Last week, in a lawsuit brought by the tobacco industry, a federal judge in North Carolina called the 1993 report flawed.
The EPA findings have been the basis for many state and local bans on smoking in public places. The EPA plans to appeal, reports CBS News Correspondent Thalia Assuras.
The EPA report declared secondhand tobacco smoke a Class A carcinogen and the cause of more than 3,000 lung-cancer deaths a year.
The agency was informed over the weekend of a ruling late Friday by U.S. District Judge William Osteen in North Carolina that struck down the report as flawed.
Osteen, acting in a lawsuit filed by the tobacco companies, said the EPA "did not demonstrate a statistically significant association" between secondhand smoke and lung cancer and did not adequately bring the industry into the deliberations.
The EPA plans to argue that industry was consulted adequately and that Osteen has no jurisdiction over the report because the EPA has never issued a formal regulation on secondhand tobacco smoke.
Since the report was issued five years ago, some states and numerous local communities have banned smoking in public places, including restaurants, offices and, in California, even bars. Some of those bans may be in jeopardy, lawyers said.
While the cancer risk from smoking has been widely accepted by scientists, the link between tobacco smoke in the environment and lung cancer has been more controversial.
Some scientists argue that secondhand smoke produces such low concentrations of carcinogens that it poses no significant additional risk. Others maintain that public exposure to the smoke is so widespread that even small concentrations produces additional cancers.