One of the key “non-scope considerations” commonly investigated during environmental due diligence for commercial property transfers is assessment of any lead impacts from lead-based paint (LBP) and lead dust.  Although the use of LBP was banned in 1978, many structures constructed before that date retain LBP on surfaces.  As that LBP deteriorates over time, it creates lead dust that can create hazardous exposure risks.

US EPA has addressed lead under a variety of federal laws including the Toxic Substances Control Act (TSCA), the Residential Lead-Based Paint Hazard Reduction Act of 1992, Clean Air Act, Clean Water Act, and others.  These laws, and various rules promulgated thereunder, work together to comprehensively address lead hazards, including establishing safe work practices during renovations, training and certification for abatement contractors, and disclosure of LBP during sale or lease of residential properties.  In particular, Section 402 and 403 of TSCA establish hazard standards and clearance levels for lead in paint, dust and soil, which are carried through to US EPA’s lead-based paint activity regulations.

On October 27, 2020, the US Court of Appeals for the Ninth Circuit heard oral argument in an appeal of US EPA’s July 9, 2019 final rule addressing the Agency’s review of the current dust-lead hazard standards (DLHS) and the definition of LBP.

The DLHS are essentially designed to identify lead dust hazards when LBP risk assessments are performed, and thereby limit exposure to lead paint dust during renovations of residential structures.  In the rule, US EPA revised the DLHS from 40 mg/ft² to 10 mg/ft² for floors, and from 250 mg/ft² to 100 mg/ft² for windowsills.   However, US EPA took no action to update the LBP definition, finding “insufficient information exists to support such a change at this time.”

The appeal was brought by several environmental and public health groups, who claim that the rule violates TSCA, as well as the Administrative Procedure Act.  Not surprisingly, the groups argued the revised standards do not go far enough, urging adoption of tighter standards of 5 mg/ft² for floors and 40 mg/ft² for windowsills.  Moreover, the groups argue that US EPA was required to, but failed to, update dust-lead clearance levels, the definition of LBP and a soil-lead standard when it issued the rule, and so US EPA violated TSCA by failing to “identify” all dangerous dust-lead conditions, which “EPA admits will result in adverse human health effects.”

The government responds that US EPA has discretion to define what “adverse health effects” means, and makes an “achievability” argument that the standards “are the lowest levels that EPA believes are reliably achievable using existing lead-hazard control practices and that are aligned with the clearance levels required under certain [Department of Housing and Urban Development] grant programs.”

This is not the first time the Ninth Circuit has been called to address the lead hazard standards.  In 2009, environmental and public health groups petitioned for US EPA to amend its regulations under TSCA, requesting in fact the same standards that would be eventually established in the 2019 rule, as well as seeking a definition of LBP from 1 mg/cm² and 0.5 percent by weight, to 0.06 percent by weight (with a corresponding reduction in mg/cm²).  US EPA agreed to commence proceedings on the DLHS and definition of LBP, but did not otherwise commit to any particular schedule.  In turn, the groups filed a petition for a writ of mandamus in the Ninth Circuit, which the court granted ordering US EPA to promulgating a proposed rule within 90 days and a final rule issued one year thereafter.

During oral argument, compliance with the 2017 writ became a focal point of consternation for the court.  In particular, the panel expressed frustration with the Agency’s inability to revise the lead-based paint definition or identify when a revision would occur, with Judge Piersol leveling pointed criticism at US EPA stating: “There’s an old song, ‘Asleep at the Wheel,’ and it just looks like that’s where we are.”  Similarly, Judge Smith criticized US EPA for offering the same excuse for inaction that it offered in 2009 and in 2017, commenting “it seems to me you created your own problem.”

Nonetheless, the environmental groups’ argument that the Administrator is to only consider health when setting lead standards was heavily challenged by Judge Smith, who questioned the legal underpinnings of the groups’ argument that Section 2601(c) of TSCA, which authorizes the US EPA administrator to “consider the environmental, economic, and social impact of any action,” does not apply.  Judge Smith seemed unconvinced by the groups’ argument that US Supreme Court precedent in Whitman v. American Trucking Associations under the Clean Air Act, applies here, noting that “the text and structure of the Clean Air Act is not similar to the text and structure of TSCA.”

The court’s exasperation at US EPA’s apparent lack of progress in making an affirmative determination regarding the definition of LBP over the past decade underscores the limited ability of the court to force such technical determinations, which lie squarely within the provenance of US EPA.  Thus, even if the court grants the groups’ request to remand the rule to EPA to revise the lead hazard standards based solely on consideration of adverse health effects and update its definitions of its definitions of dust-lead, soil-lead, and paint-lead hazards, we may be no closer to a final resolution of the matter until such time that US EPA has the technical ability (or political will) to issue such an update.

However, as the petitioners have requested remand without vacatur of the standards “as they are more health-protective than the outdated standards they replaced,” it is possible that the court may find it a suitable step forward to retain US EPA’s substantially-tighter DHLS.  Consequently, those who conduct lead-based paint abatement activities, are involved in providing lead abatement training and certification programs, and sellers or lessors of “target housing” constructed prior to 1978, should continue monitoring developments for any changes in the law or US EPA’s standards in accordance with the Ninth Circuit’s pending ruling in the case.