North Carolina v. Chemours: Early Reflections on an Ongoing State Environmental Enforcement Case

by Joel Mintz

The Trump EPA's shrinking commitment to enforcement of the nation's environmental laws has focused new attention on state-level enforcement and the extent to which it does or does not address problems of environmental pollution and threats to public health. One recent – and ongoing – controversy, involving toxic chemical contamination of a river in North Carolina by a large and profitable corporation, provides some insights into both the promise and the shortcomings of state environmental law enforcement. It also sheds light on some aspects of contemporary corporate culture and the salutary role that careful investigative journalism and public opinion can sometimes play in prodding state regulators to respond effectively to corporate pollution.

In 2012, a group of scientific researchers discovered that GenX, a fluorinated compound, was present in North Carolina's Cape Fear River – a finding that was confirmed the following year by a second team of scientists. While the health effects of GenX are still being studied by EPA, a number of researchers within the United States and abroad suspect that the chemical is a human carcinogen.

GenX and other fluorinated contaminants were also soon found in a downstream public drinking water system – the Cape Fear Public Utility Authority (CFPUA) – that supplies drinking water to the residents of Wilmington, North Carolina. The CFPUA's plant has no capacity to filter out any GenX drawn into its equipment from raw river water. GenX was also subsequently discovered in similarly unprotected water systems in three North Carolina counties (New Hanover, Brunswick, and Pender) and in wells in two other counties (Bladen and Cumberland). The sole source of this contamination was a large chemical manufacturing facility ("the Fayetteville Works") primarily owned and operated by the Chemours Company ("Chemours"), an independent and highly profitable corporation that had been "spun off" by DuPont in 2015. The facility had been under DuPont's ownership prior to that time.

In response to inquiries, DuPont assured the North Carolina Department of Environmental Quality (DEQ) that it was aware of the GenX releases at the Fayetteville Works and was adding additional treatment capacity to halt those discharges. Apparently satisfied with those assurances, DEQ – which administers the National Pollution Discharge Elimination System (NPDES) permit program within state borders – chose not to investigate Chemours' discharges or to initiate any enforcement action against the company. However, intermittent releases of GenX to the Cape Fear River from Chemours' facility apparently continued, and the contaminant continued to be carried well downstream to CFPUA's drinking water treatment plant and to other drinking water systems.

In April 2016, Chemours applied to the DEQ for a renewal of the NPDES discharge permit initially granted to DuPont. In its written application, the company described the various manufacturing processes at the Fayetteville Works. It specifically stated that "wastewater" generated in one of the plant's production areas is "discharged to the Chemours wastewater treatment plant." The company's permit renewal application omitted any mention of the fact that GenX was a byproduct of its manufacturing operations in that area of the facility. Nor did it indicate that GenX had been discharged, apparently without effective treatment or control, from an outfall at the plant directly into the river since 1980.

Saddled with a backlog of permit renewal applications, the DEQ did not immediate consider Chemours' request for renewal of its discharge permit. Nonetheless, the department expressed no concern with Chemours' conduct. In fact, a department spokesperson stated publicly that Chemours had identified its GenX discharges in its permit renewal application – a false and misleading statement that seemed to imply that the DEQ planned to continue its "laissez faire" attitude toward Chemours' discharges.

Around the same time, however, the news media began to focus public attention on Chemours' toxic discharges. On June 8, 2017, an article in the Wilmington StarNews, written by freelance investigative journalist Vaughn Hagerty (with the assistance of Adam Wagner and other staff reporters at the StarNews), revealed the misleading nature of Chemours' permit renewal application. Titled "Toxin Taints CFPUA Drinking Water," this story was the first of a series of carefully researched, insightful newspaper pieces by Mr. Hagerty and his colleagues regarding GenX releases from the Fayetteville Works. (I'd have said that even if Hagerty hadn't called me for comment!)

These media reports had a profound political impact. Informed by the StarNews' compelling reporting, members of the public in North Carolina became understandably concerned about the risks posed by GenX. They aired their anxieties, and state elected officials took notice.

On July 17, North Carolina Governor Roy Cooper sent a letter to EPA Administrator Scott Pruitt in which he announced that he had directed the DEQ and the North Carolina Department of Health and Human Services to launch an investigation of GenX in the Cape Fear River. Governor Cooper also requested that EPA expedite and finalize its health assessment of GenX and establish a "maximum contaminant level" for the compound in public drinking water.

The attitude of the DEQ towards Chemours' GenX discharges also underwent a dramatic shift over the summer of 2017. Rather than persist in its passive toleration of the company's pollution, the department began to exercise its enforcement authority in a more vigorous manner. The DEQ ordered Chemours to stop releasing fluoridated compounds into the Cape Fear River, and it filed a lawsuit in state court that sought to enjoin those discharges. The department also sent the company a letter declaring that the state was beginning the process of suspending the company's NPDES permit to pollute.

These assertive state agency enforcement actions triggered a period of long, and at times acrimonious, negotiations between representatives of Chemours and the DEQ. The result of those intense conversations was what proved to be a temporary truce between the corporation and the regulators. Chemours and the DEQ agreed to sign a "Partial Consent Decree" – soon thereafter approved by a North Carolina state court judge – under which Chemours was required to cease all discharges of GenX and other fluoridated compounds from the Fayetteville Works, and to provide regulators with certain business information, and other data, as to which the company had claimed trade secret confidentiality. The state agency also reserved the right to take enforcement action against Chemours for any violations of applicable groundwater protection standards.

Notwithstanding its respite from enforcement actions by state regulators, however, Chemours found itself facing additional legal challenges. CFPUA filed a civil lawsuit against Chemours and DuPont in federal court asserting a variety of common law and federal statutory claims, and Brunswick County filed a similar lawsuit. Those suits sought injunctive relief and monetary compensation for harm to the utilities' drinking water plants. A North Carolina NGO notified the company of its intent to file a federal Clean Water Act citizen suit. A Durham personal injury firm initiated a class action suit on behalf of persons harmed by Chemours' GenX discharges and a separate civil action on behalf of New Hanover County. Another lawsuit was filed by a couple who asserted that GenX had damaged their home water heater. Moreover, the local United States Attorney opened a federal grand jury investigation, presumably to look into the conduct of the corporation and its employees. 

Chemours' difficult legal situation worsened considerably on October 6, 2017, when the company violated the partial consent decree it had worked out with the DEQ by spilling a significant concentration of a chemical precursor to GenX into the Cape Fear River during a maintenance operation. The company also violated the terms of its NPDES pollution permit by not reporting its discharge to the DEQ within 24 hours.

Soon after the October 6 spill, Brunswick County conducted water quality tests that revealed a spike in GenX levels in the river water taken in at its own downstream drinking water treatment facility, in concentrations considerably above the health goal for GenX that had been established by the state. GenX levels measured at the CFPUA's drinking water plant also rose dramatically in the aftermath of Chemours' spill.

These developments stirred DEQ to further enforcement action. On November 16, the department announced that it was once again taking steps to revoke Chemours' NPDES permit to discharge any wastes from the manufacturing area at the Fayetteville Works where GenX is produced. The DEQ also requested that the North Carolina State Bureau of Investigation determine if there is evidence of criminal violations for Chemours' failure to report its October 6 GenX spill.

Notwithstanding his company's continuing (and growing) exposure to legal liability, however, Chemours' President and CEO, Mark Vergnano, chose to give stock analysts the distinct impression that all was going just fine with respect to the company's GenX-related problems. On November 3, Mr. Vergnano responded to a question during a company quarterly earnings call by declaring, "We've been working very closely with the regulators, both in the state and at the federal level, and we continue to be very transparent and open in working with them through this issue." Vergnano also told his analysts, "We stopped that [GenX] effluent immediately. We were not asked to do that. We felt that it was the right thing to do."

While the case is still in progress, the brief history of North Carolina's enforcement responses to the GenX discharges from Chemours' Fayetteville Works to date sheds light on some of the realities – both positive and negative – of public and state regulatory reactions to environmental pollution. It also exposes the less-than-attentive or candid approach of at least some top corporate officials toward their own company's environmental responsibilities.

Vaughn Hagerty's penetrating newspaper articles regarding the Chemours GenX case demonstrate that media attention – and the public reaction it can engender – can have a significant catalytic impact on regulatory officials and the actions they take to redress significant environmental problems. At the same time, however, the DEQ's dilatory and lax responses to Chemours' GenX toxic effluent discharges before those releases were spotlighted in the media appear to reflect a troubling passivity on the department's part in meeting its responsibility to protect public health and the environment without outside prompting.

Additionally, Chemours' appalling environmental record with respect to its GenX discharges, and the obviously false statements of its CEO to analysts of its financial soundness, belie the notion that all large, profitable corporations have now "seen the light" and have become "responsible corporate citizens" with respect to their environmental impacts. Instead, Chemours' actions and statements to date seem to reflect a disturbing failure to take responsibility for its actions that necessitate a firm and consistent environmental enforcement response. Whether the DEQ will persist in making such a response – rather than reverting to its head-in-the-sand posture towards Chemours' pollution – remains to be seen.



© 2016 The Center for Progressive Reform