Fifth Circuit TSCA Ruling: Established Process Not a “New Use”

A decades-old manufacturing process cannot constitute a significant new use under TSCA, the US Court of Appeals for the Fifth Circuit ruled on March 21, 2024 in the case Inhance Technologies v. EPA.

Inhance Technologies (“Inhance”) has strengthened plastic containers using the same fluorination process since 1983.  Unbeknownst to Inhance and EPA until March 2022, the fluorination process resulted in the creation of multiple PFAS chemicals that were included in a significant new use rule (SNUR) for long-chain perfluoroalkyl carboxylate (LCPFAC) chemical substances, which took effect in September 2020.

When EPA detected PFAS in a container manufactured by Inhance, it issued the Texas-based company a Notice of Violation of the SNUR because Inhance had not filed significant new use notices (SNUNs) for the PFAS created during the fluorination process.  EPA instructed Inhance to stop or change the fluorination process so that it no longer created PFAS.  Inhance filed two SNUNs in December 2022 but continued fluorinating plastic containers using the same process.  Following review of the SNUNs, in December 2023, EPA issued two orders under TSCA sections 5(e) and 5(f) prohibiting Inhance from manufacturing or processing PFAS through their fluorination process.  In response, Inhance successfully petitioned the Fifth Circuit for expedited review and a stay pending appeal, stating that the company would be forced to shut down if the orders were put into effect.

Inhance argued that EPA’s orders were unlawful for three reasons.  First, Inhance argued that its fluorination technology could not be understood as a “new” use under TSCA because it had been ongoing for over thirty years before EPA finalized the SNUR.  Second, Inhance argued that the PFAS created during the fluorination process constituted impurities, which are exempted from the scope of the SNUR.  Finally, Inhance argued that EPA’s interpretation of the SNUR as applying to all industries is a “reinterpretation” for which Inhance had not received fair notice.

In the end, the court did not address Inhance’s second and third points, finding the first argument sufficient to vacate EPA’s orders.  Though the statute does not define “new,” the court found Inhance’s interpretation, “not previously existing,” more compelling than EPA’s interpretation, “not previously known to the EPA,” for multiple reasons.  But ultimately, the court just did not think EPA’s interpretation was sensible, stating that it “defies common sense” and “lacks intuitive force.”  Inhance could not have been expected to submit its fluorination process as an ongoing use during the rulemaking process for the SNUR because it did not know that it created PFAS at that time, the court said.

Writing on behalf of the three-judge panel, Judge Cory T. Wilson concluded by stating that EPA is not powerless to regulate Inhance’s fluorination process.  TSCA section 6 allows for regulation of all chemical substances, unlike section 5, which only applies to new substances and significant new uses.  However, unlike section 5 rulemaking, section 6 requires EPA to conduct a cost-benefit analysis, which takes into account the substance’s benefits and economic considerations.  The court stressed that this requirement indicates that Congress wanted EPA to give more thoughtful consideration to the impact of its regulations on preexisting manufacturing processes.

Judge Wilson was joined by Chief Judge Priscilla Richman and Judge James E. Graves Jr., who concurred in the judgment only.