EPA

Facing fines, polluters turn to Trump's enforcement fixer

First in a series. Click here here for the second part.

When career EPA enforcement staffers accused an Indiana whiskey distillery of emitting massive quantities of smog-forming pollution, Patrice Douglas knew just who to call.

"I left a message last week, and am needing to talk with you about a client's difficulties with Region 5," Douglas, a lawyer at Spencer Fane LLP, said in an October 2017 email to EPA Chief of Staff Ryan Jackson, a fellow Oklahoma Republican who's one of the agency's longest-serving and most influential political appointees. "We need to escalate this matter."

In the final full month of the Obama administration, EPA's Great Lakes region claimed Douglas' client, MGP Ingredients, had improperly built air polluting warehouses in a county that at the time failed to comply with smog limits. MGPI took the allegations seriously, warning investors in November 2017 that its failure to apply for a Clean Air Act permit could cost the company at least $100,000 in fines.

But after Douglas contacted Jackson, the fortunes of MGPI — like several other polluting companies whose representatives sought his assistance — changed for the better.

Last December, Indiana regulators announced that EPA declined to pursue the case against MGPI. Meanwhile, two other Obama-era cases Jackson intervened in remain unresolved. And a $700,000 fine against an Oklahoma refinery disappeared after the chief of staff got involved in the matter.

Jackson's previously unreported role as an enforcement fixer for friends and allies — pieced together from internal agency records, enforcement documents, company financial filings and interviews — makes some former career EPA enforcement staffers question whether Jackson is abusing his powerful position to benefit favored companies and lobbyists.

"You're just handing candy out to people who come in and ask for it," Eric Schaeffer, the head of EPA's enforcement office under Presidents Clinton and George W. Bush, said after reviewing the cases flagged by E&E News.

"Once you start that, the line outside your door is going to be really long," said Schaeffer, who now leads the Environmental Integrity Project, a nonprofit watchdog group. "That's deadly for government."

EPA didn't make the chief of staff, who joined the agency when fellow Oklahoman Scott Pruitt became administrator, available for an on-the-record interview. But Jackson, who served for six years as Oklahoma Republican Sen. Jim Inhofe's top staffer prior to working at EPA, has previously defended using his high-level post to help lobbyists get things done for their clients.

"I don't think it is a different direction" for an EPA chief of staff, Jackson wrote to E&E News in July 2018 after coming under scrutiny for setting up a meeting between Pruitt and J. Steven Hart, the lobbyist whose wife had rented Pruitt a cut-rate Capitol Hill condo (E&E Daily, April 23, 2018).

"A chief of staff has specific responsibilities, but broader responsibilities to ensure a variety of things get completed, addressed, and worked out," he said. "Thank you for the acknowledgement of succeeding in getting some things accomplished though. I try to do that."

Others who have held the job — perhaps the most important position at EPA that doesn't require Senate confirmation — say there's a line between policy matters and enforcement that should be crossed only with caution.

Stan Meiburg, a longtime career EPA employee who served as the agency's second in command during the Obama years, said top political appointees have generally avoided weighing in on specific enforcement matters.

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"You try to stay away from individual cases," said Meiburg, who is now the director of sustainability graduate programs at Wake Forest University. "There is a process, and you're supposed to let it play out."

But a senior EPA official, who agreed to speak only on condition of anonymity, said it's not just permissible for Jackson and other political appointees to get involved in enforcement cases — it's essential.

"It's my role, in a supervisory capacity at a federal agency, to at least inquire about something that someone wants to raise to me, that they think might not be quite right," the official said. "I don't know why that would be a bad thing to do. ... That's why I'm going to continue to do it."

Jackson isn't the only Trump appointee to intervene in specific cases. Pruitt, his former boss, held an off-the-books meeting with a Missouri electric cooperative that President Obama's EPA accused of making major modifications to coal-burning boilers without installing modern pollution controls — a serious alleged violation that remains unresolved (Greenwire, April 15).

Their unusual involvement in the typically staff-led enforcement process comes amid a fall in EPA investigations, environmental prosecutions and other key enforcement metrics. That broad decline has attracted the attention of agency watchdogs and congressional auditors, but few have focused on specific enforcement cases that have been killed or put on ice.

That's mainly because environmental enforcement is inherently opaque. EPA generally pursues enforcement cases in instances where the violations are significant but difficult to detect or in states that have proved unable to hold powerful polluters accountable. Then malfeasance found by EPA inspectors is often made public only after deals are reached or the Department of Justice moves to file charges.

The secrecy allows career EPA lawyers and company representatives to work out settlements that, ideally, protect human health and the environment without unduly burdening business.

Post-facto permit

During the Trump administration, however, that confidentiality has allowed Jackson to help people he knows who bring him complaints about major pollution problems. People like Douglas, who didn't respond to a request for comment.

Douglas, a Republican former mayor of an Oklahoma City suburb and veteran of the state's energy commission, told Jackson that MGPI was being unfairly targeted by enforcement staff in the Great Lakes region, which covers Illinois, Indiana, Michigan, Minnesota, Ohio and Wisconsin. The Spencer Fane lawyer followed up about a month later to thank Jackson for getting involved.

"MGPI sincerely appreciates that," she wrote in an email, which was made publicly available via a Freedom of Information Act lawsuit from the Sierra Club, an environmental group. The email called for settling the matter and halting "any requirement for a trial study" of ways to control ethanol emissions from the 80-acre Lawrenceburg, Ind., distillery.

EPA dropped the case, essentially handing it off to Indiana regulators. Last month, MGPI settled with the state for $11,250, about a tenth of the penalty the company had suggested to investors it could have faced.

"MGP Ingredients, Inc.'s Lawrenceburg distillery is in compliance with the Clean Air Act," Jenell Loschke, a spokeswoman for the company, said in a statement. "We take our permitting obligations with the State of Indiana and the U.S. Environmental Protection Agency seriously."

A senior EPA official said the agency's move was motivated by an interest in harmonizing enforcement across the regions. Other offices, such as the Atlanta-based Southern region that includes the Kentucky Bourbon Trail, hadn't been pursuing Clean Air Act violations against whiskey distilleries.

Jackson's intervention in the MGPI case, the official said, led to a "good public policy outcome."

Alan Weiss, mayor of Greendale, Ind., disagrees. His city abuts the MGPI facility, and he feels federal and state officials let him down — along with the people he represents.

Weiss had hoped EPA's citation would force the company to curb its emissions of ethanol, a volatile organic compound (VOC) that helps create lung-damaging smog, which is also known as ozone pollution. Downwind from the warehouses, Cincinnati is currently violating EPA's ozone standard.

But what really bothers Weiss and people in Greendale is "whiskey fungus," a type of mold caused by ethanol vapor released during the whiskey aging process. The velvety black Baudoinia compniacensis has unknown human health effects and grows all over Greendale buildings, vehicles and street signs — particularly those closest to the MGPI warehouses.

The mayor, a political independent, said he learned of MGPI's air pollution lobbying campaign only after being contacted by E&E News. That effort even included a letter supporting the Kansas-based company's position from then-Rep. Luke Messer (R-Ind.).

"It really didn't matter what we wanted," Weiss said last month in his windowless office, beside a decal of the Indiana and U.S. flags. "Nobody was listening to our concerns."

Asked about the mayor's complaint, the senior EPA official noted that Jackson's phone number is listed on the agency's website.

"If the local community has concerns about emissions from that, they're welcome to call," the official said. "But they never did."

More 'judicious' enforcement?

Political connections and high-level support appear to also have paid dividends for Gulfport Energy Corp.

Two days before Christmas 2016, EPA accused the Oklahoma City-based company of allowing VOCs to leak from storage tanks at more than a dozen oil and gas production sites in eastern Ohio's Appalachian foothills. Several of those well pads also had improperly operating flares, which are used to burn off the smog-forming byproducts.

Benzene, toluene and xylene are VOCs associated with oil and gas production that are also hazardous air pollutants. Long-term exposure to those pollutants can cause health problems, including cancer.

EPA had been pursuing similar cases in oil patches across the country under Obama. The agency had reached multimillion-dollar settlements with several Western producers.

The oil and gas industry complained about them to Trump administration officials almost as soon as they took office. Pruitt promised them more "judicious" use of the enforcement process, better cooperation with states and more meetings with high-level EPA officials about enforcement strategies (Energywire, Jan. 17, 2018).

Still, EPA under Trump settled with Denver-based PDC Energy Inc. for a $2.5 million fine and about $20 million in pollution reduction efforts.

Looking to avoid a similar fate, Gulfport hired its first lobbyist, Ryan Thompson of the firm Akin Gump Strauss Hauer & Feld LLP, soon after Jackson joined the Trump administration in February 2017.

Thompson and Jackson share both a first name and some history. Thompson worked his way up to chief of staff in Inhofe's office. When he left in 2011, Jackson was promoted to take his place. EPA Administrator Andrew Wheeler, Jackson's current boss, served as staff director of the Environment and Public Works Committee for Inhofe when both Thompson and Jackson were working in the senator's personal office.

Early on in Jackson's tenure at EPA, Thompson recommended an Akin Gump lawyer to him. Marcella Burke, Thompson's former colleague, was later hired as EPA's deputy general counsel.

Four months after Thompson started working for Gulfport, Jackson received an email from company attorney Zachary Simpson.

"I have attached some background information per your request," Simpson wrote. The documents he sent included a summary of the company's objections to the enforcement action and interactions with career EPA staff.

Gulfport claimed some well sites were leaking planet-warming methane gas, not VOCs. Others, the company said, weren't producing enough oil and gas to be covered by the Clean Air Act.

Gulfport "is not attempting to skirt around [air regulations] when we should be subject to them," the summary document says. "However, USEPA's lack of willingness to address their flawed methods of determining applicability and blatant refusal to consider objective mathematical evidence is troublesome."

Meanwhile, other email attachments show EPA regulators were pushing the company to agree to a settlement.

But two years since Jackson got involved, Gulfport's violations remain unresolved.

At the same time, VOCs still appear to be escaping from some of the troubled well pads EPA inspectors identified in 2016.

Last month, the flare and storage tank at a site called "Boy Scout" — drilled on the grounds of the Fort Steuben Scout Reservation in Tippecanoe, Ohio — both appeared to be emitting VOCs.

E&E News visited the well pad with Leann Leiter, a certified optical gas imaging thermographer with Earthworks, who used the environmental group's Forward Looking Infrared Gasfinder 320 to detect the emissions. The FLIR camera, which costs $100,000 and uses an internal cooling system to measure the heat of emissions, is relied upon by industry and regulators to spot otherwise indiscernible VOCs.

"If what we were seeing through the camera were smoke, we would be able to see that with the naked eye," Leiter explained while an E&E News reporter watched a previously unseen plume of gas shimmer in the FLIR viewfinder. "The fact that the emissions are more or less invisible to the naked eye but the camera is able to pick them up tells us that it's a hydrocarbon within that very narrow infrared spectrum that the camera is designed to detect."

The emissions were wafting toward a house less than a football field away from the drilling operation. Across a gravel road from the well pad is the Scouts' wilderness training site; adjacent to it sits the camp's shooting range.

"If you're living downwind from that — especially if you have children or if you're in a vulnerable health position — any amount of emissions is going to be too much," she said. "And these dangerous VOCs like benzene ... there is no safe level of those kinds of exposures."

Thompson and Gulfport didn't respond to requests for comment.

The Boy Scouts of America, the nonprofit group that oversees the camp, said in a statement that it prioritizes safety and is "not aware of any instances in which any campers or camp staff experienced any effects related to the well pad."

The senior EPA official declined to offer any specifics about the ongoing enforcement effort.

"You have me at a disadvantage because you know that I can't talk about an active case," the official said. "But if it's an active case, we're doing something about it."

$1 million dispute

Thompson also advocated for a Silicon Valley clean energy darling called Bloom Energy.

Bloom first achieved widespread popularity in 2010 with a "60 Minutes" television segment that touted Google as the company's first client. The company's board now includes former Secretary of State Colin Powell and venture capitalist John Doerr, a board member of the Obama Foundation.

It might not seem like a good fit for Thompson, a lobbyist whose calling card is having worked for the Senate's top denier of climate science. But the company's fuel cells, called "Bloom Boxes," generally run on natural gas (although they can be configured for biogas), and the filter canisters inside them contain benzene. Nevertheless, the company benefits from some state and federal renewable energy programs.

EPA has been threatening the company with a fine of up to $1 million in connection with hazardous waste from the Bloom Boxes. In reports to investors and the Securities and Exchange Commission, the company has already acknowledged paying a "nominal" fine to an undisclosed state agency for related problems.

For years, a lawsuit alleges, the company disposed of spent filter canisters — with their benzene — in landfills in Mexico and California. The company said it had been operating under exemptions from hazardous waste rules granted by two state agencies.

But in 2015, EPA determined that spent filters from the boxes are hazardous waste and should be treated as such. The agency issued guidance to that effect the following year, the company said in a financial filing.

"They've lied ever since the launch," said Lindsay Leveen, a California chemical engineer and ardent critic of Bloom, who said he alerted EPA to the company's handling the dangerous canisters. "They have hazardous waste. Loads of hazardous waste."

The company says it has been complying with EPA's new guidance. At the end of the Obama administration, however, the agency began pursuing a fine for the years of improper disposal.

Enforcement staffers in EPA's Philadelphia-based Mid-Atlantic region sent a formal "request for information" to Bloom on Jan. 20, 2017 — the day Trump was sworn in — asking about the waste canisters. Such requests can foreshadow an enforcement action.

Weeks after the company was contacted by EPA, T.A. Hawks, a lobbyist at Monument Advocacy who'd worked for former Sen. Thad Cochran (R-Miss.), asked Jackson for a meeting about the benzene issue.

"We'd love to talk to you or someone on your staff about this and can bring their General Counsel," Hawks wrote. The meeting was set for March 24, 2017, in the office of Byron Brown, who was then EPA's deputy chief of staff for policy.

More than a year later, on June 15, 2018, Bloom hired Thompson.

Since then, the case appears to have languished. EPA has repeatedly declined to say whether Bloom even responded to the request for information, and Bloom has not responded to inquiries from E&E News.

Last month, Bloom agreed to pay Delaware a $40,000 fine for operating dozens of gas-powered Bloom Boxes without a permit. A spokesman for the state's Department of Natural Resources and Environmental Control said the enforcement action doesn't involve the EPA inquiry (Energywire, Aug. 6).

EPA officials said they can't discuss details of the case because it's ongoing. The senior administration official confirmed that Jackson had been asked by Thompson about the potential enforcement action, but the chief of staff only "told him it's an active case."

'Wonderful to meet you'

Another instance of Jackson interfering in environmental enforcement began on the Sunday before Memorial Day in 2017. That evening, EPA's chief of staff shot an email to John Blount, a fixture in Washington lobbying circles for more than three decades.

"May I get more information on the Ardmore TRI reporting fine?" Jackson said. He was referring to Valero Energy Corp.'s petroleum refinery in Ardmore, Okla., and EPA's Toxics Release Inventory, a database of chemical emissions from industrial facilities used to inform decisionmaking in communities, government agencies and companies.

A few days earlier, Blount and colleagues had met with Pruitt to discuss problems facing the refining industry — a meeting Jackson helped arrange. The sit-down seems to have gone well. The EPA administrator sent Blount a thank you note with a handwritten postscript: "wonderful to meet you."

Now Jackson was following up about a civil penalty against a specific facility in his and Pruitt's home state. Valero had filed Ardmore's required 2014 TRI disclosure on Nov. 23, 2015, nearly five months late. As a result, the company told investors, it had received a penalty demand from EPA for $730,820.

It's not clear why Jackson would be asking Blount about Valero's 90,000-barrels-a-day facility, but Blount represents a refinery training group of which Valero is a member. And a Valero manager was slated to attend the meeting with Pruitt.

Shortly after Jackson's email, Blount zapped back. "You bet," he wrote. "Shoot you a memo Tuesday."

There's no indication Jackson received such a memo. But three days later, the lobbyist told Jackson that one of Valero's top attorneys, Parker Wilson, would be calling him about the Ardmore fine.

The case was closed the next month by regional officials in Dallas.

EPA officials say they have no record of a call from Wilson to Jackson. Unlike a memo, phone calls are hard to track. An open records request for Jackson's 2017 phone log redacted the number of every one of his incoming or outgoing calls.

An EPA spokesman said a career attorney recommended closing the case due to "litigation vulnerabilities." But the spokesman did not provide any documentation.

Valero did not respond to numerous requests for information and clarification about the penalty.

Attempts to reach Blount were unsuccessful. When E&E News tried to leave him a message at Blount's lobbying firm, Ervin Hill Strategy, the woman who answered the phone said, "That's not possible."

EPA officials said there was nothing improper about how the case was handled.

But Schaeffer, the former EPA enforcement director, disputed the agency's claim.

"It's really greasy," he said. "You're being like a Chicago alderman in the '50s."

The senior EPA official scoffed at the notion that the isolated incidents of political intervention in environmental enforcement uncovered by E&E News could be related to the broader decline in enforcement during the Trump administration (Energywire, Feb. 11).

"Man, that's really ridiculous," the official said.

Other enforcement experts, however, aren't so sure.

"The people up there can set the tone," said George Czerniak, who retired from the agency in 2016 after heading the air enforcement branch of EPA's Great Lakes region. "All this can have a chilling effect. These cases might be symptoms of a much more pervasive disease."

Reporter Kevin Bogardus contributed.

Twitter: @corbinhiar Email: chiar@eenews.net

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