EPA Chemical Rulemaking Complicated by Challenge to Agency Power

Litigation challenging the EPA’s interpretation of the nation’s primary chemicals law is expected to increase this year, when the agency could face courts using a tougher standard for weighing its interpretation of the law.

There hasn’t been a lot of Toxic Substances Control Act (TSCA) litigation since 2016, when Congress overhauled TSCA’s core provisions, said David Fischer, a Keller and Heckman LLP attorney focusing on chemical and pesticide regulations.

But there will be many more targets starting this year, he said, as the Environmental Protection Agency begins to issue a batch of 10 final rules that will restrict commercial chemicals it has determined are too risky. The TSCA update requires EPA to issue rules eliminating unreasonable health or environmental risks.

The legal challenges come as the US Supreme Court is deciding whether courts should continue to give deference to federal agencies’ reasonable interpretations of laws they implement. That deference, known as the Chevron doctrine after the case that established the precedent, is at risk as justices consider whether to overturn it.

Lawsuits challenging the risk management and other final chemical rules have been anticipated since TSCA’s update became law. They’re part of the evolution of the body of law that surrounds a new statute: it’s signed into law; agencies implement it through final rules; parties challenge those rules and the agencies’ statutory interpretations; and courts weigh in.

“All the risk management rules could be impacted by reduced Chevron deference,” because they reflect policies this administration has implemented, said Fischer, who served as Deputy Assistant Administrator for chemical safety and pollution prevention at the EPA during President Donald Trump’s administration.

The first two of 10 coming commercial chemical rules already have been challenged in court. Four lawsuits challenging the EPA’s March 28 rule, which phases out all ongoing uses of chrysotile asbestos, have been consolidated in the US Court of Appeals for the Fifth Circuit. The first lawsuit to challenge the EPA’s May 8 rule banning most commercial and industrial uses of methylene chloride also has been challenged in the Fifth Circuit.

A third rule that has been challenged describes the procedures the EPA follows as it decides whether chemicals are unreasonably risky. That rule, officially published on May 3, changed how the EPA interprets the 2016 TSCA update as compared to the Trump administration, which issued the amended law’s first chemical risk evaluation rule published in 2017, roughly one year after the statute became law.

Agencies’ interpretations of statutes can flip-flop as administrations change, Supreme Court Justice Neil Gorsuch said during January’s oral arguments in Relentless Inc. v. Dep’t. of Commerce, one of the two cases challenging Chevron.

Litigation Triggers

A Biden-era policy that may be challenged is what the EPA used to call its “whole chemical” determination: the conclusion that a chemical altogether is unreasonably risky, said Fischer.

The EPA has stopped using that term, its final risk evaluation rule said. “It will be practicable, however, to make a single determination of unreasonable risk on the chemical substance as contemplated in the law and codified in this rule,” the EPA’s regulation said.

That doesn’t match the amended law, because the EPA’s approach means it won’t find a “condition of use,” or way a chemical is used, that is determined not to present an unreasonable risk, Fischer said.

The statute says the administration shall issue an order when it determines a chemical “does not present an unreasonable risk of injury to health or the environment.” Such orders preempt states from regulating uses of a chemical. A state couldn’t, for example, ban a flame retardant’s use in furniture, if the EPA concluded that use wasn’t too risky.

Parties also may challenge the EPA’s decisions about “reasonably foreseen” uses of chemicals, said Fischer and Lynn Bergeson, managing partner of Bergeson & Campbell PC, which specializes in domestic and international chemical laws.

Amended TSCA requires the EPA to oversee and, when needed, regulate chemicals based on their “conditions of use.” The law defines those conditions as the circumstances by which a chemical “is intended, known, or reasonably foreseen to be manufactured, processed, distributed in commerce, used, or disposed of.”

But, reasonably foreseen isn’t defined in the law.

If the agency tends to be precautionary, “the sky’s limit on what’s reasonably foreseen,” Bergeson said.

When it comes to the EPA’s decision of what could be a reasonably foreseen use of a new chemical—one that’s never been made in or imported into the US—a law firm challenging the action could give “countless examples of agency decisions where it is not reasonable to foresee a particular use. It is just not reasonable by any independent standard,” she said.

“Yet somebody at EPA cooks it up. Therefore, it is a condition of use that is reasonably foreseen, and it invites a restriction that could be the death knell of a particularly promising technology,” Bergeson said.

Beyond new chemicals, parties also could challenge the EPA’s decision to regulate—or failure to regulate—what they or the agency say is a reasonably foreseen use of a chemical that’s already in commerce, Fischer said.

Industry could argue reasonably foreseen needs to be realistically possible, he said.

If Chevron deference is eliminated or removed, a court could say it will define that instead of deferring to the agency, Fischer said.

Deference Boosts Wins

Many legal analysts speculate the Supreme Court will constrain deference in some way.

“I think it’s very likely it will be cut back, at a minimum. The court will limit the circumstances in which Chevron applies,” said Jonathan Siegel, a professor of law teaching at George Washington University’s Law School. But “it’s not like that will be a cataclysm.”

Lesser or no deference could make courts more attuned to the reason a statute is ambiguous, Siegel said. If the court thinks Congress deliberately used broad language to give the EPA leeway to offer expertise, it may give the agency more deference, he said.

“Agencies dealing with old statutes will have harder job,” Siegel said. Older statutes, such as the Clean Air Act, may not be well adapted to climate change regulations, for example, he said.

The agency may push its interpretation of a statute further than the law was intended to go, and reduced deference will make that harder for agencies to defend, Siegel said.

“Chevron is likely to be extinguished as we know it,” said Bergeson. Federal agencies’ rules could take a significant hit if the metric used in a 2017 study published in the Michigan Law Review holds true, she said.

The law professors and study authors examined 1,558 agency circuit court decisions citing Chevron from 2003 through 2013. Courts applied Chevron 77% of the time, and when they did, it boosted agency-win rates nearly 25%.

If the EPA or another agency has made an irrational decision, losing may be appropriate, Bergeson said. Yet the EPA’s judgment can be meritorious and deserving of the deference that reflects its years of experience applying technical standards and using of huge amounts of data, she said.

Like Siegel though, Bergeson isn’t too worried about the Supreme Court’s coming opinion. “A lot of state courts have already eliminated it in any event, and the world as we know it hasn’t ended,” she said.