On Aug. 18, the U.S. Court of Appeals for the D.C. Circuit in Chamber of Commerce of the United States of America v. EPA, No. 24-1193, upheld EPA’s adoption of a rule listing two PFAS compounds, Perfluorooctanoic Acid (“PFOA”) and Perfluorooctanesulfonic Acid (“PFOS”), as hazardous substances under CERCLA.
The decision is significant both as a major step in EPA’s efforts to regulate PFAS, and in that the listing of PFOA and PFOS as hazardous substances was the first time the Agency exercised this authority.
The Chamber and six other industry groups challenged the rule, arguing that EPA’s determination that PFOA and PFOS are hazardous substances did not meet statutory requirements, that its cost-benefit analysis was flawed, and its decision to list PFOA and PFOS under CERCLA was arbitrary and capricious due to a variety of uncertainties in how the listing would be implemented and its broader impact.
The court rejected each of these arguments, instead finding that EPA had satisfied its statutory burden and that the decision was not arbitrary and capricious.
First, the court held that EPA met the standard in 42 U.S.C. § 9602(a) that “substances which, when released into the environment may present substantial danger to the public health or welfare or the environment” may be listed as hazardous substances under CERCLA.
The court found that while § 9602(a) requires that the risk from such substances “must be serious and real, not hypothesized,” EPA’s citation to dozens of studies showing that PFOA and PFOS pose a human health hazard was sufficient to meet this standard.
The court also rejected arguments that EPA’s decision violated the nondelegation and void-for-vagueness doctrines, finding that CERCLA sufficiently delegates authority to EPA to rely on scientific studies to make determinations about which substances are hazardous and that the plain language of § 9602 complies with the Due Process clause of the Fifth Amendment.
EPA’s Cost-Benefit Analysis Withstands APA Challenge
Second, the court rejected petitioners’ arguments that notice of the cost-benefit analysis did not comply with the Administrative Procedure Act (“APA”), and that the cost-benefit analysis was arbitrary and capricious.
The court found that the notice complied with the APA both because EPA provided an Economic Assessment in its notice of proposed rulemaking that was logically followed by the Regulatory Impact Analysis in the final rule, and that additional information included in the Regulatory Impact Analysis merely supplemented the findings in the original Economic Assessment.
The court also rejected several arguments that the cost-benefit analysis was arbitrary and capricious, finding that:
- EPA’s cost estimates were reasonably based on example sites involving cleanup of PFOA and PFOS;
- EPA reasonably estimated the number of sites likely to be the target of enforcement for PFOA and PFOS;
- Petitioners were not affected by EPA’s estimate of the number and cost of likely cleanups at federal facilities;
- EPA “reasonably grappled” with concerns about the impact of the listing on industries that passively receive PFOA and PFOS;
- shifting cleanup costs from taxpayers to potentially responsible parties constituted a benefit of the listing; and
- the Regulatory Flexibility Act did not require EPA to consider indirect costs on small businesses that were contingent on uncertain future events.
Court Upholds Listing Despite Regulatory Uncertainty
Third and finally, the court found that the listing was not arbitrary and capricious despite the uncertainties posed by regulating PFOA and PFOS, such as:
- the location and number of sites contaminated by PFOA and PFOS;
- methods and costs for addressing PFOA and PFOS contamination;
- and the potential for unintended consequences from the designation, including on real estate transactions.
In doing so, the court accepted EPA’s reasoning that landowner liability defenses, EPA’s enforcement discretion, and other CERCLA defenses sufficiently addressed concerns about the potentially broader impacts of listing PFOA and PFOS as hazardous substances.
But the court did not discuss concerns about the widespread use of PFAS chemicals in commercial products, and whether this might lead to a corresponding widespread presence of and liability for PFOA and PFOS at CERCLA sites, instead noting that “PFOA and PFOS are two drops in a bucket of the over 800 hazardous substances under CERCLA.”