In a Stinging Rebuke of the Biden EPA’s Contorted Interpretation of TSCA, the Court of Appeals for the 5th Circuit Vacates EPA’s Methylene Chloride Risk Management Rule

Yesterday, in a much anticipated and long-awaited opinion, the Court of Appeals for the Fifth Circuit vacated and remanded in its entirety the EPA’s risk management rule for methylene chloride and the underlying unreasonable risk determinations, under the Toxic Substances Control Act (TSCA). The Court granted the petition filed by East Fork Enterprises, Epic Paint Company, and the American Chemistry Council and denied the petition filed by the Sierra Club. And by doing so, the Court provides, for the first time since the 2016 TSCA amendments, helpful judicial guardrails as to what is and is not unreasonable risk.

In its holding, the Court rejected EPA’s controversial adoption of the ‘whole chemical’ approach. After previously making risk determinations for each condition of use in its risk evaluations, EPA abruptly adopted a new ‘whole chemical approach’ where EPA concluded that methylene chloride presented unreasonable risk for the chemical as a whole. This allowed EPA to regulate uses that had previously not been found to pose unreasonable risk. The Court held that TSCA requires risk determinations to be made for individual conditions of use. The rejection of the ‘whole chemical approach’ presents questions on how EPA will handle the risk evaluations finalized or drafted using this approach in determining unreasonable risk.

In a decisive win for industry, EPA is required to consider PPE use as part of its risk determination. EPA has long argued that it should not assume workers are using PPE when assessing unreasonable risk. The Court harshly criticized EPA’s lack of evidentiary support in its decision to not consider PPE use, especially given EPA’s prior consideration of compliance with OSHA requirements in risk evaluations.

This precedential ruling also casts immediate doubt on other broad chemical restrictions finalized or planned by the EPA under TSCA, and equally important, reshapes how EPA conducts risk evaluations to reach unreasonable risk determinations. As the Court noted, the EPA can no longer engage in the application of the precautionary principle in rendering unreasonable risk determinations and rejects the idea that TSCA is a zero-risk statute. The Court emphasizes that some level of risk is permissible.

The Court rejected EPA’s overly conservative acute and chronic exposure estimates for methylene chloride stating they were not supported by substantial evidence. The Court went so far as to opine on how EPA assesses scientific studies in conducting its risk evaluation, by limiting EPA discretion to rely exclusively on a single study, while ignoring other credible studies in determining unreasonable risk. The Agency will need to provide stronger record support for its decision-making moving forward and will need to rely on actual exposure data, not just overly conservative estimates.

The Court determined that the EPA failed to adequately weigh the profound economic consequences of a ban of methylene chloride on existing markets. Moreover, the Court held that the Agency did not properly assess whether economically and technically feasible alternative substances were actually available to replace the solvent.

Conclusion

EPA will be forced to take this rule and the underlying risk evaluation back to the drafting table. This remarkable opinion will have a profound impact on the regulatory landscape as EPA navigates this new lack of discretion and rejection of core policy positions. Thus, companies should expect significant disruption and delays to EPA actions involving TSCA risk evaluations and risk management rules.

If you would like to know more about this opinion and how it could impact your business, please contact David Fischer (fischer@khlaw.com), Lauren Gates (gates@khlaw.com), or your existing contact at Keller and Heckman.