U.S. v. ILCO, Inc., 91-1004

• Decision Date: 04 August 1993
• Docket Number: No. 91-1004,91-1004
• Citation: 996 F.2d 1126
• Parties: , 62 USLW 2131, 23 Envtl. L. Rep. 21,437 UNITED STATES of America, Plaintiff-Appellant, Cross-Appellee, Alabama Department of Environmental Protection and State of Alabama, Intervenors-Plaintiffs-Appellants, Cross-Appellees, v. ILCO, INCORPORATED, a/k/a Interstate Lead Company, Inc. and Diego Maffei, Defendants-Appellees, Cross-Appellants, Leeds Excavating & Paving Company, Inc., et al., Defendants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1126

996 F.2d 1126

37 ERC 1105, 62 USLW 2131, 23 Envtl.

L. Rep. 21,437

UNITED STATES of America, Plaintiff-Appellant, Cross-Appellee,

Alabama Department of Environmental Protection and State of

Alabama, Intervenors-Plaintiffs-Appellants, Cross-Appellees, v. ILCO, INCORPORATED, a/k/a Interstate Lead Company, Inc. and Diego Maffei, Defendants-Appellees, Cross-Appellants, Leeds Excavating & Paving Company, Inc., et al., Defendants.

No. 91-1004.

United States Court of Appeals,

Eleventh Circuit.

Aug. 4, 1993.

Alton B. Parker, Spain, Gillon, Grooms, Blan & Nettles, Birmingham, AL, for State of Alabama.

Katherine Adams, U.S. Dept. of Justice, Washington, DC, for U.S.

Charles de Saillan, U.S. E.P.A., Washington, DC, for appellees.

Charles R. Driggars, Sirote & Permutt, Birmingham, AL, for ILCO, Inc.

John A. Bryson, M. Alice Thurston, U.S. Dept. of Justice, Appellate Section, Washington, DC, for appellants.

Appeals from the United States District Court for the Northern District of Alabama.

Before FAY and DUBINA, Circuit Judges, and FLOYD R. GIBSON ^*, Senior Circuit Judge.

FAY, Circuit Judge:

This case is an enforcement action filed by the United States Environmental Protection Agency and the State of Alabama against a secondary lead smelter for violations of federal and state environmental law. The district court held the defendant liable and awarded civil penalties and cleanup costs to the government, and ordered compliance with the law. Although the government received a favorable decision, it has appealed the district court's conclusion that the lead components reclaimed from spent batteries are raw materials. The district court reasoned that because the smelter recycles the components into lead ingots, the components must be raw materials, and not hazardous waste subject to the provisions of the Resource Conservation and Recovery Act. The

                defendant has cross-appealed the district court's order awarding penalties and cleanup costs to the government.   Because we find the district court's order well founded in fact and law, we affirm it in all but one respect.   We reverse the court's conclusion regarding the lead components reclaimed from spent batteries because EPA, in accordance with its authority granted by Congress, has defined "discarded material" to include "recycled material."
                

BACKGROUND

1. Industry Overview ¹

Over the years in the United States there has been a steady increase in the number of vehicle batteries which become useless and subject to disposal. In 1986 the number stood at approximately 70,000,000. Each spent battery is a potential pollutant of the environment and can have serious deleterious effects on people and animals living in the area where the battery may be discarded. Even a small number of batteries thrown into the woods, discarded along roadways or in government designated garbage areas represent a significant threat to the water we drink, the food we eat and under limited circumstances, the air we breathe. The source of this trouble in a battery is lead.... [Because lead is an expensive element, an industry has developed over the years] to reclaim the lead from spent batteries.... [In the mid-Seventies] there were approximately 50 secondary lead smelters in the United States reclaiming the lead from about 90% of all spent batteries. The smelters were themselves a major source of pollution; surface water run-off and process water discharged by the smelters created very real health-threatening problems; on-site and off-site storage or disposition of waste became an increasing risk to the quality of life; and even the air was dangerously polluted by emissions from the smelters. [In response to these problems] all levels of government began to amend existing laws and to enact new laws and regulations placing much greater controls over ownership and operation of such smelters. Compliance with these new environmental laws and regulations ... placed such a financial burden on the operation of secondary lead smelters that about 60% of the smelters operating in 1976 were out of business by 1986, and the approximately 20 smelters remaining were reclaiming only about 70% ... [of all discarded batteries.] Thus in 1986 only 55,000,000 of the available 70,000,000 batteries were reclaimed, leaving the 15,000,000 unreclaimed spent batteries to endanger the health of all persons near the site of their repose. The 55,000,000 reclaimed batteries produced about 60% of all lead used in the United States.... [This brief overview demonstrates the secondary lead smelting industry] is a most vital industry not only to our economy but also to [our] environment.... Without the industry, over 70,000,000 contaminated batteries would be scattered throughout our country annually. [Nevertheless, the heart of this industry centers around the handling of hazardous materials. Exempting the industry from regulation cannot be justified on the theory that its contribution to resolving our environmental problems outweighs the environmental harm caused by its operations.]

2. Factual and Procedural Background

Against this industry backdrop the present case unfolds, spanning nearly a decade of interaction between the Environmental Protection Agency ("EPA"), the Alabama Department of Environmental Management ("ADEM") and Interstate Lead Company, Inc. ("ILCO"). The voluminous facts are very briefly set forth.

ILCO owned and operated a secondary lead smelting facility in Leeds, Alabama, from the 1960's until operations ceased in 1992. As such, it was one of the 20 smelters remaining in the country which reclaimed spent batteries. In 1986 ILCO reclaimed over 2,500,000 batteries, or about 5% of those ILCO purchased batteries from various suppliers and placed them in a reclamation process. Incoming batteries were cracked open and drained of sulfuric acid. The rubber or black plastic battery boxes were chipped and washed to remove lead particles. The lead battery components known as "plates and groups" were then removed from the broken batteries and run through ILCO's smelting process to produce lead ingots for sale. The operation produced several waste products which were the subject of litigation in the district court: waste acid, wastewater treatment sludge, broken battery casings or "chips," and emission control dust and blast slag from the smelting process. EPA asserted, and continues to argue on appeal, that the reclaimed lead plates and groups were also waste products. The defendants viewed the plates and groups as raw materials essential to the lead recovery industry.

                reclaimed in the United States.   Diego Maffei is the president and majority shareholder of ILCO
                

EPA and ADEM initiated this case as an enforcement action against ILCO and its president, Diego Maffei, seeking an injunction to curtail ongoing violations of environmental laws and regulations at ILCO's plant in Leeds and seeking penalties for past violations. ² The amended complaint contained six claims, but two settled during trial. Of the four remaining claims, EPA first alleged ILCO violated the Clean Water Act ("CWA"), 33 U.S.C. §§ 1251-1387, by improperly discharging waste water at or near the plant site in violation of its NPDES permit, ³ and subsequent to March 1984 without any permit. ⁴ The second and third claims concerned the treatment, storage and disposal of hazardous wastes since 1980 in violation of the Resource Conservation and Recovery Act ("RCRA"), as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901-92k. In the second claim EPA charged ILCO with maintaining storage areas, an incinerator and a treatment tank, all containing hazardous waste, in violation of regulations applicable to their status as an interim facility and maintaining other storage facilities and a landfill without the requisite permit. ⁵ The third claim encompassed the same RCRA violation, alleging that the facility permitted releases of hazardous waste into the environment. The fourth claim focused upon alleged violations of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. §§ 9601-75, at a place known as "the Church of God site," located about six miles north of the plant. ILCO was charged with dumping hazardous waste in a ravine behind the Church of God, which released or threatened to release hazardous substances into the environment. Consequently, EPA sought recovery for the excavation costs incurred in removing the waste.

This appeal arises from a finding of liability against ILCO and Maffei under the CWA and the RCRA, and a judgment awarded to EPA for cleanup costs. The district court ordered the defendants (1) to pay a $3.5 million penalty for violations of RCRA, the

                CWA and state laws, 6 (2) to attain compliance with the laws, and (3) to reimburse the United States $845,033 for prejudgment interest and response costs incurred by EPA in performing a cleanup at the Church of God.   The court found the lead plates and groups to be solid waste as defined in 40 C.F.R. § 261.2 because they exhibit the characteristic of "Extraction Procedure toxicity" for lead and cadmium as defined in that regulation.   However, the court also held the plates and groups at the ILCO facility were not "hazardous waste," accepting ILCO's argument that it did not "discard," but rather purchased the plates and groups as raw materials for the purpose of recovering lead values.   EPA and ADEM appeal this ruling. 7
                

DISCUSSION

The sole question of law raised by EPA on appeal is whether lead parts, which have been reclaimed from spent car and truck batteries for recycling purposes, are exempt from regulation under RCRA. The standard of review is de novo. Novak v. Irwin Yacht and Marine Corp., 986 F.2d 468, 470 (11th Cir.1993). Reviewing the interpretive decisions of an administrative agency is a two-step process: If Congress has clearly and directly spoken to the precise question at issue, effect...