D.C. Circuit Upholds EPA's Hazardous Substance Designation for PFOA and PFOS

The U.S. Court of Appeals for the D.C. Circuit has cemented the Environmental Protection Agency's authority to compel the cleanup of two widely used 'forever chemicals,' ruling unanimously that the agency can designate PFOA and PFOS as hazardous substances under the Superfund law.

The decision allows the EPA to immediately enforce strict liability against manufacturers, waste handlers, and property owners, shifting the financial burden of remediation from taxpayers to private industry. By upholding the rule, the court has activated a powerful statutory mechanism that enables federal regulators to identify contaminated sites nationwide and issue binding remediation orders to the parties deemed responsible for the pollution.[4][5]

The August 18, 2026, ruling resolves a multi-industry challenge to a May 2024 EPA regulation that brought perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS) under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). By upholding the rule, the three-judge panel ensures that releases of one pound or more within a 24-hour period must be reported immediately to the National Response Center, state emergency response commissions, and local planning committees.

The designation elevates these chemicals from their prior status as mere 'pollutants or contaminants'—which the EPA could only address on a site-by-site basis using public funds—to fully regulated hazardous substances that carry the threat of joint and several liability.[3][4]

At the center of the legal dispute was the statutory threshold required to trigger CERCLA's jurisdiction over a new chemical. A coalition of seven industry groups, led by the U.S. Chamber of Commerce alongside waste-management and chemical-industry trade associations, argued that the EPA had to prove a chemical 'will' cause substantial harm upon release.

Writing for the unanimous panel, Judge Patricia Millett firmly rejected that standard, stating that the law's requirement that a substance 'may present substantial danger' denotes a scientifically supported possibility, not an absolute certainty. The court concluded that demanding definitive proof of harm for every potential release would fundamentally undermine the statute's preventative design.[4]

Requiring absolute certainty, the court noted, would 'legislatively paralyze CERCLA' and prevent the agency from addressing emerging environmental threats. The panel found that the EPA had adequately relied on an extensive body of peer-reviewed research linking PFOA and PFOS to severe human health impacts, including cancer, developmental delays in children, cardiovascular conditions, and immune system disruption.

The court also credited the agency's focus on the environmental fate and transport of the chemicals, specifically their tendency to persist in soil and groundwater for centuries and bioaccumulate in human tissue, which originally earned them the 'forever chemicals' moniker.[3][4]

The financial stakes of the hazardous substance designation are massive, and the economic projections presented during the rulemaking process varied wildly. The Chamber of Commerce had estimated that aggregate compliance and cleanup costs across the U.S. economy could reach between $11 billion and $22 billion, with recurring annual costs hovering between $700 million and $900 million.

In stark contrast, the EPA's own Regulatory Impact Analysis projected direct compliance costs of just $2,658 per release, totaling roughly $1.63 million annually nationwide. The vast discrepancy stems from whether the estimates include the downstream costs of actual site remediation or merely the administrative burden of reporting releases.[4]

The court ultimately upheld the EPA's cost-benefit analysis under a deferential 'zone of reasonableness' standard, concluding that the agency reasonably treated the shifting of cleanup costs from public funds to responsible private parties as a statutory advantage rather than an economic penalty.

The ruling also dismissed procedural arguments that the EPA failed to provide adequate notice of its economic assessments during the rulemaking process. The panel determined that the final Regulatory Impact Analysis was a logical outgrowth of the initial Economic Assessment published in 2022, noting that the agency had explicitly solicited public comment on how to quantify the rule's financial impacts.[2][4]

For the commercial real estate and waste management sectors, the appellate decision closes a window of regulatory ambiguity but opens a new era of liability risk. Because CERCLA imposes strict, joint-and-several liability, entities that passively received PFAS-containing materials—such as municipal landfills, wastewater treatment plants, and recycling facilities—now face potential exposure.

The court noted that while the designation itself does not automatically mandate a site cleanup, it activates the legal framework under which the EPA can issue unilateral administrative orders or private parties can sue for contribution to recover their own remediation expenses.[2]

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The EPA has previously stated it intends to exercise enforcement discretion, publishing a policy in April 2024 indicating it will focus its resources on primary PFAS manufacturers and significant industrial users rather than passive receivers or municipal water systems.

However, industry advocates and legal analysts note that agency policy does not carry the force of law and cannot prevent private entities from launching cost-recovery litigation against secondary handlers. Consequently, commercial lenders and real estate developers are being advised to significantly heighten their environmental due diligence when underwriting transactions involving properties with potential historical exposure to the chemicals.[1]

The D.C. Circuit's ruling arrives as the EPA navigates a complex transition in its broader, multi-statute strategy to regulate per- and polyfluoroalkyl substances. While the agency successfully defended its CERCLA authority, it is simultaneously managing delays in other regulatory arenas.

In April 2026, the EPA delayed the start of a separate, massive reporting period under the Toxic Substances Control Act to January 2027 while it revises the rule's parameters, and the agency continues to review proposed drinking water limits under the Safe Drinking Water Act that would establish maximum contaminant levels for several PFAS compounds.[2][3]

The industry coalition has not yet announced whether it will seek an en banc rehearing before the full D.C. Circuit or petition the U.S. Supreme Court for certiorari. The court has withheld the formal mandate pending the disposition of any timely petitions for rehearing, but until such an appeal is filed and granted, the EPA holds the undisputed statutory mechanism to identify contaminated sites.

Legal experts anticipate that the ruling will immediately alter how corporations manage environmental indemnities, insurance coverage, and merger negotiations involving assets tied to the legacy use of PFOA and PFOS.