Marine Shale v. EPA

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 95-60228
MARINE SHALE PROCESSORS INC.,
Petitioner,
versus
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY,
Respondent.
Petition for Review of Order of
Environmental Protection Agency
April 18, 1996
Before REYNALDO G. GARZA, KING, and HIGGINBOTHAM, Circuit Judges.
HIGGINBOTHAM, Circuit Judge:
This case is an appeal of Marine Shale Processors, Inc. from
final agency action of the Environmental Protection Agency.
Specifically, MSP challenges EPA’s decision to deny MSP’s
application for a Boiler and Industrial Furnace Permit required by
the Resource Conservation and Recovery Act, 42 U.S.C. § 6901-92K.
This case is one of the trio described in United States v. Marine
Shale Processors, Inc., No. 94-30664. We affirm.
I
In 1980, EPA promulgated regulations pursuant to RCRA
governing the treatment, storage, and disposal of hazardous waste.
See, e.g., Final Rule, Hazardous Waste Management: Overview and
Definitions; Generator Regulations; Transporter Regulations, 45
Fed. Reg. 12,721 (1980); Final Rule, Interim Final Rule, and
Request for Comments, Hazardous Waste Management System:
Identification and Listing of Hazardous Waste, 45 Fed. Reg. 33,082
(1980). These regulations defined two methods of processing waste,
incineration and recycling. The rules required facilities engaged
in incineration to procure a permit called a Subpart O permit, a
reference to 40 C.F.R. pt. 264 subpt. O. See Proposed Rule and
Request for Comment, Identification and Listing of Hazardous Waste;
Amendments to Definition of Solid Wastes, 53 Fed. Reg. 519, 522
(1988). Facilities engaged in recycling could operate without
permits. See 45 Fed. Reg. at 33,120 (promulgating 40 C.F.R. §
261.6); see also Final Rule, Hazardous Waste Management System;
Definition of Solid Waste, 50 Fed. Reg. 614, 626-27 (1985).
In 1985, EPA defined a new category of hazardous waste
processing devices called "industrial furnaces," a term defined to
include "aggregate kilns" having certain characteristics. 50 Fed.
Reg. at 661. Industrial furnaces could engage in either
incineration or burning for energy recovery. If the industrial
furnace facility engaged in incineration, then it needed a Subpart
O permit. If the industrial furnace engaged in recycling, no
permit was necessary. 50 Fed. Reg. at 626-27. MSP began
operations in 1985, claiming an exemption from the Subpart O permit
requirement on the grounds that its kiln was an aggregate kiln and
that its facility was an industrial furnace engaged in recycling.
2
On August 14, 1990, the United States sued MSP in United
States District Court for the Eastern District of Louisiana in the
action giving rise to Nos. 94-30419 and 94-30664, claiming among
other things that MSP had incinerated hazardous waste without a
Subpart O permit since it opened for business in 1985. In 1991,
EPA promulgated new rules requiring that all devices using thermal
combustion to treat hazardous wastes have either a Subpart O permit
or a new form of permit for recycling facilities called a Boiler
and Industrial Furnace permit. Final Rule, Burning of Hazardous
Wastes in Boilers and Industrial Furnaces, 56 Fed. Reg. 7134, 7138
(1991). These regulations ended the exception from the permit
requirement for facilities engaged in recycling. MSP submitted a
BIF permit application and a Certification of Compliance with BIF
regulations. On the basis of these filings and its contention that
it fit within the previously existing recycling exemption, MSP
claimed interim status to operate while EPA considered the permit
application. EPA's internal consideration of MSP's application for
a BIF permit proceeded simultaneously with litigation of the United
States' action in Louisiana District Court.
On January 31, 1994, EPA issued a tentative decision denying
MSP's BIF permit application. EPA rested its tentative denial
decision upon its conclusion that MSP did not produce aggregate and
that its system did not use thermal treatment to accomplish
recovery of materials or energy within the meaning of 40 C.F.R. §
260.10. EPA opened its decision for public comment.
3
A jury trial on the United States' claim in district court
that MSP had incinerated waste without a permit began in April,
1994. At the end of a five-week trial, the court submitted 13
interrogatories to the jury. In late May, the jury found itself
able to agree to the answer to only nine of the questions. The
questions relevant to this appeal, together with the jury's answer
if any, were as follows:
1. Was MSP entitled to a recycler exemption from
the requirement of a permit as an operator of an
incinerator of hazardous waste? (unable to answer)
2. Were all of the hazardous wastes accepted by MSP
beneficially used or reused or legitimately recycled?
(unable to answer)
2(a). Were all of the hazardous wastes accepted by
MSP prior to August 21, 1991, beneficially used or reused
or legitimately recycled? (unable to answer)
10. Is MSP's rotary kiln an aggregate kiln? (yes)
13. Are the rotary kiln, oxidizers Nos. 1 and 2,
and slag box part of a kiln system that produces
aggregate? (yes)
Because the jury failed to answer four of the interrogatories, the
district court declared a mistrial.
In September, 1994, EPA issued a final decision denying MSP's
application for a BIF permit. EPA rested upon its finding that
MSP's rotary kiln system did "not meet the definition of aggregate
kiln and, therefore, does not meet the definition of industrial
furnace." EPA also cited MSP's poor history of compliance with the
environmental laws, as well as its finding that MSP could not
qualify as an aggregate kiln because it destroyed hazardous waste.
MSP appealed to the Environmental Appeals Board, relying on
4
principles of Article III, the seventh amendment, collateral
estoppel, due process, and the Administrative Procedures Act, 5
U.S.C. §§ 701-06.
In March, 1995, after a review of the record, the EAB affirmed
EPA's denial. In re Marine Shale Processors, Inc., Dkt. No.
06900009, RCRA Appeal No. 94-12, 1995 WL 135572 (EPA 1995). The
EAB stated that MSP did not produce "commercial-grade aggregate"
from its system and thus that its facility could not qualify as an
aggregate kiln. The EAB questioned EPA's reliance on MSP's
compliance history and on MSP's destruction of hazardous waste, but
ultimately affirmed the decision in its entirety. In April, 1995,
EPA finally denied MSP's BIF permit application on all grounds
stated in its September, 1994 ruling. MSP appeals the denial of
its permit, invoking our authority under 5 U.S.C. § 706(2) to set
aside final agency action. We affirm.
II
MSP invokes Article III, the Seventh Amendment, and collateral
estoppel principles to attack EPA’s permit denial.
A
MSP begins its assault upon the permit denial with
constitutional arguments based on Article III and the Seventh
Amendment. Its first argument is that Article III and the Seventh
Amendment prevent EPA from ruling on its permit application. Its
second argument is that the United States, by filing its lawsuit
and thus invoking the judicial power of an Article III court, could
5
not continue to consider in an internal administrative proceeding
issues identical to those being litigated in the Article III court.
With cites to Montesquieu and Madison, MSP argues that the moment
the United States filed suit the district court obtained exclusive
power to decide any issue before it and that EPA’s permitting staff
could not resolve any legal question pending before the district
court without running afoul of the constitutional prohibition
forbidding Executive Branch review of Article III court decisions.
In a similar vein, MSP invokes the Seventh Amendment, contending
that once the Seventh Amendment is activated as to an issue, a
party is entitled to have the issue resolved by a jury.
With regard to both MSP’s Seventh Amendment and Article III
arguments, we begin with the proposition that, in the absence of a
simultaneous district court proceeding, Congress violated neither
constitutional principle by providing that EPA should adjudicate
MSP’s permit application. See In re Texas General Petroleum Corp.,
52 F.3d 1330, 1336 (5th Cir. 1995) (“Whether an Article III court
is necessary involves the same inquiry as whether a litigant has a
Seventh Amendment right to a jury trial.”) (citing Granfinanciera,
S.A. v. Nordberg, 492 U.S. 33, 53-54 (1989)). MSP’s contention to
the contrary comes decades, perhaps centuries, too late.
Congress’s choice to grant EPA authority over the permit proceeding
represents a classic constitutional example of the public rights
doctrine.
Viewing our inquiry as governed by “practical attention to
substance rather than doctrinaire reliance on formal categories,”
6
Thomas v. Union Carbide Agricultural Products Co., 473 U.S. 568,
587 (1985), we note the following characteristics of the permit
proceeding. First, it is a dispute to which the sovereign is a
party. See Crowell v. Benson, 285 U.S. 22, 50 (1932); Murray’s
Lessee v. Hoboken Land & Improvement Co., 59 U.S. (18 How.) 272,
284 (1855). Second, the permit requirement “serves a public
purpose as an integral part of a program safeguarding the public
health.” Thomas, 473 U.S. at 589. Third, the scientific and
technical nature of the decisions in this permit proceeding make
the decision “peculiarly suited to examination and determination by
an administrative agency specially assigned to that task.”
Crowell, 285 U.S. at 46. Fourth, the permit proceeding, and indeed
most of RCRA itself, deals with a narrowly cabined area of the law.
See Commodity Futures Trading Commission v. Schor, 478 U.S. 833,
852 (1986) (referring to a “particularized area of law”) (internal
quotation marks omitted). Fifth, the permit application implicates
a federal right not immediately analogous to the state common law
causes of action “assumed to be at the ‘core’ of matters normally
reserved to Article III courts.” 478 U.S. at 853. Sixth, EPA,
“unlike the bankruptcy courts under the 1978 Act, does not exercise
‘all ordinary powers of district courts,’ and thus may not, for
instance, preside over jury trials or issue writs of habeas
corpus.” 478 U.S. at 853 (quoting Northern Pipeline Construction
Co. v. Marathon Pipe Line Co., 458 U.S. 50, 85 (1982) (plurality
opinion)). Seventh, Congress has provided for judicial review over
the agency’s permit denial under 5 U.S.C. §§ 704-06. See 478 U.S.
7
at 854-55. Under such circumstances, Congress violated neither the
Seventh Amendment nor Article III in delegating the permitting
decision to EPA.
Having established that EPA could constitutionally adjudicate
the permitting proceeding in the absence of a suit by the United
States, we address MSP’s argument that the enforcement action
altered the constitutional landscape. We find MSP’s contention
convincing in neither the Article III nor the Seventh Amendment
context. At bottom, both arguments fail for the same reason: This
is not a case in which EPA has sought to review or alter the
decision in the district court, to reverse the district court’s
findings, or to interfere with the judiciary’s ability to issue a
binding decision. Cf. Hayburn’s Case, 2 U.S. (2 Dall.) 40 (1792)
(suggesting that the judiciary could not render an opinion as to
whether a citizen was entitled to a pension when both the Secretary
of War and the Congress retained power to decide whether to honor
the judiciary’s judgment); Town of Deerfield v. FCC, 992 F.2d 420
(2d Cir. 1993) (rejecting the FCC’s attempt to alter or amend a
federal court judgment). EPA has, to be sure, disagreed with
several of the conclusions of the district court, but it has never
sought to interfere with the effect that these conclusions have
upon the causes of action being adjudicated there. The permit
application and the district court litigation involve common
issues, but the two proceedings are deciding different questions,
the most important of which is that the permit proceeding concerns
whether MSP may operate legally in the future, while the district
8
court proceeding concerns whether MSP has operated legally in the
past.
Should EPA attempt to use the rulings in the permit proceeding
to collaterally estop MSP in the district court action, MSP’s
argument may have force; we make no comment on this question. Cf.
Parklane Hosiery Co v. Shore, 439 U.S. 322 (1979) (holding that the
Seventh Amendment does not prevent an equity court’s determination
of legal issues from estopping relitigation of the same issues in
a subsequent action at law). But given that EPA could
constitutionally adjudicate the permit application in the absence
of the district court litigation, MSP can make no argument until
the permitting proceeding has some effect upon the issues being
decided in the district court litigation. When and if MSP feels
that effect, it may litigate these issues.
Accordingly, EPA has never sought to judge its own case any
more than it does in any normal permit application proceeding. If
the permitting arm of the agency could constitutionally exercise
jurisdiction over MSP’s permit application in the absence of a
district court proceeding, as we have held, then nothing in Article
III prevented EPA’s permit staff and the district court from
proceeding simultaneously. Having established this general
principle, we examine MSP’s arguments in detail.
1
MSP argues that as a result of EPA’s suit, Article III gave
the district court exclusive power to decide the controversy
between MSP and EPA. MSP points to no statute or constitutional
9
provision granting exclusive jurisdiction to the federal district
courts to decide all disputes between EPA and entities like MSP.
Its argument assumes that there would be no Article III bar had EPA
denied the permit and then filed the district court suit, or if EPA
had litigated the suit to completion and then denied the permit.
We find MSP’s Article III arguments unconvincing. State
courts are not Article III courts, yet nothing in Article III
prevents a state court from litigating the same controversy pending
before a district court. Kline v. Burke Construction Co., 260 U.S.
226, 230 (1922). In such cases, if the state court reaches final
judgment first, its disposition may preclude further litigation in
the district court without violating Article III. Id. at 233-34;
Wayside Transportation Co. v. Marcell’s Motor Express, Inc., 284
F.2d 868, 870-71 (1st Cir. 1960). MSP cites to no case suggesting
that this principle would change if the state itself were a party
to both the state court and federal court litigation. Like the
Sixth Circuit,
We see no reason why the rule permitting a second
tribunal to proceed to the decision of an in personam
matter within its jurisdiction, in spite of the fact that
another action between the same parties is pending in
another tribunal, should not be applicable as between a
United States District Court and a federal administrative
agency in which Congress expressly has placed
responsibility for regulation in a specific area.
Ashland Oil & Refining Co. v. FPC, 421 F.2d 17, 21 (6th Cir. 1970).
MSP cites California v. FPC, 369 U.S. 482 (1962), for the
broad proposition that any time a federal court has jurisdiction
over a controversy in which an agency is a party, the agency must
withhold administrative action until the court has reached a
10
decision. We do not read California so broadly. In that case, the
Supreme Court held that the FPC should not have approved a merger
while a suit challenging the merger, filed by the United States,
was pending in federal district court. Justice Brennan’s majority
opinion does not mention Article III. Instead, it justifies its
holdings with “practical reasons,” primarily the difficulty of
unscrambling an already consummated merger.
MSP points out no analogous practical considerations in this
case. To the contrary, EPA could reasonably decide that the
district court litigation promised to continue for years. The EAB,
for instance, considered MSP official George Eldredge’s statement
that “whatever action EPA proposes, and whatever the outcome of the
lawsuit, the case is going to drag on for years. In the mean[
]time, we’ll be doing business as usual.” In re Marine Shale
Processors, Inc., Dkt. No. 0690009, RCRA Appeal No. 94-12, 1995 WL
135572, at * 17 (EPA 1994) (internal quotation marks omitted). EPA
could conclude that awaiting the decision of the judiciary on those
issues common to the district court litigation and the permit
proceeding would unduly delay resolution of the important questions
in the latter and would allow an admitted violator of the
environmental laws to continue operating, perhaps in further
violation of these laws, until the conclusion of the litigation and
the inevitable appeal. Normally, speedy adjudication from an
administrative agency is something to be encouraged, and we cannot
fault EPA’s decision not to await the unavoidably ponderous
progress of the district court litigation.
11
2
For similar reasons, we reject MSP’s seventh amendment
argument. As EPA acknowledges, MSP has a right to a jury trial in
the district court proceeding. See Tull v. United States, 481 U.S.
412 (1987). But because the permit application triggered a public
rights dispute, MSP has no right to a jury trial in this
proceeding. Atlas Roofing Co. v. OSHRC, 430 U.S. 442, 455 (1977);
see also id. at 450 (noting that jury trials may be incompatible
with agency processes). MSP cites no case holding that the
pendency of an action in one tribunal in which a jury trial right
attaches prevents another tribunal from proceeding without a jury.
Unless and until MSP is prevented from litigating its defenses in
the district court to a jury, no arguable jury trial violation has
occurred.
Nothing in Beacon Theaters, Inc. v. Westover, 359 U.S. 500
(1959), requires a different result. In Beacon Theaters, the
plaintiff filed an action seeking an injunction prohibiting the
defendant from prosecuting an antitrust suit. The defendant
counterclaimed in a complaint stating the antitrust cause of action
and demanded a jury trial. The trial judge scheduled the hearing
on the plaintiff’s request for injunctive relief ahead of the jury
trial on the defendant’s antitrust claim. The Supreme Court held
that the trial court abused its discretion in scheduling the equity
suit first because such scheduling would have the effect of
depriving the defendant of its right to a jury trial in the
counterclaim. Crucial to this holding was the fact that modern
12
rules of civil procedure allowed joinder and joint resolution of
multiple claims of multiple parties, thus in effect giving the
plaintiff an adequate remedy at law by joining all involved. See
id. at 507, 509, 511; see also Dairy Queen, Inc. v. Wood, 369 U.S.
469, 472-73 (1962) (interpreting Beacon Theaters in this manner);
Lytle v. Household Manufacturing, Inc., 494 U.S. 545, 550-52 (1990)
(discussing the importance of the fact that legal and equitable
claims were tried in the same lawsuit in applying the Beacon
Theaters rule). In this case, in contrast, the district court may
not grant a permit, and the adjudicatory arm of EPA may not grant
the relief sought in EPA’s district court complaint. A single
proceeding could not resolve both issues.
B
MSP next argues that EPA’s permit denial violated the
principle of collateral estoppel. In order to invoke collateral
estoppel, however, “the issue under consideration [must be]
identical to that litigated in the prior action.” Copeland v.
Merrill Lynch & Co., 47 F.3d 1415, 1422 (5th Cir. 1995). MSP’s
collateral estoppel argument fails because the jury was either not
asked to resolve or unable to resolve questions crucial to EPA’s
decision to deny MSP’s permit application.
MSP based its BIF permit application to EPA upon the
contention that its kiln system constituted an industrial furnace.
40 C.F.R. § 260.10 defines industrial furnace as “any of the
following enclosed devices that are integral components of
manufacturing processes and that use thermal treatment to
13
accomplish recovery of materials or energy.” The definition then
lists a series of twelve devices by name, which Judge Duplantier
referred to as the “twelve apostles.” “Aggregate kilns” are one of
the twelve apostles. As applied to this case, then, section 260.10
requires EPA to grant MSP a permit if Marine Shale’s kiln is (1) an
aggregate kiln, (2) that is an integral component of a
manufacturing process, and (3) that uses thermal treatment to
accomplish recovery of materials or energy.
In addition, paragraph thirteen of the definition provides
that EPA may add other devices to the list of the twelve apostles
after consideration of five enumerated factors with a sixth
catchall statement that EPA might consider “other factors, as
appropriate.” The first of these five factors is “the design and
use of the device primarily to accomplish recovery of material
products.” The remaining four generally focus on the inquiry of
whether a facility makes a product.
In an interpretive step that MSP has not challenged, EPA
analyzed MSP’s permit application in terms of the five factors
articulated in paragraph thirteen and did not directly focus on the
narrative criteria preceding the list of the twelve apostles. We
note that the first of the five factors mimics the second of the
narrative criteria and that both focus on whether a facility
recovers energy or materials.
EPA denied MSP’s permit application on the basis of its
finding that MSP’s kiln system met none of the five factors
14
enumerated in paragraph thirteen.1 In particular, EPA discussed
extensively its grounds for finding that the majority of the
hazardous waste processed by MSP contributed nothing to the
production of a product and were not recovered or recycled, and
therefore that MSP did not use thermal treatment to recover energy
or materials. In addition, EPA found that MSP’s kiln did not
produce aggregate after defining aggregate according to commercial
specifications.
The jury’s findings covered only a portion of the industrial
furnace inquiry considered in terms of either the narrative
criteria and the twelve apostles or the five factors in paragraph
thirteen. The jury found that MSP’s rotary kiln was an aggregate
kiln, and that MSP’s kiln, oxidizers, and slag box were part of a
system that produced aggregate. For whatever reason, the jury was
not asked whether MSP uses thermal treatment to recover energy or
materials. The interrogatories most analogous to the thermal
treatment inquiry were questions 2 and 2(a), which asked the jury
whether the hazardous wastes received by MSP were beneficially used
or reused or legitimately recycled. The jury failed to reach a
1
Although the EAB affirmed Region VI’s initial decision to
deny the permit primarily upon the ground that MSP’s kiln was not
an aggregate kiln, it “recognize[d] that the Region based its
decision on other grounds as well” and clarified that “to the
extent we have not ruled on those other grounds, nothing in this
decision should be construed as preventing the Region from basing
its final permit decision on these other grounds.” 1995 WL 135572,
at * 24. The final agency action of which MSP complains is Region
VI’s formal denial of its permit application. This denial makes
clear that one of the bases of Region VI’s denial was MSP’s failure
to meet the criteria stated above. MSP has not argued to this
court that our review is limited to the grounds articulated in the
EAB’s decision.
15
verdict on these interrogatories. Accordingly, EPA decided issues
that the jury did not, and collateral estoppel does not apply.
MSP seeks to avoid the force of this argument by contending
that the jury decided whether MSP used thermal processes to recover
energy or materials when it decided that MSP produced aggregate.
This argument is structurally identical to SWP’s contention, which
we rejected in United States v. Marine Shale Processors, Inc., No.
94-30419, at 11, that producing a product is necessarily recycling,
and we disagree for the same reason here. A reasonable trier of
fact could find that, to the extent that MSP produced aggregate, it
did so without recovering the energy or materials in the hazardous
wastes that it accepted.
MSP’s brief suffers from the assumption that the only issue in
the permit application proceeding was whether its rotary kiln
constituted an aggregate kiln. That assumption is incorrect. Not
all aggregate kilns are industrial furnaces, as the narrative
criteria of the definition of industrial furnace and the first of
the five factors in paragraph thirteen make clear.2
2
We also reject MSP’s implication that the district court’s
ruling that MSP had interim status as a BIF estopped EPA from
denying the permit. Interim status is designed to last only until
EPA rules on a permit application.
Because of our disposition of MSP’s collateral estoppel
argument on the grounds of lack of identity of the legal issues
involved, we do not reach EPA’s argument that the jury’s findings
cannot support collateral estoppel because they have not been
incorporated into a final judgment. We note, however, the tension
between the dictum in Recoveredge L.P. v. Pentecost, 44 F.3d 1284,
1295 (5th Cir. 1995), which suggests that jury findings are
sufficient to support collateral estoppel even if the verdict has
not yet resulted in a final judgment, and the holding of Avondale
Shipyards, Inc. v. Insured Lloyd’s, 786 F.2d 1265, 1272 (5th Cir.
1986), which suggests that partial summary judgments are
16
III
MSP argues that EPA's findings of fact and conclusions of law
were arbitrary and capricious. We do not agree.
We limit our review in this case to sections III.A and III.B
of EPA’s September 15, 1994 Statement of Basis for Denial of Permit
Application by Marine Shale Processors, Inc. The findings of fact
and conclusions of law included in these two sections are
sufficient to uphold EPA’s decision. Although we find none of
EPA’s findings of fact or conclusions of law in these two sections
arbitrary, capricious, or contrary to law, we focus our discussion
here on the evidence underpinning the finding that MSP’s system
does not use thermal processes to accomplish recovery of energy or
materials and on certain determinations EPA made in deciding that
MSP’s material does not qualify as aggregate within the meaning of
40 C.F.R. § 260.10.
A
EPA’s finding that MSP has not designed or used its facility
to accomplish recovery of material products and thus that MSP does
insufficient. Under Fed. R. Civ. P. 54(b), both jury findings and
partial summary judgments are subject to revision before entry of
final judgment. Even when, as here, a trial judge has rejected a
motion for a judgment as a matter of law seeking to upset the
jury’s findings, Rule 54(b) provides that this rejection is itself
subject to revision at any time before final judgment. We thus
have some difficulty justifying a rule, if in fact it exists in
this circuit, allowing issue preclusion to attach to jury verdicts
but not to summary judgments, when neither has been incorporated
into a final judgment. We do not seek to resolve this tension in
this case.
Given our disposition of this case, we also do not reach EPA’s
argument that the different burdens of proof and nature of the
proceedings precludes invocation of collateral estoppel.
17
not use thermal treatment to accomplish recovery of materials or
energy is not arbitrary or capricious. As our discussion will make
clear, EPA’s decisions are highly technical and scientific and are
not readily susceptible to lay review. Most of these decisions are
factual. We bear these considerations firmly in mind when
considering MSP’s request that we upset EPA’s conclusions in an
area in which Congress has chosen to trust the experts.
Throughout this section, we assume that MSP produces something
its calls aggregate and that its kiln system is an integral
component of the process for this aggregate’s production. We focus
entirely on the question of whether EPA could conclude that MSP
does not use thermal treatment to accomplish recovery of materials
or energy, or that the design and use of MSP’s device is not
primarily to accomplish recovery of material products.
1
EPA considered evidence that MSP processed quantities of “lab
packs” containing wastes that could contribute nothing to the
production of a product. The lab packs were packages of kitty
litter and other absorbent material surrounding glass or plastic
containers of toxic chemicals. For example, Dr. Douglas Kendall,
an EPA chemist, used MSP’s manifests and Material Characterization
Data Sheets to determine that MSP processed sulfur, toluene
solution, ammonium hydroxide, hydrochloric acid solutions and
mixtures, nitric acid, and sulfuric acid. Dr. Kendall confirmed
that these wastes do not release significant energy when burned
and, because they react to form gases at high temperatures, could
18
not provide bulk for MSP’s product. EPA considered similar
evidence regarding such materials as poisons, pesticides, other
acids, and bases; specific substances included methylene chloride,
trichlorotrifluoroethane, chloroform, perchloroethylene,
trichloroethylene, nitric oxide, fluorotrichloromethane,
pentachlorophenol, ethylenediamine, formaldehyde, carbon
tetrachloride, and phosgene. MSP’s experts could not specify how
many of these substances contributed to a manufacturing process.
MSP’s handling of these substances also suggests that they
contribute nothing to production. MSP employee Annika Keslick told
EPA that MSP normally opened ten percent of these lab packs, and
MSP’s examination upon opening was limited to matching the name on
the glass or plastic container within the pack to the information
contained on the MCDS or manifest.
EPA could find that MSP was not accomplishing recovery of
energy or materials from these wastes. The composition of the
wastes themselves did not allow their combustion to contribute to
any production process, and we cannot understand how MSP could have
recovered energy or materials from these wastes without sampling
them to verify their contents. MSP’s only defense of its treatment
of the lab pack wastes is that the kitty litter and other packaging
provide mass for its aggregate. EPA could conclude that this
argument misconstrues the regulations and is wrong as a matter of
law. One does not recycle hazardous waste by placing that waste
into a container and then recycling the container.
19
MSP correctly points out that the lab packs constitute only
around one percent of the total volume of wastes processed at its
facility. Nevertheless, the amount of material is significant in
absolute terms in that MSP process an average to three to four
hundred of the lab packs per week, and MSP’s cavalier treatment of
these “feedstocks” gives us pause when we consider the remainder of
MSP’s claim that all of its wastes contribute in some way to its
process.
2
EPA considered evidence that MSP processed large quantities of
waste with metal contaminants that contribute in no legitimate way
to any manufacturing process and thus that MSP’s use of these
wastes did not constitute recovery of energy or materials. The
metallic composition of these wastes spanned the periodic table and
included highly variable quantities of lead, barium, cadmium, iron,
silicon, aluminum, manganese, copper, zinc, bromine, strontium,
calcium, and chromium. MSP’s kiln did not destroy these metals.
The residue from the process of metal-bearing waste, which MSP
calls primary aggregate, normally required slagging to reduce
leaching potential.
MSP suggests that it used these metals for two purposes.
First, all provide mass for the ultimate product. Second, some
compounds from these metals had other properties useful to the
manufacturing process or the ultimate product. Dr. Paul Queneau,
a metallurgical engineer, told EPA that iron oxide and alumina and
titanium are “chain formers, and they very much enhance the
20
environmental stability of the slag.” Other metallic oxides lower
the melting point of the mixture and decrease its “melt viscosity.”
EPA’s disbelief of these justifications was not arbitrary or
capricious. EPA scientists stated that the metal content of the
waste necessitated slagging before the ultimate product could be
legally placed on the ground and that the slagging process
significantly reduced the mass produced. Dr. Terrance McNulty, an
expert in extractive metallurgy, also provided evidence that many
of these metals impeded production of the slag. Barium, for
instance, which at times constituted fourteen to sixteen percent of
the slag mass, impeded production because the high melting points
of its compounds made liquification more difficult. Most
importantly, EPA considered evidence suggesting that while many of
the metal compounds do exhibit some of the desirable properties
that Dr. Queneau identified, they do so only when present in
certain concentrations. Chemist Stanley Wrobleski confirmed that
Marine Shale made no attempt to control the metallic composition of
its primary or slagged material and that metal concentrations
varied widely. Moreover, EPA considered evidence such as a letter
from Woodward-Clyde Consultants, MSP’s primary environmental
consultant, to George Eldredge, an MSP officer, stating that many
of the metal compounds “are not introduced specifically or
purposefully into the raw product in order to incorporate a
particular physical characteristic into the produced aggregate but
are inherent elements of the raw materials used in the manufacture
21
of the aggregate.”3 Under such circumstances, EPA could conclude
that MSP’s process did not recover of these metal-bearing wastes or
their metallic constituents.4
3
The largest percentage of MSP’s wastes consists of soil
contaminated by organic compounds. MSP contends that the soil
3
Although this same letter concluded that “these elements
are beneficial in enhancing the quality of the produced aggregate,”
it appears that this conclusion was based entirely upon the
coincidence that “the majority of the elements of the produced
aggregate are also the major constituents in some of the more
common and select construction materials in use today.” Nothing in
this letter sought to match the concentration of metals in MSP’s
material to that in the more common and select construction
materials. Marine Shale’s argument would lead to the conclusion
that any material containing sugar, butter, eggs, and flour is a
cake.
4
EPA warned the regulated community about this type of “use”
of metallic compounds shortly after filing the lawsuit in this
case.
The Agency notes in addition that it ordinarily does not
consider metal-bearing hazardous wastes to be used as
ingredients when they are placed in industrial furnaces
purportedly to contribute to producing a product. . . .
To be considered legitimate use as an ingredient, it
would normally need to be demonstrated to EPA (or an
authorized State) pursuant to § 261.2(f) that the
hazardous metal constituents in the waste are necessary
for the product (i.e. are contributing to product
quality) and are not present in amounts in excess of
those necessary to contribute to product quality. This
would normally require some demonstration that these
hazardous metal constituents do not render the product
unsafe for its intended use. (The other sham recycling
criteria discussed frequently by EPA would have also to
be satisfied). The types of uses of hazardous wastes in
industrial furnaces to produce waste-derived products of
which the Agency is aware, such as using hazardous wastes
to produce aggregate or cement[,] . . . do not appear to
satisfy these criteria.”
Final Rule, Burning of Hazardous Wastes in Boilers and Industrial
Furnaces, 56 Fed. Reg. 7133, 7185 (1991).
22
provides raw material, or mass, for its aggregate and that the
organic compounds release heat when burned. Accordingly, MSP
argues that both the soil and the waste contribute to its aggregate
production process.
EPA’s rejection of these arguments was not arbitrary or
capricious. EPA considered evidence that some of these wastes
consisted of soil contaminated with pentachlorophenol, which it
specifically labeled a low energy hazardous waste constituent. In
addition, EPA could conclude that MSP’s process generates heat far
in excess of that needed to make its product. Ronald Corwin, an
EPA expert witness, suggested that the vast majority of the heat
MSP produced from its burning travels in non-contact cooling water
through MSP’s facility and out into Bayou Boeuf. While MSP
correctly points out that no recycling process is one hundred
percent efficient, EPA’s assessment of whether this heat is used or
wasted is a particularly technical judgment about the overall
efficiency of MSP’s process. We will not disturb this judgment in
this case.
4
At oral argument, MSP strenuously contended that EPA’s permit
denial decision rested on the conclusion that EPA could reject the
application if MSP burned a thimbleful of hazardous waste for
destruction, and thus that EPA had imposed an unreasonable burden
in requiring a potential BIF to prove that it was recovering every
atom or every bit of heat from waste in order to claim entitlement
to a BIF permit. We make no comment on this argument; this is
23
simply not a thimbleful case. EPA has concluded that the
overwhelming majority of MSP’s wastes are burned for destruction,
not used for recovery of energy or materials. The findings of fact
and conclusions of law underlying these decisions are not arbitrary
or capricious. EPA could conclude that to the extent that MSP
produced a product, it did so in spite of the wastes it purported
to recycle.
5
MSP’s final attack on this analysis is that a focus upon
recovery of energy or materials constitutes an analysis of the role
that each material plays in the manufacturing process and of the
purpose the particular facility serves. After the promulgation of
the BIF regulations, MSP argues, a focus on purpose is improper.
In particular, MSP quotes the EAB’s statement that “we have serious
doubts as to whether after promulgation of the BIF rule the purpose
for which MSP is burning hazardous waste at the facility is
relevant to the determinant of whether MSP’s facility meets the
industrial furnace definition.” In re Marine Shale Processors,
Inc., Dkt. No. 06900009, RCRA Appeal No. 94-12, 1995 WL 135572, at
* 25 n.32 (EPA 1995). MSP also notes that 40 C.F.R. § 266.100
establishes that the BIF rules regulate BIFs without regard to
whether the particular facility is burning for destruction or is
recycling.
MSP’s argument fails to separate two analytically distinct
issues and regulations. 40 C.F.R. § 260.10 governs whether a
facility definitionally qualifies as a BIF. Once a facility has
24
definitionally qualified as a BIF, 40 C.F.R. pt. 266 subpt. H
governs most aspects of its operations, including burning for
destruction. Although we note that some tension might arise if EPA
were to interpret section 260.10's definition of BIF to exclude a
facility that burns a thimbleful of waste for destruction, EPA has
not done so here, as is made clear by EPA’s focus on whether MSP
uses its kiln system “primarily to accomplish recovery of material
products.” 40 C.F.R. § 260.10 (emphasis added). We cannot
conceive of an interpretation of “to accomplish recovery of
materials or energy” and other similar phrases in section 260.10
that does not focus on purpose.
An analysis of the preambles to the regulations defining BIFs
supports our conclusion. In distinguishing between boilers and
incinerators, EPA did seek to shift the initial focus of the
definitional inquiry from primary purpose to structural design.
Thus, EPA considered and eventually adopted a definition of boiler
depending on whether the facility “achieve[s] heat transfer within
the combustion chamber itself, generally by exposing the heat
recovery surface to the flame.” Proposed Rule, Hazardous Waste
Management System: General, 48 Fed. Reg. 14,472, 14,483 (1983);
see Final Rule, Hazardous Waste Management System; Definition of
Solid Waste, 50 Fed. Reg. 614, 626-27 (1985).5 But EPA recognized
that some facilities normally engaging in recycling lacked this
5
Even in the boiler context, EPA used the integral design
test as a proxy for discovering the primary purpose of the
facility. See, e.g., 50 Fed. Reg. at 626 (“The definition of
boilers focuses on physical indicia of their legitimate use for
energy recovery.”).
25
distinguishing characteristic of boilers, and therefore chose to
rely in part upon the primary purpose test in defining industrial
furnaces. 50 Fed. Reg. at 626-27. Thus, the language of the rules
and the preambles support our conclusion that EPA may interpret 40
C.F.R. § 260.10 to include a focus on the primary purpose of the
facility or the role played by wastes processed within it.
B
We hold that EPA’s refusal to label MSP’s kiln an aggregate
kiln was not arbitrary or capricious. MSP’s primary attack upon
this portion of EPA’s reasoning is that EPA erred by narrowing its
definition of “aggregate” to “commercial grade aggregate.” In
particular, MSP disputes EPA’s reliance upon standards promulgated
by the Louisiana Department of Transportation in reaching its
decision that MSP’s material does not constitute commercial grade
aggregate. EPA’s interpretations of its own regulations are
entitled to substantial deference. Ford Motor Credit Co. v.
Milhollin, 444 U.S. 555, 566 (1980). We find no error.
In making its adjudicative decision, EPA had to employ some
set of standards to distinguish aggregate from any material, like
cigarette ash, capable of occupying space. The history of EPA’s
focus on recycling of hazardous wastes to produce a commercial
product, as well as the use of commercial terms like
“manufacturing” process and “industrial” furnace, suggests that
EPA’s decision to employ commercial criteria in its decision was
reasonable at least.
26
EPA considered factual evidence from witnesses knowledgeable
in the construction field that aggregate purchasers typically
employ at least some specifications for the product they purchase.
In addition, EPA heard evidence that a material must meet LaDOT
specifications before the State of Louisiana will buy it for state
construction projects and that many private commercial contractors
adopt these specifications as well. In the face of this legal
history, regulatory language, and factual evidence, we cannot fault
EPA’s choice to rely on common commercial specifications to define
the term “aggregate kiln” in 40 C.F.R. § 261.10.
We also find nothing wrong with EPA’s decision to consider
LaDOT criteria as highly indicative, though not conclusive, of the
content of common commercial specifications. MSP has proposed no
alterative set of standards or definition. Federal courts give
deference to an agency’s interpretation of its own rules; under the
circumstances of this case, however, we seriously doubt that such
deference is necessary. We find no error in EPA’s choice of legal
standard.
Given EPA’s legal interpretation of its own regulation, we
find nothing arbitrary or capricious in its application of this
interpretation to the facts at hand, and we refuse to upset its
conclusion that MSP’s material is not commercial grade aggregate.
MSP concedes that its material, and substances made from it, could
not comport with many of the LaDOT standards. In addition, MSP
concedes that it conducts no tests at all on its material to
determine strength, size, shape, specific gravity, absorbency,
27
durability, compaction, or texture. Although MSP presented expert
studies suggesting that its slagged and primary material could be
useful in the production of certain concrete and asphaltic
products, other experts disagreed. The choice of which expert
opinions to credit belongs to the EPA permitting staff. Like the
Environmental Appeals Board, we are struck by the fact that MSP has
never field tested any of the products that its experts testified
might possibly be manufactured in part from its slagged and primary
material and that none of MSP’s product has ever been commercially
used for these purposes. In re Marine Shall Processors, Inc., Dkt.
No. 06900009, RCRA Appeal No. 94-12, 1995 WL 135572, at * 12 (EPA
1994). Under such circumstances, EPA’s application of the law to
the facts is not arbitrary or capricious.
IV
MSP continues its attack on the permit denial process by
alleging that EPA's failure to insulate fully the personnel
litigating the district court action from those participating in
the permit denial process rendered the latter deficient under the
Due Process Clause. MSP highlights the roles of two individuals,
Dr. Allyn Davis and Ms. Terry Sykes.6 We find no due process
violation.
A
6
MSP also devotes a footnote to an allegation of misconduct
by Mr. Steven Silverman, an attorney in EPA’s Office of General
Counsel, labeling him the “finalizer” of EPA’s permit denial
decision. This portion of MSP’s argument lacks merit.
28
Dr. Davis was the Director of EPA Region VI's Hazardous Waste
Management Division, which has oversight of both enforcement and
permitting issues within Region VI. Dr. Davis referred MSP’s
facility to EPA's enforcement arm. He later made the initial
determination that MSP should not receive a BIF permit. MSP also
attacks Dr. Davis's adjudicative role on the grounds that his
deposition testimony showed that he had prejudged certain key
issues.
We find nothing remarkable in Dr. Davis’s role in the
permitting process.
It is also very typical for the members of administrative
agencies to receive the results of investigations, to
approve the filing of charges or formal complaints
instituting enforcement proceedings, and then to
participate in the ensuing hearings. This mode of
procedure does not violate the Administrative Procedure
Act, and it does not violate due process of law.
Withrow v. Larkin, 421 U.S. 35, 56 (1975). In his depositions, Dr.
Davis repeatedly testified that he had not prejudged issues, that
his decisions were based on information available at the time, and
that he had decided to refuse MSP’s permit application after an
unbiased review of the evidence involved in the case. The fact
that Dr. Davis came to one conclusion based on some evidence did
not at all prevent him from deciding the issue fairly when
confronted with all the evidence. See NLRB v. Donnelly Garment
Co., 330 U.S. 219, 236-37 (1947) (holding that a hearing examiner’s
prior adverse ruling did not prevent him from adjudicating the same
case on retrial even though the examiner’s initial decision had
been reversed for improper exclusion of evidence).
29
B
Ms. Sykes was one of the United States' attorneys in the
enforcement action at pre-trial and early in the trial itself.
After Dr. Davis and permit staff determined initially that EPA
should deny MSP's permit application and identified the grounds for
that determination, Ms. Sykes wrote a draft of the findings of fact
and conclusions of law that served as the basis for EPA's statement
justifying the permit denial. Permit staff official Elaine Taylor
provided evidence that Ms. Sykes became involved only after the
permitting branch had completed an exhaustive review of MSP’s six
volume application, after Dr. Davis had approved the staff
recommendation to deny the permit, after the staff had identified
the grounds for the refusal, and several months after Ms. Sykes
resigned from the district court litigation team. EPA relied on
Ms. Sykes because of the illness of another attorney.
Ms. Sykes’ role in the process was less than ideal, and the
EAB correctly labeled it a mistake in judgment. In re Marine Shale
Processors, Inc., Dkt. No. 06900009, RCRA Appeal No. 94-12, 1995 WL
135572, at * 23 (EPA 1994). The question, however, is whether Ms.
Sykes’ role denied MSP due process. We think not.
Ms. Sykes “is entitled to the normal presumption of good faith
that, in courts of law, government officials still enjoy, that must
be refuted by well-nigh irrefragable proof.” Starr v. FAA, 589
F.2d 307, 315 (7th Cir. 1979); see Schweiker v. McClure, 456 U.S.
188, 195-96 (1982). MSP’s burden is to persuade us that the use of
Ms. Sykes posed “such a risk of actual bias or prejudgment that the
30
practice must be forbidden if the guarantee of due process is to be
adequately implemented.” Withrow, 421 U.S. at 47. In this case,
Ms. Sykes’ made no decision at all. She had no power to decide
whether to grant MSP its permit, nor did she have power over those
making that decision. Her role consisted entirely of articulating
the thoughts and decisions of others. Even if Sykes’ mind were
“irrevocably closed,” FTC v. Cement Institute, 333 U.S. 683, 701
(1948), she had a small role in the decision making process.
MSP analogizes Sykes’ role to that of a federal court law
clerk and argues that our decision in Hall v. SBA, 695 F.2d 175
(5th Cir. 1983), mandates reversal here. In Hall, we remanded a
judgment for a new trial because a magistrate judge used a law
clerk who from previous experience possessed intimate knowledge of
the facts of the case and who had previously written a letter to
the defendants stating that she agreed with the plaintiff. Hall
does not control our decision in this case for two reasons. First,
Hall was a decision under 28 U.S.C. § 455, which governs judicial
conduct. “As this and several other circuits have recognized,
section 455 establishes a statutory disqualification standard more
demanding than that required by the Due Process Clause.” United
States v. Couch, 896 F.2d 78, 81 (5th Cir. 1990); see also Dirt,
Inc. v. Mobile County Commission, 739 F.2d 1562, 1566 (11th Cir.
1984) (“Although such an appearance of bias is clearly present in
this case, the standards governing administrative proceedings are
far more relaxed than those controlling judicial hearings.”).
Second, the Hall law clerk was involved throughout the entirety of
31
the trial; she wrote bench memoranda, administered the case until
the end of litigation, and had daily informal access to the
magistrate. The danger existed that her bias affected the decision
itself. In this case, the record shows that EPA used Sykes only
after unbiased staff had reached the tentative decision to deny
MSP’s permit and had identified the grounds for the denial, and
that Sykes had no role in the process beyond providing a draft of
the eventual findings of fact and conclusions of law.
By comparison, we note that district courts occasionally adopt
wholesale the findings of fact and conclusions of law written by a
victorious litigant. While we discourage this practice, we have
never radically altered the standard of review in such cases, much
less concluded that such an adoption results in a per se due
process violation. See Lewis v. NLRB, 750 F.2d 1266, 1272 n.5 (5th
Cir. 1985); James v. Stockham Valves & Fittings Co., 559 F.2d 310,
314 n.1 (5th Cir. 1977) cert. denied, 434 U.S. 1034 (1978). We
tolerate the occasional use of this device because of our trust
that district courts will closely examine the proposed findings and
will carefully consider the objections and arguments of the
opposing party. In this case, EPA formalized exactly this sort of
review process. After Sykes wrote the proposed findings, EPA gave
MSP an opportunity to criticize her work. MSP took full advantage
of this opportunity by filing 18 boxes of argument. EPA’s
permitting staff then reexamined the findings and adhered.
These facts distinguish this case from Bethlehem Steel Corp.
v. EPA, 638 F.2d 994, 1009 (7th Cir. 1980), upon which MSP
32
principally relies. MSP does not allege that EPA failed to
disclose the grounds for its decision, that prosecutorial staff
sought to delay the timing of an adjudication in order to gain a
tactical advantage, or that adjudicatory staff sought to force MSP
to waive certain litigation defenses in return for favorable
treatment on its permit application. It was the combination of all
of these factors, together with the improper mixing of adjudicatory
and prosecutorial staff, that concerned the Seventh Circuit in
Bethlehem Steel.
We question whether the use of Sykes as a federal law clerk
would have passed the muster under section 455, given our statement
in Hall that “[e]very judge has suffered a change of heart after
reaching a tentative decision. Much might happen during the
research and writing to affect the decision. Until the decision
was signed and rendered, it was in pectore judicis, subject to
possible influence.” 685 F.2d at 179. Nevertheless, the
constitutional standard for agency adjudication is not as
stringent, and we hold that EPA provided MSP due process of law in
its review of the permit application.
IV
MSP makes one final argument. It contends that EPA exceeded
its statutory authority by basing the permit denial in part on
MSP's poor history of compliance with environmental laws. We
refuse to reach this argument. We have upheld EPA’s denial of
MSP’s permit on other grounds, and MSP does not argue that the
33
inclusion of this alternative grounds for decision renders the
permit denial infirm.
AFFIRMED.
34