D.C. Circuit Upholds EPA's Hazardous Substance Designation For PFOA, PFOS
By Kevin Westerling,
@KevinOnWater
For an industry still absorbing the compliance costs of PFAS regulation, this month's court ruling offered little in the way of surprise and no immediate change in regulatory obligations.
The U.S. Court of Appeals for the D.C. Circuit has rejected industry challenges to the EPA's designation of PFOA and PFOS as hazardous substances under CERCLA, leaving the agency's April 2024 rule fully intact. While the case centered on the EPA's authority to make the designation, its practical significance for water utilities is simpler: the liability concerns that have accompanied the rule since its adoption remain unresolved.
In an Aug. 18 ruling in Chamber of Commerce of the United States of America v. EPA (No. 24-1193), a three-judge panel consisting of Judges Patricia Millett, Gregory Katsas, and Neomi Rao unanimously denied petitions for review filed by seven industry groups. The EPA finalized the designation in April 2024, and it took effect that July.
How Much Certainty Does CERCLA Require?
The case turned on a narrow but significant question: how much evidence of harm must the EPA have before designating a substance as hazardous under CERCLA?
Section 102(a) authorizes the EPA to designate a substance if it "may present substantial danger" to public health, welfare, or the environment when released. The petitioners argued that the standard was too open-ended to withstand nondelegation and vagueness challenges unless the EPA could demonstrate a stronger degree of certainty that harm would occur.
The court disagreed.
Applying the post-Loper Bright framework of independently determining a statute's best reading, the panel concluded that Congress intentionally chose language based on potential risk rather than certainty. The judges found that the word "may" refers to possibility, not inevitability, and rejected the argument that the the EPA must wait until harm is effectively assured before acting.
The panel also rejected claims that the EPA's economic analysis was arbitrary and capricious, finding the agency's assessment of compliance costs and affected industries sufficiently supported by the record.
The Rule Remains In Place
The ruling leaves all key elements of the designation unchanged.
Entities must continue reporting releases of PFOA or PFOS at or above one pound within 24 hours to the National Response Center and to applicable state, tribal, and local emergency response agencies. Federal agencies transferring or selling property remain obligated to disclose past storage, release, or disposal of the chemicals and ensure necessary cleanup obligations are addressed.
The designation also continues to provide the EPA, states, tribes, and private parties with CERCLA cost-recovery authorities that can be used to pursue cleanup expenses from potentially responsible parties.
Importantly, the decision addressed the EPA's authority to establish the designation. It did not determine how liability should ultimately be allocated among manufacturers, utilities, landfills, airports, municipalities, and other entities that may become involved in PFAS cleanup disputes. Those questions will continue to be addressed in site-specific enforcement actions and litigation.
Utilities Still See A Liability Gap
For water utilities, the practical landscape remains largely unchanged.
When the EPA finalized the designation in 2024, it simultaneously issued an enforcement discretion policy stating that the agency intends to focus enforcement on entities that significantly contributed to PFAS contamination, including manufacturers, rather than passive receivers such as drinking water utilities, wastewater systems, municipal landfills, and farms.
Utility groups have long argued that policy commitments and legal protections are not the same thing.
The EPA's enforcement discretion policy reflects how the agency currently intends to prioritize its resources, but it does not alter CERCLA's underlying liability framework. Nor does it prevent private parties from pursuing cost-recovery or contribution claims against utilities and other entities that did not manufacture PFAS but may nonetheless be connected to contaminated sites.
That distinction remains at the center of utility concerns surrounding the rule.
AWWA, which was not a party to the litigation, emphasized that point in its response to the decision. In an Aug. 18 statement, the association said it "remains concerned that water utilities — as passive receivers of PFAS — could be exposed to significant legal and financial liability under the act" and renewed its call for Congress to enact a statutory exemption for drinking water and wastewater utilities.
The association argued that, absent such protections, utilities and their ratepayers could bear cleanup costs that policymakers have repeatedly said should fall on PFAS manufacturers, potentially diverting resources from infrastructure upgrades, cybersecurity investments, and other system priorities.
Related reading: While the D.C. Circuit's ruling preserves the EPA's PFAS hazardous substance designation, questions surrounding utility exposure under CERCLA remain. Water Online previously examined potential liability pathways, proposed legislative protections, and efforts by utilities to recover PFAS-related costs from manufacturers in CERCLA And PFAS: What's The Liability For Water And Wastewater Utilities?
What Comes Next
Whether the petitioners seek rehearing before the full D.C. Circuit or pursue review by the U.S. Supreme Court remains to be seen.
For now, the court has settled one question: EPA had the authority under CERCLA to designate PFOA and PFOS as hazardous substances.
The question that continues to concern many water utilities remains unresolved. While the EPA has stated that passive receivers are not a priority for federal enforcement, Congress has not provided those entities with a statutory liability exemption. As a result, utilities remain outside the EPA's stated enforcement focus but not necessarily outside CERCLA's reach.