is not a use
'similar to' use as an industrial cleaning agent. Thus, even assuming the EPA's 1985 Final Rule and its accompanying regulations lacked enough clarity, on their own, to provide Howmet fair notice of the EPA's interpretation of its spent material definition, the Guidance Manual, made available to Howmet one year after the regulation was promulgated and thirteen years before the conduct at issue here, was sufficient to do so."
    In a convincing dissent, Justice Kavanaugh argues, ". . .the statute provides that hazardous waste must be 'discarded material.' 42 U.S.C. § 6903(5), (27). In 1985, EPA issued regulations that construe 'discarded material' to include certain 'spent material.' See 40 C.F.R. § 261.2. A material is "spent" if it is no longer suitable for 'the purpose for which it was produced.' Id. § 261.1(c)(1). A separate regulation makes clear that 'purpose,' though singular, can include multiple purposes. See id. § 260.3(b). The key issue in this EPA enforcement action concerns the 1985 regulations' phrase 'purpose[s] for which [a material] was produced.' The material at issue here -- liquid potassium hydroxide -- is produced and marketed for, among other things, use in fertilizer. Yet EPA seeks to impose fines on Howmet for shipping liquid potassium hydroxide for use in fertilizer simply because Howmet had already used the potassium hydroxide as a metal cleaning agent. In justifying its enforcement action, EPA claims that the "purpose for which [a material] was produced" includes only the material's first use by the purchaser. In my judgment, EPA's argument mangles the language of the 1985 regulations."
    Access the complete opinion (click here).