D.C. Circuit Rejects Environmentalist Arguments, Sides with Industry over TSCA CBI Rule

EPA’s 2023 rule revising confidential business information (CBI) claims under the Toxic Substances Control Act (TSCA) is only unlawful insofar as it could lead to certain inadvertent waivers of confidentiality by downstream entities, the D.C. Circuit ruled on December 20, 2024.

The case, Environmental Defense Fund v. EPA, No. 23-01166, consolidated petitions from the Environmental Defense Fund (EDF) and the American Chemistry Council (ACC).  EDF’s arguments in favor of narrower confidentiality protections were rejected by the court, whose ruling leaves EPA’s CBI rule largely intact.

However, the court agreed with ACC’s challenge to a provision in the rule that allowed downstream entities to waive CBI protections put in place by the upstream manufacturer when reporting information to EPA.  Specifically, ACC argued that the rule’s requirement that downstream entities assert and substantiate confidentiality claims for chemical identities reported via an “accession number” is arbitrary and capricious.  Under the CBI rule, if “any submitting entity fails to substantiate a confidentiality claim for a chemical identity…the chemical identity is no longer entitled to confidential treatment.”

Accession numbers are non-confidential identifiers assigned to chemicals whose identities are claimed as CBI.  Downstream entities reporting information to EPA using an accession number may have no knowledge of the chemical’s actual identity, the court noted, and may not have any incentive to keep it secret.  Nor would they necessarily have the information needed to adequately substantiate a claim, the opinion continues.

“This regulatory scheme cannot be squared with the commands of the statute, which require EPA to protect from disclosure chemical identities for which CBI claims have been properly assessed,” the court held, vacating the CBI rule “to the extent it allows for the unlawful disclosure of confidential information.”

Key Provisions are “Best Reading”

EDF challenged three provisions of the CBI rule.  The court rejected these challenges, explaining that EPA’s positions were  consistent with the “best reading” of the statute—the new legal framework adopted by the Supreme Court in Loper Bright v. Raimondo, the decision that struck down Chevron deference.

EDF argued that the rule’s use of “permissive” language and revised timeframe for when a CBI claim must first be substantiated were arbitrary and capricious.  However, the court found that the CBI rule sufficiently justified why those changes were necessary.  The permissive language at issue included a provision allowing EPA discretion in whether to disclose information that has lost CBI protection, unlike earlier regulations requiring its immediate and automatic release.

EDF also challenged the scope of the CBI rule’s definition of a “health and safety study,” which are statutorily ineligible for CBI protection.  EDF contended that the definition should include the entirety of any written report submitted to EPA that presents findings of a health and safety study, including information like the identity of the company submitting the report and the name of the lab that conducted the study—information which is currently eligible for CBI protection.  The court disagreed, holding that the statutory definition of health and safety study “suggest[s] that the term refers only to the evaluation of a chemical’s health and environmental effects, not the entire document containing that evaluation.”

More on the CBI rule can be found in a previous blog post.  An earlier post on the case, written after EDF filed its statement of issues, can be found here.