The U.S. Court of Appeals for the District of Columbia recently denied industry groups’ challenge to an Environmental Protection Agency (“EPA”) rule designating PFOA and PFOS as hazardous substances under Section 102(a) of the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”). With the designation in place, EPA retains the authority to compel cleanups of sites contaminated with PFOA or PFOS and recover the costs of those cleanups.
Background
Section 102(a) of CERCLA authorizes EPA to promulgate regulations to designate as hazardous substances “elements, compounds, mixtures, solutions, and substances which, when released into the environment may present substantial danger to the public health or welfare or the environment.” A designation triggers immediate legal consequences, including release-reporting obligations and, in certain circumstances, liability for response costs.
In May 2024, EPA sought to add two per- and polyfluoroalkyl substances or “PFAS” — PFOA and PFOS — to that list using its Section 102(a) authority. Shortly after EPA issued the rule, industry groups petitioned for review, challenging EPA’s designation on three grounds: (1) EPA misinterpreted the “may present substantial danger” standard, (2) EPA’s cost benefit analysis failed to adhere to the Administrative Procedure Act’s (“APA”) notice requirements and (3) EPA’s designation was arbitrary and capricious because of the uncertainties about its costs and impacts.
D.C. Circuit Upholds EPA’s Rule
The court sided with EPA on each of the three bases for review. Applying the Loper Bright Enterprises v. Raimondo framework, the court found in favor of EPA’s interpretation of the “may present substantial danger” standard on the basis that such standard does not require EPA to find that a substantial danger will occur upon the release of the substance. The court also rejected the industry groups’ claim that EPA violated the APA’s notice requirements. Finally, the court rejected the claim that EPA’s cost benefit analysis was arbitrary and capricious. The court found that EPA adequately addressed the uncertainties that come with predicting future cleanup costs by modeling costs and explaining its methodology.
Key Takeaways
As a practical matter, the D.C. Circuit’s decision means all potentially responsible parties could face the specter of strict, joint-and-several liability for the costs of cleanup at sites contaminated with PFOA and PFOS. This includes not only the owners and operators of contaminated sites, but all parties who arranged for disposal of hazardous substances at those sites, as well as those who transported hazardous substances to those sites.
The effects of this ruling may also be felt at previously “closed” CERCLA sites. EPA often reserves the right to reopen those sites if new information indicates that a remedial action is not protective of human health and the environment. The regulated community should evaluate the scope of their reopeners for closed CERCLA sites where PFOA or PFOS could be present, especially those with approaching five-year reviews.
EPA’s hazardous substance designation is not limited to cleanups; it also imposes release reporting obligations. Parties managing hazardous substances should note that a release of more than one pound of PFOA or PFOS must be reported to the National Response Center within twenty-four hours. The regulated community should prepare and update response plans to account for these release reporting requirements.
If you have questions about how this decision may affect your organization or need assistance evaluating potential CERCLA liability, previously closed sites or release-reporting obligations, please contact Brenden Catt, Paul Beach, Daniel DeWitt, Dennis Donohue, Michael Woo or your Warner attorney.
