Since taking office two years ago, the Biden Administration has emphasized efforts to incorporate environmental justice considerations into federal agency permitting, funding and financial support decision-making. Environmental justice, which the U.S. Environmental Protection Agency (“EPA”) defines as “fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income, with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies,” is now a major factor in federal, state and local consideration of project permit applications and federal programs. The Administration’s renewed focus on environmental justice has empowered Environmental NGOs, and has given state, local, and tribal authorities detailed guidance and numerous tools to incorporate analyses of the environmental justice and civil rights impacts of a proposed action into their evaluation of projects, permits, and programs.

Because complying with environmental justice review requirements dictates substantial pre-project community engagement and extensive public comment during permitting, and raises the prospect of post-permitting enforcement and litigation, environmental justice review has major ramifications for those seeking to build or expand facilities in environmental justice communities.

The risk for project proponents is not theoretical. On September 12, 2022, a judge revoked fourteen permits issued by the Louisiana Department of Environmental Quality (“LDEQ”) for a new plastics manufacturing facility. In doing so, the court found “that the communities closest to the [proposed] site are in the 95-100th percentile for cancer risk associated with exposure to toxic air pollutants from industrial sites” and determined LDEQ’s failure to consider cumulative impacts to the affected community in making its permitting decision to be unlawful.

As this example illustrates, understanding the evolving environmental justice landscape is critical to owners, contractors, and others involved in the planning, permitting, and execution of construction projects.

PERMITS MUST PASS ENVIRONMENTAL JUSTICE AND CIVIL RIGHTS REVIEW

One of the most impactful recent developments for the construction industry was EPA’s release of Interim Environmental Justice and Civil Rights in Permitting Frequently Asked Questions (“the FAQ”), which provides resources and information to help federal, state, and local permitting agencies meet their obligations to integrate environmental justice and civil rights into the permitting process. EPA has stated that it intends to issue additional civil rights guidance in the near future.

The FAQ focuses on Title VI of the Civil Rights Act of 1964, which applies to public and private entities that receive federal funds. EPA interprets Title VI and EPA’s related regulations as prohibiting intentional discrimination and disparate impacts in permitting policies, processes, and decisions. One of the biggest, if not the biggest, takeaway from the FAQ is that a new construction or expansion project could pass environmental review, but a permitting agency still could deny a permit on civil rights grounds.

According to the FAQ, Title VI requires an analysis of whether a proposed action disparately impacts members of a group identified by race, color, or national origin. The question decisionmakers must address is whether there will be an adverse impact on members of such a group; whether a disproportionate share of the adverse impact will be borne by such a group; and, whether there is a causal link between the permitting policy, process, or decision and the disparate impact.

If the answer to these questions is yes, then the FAQ says there must be a “substantial legitimate justification” for the action. If there is no legally sufficient justification, and no mitigation measures can address the disparate adverse impact, the FAQ instructs that permit denial may be the only way to avoid a Title VI violation.

Even if there is a substantial legitimate justification for impacts on environmental justice communities, the FAQ says Title VI requires the permitting agency to determine if there are “comparably effective alternative practices” with less discriminatory effect. That, in turn, requires consideration of mitigation measures to address the adverse impact, and EPA includes “not renewing the permit” as one possible alternative.

If a project proponent identifies a high risk in its environmental justice and civil rights assessment, the FAQ suggests measures to mitigate adverse disparate impacts – which could include the following, among others:

• alternative siting;
• continuous compliance monitoring equipment;
• enhanced compliance assurance programs and reporting requirements;
• establishment of a public-facing website with compliance information and real time data;
• additional pollution controls or more stringent pollution limits;
• enforceable and/or best practices to minimize emissions and discharges; and
• expanded buffer zones; and
• modified operational hours.

IMPLICATIONS FOR PROJECT PROPONENTS

Through the FAQ and other guidance, EPA emphasizes that environmental justice and civil rights considerations must be a central part of permitting for a wide range of construction activities across many industries in the U.S. In particular, owners and contractors that develop energy production facilities, oil and gas pipeline and processing facilities, refineries, chemical plants, manufacturing facilities, logistical distribution warehouses, and agricultural facilities in or near environmental justice communities should keep the following in mind.

• Conduct risk assessment early in the planning process

Project proponents must undertake environmental justice and civil rights risk assessments early in the planning process to mitigate the risk of permit denial or cost-prohibitive modifications by the permitting agency after the proponent has spent significant time and money on the project. As noted above, a permit application might pass traditional environmental review but still face denial under civil rights laws and environmental justice policy.

Relatedly, project proponents should expect NGOs, state attorneys general, and local officials to aggressively use Title VI in challenges to permits and in enforcement actions on projects in or near environmental justice communities. Conducting environmental justice and civil rights assessments will help project proponents identify and mitigate their risks for these types of enforcement actions and lawsuits.

• Engage with the community early in the planning process

Environmental justice and civil rights laws require early community engagement, and, practically speaking, effective community engagement by the project proponent may help limit community pressure on the permitting agency to deny or modify the permit and reduce the threat of citizen suits challenging the permit later on.

• Place due emphasis on permitting risk before commencing preliminary engineering or procurement activities

Given the not-theoretical risks associated with the denial of environmental permits and/or a possibly prolonged review process given the need for both environmental and civil rights reviews, project proponents should place due emphasis on permitting risk before expending substantial capital on a particular site or project. A project proponent might, for example, consider delaying the commencement of preliminary engineering to a later time in the project development cycle than otherwise would have been the case given the increased risk. If project proponents must proceed with expensive engineering or procurement contracts before obtaining permits subject to environmental justice reviews, mitigation measures should be taken to minimize or lessen up-front expenses and exposure to counterparties. Project proponents should also consider means of sharing the risk of permitting delays and/or possible denials with their counterparties, including joint venture partners.

CONCLUSION

Project proponents would do well to seek legal assistance in identifying and assessing environmental justice and civil rights risks in their project planning and business decisions, particularly where projects may be located close to or within environmental justice communities.