Lynn L Bergeson, Kelly N Garson, “Loper Bright and TSCA: Will the demise of Chevron matter?,” Chemical Watch, July 22, 2024.
The standard of judicial review for most critical TSCA determinations under section 19 is “substantial evidence in the record taken as a whole”. This is a tough standard, considerably more rigorous than the Administrative Procedure Act (APA) standard under section 706, where agency action will be set aside if it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” The recent Loper Bright decision overturning Chevron has invited much discussion on whether decisions made by the US EPA under TSCA, especially under sections 4 (testing), 5 (new chemicals), and 6 (existing chemicals), can be expected to be challenged more routinely and with a greater probability of success. The answer is probably so, but time will tell. The better question, however, is what stakeholders should do differently in advocating on TSCA issues in light of Loper Bright. We address both questions below.
Much has already been written about the demise of Chevron, and we do not dwell on the decision – or Justice Kagan’s vigorous dissent – here. Unquestionably, the Loper Bright decision is consequential, albeit widely expected. Logically, one would think that Chevron deference might be especially missed by the EPA, particularly in addressing TSCA challenges. After all, the critically important term “unreasonable risk” is undefined in TSCA, yet its construction is central to many TSCA rulemakings and decisions.
The EPA has had several bites at the apple in crafting a regulatory construct of unreasonable risk but it remains a fluid, frustratingly difficult concept to define, inviting the very agency leeway that Chevron has afforded and the EPA has welcomed over the past four decades. The EPA may well be understandably anxious, as it remains to be seen how EPA decisions might fare under a Skidmore deference standard, or wherever else the deference standard might shake out post Loper Bright.
Given the youth of the 2016 TSCA amendments made under the Frank R Lautenberg Chemical Safety for the 21st Century Act relative to, say, the Clean Air Act, final agency actions under TSCA, especially sections 5 and 6, are already subject to judicial review. This is as would be expected with new legislation, as litigants seek favorable judicial precedent to shape how the law will be interpreted. Two recent cases, however, suggest Chevron deference was not a consideration, possibly suggesting these courts have already moved on.
In the case of Inhance Technologies, L.L.C. v EPA [96 F.4th 888, 894 (5th Cir. 2024)], the US Court of Appeals for the Fifth Circuit stated that “EPA’s interpretation of section 5 distorts TSCA’s framework and defies common sense”. Stemming from a petition for review of orders issued to Inhance under TSCA sections 5(e) and 5(f), the case did not ultimately turn on whether the EPA’s orders were supported by substantial evidence, but on whether the EPA had the statutory authority to regulate Inhance’s manufacturing and processing activities as a “significant new use” under TSCA section 5.
As TSCA defines neither “new” nor “significant new use”, the court stated that it must ascertain the plain meaning of the statute and whether the EPA exceeded its statutory authority based on the statutory text and “the language and design of the statute as a whole” [96 F.4th at 893]. The Fifth Circuit could have cited directly the (now defunct) Chevron framework in completing this analysis. Instead, the Fifth Circuit cited to cases concerning statutory interpretation that are both progeny of Chevron and “Chevron-avoidant” (ie Sackett v EPA, 598 US 651 (2023)). The case raised constitutional concerns that may have precluded the court from applying the Chevron framework. To address those issues, the Fifth Circuit invoked the “constitutional-doubt” canon, citing to the proposition in Jennings v Rodriguez that “when statutory language is susceptible of multiple interpretations, a court may shun an interpretation that raises serious constitutional doubts and instead may adopt an alternative that avoids those problems” [583 US 281, 286 (2018)].
In reviewing possible interpretations of “significant new use”, the EPA was afforded no deference. Inhance and the EPA set forth two different definitions of “new” under TSCA: Inhance argued that “new” means “not previously existing”, whereas the EPA argued “new” also means “not previously known” to the EPA [96 F.4th at 893]. The Fifth Circuit decided unflinchingly that TSCA plainly prohibited the regulation of a previously existing use as a “significant new use”, which may instead be regulated under the provisions of TSCA Section 6.
The court found that the EPA’s interpretation contorted and redefined the term “new”, whereas Inhance’s interpretation was “more persuasive” by aligning closely with the text of TSCA section 5 and TSCA as a whole [Id. at 893-94]. Moreover, the EPA’s interpretation raised serious constitutional concerns by failing to provide fair notice to the public of the conduct regulated under TSCA, a requirement rooted in the Fifth Amendment’s Due Process Clause [Id. at 894-95]. Beyond the immediate impacts on Inhance through the vacatur of the EPA’s orders, the Inhance decision will have cascading impacts on the EPA’s administration of TSCA section 5.
TSCA mandates that manufacturers and processors are responsible for developing adequate information on the environmental and health effects of chemical substances and mixtures. A case of first impression, Vinyl Institute v EPA challenged the EPA’s implementation of its new TSCA section 4 test order authority under Lautenberg in the US Court of Appeals for the DC Circuit [No 22-1018, slip op. at 8 (DC Cir. 5 July 2024)]. Though the DC Circuit has not yet issued its mandate in the case, the petition for review concerned the EPA’s 2022 test order requiring avian chronic toxicity testing for 1,1,2-trichloroethane. In reviewing whether the EPA met the rigorous burden of demonstrating substantial evidence under TSCA section 4(a)(2), which authorises the EPA to require the development of new information necessary for it to conduct a TSCA section 6 risk evaluation, the court found that the EPA did not provide substantial evidence in the public record for the court to review, leading to the court’s vacatur and remand of the order [Id. at 3].
The DC Circuit did not find, however, that all of the EPA’s determinations lacked substantial evidence. In those cases where the court upheld an EPA decision, the court considered whether the EPA’s explanation “makes sense” or was a reasonable determination [Id. at 19-20]. Most significantly, the DC Circuit held that the EPA provided substantial evidence demonstrating that avian chronic toxicity testing is in fact necessary for the EPA to complete its 1,1,2-trichloroethane risk evaluation [Id. at 20].
The court did not probe further into what Congress may have intended when specifying that the EPA may only issue a TSCA section 4(a)(2) test order when “necessary … to perform a risk evaluation”, and whether that determination requires the EPA to consider factors such as exposure. Instead, the DC Circuit looked at the steps the EPA took when considering issuing a test order, including its previous determinations under TSCA section 6, and the information the EPA claimed it relied upon. The court concluded that EPA’s “necessity” determination was “reasonably determined”.
Following closely on the heels of the 28 June Loper Bright decision, the DC Circuit in the Vinyl Institute case did not engage in any further statutory analysis, concluding only that “substantial evidence in the record” indicates that testing is necessary without requiring the EPA to demonstrate a certain level of exposure to the chemical substance.
This was not the first time that the DC Circuit was tasked with review of the EPA’s TSCA section 4 testing authority. The DC Circuit also considered whether the EPA must consider exposure when requiring new testing in Chemical Manufacturers Association (CMA) v EPA and concluded that the EPA must have a “more-than-theoretical basis for inferring the existence of exposure” [859 F.2d 977, 988 (DC Cir. 1988)]. CMA concerned a test rule arising under TSCA section 4(a)(1), a separate testing authority from the TSCA section 4(a)(2) provisions considered in Vinyl Institute. The DC Circuit’s CMA analysis as to what, if any, factors the EPA must consider before requiring new testing, was therefore rendered inapplicable. Regardless of whether the analysis applied, the divergence of the DC Circuit’s approach in these two cases is noteworthy.
In CMA, the DC Circuit explored whether the EPA gave effect to the “unambiguously expressed intent of Congress” in issuing a test rule under TSCA section 4 pursuant to Chevron’s two-step framework [859 F.2d at 984]. After finding that Congress did not address the issue of what evidence of exposure is required before the EPA can issue a test rule (Chevron Step One), the DC Circuit analysed whether the EPA’s interpretation was reasonable under the rule (Chevron Step Two) [859 F.2d at 988-89]. The DC Circuit upheld the EPA’s interpretation, finding that it met the standard discerned from TSCA’s legislative history that the EPA may not issue testing based on “mere conjecture or speculation” but must have a reasonable “basis for concern” that demonstrates a “more-than-theoretical basis” for suspecting unreasonable risk [Id. at 986].
Chevron preceded CMA by four years, whereas Loper Bright preceded Vinyl Institute by four business days. Variability in whether and how Chevron applied, however, was not unexpected. Studies regarding how courts of appeals applied Chevron have demonstrated wide variability in the level of deference afforded to federal agencies and across subject matter [Congressional Research Service (CRS), “Chevron Deference in the Courts of Appeals,” 8 June 2023, CRS Report No LSB10976]. The DC Circuit in particular has been regarded as “Chevron-friendly”, and most TSCA cases – regardless of the circuit in which they are heard – have generally acknowledged the “great deference” afforded to the EPA in its interpretations of TSCA. Though the application of the Chevron framework has varied (one of the court’s critiques of the court in Loper Bright), where applied even if courts were more likely than not to defer to the agency, courts were required to outline the basis for why such deference was afforded.
TSCA is ripe for challenges to the EPA’s statutory interpretation. Courts may continue to rely on what appears to be “common sense” interpretations of the statute, as adopted in recent DC Circuit and Fifth Circuit cases, while new tests continue to unfold under Loper Bright. It is clear from Loper Bright that the courts may not defer to one of many “permissible interpretations” but must uncover and apply the “best interpretation” of TSCA. As the EPA remains at the relative beginning of its journey in implementing Lautenberg, courts may remain apt to consider the EPA’s technical expertise and afford deference – but only to a point.
TSCA establishes several pathways for the EPA to evaluate whether an existing chemical, new chemical, or significant new use of a chemical presents an unreasonable risk to human health and the environment and to protect against that risk. The EPA is often delegated broad authority to carry out this mandate. As per Loper Bright, sometimes “the best reading of a statute is that it delegates discretionary authority to an agency” to interpret a statute, wherein the court’s role is “ensuring the agency has engaged in ‘reasoned decision-making’ within those boundaries”.
The DC Circuit may have been one of the first to make such a determination in Vinyl Institute, when it considered the EPA’s testing necessity finding to be “reasonably determined”. Notably, the court also held that where there is statutory ambiguity, the courts must use the traditional tools of statutory construction to resolve it, which is “no less true when the ambiguity is about the scope of an agency’s own power – perhaps the occasion on which abdication in favour of the agency is least appropriate”. Perhaps not “if” but “when, where and to what extent” Congress has authorised this exercise of discretion by the EPA will be the future litigation battlefield for TSCA.
Legal scholars will debate the merits of Loper Bright for years to come. This is a good thing, as reasonable people will disagree whether the decision reflects, as some argue, another shameless grab of judicial power by a deeply conservative and partisan majority court hell-bent on perfecting the unitary executive theory or, as others claim, a necessary correction to address agency overreach derivative of too much deference. There is little disagreement, however, that the demise of Chevron changes forever how effective advocacy under TSCA must be conducted going forward. Several points merit mention here:
First, the EPA’s well-supported views will continue to command respect under any standard. The court in Loper Bright made it abundantly clear that although an agency’s view is not binding on the court, an agency’s view “may be especially informative ‘to the extent it rests on factual premises within [the agency’s] expertise.’” This may telegraph a return to Skidmore deference, or not, though that remains to be seen. At the least, however, this means TSCA advocates must be relentlessly compelling, fact based and thorough in advocating for their positions in a Chevron-free world. Industry advocates will have a better shot at prevailing based on a careful review of the record taken as a whole, free of the Chevron mandate some courts have been compelled to apply.
As we have seen in TSCA section 6 rulemakings, and EPA section 4 orders and section 5 determinations, EPA decisions are vulnerable based on any number of deficiencies, including misapprehensions of fact, reliance on provably unreliable data, wildly overly conservative assumptions regarding risk, and a failure to rely on the best available science.
Second, industry advocates need to anticipate how EPA rulemakings and decisions will adapt to Loper Bright. Some have suggested the major questions doctrine and non-delegation doctrine loom larger now that Chevron’s light has been extinguished. This means industry advocates need to fashion advocacy through a wider aperture and with a nod to broader judicial principles.
Third, the EPA and other agencies can be expected to rely less on notice and comment rulemakings and more on interpretative rules that are harder to challenge judicially. The current EPA has already moved in this direction. This includes the EPA’s policy change wherein it agreed to revise its risk determinations for its first ten chemicals to undergo risk evaluation in response to various legal challenges (now to be codified in the EPA’s risk evaluation rule, also subject to impending judicial review), the EPA’s revocation of the 1980 guidelines providing a mechanism to address errors in original reporting forms to keep current the TSCA Inventory under TSCA section 8, and swift policy reversal to allow “absence of an ingredient” claims on pesticide labels under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). Advocates will need to be more willing to sue than they historically have been.
Finally, venue selection has always been an important consideration, and Loper Bright elevates considerably the relevance of the venue. The Supreme Court and legal scholars have raised concerns regarding the patchwork application of Chevron across federal circuits, based upon the subject matter at issue and the parties to a case. Though some environmental statutes specify that certain cases be heard in the DC Circuit, TSCA’s judicial review and citizens’ suit provisions do not include such a mandate. Both the venue and the litigants engaged in seeking review of the EPA’s implementation of TSCA will continue to shape the framework of Lautenberg. Attention, engagement and thorough reasoning as to what may constitute not only a permissible but the “best” interpretation of TSCA for present and future applications will be vital as Loper Bright becomes the new “cornerstone” of administrative law.