United States: D.C. Circuit Hears Oral Argument On Challenge To Carbon Sequestration RCRA Conditional Exclusion

In December 2010, the United States Environmental Protection Agency ("EPA") promulgated regulations under the Safe Drinking Water Act, 42 U.S.C. §§ 300f et seq., creating a new category of underground injection wells—Class VI—to govern underground injection of carbon dioxide ("CO₂") for geologic sequestration. Geologic sequestration involves capturing CO₂ gas from stationary emissions sources, compressing that gas into what is called a supercritical fluid, transporting the fluid by pipeline, and then injecting the fluid into Class VI underground injection wells.

On January 3, 2014, the EPA promulgated a rule under the Resource Conservation and Recovery Act ("RCRA") conditionally excluding from the definition of "hazardous waste" hazardous CO₂ streams that are injected into Class IV wells for purposes of geologic sequestration and that meet other criteria. 79 Fed. Reg. 350 (Jan. 3, 2014).

On April 2, 2014, the Carbon Sequestration Council, its member Southern Company Services, and the American Petroleum Institute ("API") filed a petition for review of the final rule in the United States Court of Appeals for the District of Columbia, arguing that the CO₂ emissions used in geologic sequestration are not "solid waste" and, therefore, not subject to RCRA, negating the need for the conditional exclusion. Under RCRA, a "solid waste" is, in relevant part, "other discarded material, including solid, liquid, semisolid or contained gaseous material." 42 U.S.C. § 6903(27). Petitioners contended that the supercritical fluid injected into the wells is not a "solid waste" under RCRA because it is not included as one of the specifically enumerated forms of material in the definition of "solid waste," and it is clear that Congress intended this to be an exclusive list.

In the alternative, the petitioners argued that EPA's interpretation that the compressed gas is a "solid waste" is not entitled to deference pursuant to Chevron U.S.A., Inc. v. Natural Resource Defense Council, Inc., 467 U.S. 837 (1984) because (i) EPA's interpretation of the definition was not compelled; (ii) EPA did not consider the matter in a detailed and reasoned manner, including considering how the RCRA regulatory scheme would apply to CO₂ emissions; and (iii) EPA's position conflicts with its longstanding position that RCRA does not apply to uncontained gases. Finally, the petitioners argued that captured CO₂ is not a "solid waste" because it is not discarded, since there is a possibility that the fluid could be used for enhanced oil recovery or other productive use.

EPA responded to the petition, arguing that the petitioners lacked standing primarily because they failed to allege a sufficient injury-in-fact. On the merits, EPA argued that the rule is reasonable because (i) the list of physical forms in the RCRA definition of "solid waste" is a nonexhaustive list and EPA reasonably interpreted it to include the supercritical fluid, and (ii) when "discarded" is given its ordinary meaning, EPA reasonably determined that the supercritical fluids were discarded.

Judges Garland, Brown, and Edwards heard oral argument on March 26, 2015, but have not yet ruled on the Petition.

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