Environmental Defense Fund v. Envtl. Prot. Agency
Opinion
The Toxic Substances Control Act,
The Environmental Defense Fund challenges that 2017 rule on the ground that it unlawfully shields information from public disclosure. Environmental Defense is correct that the EPA's elimination of questions pertaining to reverse engineering was arbitrary and capricious, and so we grant the petition in that respect. We otherwise deny the petition for review.
I
A
Congress passed the Toxic Substances Control Act ("Control Act") in 1976 to "assure that * * * innovation and commerce in * * * chemical substances and mixtures do not present an unreasonable risk of injury to health or the environment."
"[C]oncern[ed] about the pace of EPA's work" keeping the Inventory up to date, H.R. REP. NO. 176, 114th Cong., 1st Sess. 12 (2015), Congress amended the Control Act in 2016.
See
Frank R. Lautenberg Chemical Safety for the 21st Century Act, Pub. L. No. 114-182,
Congress directed the EPA to update the confidential portion of the Inventory as well. In particular, the 2016 amendments to the Control Act instruct the EPA to (i) "require any manufacturer or processor of a chemical substance on the confidential portion of the [Inventory] that seeks to maintain an existing claim for protection against disclosure of the specific chemical identity of the chemical substance as confidential" to notify the EPA of that request; (ii) demand that chemical companies provide "substantiation" for those claims of confidentiality; and (iii) "move any active chemical substance for which no [confidentiality] request [i]s received" to the nonconfidential portion of the list.
When an application to maintain confidential treatment is received, the EPA
must independently determine whether confidentiality is warranted. To that end, Congress directed the EPA to "promulgate a rule that establishes a plan to review all claims to protect the specific chemical identities" asserted as confidential.
Once the EPA compiles the initial list of active chemical substances, the Control Act affords the agency up to seven years to complete its review of which of those active chemical substances should receive confidential treatment.
The EPA promulgated the final Inventory Rule in August 2017.
To assert a claim of confidentiality, the Control Act requires the requesting company to certify that:
(i) My company has taken reasonable measures to protect the confidentiality of the information;
(ii) I have determined that the information is not required to be disclosed or otherwise made available to the public under any other Federal law;
(iii) I have a reasonable basis to conclude that disclosure of the information is likely to cause substantial harm to the competitive position of my company; and
(iv) I have a reasonable basis to believe that the information is not readily discoverable through reverse engineering.
But the Control Act does not stop there. The Act further mandates that, once a claim of confidentiality is asserted, its proponent must "substantiate" the need for secrecy.
• Do you believe that the information is exempt from [the Act's] substantiation [requirement]?
• Will disclosure of the information likely result in substantial harm to your business's competitive position?
• To the extent your business has disclosed the information to others (both internally and externally), what precautions has your business taken?
• Does the information appear in any public documents, including (but not limited to) safety data sheets, advertising or promotional material, professional or trade publication, or any other media or publications available to the general public?
• Is the claim of confidentiality intended to last less than 10 years[?]
• Has EPA, another federal agency, or court made any confidentiality determination regarding information associated with this chemical substance?
• Is the confidential chemical substance publicly known to have ever been offered for commercial distribution in the United States?
See
The Inventory Rule does not expressly incorporate all of the Act's many procedural requirements. Nor does it address the Control Act's requirement,
B
The Environmental Defense Fund is an organization that promotes public awareness of the environmental and health risks that chemicals pose.
See
Environmental Defense Standing Addendum 3. Environmental Defense timely petitioned this court for review of the Inventory Rule.
See
II
We start, as we must, by verifying that Environmental Defense has Article III standing to challenge the Inventory Rule.
See
DaimlerChrysler Corp. v. Cuno
,
Environmental Defense has succeeded in that task by asserting a quintessential claim of informational standing. The law is settled that "a denial of access to information" qualifies as an injury in fact "where a statute (on the claimants' reading) requires that the information 'be publicly disclosed' and there 'is no reason to doubt their claim that the information would help them.' "
Friends of Animals v. Jewell
,
A
Environmental Defense challenges five distinct features of the Inventory Rule: (i) the EPA's exclusion of substantiation questions regarding reverse engineering; (ii) the Rule's criteria for "maintaining" a confidentiality claim; (iii) the EPA's choice not to incorporate certain regulatory requirements into the Inventory Rule; (iv) the EPA's failure to implement the Act's "unique identifier" requirements in this rulemaking; and (v) the Rule's exemption of exported chemicals from its notification requirements. We must uphold the EPA's Rule unless it is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law."
1
Environmental Defense challenges the EPA's failure to require companies to "substantiate" that a chemical identity they wish to keep confidential is not "readily discoverable through reverse engineering."
See
a
At the outset, the EPA and Industry argue that Environmental Defense lacks standing to challenge the agency's choice of substantiation questions. In their view, it is "merely speculative" that the inclusion of any particular question "would lead EPA to disapprove-or would cause a potential claimant not to submit-a request to maintain a specific chemical identity on the confidential portion of the * * * Inventory." EPA Br. 35 (formatting altered).
That makes little sense. Substantiation questions are the EPA's tool for gathering the information it uses to evaluate confidentiality claims. They are, in other words, an indispensable procedural step in the agency's confidentiality determination. Because Environmental Defense asserts an informational injury that arises directly from confidentiality determinations, "[a]ll that is necessary" for standing is for Environmental Defense "to show that the procedural step was connected to the substantive result."
Sugar Cane Growers Coop. of Fla. v. Veneman
,
b
When a company makes a confidentiality claim under the Act, it must both "assert" and then "substantiate" the need for such protection.
In the Notice of Proposed Rulemaking for the Inventory Rule, the EPA listed more than twenty substantiation questions, including questions related to each of the four statutorily required assertions.
Does this particular chemical substance leave the site of manufacture in any form, e.g. , as product, effluent, emission? If so, what measures have been taken to guard against the discovery of its identity? * * * If the chemical substance leaves the site in a product that is available to the public or your competitors, can the chemical substance be identified by analysis of the product?
Id . at 4268.
By the agency's own admission, the final rule sets forth an "extensively re-written" list of questions. 82 Fed. Reg. at 37,527, 37,537. The EPA scrapped, among other things, all substantiation questions related to the requirement that a substance's chemical identity not be susceptible to reverse engineering. See id . at 37,544.
An agency acts arbitrarily and capriciously when it offers inaccurate or unreasoned justifications for a decision.
See
Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co.
,
That is precisely what the EPA did here. Its omission of any inquiry into a chemical identity's susceptibility to reverse engineering effectively excised a statutorily required criterion from the substantiation process.
See
The agency's explanation for excising that criterion was, nonsensically, a denial that it had done so. Specifically, the EPA explained that the omission is "intended to more succinctly secure answers for the basis of the [confidentiality] assertions [.]" 82 Fed. Reg. at 37,537 (emphasis added). But succinctness means no unnecessary words; it does not mean no words at all. What the Inventory Rule actually does is decline altogether to "secure answers" substantiating a company's "assertion" that its chemical product cannot be reverse engineered. Id . But it makes no sense to treat as confidential the chemical identity of a substance that can readily be discovered through reverse engineering-as the EPA itself agrees. Oral Argument Tr. 24:48-24:59 ("[D]oes the EPA agree that if something is readily reversibly engineered [then] it doesn't qualify for confidential treatment?" [Agency counsel]: "Yes.").
Yet the EPA's Rule offers no sensible explanation at all for that gap in substantiation, nor does it even acknowledge the consequence of its omission. That error is fatal. The Inventory Rule is arbitrary and capricious to the extent that it omits any substantiation requirement pertaining to reverse engineering.
See
State Farm
,
2
Next, Environmental Defense contends that the Inventory Rule enables a broader array of companies to "maintain" an existing confidentiality claim than the Control Act allows.
Under the Control Act, if a manufacturer or processor wants the confidential status of an already listed chemical to continue on the updated Inventory, it must submit a request to the EPA.
Environmental Defense reads the statutory language differently. In its view, the Control Act permits only the original claimant or its successor-in-interest to preserve confidential treatment.
The EPA wins this debate.
For starters, the text of the Control Act does not require Environmental Defense's rule. The relevant statutory language is silent as to whether a company may maintain an existing claim of confidentiality if it was not the original claimant.
See
The EPA's position easily clears that hurdle. Allowing any chemical manufacturer or processor to seek continued protection against public disclosure for its chemical substance fits comfortably within the statutory text. Section 2607's sole limitation on the class of manufacturers and processors that may wish to maintain an existing confidentiality claim is that they manufacture or process "a chemical substance on the confidential portion of the [Inventory]."
Nothing in the word "maintain" contracts that broad language. To "maintain" commonly means "to keep in an existing state." MERRIAM-WEBSTER DICTIONARY 431 (def. 1) (7th ed. 2016). The word imposes no limit on who may do that maintaining. A recent homebuyer, for example, might maintain the existing landscaping. New team players certainly hope to maintain the winning streak of last year's team. So too here, the statutory language naturally permits a manufacturer or processor to maintain a confidentiality status first obtained by another.
Environmental Defense agrees that an original claimant's successor-in-interest can "maintain an existing claim." But nothing in the statutory text requires drawing an impermeable line there. The EPA reasonably concluded that the claimant's corporate genealogy is beside the point.
Environmental Defense reasons that all claimants who were not original claimants or their successors-in-interest should be required to file a new claim of confidentiality under
Environmental Defense's approach is no real alternative at all. The Control Act provides that for active substances, if "no request [i]s received to
maintain an existing claim
for protection against disclosure," the EPA "
shall
" move that chemical substance "from the confidential portion of the list * * * to the nonconfidential portion of that list."
Environmental Defense finds that consequence untroubling, reasoning that any company that had not already claimed confidentiality for a chemical that it manufactures or processes should be deemed to have forfeited the claim. Environmental Defense Br. 40-41. But that ignores the myriad circumstances in which it would have made no sense for a company to submit its own confidentiality claim. For instance, there would be no need for more than one manufacturer in a co-manufacturing arrangement to submit a confidentiality claim for the same chemical substance. Likewise, an importer notified by a supplier that a chemical already was on the confidential portion of the list would have had no reason to submit a redundant claim. The EPA sensibly determined that companies like those "legitimately benefit from the confidential status of a specific chemical identity," and therefore should have the opportunity to seek confidentiality going forward. 82 Fed. Reg. at 37,527.
For all of those reasons, the EPA acted well within its discretion in concluding that, as part of the Inventory update, any manufacturer or processor of a chemical substance can file a claim to maintain the chemical substance's confidentiality.
3
The Inventory Rule provides that information claimed to be confidential "will be treated and disclosed in accordance with 40 C.F.R. part 2, subpart B," which regulates the EPA's treatment of confidential business information. 82 Fed. Reg. at 37,543 (codified at
At the outset, the EPA and Industry again contest Environmental Defense's standing to make this claim. And once again, they try to dress a merits argument in jurisdictional garb. Environmental Defense is challenging provisions of the Inventory Rule that it views as withholding information from public disclosure. That is the same type of individualized and direct informational injury that parties have
standing to challenge.
See
Friends of Animals
,
Turning to the merits, Environmental Defense argues that the Inventory Rule's disclosure procedures unlawfully fail to incorporate the Control Act's requirements that the EPA (i) review claims within ninety days,
That claim fails. Environmental Defense cites nothing in the regulation that contradicts those statutory obligations. The EPA acknowledges, as it must, that the Act "applies of its own force," EPA Br. 44, and nothing in the Inventory Rule countermands or frustrates those statutory obligations. The Inventory Rule's provisions simply complement and elaborate upon some of the statutory requirements without displacing the others.
Environmental Defense seems to want the statutory requirements duplicated in the rule for duplication's sake. That is not necessary. "[A] regulation can never 'trump the plain meaning of a statute.' "
Texas v. EPA
,
4
Environmental Defense's fourth objection to the Inventory Rule is that it fails to implement the statutory scheme for assigning a unique public identifier for each chemical identity it decides to keep confidential. Environmental Defense points to the Control Act's requirement that the EPA "develop a system to assign a unique identifier to each specific chemical identity for which the Administrator approves a request for protection from disclosure," and then "apply that identifier consistently to all information relevant to the applicable chemical substance[.]"
There is no question that the Inventory Rule does not implement those requirements. But the APA is patient. Or at least more patient than Environmental Defense. Agencies need not address all regulatory obligations "in one fell swoop."
United States Telecom Ass'n v. FCC
,
Environmental Defense separately complains that the EPA failed to address its comment about implementing the unique identifier system. To be sure, an agency's "fail[ure] to respond to major substantive comments" can render a decision arbitrary and capricious.
Sierra Club v. EPA
,
5
Lastly, Environmental Defense objects to the exclusion of export-only chemicals from the Inventory Rule's requirement that chemical companies notify the EPA of chemical substances being manufactured or processed. We hold that the EPA's decision reflected a reasonable interpretation of the Control Act.
Under the Control Act, the EPA "shall require manufacturers" and "may require processors" to "notify the Administrator * * * of each chemical substance on the [Inventory] that the manufacturer or processor * * * has manufactured or processed
for a nonexempt commercial purpose
during the 10-year period ending on the day before June 22, 2016."
Environmental Defense insists that the statute itself declares exports to be a "nonexempt commercial purpose" because Section 2611, which applies specifically to exports, says that "this chapter (
other than section 2607 of this title
) shall not apply to any chemical substance, mixture, or to an article containing a chemical substance or mixture" that is manufactured or processed for export.
We agree with Environmental Defense that the upshot of Section 2611 is that Section 2607"shall * * * apply" to chemicals for export. But what does it mean to "apply"
In light of this congressional silence, the Rule's narrow excision of exports from one reporting requirement passes muster.
See
Chevron
,
Nor did the EPA fail to provide sufficient notice in the Notice of Proposed Rulemaking that export-only chemicals would be excluded from the statute's definition of "nonexempt commercial purpose."
See
Environmental Defense Br. 57. The Notice advised that the EPA intended to define "nonexempt commercial purpose" consistently with the "commonly-accepted usage" of that phrase at the time the Control Act was amended. 82 Fed. Reg. at 4259. Two of the three legal sources the agency cited for that common usage-
* * * * *
For all of those reasons, we order a limited remand, without vacatur, for the EPA to address its arbitrary elimination of substantiation questions regarding reverse engineering. We otherwise deny the petition for review.
So ordered .
See How to Access the TSCA Inventory , EPA, https://www.epa.gov/tsca-inventory/how-access-tsca-inventory #download (last visited April 17, 2019).
40 C.F.R. part 2, subpart B is codified at
This is not a case in which the agency is sitting on its hands. The EPA solicited comments "on approaches for assigning and applying unique identifiers"
before
the final Inventory Rule was promulgated,
Reference
- Full Case Name
- ENVIRONMENTAL DEFENSE FUND, Petitioner v. ENVIRONMENTAL PROTECTION AGENCY and Andrew Wheeler, Administrator, United States Environmental Protection Agency, Respondents American Chemistry Council, Et Al., Intervenors
- Cited By
- 16 cases
- Status
- Published