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The decision unlocks the full suite of CERCLA liability for PFOA and PFOS used historically across a wide array of value chains.

By Julia A. Hatcher, Tom Lee, Benjamin D. Gibson, and Casey Lynn Kirk

Key Points:

  • The decision holds that CERCLA grants EPA the authority to designate new hazardous substances when evidence demonstrates the “possibility” of “substantial danger to the public health or welfare or the environment,” and EPA need not have “certainty” of that danger.
  • Under the decision, PFOA and PFOS carry the same strict, joint and several, and retroactive liability that has long applied to legacy contaminants like lead and benzene.

In a recent decision,1 the US Court of Appeals for the D.C. Circuit upheld the Environmental Protection Agency’s (EPA’s) designation of perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS) as “hazardous substances” under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).

To make this designation, EPA used its freestanding authority under Section 102(a) — for the first time in CERCLA’s 40-plus-year history — rather than rely on designations made under other environmental statutes, such as the Clean Water Act, Clean Air Act, Resource Conservation and Recovery Act, or Toxic Substances Control Act.

The designation also marks the first time that any per- and polyfluoroalkyl substances (PFAS) have been regulated as a “hazardous substance” under CERCLA.

New Liability Landscape

The decision has major implications for industry and property owners across nearly every sector of the US economy. For example:

  • The decision upholds a rule that exposes a wide range of potentially responsible parties (PRPs) to strict, joint and several liability for two PFAS chemicals that historically were used across a wide array of value chains, including in the production of petrochemicals, electronics, semiconductors, oils, plastics, rubbers, pharmaceuticals, medical devices, firefighting products, consumer goods, personal care products, and paper and packaging materials.
  • The rule complicates real estate transactions and mergers and acquisitions because it triggers heightened “all appropriate inquiries” due diligence obligations to evaluate PFOS and PFOA.
  • The decision establishes precedent that validates EPA’s first-time use of a potentially powerful statutory provision that EPA can invoke in the future to target additional contaminants of emerging concern, including not only other PFAS, but also potentially contaminants being studied under other EPA-administered laws, such as, for example, contaminants subject to the Safe Drinking Water Act unregulated contaminant monitoring rule, or as another example, chemicals targeted for risk evaluation under the Toxic Substances Control Act.

The Rule and the Challenge

In May 2024, EPA designated two of the most widely studied and historically used PFAS — PFOA and PFOS — as “hazardous substances” under CERCLA, marking the agency’s first-ever use of its Section 102(a) authority to list substances directly that “may present substantial danger to the public health or welfare or the environment.”

Prior to the change in presidential administrations, industry groups, led by the US Chamber of Commerce, had filed a petition for review in the D.C. Circuit challenging the Biden-era rule. After the change, the Trump administration initially requested that the case be placed in abeyance while reviewing the designation. In September 2025, EPA announced that it would retain and defend the Biden-era rule. Briefing resumed and oral argument was held on January 20, 2026.

The industry petitioners raised three main arguments:

  1. EPA misinterpreted the statutory term “may present substantial danger” in a manner that places no meaningful limits on the agency’s designation authority.
  2. CERCLA requires EPA to conduct a cost-benefit analysis, and EPA relied on a deeply flawed methodology in the cost-benefit analysis that accompanied its proposed rule. Moreover, EPA violated the Administrative Procedure Act (APA) due process requirements by presenting a new methodology and cost-benefit analysis in the final rule without any opportunity for public notice and comment.
  3. EPA acted arbitrarily, capriciously, and contrary to law by designating PFOA and PFOS as CERCLA hazardous substances despite deep uncertainty about where those substances are located, how to clean them up, and how much that will cost.

On August 18, 2026, the three-judge panel, consisting of Circuit Judges Patricia A. Millett, Gregory G. Katsas, and Neomi Rao, upheld the rule. In an opinion authored by Judge Millett, the court concluded that EPA had acted within the scope of its statutory authority and that its cost-benefit analysis complied with all applicable notice requirements and reasonably quantified and weighed the rule’s benefits and costs.

What the Decision Means for PRP Liability

Prior to its Section 102(a) designation of PFOS and PFOA as “hazardous substances,” EPA had relied on its “imminent and substantial danger” authority under Section 104 to regulate PFOA and PFOS as “pollutants or contaminants” on a site-specific basis. Based on this authority, EPA was able to investigate and remediate PFOA and PFOS contamination at select sites using public funds, but EPA could neither compel PRPs to undertake action nor seek recovery from PRPs for EPA’s Section 104 costs.

The Section 102(a) designation of PFOA and PFOS as “hazardous substances” changes all of that: EPA now has full authority to compel PRPs to investigate and remediate PFOS and PFOA contamination at sites and/or to recover any costs that EPA incurs doing so.

With the rule remaining in place, PRPs — including property owners, operators, and arrangers — are now exposed to strict, joint and several liability for the entire cost of PFOA and PFOS contaminated site cleanups, regardless of fault or the extent of their contribution. PRPs subject to ongoing or past site investigation and remediation actions should take special note: EPA could rely on the rule to expand the scope of ongoing investigations at existing Superfund sites or reopen previously closed sites on the basis of potential PFOA or PFOS contamination.

The Passive Receiver Problem

The rule also intensifies the passive receiver problem: entities that received hazardous substances in their feedstocks, products, or waste — without ever manufacturing or intentionally using them — may nonetheless face PRP liability. Although the production and intentional use of PFOA and PFOS have largely been phased out, their use historically in a wide array of value chains has led to PFOA and PFOS in the industrial and consumer waste streams sent to landfills,2 the wastewater flowing into wastewater treatment facilities, at farms where biosolids made from wastewater treatment sludge have been applied to the land, and in aqueous film-forming foams used at airports, shipyards, military bases, firefighting training facilities, and chemical plants and refineries.3 EPA’s April 2024 Enforcement Discretion and Settlement Policy indicates that EPA does not intend to pursue publicly owned or operated landfills, community water systems or publicly owned wastewater treatment (POTW) facilities, farms where biosolids made from POTW sludge have been applied to the land, publicly owned airports or fire departments, or other passive receivers where equitable factors do not support seeking response actions or costs under CERCLA.

However, this policy is not a statutory exclusion from liability and remains subject to change in application and interpretation across different presidential administrations. EPA has renewed calls on Congress to enact a permanent legislative fix, but as of yet, that has not happened.

Property Owners and Real Estate Transaction Impacts

Property owners could face liability for legacy contamination caused by other PRPs. For transactions involving the transfer of owned or leased real property, parties must conduct “all appropriate inquiries” to be eligible for CERCLA’s landowner or lessee liability defenses, including the innocent landowner, bona fide prospective purchaser, and contiguous property owner defenses.

In order to satisfy the “all appropriate inquiries” standard, the investigation must include an analysis of all CERCLA hazardous substances that may have been released on the property, which means that PFOA and PFOS must be evaluated in Phase I reports now that they are designated. Detections of PFOA and PFOS in soil, groundwater, sediment, and building materials, as well as the expanding understanding of how and where the chemicals were historically used, are leading to increases in environmental due diligence costs and timelines.

Reporting and Notice Requirements

The “hazardous substance” designation means facilities must report releases of 1 lb. or more of PFOA or PFOS within 24 hours, identify such substances on shipping papers when shipped in qualifying quantities, and comply with federal property transfer notice and warranty requirements under Section 120(h).

Notably, Section 101(22) defines “release” broadly as any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into the environment. As a result, even though commercial manufacture, processing, and use of PFOA and PFOS have largely ceased, release still may occur as a result of existing contamination.

What the Decision Means for Future Hazardous Substances Designations

A critical dimension of this rule is EPA’s first-time use of a 40-plus-year-old statutory provision to accomplish it. CERCLA defines “hazardous substance” primarily by cross-reference to substances already regulated as hazardous or toxic under four other environmental statutes: the Clean Water Act, the Clean Air Act, the Resource Conservation and Recovery Act, and the Toxic Substances Control Act. By operation of those cross-references, about 800 substances have already attained hazardous substance status under CERCLA, each brought in through the “automatic” operation of another statute’s listing or permitting scheme.

PFOA and PFOS, however, are the first substances ever designated as CERCLA hazardous substances directly by EPA rulemaking under Section 102(a).

Section 102(a) authorizes EPA to designate chemicals as “hazardous substances” if they “may present substantial danger to the public health or welfare or the environment” when released into the environment. In its rulemaking, EPA interpreted Section 102(a) as requiring a “possibility” of “substantial danger” based on an assessment of two primary factors: the “hazard” from exposure to the chemical (i.e., the potential harm to humans or the environment) and “environmental fate and transport” of the chemical (i.e., how the substance moves and changes in the environment). After evaluating scientific data regarding their toxicity, mobility, resistance to degradation, and persistence in the environment, EPA found that PFOA and PFOS met this standard.

Rejecting industry arguments that EPA’s interpretation places no fixed boundaries on its discretion, the court’s decision to uphold the rule affirms that the “possibility” of “substantial danger,” not a certainty or probability, is sufficient for designating a chemical as a Section 102(a) “hazardous substance” and thereby unlocking EPA’s full suite of cleanup authorities. The court explained that “[t]o require absolute scientific certainty as to what will happen upon every individual release of a dangerous chemical would have been to legislatively paralyze CERCLA” but noted that the “substantial danger” requirement “has real bite” and operates to limit EPA’s authority to list new substances.

The decision establishes precedent that would allow EPA to use Section 102(a) to address other contaminants of emerging concern, including other PFAS compounds, that may not fit within the narrower criteria of other listing mechanisms and where the scientific evidence may not yet be conclusive as to the chemical’s actual or probable harm in different release scenarios.

The court also rejected petitioners’ many statutory interpretation, procedural, and substantive arguments challenging the designation based on lack of notice and alleged deficiencies in EPA’s cost-benefit analysis. Notably, in evaluating whether EPA provided sufficient notice to the public that it might designate PFOA and PFOS as hazardous substances, the court held that notice “is particularly easy to find here” given that EPA previously found on a site-specific basis that PFOS and PFOA qualified as a Section 104 “pollutant or contaminant” that “may present an imminent and substantial danger to the public health or welfare,” with “pollutant or contaminant” defined in CERCLA as any substance that “will or may reasonably be anticipated to cause death, disease, behavioral abnormalities, cancer, genetic mutation, physiological malfunctions (including malfunctions in reproduction) or physical deformations.”

Given the similarities between the “pollutant or contaminant” regime and the “hazardous substance” designation mechanism, the court ruled that the fact that “EPA has already identified and treated PFOA and PFOS as pollutants and contaminants at multiple Superfund sites” … “provide[s] fair notice that PFOA and PFOS might also qualify as ‘hazardous substances’.”

The court’s finding on this issue highlights an important point: EPA’s previous site-specific findings that certain chemicals qualify as “pollutant[s] or contaminant[s]” under CERCLA Section 104 may indicate EPA’s priorities for future Section 102(a) “hazardous substance” designations that unlock the full suite of CERCLA authorities across all sites.

Further, in response to petitioners’ complaints that EPA failed to adequately consider the rule’s significant costs and severe consequences to regulated parties, the court found that EPA had reasonably calculated and weighed the action’s direct and indirect costs, including those with respect to PRP liability. The court viewed potential PRP liability as an indirect and highly uncertain effect of the rule, noting that CERCLA response actions are discretionary, contingent, and site-specific and that numerous additional regulatory steps must occur following designation before any liability can ever attach to a PRP. The court also agreed with EPA’s characterization of PRP liabilities as both a cost, to regulated parties, and a benefit, because it advances CERCLA’s statutory purpose of shifting costs from taxpayers to parties responsible for the pollution.

On the passive receiver problem, the court found that EPA’s rulemaking adequately grappled with petitioners’ concerns and reasonably considered CERCLA’s limitations on liability and EPA’s enforcement discretion as mitigating factors.

For all of these reasons, the court found that EPA was justified in concluding that the benefits of the action outweighed its costs to PRPs. The court’s decision to uphold the rule despite its potentially significant costs, and its affirmation of EPA’s cost-benefit analysis, sets precedent that petitioners challenging future Section 102(a) listings will need to grapple with and distinguish.

EPA’s Promised Framework Rule Could Limit Future Section 102(a) Designations

EPA has promised a forthcoming framework rule for future Section 102(a) designations, intended to provide a “more uniform approach” to future listings. EPA has signaled that under the new framework, the agency will take costs to manufacturers, passive receivers, consumers, and the economy at large “very seriously.” Indirect costs to PRPs may therefore play a more central role in future Section 102(a) rulemakings. EPA has further indicated that the framework would establish other “rules of the road.” Although EPA did not specify what those rules might look like, they could seek to limit the type of data used to justify Section 102(a) designations, which could narrow the scope of Section 102(a)’s “possibility” of “substantial danger” threshold. Notably, EPA would need to abide by any such narrower scope as long as the rule remains in effect (and has not been rescinded by EPA through a notice and comment process). Such a rule, therefore, would place guardrails on EPA’s discretion.

Key Takeaways for the Regulated Community

The D.C. Circuit’s decision to uphold EPA’s PFOA and PFOS hazardous substance designation presents challenges to regulated parties across virtually every sector of the economy.

Companies and individuals who have ever owned or operated a Superfund site, used or generated hazardous substances, arranged for waste disposal, or engaged in real estate transactions involving properties with any history of PFOA or PFOS manufacture, processing, use or contamination may want to assess their potential CERCLA exposure based on PFOA and PFOS if they haven’t done so already.

Companies and individuals with current or past operations at any property owned, leased, or operated by the company or individual, with any nexus to other chemicals previously treated by EPA as site-specific Section 104 “pollutant[s] or contaminant[s]” under CERCLA may also want to consider assessing potential CERCLA exposure in light of the possibility of future Section 102(a) hazardous substance designations.

Due diligence protocols for real estate transactions, merger and acquisition activity, and project financing should be updated to account for PFOA and PFOS as CERCLA hazardous substances in order to satisfy the “all appropriate inquiries” standard.

In addition, passive receivers of PFAS may want to monitor the progress of legislative efforts that aim to enact new law that would provide legal protections from CERCLA liability based on the presence of PFOA and PFOS.

Finally, PFAS have been a key topic of conversation and regulation over the last several years. Although the panel’s unanimous decision suggests that the debate is over as to whether PFOS and PFOA will remain hazardous substances under CERCLA, regulated parties should be aware that US Supreme Court review remains a possibility, as the industry parties have the option over the next several months to petition the Supreme Court for certiorari. Should the Supreme Court grant certiorari, that could alter the regulatory landscape by leading to a stay of the rule or ultimately to a ruling that overturns the D.C. Circuit’s decision and vacates the rule.

  1. Chamber of Commerce of the United States of America v. Environmental Protection Agency, No. 24-1193 (D.C. Cir. Aug. 18, 2026). ↩︎
  2. See, e.g., Linda G. T. Gaines, “Historical and Current Usage of Per- and Polyfluoroalkyl Substances (PFAS): A Literature Review,” Am. J. of Industrial Medicine, (May 2022). ↩︎
  3. EPA, “Our Current Understanding of the Human Health and Environmental Risks of PFAS”, (July 14, 2026), available at: https://www.epa.gov/pfas/our-current-understanding-human-health-and-environmental-risks-pfas. ↩︎