NORTH CAROLINA — The state’s chief administrative judge ruled against the Department of Environmental Quality in a dispute over regulation of a toxic chemical contaminating the tri-county region. Some critics argue the decision may also present a conflict of interest.
READ MORE: NC power struggle over PFAS policy intensifies after nonprofits petition for federal intervention
Sandra Van der Vaart is the spouse of Chief Administrative Judge Donald Van der Vaart who oversaw the case; she also happens to be chair of a prominent lobby organization, the NC Chamber Legal Institute, opposed to PFAS regulation.
Judge Van der Vaart ruled in favor of the City of Asheboro last week in a lawsuit challenging 1,4-dioxane limits in its Department of Environmental Quality permit. Environmentalists believe the ruling sets a precedent that limits DEQ’s authority to regulate individual dischargers for other toxins including PFAS.
“This is a power play by the people who are currently in charge of permitting in North Carolina,” former EPA Office of Science and Technology Director Betsy Southerland said. “They have taken it away from the executive branch and given it to these new groups who say they’re no longer going to abide by the Clean Water Act.”
The Environmental Protection Agency classifies 1,4-dioxane as a likely carcinogen.
EPA data collected between 2013 and 2015 found seven of the 20 highest 1,4-dioxane concentrations in U.S. drinking water in the Cape Fear watershed.
The Department of Environmental Quality determined wastewater treatment plants in Greensboro, Asheboro, and Reidsville among top sources of the compound. The facilities receive the chemical from industrial dischargers, including textile, chemical and plastics manufacturers Unfi and Dystar. The chemicals flow downstream into the tri-county region.
The Department of Environmental Quality included 1,4-dioxane limits in Asheboro’s August 2023 permit. Asheboro filed a petition against the regulation a month later, arguing it placed excessive financial burdens on the city. Reidsville and Greensboro joined Asheboro in the suit shortly after.
Cape Fear Public Utility Authority, Brunswick County, and the Fayetteville Public Works Commission also joined the case on DEQ’s side as the “downstream intervenors.” The downstream intervenors argued 1,4-dioxane discharges from the upstream facilities contaminated their regions and unfairly forced them to incur sampling and clean-up costs.
Van der Vaart ruled the Department of Environmental Quality “arbitrarily and capriciously violated” the Administrative Procedures Act by enforcing 1,4-dioxane limits on the three upstream utilities. The judge stated DEQ erred by citing statutes that apply to carcinogens because EPA classifies the compound as a “likely carcinogen” and stated enforcement would require the implementation of statewide water standards.
Under the Clean Water Act, state agencies can regulate compounds, such as PFAS and 1,4-dioxane, through “numerical” standards that set a specific, statewide limit for all dischargers or “narrative” standards used to regulate individual facilities. DEQ employed narrative standards to set limits for Asheboro, Reidsville, and Greensboro.
In North Carolina, the Department of Environmental Quality must propose numerical standards to the Environmental Management Commission. The commission is a 15-member body appointed by the governor, General Assembly, and agricultural commission responsible for reviewing and approving DEQ’s proposed regulations.
After Environmental Management Commission approval, proposed regulations go through a public comment and hearing phase. The Office of Administrative Hearings then makes the final decision whether to approve permits.
The Environmental Management Commission approved DEQ’s proposed 1,4-dioxane standards in 2022, but the Rules Review Commission — a 10-member body within the Office of Administrative Hearings — rejected the request. The EMC sued in response, but dropped the litigation after a new Republican-majority body took over in January.
Southern Environmental Law Center senior attorney Jean Zhuang described narrative standards as an important tool in the absence of statewide standards, which take years to implement. She argued Van der Vaart’s ruling serves as a de-facto rejection of DEQ’s use of narrative standards, inhibiting the agency’s ability to use them in the future.
“They’ve fought to dismantle the whole permitting program and DEQ’s ability to limit toxic chemicals,” she said. “There was a way to approach cost concerns in a way that was reasonable and tailored to their specific circumstances that wouldn’t attack DEQ’s ability to protect North Carolina communities in general.”
SELC views the ruling as part of a broader pattern of appointed officials and lawmakers blocking PFAS and 1,4-dioxane regulation in North Carolina. The legal nonprofit petitioned the EPA last month to take over the state’s water permitting program. The SELC petition argues the Rules Review Commission improperly rejected proposed 1,4-dioxane standards by disagreeing with DEQ’s fiscal analysis.
Because it is not subject to restrictions on lobbying and ex parte communications that generally apply to administrative agencies, SELC argues Rules Review commissioners are more likely to be influenced by special interest groups and stop draft rules from becoming regulations.
The petition cites emails showing former RRC staff counsel Lawrence Duke recommended rejecting 1,4-dioxane standards after receiving letters from industrial and municipal sources and meeting with Van der Vaart.
“I don’t know if I communicated it fully after those meetings,” Duke wrote to Reidsville’s attorney. “But I greatly appreciate your hard work crafting arguments and providing data on the 1,4-dioxane rules. Thank you.”
Lawyers representing 1,4-dioxane dischargers also recognized the precedent-setting ramifications of the lawsuit. Attorney Clark Wright described 1,4-dioxane as the “tip of the iceberg” compared to DEQ’s efforts to regulate PFAS in a January memorandum sent to Van der Vaart for the case.
“This class of currently unregulated chemicals inevitably will be the subject of future similar regulatory efforts by [DEQ],” he wrote. “Therefore, let’s get it right now. In doing so, this court will be setting the proper legal rules of the road for [DEQ] to follow in its efforts to regulate other newly identified chemicals of concern.”
How does this ruling affect the tri-county region?
CFPUA declined to comment on the ruling, but its legal brief argued Asheboro’s petition represented a distortion of the Clean Water Act that would allow dischargers to offload pollution onto others.
CFPUA maintains a Source Water Protection Plan outlining potential contamination threats to raw water intake on the Cape Fear River. Greensboro, Asheboro, and Reidsville are identified as high risk threats of 1,4-dioxane contamination.
CFPUA spokesperson Cammie Bellamy told Port City Daily that CFPUA’s Sweeney Water Treatment Plant’s uses an ozonation process and biological filters to remove
1,4-dioxane from the Cape Fear River to consistently low levels. She added the utility is collaborating with an engineering firm to consider possible methods of reducing it lower.
DEQ proposes 1,4-dioxane levels of 330 parts per trillion for drinking water supplies for safe consumption. CFPUA’s most recent post-treatment water sampling at the Sweeney Plant found levels of 0.08 parts per billion, with some higher spikes in recent years.
SELC attorney Zhuang argued the ruling could inhibit industrial pretreatment of 1,4-dioxane, increasing costs for utility customers.
She cited a recent NC Collaboratory report finding the upstream utilities successfully reduced discharges by requiring industrial customers to make product replacements, divert waste, and install treatment. Greensboro spent a total of $70,794 on 1,4-dioxane testing in 2023:
“Municipal source control efforts have been effective in reducing 1,4-dioxane discharges without treatment at POTWs. With implementation of source control, average effluent concentrations have decreased by over 97% from the TZ Osborne WRF in Greensboro, ~80% from the Asheboro wastewater treatment plant, and 99% from the Reidsville wastewater treatment plant.”
Several of the state’s largest known 1,4-dioxane dischargers are in the Cape Fear region. Stepan Company in New Hanover County — which produces chemical ingredients — released 307,958 pounds in 2014 alone. It drastically reduced its 2015 discharge to 1,400 pounds. The firm didn’t respond to PCD’s inquiry by press, but the company’s most recent annual SEC filing stated compliance with 1,4-dioxane regulations is not expected to have a significant negative impact on the company’s earnings.
The DuPont/DAK Americas Cape Fear plant in Leland released 413,617 pounds of 1,4-dioxane from 1991 to 2013, according to the EPA’s toxic release inventory. DuPont operated a polyester fiber facility in Leland from 1968 to 2001 before selling it to DAK.
Bellamy told Port City Daily Stepan and the DuPont/DAK Cape Fear Plant are downriver of the CFPUA’s raw water intake and are not included in CFPUA’s source water protection plan. She noted DAK — now known as Alpek Polyester — operates another facility in Fayetteville that is included as a risk for local 1,4-dioxane contamination.
Penelope Fenner-Crisp — who served as a director of the Environmental Protection Agency’s Office of Toxic Substances in the 1980s — told Port City Daily the compound’s carcinogenic potential has been understood for decades and DEQ was acting within its authority under the Clean Water Act.
Administrative judges’ ethics oversight
The Office of Administrative Hearings is a nonpartisan and independent agency that handles disputes with state agencies. It grew in influence after a 2011 bill, SB 781, gave the Office of Administrative Hearings final authority over National Pollutant Discharge Elimination System permits.
Chief Supreme Court Justice Paul Newby appointed Van der Vaart as chief administrative law judge in 2021. Former administrative judges and environmentalists have raised concerns the appointment could politicize the agency, citing controversial policies Van der Vaart oversaw during his time as Department of Environmental Quality secretary from 2015 to 2016.
The EPA sent a letter to Van der Vaart in 2015, threatening to take over the state’s water and air pollution permitting program for blocking citizens from challenging industrial permits.
Van der Vaart’s administration provided information showing high levels of 1,4-dioxane contamination in the state in transition documents to his successor, DEQ secretary Michael Regan, now the EPA administrator. Van der Vaart’s office also received an EPA and NC State University research report about GenX contamination in the lower Cape Fear in 2016 but did not share the information in transition documents to Regan.
Stan Meiburg — a former EPA deputy administrator who spent 39 years with the agency — told Port City Daily last month he did not know of any other state that gives the administrative court final decision-making power over pollution discharge permits. He was particularly concerned about oversight of potential conflicts of interest among administrative judges.
Unlike other judges, the Ethics Commission does not conduct ethics reviews for administrative judges or require them to file statements of economic interest. Ethics commission executive director Kathleen Sullivan told Port City Daily the position is not considered a “public servant” or “judicial officer” under the State Government Ethics Act.
A Judicial Standards Commission spokesperson similarly said the commission does not provide oversight of administrative judges. She cited the Department of Justice as the agency charged with the responsibility; DOJ spokesperson Nazneen Ahmed said she did not believe her agency oversaw administrative judges but would check back to confirm.
The American Bar Association’s Model Code for Judicial Conduct for State Administrative Law Judges states administrative judges should disqualify themselves from any proceeding in which their spouse has a more than trivial interest.
The chief administrative judge’s wife, Sandra, is the executive vice president, chief legal secretary, and corporate secretary of Laboratory Corporation of America Holdings — commonly referred to as Labcorp — a Burlington-based multinational healthcare firm.
The Department of Environmental Quality issued Labcorp’s Burlington facility 12 violations in November 2017, including failing to submit a permit application for operating as a treatment, storage, and disposal facility. The company provides testing of hazardous chemicals including PFAS and regulatory compliance services to clients.
Labcorp is a “Pinnacle Member” of the North Carolina Chamber of Commerce. It provides the highest membership option offered by the organization and provides eligibility for representation on the board of directors.
The state chamber lobbies on behalf of its members as the largest business association in the state. It is lobbying against the Department of Environmental Quality’s proposed PFAS water standards and it has taken credit for blocking PFAS regulation bills in recent years.
NC Chamber members include 1,4-dioxane dischargers Unifi Inc., Ecolab, and GFL Environmental. The group represents a number of PFAS dischargers, including Chemours, which is in its second-highest “Champion” category.
Sandra Van der Vaart is chair of the North Carolina Chamber of Commerce’s Legal Institute, which develops strategies for members facing legal threats including “attempts to use environmental statutes to achieve anti-business policy.”
NC Chamber spokesperson Kate Payne told Port City Daily the chamber was not involved in the 1,4-dioxane case but supported the ruling:
“[The chamber] has consistently observed that adherence to the rule of law is a positive thing for our state and, more generally, for our society. It was refreshing to see that efforts by the government to sidestep the protections afforded to regulated parties by the Administrative Procedures Act were unsuccessful.”
The NC Chamber states membership benefits to its legal arm include increased influence in shaping policy in the courts.
The lobby group supported the 2011 bill giving permit authority to the Office of Administrative Hearings and described 2023 Administrative Procedure Act reforms expanding OAH authority over the Environmental Management Commission’s temporary environmental rules as its “top regulatory win of the decade.”
The NC Chamber Legal Institute published a blog post covering the Environmental Management Commission’s 1,4-dioxane lawsuit against the Rules Review Commission — as well Governor Roy Cooper’s suit against senate president Phil Berger over Environmental Management Commission appointment authority — in February.
The Legal Institute emphasized the lawsuits’ importance for determining who has power over PFAS regulations and other water quality standards:
“The last word will be uttered by the courts. That’s precisely why your NC Chamber has a Legal Institute, why we are closely watching these cases, and why we will be there to represent our members’ interests when the time comes to do so.”
Tips or comments? Email journalist Peter Castagno at peter@localdailymedia.com.
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