INSIGHT: Environmental justice throws wrench in permitting chemical plants

COLORADO SPRINGS, Colorado (ICIS)–A recent executive order from the US president has made environmental justice a new factor that could stymie new chemical plants and other large-scale projects in the US.

• Environmental justice attempts to account for poor and marginalised people who have suffered from mining, pollution, manufacturing and other activities that threaten their health
• US President Joe Biden’s executive order sets environmental justice as a goal, but it does not specify how to achieve that goal, which exposes future chemical projects to challenges and uncertainty
• The challenges posed by environmental justice highlight the need for permit reform, which could remove barriers to chemical projects as well as the infrastructure that companies need to provide their operations with energy and feedstock

ENVIRONMENTAL JUSTICE HAS ALREADY STYMIED A MAJOR CHEMICAL PROJECT
Environmental justice has already derailed a major petrochemical project.

FG LA LLC, a subsidiary of Formosa Plastics Group, had planned to build the $9.4bn Sunshine Project, a two-phased chemical complex that would produce polyethylene (PE), ethylene glycol and polypropylene (PP).

In 2022, a state court in Louisiana voided project’s air permit because the company did not give enough consideration to environmental justice. It was likely the first time that a court cited environmental justice in voiding the air permit of a chemical project.

BIDEN’S ENVIRONMENTAL JUSTICE ORDER
In April 2023, US President Joe Biden signed an executive order proclaiming that environmental justice is a duty of all agencies under the presidency and it should be incorporated into their missions.

The order created the White House Environmental Justice Interagency Council and the White House Office of Environmental Justice. The office will coordinate the implementation of environmental-justice policies across the federal government.

Agencies will need to develop, review and update environmental-review policies and submit them to the White House Council on Environmental Quality (CEQ).

The presidency will keep tabs of the agencies’ performance through a new Environmental Justice Scorecard that it will make public.

For chemical companies the challenge is that federal agencies participate in the process of issuing permits for new plants. Under the order, environmental justice will start factoring into the permitting process.

The president’s environmental-justice executive order will add a new batch of requirements that federal agencies will consider before approving permits.

The problem is that the executive order does not specify how federal agencies will meet the president’s environmental-justice ambitions.

Those missing details will trickle down to chemical companies as they apply for permits to build their plants. They will not know what steps they need to take to address environmental justice.

Critically, that vagueness could open up projects to court challenges. In those instances, it would be up to the court to decide whether the permitting process successfully addressed environmental justice. The permits could be delayed or voided. At the least, the executive order injects additional uncertainty in developing new projects.

IMPACT OF THE ORDER
The executive order also will indirectly affect chemical companies because the projects of their suppliers and customers will face similar challenges.

Those projects could include pipelines that ship natural gas and feedstock to chemical plants.

Increasingly, chemical companies are relying on renewable power to reduce their carbon emissions. Environmental justice could make it more difficult to build solar panels and wind turbines as well as the transmission lines needed to send renewable power to chemical plants.

Green hydrogen requires electrolysers and pipelines. Carbon capture and storage requires pipelines and wells. All of these require permits.

Such projects are also a priority of the Biden administration, and environmental justice could get in the way of meeting the president’s sustainability ambitions.

These kinds of conflicts are supposed to be flagged by the Office of Information and Regulatory Affairs (OIRA), part of the Office of Management and Budget (OMB).

They need to be resolved before large-scale projects get mired in red tape and legal challenges brought on by concerns about environmental justice.

ENVIRONMENTAL JUSTICE AND PERMIT REFORM
Environmental justice and permitting are two sides of the same coin.

Environmental justice addresses a lack of power in the permitting process. Permit reform addresses the abuse of power.

The danger of US policy makers is that they are addressing environmental justice without tackling permit reform. If that happens, companies will have a very hard time building anything in the country.

The US has taken some initial steps to address permit reform in the debt-ceiling agreement, which Biden recently signed into law.

Importantly, those steps amended the National Environmental Policy Act (NEPA). The act governs the permitting process for major projects such as chemical plants.

One provision in the debt-ceiling agreement effectively draws a boundary on NEPA, preventing further sprawl of the act.

Trade groups have described the permit reform provisions in the debt-ceiling agreement as a first step. They said more needs to be done.

For example, the debt-ceiling agreement does not set deadline for making judicial-review requests. Nor does it set statute of limitations for court challenges.

Republicans in the House of Representatives included these and other permit-reform proposals in House Bill 1, also known as the Lower Energy Costs Act.

The bill has little chance of passing the Democrat-controlled Senate, but it does show that Republicans support some of the provisions that would make it easier to issue permits for large-scale projects.

Individual provisions in House Bill 1 could attract enough support from Democratic legislators to pass the Senate.

They could be incorporated into must-pass legislation such as the Farm Bill.

Insight article by Al Greenwood