Insights & Events

In 2024, the Supreme Court in Loper Bright Enterprises v. Raimondo, 603 U.S. 639 (2024) overturned 40-year-old precedent according governmental agencies great deference in their interpretation of the statutes they enforce. With “Chevron deference” now limited, trial courts, and now Courts of Appeal, have begun to grapple with Loper Bright’s impact on countless areas of the law, including cases involving claims relating to environmental contamination. As two Courts of Appeal cases highlight, the contours of agency deference in a post-Chevron world have the potential to significantly impact corporate liability for historic environmental contamination.

First, the D.C. Circuit recently heard argument in a challenge to Environmental Protection Agency (“EPA”) rulemaking designating certain per- and polyfluoroalkyl substances (“PFAS”) as “hazardous substances” under CERCLA Section 102, the first time the agency has ever made such a designation. Chamber of Com. of the U.S. v. EPA, No. 24-1193 (D.C. Cir. 2024). At issue is EPA’s interpretation of Section 102’s language permitting the EPA Administrator to designate as “hazardous substances” those which “may present substantial danger to the public health or welfare or the environment . . . .”. 42 U.S.C. § 9602. Petitioners argue that EPA’s interpretation of the phrase “may present substantial danger” to mean “only a ‘possibility [that] the substance, when released into the environment, presents substantial danger’” directly contravenes the Supreme Court’s holding in Loper Bright that “[a]n agency’s interpretation of a statutory term, even one that ‘delegates discretionary authority,’ must have ‘fix[ed] boundaries.’” Pet’r Br. at 30-31. The EPA argues in turn that Loper Bright counsels, “in ‘a case involving an agency . . . the statute’s meaning may well be that the agency is authorized to exercise a degree of discretion.’” EPA Br. at 27. Given the expansive liability that CERCLA imposes, the case has significant implications not just for those directly impacted by this particular designation of certain PFAS substances but also for any potentially responsible parties for other substances that may be subject to Section 102 rulemaking in the future.

Second, the Third Circuit is evaluating this year whether and to what extent Loper Bright impacts judicial discretion to review agency settlements resolving claims for environmental contamination. United States v. Alden Leeds, Inc., No. 25-1272 (3rd Cir. 2025). In 2024, a New Jersey district court judge approved a settlement resolving CERCLA claims brought by the United States against 82 settling defendants for contamination of the Passaic River. The settlement value was based on a report prepared at the request of the agency that determined the relative shares of responsibility for those defendants, which, after modification by EPA, was challenged by one of the remaining parties, OxyChem, as procedurally and substantively flawed. Among other issues, OxyChem challenged the provisions of the settlement that provide the settling defendants with contribution protection against claims that may be brought against them in the future by other potentially responsible parties like OxyChem. Citing Loper Bright, OxyChem argues that the court was overly deferential to EPA’s allocation of responsibility to the 82 settling defendants, leaving OxyChem with a disproportionate share of the potential liability and no recourse against the settling defendants in the future. OxyChem Br. at 30. The settling defendants counter that Loper Bright applies only to an agency’s interpretation of the law, not court oversight of settlement agreements, and that the Supreme Court’s more recent decision in Seven County Infrastructure Coalition v. Eagle County, 145 S. Ct. 1497 (2025), reaffirmed the “substantial deference” courts give agencies in exercising their discretion, such as in decisions to settle a case. Small Parties Group Br. at 57. Resolving the degree to which courts will scrutinize agency rationale in reaching a settlement agreement could have significant impact on CERCLA liability for parties that remain in cases where the agency settles claims against some but not all potentially responsible parties, especially where the settlement also provides contribution protection for those that settle early.

These two cases likely mark just the tip of the iceberg in environmental litigation over the proper scope of agency deference in a post-Chevron world. Despite their significant substantive and procedural differences, both cases make clear that disputes over the proper interpretation of Loper Bright and its progeny will loom large in environmental litigation for years to come.

— By David Schifrin