DC Circuit Makes Clear Loper Bright Did Not End Deference to Agency Factual Determinations

In a decision on the US Environmental Protection Agency’s risk assessment of a chemical included in its Miscellaneous Organic Chemical Manufacturing (MON) rule, the US Court of Appeals for the District of Columbia Circuit reiterated that agency determinations of fact on scientific issues are entitled to “extreme deference.”

The US Supreme Court’s holding in Loper Bright Enterprises v. Raimondo[1] —that agency interpretations of ambiguous statutes are not entitled to deference—was a sea change in administrative law. [2] However, it did not affect other longstanding administrative law principles, such as judicial deference to agency factual determinations.

The DC Circuit’s August 13, 2024 decision in Huntsman Petrochemical [3] provides a vivid illustration of courts’ continuing deference to agencies on factual issues. In Huntsman, a chemical manufacturer and two trade associations lost their bid challenging the Environmental Protection Agency’s (EPA’s) rule addressing exposure to ethylene oxide emissions at certain chemical manufacturing facilities. The heart of the case was whether EPA’s assessment of the cancer risk of ethylene oxide was arbitrary and capricious. The DC Circuit held that it was not, emphasizing that an agency’s evaluation of scientific data within its area of expertise is still accorded “an extreme degree of deference.”

BACKGROUND

The Clean Air Act (CAA) requires strict technology-based limits on sources of hazardous air pollutants. Within eight years after implementation of these standards, EPA must assess whether there is “remaining risk” within each source category and, if so, promulgate standards addressing it. EPA implements this CAA provision through a “residual risk and technology review.” Where EPA finds an “unacceptable” residual risk, it must require emissions reductions.

On August 12, 2020, EPA finalized revisions to the national emission standards for miscellaneous organic chemical manufacturing, referred to as the “MON” rule. The revisions included amendments addressing ethylene oxide (EtO) emissions. The regulatory basis for the ethylene oxide emissions amendments was driven by a cancer risk value developed by EPA’s Integrated Risk Information System (IRIS) Program Office.

EPA’s IRIS Program is tasked with developing toxicity values for health effects resulting from chronic exposure to chemicals found in the environment that can be used by other EPA program offices to set national standards.

A 2016 IRIS Assessment for EtO determined that EtO exposures as low as 0.1 ppt creates a 1-in-1,000,000 cancer risk (referred to as the “IRIS Value” or “Risk Value”). Subsequently, EPA reconsidered whether to use the IRIS value or an alternative risk value developed by the Texas Commission on Environmental Quality (TCEQ) that estimated a cancer risk about 3,000 times lower than EPA’s Risk Value.

Ultimately, on December 21, 2022, EPA rejected the use of the TCEQ’s risk value and finalized the national emission standards, making no changes to the regulatory text or the underlying technical analysis.

In February 2023, Huntsman Petrochemical, and two trade associations filed a petition for review in the DC Circuit challenging EPA’s finding of residual risk, arguing that reliance on the IRIS risk value was arbitrary and capricious because IRIS analyses are not regulations, are not subject to the Administrative Procedure Act (APA), and are not prepared pursuant to any statute.

The DC Circuit heard oral argument in February 2024. On July 27, the petitioners filed a letter to advise the court of supplemental authority, arguing that the Loper Bright decision requires the court to independently evaluate whether EPA unlawfully interpreted Section 112(f) of the CAA when it relied solely on the IRIS value to make its residual risk determination.

DECISION

A three-judge panel denied the petition for review of the MON rule’s standards for EtO, holding that EPA adequately explained its approach to modeling the cancer risk from EtO. While the court acknowledged that the “Petitioners’ approach to statistical modeling and the TCEQ model itself may have advantages . . ., EPA’s explanations of its model development and selection sufficiently articulate a rational connection between the facts and the choices EPA made.” For the court’s arbitrary-and-capricious-standard review, that was enough.

Although the court did not reference Loper Bright, its analysis made plain the court’s view that Loper Bright did not alter the status quo that agencies are afforded deference to their factual determinations under the APA. Indeed, quoting a pre–Loper Bright DC Circuit precedent, [4] the court held that EPA’s factual determinations were entitled to “an extreme degree of deference.”

IMPLICATIONS

Loper Bright addressed deference to an agency’s statutory interpretation. However, this dispute was not about statutory interpretation but about a factual determination—specifically, whether EPA’s use of the IRIS Value as the basis for ethylene oxide emission standards was reasonable. Resolving the question required the court to delve into EPA’s technical analysis.

Identifying a value for cancer risk is a prime example of the technical expertise to which judicial review will be limited to ensuring that the agency has not departed from a rational course. In other words, even post–Loper Bright, courts will not review an administrative technical record to determine whether it would reach a different conclusion.

Where there might be two rational interpretations of the technical data, reviewing courts will still accord federal agencies “an extreme degree of deference.” Successfully challenging an agency’s technical analysis, therefore, will still require a petitioner to demonstrate how the agency’s explanation is insufficient or inconsistent with the data.

In light of that starkly different treatment of agency statutory interpretations and determinations of fact, future courts may need to wrestle with how to resolve mixed questions of facts and law. Creative petitioners challenging agency rules will undoubtedly look for ways to characterize agency actions as involving statutory interpretation. At the same time, agencies will be inclined to argue that they are making factual determinations and may take steps in rulemakings and other proceedings to style their actions as such.