Factoring Environmental Justice Into Investment Plans to Control Costs, Time and Potential Liability

“Environmental Justice” is an effort intended to address the disproportionate adverse impacts of pollution on disadvantaged communities, primarily comprised of minorities and lower-income people. The movement is gaining media attention, but companies may not fully understand its impact on their ability to operate existing or develop new businesses. Governments, environmental advocacy groups, and individual citizens now have additional grounds to challenge businesses based on Environmental Justice claims. Familiarity with Environmental Justice concerns and requirements will help businesses control costs, stay on schedule, and limit future litigation.

Environmental Justice has been a part of the United States’ official policy since the 1990s, but the Biden Administration has now made Environmental Justice a priority in decision-making for all federal agencies, including the Environmental Protection Agency (EPA), the Department of Housing and Urban Development (HUD), the Department of Energy (DOE), and the Department of Justice (DOJ). The emphasis on Environmental Justice adds further considerations to companies’ decision-making regarding site selection and business operations. The businesses located in urban areas where there tend to be greater concentrations of Environmental Justice communities located near industrial facilities will likely be more affected than those in rural areas. However, Environmental Justice will be an important factor wherever communities predominately made up of people of color, indigenous people, or lower-income families reside nearby.

Whether requesting new permits or renewing existing permits for operations or construction, companies should plan for potentially longer approval times, higher consultant and equipment costs, and even rejection. Businesses locating, or already located, near Environmental Justice communities will face increased scrutiny on potential air emissions, discharges to water, waste generation, water usage, noise, and construction issues. Additional testing and analysis will be necessary to evaluate future impacts. The government may require public notice and public meetings before rendering any decision. As a condition to approval, the government may require such businesses to more rigorously address any adverse effects their operations may have on those communities, including potential health impacts and impacts to their surrounding environment. For example, facilities may be required to install additional pollution controls, implement health monitoring programs in the community, or share more environmental information with the local community, which would all significantly increase the cost to operate.

Although many state governments, such as the Georgia Department of Natural Resources Environmental Protection Division (EPD), have the authority to issue or deny environmental permits and make enforcement decisions, the EPA is going to increasingly engage in “over filing,” or taking authority back from the states to pursue actions against private industry. Ongoing operations will likely see an increase in environmental compliance inspections, monitoring, and stricter enforcement actions by regulating agencies. EPA recently announced its intent to expedite required cleanups of contaminated sites. Penalty amounts are likely to increase, and businesses may be required to complete Supplemental Environmental Projects (SEPs) or community service projects that benefit nearby communities. Some companies may even be required to pay restitution or mitigation costs to communities that have been harmed by past emissions or other violations. A big change from the previous administration will be an increase in criminal prosecutions that could result in jail time for individual offenders in Environmental Justice areas.

Some states have passed their own Environmental Justice laws, but others, like Georgia, defer to federal authority. Regardless of a state’s legal position, we expect to see a significant increase in citizen suits filed by nonprofit groups. For example, environmental groups have already raised legal challenges to state-proposed permits in Georgia, Alabama, and Louisiana. Some members of Congress have introduced legislation that would allow Environmental Justice legal challenges to activities involving the federal government, such as tax credits, permit approvals, or emission standards. An Environmental Justice claim is nuanced but is based on whether disproportionate impacts exist; this is an easier threshold than having to prove intent.

There are steps a company can take to protect its investment:

  1. When choosing a site for a new facility, identify whether an Environmental Justice community is located in the vicinity. Talk to a local real estate or business broker, review the EPA’s EJSCREEN tool, and consult with the state environmental department.
  2. Build in extra time and dollars to address Environmental Justice issues to cover negotiations with the government, additional testing, pollution controls, emissions monitoring, or discussions with community stakeholders.
  3. Consider entering into dialog with the surrounding community. Even if an investment presents potential adverse impacts, growing a new business does benefit communities via increased investment and employment opportunities. Let community members have a voice and listen to their concerns; they may conclude that the benefits of a proposed investment outweigh the potential costs and become an ally.
  4. If already operating near an Environmental Justice community, be prepared in advance for an inspection and a notice of potential violations. Make sure to know the requirements, conduct internal audits, and document all compliance.
  5. Get good advice from a lawyer and/or environmental consultant on the rights and obligations under environmental laws. If seeking a permit to build a new facility or expand an operation, or if hit with a notice of violation, find out the legal parameters and the actual environmental facts.

See how your site measures up to environmental justice issues here: https://ejscreen.epa.gov/mapper/.