The Nickel Report

In December 2018, an article in this blog flagged a petition for EPA rulemaking under the Toxic Substances Control Act (TSCA) that, if denied, had the potential to set up precedent-setting litigation on citizens’ ability to use the courts to require EPA action under TSCA. Now, nearly a year later, the scenario that article described is coming true. In a challenge to EPA’s denial of that petition, a federal district court is poised to decide what constitutes a petition for issuance of a new rule as opposed to one for amendment of an existing rule—and in the process, to decide when a court may cast aside deference to EPA and undertake its own evaluation independent of the Agency’s record and conclusions.

The rulemaking petition in question, submitted by the Asbestos Disease Awareness Organization (ADAO), asked EPA to amend its Chemical Data Reporting (CDR) rule to require greater reporting and disclosure of data on the production, importation and processing of asbestos and asbestos-containing products. EPA denied the petition in December 2018. The Agency denied a similar petition by numerous states seeking substantially the same amendments in April 2019.

Under section 21 of TSCA, when EPA denies a petition for rulemaking, the petitioner may file suit in federal district court where a judge will decide whether to compel EPA to undertake the requested rulemaking. Where the petition sought amendment of an existing rule, TSCA section 21(b)(4)(A) provides for judicial review that is similar in scope to review under the Administrative Procedure Act, which is limited to the administrative record and provides some deference to the Agency’s determinations. However, where the petition sought issuance of a new rule, section 21(b)(4)(B) provides for a much more expansive “de novo proceeding” in which the court may consider additional evidence not presented to EPA.

ADAO challenged EPA’s denial of its petition in the US District Court for the Northern District of California in February 2019. As anticipated, this litigation has teed up the issue of when TSCA section 21’s special “de novo” review is triggered. However, the route that this issue took to end up before the court was a bit indirect.

ADAO asserts two claims regarding EPA’s denial of its petition. First, it seeks review under the “de novo” provisions of TSCA section 21(b)(4)(B). And second, it separately seeks review under the Administrative Procedure Act. Surprisingly, EPA did not immediately file a motion to dismiss the TSCA claim arguing that ADAO’s petition was not one seeking issuance of a new rule under section 21(b)(4)(B). Instead, EPA simply moved to dismiss the Administrative Procedure Act claim on the basis that it was duplicative of the TSCA claim. It was only after oral argument on this motion that EPA filed a “notice of clarification” asserting that the “de novo” provisions of section 21(b)(4)(B) would not apply to this case.

In response to this notice, on September 17, the court ordered the parties to submit new briefs addressing whether the ADAO petition “constituted a request to initiate a proceeding for the issuance of a new rule (and thus subject to Section 21(b)(4)(B)) or an amendment of an existing rule (and thus subject only to Section 21(b)(4)(A)).”

The parties submitted their briefs on September 27. Both EPA and ADAO agree that a de novo proceeding is not available where a TSCA petition merely requests amendment of an existing rule. But ADAO asserts that its petition, despite explicitly seeking to “amend” the CDR Rule, actually sought issuance of a new rule. ADAO cites TSCA’s legislative history to argue Congress intended de novo review to be available for denial of a petition where EPA had not previously considered the general subject matter in a rulemaking. According to ADAO, its petition raised new issues and sought new asbestos-related requirements that were not contemplated when EPA promulgated the CDR Rule and were based on events that post-dated that rule.

EPA, on the other hand, asserts ADAO’s petition merely sought amendments. EPA did not limit its arguments to pointing out where ADAO’s petition explicitly calls for “amending” the CDR Rule rather than issuing a new one, perhaps anticipating that it may soon face this issue again in now-pending litigation over the similar petition filed by states (who artfully worded their petition to avoid use of the word “amend”). The Agency notes the substance of ADAO’s petition (in both its requested changes and its focus on the CDR Rule’s purposes) is more akin to amending the CDR Rule than promulgating a separate rule. EPA also notes there is substantial record material enabling review of the general subject matter involved, including the record for its previous CDR Rule revisions and for its ongoing asbestos risk evaluation.

Finally, EPA argues that—as this blog previously noted—construing ADAO’s petition as one triggering de novo review could interfere with EPA’s separate and ongoing risk evaluation for asbestos and undermine TSCA’s provisions for judicial review of that process. A de novo proceeding under section 21(b)(4)(B) could cause the court to determine whether a chemical presents an unreasonable risk, which is precisely the question EPA is considering in its asbestos risk evaluation. In that case, EPA and the court could reach different conclusions on unreasonable risk. Further, construing ADAO’s petition as one for a new rule also risks a scenario in which an appellate court reviewing any EPA finding of no unreasonable risk could only do so under the Administrative Procedure Act’s “arbitrary and capricious” standard, while a district court reviewing a petition could make its own “unreasonable risk” finding in a de novo proceeding.

The district court’s resolution of this issue will have significant implications for how citizen groups can use TSCA’s petition process to force EPA’s hand. The de novo provisions of section 21(b)(4)(B) grant courts significantly expanded authority to make determinations about the risks from a chemical substance and to require EPA action in response. A ruling in favor of ADAO could encourage citizen groups to artfully phrase their petitions as seeking issuance rather than amendment of a rule in order to avail themselves of this option. Industries subject to TSCA should closely watch this case to see how the court will resolve this novel issue.