Top EPA air appointee offloaded oil stocks

By Kevin Bogardus, Sean Reilly | 09/30/2021 01:35 PM EDT

Before coming to the Biden EPA, top agency officials often had ties to organizations with business before the agency, through employment, clients and financial holdings, according to more than a hundred ethics documents and financial disclosure reports reviewed by E&E News.

Photo collage. Left to right:  Janet McCabe, Carlton Waterhouse, Melissa Hoffer and Joe Goffman.

Ethics documents show several of President Biden's political appointees at EPA have former clients and financial interests with business before the agency. Left to right: Janet McCabe, Carlton Waterhouse, Melissa Hoffer and Joe Goffman. Claudine Hellmuth/E&E News (illustration); Francis Chung/E&E News (EPA building); EPA (text and McCabe); Environmental Law Institute (Waterhouse); Hampshire College (Hoffer); Harvard Law School (Goffman)

Minutes after taking the oath of office on Jan. 20, President Biden delivered strong and impassioned comments in his inaugural address to describe the perils posed by “a climate in crisis.”

Earth, he said, is voicing “a cry for survival” that could not be “any more desperate or any more clear.”

Not long after, one of Biden’s top EPA appointees in the fight against climate change was unloading stock in some of the biggest producers of the fossil fuels that are driving up global temperatures.


On Jan. 22, Joe Goffman, acting head of the agency’s Office of Air and Radiation, sold shares in Exxon Mobil Corp., Marathon Petroleum Corp., Occidental Petroleum Corp. and Chevron Corp., according to financial disclosure records.

The precise value of his holdings was not revealed since sales and purchases must be reported only within dollar ranges. They totaled between $46,000 to $165,000.

Furthermore, the day before, Goffman sold between $181,000 and $465,000 in Berkshire Hathaway Inc., the conglomerate headed by famed investor Warren Buffett. Its varied holdings include power producer PacifiCorp, which runs a half-dozen coal-fired power plants in Utah and Wyoming and has clashed with EPA over air pollution reduction requirements.

Goffman is not the only Biden EPA appointee to have held stock in fossil fuel producers and consumers, records show. Others include Radhika Fox, head of the agency’s water office, and JoAnn Chase, director of the American Indian Environmental Office. Goffman’s holdings stand out, however, because of the air office’s role in reducing greenhouse gas emissions as well as in ensuring those companies’ compliance with the Clean Air Act.

Goffman also signed a recusal statement, which he later updated, pledging to stay away from matters affecting vast swaths of industry. Yet that prohibition only focuses on individual sectors.

“If a matter affects all sectors or if a particular matter affects a combination of sectors, including the ones listed below, then I understand that I do not have a financial conflict of interest,” Goffman said in his recusal statement.

Goffman, who has not been nominated to the air office post but has been leading the office in an acting capacity since January, is now in his third tour at EPA. Before rejoining the agency, he was executive director of Harvard University’s Environmental & Energy Law Program and is covered by a two-year bar on taking part in matters involving the school.

And while Goffman no longer reports ownership of oil company stocks, his or his spouse’s financial stakes in 64 other companies were substantial enough to disqualify him from “participating personally and substantially in any particular matter” affecting them “as a specific party.” That sprawling roster includes tech companies Facebook Inc. and PayPal Holdings Inc.; drug maker Pfizer Inc.; and cigarette producers Altria Group Inc. and Philip Morris International Inc., according to his statement.

EPA did not grant a request for an interview with Goffman for this story.

“Any notion that Joe Goffman is conflicted is completely refuted by his decades of work to protect people from pollution, and his recent leadership of the Office of Air and Radiation, where he has delivered clear results on the Biden-Harris agenda to tackle the climate crisis and to ensure clean, breathable air for those that need it most,” EPA spokesperson Tim Carroll told E&E News.

He added that Goffman committed to uphold “the ethical obligations as acting assistant administrator” and is following through with “the necessary steps to comply with that commitment, in coordination with the agency’s ethics officials.”

E&E News obtained more than a hundred ethics documents and financial disclosure reports filed by Goffman and Biden’s other EPA appointees, either under the Freedom of Information Act or through requests to agency ethics officials. The records show those top EPA officials often had ties to those with business before the agency through past employment, former clients and financial holdings.

EPA is a powerful agency with regulations that slash pollution and move markets, requiring its officials to often dump stocks and keep their distance from prior work to stay within ethical boundaries.

Further, Biden’s appointees often tangled with the agency during the Trump administration, necessitating them to step away from litigation they once led against EPA’s rollbacks of environmental rules. And as appointees, they signed the president’s ethics pledge, which has tough standards such as limiting contact with former clients and employers.

Carroll with EPA told E&E News that along with abiding by “the high ethical standards required of all employees,” the agency’s political appointees are required to sign the ethics pledge and have ethics training as part of the onboarding process.

“Career ethics officials consider the full range of potential financial conflicts, pledge concerns, impartiality concerns, attorney bar obligations and any additional potential conflicts real or perceived. They counsel appointees on these issues and work with them to resolve conflicts appropriately,” Carroll said.

He added that EPA appointees are committed to following ethics rules and have taken the necessary steps to comply with them.

“Upholding these ethical obligations is crucial as these appointees work to advance this administration’s agenda to tackle the climate crisis, advance environmental justice and deliver environmental benefits for all Americans,” Carroll said.


Ties to green groups

Those ethics restrictions could come into play between EPA and environmental organizations during the Biden administration.

Before joining the air office in January as deputy assistant administrator for mobile sources, Alejandra Nunez was a senior attorney with the Sierra Club. There, she worked on litigation challenging the Trump administration’s decision to revoke California’s long-standing waiver to set vehicle tailpipe emissions standards stronger than EPA’s. Under Biden, the agency is revisiting that decision.

Nunez is barred from involvement in the courtroom challenges to that decision, according to her most recent recusal statement, signed last month. Similarly, Nunez is recused from direct involvement in a separate bloc of lawsuits contesting another Trump-era decision to weaken vehicle fuel efficiency requirements in which the Sierra Club is a plaintiff.

Because of her “current level of financial ownership,” Nunez is also disqualified from participation in specific matters that could affect 10 businesses, ranging from online retail colossus Inc. to Peloton Interactive Inc., the exercise equipment maker.

Tomás Elías Carbonell, now the air office’s deputy assistant administrator for stationary sources, was previously senior counsel and director of regulatory policy at the Environmental Defense Fund. Like the Sierra Club, EDF has been in the thick of legal fights against Trump-era rollbacks.

Carbonell represented the group over the scrapping of the legal basis for EPA’s limits on power plant mercury emissions, court records indicate. A Colorado-based coal company is now suing to end those limits altogether. In his EPA post, Carbonell can’t have anything to do with that suit, along with related litigation that seeks to strengthen the standards, besides restoring their legal underpinning, according to his recusal statement.

Among other cases on his recusal list, Carbonell has to steer clear of litigation over a high-profile rollback that allows industrial plants to ease hazardous pollutant controls if their emissions fall below specified levels.

Carbonell is also subject to a two-year cooling-off period regarding “any particular matter” in which the Environmental Defense Fund is involved. He also has a one-year ban on dealings with the Institute for Policy Integrity, a liberal-leaning group based at New York University, where he served as an unpaid adviser.


Time to divest

It’s not just appointees in EPA’s air office facing a number of ethics restrictions. Across the agency, top officials have vowed to stay away from ex-clients and financial interests.

Chief of staff Dan Utech signed a recusal statement in April. It noted he is disqualified in taking part in issues involving Donaldson Company Inc., Intel Corp. and Paychex Inc. because of his level of ownership in those companies. He later filed a transaction report reporting the sale of several assets, including interests in those firms worth between $80,000 and $200,000 overall.

Utech’s updated recusal, signed in August, no longer listed those companies as financial conflicts of interest. He would continue to recuse himself from “any particular matter” involving his past employer Yale University and former consulting clients like the Energy Foundation, the Center for Applied Environmental Law and Policy, and Clean Wisconsin.

Several Biden appointees received certificates of divestiture. The documents lets officials offload financial holdings that conflict with their public duties. It also allows them to defer capital gains taxes on the sale of those assets as long as their proceeds are reinvested in property that is ethically palatable, such as Treasury notes and mutual funds.

Fox received such a certificate to sell stocks like Berkshire Hathaway, Chevron Corp. and Exxon Mobil Corp. (Greenwire, Aug. 18). She has since sold interests in those companies, according to a transaction report she filed.

In April, the spouse of Victoria Arroyo, associate administrator of EPA’s policy office, was issued a certificate to sell shares of DuPont, Dow Inc. and Chemours Co., among others. The following day, those interests were sold, Arroyo indicated in a financial disclosure form.

Nunez’s spouse received a certificate to sell holdings in BorgWarner Inc. Susannah Weaver, senior counselor at EPA, and her spouse also received one to divest their shares in Sunrun Inc. and SolarEdge Technologies Inc.

Goffman was also issued a certificate to sell his shares in Ecolab Inc. and Roper Technologies Inc.

If EPA appointees own stock over certain thresholds, agency ethics officials may judge they have a financial conflict of interest with their government duties. Those appointees could then face additional ethics restrictions. But if their stock ownership is below those levels or if they sell off the asset, they no longer have that conflict.


Lists of lawsuits

Appointees’ past legal work also means they have to avoid certain cases they once litigated against EPA — or be cleared by ethics officials to weigh in on them again at the agency.

Melissa Hoffer, EPA’s acting general counsel, has several ethics documents, stemming from her litigation history. As chief of the Massachusetts Office of the Attorney General’s Energy and Environment Bureau, she often challenged the Trump EPA in court.

Hoffer was given an “impartiality determination” the day before Biden was inaugurated so she could take part in “policy decisions” about lawsuits involving the Bay State, including cases she had worked on before. She, however, had to avoid working on the merits of those cases.

Hoffer also has another determination allowing her to do “new or future” work with Massachusetts and received consent to work on a matter tied to the Merrimack Generation Station in New Hampshire. Also included among the documents is a list of environmental cases involving Massachusetts, which she will be personally recused from.

Several other EPA senior attorneys, such as Dimple Chaudhary, Marianne Engelman-Lado and Weaver, had similar lists of lawsuits among their ethics documents. All three are recused from the cases they name for the entirety of their time at the agency.

Engelman-Lado was given a waiver from Biden’s ethics pledge so she could take part in pesticides and toxic chemicals matters involving her former client, the Natural Resources Defense Council (Greenwire, April 29).

Carroll with EPA said appointees who are attorneys are subject to the federal ethics laws, Biden’s ethics pledge and to their own bar rules.”Generally speaking, those restrictions relate to specific party matters, such as litigation, enforcement actions, permits or contracts in which they previously participated or in which a former employer or former client is a party,” Carroll said. “Broad policy matters, including rulemaking, are not specific party matters at all. These restrictions do not attach to matters of general applicability.”

Other Biden appointees at EPA will stay away from their old clients, as required by Biden’s ethics pledge.

Jennifer Macedonia, deputy associate administrator in EPA’s policy office, will avoid Duke University, the Environmental Defense Fund and Meier Engineering Research, all former clients of hers, she said in her recusal statement.

EPA Deputy Administrator Janet McCabe will do the same for her former employers, the Environmental Law & Policy Center and Indiana University, according to her recusal.

Ya-Wei (Jake) Li, deputy assistant administrator for pesticide programs, is recused from matters involving nearly a half-dozen ex-clients like CropLife America, the Electric Power Research Institute and Perkins Coie LLP, as well as former employers, the Environmental Policy Innovation Center and the Sand County Foundation, his statement says.

Appointees’ recusal periods typically last a year after they resigned from their prior jobs or two years after they joined the federal government, as required by the president’s ethics pledge. They should avoid “particular matters” with past business ties, such as meetings with them, unless “general applicability” applies.

Several at EPA who held positions in local and state governments can interact with those prior employers while at the agency.

Philip Fine, EPA’s principal deputy associate administrator for policy, has an impartiality determination to participate in “new or future specific party matters” involving the South Coast Air Quality Management District, his past employer, but not on the same issues he worked on “personally and substantially.”

Casey Katims, EPA’s deputy associate administrator for intergovernmental affairs and former aide to Washington Gov. Jay Inslee (D), also has a determination so he could work on issues involving the state of Washington.

Administrator Michael Regan received a determination regarding the North Carolina Department of Environmental Quality, which he led before taking charge of EPA. He will stay away from a number of cases as well, his recusal statement said (Greenwire, May 17).


‘Change that designation’

Others have connections outside the agency, albeit with EPA ethics officials’ approval.

Arroyo received an approval of outside activity to teach a Georgetown University Law Center course on climate change law this past spring semester. And so did Carlton Waterhouse, deputy assistant administrator in EPA’s Office of Land and Emergency Management and the nominee to lead that office, to teach a property law course at Howard University School of Law.

Carroll with EPA said Waterhouse’s leave from Howard started on Feb. 1, “with the exception of completing the property law course which began before Carlton’s appointment.”

“Other than teaching that single course, no other Howard duties have been performed since Feb. 1, 2021,” Carroll said.

Both Arroyo and Waterhouse faced various ethics restrictions though, the documents say, including not to misuse their EPA positions for “the private gain” of their respective schools.

Weaver was approved for serving on the Georgetown law school’s board of visitors. It was an unpaid role advising the law school’s dean but because of her EPA position, there are limits on who she could fundraise from, interview for agency jobs and how she identifies herself.

Georgetown University Law Center’s website had listed her solely with her agency affiliation, Weaver’s approval warned. An archived webpage from Aug. 2 shows that EPA identification.

“Please take steps immediately to notify GULC to change that designation. You are not serving in your official EPA capacity,” the document said.

The website now says she is a “Federal Employee.”