Filed: Apr. 19, 1996
Latest Update: Mar. 02, 2020
Summary: IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT No. 94-30419 UNITED STATES OF AMERICA, ET AL., Plaintiffs, UNITED STATES OF AMERICA, Plaintiff-Appellee, Cross-Appellant, versus MARINE SHALE PROCESSORS, Defendant-Appellee, ******************************************** SOUTHERN WOOD PIEDMONT COMPANY, Intervenor-Appellant, Cross-Appellee. Appeal from the United States District Court for the Western District of Louisiana April 18, 1996 Before REYNALDO G. GARZA, KING, and HIGGINBOTHAM, Cir
Summary: IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT No. 94-30419 UNITED STATES OF AMERICA, ET AL., Plaintiffs, UNITED STATES OF AMERICA, Plaintiff-Appellee, Cross-Appellant, versus MARINE SHALE PROCESSORS, Defendant-Appellee, ******************************************** SOUTHERN WOOD PIEDMONT COMPANY, Intervenor-Appellant, Cross-Appellee. Appeal from the United States District Court for the Western District of Louisiana April 18, 1996 Before REYNALDO G. GARZA, KING, and HIGGINBOTHAM, Circ..
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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 94-30419
UNITED STATES OF AMERICA, ET AL.,
Plaintiffs,
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
Cross-Appellant,
versus
MARINE SHALE PROCESSORS,
Defendant-Appellee,
********************************************
SOUTHERN WOOD PIEDMONT COMPANY,
Intervenor-Appellant,
Cross-Appellee.
Appeal from the United States District Court
for the Western District of Louisiana
April 18, 1996
Before REYNALDO G. GARZA, KING, and HIGGINBOTHAM, Circuit Judges.
HIGGINBOTHAM, Circuit Judge:
This is an appeal and cross-appeal from a Rule 54(b) judgment
in favor of a company attempting to clean up its hazardous waste
sites. It is one of the trio of cases described in United States
v. Marine Shale Processors, Inc., No. 94-30664. We vacate the
judgment and remand.
I
From 1923 to 1985, Southern Wood Piedmont Company operated
several wood treatment facilities designed primarily to manufacture
railroad ties and telephone poles. These facilities treated wood
with preservatives such as creosote and pentachlorophenol, leaving
behind acres of soil contaminated with toxic wastes. Facing
slackening demand, SWP in 1985 decided to close its facilities and
clean up its waste sites. It sought to avoid regulation under the
Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901-92K, and
liability under The Comprehensive Environmental Response,
Compensation & Liability Act, 42 U.S.C. §§ 6901-75, by recycling
its contaminated soil into a product covered by EPA regulations
known as the Product Rule. See 40 C.F.R. § 266.20(b). If SWP were
successful in recycling its hazardous waste into a product covered
by the Product Rule, the resulting material could be placed on the
ground without violating RCRA. Relying in part on its own
investigation and in part on letters from the Louisiana Department
of Environmental Quality stating that Marine Shale Processors, Inc.
was a legitimate recycler of hazardous waste, SWP contracted with
MSP to dispose of SWP's contaminated soil.
From 1986 to 1989, ninety-five percent of the material SWP
sent to MSP arrived in shipments called "campaign runs." In a
campaign run, MSP earmarked one to two weeks of kiln time to
process SWP's soil exclusively. Until 1989, MSP processed the
other five percent of SWP's material together with whatever other
material happened to be available at the time. In 1989, SWP and
2
MSP modified their contract so as to require MSP to process SWP's
material separately from all other materials. Before beginning a
campaign run pre-1989 or any SWP processing post-1989, MSP purged
its kiln but not its baghouses or its oxidizers.
This appeal concerns SWP’s intervention in the suit described
in No. 94-30419. SWP’s complaint in intervention alleged that "MSP
has taken delivery of certain material from [SWP] . . . and, using
its thermal process, has made a product from that material." The
complaint in intervention further alleged that SWP's soil "[was]
and at all times has been processed by MSP separately from material
from other sources." SWP sought a declaratory judgment that the
Product Rule exempted the material produced from its contaminated
soil from RCRA regulation.
The district court submitted interrogatories to the jury. The
jury returned answers to some of these questions and found itself
unable to agree on others. The interrogatories relevant to this
appeal, together with the jury's answer if any, are set out below:
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)
3. Was the material produced by MSP from Southern
Wood Piedmont Company's waste a "product" produced for
the general public's use? (yes)
4. Did the waste material received by MSP from
Southern Wood Piedmont Company undergo a chemical
3
reaction in the course of processing the material so as
to become inseparable by physical means? (yes)
5. Was the material produced by MSP from waste
other than Southern Wood Piedmont Company's waste a
"product" produced for general public's use? (unable to
answer)
6. Did the waste material produced by MSP from
waste other than Southern Wood Piedmont Company's waste
undergo a chemical reaction in the course of processing
the material so as to become inseparable by physical
means? (unable to answer)
Because the jury found itself unable to answer interrogatories
1, 2, 2(a), 5 and 6, among others, the district court declared a
mistrial. Based on the jury's affirmative answers to
interrogatories 3 and 4, SWP moved for the entry of judgment under
Fed. R. Civ. P. 54(b). District court judge Duplantier obliged and
entered an order stating in relevant part:
[A]ll material produced by Marine Shale Processors, Inc.
from Southern Wood Piedmont Company materials processed
separately from other materials satisfies all criteria of
40 C.F.R. § 266.20(b) and corresponding Louisiana
regulations, and, as such, is not subject regulation as
a hazardous waste . . . . (emphasis added)
SWP objects to the emphasized portion of the district court's
judgment. On appeal, SWP asks this court to modify the judgment to
read as follows:
[A]ll material produced by Marine Shale Processors, Inc.
from Southern Wood Piedmont Company materials satisfies
all criteria of 40 C.F.R. § 266.20(b) and corresponding
Louisiana regulations, and, as such, is not subject to
regulation as a hazardous waste . . . .
The dispute on this issue focuses on the fact that MSP often mixed
metal-bearing baghouse dust with material emerging from its kiln in
a slagging process. Because MSP did not clean its baghouses before
processing SWP waste, the material produced from the processing of
4
SWP’s contaminated soil was mixed with quantities of toxic metals
from other sources.
On cross appeal, the United States contends that the district
court erred in entering a Rule 54(b) judgment for several reasons.
The United States first attacks the judgment in favor of SWP on the
ground that the district court improperly entered judgment when the
jury had been unable to answer the question of whether MSP was
engaged in a process of legitimate recycling. Second, the United
States contends that the district court erred in holding that MSP
had obtained an express exemption from the Louisiana Department of
Environmental Quality as required by Louisiana Regulations
operating in lieu of the federal Product Rule. See 42 U.S.C. §
6926(b). Third, the United States argues that the court gave
erroneous jury instructions addressed to interrogatory 3. Finally,
the United States contends that the district court abused its
discretion on certain evidentiary rulings.
We discuss the issues raised by the United States’ cross
appeal first. Because we agree with the United States on some of
the contentions in its cross-appeal, we vacate and remand. Given
our disposition of the United States’ cross-appeal, we do not reach
the questions posed by SWP’s appeal. On remand, the district court
may choose to structure additional or substitute interrogatories so
as to eliminate any dispute springing from the ambiguity in the
language of questions three and four.
II
5
The United States argues that the district court improperly
entered a Rule 54(b) judgment in the absence of a jury resolution
on the question of whether MSP was engaged in a process of
legitimate recycling. According to the United States, the federal
Product Rule1 exempts a product produced for the general public’s
use only if the product emerges from a process of legitimate, as
opposed to sham, recycling. Because the jury failed to answer
interrogatories 1, 2, and 2(a), the United States argues, it had
failed to determine the analytically prior issue of whether MSP was
engaged in legitimate recycling. Thus, the district court abused
its discretion by entering a Rule 54(b) judgment when the jury had
not decided all issues relating to the SWP declaratory judgment.
40 C.F.R. § 261.6(a)(2) declares that “recyclable materials
used in a manner constituting disposal” are “not subject to
[regulation as listed or characteristic wastes] but are regulated
under subpart[] C . . . of part 266.” The Product Rule appears in
Subpart C of part 266; this regulation provides,
Products produced for the general public’s use that are
used in a manner that constitutes disposal and that
contain recyclable materials are not presently subject to
regulation if the recyclable materials have undergone a
chemical reaction in the course of producing the products
so as to become inseparable by physical means and if such
products meet the [treatment standards for land disposal]
1
We address here the content of the “federal Product Rule”
even though, as we explain in the next section, Louisiana has
operated its own RCRA program under 42 U.S.C. § 6926(b) since 1985.
The parties have assumed throughout this case that the only
difference in content between the Louisiana and federal product
rules is the one discussed in the next section. We use the more
accessible version of the regulations contained in the Code of
Federal Regulations, as opposed to the less widely distributed
Louisiana Administrative Code, throughout this opinion.
6
for each recyclable material (i.e. hazardous waste) that
they contain.
40 C.F.R. § 266.20 (alterations added). Accordingly, in order to
be exempt from regulation under the Product Rule, a substance must
(1) be produced for the general public’s use, (2) used in a manner
that constitutes disposal, (3) contain recyclable materials, (4)
have undergone a chemical reaction during the production process so
as to be inseparable by physical means, and (5) meet land ban
standards for each hazardous waste it contains. The United States
focuses on the third element.
The third element of the Product Rule requires that the
substance at issue contain recyclable materials. “Hazardous wastes
that are recycled will be known as ‘recyclable materials.’” 40
C.F.R. § 261.6(a)(1). “A material is “recycled” if it is used,
reused, or reclaimed.” 40 C.F.R. § 261.1(c)(7).2 “A material is
‘used or reused’ if it is . . . [e]mployed as an ingredient
(including use as an intermediate) in an industrial process to make
a product.” 40 C.F.R. § 261.1(c)(5)(I). Accordingly, in order for
its substance to meet the third element of the product rule, a
facility must have employed the hazardous waste as an ingredient in
an industrial process to make a product. Mercifully, the
regulatory definitions end here; the regulations do not define the
terms “ingredient” or “industrial process.”
2
Despite the government’s implication, these definitions do
apply to Part 266. Section 261.1(c) establishes that its
definitions are “[f]or the purposes of §§ 261.2 and 261.6.” 40
C.F.R. § 261.6(a)(2)(I) refers specifically to Part 266. Nothing
in 40 C.F.R. § 261.2(e)(2) limits the scope of these definitions.
7
The United States points out that EPA has consistently
interpreted the Product Rule to include a requirement that the
substance at issue be produced from a process of legitimate, as
opposed to sham, recycling.3 According to these documents, sham
recycling, as opposed to legitimate recycling, occurs when the
hazardous waste purportedly recycled contributes in no significant
way to the production of the product allegedly resulting from the
recycling. One EPA publication, in the midst of discussing an
example involving the recycling of hazardous waste to produce
aggregate in an aggregate kiln, states that legitimate recycling is
occurring if “the prohibited hazardous wastes and their hazardous
constituents do contribute legitimately to producing aggregate.”4
3
See Final Rule, Hazardous Waste Management System;
Definition of Solid Waste, 50 Fed. Reg. 614, 638-39, 646 n.36 1985)
(articulating sham recycling criteria); see also Final Rule, Land
Disposal Restrictions Phase II -- Universal Treatment Standards,
and Treatment Standards for Organic Toxicity Characteristic Wastes
and Newly Listed Wastes, 59 Fed. Reg. 47,982, 48,026 n.1 (1994);
Proposed Rules, Land Disposal Restrictions for First Third
Scheduled Wastes, 53 Fed. Reg. 17,578, 17,605-06 (1988); Proposed
Rule and Request for Comment, Identification and Listing of
Hazardous Wastes; Amendments to Definition of Solid Wastes, 53 Fed.
Reg. 519, 522 (1988); Proposed Rule and Request for Comment,
Hazardous Waste Management System: General, 48 Fed. Reg. 14,472,
14,474 (1983); Enforcement Guidance, 48 Fed. Reg. 11,157, 11,158
(1983); United States v. Self, 2 F.3d 1071, 1079 (10th Cir. 1993)
(referring to “EPA’s long-standing distinction between legitimate
and sham burning for energy recovery”).
4
Proposed Rules, Land Disposal Restrictions, 53 Fed. Reg. at
17,606; see also Proposed Rules, Land Disposal
Restrictions--Supplemental Proposal to Phase IV, 61 Fed. Reg. 2338,
2343 (1996) (“Sham recycling is, of course, nothing more than waste
disposal or waste treatment.”); Burning of Hazardous Waste in
Boilers and Industrial Furnaces, 52 Fed. Reg. 16,982, 16,989 (1987)
(discussing previous EPA policy of presuming that the burning of
materials with less than a specified BTU/lb ratio constituted sham
recycling because combustion of such materials was not an efficient
method of producing heat).
8
In other words, the sham versus legitimate recycling inquiry
focuses on the purpose or function the hazardous waste allegedly
serves in the production process. If the waste does not in fact
serve its alleged function in the process, then sham recycling is
occurring.
Although the text of 40 C.F.R. § 266.20(b) itself does not
mention sham or legitimate recycling, the distinction is inherent
in the language “[e]mployed as an ingredient . . . in an industrial
process to make a product” in 40 C.F.R. § 261.1(c)(5)(I). A
hazardous waste is not “employed as an ingredient” if it
contributes in no legitimate way to the product’s production.
EPA’s interpretation of its own regulation as including a
distinction between sham and legitimate recycling is entitled to
deference. Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 566
(1980). In this case, the interpretative exercise is fairly
straightforward. A substance cannot be an ingredient in making
something if it is merely along for the ride.
We agree with the United States that the district court should
not have entered a Rule 54(b) partial judgment without deciding
whether MSP was engaging in sham versus legitimate recycling. To
illustrate our reasoning, we provide the following examples.
Hypothetical Facility A generates a large amount of liquid organic
waste. In order to rid itself of the waste, Facility A heats the
liquid to very high temperatures in the presence of oxygen, causing
the carbon and hydrogen in the organic waste to burn away. The
temperatures in the heating device are so high as to make
9
irrelevant any heat contribution from the burning of the organic
waste.5 Facility A has incinerated, not recycled, its organic
waste. To the extent that Facility A has made a product, it has
done so without using its hazardous waste.
Hypothetical Facility B also generates a large amount of
liquid organic waste. In order to rid itself of the waste, the
facility dumps it into soil. Facility B then digs up the soil
containing the waste and heats it to very high temperatures in the
presence of oxygen, causing the carbon and hydrogen in the organic
waste to burn. The temperatures in the heating device are so high
as to make irrelevant any heat contribution from the burning of the
organic waste. The soil, however, conglomerates together and forms
something that Facility B calls “aggregate.” Under such
circumstances, Facility B has not recycled its hazardous waste.
The only difference between Facilities A and B is that Facility B
dumped its waste in soil first. If the organic waste provides
neither energy nor materials, then the organic material contributes
nothing to the production of the “aggregate.” Facility B could
have manufactured the exact same “aggregate” by dumping virgin soil
into its heating device.
SWP argues that producing a product is recycling. This
contention ignores the fact that the hazardous waste in MSP’s
5
An easier case is presented if the organic compound is a
low energy hazardous waste, thus making it an inappropriate fuel.
In a third possibility, the facility does not use the lion’s share
of the heat produced from the burning of its organic waste. See
Marine Shale Processors, Inc. v. United States Environmental
Protection Agency, No. 95-60228, at 22-23.
10
“feedstocks” may simply be along for the ride. At bottom, SWP’s
argument depends on the idea that soil contaminated with organic
waste is a fundamentally distinct substance from the organic waste
itself. We do not agree. See Chemical Waste Management, Inc. v.
Environmental Protection Agency, 869 F.2d 1526, 1539 (D.C. Cir.
1989) (holding that EPA could reasonably reject the argument that
“an agglomeration of soil and hazardous waste is to be regarded as
a new and distinct substance”). Incineration does not cease to be
incineration when one dumps the waste to be incinerated into a
temporary medium like soil.
In Marine Shale Processors, Inc. v. United States
Environmental Protection Agency, No. 95-60228, at 17-26, we held
that EPA could conclude that MSP is burning its organic wastes for
destruction, and thus that the waste is not recycled or reclaimed
or reused. This holding supports our conclusion that, at minimum,
an issue of fact exists as to whether SWP’s organic waste is a
legitimate ingredient in the production of any Marine Shale
product. Accordingly, we vacate the district court’s Rule 54(b)
judgment and remand for further proceedings. We express no view as
to the sufficiency of the evidence to support a jury finding in
favor of or against SWP, nor regarding any possible preclusive
effect of EPA’s conclusions in number 95-60228.
III
The United States argues that the district court erred by
issuing a declaratory judgment because the court mistakenly held
11
that MSP had complied with a Louisiana regulation including a more
stringent requirement than the federal Product Rule. Specifically,
the government refers to the Louisiana counterpart to the federal
Product Rule, L.H.W.R. § 33.V.4139.A.2, formerly L.A.C. §
22.20(a)(2). This Louisiana regulation, the government contends,
included a requirement that LDEQ issue an exemption before the
facility could place a recycled product on the ground under the
Product Rule. The United States asks us to render judgment on the
ground that the district court erred in determining that LDEQ
issued an exemption to MSP.
A
RCRA is an exercise of federalism. Congress initially
required EPA to promulgate regulations governing the treatment of
hazardous waste from cradle to grave. 42 U.S.C. § 6921. EPA
complied with the congressional order in 1980, and promulgated what
became a federal regulatory floor. See, e.g., 40 C.F.R. pts. 260-
272. Under 42 U.S.C. § 6926(b), however, states could assume
primary responsibility for RCRA enforcement by developing their own
programs, which EPA would approve after a review to assure that the
state program provided for a level of regulation at least as high
as the federal floor. See 40 C.F.R. pt. 271. RCRA expressly
allowed states to impose regulations more stringent than those
outlined in the federal floor. 42 U.S.C. § 6929. 42 U.S.C. §
6928(a) gave EPA the power to enforce the substance of an approved
state’s program against private parties in that state.
12
42 U.S.C. § 6929 imposed a duty upon approved states to
maintain their RCRA programs at a level at least as stringent as
the federal floor. Because EPA often amended the regulatory scheme
governing the treatment, storage, and disposal of hazardous wastes,
approved states also had to enact conforming amendments. 40 C.F.R.
§ 271.216 provided a procedure governing EPA scrutiny of state
program amendments. This process required the state to submit its
proposed alterations to EPA; EPA then approved or disapproved of
the amendments depending on whether they maintained a level of
regulation at least as high as the federal floor. 40 C.F.R. §
271.21(a-b).
Between 1980 and 1985, Louisiana constructed its RCRA program
and sought EPA approval under 42 U.S.C. § 6926(b). In 1985, EPA
amended its floor regulations and promulgated what became the
federal Product Rule. Final Rule, Hazardous Waste Management
Systems; Definition of Solid Waste, 50 Fed. Reg. 614, 666 (1985);
see 40 C.F.R. § 266.20(b). The previous section outlined the
substance of the federal Product Rule; briefly, it allowed
facilities that recycled hazardous waste into products for the
general public’s use to place these products on the ground without
violating RCRA. Very shortly after promulgating the federal
Product Rule, EPA approved Louisiana’s RCRA program. Notice of
Final Determination on Louisiana’s Application for Final
6
No party has argued that EPA lacked the power to promulgate
40 C.F.R. § 271.21, or that the operation of section 271.21 is
unconstitutional. See New York v. United States, 505 U.S. 144
(1992).
13
Authorization, Louisiana; Decision on Final Authorization of State
Hazardous Waste Management Program, 50 Fed. Reg. 3348 (1985).
Because of the short time between EPA promulgation of the federal
Product Rule and its approval of the Louisiana submission,
Louisiana’s program had no counterpart to the Product Rule.
Instead, the Louisiana program included a counterpart to the
general exemption in the original 1980 floor regulations.
The federal Product Rule as promulgated in 1985 was self-
executing. That is, a facility did not have to obtain an express
permit or exemption from EPA before operating under its terms. If
a facility violated the terms of the federal Product Rule by, for
instance, placing non-recycled hazardous waste on the ground, then
the facility was subject to administrative penalties or an
enforcement action. Louisiana’s counterpart to the federal Product
Rule was L.H.W.R. § 22.20(a)(2), superseded by L.H.W.R.
33.V.4139.A.2. This provision, unlike the federal rule, was not
self-executing. It provided that facilities meeting certain
conditions “may be exempted by the Administrative Authority” and
thereby allowed to place a product resulting from the recycling of
hazardous waste on the ground.
The parties agree that the following fairly unusual chain of
events occurred regarding L.H.W.R. § 22.20(a)(2). For reasons not
addressed in the record Louisiana did not submit the Louisiana
Product Rule for EPA approval until May 16, 1989. The submission
included the version of the Louisiana Product Rule requiring a
facility to obtain LDEQ approval before placing recycled materials
14
on the ground. Four days later, LDEQ deleted the provision
requiring LDEQ approval and made L.H.W.R. § 20.22(a)(2), now L.A.C.
§ 33.V.4139.A.2, self-executing. LDEQ did not, however, change its
submission to EPA. As a result, when EPA approved the Louisiana
amendments effective January 29, 1990, see Immediate Final Rule,
Louisiana: Final Authorization of State Hazardous Waste management
Program Revisions, 54 Red. Reg. 48,889 (1989), it approved the
version of the Louisiana Product Rule requiring that LDEQ grant an
express exemption in order to allow a facility to place products on
the ground.
B
The above discussion illustrates that the United States’
argument implicates at least three separate questions. First,
when, if ever, did EPA become able to enforce the requirement that
a facility wishing to take advantage of the Product Rule’s
exception from RCRA regulation receive an express exemption from
the “Administrative Authority”? Second, did LDEQ, which all
parties have assumed to be the “Administrative Authority” specified
in the Louisiana Product Rule, in fact issue an exemption to MSP?
Third, if LDEQ did issue an exemption at one time, did LDEQ later
revoke it?
The first question depends in part upon a construction of 40
C.F.R. § 271.21. We note that the parties have assumed, and Marine
Shale has expressly argued in a separate section of its brief, that
an authorized state’s attempt to alter, amend, or repeal a portion
of its own regulations does not become effective in the state until
15
approved by EPA pursuant to section 271.21. The operation of this
regulation may raise significant statutory and constitutional
concerns.
The record on the latter two questions is, to say the least,
equivocal. LDEQ issued a series of letters to MSP generally
suggesting that MSP’s operations were in compliance with many
Louisiana regulations. None of these letters mentioned the
Louisiana Product Rule, and many occurred before that rule took
effect in Louisiana. Some years later, LDEQ issued orders to MSP
that the United States has argued constituted revocations of any
previously issued exemptions. Some of these letters and orders
were the subject of conflicting deposition testimony. In
particular, two LDEQ officials gave polar opposite interpretations
of a June 9, 1986 letter from LDEQ to MSP. To some extent, the
resolution of whether LDEQ issued an exemption may require findings
of fact depending on the credibility of witnesses.
The district court expressly noted that the exemption issue
remained outstanding at several stages of the litigation below.
The parties have cited to no place in the record, however, in which
the district court focused on the three questions outlined above.
The judgment issued by the district court included a declaration
that certain material “satisfied all criteria of 40 C.F.R. §
266.20(b) and corresponding Louisiana regulations.” From this
phrase, we are unable to determine whether the district court held
that the Administrative Authority exemption requirement was never
16
enforceable by the United States,7 and thus did not constitute a
“corresponding Louisiana regulation,” or that LDEQ had issued an
exemption to MSP that remained in effect.
Because the district court did not issue express findings of
fact and conclusions of law on this question, we are uncertain as
to the scope and grounds of its decision. Our uncertainty renders
appellate review on this matter difficult; this difficulty is
particularly acute because resolution of the last two of the three
above questions may depend on credibility determinations properly
made by the district court. Under such circumstances, we think it
proper to vacate any finding that the district court made on this
question and remand for further proceedings consistent with this
opinion. We note that no party has suggested, and we do not
believe, that the presence or absence of an exemption from the
Administrative Authority affects a facility’s duty to comply with
the substantive requirements of the Product Rule. Accordingly, our
remand on this issue leaves unaffected any of our holdings or the
jury’s findings on the Product Rule’s substantive criteria; should
the district court decide this case on MSP’s failure to meet one of
the substantive criteria of the Product Rule, it may not need to
reach the exemption question.
IV
7
Although LDEQ intervened in this litigation, the terms of
the district court’s order allowing the intervention appear to
prevent LDEQ from arguing in this suit that state law unenforceable
by EPA imposed an Administrative Authority exemption requirement.
17
The United States argues that the district court committed two
fatal errors in its jury instructions.8 First, the United States
argues that the district court erroneously failed to include an
interrogatory and a jury instruction regarding whether any product
manufactured from the recycling of SWP’s waste met land ban
standards. Second, the United States argues that the district
court erroneously defined the phrases “for the general public’s
use” and “inseparable by physical means.
A
We do not discuss the United States’ land ban argument because
the United States waived it below. At the charging conference, MSP
asked the district court for a directed verdict on the issue of
whether the material produced from the process of SWP soil met land
ban standards. Judge Duplantier stated, “I’m not directing a
verdict on it. There is just nothing to be said about it.”
Counsel for the United States responded, “No contest.” The
district court had by this time made clear that it would consider
all matters orally raised at the charging conference preserved for
appeal. Regardless of the content of the submissions before the
charging conference, the United States at this point in the trial
8
Despite the fact that we vacate and remand the district
court’s Rule 54(b) judgment on other grounds, we reach the United
States’ arguments concerning instructional and evidentiary error.
Had the United States identified harmful error, we would have been
obligated to vacate the jury’s responses to interrogatories 3 and
4 and remand for a new trial on those matters. Judicial economy
counsels that we reach these issues now, so that any error may be
corrected in a single proceeding on remand.
18
agreed that nothing need be said to the jury regarding the
application of land ban standards to the SWP material.
B
The United States argues that the court improperly instructed
the jury regarding the meaning of the federal Product Rule’s
requirement that the product be “produced for the general public’s
use.” The court instructed the jury on this subject as follows:
MSP must prove . .. that there is a known market for its
materials for the general public’s use, not just for
MSP’s own use.
. . . When you consider [interrogatory numbers 3
and 5], you should consider all of the evidence
concerning the sales by MSP and its use of the material
on its own property prior to the court order of August,
1991. After that court order, sales were restricted to
[MSP’s sister corporation, Recycling Park, Inc.] only,
and use of the material was restricted to [RPI’s
property] only. So, you remember what the court order
said, that after that time, of course, they couldn’t
produce that evidence because they couldn’t sell it.
The United States first argues that the district court should
not have mentioned the August, 1991 court order because that order
was irrelevant to the existence of a market when MSP voluntarily
ceased sales to the public a year before this order. We do not
agree. The best evidence of a market for MSP’s material would be
evidence that MSP sold it. The court committed no error by
reminding the jury why MSP could not come forward with evidence of
a sale after the court enjoined it from moving the material.
The United States’ second argument regarding general public
use is that the district court’s instruction improperly prevented
the jury from considering the fact that MSP continued to produce
its so-called product for years even after it was unable to
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complete a sale. The court’s instruction did nothing of the sort.
The instruction informed the jury that it should only consider
evidence of the use and sale of the product before 1991; nothing in
this instruction barred the jury from considering MSP’s continued
production.
The United States’ final attack on the jury instructions
concerns the court’s definition of inseparable. Taking the
instruction as a whole, we hold that it sufficiently communicated
to the jury that the proper question was whether the hazardous
waste constituents had undergone a chemical reaction so as to
become inseparable by physical means.
V
The United States also attacks three evidentiary rulings of
the district court. We find any error harmless.
The first ruling concerns expert testimony. The United States
called Dr. John Drexler to testify as an expert on certain
geological matters. The United States sought to elicit testimony
from Dr. Drexler based on data contained in a report prepared by an
MSP expert hired in preparation for the litigation. The district
court sustained objections to this testimony because the report was
not in evidence. The United States relies on Fed. R. Evid. 703,
which specifies that an expert may rely on inadmissable facts and
data “of a type reasonably relied upon by experts in the particular
field.” MSP responds by noting that, as the Fourth Circuit has
recently stated, “[r]eports specifically prepared for purposes of
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litigation are not, by definition, of a type reasonably relied upon
by experts in the particular field.” United States v. Tran Trong
Cuong, 18 F.3d 1132, 1143 (4th Cir. 1994) (internal quotation marks
omitted).
That a research protocol or method was conducted in
anticipation of litigation does not mean that it cannot be the type
of study an expert would rely upon in expressing his opinion. At
the same time, a district court may decide that the financial and
other incentives of litigation pose an unacceptable risk to the
objectivity and neutrality of the person gathering the data, such
that the data would not normally be considered reliable in the
relevant field. We note that this rationale suggests the
usefulness of cross-examination of the data gatherer, a core
hearsay principle. On the other hand, a district court may decide
that the combination of scientific discipline and the constraint
imposed by a well-accepted testing methodology provides sufficient
indicia of reliability so as to make the data something that those
in the field normally use. This result might be more likely when
a party’s own expert gathers data adverse to the party. In this
case, we do not reach this question. We find any error in the
exclusion of this data harmless.
Next, the United States complains that the district court
improperly admitted evidence and permitted closing argument
regarding the impact upon MSP of an adverse verdict, a company
providing jobs to 364 citizens of Louisiana. The government also
objects to MSP’s characterization of this lawsuit as a government
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attempt to put MSP out of business. MSP and SWP provide no
explanation for the relevance of the evidence. They defend the
argument by referring to the fact that, in response to MSP’s
attempt to elicit evidence of the economic effect of an adverse
judgment, the government unsuccessfully attempted to cross-examine
on the same issue, even though the district court called the
government’s questions “wrong and unprofessional” in the jury’s
presence, and even though the court struck all of the evidence and
instructed the jury to disregard it. Such evidence and argument,
especially where as here it lacks any relevance to issues the jury
must decide, can carry the danger of significant prejudice. See
Fed. R. Evid. 402, 403; Whitely v. OKC Corp., 719 F.2d 1051, 1054-
55 (10th Cir. 1983). Again, we note that MSP and SWP have
articulated no theory of relevance for this evidence and no
credible explanation for the argument. Nevertheless, we hold that
none of the trial judge’s rulings substantially prejudiced the
United States in this case. The district court struck all of the
evidence, and the comments during argument certainly did not “so
permeate the proceedings that they impair[ed] substantial rights
and cast doubt on the jury’s verdict.” Bufford v. Rowan Companies,
Inc.,
994 F.2d 155, 157 n.1 (5th Cir. 1993).
Finally, the United States attacks the district court’s
admission of evidence proving that United States agencies sent
waste to MSP for processing. We find any error in the admission of
this evidence harmless.
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VI
We VACATE the Rule 54(b) judgment and REMAND for further
proceedings consistent with this opinion.
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