Fifth Circuit Restricts Scope of EPA’s Statutory Authority to Regulate “New Uses” of “Forever Chemicals” under Toxic Substances Control Act

Written By: Lauren Spiezia

On March 22, 2024, the Fifth Circuit Court of Appeals vacated two orders issued by the U.S. Environmental Protection Agency (EPA) to Inhance Technologies, a Texas-based plastic treatment company, prohibiting it from utilizing fluorination to reinforce plastic packaging because it produces perfluoroalkyl and polyfluoroalkyl substances (PFAs).

During fluorination, fluorine gas is used to construct a strengthened barrier between the contents and walls of a plastic container to reduce the chance that its shape will become distorted over time. The process incidentally creates PFAs, also known as “forever chemicals,” which are a group of manmade chemicals commonly used in many consumer and industrial products that often do not chemically break down. Research has linked PFAs to environmental harm as well as many types of health conditions in humans, including hormonal system interference, kidney, liver, and thyroid diseases, and reproductive and pregnancy problems.

Background on the Case
The EPA had issued the orders to Inhance pursuant to Section 5 of the Toxic Substances Control Act (TSCA), which gives the agency regulatory authority over the usage of new chemical substances as well as significant new uses of already-existing chemical substances. For the EPA’s exercise of this power to be proper, the use must actually be “new,” meaning it is novel in some way. Also, the use must be subject to the agency’s Significant New Use Rule (SNUR) on toxic substances, which the EPA invoked in this case. Inhance, in response, asserted that a limitation on this process would cause severe economic harm and the orders exceeded the EPA’s authority.

In its reasoning, the court rejected the EPA’s claim that the TSCA applies to the fluorination process, which Inhance has used for 40 years. Specifically, it reasoned that, although this process had been discovered to incidentally create PFAs in March 2022, the actual practice itself is not a “new use” under the TSCA. Rather, the process itself has been used for decades and, in the court’s opinion, the SNUR in question was not intended to include uses that were already in existence when it was proposed in 2015.

Significance of the Decision
Largely, this decision clarifies that a use of a substance that was underway at the time a SNUR was proposed cannot be classified as a “new use.” In this situation, the EPA cannot place restrictions on that use under Section 5 of the TSCA, regardless of whether the manufacturer knew that the use was happening. However, the majority did note that the EPA may instead be able to regulate the fluorination process under Section 6, which grants the agency broader regulatory powers over all chemical substances to restrict those that pose unreasonable risk of injury to health or the environment. As such, this case essentially refines and limits the scope of the term “new use” under Section 5, different from the broader interpretation that the EPA has historically utilized.

Potential Future Implications
The Fifth Circuit’s language regarding federal agencies’ duty to ensure parties are not surprised by violations for their good faith reliance on the agency’s previous positions could potentially contribute to a burden shift in Section 5 proceedings. Simply put, the EPA traditionally placed an obligation on entities using chemicals to alert the agency of uses they were engaged in around the time of the drafting and enactment of a new SNUR, particularly during the comment period between its proposal and promulgation. However, under the framework articulated by this court, it appears that the EPA may now share some of that duty in making itself aware of ongoing processes, which could burden the agency.

Also, while the Fifth Circuit does position Section 6 of the TSCA as a possible avenue for regulation in these circumstances, the process for rulemaking under this provision is much more demanding than that of Section 5. This is because Section 6, unlike Section 5, mandates the EPA conduct a thorough cost-benefit analysis, taking into account the chemical’s negative effects as well as the potential economic repercussions of limiting or banning the substance.

This decision begs the question of how other Circuits may continue to refine the definition of “new uses” under Section 5 of the TSCA in the future. Thus, there is some ambiguity as to which circumstances allow the EPA to halt long-standing chemical substance usages discovered to be harmful to human and environmental health.