Monday, June 24, 2024

Environmental Management Commission stalls PFAS standards, members own stock in companies lobbying against regulation

Despite pressure from regulators and activists, North Carolina’s top environmental rule-making body delayed action on PFAS water standards. This comes as several decision-makers own stock in companies reliant on the compounds, many opposing new regulations. (Courtesy Port City Daily/Shea Carver)

NORTH CAROLINA — Despite pressure from regulators and activists, North Carolina’s top environmental rule-making body delayed action on PFAS water standards. This comes as several decision-makers own stock in companies reliant on the compounds, many opposing new regulations. 

READ MORE: NC Chamber of Commerce pushes against DEQ’s proposed PFAS water standards

The Environmental Management Commission is a 15-member body appointed by the governor, General Assembly leaders, and the agricultural commissioner. It is charged with reviewing and enacting rules for the North Carolina Department of Environmental Quality.

DEQ requested the EMC begin the rulemaking process to adopt PFAS surface water and groundwater standards at its May 10 meeting. Commissioners declined the request, citing the need for more time to study the financial implications of the proposal, namely costs associated with requiring companies to install filtration technology. 

EMC’s reasoning mirrored the North Carolina Chamber of Commerce’s argument to delay PFAS standards put forward in a letter on April 22. 

EMC chair J.D. Solomon had a meeting with the NC Chamber to provide environmental updates on March 27. PCD asked Solomon if PFAS standards were discussed at the meeting; he referred questions to attorney Sean Sullivan, the chair of the chamber’s environmental committee. 

DEQ Secretary Elisabeth Biser sent letters to the chamber and EMC denouncing stalled PFAS action earlier this month, noting DEQ had already provided an economic analysis and given multiple information presentations throughout the past six months.

On Tuesday, she told Port City Daily the DEQ’s two biggest priorities are regulation for PFAS and 1,4-dioxane, a compound commonly used as an industrial solvent. Biser argued state standards are essential to make industrial polluters pay for clean-up costs instead of putting the entire burden on taxpayers.

“Delaying standards on PFAS and 1,4-dioxane doesn’t make environmental or health sense,” she said. “And that, quite frankly, is why it’s so frustrating.”

The Environmental Protection Agency published a draft assessment for 1,4 dioxane in July 2023 finding the compound poses an “unreasonable risk to human health,” associating it with cancer and liver toxicity. 

DEQ followed up with a human health-risk assessment for the compound earlier this month, which found NC residents may be exposed to 1,4-dioxane drinking water concentrations more than twice the national average. DEQ found some areas within the Cape Fear River Basin exposed to the third highest 1,4-dioxane concentrations in the country.

The EMC rejected consideration of 1,4-dioxane water standards at its January and March meetings before adopting it as an information item for further review earlier this month.

The chamber and the chemistry council

A Port City Daily review of EMC financial disclosures found at least three commissioners own stock in companies that have either directly lobbied against PFAS and 1,4-dioxane regulation or pay lobbying dues to organizations that lobby on their behalf, such as the Chamber of Commerce and the American Chemistry Council. Both organizations sent letters to the EPA opposing recent regulatory actions on PFAS and 1,4-dioxane.

To the North Carolina Ethics Commission, state-level public officials are required to file annual “Statements of Economic Interest,” including stock holdings over $10,000 held by officials and their spouses at the end of the prior year.

The commission conducts ethics reviews of state boards biannually to identify conflicts of interest for state officials. Executive director Kathleen Edwards told PCD the next round of ethics reviews will begin in the fall.

The commission did not find “an actual conflict of interest, but found the potential for a conflict of interest” in EMC chair Solomon’s 2022 filings.

The review cited Solomon’s ownership of environmental management consulting firm J.D. Solomon Inc, which serves water and wastewater utilities. The ethics commission advised him to exercise caution on issues that may relate to his company or clients. 

In an August 2023 blog post, Solomon analyzed the negative impact of PFAS litigation on investment portfolios:

“PFAS lawsuits are increasing to the point that it is weakening several great companies that produce legal products. Did they know more about the potential human and environmental impacts than they led us to believe? Maybe. But on the other hand, what did state and federal regulators know? PFAS is not new.”

The chair’s 2022 disclosure did not include stock holdings, unlike his most recent statement of economic interest. PCD asked Solomon if he believed his investments could be a conflict of interest; he referred the question to the Ethics Commission and special deputy attorney general Phillip Reynolds.

A 2014 Ethics Commission advisory opinion found stock holdings over $10,000 would not be a conflict of interest unless a state official’s regulatory actions could reasonably impact the companies’ financial status or stock value. The EMC’s by-laws state members participating in an agenda item must disclose potential conflicts of interest and recuse themselves from actual conflicts of interest.

Solomon owns at least $10,000 in ExxonMobil stock. Exxon and its affiliate trade group, American Petroleum Institute, were among the most prominent entities lobbying against PFAS regulation from 2019 to 2022, according to a November analysis by nonprofit Food & Water Watch. In a secretly recorded 2021 video, Exxon’s senior director admitted the group used the same tactics to oppose PFAS regulations that it has used on climate change initiatives.

The chair also owns at least $10,000 in manufacturer Proctor & Gamble. Like ExxonMobil, the company is a paying member of some of the top lobbying groups opposed to PFAS and 1,4-dioxane regulation, the American Chemistry Council and the Chamber of Commerce. 

A P&G shareholder group requested a report on the company’s PFAS management practices last month, citing evidence of the compounds in P&G’s Tampax products.

The chair also holds at least $10,000 in Southwest Airlines. Southwest is a member of trade association Airlines for America, which has lobbied against PFAS regulation as part of a coalition with the Chamber of Commerce. 

Duke Energy — a member of the national and North Carolina Chamber — is another investment held by Solomon. Duke has given at least $498,720 to the chamber since 2022. The NC chamber’s 2022 and 2023 legislative reviews note bills requiring PFAS manufacturers to pay for clean up costs and meet “technologically feasible” water standards were “sidelined by chamber opposition”. 

Clean Cape Fear founder Emily Donovan criticized the EMC and NC Chamber for pushing to delay PFAS water standards. She cited widespread recognition of the extent of contamination in NC demonstrated by the United Nations’ admonishment of Chemours in November. 

“One of the most powerful comments they made is that health and environmental regulators in the United States have fallen short in their duties to protect against business related human rights abuses,” she told PCD.

Fossil fuels and defense contractors

The fossil fuel sector discharges PFAS through fracking and other manufacturing operations, leading trade groups like the American Petroleum Institute to join lobbying efforts against PFAS regulation.

A 2022 Inside Climate News investigation found Duke Energy’s North Carolina and South Carolina utilities had the highest leaks of sulfur hexafluoride, known as SF6, of any utility in the country. SF6 has the same fluorine-based chemistry as PFAS “forever chemicals” and remains in the atmosphere for around 600 years, according to Colorado State University scientist A.R. Ravishankara. 

EMC member Charles Carter was Duke’s environmental attorney before joining the EPA from 1981-1990, where he served as assistant general counsel. Carter and his spouse own at least $10,000 in stock in several natural gas companies that are paying members of organizations that lobby against PFAS regulations, such as the National Association of Manufacturers and Chamber of Commerce:

  • Dominion Energy
  • Emerson Electric Company 
  • Southern Company

Carter has been a member of the EMC since 2013. His spouse invested in the companies in 2021, when he voted against an EMC proposal to set carbon emission limits for NC electric companies. Carter’s 2022 ethics review did not find a conflict of interest, but found his position as a partner of law firm Earth & Water Law a potential conflict.

EMC member Michael Ellison is a senior project manager with consulting firm WK Dickson, which provides services to the aviation, water utility, development, natural gas, and solar industries.

He invests at least $10,000 in defense contractor Lockheed Martin, which cited PFAS regulation as a liability in its most recent annual SEC filing. The EPA has enforced remedial actions against Lockheed to clean up 1,4 dioxane emissions in groundwater.

Lockheed has 30 facilities in NC and is the biggest contractor of the Department of Defense. The DOD is facing over two dozen lawsuits for water and soil contamination at hundreds of sites near military facilities around the country; a 2023 federal study associated PFAS exposure in Air Force service members with testicular cancer. 

1,4-Dioxane and the Rules Review Commission

As the North Carolina Chamber Legal Institute noted in February, recent legal and legislative power struggles have influenced the EMC’s regulatory decisions. 

The chamber highlighted the importance of the Rules Review Commission, charged with reviewing and approving rules for state agencies. If the EMC approves DEQ’s request for PFAS water standards, the RRC will need to provide a followup review and approve the regulation for its enactment. 

RRC member William Nelson is the chair of the North Carolina Chamber’s tax policy committee, according to his 2024 SEI.

While the RRC hasn’t reviewed PFAS standards yet, it rejected DEQ’s proposed 1,4 dioxane water standards in May 2022. In response, the EMC initiated a suit against the RRC for rejecting the request last March.

The RRC’s 10 members are appointed by House Speaker Tim Moore and Senate President Phil Berger. Governor Roy Cooper sued the RRC in 2020, arguing it provided an unconstitutional veto authority over rules issued by the executive branch.

Cooper dropped the suit in 2022, but struggles over appointment authority continued last year. The General Assembly overrode Cooper’s veto to pass Senate Bill 512 in October 2023, which gave Agricultural Commissioner Steve Troxler the authority to appoint two members of the EMC. 

The governor previously appointed nine of the commission’s 15 members, while lawmakers appointed six.

The new EMC majority appointed by legislative leaders and Troxler voted to elect Solomon as chair, replacing environmental lawyer Robin Smith. The EMC voted to drop the lawsuit against the RRC for rejecting 1,4-dioxane standards during Solomon’s first meeting as chair in January.

Several RRC members also own stock in member companies of the American Chemistry Council, such as vice chair Randy Overton. According to his most recent financial disclosures, Overton owns over $10,000 in PFAS manufacturers DuPont, Corteva, Dow Inc. and Honeywell.

The RRC cited DEQ’s flawed fiscal analysis as its reason for rejecting 1,4-dioxane water standards in 2022. However, the Office of State Budget Management — the state body charged with verifying economic analyses in the rulemaking process — approved DEQ’s study.

Southern Environmental Law Center senior attorney Jean Zhuang recently spoke before Greensboro City Council to criticize the corporate dischargers and municipalities that requested the RRC block 1,4-dioxane regulations. 

“I don’t think there’s any other way to read it other than they are protecting industries that could release these chemicals over the health and safety of our communities,” she told PCD.

DEQ continues to pursue 1,4-dioxane regulation. The Clean Water Act requires states to review and modify water quality standards every three years. The DEQ’s proposed triennial review package includes 1,4-dioxane standards, which require EMC authorization to initiate a public comment and public hearing period before final approval by the Rules Review Commission. EMC adopted the triennial review as an information item for further review at the May 8 meeting.

Carter told PCD he believes the DEQ has failed to provide necessary regulatory information for the EMC to move PFAS and 1,4-dioxane regulation forward.

“EMC has delayed nothing,” he said.

Biser disputed the argument, stating DEQ presented sufficient information at the EMC’s November, January, and March meetings to move PFAS standards forward to the public comment and hearing portion of the rule-making process.

“If they don’t understand the job, they should stand down,” Cape Fear River Watch executive director Dana Sargent told PCD. “Their attempt to delay groundwater rules claiming they need more information is beyond belief, considering NC has more data on PFAS groundwater contamination than any in the nation — including many with standards set.”


Tips or comments? Email journalist Peter Castagno at peter@localdailymedia.com.

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