National Recycling Coalition, Inc. v. Reilly

BUCKLEY, Circuit Judge: At issue is a guideline governing federal purchases of recycled paper products that the Environmental Protection Agency promulgated pursuant to the Resource Conservation and Recovery Act. The Act requires procuring agencies to purchase products containing reclaimed materials but excepts from the purchase obligation certain categories of items, including those found to be “only available at an unreasonable price.” Petitioners challenge the guideline’s construction of the “unreasonable price” exception to mean that procuring agencies are not required to purchase recycled products if they are more expensive than alternatives made of virgin materials. They also argue that the guideline is deficient because it excludes certain “incidental purchases” from the procurement requirements and fails to fulfill the EPA’s statutory obligation to provide information about the availability, performance, and relative price of recycled paper products. We conclude that the EPA’s interpretation of the Act is permissible and that the agency has substantially met its statutory obligations. I. Background Responding to the problem of increasing amounts of hazardous and solid waste in this country, Congress in 1976 passed the Resource Conservation and Recovery Act (“Act”), 42 U.S.C. §§ 6901-6991 (1982 & Supp. IV 1986). One statutory objective was to encourage the reclamation of such materials. See H.R.Rep. No. 1491, 94th Cong., 2d Sess. 2 (1976), 1976 U.S.Code Cong. & Admin.News, 6238, 6239. To this end, the Act imposes the obligation to buy recycled products on “procuring agencies,” which are defined, in section 1004, as any Federal agency, or any State agency or agency of a political subdivision of a State which is using appropriated Federal funds for such procurement, or any person contracting with any such agency with respect to work performed under such contract. 42 U.S.C. § 6903(17). Two of the Act’s provisions are relevant here. Section 6002(c)(1) provides that each procuring agency which procures any items designated in [EPA] guidelines shall procure such items composed of the highest percentage of recovered materials practicable, consistent with maintaining a satisfactory level of competition, considering such guidelines. The decision not to procure such items shall be based on a determination that such procurement items — ****** — 223 — (C) are only available at an unreasonable price. Id. § 6962(c)(1) (emphases added). Section 6002(e) provides that the Administrator of the Environmental Protection Agency shall prepare, and from time to time revise, guidelines for the use of procuring agencies in complying with the requirements of this section. Such guidelines shall— (1) designate those items which are or can be produced with recovered materials and whose procurement by procuring agencies will carry out the objectives of this section; and (2) set forth recommended practices with respect to the procurement of recovered materials and items containing such materials and with respect to certification by vendors of the percentage of recovered materials used, and shall provide information as to the availability, relative price, and performance of such materials and items and where appropriate shall recommend the level of recovered materials to be contained in the procured product. Id. § 6962(e). Pursuant to this directive, on April 9, 1985, the EPA issued a proposed rule and guideline for purchases of recycled paper and paper products. 50 Fed.Reg. 14,076 (1985). On June 22, 1988, the EPA issued a final rule, 53 Fed.Reg. 23,546 (1988) (“final rule”), in which it promulgated the guideline codified at 40 C.F.R. Part 250 (1988), id. at 23,561 (“guideline”). Petitioners challenge the guideline on three grounds. They assert, first, that the EPA’s interpretation of “unreasonable price” contravenes the intent of the Act; second, the exclusion from coverage of “unrelated” or “incidental” purchases implies a limitation on the obligation to procure recycled products that finds no support in the statute; and third, its failure to provide price and availability information violates an explicit statutory command. The EPA defends the guideline on the merits and also contends that petitioners lack standing to bring this action or, in the alternative, fail to present a claim that is ripe for judicial disposition. As these arguments implicate our jurisdiction, we must consider them first. II. Discussion A. Justiciability Issues 1. Standing The Supreme Court has summarized the constitutional elements of standing in these terms: [A]t an irreducible minimum, Art. Ill requires the party who invokes the court’s authority to “show that he personally has suffered some actual or threatened injury as a result of the putatively illegal conduct of the defendant,” ... and that the injury “fairly can be traced to the challenged action” and “is likely to be redressed by a favorable decision”---- Valley Forge Christian Coll. v. Americans United for Separation of Church & State, Inc., 454 U.S. 464, 472,102 S.Ct. 752, 758, 70 L.Ed.2d 700 (1982) (citations omitted). The EPA argues that petitioners lack standing to challenge its guideline because it merely “recommend[sJ practices with respect to the procurement of recovered materials,” 42 U.S.C. § 6962(e)(2) (emphasis added), which the procuring agencies are free to accept or disregard; therefore, any injuries alleged by petitioners cannot fairly be traced to the guideline nor be redressed by a decision in their favor. Rather, the injuries (if they occur) will result from the purchasing policies adopted by individual procuring agencies and can only be redressed in actions brought against them. Thus, the EPA asserts, whatever injury petitioners might ultimately suffer will be caused by third parties rather than by its guideline. The EPA’s argument ignores the fact that the EPA itself is a substantial purchaser of paper products. As the EPA’s counsel acknowledged at oral argument, the agency would feel bound by its own guideline in making its paper product purchases. Petitioners, however, must do — 224 — more than establish the causal link between the challenged guideline and the injuries they allege. As they bring this action on behalf of their members, petitioners must also satisfy the requirements for representational standing: An association ... will have standing to sue on behalf of its members when [1] they would otherwise have standing in their own right, [2] the interests the organization seeks to protect are germane to its purpose, and [3] neither the claim asserted nor the relief requested requires the participation of individual members in the law suit. Hazardous Waste Treatment Council v. EPA, 861 F.2d 270, 273 (D.C.Cir.1988) (citing Hunt v. Washington State Apple Advertising Comm’n, 432 U.S. 333, 343, 97 S.Ct. 2434, 2441, 53 L.Ed.2d 383 (1977)), cert. denied, 432 U.S. 333, 97 S.Ct. 2434, 53 L.Ed.2d 383 (1989). Petitioners are membership organizations dedicated, in the case of the National Recycling Coalition (“NRC”), to encouraging the recovery, reuse, and conservation of materials and energy and, in the case of the Environmental Defense Fund (“EDF”), to the protection of the environment and public health. Thus they satisfy the second and third requirements for representational standing: the interests they seek to protect are clearly germane to their organizational purposes, and the participation of affected members in this action is not required. Furthermore, the NRC includes corporations engaged in commercial recycling who would clearly have standing to bring this action in their own right because of the potential impact of the guideline on the market for their products and because any economic injury they might suffer would be redressed by a favorable outcome. Thus, the NRC has representational standing. Having so found, we need not inquire into the standing of its copetitioner. Hazardous Waste Treatment Council, 861 F.2d at 273. 2. Ripeness The EPA also argues that even if petitioners do have standing, we should refrain from hearing this case because their claims are not yet ripe. The Supreme Court has established a two-part test for ripeness that requires us to evaluate “both the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration.” Abbott Laboratories v. Gardner, 387 U.S. 136, 149, 87 S.Ct. 1507, 1515, 18 L.Ed.2d 681 (1967). In Eagle-Picher Industries, Inc. v. EPA, 759 F.2d 905, 918 (D.C.Cir.1985), however, we stated that “[wjhere the first prong of the [Abbott Laboratories] ripeness test is met and Congress has emphatically declared a preference for immediate review ... no purpose is served by proceeding to the second prong.” In our view, the guideline satisfies the Eagle-Picher test. The guideline represents final agency action; and as it will affect the EPA’s own procurement decisions, it is irrelevant that other procuring agencies have not yet adopted them. Furthermore, Congress has “declared a preference” for prompt judicial review of the EPA guideline: [A] petition for review of action of the [EPA] Administrator in promulgating any regulation, or requirement under this chapter ... shall be filed within ninety days from the date of such promulgation____ 42 U.S.C. § 6976(a)(1). As the provision requiring the EPA to issue the guideline falls within the same chapter as section 6976(a)(1), we conclude that judicial review at this time is not merely “preferred,” it is statutorily required. We therefore turn to the merits. B. “Unreasonable Price” The Act provides that a procuring agency is not required to purchase products containing reclaimed materials if it determines that such items “are only available at an unreasonable price.” 42 U.S.C. § 6962(c)(1)(C). In its final rule, the EPA noted that while certain commentators had stated that a “reasonable price” included price preferences, the Act did not explicitly authorize it to recommend payment of such a preference. The agency concluded that — 225 — unless an agency has an independent authority to provide a price preference or to create a set-aside, EPA believes that a price is “unreasonable” if it is greater than the price of a competing product made of virgin material. 53 Fed.Reg. 23,559. Thus, in the EPA’s view, while the Act creates a preference in favor of recycled goods in “tie-breaking” situations where products made of reclaimed and virgin materials are offered at the same price, it does not require agencies to pay a premium in order to purchase them. Because Congress has entrusted the EPA to administer the Act, our review will be guided by the two-prong test established by Chevron U.S.A. Inc. v. NRDC, Inc., 467 U.S. 837, 842-45, 104 S.Ct. 2778, 2781-83, 81 L.Ed.2d 694 (1984), and its progeny. First, if Congress has clearly expressed its intent on the precise question involved, a reviewing court will enforce it. Id. at 842-43, 104 S.Ct. 2781-82. In ascertaining a statute’s plain meaning, we “must look to the particular statutory language at issue, as well as the language and design of the statute as a whole.” K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 108 S.Ct. 1811, 1817, 100 L.Ed.2d 313 (1988). Second, [i]f the statute is silent or ambiguous with respect to the specific issue addressed by the regulation, the question becomes whether the agency regulation is a permissible construction of the statute. If the agency regulation is not in conflict with the plain language of the statute, a reviewing court must give deference to the agency’s interpretation of the statute. Id. (citations omitted). In this case, if we find the Act to be silent or unclear as to the precise meaning to be given section 6002, we must defer to the EPA’s interpretation as “permissible” if it does not contravene the statute’s plain meaning. In making this determination, we first focus on the language of section 6002(c)(1)(C), which relieves a procuring agency of the obligation to purchase recycled items if it determines that they “are only available at an unreasonable price.” As the word “unreasonable” is inherently subjective, the language of section 6002(c)(1)(C) provides little guidance as to Congress’ specific intent. Petitioners nevertheless challenge the EPA’s interpretation as contrary to the plain meaning of the Act. They maintain that a “reasonable price” means one that is “not excessive or extreme; fair; moderate,” citing a dictionary definition to support their position that a reasonable price need not be the lowest price. Petitioners then argue that if the ordinary meaning of this language is read in light of the Act’s purpose of encouraging recycling, section 6002(c)(1) must be construed to permit the purchase of the statutorily preferred recycled products at prices higher than the lowest at which goods made from virgin materials are offered. To bolster their contention that the EPA’s interpretation will frustrate the Act’s aim, petitioners argue that the tiebreaker preference provided by the EPA’s construction deprives the Act of any real value as a means of promoting the purchase of recycled materials because tie bids for paper products are very rare. Petitioners further contend that the guideline renders section 6002(c)(1)(C) meaningless because in all but the rare tie-breaking case, procuring agencies would only be required to buy recycled products when offered at the lowest bid, which is the normal requirement under the rules governing federal purchases. We reject this argument. Petitioners contend that the statutory objective of encouraging recycling can only be fulfilled if agencies are permitted to pay something over the minimum bid for products made of virgin materials. This reasoning, however, rests on the unsupported assumption that price was the critical obstacle to the marketing of recycled products prior to the Act’s passage. If this were true, the inference that Congress contemplated the preferential prices might be compelling. Counsel for petitioners and the EPA agreed at oral argument, however, that nothing in the record suggests that paper products containing reclaimed materials are more — 226 — expensive than those made from virgin fibers. Accord H.R.Rep. No. 198, 98th Cong., 2d Sess. 71, reprinted in 1984 U.S. Code Cong. & Admin.News 5576, 5630 (citing Maryland’s report that “ ‘recycled, paper has generally been less expensive than virgin paper.’ ”). While there is no evidence that Congress viewed price as the inhibiting factor in the use of reclaimed materials, the Act’s provisions suggest that Congress relied on factors other than price to achieve its policy goals. Section 6002 requires the EPA to identify acceptable recycled alternatives to products made of virgin materials and to develop ■ specifications for their purchase, and it establishes a major market for such goods by mobilizing the purchasing power of the federal government. These requirements are entirely compatible with a strategy that depends on a heightened awareness of the need to utilize recycled materials, the dissemination of information through the EPA guidelines, and on an assured market to encourage the development, production, and sale of recycled goods at competitive prices. Petitioners also assert that the structure of section 6002 compels the conclusion that Congress contemplated the payment of preferential prices for products containing recovered materials because section 6002(i) establishes “an affirmative procurement program that will assure that items composed of recovered materials will be purchased to the maximum extent practicable.” 42 U.S.C. § 6962(i)(l) (emphases added). This program, which each procuring agency is required to put into effect, must include “a recovered materials preference program.” Id. § 6002(i)(2)(A) (emphasis added). Petitioners reason that such a program would be meaningless if a preference based on the content of recycled materials came into play only as a tie-breaker. Thus, they conclude that the phrase “unreasonable price” must be interpreted to permit some degree of preferential pricing. This structural argument has little merit. Section 6002(i) was added to the Act by amendment in 1984. Therefore, its adoption tells us nothing about Congress’ intent when it enacted the “unreasonable price” provision eight years earlier. And even if the affirmative procurement amendment had been offered contemporaneously and been accepted as part of the bill as enacted, its adoption would not have carried the necessary implication that Congress contemplated the payment of preferential prices for recycled goods. In fact, statements made by two of the amendment's Senate sponsors tug in the opposite direction: MR. MATHIAS. This amendment does not change existing [Joint Committee on Printing] specifications nor the requirement that low price prevail before a paper products contract is awarded. MR. KASTEN. The Senator from Maryland [Mr. Mathias] is correct. Under my amendment, all paper products purchased by the federal government must continue to meet JCP specifications, and, most importantly, lowest price continues to be the determining factor in awarding these contracts____ MR. MATHIAS. Are we to understand, for example, that if GSA establishes a 25-percent-minimum-content standard for “post consumer waste product” and one supplier can meet that requirement at a cost of $20 per given amount and another supplier can offer the same amount of virgin paper for $15, then GSA is obligated to buy the virgin paper? MR. KASTEN. The Senator is correct. This amendment only adds a third criterion to Federal paper product purchases. All other things being equal, this amendment states that recycled paper will be purchased by the Federal Government. The purpose of this amendment is to send a message that the Federal Government supports and encourages efforts to recycle paper. 130 Cong.Rec. 20,855 (1984). We cite this exchange not because it reflects an authoritative interpretation of the “unreasonable price” provision (it does not), but because it rebuts the inference petitioners would have us draw from Congress’ adoption of section 6002(i). Clearly, Senators Kasten and Mathias would not — 227 — have seen an inconsistency between the affirmative procurement programs mandated by their amendment and the EPA’s understanding of what constitutes an “unreasonable price.” While we acknowledge that petitioners’ interpretation of section 6002 is entirely plausible, our examination of the text of section 6002(c)(1)(C) and the language and design of the Act fails to reveal what Congress intended the phrase “unreasonable price” to mean. Consequently, we must move to Chevron’s second prong to determine whether the EPA’s construction of that provision is “permissible.” If we conclude it does not conflict with the statute’s plain meaning, we are required to defer to it. See K Mart, 108 S.Ct. at 1817. For the reasons discussed above, we find the EPA’s interpretation of “unreasonable price” to be consistent with the Act’s overall purpose. Therefore, we accede to the agency’s construction. C. “Incidental Purchases” By its terms, the guideline does not cover [purchases of paper and paper products that are unrelated or incidental to Federal funding, i.e., not the direct result of a Federal contract, grant, loan, funds disbursement, or agreement with a procuring agency---- 53 Fed.Reg. 23,562 (codified at 40 C.F.R. § 250.3(e) (1988)). The preamble to the final rule provides the following illustration of the scope of the exclusion: - An example of a paper purchase unrelated to or incidental to Federal funding is where a contractor purchases paper under a grant for construction of a public works project. The paper purchase would not be subject to the requirements of Section 6002 or this guideline, even though some of the grant funds supporting the contract might be used to finance the purchases. Id. at 23,550. Petitioners maintain that the EPA’s distinction between incidental and non-incidental purchases has no statutory basis. They point out that section 6002(e) requires the agency to prepare guidelines “for the use of procuring agencies,” 42 U.S.C. § 6962(e), which are defined to include “any person contracting with such agency with respect to work performed under such contract.” Id. at 6903(17) (emphasis added). The EPA counters that petitioners are precluded from pursuing this challenge on appeal because they failed to raise it during the rulemaking process. Petitioners concede this failure but assert that they never had a fair opportunity to raise this objection during the notice and hearing period because they did not realize that the exclusion would extend to public work contractors until the EPA provided an example of the exclusion’s scope in its final rule. Petitioners also argue that we may appropriately consider its claim because the doctrine requiring exhaustion of administrative remedies is at its weakest when the issue raised for the first time on appeal is a pure question of statutory interpretation (citing Railroad Yardmasters v. Harris, 721 F.2d 1332 (D.C.Cir.1983)). We demur on two grounds. First, as the guideline proposed by the EPA in 1985 contained the precise language codified at 40 C.F.R. § 250.3 (1988), see 50 Fed.Reg. 14,082 (1985), petitioners had adequate notice of the nature and scope of the exclusion even though they did not have the benefit of the example included in the final rule. Second, Railroad Yardmasters permitted the question of statutory interpretation to be raised on appeal because it implicated the agency's authority to act. Id. at 1338-39. As the EPA’s power to issue the disputed guideline is not challenged, we decline to make an exception to the general rule that a reviewing court will not consider an objection that petitioners failed to raise during the administrative process. Northside Sanitary Landfill, Inc. v. Thomas, 849 F.2d 1516, 1519 (D.C.Cir. 1988), cert. denied, — U.S. —, 109 S.Ct. 1528, 103 L.Ed.2d 833 (1989); Eagle-Picher Industries, Inc. v. EPA, 822 F.2d 132, 146 (D.C.Cir.1987). D. EPA Provision of Relevant Information Petitioners’ final assertion is that the EPA’s guideline fails to comply with section 6002(e) of the Act, which provides: — 228 — The Administrator ... shall prepare, and from time to time revise, guidelines for the use of procuring agencies in complying with the requirements of this section. Such guidelines ... shall provide information as to the availability, relative price, and performance of such materials and items____ 42 U.S.C. § 6962(e). As the agency provided an adequate discussion of the performance of recycled products in the final rule’s preamble, see 53 Fed.Reg. 23,548-49, we turn to the EPA’s acknowledged failure to publish the balance of the information required by section 6002(e). In explaining its omission, the EPA claimed that the availability and price of recycled paper and paper products were subject to such sharp and frequent fluctuations that specific information about them “would not remain accurate long enough ... to be useful in a guideline.” Id. at 23,559. At oral argument, however, EPA’s counsel stated that the agency maintains a docket with updated data on relative prices and availability that is accessible to the public. Given the practical difficulties detailed by the agency, we conclude that although the EPA is in technical non-compliance with the statute, it may cure that deficiency by inserting in its guideline a reference to where and how interested parties may secure such data. Accordingly, we decline to invalidate the regulation on the understanding that the agency will promptly amend the guideline to provide the requisite information. III. Conclusion For the foregoing reasons, we reject petitioners’ arguments and, therefore, deny the petition for review. So ordered.