September 21, 2020
Bruce S. Katcher and Jill Hyman Kaplan
MGKF Special Alert
On September 18, 2020 Governor Murphy signed legislation that enacts an expansive environmental justice process for environmental permit applicants for a specified list of facilities located in what the law defines as overburdened communities. With this law, New Jersey has embarked on an uncertain path toward a declared legislative goal that no community should bear “a disproportionate share of the adverse environmental and public health consequences that accompany the State’s economic growth.” In some cases this process may result in permit denials and in others the imposition of permit conditions to alleviate adverse impacts. The law does not go into effect until the New Jersey Department of Environmental Protection (NJDEP) adopts implementing regulations.
The underlying intent behind the law is supported by many, many businesses in New Jersey and addressing these issues was one of Governor Murphy’s key legislative goals. Unfortunately, it is uncertain whether this legislation will achieve those goals without adversely affecting the state’s economy and job prospects in the communities it intends to protect. This article will address how the law works and identifies some of the potential consequences and pitfalls.
Coverage of the Law
The law applies to a “permit” for any new “facility” or expansion of or permit renewal for a facility located in an “overburdened community.” Each of these key terms are addressed below.
“Overburdened community” is defined as any census block group, as determined in accordance with the most recent United States Census, in which:
- at least 35 percent of the households qualify as low-income households;
- at least 40 percent of the residents identify as minority or as members of a state recognized tribal community; or
- at least 40 percent of the households have limited English proficiency.
NJDEP is required to publish and update a list of these communities on its website. According to data provided by the NJDEP while the law was under legislative consideration, the population of the affected census block groups exceeds 4.5 million people which is approximately 50 percent of the projected 2020 population of the state. Consequently, the demographic scope of the law could be very broad. Additionally, notwithstanding that the intent of the legislation is to address adverse environmental and public health impacts, the overburdened community definition does not rely on any environmental or health impacts as defining factors.
“Facility” is defined to include any of the following:
- major source of air pollution, as defined under federal and state air pollution laws;
- resource recovery facility or incinerator;
- sludge processing facility, combustor, or incinerator;
- sewage treatment plant with a capacity of more than 50 million gallons per day;
- transfer station or other solid waste facility, or recycling facility intending to receive at least 100 tons of recyclable material per day;
- scrap metal facility;
- landfill, including, but not limited to, a landfill that accepts ash, construction or demolition debris, or solid waste; or
- medical waste incinerator
Excluded are facilities that accept medical waste for disposal that are attendant to hospitals and universities that process their own medical waste.
While the law is viewed by its sponsors as applying to a narrow range of facilities, the inclusion of major sources of air pollution belies this notion as many existing manufacturing facilities and utilities (and potentially a significant number of commercial and institutional facilities) fall under this umbrella. As of August, NJDEP’s Dataminer identified 262 facilities holding Title V air permits. While not all of these facilities are in overburdened communities, many are (including several hospitals and universities not exempted under the medical waste exclusion) and employ many who live in these communities. Existing Title V facilities must obtain a permit renewal every five years under state and federal law. New facilities that may need a Title V permit and expansions of existing facilities that trigger Title V permits may also be subject to environmental justice reviews.
“Permit” includes any “individual permit, registration or license” under a broad range of state environmental laws, including the major state laws regulating solid and medical waste and recycling, air and water pollution and water supply, floodplains and wetlands, and the coastal zone and the Highlands.
Excluded are approvals required to conduct site remediation and for major source minor modifications that do not increase emissions. Presumably, general permits and permits by rule are also excluded, although this should be clarified when NJDEP adopts its regulations.
What is Required of Applicants
Before any of the affected permit applications may be considered “complete for review” by the NJDEP, the law requires the applicant to do the following:
- prepare an environmental justice impact statement (EJIS) to “assesses the potential environmental and public health stressors associated with the proposed new or expanded facility, or with the existing major source, as applicable.” The EJIS must also assess the “environmental or public health stressors already borne by the overburdened community as a result of existing conditions located in or affecting the overburdened community.”
- transmit the EJIS to the NJDEP, the governing body and the clerk of the overburdened municipality in which the facility is located at least 60 days before an environmental justice hearing is held;
- give notice of, organize and hold the environmental justice public hearing in the overburdened municipality. The NJDEP may require the hearing to be consolidated with any other public hearing held on the application and may consider a request by an applicant to consolidate hearings which, if granted, will not preclude NJDEP from declaring the application complete for review.
“Environmental and pubic health stressors” are broadly defined as “sources of pollution,” including a wide array of sources impacting air, land and water, and also as “conditions that may cause potential public health problems,” including a variety of public health conditions. Thus, the scope of the EJIS is extremely broad and, given its focus on both the subject facility and existing conditions already in or affecting the community, could require a huge, very costly effort by the applicant to collect the requisite information. The law does not specify where or how to obtain information regarding existing stressors. Further, some of this information may be unavailable or in dispute and may give rise to conflict and possibly litigation between the applicant and other potential sources of pollution in the area.
If a facility requires multiple permits, it only has to go through the process once, unless NJDEP determines that more than one hearing is necessary because of the complexity of the applications.
What Will NJDEP Do With the EJIS?
NJDEP is required to evaluate the testimony presented at the hearing (and written comments received) and decide whether to issue the permit or impose any conditions to avoid or reduce the stressors affecting the community. The only guidance on how to do this is the following:
- For new facilities, NJDEP “shall” deny a permit if it finds that issuance of the permit would “together with other stressors cause or contribute to adverse cumulative environmental or public health impacts” in the community “that are higher than those borne by other communities within the State, county, or other geographic unit of analysis as determined by the Department.” There is an exception that allows NJDEP to grant a permit, subject to conditions “on the construction and operation of the facility to protect the public health,” if the agency determines that the facility will “serve a compelling public interest in the community”.
- Existing facilities looking for expansions or permit renewals are treated somewhat more leniently. For these facilities, upon making the same finding as provided for new facilities concerning the relative impact of stressors, NJDEP “may” apply permit conditions “on the construction and operation of the facility to protect the public health”. The agency is not given the authority to deny a permit because of its stressor finding.
Notably, the legislation provides no scientific factors or objective standards on which NJDEP should make its decisions regarding permit denials or conditions, or on which businesses can plan or make decisions.
Preservation of Title V Permit Shield and Timing of Permit Issuance
Given the uncertainties as to how long the EJIS process may take to complete, industry sought to include a provision in the law that would preserve the so-called Title V “application permit shield” (see N.J.A.C. 7:27-22.7) that authorizes a facility to continue to operate as long as it submits an “administratively complete” Title V permit renewal application at least 12 months before its permit is scheduled to expire, even if the renewal is not issued until after the expiration date. The provision that was included to address this issue indicates that the law is not to be construed to limit a permit renewal applicant’s right to continue operations during the renewal process “to the extent such right is conveyed by applicable law, rule or regulation including the application shield” afforded air permits.
Whether this provision addresses the concern is unclear. The shield does not go into affect until an application is administratively complete and the law says elsewhere that an application is not complete for review until after the EJIS process is complete. Consequently, all renewal applicants are cautioned that they may have to begin the renewal process well in advance of their permit expiration deadlines to complete the EJIS process at least 12 months before the permit expiration and preserve the permit shield.
Because NJDEP must hold a public hearing for any Title V permit renewal that garners a significant degree of public interest, there may be an opportunity to combine that hearing with the environmental justice hearing, thereby saving some time and expense. However, given the need to ensure an administratively complete renewal application, applicants will need to secure such a determination from NJDEP well in advance of the renewal application deadline.
Other timing requirements that should be considered include that all permit applicants must give 60 days advance notice before the public hearing, and DEP cannot issue a permit until at least 45 days after the public hearing. Therefore, even applicants that are not concerned with the “permit shield” need to plan well in advance to get their necessary permits or renewals.
Significant and Unintended Consequences
The law gives rise to a variety of additional concerns. For example, neither “new facility” nor “expansion” is defined in the legislation. Depending on the regulations NJDEP promulgates or its interpretation of these terms, this law could affect long-existing facilities that require a permit for the first time because of a change in NJDEP interpretation or enforcement policy, revised regulations expanding coverage, or the handling of new chemicals for the first time. This could jeopardize millions of dollars of investment made in justifiable reliance on prior law.
In addition, the arbitrary way these requirements are triggered for businesses – the serendipity of a business having to obtain or renew permits and not the level of environmental or public health impact – could result in less significant or fully compliant sources of emissions or discharges experiencing more constraints than more significant or noncompliant sources. Thus, existing facilities needing a permit or renewal that are in full compliance with environmental and public health laws are subject to the EJIS process regardless of their compliance, and are potentially subject to permit conditions that go beyond compliance with existing environmental laws. Yet, other facilities that are not in compliance and are adversely affecting public health may not be subject to the law at all (or may not have a triggering event for years). This uneven treatment could put many existing complying facilities out of business if the expense of such additional compliance is excessive or technologically infeasible and leave noncompliers wholly unaffected.
Finally, the statute does not address what is needed to support a finding of causing or contributing to adverse cumulative environmental or public health impacts that are higher than those borne by other communities, nor a finding of compelling public interest in the community. Those issues are left completely to NJDEP to define by regulation or guidance with no prescribed guidelines.
What is not uncertain is that the permit applicant will be required to bear the NJDEP’s costs to implement the law, including the cost of providing technical assistance to the affected communities, which could be very significant.
The environmental justice legislation has lofty goals that are supported by both New Jersey citizens and businesses. However, the legislation’s failure to specify identifiable standards or the source and scope of existing environmental or public health stressor data to be considered makes this legislation unwieldy and potentially very expensive for new or existing businesses. Hopefully, some of the uncertainties and arbitrary aspects of this precedential legislation will be addressed in NJDEP’s upcoming regulations.