Fifth Circuit Vacates EPA’s TSCA Risk Management Rule for Methylene Chloride

Yesterday, the Fifth Circuit issued its decision in East Fork Enterprises, Inc. v. EPA, Case No. 24-60227 (5th Cir.) vacating EPA’s TSCA section 6(a) risk management rule for methylene chloride as well as the underlying determination of unreasonable risk. This decision is likely to have extensive impacts on EPA’s administration of the Toxic Substances Control Act (TSCA). Five key takeaways from this decision are outlined below.

Key Takeaways

1.“Whole Chemical” Approach to Risk Evaluations

The Fifth Circuit held that EPA “lacked legal authority under TSCA to determine that a chemical or substance poses unreasonable risk ‘as a whole’ rather than to evaluate each of its conditions of use.” A return to the “condition of use” approach to conducting risk evaluations and making risk determinations was anticipated (as it was part of EPA’s proposed revisions to the Risk Evaluation framework rule), but the court’s decision all but solidifies this approach and raises questions about what is next for the numerous other risk evaluations in which EPA relied on the “whole chemical” approach.

2. EPA’s Assumptions Regarding Non-Use of PPE

The Fifth Circuit also found that EPA violated TSCA in assuming that workers exposed to methylene chloride do not properly use PPE. The court held that EPA’s consideration of the “conditions of use” of methylene chloride must take into account the use of personal protective equipment (PPE) because “[t]he use of PPE is plainly a critical ‘condition’ or ‘circumstance’ regarding the use of MC.”  The court further noted that EPA’s failure to consider the use of PPE in making its risk determinations violated its obligation under TSCA section 6(b)(4)(F)(iv) to consider the intensity of exposures under the conditions of use.

3. “Unreasonable Risk”

The court’s decision also provides some long-awaited guidance on the meaning of “unreasonable risk” under TSCA. Holding that the “EPA’s approach to ‘unreasonable risk’ was far more conservative than the statutory term connotes,” the Fifth Circuit distinguished TSCA’s “unreasonable risk” standard from other environmental statutes such as the Clean Air Act that incorporate a “precautionary principle.” The court held that “TSCA’s text does not authorize anything like a precautionary or lowest possible risk principle,” and “‘[u]nreasonable risk’ must allow for some risk experienced by users of [methylene chloride] or those in contact with it.” The Fifth Circuit also rejected EPA’s argument that it was required to defer to the agency’s technical expertise underlying the unreasonable risk determination, finding that “‘[u]nreasonable risk’ is not a factual finding but a prudential baseline set by the statute.” Thus, pursuant to Loper Bright, the court held that EPA’s interpretation of the term “unreasonable” was subject to judicial review. 

The Fifth Circuit also undertook a review of EPA’s methodology relied upon to support its determination that methylene chloride presents an unreasonable risk, focusing specifically on its assessment of risks to workers. In assessing EPA’s approach to calculating a limit of 16 parts per million (ppm) for acute exposure to methylene chloride, the court criticized the Agency’s reliance on a single human study involving twelve individuals to the exclusion of other available studies without sufficient explanation, as well as EPA’s reliance on a “precursor” to an adverse health effect rather than an adverse health effect in determining the exposure limit above which “unreasonable risk” would occur and other conservative assumptions. The Fifth Circuit also noted the significant difference between the Occupational Health and Safety Administration (OSHA) acute exposure standard of 125 ppm and EPA’s limit of 16 ppm.

With respect to EPA’s development of a limit of 2 ppm for chronic exposure, the court similarly criticized EPA’s reliance on a single rat study to the exclusion of three human epidemiological studies, noting that these studies appear to undermine the Agency’s conclusions with respect to liver effects associated with chronic exposure to methylene chloride and noting that it was “irrational for EPA to ignore evidence contrary to its presuppositions.” While acknowledging that the three human studies available to EPA may have had limitations, the court held that “the substantial evidence standard [under TSCA] did not allow EPA to completely exclude those results when it developed its exposure limits.”

In summary, the court found that EPA’s risk analysis “yielded extraordinarily small limits for both acute and chronic exposures” that lacked support in the record, failed to consider alternative data, were based on “unrealistic benchmark margins of error” and therefore “more closely approximate[d] the precautionary principle” than TSCA’s “unreasonable risk” standard.

Under the Fifth Circuit’s interpretation, therefore, EPA must determine whether “unreasonable risk” exists on a case-by-case basis considering all of the information in front of it (including contradictory information), and “unreasonable risk” must be something more than “no risk.” Because of the fact-specific nature of this inquiry, it is hard to predict exactly how the court’s interpretation will impact EPA’s risk evaluation and risk determination approach. However, greater scrutiny of the studies that the Agency relies upon and conservative adjustments applied in the interpretation of such studies can be expected.  Further, because the "unreasonable risk" standard also applies to EPA's review of new chemicals under TSCA section 5, the Fifth Circuit's interpretation arguably applies to the Agency's risk determinations for new chemicals in addition to existing chemicals.

4. “To the Extent Necessary”

Though acknowledging that it was unnecessary for it to do so, the Fifth Circuit also assessed whether EPA’s risk management rule went beyond what was “necessary” to address unreasonable risk from methylene chloride and therefore violated TSCA. Noting the agency’s “aggressive decision to largely prohibit [methylene chloride’s] uses, rather than approve or modestly revise the OSHA standard,” the Fifth Circuit held that EPA’s “near-prohibition” on the use of methylene chloride was contrary to the statute. The court’s opinion distinguished the risk evaluation stage under TSCA section 6(b) (in which the Agency is prohibited from considering costs and other non-risk factors) from the risk evaluation stage under TSCA section 6(a), which it found “reflects significant cost-benefit considerations.” The court rejected EPA’s argument that bans on the use of methylene chloride were necessary because of uncertainty about whether the low exposure limit was achievable as unsupported by the record and also found that EPA had not sufficiently considered alternatives to an outright ban or the availability of alternatives to methylene chloride. While the Fifth Circuit did not go as far as to re-adopt the “least burdensome” standard for risk management that existed prior to the 2016 amendments to TSCA, it made clear that EPA must weigh costs and other burdens much more heavily than it did when making risk management decisions in for methylene chloride. 

5. Exclusion of Exposure Pathways from Risk Evaluations

In addition to vacating the TSCA section 6(a) rule for methylene chloride and the underlying unreasonable risk determination based on arguments raised by industry petitioners, the Fifth Circuit considered and rejected three arguments raised in a challenge to the rule by Sierra Club. Of greatest interest, the court rejected Sierra Club’s arguments raised that EPA had improperly failed to evaluate risks from air and water exposures to populations located at the fence line of facilities that use methylene chloride. The court noted that EPA had conducted a screening-level assessment of risks to these populations, which had found that most of the risk was “adequately addressed” by the TSCA section 6(a) rule and restrictions under other statutes such as the Clean Air Act. It then rejected Sierra Club’s argument that EPA was required to conduct a full risk evaluation-level assessment of these risks, noting the statutory timeframes on EPA’s completion of risk evaluations and concluded that “[a] fair reading of the TSCA leaves ample latitude for EPA to exclude certain  exposure pathways when the science or methodology is not developed.”

Finally, the court also rejected Sierra Club’s argument that EPA’s risk evaluation had not adequately addressed “unreasonable risk to people whose genetics make them more susceptible to cancer from [methylene chloride] exposure” and found that Sierra Club lacked standing to bring a challenge to the rule on the basis that EPA did not evaluate the impacts of methylene chloride on the depletion of the ozone layer.

Conclusion

The court has now remanded the methylene chloride risk management rule and underlying unreasonable risk determination to EPA for reconsideration, a process that is likely to take several years. Additionally, as discussed above, the effects of this decision are expected to reach far beyond EPA’s regulation of methylene chloride. The Fifth Circuit’s rejection of the “whole chemical” approach to risk evaluations and EPA’s assumptions regarding the non-use of PPE, as well as its interpretations of “unreasonable risk” and “to the extent necessary” will likely require EPA to revisit (again) existing risk evaluations and risk management rules, as well as those under development — a significant setback more than 10 years after the amendments to TSCA. We will continue to track EPA’s actions in response to this decision.

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