A recent Supreme Court ruling could further threaten the Environmental Protection Agency’s (EPA) designation of PFAS as a hazardous substance as the agency seeks to advance a novel use of delegated legislative authority to further regulate PFAS chemicals.

On June 28, the Supreme Court issued an opinion on the case Loper Bright Enterprises v. Raimondo603 US ____ (2024), overturning the long-standing doctrine known as “Chevron respect.” Loper Light greatly expands the power of federal courts to review and reject interpretations of statutes by federal agencies.

Less than two months passed before the Court issued a decision in the case Loper LightThe U.S. Environmental Protection Agency (EPA) published a long-awaited regulation designating two PFAS compounds, perfluorooctanoic acid (PFOA) and perfluorooctane sulfonic acid (PFOS), as “hazardous substances” under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or Superfund) on May 8, 2024. The final regulation has significant immediate effects, which Pillsbury described in more detail here , but it is also novel in a legal sense: The final regulation marks the first time the agency has designated a hazardous substance using its authority under section 102(a) of CERCLA.

Chevron Respect and Loper LightExplained
The principle of agency subordination has been overthrown by Loper Light was established 40 years ago in Chevron USA, Inc. v. Natural Resources Defense Council467 U.S. 839 (1984). In an attempt to resolve statutory ambiguity regarding the meaning of a regulated “source” under the Clean Air Act, the Supreme Court created a simple, two-step test for federal courts reviewing agencies’ interpretations of the statutes.

First, courts should assess whether the text of the statute reveals that Congress has expressly and unambiguously addressed the issue at issue. If it has not, and the statute is ambiguous, courts have to defer to the agency’s interpretation, so long as the agency’s interpretation is reasonable. The Supreme Court has held that federal judges are not experts in the technical issues of regulation that administrative agencies face, nor are judges as accountable to the public as are agencies in the executive branch.

Since the Supreme Court issued its opinion in 1984, Chevron deference allowed administrative agencies greater flexibility in considering the scope of authority delegated to them by Congress. Chevron has been cited by federal courts numerous times and has served as the basis for sustaining countless federal regulatory efforts, from cases involving the Social Security Administration to the Immigration and Naturalization Service to, of course, the EPA.

Writing for the majority in Loper LightChief Justice Roberts characterized Chevron as “fundamentally flawed” and “impractical,” primarily because federal courts have long had difficulty assessing what exactly constitutes “ambiguity,” thereby preventing the judiciary from adequately interpreting federal law. The court also rejected the idea that agencies’ technical expertise requires deference in interpreting ambiguous statutes, holding instead that federal courts are best equipped for this task because the courts’ primary job is to decide questions of law by exercising their own independent judgment.

The court also ordered federal courts to return the pre-Chevron structure: Skidmore respect. Based on Skidmore v Swift & Co.323 U.S. 134 (1944), Skidmore directs federal courts to give weight and consideration to reasoned, technical agency judgments. However, federal courts may still reject an agency interpretation if, in the court’s opinion, the interpretation is not the best of everything interpretation of the disputed provision.

Implications for PFAS regulations
The Environmental Protection Agency’s (EPA) designation of PFOA and PFOS as hazardous substances under CERCLA is already being challenged by industry associations in the U.S. Court of Appeals for the District of Columbia Circuit. (See Chamber of Commerce et al v EPA(D.C. Cir., No. 24-01193 (filed June 10, 2024).) In a nonbinding statement of issues for the Court to consider, Petitioners indicated their intention to press the question of statutory interpretation as to “whether EPA misinterpreted CERCLA in designating PFOA and PFOS as hazardous substances.”

Comments on EPA’s proposed rule identify the precise subjects of these regulatory challenges. For example, a conglomerate of oil and gas trading groups challenged EPA’s interpretation of section 102(a), which authorizes EPA to “promulgate and revise, as necessary, regulations designating as hazardous substances…elements, compounds, mixtures, solutions, and substances that, if released into the environment, may pose a significant risk to public health or welfare or the environment.” Specifically, commenters argued that EPA’s criteria for assessing whether a chemical or substance poses a “significant risk to public health or welfare” were unclear and not adequately defined in the final rule.

EPA’s response to these comments reveals that the agency believes it is entitled to a certain degree of deference in determining hazardous substances. In the preamble to the final rule, the agency defended its interpretation, noting that “EPA takes final action…after considering available scientific and technical information and after considering comments on the proposed determination. Available information indicates that human exposure to PFOA and/or PFOS is associated with a wide range of adverse health effects” (89 Federal regulation 39125). Groups challenging the rule will likely argue in response that EPA is making the same mistake that the Supreme Court found for federal agencies in Loper Bright; EPA has failed to promulgate a court-ordered or anything resembling a permanent standard to support its interpretation of the phrase “may pose a significant risk to the public health or environmental welfare.” A court reviewing the final rule could still rely on EPA’s understanding of the scientific and public health literature on the effects of PFAS chemicals and uphold the rule. However, in a post-Chevron landscape, a reviewing court is more likely to invalidate EPA’s approach and vacate the final regulation.

The question remains how the U.S. Court of Appeals for the District of Columbia or other reviewing courts will review the EPA’s interpretation of CERCLA and other environmental laws in light of Loper LightRegardless, EPA intends to continue working to further regulate PFAS substances, consistent with the Biden Administration’s PFAS Strategic Roadmap.

Pillsbury attorneys will continue to monitor the implications of this decision both within the environmental law context and as it spreads to other agencies and issue areas.

(See source.)