D.C. Circuit Upholds Designation of PFOA and PFOS as CERCLA Hazardous Substances

Introduction

In a significant and unanimous ruling, the D.C. Circuit upheld the Environmental Protection Agency’s (“EPA”) final rule designating perfluorooctanoic acid (“PFOA”) and perfluorooctanesulfonic acid (“PFOS”) as “hazardous substances” under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), denying the petitions of seven industry groups seeking to overturn that designation.^[1] CERCLA, also known as the “Superfund Statute,” allows EPA to require potentially responsible parties to fund cleanup of hazardous substances.

While the regulated community has been managing regulatory obligations and potential liabilities associated with PFOA and PFOS for some time, the ruling confirms CERCLA as an available regulatory tool for both response actions and cost allocations for remediation of PFOA and PFOS contamination.

Background

“PFAS” describes a category of over 15,000 man-made chemicals that have been used since the 1940s in products like non-stick cookware, water-repellant clothing, and firefighting foam. Op. at 7. PFOA and PFOS are two of the most common and well-studied PFAS compounds. Id.

Prior to the final rule, EPA had regulated PFOA and PFOS only as “pollutants or contaminants” under CERCLA, limiting EPA’s enforcement powers and often placing the cost of clean-up on the public. Id. In May 2024, EPA issued a final rule elevating PFOA and PFOS to full “hazardous substance” status under CERCLA, broadening EPA’s enforcement tools and allowing EPA to recover cleanup costs from potentially responsible parties through CERCLA’s strict, joint, and several liability framework.^[2] The D.C. Circuit unanimously upheld this rule, denying all challenges to EPA’s designation of PFOA and PFOS as hazardous substances.

The Court’s Decision

The court rejected the petitioners’ three main attacks: (1) that EPA misread CERCLA’s “may present substantial danger” standard;^[3] (2) that EPA’s cost-benefit analysis lacked adequate Administrative Procedure Act (“APA”) notice; and (3) that EPA acted arbitrarily and capriciously—both in its cost-benefit treatment and in regulating amid acknowledged uncertainty.

First, Petitioners argued that EPA’s interpretation of the phrase “may present substantial danger” in CERCLA’s definition of a hazardous substance was overly broad, and that the statutory text required EPA to find that danger “will” occur upon release. Op. 12-13. EPA read Section 2602(a)’s “hazardous substance” language to mean “pollutant or contaminant” carrying a “risk of harm,” assessing that harm based on imminence and uniformity. Op. at 18-19. The court held that EPA’s interpretation was the best reading of the statute, noting first that the term “may” was directly in the statute and that “the primary meaning of ‘may’ is one of contingency both in the ordinary usage and in dictionaries at the time of CERCLA’s enactment.” Op. 13-14.^[4] The statute therefore refers to the “chance of harm… not its certainty.” Op. 13.

The court further noted that CERCLA is grounded in scientific understanding of health and environmental risks, and that science, by its nature, deals in probabilities rather than certainties. Op. 15. Requiring “absolute scientific certainty as to what will happen upon every individual release of a dangerous chemical” would, in the court’s view, violate CERCLA’s purpose. EPA performed analyses, including toxicity assessments in drinking water and cancer assessments of both humans and animals for PFOA and PFOS. Op. 17. These analyses caused EPA to reasonably conclude that these substances may pose a substantial risk to public health, welfare, and the environment if released. Id.

Second, Petitioners argued that EPA “violated the APA’s notice requirement by failing to disclose its Regulatory Impact Analysis until publication of the final rule.” Op. 23. The court held that any deviations to the Regulatory Impact Analysis were “a logical outgrowth of the Economic Assessment’s cost-benefit analysis,” including addressing comments on the proposed rule throughout, therefore not just satisfying APA’s notice requirement, but demonstrating how it should work in practice. Op. 29.

Third, the court rejected Petitioners’ argument that the final rule was arbitrary and capricious under the APA because EPA did not “carefully assess” the “severe consequences” of its action, including uncertainty about where PFOA and PFOS are located and in what quantities, what economic costs the rule would impose, and unintended consequences for real estate transactions. Op. 45. The court found, despite EPA’s acknowledgment that “uncertainties exist in regulating PFOA and PFOS as hazardous substances,” Id., as EPA explained, the unique, discretionary, and contingent nature of CERCLA actions means uncertainties will always exist at the initial stage of any CERCLA response action. Op. 46. The court agreed this framework adequately includes “numerous additional regulatory steps…before any liability ever attaches to a responsible party,” including the fact that CERCLA clean-up determinations are “discretionary, contingent, and site-specific.”  Id.

Immediate Compliance Impacts

EPA’s designation triggers three compliance requirements under CERCLA:

• Parties responsible for the release of more than one pound of PFOA or PFOS must now report that release to national authorities and sometimes to local authorities and the public. 42 U.S.C. §§ 9602(b), 9603.
• “Federal agencies selling land contaminated with PFOA and PFOS generally must now provide notice of the presence of hazardous substances” Op. at 9; 42 U.S.C. § 9620(h); and
• Shipments containing more than one pound of PFOS and/or PFOA must now be labelled and identified in compliance with the Hazardous Materials Transportation Act. 49 U.S.C. § 5101 et. seq.

Best Practices Going Forward

Industry and federal agencies with any nexus to PFOA or PFOS should consider the following steps to ensure compliance and mitigate enforcement and liability risk:

• Conduct a PFOA/PFOS audit. Identify all current and historical sites, operations, and supply-chain activities involving PFOA and PFOS to assess potential exposure.
• Review reporting obligations. Determine whether any reportable releases of PFOA or PFOS (above one pound) may occur, and ensure processes are put in place to provide adequate notification to federal, state, and local authorities.
• Assess real estate holdings. Review any land transactions involving properties where PFOA or PFOS contamination may be present.
• Evaluate indemnification and contractual protections. Review existing contracts and indemnification agreements to ensure that PFAS-related liabilities are appropriately allocated.
• Monitor state-level activity. EPA has acknowledged that states may use their own authorities to require investigations, site characterizations, and further response including cleanup. State-level enforcement activity may move independently of federal action and on a faster timeline. Even with a nationwide rule in place, companies should be aware of state and local requirements.
• Engage early with EPA if a site is under scrutiny. Given the preference for settlements under CERCLA, early engagement with EPA may provide opportunities to shape the scope of any required response action and limit overall exposure.

We continue to monitor developments in this space; please see this link if you are interested in receiving additional updates. If you would like to discuss this or any other PFAS developments, please reach out to the authors.