Opinion for the Court filed PER CURIAM.
These consolidated petitions for review challenge various aspects of a final Environmental Protection Agency ("EPA" or "agency") rule promulgated under the authority of the Resource Conservation and Recovery Act of 1976 ("RCRA") § 3004, 42 U.S.C. § 6924. The rule sets out land disposal prohibitions and treatment standards for "First-Third" scheduled wastes ("First-Third Rule"), 53 Fed.Reg. 31,138 (Aug. 17 1988).
The American Petroleum Institute, the American Iron and Steel Institute, the Chemical Manufacturers Association and the National Association of Metal Finishers (collectively "Industry Petitioners") challenge EPA's conclusion that the RCRA precludes the agency from considering land treatment, in conjunction with pretreatment, as an authorized method of treating hazardous wastes. Industry Petitioners also challenge EPA's abandonment of comparative risk analysis as a means of determining authorized treatment standards for hazardous wastes, claiming that the agency did not provide adequate reasons for abandoning this type of risk assessment.
The Natural Resources Defense Council, Chemical Waste Management, Inc. and the Hazardous Waste Treatment Council (collectively "NRDC") challenge the part of the First-Third Rule that establishes treatment standards for K061 hazardous waste. NRDC claims that EPA has unlawfully exempted the slag residues that result from the "treatment" of K061 in zinc smelters from the RCRA's restrictions on land disposal of hazardous wastes.
We agree with EPA that the RCRA does preclude land treatment in conjunction with pretreatment as a method of treating hazardous wastes. Additionally, we find that EPA provided adequate reasons for abandoning comparative risk analysis. However, because we find that EPA unlawfully exempted the residue produced from smelting K061 waste from the RCRA's restrictions on land disposal of hazardous wastes, we vacate that portion of the rule and remand to the agency for further rulemaking consistent with this opinion.
Subtitle C of the RCRA establishes "a `cradle to grave' regulatory structure overseeing the safe treatment, storage and disposal of hazardous waste." United Technologies
First, EPA has published several lists of specific hazardous wastes ("listed wastes") in which EPA has described the wastes and assigned a "waste code" to each one. 40 C.F.R. § 261, Subpart D. Second, EPA has identified four characteristics of hazardous wastes: ignitability, corrosivity, reactivity and extraction procedure toxicity. See 40 C.F.R. § 261.20-.24. Any solid waste exhibiting one or more of these characteristics is automatically deemed a "hazardous waste" subject to regulation under Subtitle C of the RCRA even if it is not a "listed" waste. See Hazardous Waste Treatment Council v. EPA, 861 F.2d 270, 271 (D.C.Cir.1988).
Once a waste is listed or identified as hazardous, its subsequent management is regulated. Treatment, storage and disposal of a hazardous waste normally can be undertaken only pursuant to a permit that specifies the conditions under which the waste will be managed. 42 U.S.C. §§ 6922-6925.
In the 1984 amendments to the RCRA, Congress shifted the focus of hazardous waste management away from land disposal to treatment alternatives, determining that:
42 U.S.C. § 6901(b)(7). Consistent with this finding, Subtitle C of the RCRA now prohibits hazardous wastes from being disposed of on the land unless one of two conditions is satisfied: (1) the Administrator of EPA determines, "to a reasonable degree of certainty, that there will be no migration of hazardous constituents from the disposal unit or injection zone for as long as the wastes remain hazardous." 42 U.S.C. § 6924(d), (e), (g), (m); or (2) the waste is treated to meet standards established by EPA pursuant to 42 U.S.C. § 6924(m). Section 6924(m)(1), which sets forth treatment requirements, provides:
42 U.S.C. § 6924(m)(1).
To satisfy this directive, EPA required that the hazardous wastes subject to the standards be treated to levels that are achievable by performance of the best demonstrated available technology ("BDAT") or be treated by methods that constitute BDAT. See 51 Fed.Reg. 40,572, 40,578 (Nov. 7, 1986). EPA also explained that in setting BDATs it would compare the risk of various treatments for a particular waste with the risk of land disposal of that waste ("comparative risk" assessment).
B. EPA's First-Third Rule
1. Land Treatment
EPA's First-Third Rule established BDATs for the petroleum refining wastes with the waste codes K048-K052, as set forth in 40 C.F.R. §§ 268.41.
Notwithstanding the requests of Industry Petitioners, the agency refused to consider
2. K061 Hazardous Waste
The final First-Third Rule also established BDATs for K061, a zinc-bearing listed hazardous waste that emanates from the primary production of steel in electric furnaces. 40 C.F.R. § 261.32. The rule established separate treatment standards for two subcategories of K061: a high zinc subcategory (K061 that is at least 15% zinc in composition) and a low zinc subcategory (K061 that is less than 15% zinc in composition). Only the treatment standard for the high zinc subcategory is at issue in this case.
EPA determined that high temperature metals recovery was the BDAT for treating high zinc K061 hazardous wastes. It selected this treatment method on the ground that mandatory recycling of recoverable metals would reduce the amount of hazardous wastes ultimately treated and disposed. 53 Fed.Reg. 31,162 (1988).
Nonetheless, EPA determined that it lacked authority to establish any treatment standards for the slag residue that results from the metals reclamation process. As the agency explained in the notice of proposed rulemaking, the furnaces used for metals reclamation "are normally ... essential components of the industrial process, and when they are actually burning secondary materials for material recovery[,] [they] can be involved in the very act of production, an activity normally beyond the Agency's RCRA authority." 53 Fed.Reg. 11,753 (1988). Consequently, EPA felt constrained to view K061 as no longer being "waste" within the meaning of the RCRA once the K061 enters a reclamation furnace. See id. In the preambles to the final rule, EPA related this analysis to the agency's so-called "indigenous principle," under which EPA disclaims the power to regulate any material generated by the same type of furnace in which the material is being reclaimed. See 53 Fed.Reg. 31,162.
3. Comparative Risk
In addition to establishing BDATs for various hazardous wastes, the First-Third Rule discussed certain general principles that the agency would follow in establishing treatment standards. As part of this discussion, EPA stated that it would no longer compare the risks of treatment technologies with the risks of land disposal in determining treatment technologies. 53 Fed.Reg. 31,190-91 (Aug. 17, 1988). EPA found that such assessments had been of negligible benefit to the agency in previous rulemakings and concluded that the continued use of the assessments would have no influence on the treatment standards chosen under the First-Third Rule and subsequent rulemakings and could lead to environmentally counterproductive results. Id.
A. Land Treatment
Prior to the final First-Third rulemaking, Industry Petitioners asked EPA to consider
Industry Petitioners take issue with EPA's finding that the RCRA precludes consideration of land treatment as a BDAT. They maintain that the RCRA permits EPA to consider land treatment and that we must vacate the portion of the agency's rule that established BDATs for petroleum wastes because the agency misinterpreted the RCRA in determining those BDATs. See Securities and Exchange Commission v. Chenery Co., 318 U.S. 80, 95, 63 S.Ct. 454, 462, 87 L.Ed. 626 (1943) ("[A]n administrative order cannot be upheld unless the grounds upon which the agency acted in exercising its powers were those upon which its action can be sustained."). See also International Brotherhood of Electrical Workers, Local Union No. 474 v. NLRB (St. Francis Hospital), 814 F.2d 697, 708 (D.C.Cir.1987) ("[w]hen [an agency] bases a decision on a standard it unjustifiably believes was mandated by Congress, [its] decision must not be enforced, even though [it] might be able to adopt the very same standard in the exercise of its discretion"). We find, however, that EPA properly interpreted the RCRA as precluding consideration of land treatment.
Section 6924(k) of the RCRA specifically includes the placement of hazardous waste in a "land treatment facility" within its definition of land disposal. See n. 5 supra. Consequently, land treatment is subject to all of the statutory restrictions applicable to land disposal generally. In simple terms, land treatment is a form of land disposal involving the placement of hazardous waste directly on the ground (rather than, for example, in a landfill or surface impoundment) with the expectation that the hazardous constituents will eventually become less hazardous.
The RCRA clearly specifies, however, that hazardous wastes must be treated before being land disposed. Unless a waste is disposed of in a unit demonstrated to meet the "no migration" test of 42 U.S.C.
Sections 6924(m)(1) and (2) are equally explicit. In pertinent part they provide that when a
(Emphasis added.) These provisions are unambiguous: treatment, i.e., a BDAT, must substantially diminish the toxicity of a waste or substantially reduce the likelihood of the migration of its hazardous constituents prior to land disposal.
While there is one instance in which Congress allowed hazardous wastes to be treated in nonprotective land disposal units without first being treated to meet the § 6924(m) treatment standards, this is the exception that proves the rule. Pursuant to 42 U.S.C. § 6925(j)(11), Congress allowed surface impoundments (a type of land disposal unit under § 6924(k)) to receive, on an interim basis, hazardous wastes that have not been treated to meet § 6924(m) standards. Such surface impoundments must, however, meet certain "minimum technological requirements" specified in § 6924(o)(1), including double liners and leachate collection systems. 42 U.S.C. § 6925(j)(11)(A). Moreover, the hazardous treatment residues from such surface impoundments must be removed for subsequent management within a year after the hazardous waste has been placed in the impoundment. 42 U.S.C. § 6925(j)(11)(B).
If Industry Petitioners' interpretation of § 6924(m) were correct, § 6925(j)(11) would be surplusage since EPA would already have been authorized to permit the treatment of hazardous wastes subsequent to land disposal. Moreover, § 6925(j)(11) shows that when Congress intended to allow the land disposal of untreated hazardous wastes in units not meeting the "no migration" standard, it did so explicitly and placed numerous restrictions upon such disposal.
In sum, then, because we find no indication in the record that the pretreatment component of the BDAT that Industry Petitioners asked EPA to consider — land treatment in conjunction with some form of pretreatment — would by itself meet the strictures of § 6924(m), we find that EPA was correct in concluding that the BDAT suggested by Industry Petitioners was precluded from consideration by § 6924(m).
Of course, if Industry Petitioners had asserted that the pretreatment they were contemplating in conjunction with land treatment by itself met either the "substantially diminish" or "substantially reduce" requirement of § 6924(m), we would agree that EPA erred in concluding that the RCRA precluded consideration of the recommended BDAT.
B. Comparative Risk
In the First-Third Rule, EPA announced that it would no longer engage in comparative risk assessment — comparing the risks to human health and the environment of treatment of a waste by a particular BDAT with those inherent in land disposal of the same waste. Industry Petitioners challenge this decision. EPA claims, however, that Industry Petitioners lack standing to raise their challenge because Industry Petitioners have alleged no harm flowing from EPA's decision to abandon comparative risk assessment. We disagree.
In their comments on EPA's Proposed First-Third rulemaking, Industry Petitioners identified several techniques for the treatment of refinery wastes. See, e.g., API Comments, J.A. 277-92. In the final rule, however, without performing comparative risk analyses, EPA rejected several of these methods in establishing treatment levels for the wastes, and limited standards for the listed petroleum refining wastes essentially to three technologies (incineration, a three-cycle solvent extraction process and fixation). 53 Fed.Reg. 31,160 (Aug. 17, 1988). Consequently, the alternative and allegedly cheaper technologies recommended by Industry Petitioners were precluded from use. Industry Petitioners claim that had comparative risk assessments been made, these alternative technologies would not have been rejected by EPA. See API Comments, J.A. 278-91. Preclusion of such technologies in many cases may increase the cost of waste treatment for refiners and may compel refiners to make expensive changes in the manner in which they manage hazardous wastes. Thus, Industry Petitioners have alleged an "actual or threatened injury as a result of the putatively illegal conduct of the defendants." Gladstone Realtors v. Village of Bellwood, 441 U.S. 91, 99, 99 S.Ct. 1601, 1608, 60 L.Ed.2d 66 (1979).
Industry Petitioners contend that EPA's decision to abandon comparative risk analysis was arbitrary and capricious. In reviewing an agency's action under the arbitrary and capricious standard, we must affirm the agency if it has articulated a satisfactory explanation for its action including a "rational connection between the facts found and the choice made." Motor
First, EPA explained that if a comparative risk assessment resulted in ruling out all treatments as riskier than land disposal (in terms of the potential danger it posed to human health and the environment), then treatment standards could not be set for a given waste and that waste could not be land disposed. 53 Fed.Reg. 31,190 (Aug. 17, 1988).
The second reason EPA offered for abandoning comparative risk was that the methodology had not proven to be particularly useful because it does not compare equally viable options since land disposal is presumptively disfavored by the RCRA. 53 Fed.Reg. 31,190 (Aug. 17, 1988). Industry Petitioners also reject this reason, arguing that comparing the risks inherent in treatments with those attendant to land disposal serves the useful purpose of helping the agency eliminate consideration of treatments that are riskier than land disposal.
The ultimate goal of comparative risk assessment, however, is not to eliminate consideration of individual treatment technologies, but to arrive at treatments that can be used as BDATs. EPA has noted that comparative risk assessment has not been helpful in that regard. See id. ("the use of [comparative risk in prior rulemakings] [has] not affect[ed] the determination as to whether a specific treatment technology was available"). Thus we agree with EPA that rather than continuing to expend resources on comparative risk analyses which have in the past proven relatively useless to the agency, it is considerably more efficient for the agency's time to focus on comparing "the net risk posed by alternative [treatment] practices [as a way to] ... identif[y the]  `best' treatment technologies." Id.
In sum, then, we find that EPA's decision to abandon comparative risk analysis was not arbitrary and capricious, and that the agency articulated a more than satisfactory explanation for its action.
C. K061 Hazardous Waste
Ordinarily, once EPA determines that a particular substance is a hazardous waste, the agency continues to treat as a hazardous waste any product "derived from" that substance in the course of waste treatment. See 40 C.F.R. § 261.3(c)(2). EPA
NRDC argues that EPA's failure to prescribe treatment standards derives from a flawed interpretation of the scope of EPA's statutory authority. We agree. We conclude that the EPA failed to give a reasoned explanation for its construction of the RCRA and therefore remand for further consideration of this issue.
As a threshold matter, we consider EPA's claim that NRDC's challenge should be dismissed as unripe. Our primary concern in assessing the ripeness of a preenforcement challenge to agency action is "the fitness of the issue for judicial decision." Abbott Labs. v. Gardner, 387 U.S. 136, 149, 87 S.Ct. 1507, 1516, 18 L.Ed.2d 681 (1967).
Applying these criteria, we have no difficulty concluding that NRDC's challenge is ripe. Whether EPA has the statutory authority to prescribe treatment standards for K061 slag is a purely legal question, one that can be answered solely by consulting the text, legislative history and judicial interpretations of the RCRA. See Better Gov't Ass'n, 780 F.2d at 92. Nor will EPA have occasion to refine its conclusion that it lacks statutory authority to regulate K061 slag in the course of applying the standards that the agency has promulgated for the treatment of K061.
EPA challenges this analysis on the ground that the agency's so-called "indigenous principle" is not yet final. EPA notes that this principle — which the agency uses to identify the general characteristics of materials that fall outside the range of the RCRA by virtue of being reclaimed in an industrial furnace — is the subject of pending rulemakings. See 54 Fed.Reg. 43,731-32 (1989); 52 Fed.Reg. 16,989-91 (1987). EPA suggests that we defer review of the First-Third Rule until those rulemakings are concluded.
We see no merit in this suggestion. The rulemakings in which EPA is currently developing and applying the indigenous principle are entirely separate from the First-Third Rule. If these proceedings result in a conception of the agency's authority consistent with that reflected in the First-Third Rule — as EPA expects, see 53 Fed.Reg. 31,162 — they will not furnish a new opportunity to challenge the agency's refusal to prescribe standards for K061 slag. Nor would a change in position initiated in these rulemakings undo the agency's failure to issue such standards in the First-Third rulemaking. It is true that the agency could at that point amend the First-Third Rule. But an agency always retains the power to revise a final rule through additional rulemaking. If the possibility of
3. The Merits
EPA concluded that it lacked authority to regulate K061 slag because the material is not a "solid waste," and thus not a "hazardous waste," for purposes of the RCRA. See 42 U.S.C. § 6903(5) (defining "hazardous waste" to be a subset of "solid waste"). The RCRA defines "solid waste" as
Id. § 6903(27) (emphasis added). Although it is undisputed that K061 is a "solid waste" when it leaves the electric furnace in which it is produced,
Review of the EPA's interpretation of the RCRA is governed by 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). Under Chevron's familiar two-step analysis, we ask first "whether Congress has directly spoken to the precise question at issue"; if so, we "must give effect to the unambiguously expressed intent of Congress." Id. at 842-43, 104 S.Ct. at 2781-82. If not, we defer to the agency's interpretation so long as it is "permissible," id. at 843, 104 S.Ct. at 2782, that is, "so long it is reasonable and consistent with the statutory purpose." Ohio v. Department of the Interior, 880 F.2d 432, 441 (D.C.Cir.1989) (emphasis added).
Our application of the Chevron test is necessarily influenced by the agency's own explanation of its action. In this case, EPA concluded that the terms of the RCRA left it no choice but to disclaim authority to prescribe treatment standards for K061 slag. See 53 Fed.Reg. 11,753; see also 53 Fed.Reg. 31,162. It follows that we can uphold EPA's construction of the statute only if the agency's exercise of authority over the slag was indeed foreclosed by the RCRA under Chevron step one. For an agency's conclusion that a particular course is compelled by a statute that is actually ambiguous does not display the caliber of reasoned decisionmaking necessary to warrant. Chevron step two deference. See, e.g., King Broadcasting Co. v. FCC, 860 F.2d 465, 470 (D.C.Cir.1988). Because a reviewing court is powerless to remedy this defect in reasoning, see Chenery, 318 U.S. at 95, 63 S.Ct. at 462, the proper course in such a situation is to remand so that the agency can pursue a reasoned interpretation of the statute. See St. Francis Hosp., 814 F.2d at 707-08; Prill v. NLRB, 755 F.2d 941, 942 (D.C.Cir.), cert. denied, 474 U.S. 948, 106 S.Ct. 313, 88 L.Ed.2d 294 (1985).
"[E]mploying traditional tools of statutory construction," Chevron, 467 U.S. at 843 n. 9, 104 S.Ct. at 2781 n. 9, we find that the answer to the question regarding EPA's authority to prescribe treatment standards for K061 slag is at best ambiguous. EPA contends that K061 "discarded" by producers of steel is no longer "discarded" under section 6903(5) when it arrives at a facility for metal reclamations. An at least equally plausible reading of the statute, however, is that K061 remains "discarded" throughout the "waste treatment" process dictated by the agency. Indeed, EPA does not seriously contend that this reading of the statute is foreclosed by the text of the statute, nor does it refer us to anything in the legislative history that prohibits such a construction.
Id. Materials subject to such a process were not "discarded" because they were never "disposed of, abandoned, or thrown away." Id. at 1193.
AMC is by no means dispositive of EPA's authority to regulate K061 slag. Unlike the materials in question in AMC, K061 is indisputably "discarded" before being subject to metals reclamation. Consequently, it has "become part of the waste disposal problem"; that is why EPA has the power to require that K061 be subject to mandatory metals reclamation. See 53 Fed.Reg. 11,752-53 (recognizing this point). Nor does anything in AMC require EPA to cease treating K061 as "solid waste" once it reaches the metals reclamation facility. K061 is delivered to the facility not as part of an "ongoing manufacturing or industrial process" within "the generating industry," but as part of a mandatory waste treatment plan prescribed by EPA. As such, the resulting slag appears to remain within the scope of the agency's authority as "sludge from a waste treatment plant." 42 U.S.C. § 6903(27); see also 42 U.S.C. § 6903(34) (defining "treatment" as "any method, technique, or process ... designed to change the physical [or] chemical ... character or composition of any hazardous waste so as to ... render such waste ... amendable for recovery....").
We add, however, that the scope of the agency's interpretive discretion on remand is far from unbounded. First, although we conclude that Congress has not spoken precisely on the question of EPA's authority to regulate the slag produced from the treatment of K061, any "permissible" construction of the relevant provisions must comport with the broader "statutory purpose" of the RCRA. See Ohio v. Department of Interior, 880 F.2d at 441. Thus, it appears unlikely that EPA can simply readopt the conclusion that its authority to regulate K061 ends at the door of the reclamation facility. To reach such a conclusion, EPA would have to reconcile this position with the RCRA's acknowledged objective to "establish a `cradle-to-grave' regulatory structure" for the safe handling of hazardous wastes. United Technologies Corp., 821 F.2d at 716.
After reconsidering these matters with AMC in correct focus, it appears likely that EPA will recognize that it must comply with its statutory mandate to prescribe treatment standards for the disposal of K061 slag. And, if as we expect, this is the result on remand, then EPA must enforce the RCRA's ban on land disposal of K061 slag unless the agency determines that one of the statutory exceptions of Subtitle C is satisfied. See 42 U.S.C. § 6924(d), (e), (g), (m).
EPA was correct in concluding that the RCRA's land disposal and hazardous waste treatment provisions preclude consideration of land treatment of hazardous wastes. Consequently, we deny the petition to review EPA's interpretation of the RCRA's land disposal and hazardous waste treatment provisions. Additionally, because EPA provided adequate reasons for abandoning comparative risk assessment, we deny the petition to review its decision in this regard. However, because EPA unlawfully exempted the K061 residues from the RCRA's land disposal restrictions, we grant the petition to review EPA's rulemaking on K061 wastes, vacate that part of the rule, and remand for further rulemaking consistent with this opinion.
51 Fed.Reg. 1,602, 1,702 (Jan. 14, 1986) (proposed "solvents and dioxins" rule).
42 U.S.C. § 6924(d)(1) (emphasis added). The "no migration" provision is not in issue here, however, because Industry Petitioners do not argue that the BDAT they are requesting meets the "no migration" test.
While the "hammer" date for "First-Third" wastes — August 8, 1988 — has already passed, EPA's reasoning is not "moot" since "hammers" for "Third-Third" and other wastes have yet to fall.
Id. at 1187 n. 14 (first emphasis added).