D.C. Circuit Upholds EPA’s Designation of Certain PFAS as Hazardous Substances Under CERCLA

On August 18, the U.S. Court of Appeals for the D.C. Circuit upheld the designation of two types of polyfluoroalkyl substances (PFAS)—perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS)—as hazardous substances by the U.S. Environmental Protection Agency (EPA). The EPA designated these chemicals as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).

EPA’s Final Rule

A variety of trade associations and industry groups challenged the final rule to designate PFOA and PFOS as hazardous substances in the D.C. Circuit Court of Appeals. At the beginning of the Trump Administration, the U.S. Department of Justice (DOJ) sought and received, a stay of the case to allow EPA to reconsider designating PFOA and PFOS as hazardous substances. On September 17, 2025, the DOJ advised that EPA was retaining the rule and wished for litigation to move forward. On January 18, Judges Patricia Millett, Gregory Katsas and Neomi Rao of the D.C. Circuit heard oral arguments from the parties.

The D.C. Circuit’s Decision

Petitioners advanced three main challenges:

• EPA misinterpreted the term ‘may present substantial danger’ in CERCLA’s definition of a hazardous substance.
• EPA’s cost-benefit analysis provided insufficient notice to the parties and
• EPA’s cost-benefit analysis and decision to regulate in the face of uncertainty were arbitrary and capricious.

The three-judge panel of the D.C. Circuit unanimously rejected these challenges, which were addressed in detail in an opinion Judge Millett authored. First, the court explained that EPA could find that these substances “may present substantial danger” without finding that the substances, in fact, presented substantial danger, focusing on Congress’s use of the word “may.”  Second, it found that EPA provided adequate notice of its cost-benefit analysis—even though EPA’s Regulatory Impact Analysis was not disclosed until EPA announced the final rule—because its final analysis was a logical outgrowth of EPA’s prior analysis, which was made public prior to the final rule and upon which Petitioners commented. Third, the D.C. Circuit held that EPA’s cost-benefit analysis was not arbitrary and capricious. Petitioners made several arguments as to why they believed EPA’s analysis erred. However, the D.C. Circuit rejected these arguments noting, in part, that EPA had discretion in how it estimated the estimated costs from the proposed rule. 

Petitioners could seek to have the panel decision reversed through seeking review by the entire D.C. Circuit or by the Supreme Court, but have not done so as of this alert’s publication.

What Does This Final Rule Mean for Businesses and Industries?

The designation of PFOA and PFOS as hazardous substances has many implications for a variety of businesses and industry.  Most notably, CERCLA imposes strict liability on certain classes of parties—designated as potentially responsible parties (PRPs)—for the cost to clean up hazardous substances at Superfund sites, which now include PFOA and PFOS.  PRPs under CERCLA include not only entities that generated or disposed of PFOA or PFOS, but also landowners where the substances eventually were disposed of—even where the landowners purchased the property after the disposal occurred. In most cases, where there are multiple PRPs at a cleanup site, all PRPs are jointly and severally liable for the cost of the entire cleanup.  Furthermore, PRPs are liable to cleanup PFOA and PFOS even if they were disposed of prior to them being designated hazardous substances.

EPA’s rule could have numerous impacts with respect to Superfund sites. First, it could lead to the creation of new Superfund sites to specifically address PFOA and PFOS contamination. Second, the rule could increase the scope of cleanup activities at active Superfund sites by now requiring cleanup of PFOA and PFOS in addition to previously identified contaminants of concern. Third, it could lead to the reopening of closed Superfund sites to address PFOA and PFOS that would not have been previously addressed.  Since PFAS were widely used and their components break down very slowly over time, for a majority of Superfund sites it will not be a question of whether PFAS are present, but whether they are present in amounts requiring remedial actions. 

Potential Enforcement Actions

At the same time EPA listed PFOA and PFOS as hazardous substances in September 2025, it issued a PFAS Enforcement Discretion and Settlement Policy Under CERCLA. Under that policy, EPA “will focus on holding responsible entities who significantly contributed to the release of PFAS into the environment, including parties that manufactured PFAS or used PFAS in the manufacturing process, federal facilities, and other industrial parties.” 

EPA also stated that certain entities generally will not be targets of CERCLA response actions or cost recovery efforts where equitable factors weigh against such actions, including:

• Community water systems and publicly owned treatment works
• Municipal separate storm sewer systems
• Publicly owned/operated municipal solid waste landfills
• Publicly owned airports and local fire departments and
• Farms where biosolids are applied to the land. 

Those entities are often called “passive receivers,” as they did not cause the contamination, and EPA appears to continue to support this Biden-era approach to enforcement.  In fact, the agency announced that it would work with Congress to create a statutory fix to protect passive receivers from PFAS liability under CERCLA.

Despite EPA’s policy of enforcement discretion, states and tribal governments may also order cleanups of PFOA and PFOS under the authority granted to them under CERCLA. In addition, private parties are generally entitled to recover a portion of their costs spent to clean up hazardous substances under CERCLA from PRPs, which would now include PFOA and PFOS. 

Although the largest impact of designating PFOA and PFOS as hazardous substances under CERCLA relates to potential cleanup costs at Superfund sites, the designation has several other ramifications as well.

These are:

• Under CERCLA sections 103 and 111(g) and section 304 of the Emergency Planning and Community Right-to-Know Act (EPCRA), facilities must report to relevant state and local authorities releases of one pound of PFOA or PFOS within a 24-hour period.
• Under EPA’s All Appropriate Inquiries Rule, which is the process for evaluating a property’s environmental conditions, PFOA and PFOS must now be considered during the Phase I Environmental Site Assessment Process as set forth in ASTM International Standard E1527-21. This is relevant, in part, because it governs what investigation must take place for a property purchaser to avail itself of the bona fide prospective purchaser defense under CERCLA. In addition, CERCLA section 120(h) requires federal agencies that sell or transfer real property to provide notice of the presence of PFOA or PFOS in certain circumstances.
• CERCLA section 306 requires the U.S. Department of Transportation to regulate any substance added to the CERCLA list as hazardous materials in accordance with the Hazardous Materials Transportation Act (HMTA).

Additional Regulatory Action Regarding PFAS

The regulatory landscape with respect to PFAS is rapidly changing at both the state and federal levels.  The D.C. Circuit’s decision comes while another key challenge is pending in that court. At the start of the second Trump Administration, under the Safe Drinking Water Act, EPA decided to maintain the current National Primary Drinking Water Regulations (NPDWR) for the two most common PFAS—PFOA and PFOS—while rescinding regulations for several other PFAS. Those decisions are currently being challenged in the D.C. Circuit with oral argument scheduled for September 18.

Almost every industry could be affected by EPA’s designation of PFOA and PFOS as hazardous substances, but entities currently involved in the cleanup of Superfund sites should be particularly aware of this rule’s potential impact now that the D.C. Circuit has upheld it. 

Please contact Phillip Dupré or any member of the Phelps Environmental team if you have any questions or need advice or guidance.