Fifth Circuit Vacates EPA's Methylene Chloride Risk Management Rule Under TSCA

Highlights

• The U.S. Court of Appeals for the Fifth Circuit recently vacated the U.S. Environmental Protection Agency's (EPA) methylene chloride risk management rule under the Toxic Substances Control Act (TSCA) in East Fork Enterprises, Inc. v. EPA, finding that errors of law occurred and substantial evidence did not support EPA's decision.
• The court held that TSCA requires EPA to issue separate risk determinations for each condition of use of a chemical substance, rejecting EPA's "whole chemical" approach, and also found that EPA violated TSCA by assuming that workers do not use personal protective equipment when making determinations of unreasonable risk.
• The court concluded that EPA's occupational exposure limits were not based on the best available science and that EPA regulated beyond the extent necessary to address unreasonable risk.
• The decision, among the most significant appellate rulings interpreting key TSCA terms since the 2016 Lautenberg amendments, could carry significant implications for past, pending and future TSCA Section 6(a) risk management rules.

The U.S. Court of Appeals for the Fifth Circuit on September 15, 2026, issued its decision in East Fork Enterprises, Inc. v. EPA, Nos. 24-60227 and 24-60256, granting industry petitioners' petition for review and vacating the U.S. Environmental Protection Agency's (EPA) risk management rule for methylene chloride (MC) under the Toxic Substances Control Act (TSCA). The panel found that EPA committed errors of law and that substantial evidence did not support key aspects of EPA's unreasonable-risk determination and resulting risk-management rule. The decision is among the most significant appellate rulings addressing core TSCA provisions since the U.S. Congress enacted the Frank R. Lautenberg Chemical Safety for the 21st Century Act (Lautenberg Act) in 2016 and has the potential to influence future TSCA risk evaluations and risk-management rulemakings.

TSCA Background

Congress enacted the TSCA in 1976 to regulate chemical substances in commerce and substantially amended the statute through the Lautenberg Act in 2016. As amended, TSCA requires EPA to evaluate existing chemical substances and determine whether they present an "unreasonable risk of injury to health or the environment" under their applicable "conditions of use." 15 U.S.C. §§ 2602(4), 2605(b).

If EPA determines that a chemical substance presents an unreasonable risk, TSCA directs the agency to promulgate risk-management requirements under Section 6(a) "to the extent necessary" so that the chemical no longer presents such risk. 15 U.S.C. § 2605(a). In conducting risk evaluations and adopting risk-management measures, EPA must rely on the "best available science" and the "weight of the scientific evidence." 15 U.S.C. § 2625(h), (i)-(k). TSCA also requires EPA to consider, to the extent practicable, the benefits of the chemical substance, reasonably ascertainable economic consequences of the regulatory action and available alternatives. 15 U.S.C. § 2605(c)(2).

Unlike most environmental statutes, under which agency action is reviewed pursuant to the Administrative Procedure Act's (APA) arbitrary-and-capricious standard, TSCA subjects risk management rules to a more demanding "substantial evidence" standard of judicial review, which requires that EPA's factual findings and regulatory determinations must be supported by substantial evidence in the rulemaking record. 15 U.S.C. § 2618(c)(1)(B). The Fifth Circuit described that standard as "fairly rigorous and more searching" than traditional APA review, citing both Vinyl Institute, Inc. v. EPA, 106 F.4th 1118, 1124 (D.C. Cir. 2024), and Corrosion Proof Fittings v. EPA, 947 F.2d 1201, 1214 (5th Cir. 1991). The court relied heavily on this heightened standard in reviewing EPA's Methylene Chloride Rule.

MC is a widely used solvent employed in a range of industrial, commercial and manufacturing applications, including adhesives, sealants, paint and coating removers, refrigerant production, battery manufacturing and other chemical-processing operations. Due to concerns regarding cancer and other health risks, MC has long been the focus of regulatory scrutiny, including EPA's 2019 ban on consumer paint-stripping uses. In 2024, EPA issued the Methylene Chloride Rule under TSCA Section 6, establishing extensive restrictions on the chemical's manufacture, processing, distribution and use.

The Methylene Chloride Rule

In June 2020, EPA published a final risk evaluation covering 53 conditions of use for MC. The agency found that 47 conditions of use presented an unreasonable risk, while six did not. In November 2022, under the Biden Administration, EPA revised its risk determination for MC in two significant respects. First, the agency adopted a "whole chemical" risk determination rather than issuing separate determinations for each condition of use. Second, the agency assumed that workers do not use personal protective equipment (PPE) when working with the chemical for purposes of making its risk determination, a departure from its 2020 risk evaluation, which had assumed PPE use based on reasonably available information and existing Occupational Safety and Health Administration (OSHA) requirements.

EPA published the final Methylene Chloride Rule in May 2024. See Methylene Chloride; Regulation Under TSCA, 89 Fed. Reg. 39,254 (May 8, 2024) (codified at 40 C.F.R. § 751). Under the Rule, EPA prohibited 40 of the 53 identified conditions of use, including all consumer products containing MC. For the remaining 13 commercial and industrial conditions of use, EPA imposed a Workplace Chemical Protection Program that established exposure limits of 16 parts per million (ppm) for 15-minute acute exposure and two ppm for eight-hour chronic exposure.

Industry petitioners and manufacturers of MC-containing products, along with intervenor the American Chemistry Council, challenged the Rule. The Sierra Club also petitioned for review, arguing that EPA's Rule was not sufficiently protective.

The Fifth Circuit's Decision

The Fifth Circuit vacated EPA's Methylene Chloride Rule and the underlying unreasonable-risk determination, identifying four principal legal and evidentiary deficiencies in EPA's rulemaking.

TSCA Requires Separate Risk Determinations for Each Condition of Use

The court held that TSCA requires EPA to evaluate unreasonable risk by reference to specific "conditions of use," not by determining that a chemical substance as a whole presents an unreasonable risk. The court emphasized that Section 6 repeatedly directs EPA to assess and regulate risk under particular conditions of use and concluded that EPA's "whole chemical" approach was inconsistent with the statutory framework. The court also noted that EPA's earlier procedural regulations required risk determinations on a condition-of-use basis and observed that EPA's subsequent shift to a whole-chemical methodology altered the outcome for several conditions of use without any corresponding change in the underlying scientific record.

EPA Violated TSCA by Assuming Workers Did Not Wear PPE

The court also concluded that EPA acted unlawfully when it assumed workers were not using PPE in its risk determination. According to the court, PPE use is part of the relevant "conditions of use" because it directly affects the exposure circumstances under which a chemical substance is manufactured, processed, used and disposed of. The court found that EPA had previously relied on PPE usage in its 2020 risk determination and acknowledged the existence of OSHA regulations requiring employers to provide PPE for MC exposures. The court therefore rejected EPA's decision to exclude PPE from the risk determination and held that the agency's assumption lacked adequate support in the record.

EPA's Finding of Unreasonable Risk Was Not Based on "Best Available Science"

The court further held that EPA failed to satisfy TSCA's requirements that risk determinations be based on the "best available science" and the "weight of the scientific evidence." The court concluded that EPA did not adequately account for contrary evidence in the administrative record, including certain epidemiological studies, expert submissions and public comments challenging the agency's conclusions regarding acute and chronic exposure risks. The court emphasized that TSCA does not establish a zero-risk standard and that EPA must support its risk determinations with substantial evidence.

EPA Regulated Beyond the Extent Necessary to Address Unreasonable Risk

Finally, the court held that EPA failed to satisfy TSCA's requirement that restrictions be imposed only "to the extent necessary" to address an unreasonable risk. The court concluded that EPA did not adequately consider less-restrictive regulatory alternatives, the benefits of MC or reasonably ascertainable economic consequences of its rule. The court also found that EPA relied on uncertainty regarding compliance with the agency's new exposure limits as a basis for prohibiting many conditions of use, rather than evaluating whether alternative regulatory approaches could adequately address the identified risks.

Based on these findings, the Fifth Circuit vacated both EPA's MC risk-management rule and the underlying unreasonable-risk determination. The court remanded the matter to EPA without directing a particular regulatory outcome on remand.

Implications for Regulated Entities

Potential Significance for Future TSCA Rulemaking: The Fifth Circuit's decision is one of the most significant appellate rulings to address key provisions of TSCA following Congress' 2016 amendments through the Lautenberg Act. The decision addresses EPA's authority to make risk determinations, the role of "conditions of use" in the TSCA framework, consideration of personal protective equipment in risk determinations and evidentiary standards governing unreasonable-risk determinations. The court also applied independent judicial interpretation to the relevant statutory provisions following Loper Bright Enterprises. As a result, the decision is likely to be highly relevant to future TSCA risk evaluations, risk-management rulemakings and related judicial challenges.

Implications for Other Pending TSCA Litigation: The decision may have implications beyond MC. Several other TSCA risk management rules remain subject to judicial challenge in other U.S. Courts of Appeal, including rules addressing chrysotile asbestos (Fifth Circuit), trichloroethylene (Third Circuit), perchloroethylene (Fifth Circuit) and carbon tetrachloride (Eighth Circuit). Although those cases involve different chemicals, records and procedural postures, the Fifth Circuit's interpretation of key TSCA provisions – including condition-of-use-specific risk determinations, the treatment of workplace controls in evaluating unreasonable risk and requirement that regulations address unreasonable risk only to the extent necessary under TSCA – is likely to feature prominently in future litigation. Stakeholders may view the decision differently depending on their interests and litigation positions.

This is not the first time a court has referenced TSCA's substantial-evidence standard. In the U.S. Court of Appeals for the Ninth Circuit's review of EPA's decabromodiphenyl ether rule, the court concluded that EPA lacked substantial evidence to support aspects of its decision not to regulate certain exposure pathways, and remanded the rule for further consideration.

Risk Evaluation Framework Rule: The U.S. Court of Appeals for the District of Columbia Circuit is separately considering a challenge to EPA's 2024 amendments to the TSCA risk evaluation procedural framework rule, "Procedures for Chemical Risk Evaluation Under TSCA," 89 Fed. Reg. 37,028 (May 3, 2024). Holland & Knight argued on behalf of industry petitioners, and the case is currently held in abeyance. Many of the issues addressed by the Fifth Circuit in East Fork Enterprises, including the whole-chemical risk determination and treatment of PPE in risk determinations, are highly relevant to the Framework Rule challenge.

Risk Determinations: One of the decision's most significant holdings concerns EPA's treatment of PPE. The court concluded that PPE use may constitute part of the relevant "conditions of use" that EPA must consider when determining whether a chemical substance presents an unreasonable risk. Going forward, EPA's treatment of existing workplace controls, including OSHA-mandated protective measures, may be an important issue in future risk determinations and related litigation.

Scientific Record and Evidentiary Requirements: The decision also underscores the importance of TSCA's statutory requirements that EPA rely on the "best available science" and "weight of the scientific evidence." The court closely examined EPA's treatment of competing scientific studies, expert submissions and public comments when evaluating whether substantial evidence supported the agency's conclusions. As a practical matter, regulated entities, trade associations and other stakeholders may wish to continue developing robust scientific and technical records during future TSCA risk evaluations and rulemaking.

Scope of Risk Management Measures: The court's analysis of TSCA's "to the extent necessary" requirement may also affect future risk-management actions under Section 6. The decision emphasizes EPA's obligation to consider the benefits of the chemical substance, reasonably ascertainable economic consequences and available alternatives when developing regulatory measures. Future TSCA rules may therefore face increased scrutiny regarding both the factual basis for the identified unreasonable risk and the relationship between that risk and the selected regulatory response.

Immediate Practical Effects: As a result of the vacatur, the MC prohibitions, restrictions, workplace requirements and exposure limits established by the Methylene Chloride Rule will no longer be in effect. EPA has not yet announced how it intends to respond. Potential next steps could include further administrative proceedings, a revised unreasonable-risk determination or revised risk-management rule. Entities that had been preparing for compliance with the Rule should monitor EPA's response to the remand and continue to comply with existing OSHA requirements applicable to MC.

Procedural Outlook: The decision addresses some of the most pressing questions on how TSCA should be interpreted. Absent further appeal by EPA or other parties, the decision will be final after the court issues its final mandate. Even absent further appeal, regulated parties should continue to closely watch other TSCA Section 6 rules that remain pending before federal courts, including challenges involving asbestos, trichloroethylene, perchloroethylene, and carbon tetrachloride. If those cases move forward, they could potentially provide additional (or even conflicting) interpretations of key TSCA provisions. Regulated parties should also pay close attention to how this decision affects EPA's anticipated amendments to the TSCA risk evaluation framework rule and any forthcoming risk management rules. The ultimate implications of the decision for EPA's broader TSCA program therefore remain subject to further regulatory development and likely future litigation.

Congressional Implications: EPA's authority to collect TSCA fees is scheduled to expire on December 11, 2026, and both the U.S. House of Representatives and U.S. Senate have begun considering reauthorization legislation. The House Energy Subcommittee on Environment and Senate Committee on Environment and Public Works have each held hearings on discussion drafts that would reauthorize and modify aspects of TSCA. Holland & Knight Partner Dimitri Karakitsos and Senior Policy Advisor Michal Freedhoff were invited to testify based on their extensive experience with TSCA implementation and reform. Though it is encouraging that Congress has begun work on reauthorization, significant negotiations remain before December 11 to achieve a broadly supported bipartisan compromise. Against that backdrop, the Fifth Circuit's decision may become part of the broader discussion regarding TSCA implementation, including EPA's exercise of regulatory authority, and operation of the risk evaluation and risk management framework. Stakeholders on all sides of TSCA issues may cite the decision in support of differing legislative and policy proposals as the reauthorization process continues.