In its first six months, the Biden Administration has taken tangible steps to advance environmental justice (EJ) across the federal government. The US Environmental Protection Agency (EPA) and Department of Justice (DOJ) have announced strategies to strengthen environmental enforcement, environmental agencies have begun to incorporate EJ concerns into project permitting and environmental reviews, and the White House has provided key guidance to help agencies direct funding to advance EJ. The federal EJ framework established by these initial actions is unprecedented in scope and potential impact.

President Biden’s Executive Order on Tackling the Climate Crisis at Home and Abroad, signed his first week in office, outlined an ambitious strategy to respond to climate change with an emphasis on EJ. WilmerHale examined the Administration’s EJ plans in a prior client alert and predicted that agencies would seek to advance EJ through environmental enforcement, permitting and environmental review, regulatory updates, and federal investments. The Administration’s burst of early action has been followed by more measured agency plans. Agency announcements provide the regulated community with advance notice of future environmental enforcement priorities. Regulated entities should consider incorporating several best practices to remain ahead of the evolving EJ regulatory and enforcement landscape.

I. Prepare for Increased Federal Enforcement Involving Disadvantaged Communities

Among President Biden’s key EJ priorities, agencies have made the most progress revising enforcement policies. Several new enforcement policies at EPA and DOJ articulate how these agencies will advance EJ by prioritizing enforcement of violations that affect disadvantaged communities. EPA’s announcements highlight changes to inspection protocols, remedies and community outreach. As anticipated, EPA will use mapping tools to target areas for enforcement and is reviving the use of Supplemental Environmental Projects (SEPs) as a remedial tool to provide direct benefits to impacted communities. SEPs are environmentally beneficial projects that EPA can include in settlement agreements to provide direct environmental benefits to the affected local community. The policies integrate EJ into a variety of specific enforcement programs, including criminal and cleanup enforcement actions.

In April, EPA Administrator Michael Regan released a letter to EPA employees naming EJ initiatives one of his top priorities. Regan directed EPA offices to (1) strengthen enforcement actions for violations of key environmental and civil rights statutes in overburdened communities; (2) improve early engagement with pollution-burdened communities; and (3) prioritize underserved communities in requests for grant applications and in making grant award decisions. Following Regan’s initial announcement, EPA Acting Assistant Administrator Larry Starfield issued a series of memos clarifying how EPA will strengthen EJ enforcement:

• An April 26 memo directed enforcement staff to use the “full array of policy and legal tools” to ensure that environmental laws are benefiting everyone, and withdrew a Trump-era memo that restricted the scope of injunctive relief. Starfield’s memo encourages EPA’s case teams to consider tools like SEPs when fashioning provisions to benefit communities harmed by past noncompliance.
• On April 30, Starfield issued another memo setting out concrete steps to advance Regan’s EJ priorities. These steps include (1) increased facility inspections for facilities in overburdened communities; (2) resolving noncompliance through remedies that will provide tangible benefits to communities (including SEPs); and (3) increased community engagement and awareness in burdened communities.
• A June 21 memo directs the criminal enforcement program to strengthen detection of environmental crimes in overburdened communities through the use of mapping tools and improved communication between civil and criminal staff about facility inspections to prevent potential enforcement actions from slipping through the cracks. The memo also announces a partnership between EPA and DOJ to improve attention and support to the victims of environmental crimes. The Environmental Crime Victim Assistance Program seeks to improve outreach to potential environmental crime victims in burdened communities.
• Most recently, on July 1, Starfield provided guidance for advancing EJ through cleanup enforcement actions under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and the Resource Conservation and Recovery Act (RCRA). The memo notes that EPA will use mapping tools to identify overburdened communities to target for CERCLA and RCRA actions and identifies steps to help the agency ensure that cleanups in disadvantaged communities are undertaken early, completed promptly, and build trust in the impacted communities.

As pandemic restrictions continue to lift and agency personnel return to the field, we expect increased inspections and enforcement focused on violations in overburdened and disadvantaged communities. Funding boosts are also expected to increase EPA’s enforcement capacity. The House Appropriations Committee passed a fiscal 2022 spending bill that would increase EPA’s funding to its highest level ever—$11.3 billion—with investments in EPA’s EJ program increasing from $13 million to $248 million. EPA is expected to distribute these funds to a variety of programs ranging from air monitoring to reducing childhood lead exposure. With more resources available, we expect the agency to perform more inspections and pursue more enforcement actions for violations in EJ communities.

EPA is not the only federal regulator increasing its focus on EJ in the enforcement context. Perhaps as a sign of what is to come, the acting US Attorney for the Eastern District of New York created an Environmental Justice Team. The team’s priorities include both protecting children from lead exposure and preserving wetlands.

Regulated entities should prepare for heightened enforcement in disadvantaged communities by proactively considering the environmental effects of their business operations on neighboring communities. Mapping tools such as EPA’s EJSCREEN can help companies identify and better understand potential EJ impacts of their operations, mitigate impacts and evaluate enforcement risks.

II. Engage With Local Communities Outside of Federal Permitting Processes and Environmental Reviews

EJ concerns are increasingly important to both regulators and local communities. Community engagement and EJ are likely to become a central focus in the permitting and environmental review process. As forecast in our previous client alert, agencies can leverage these processes to promote environmental equity. Some recent agency actions illustrate how EJ may factor into these processes.

For instance, EPA recently ordered the Limetree Bay Refinery in St. Croix, US Virgin Islands, to close after a series of incidents released pollution into a community that is disproportionately affected by environmental burdens. Beginning earlier this year, EPA issued several notices of violations under the Clean Air Act. Agency officials noted that the decision to close the refinery was motivated by significant EJ concerns and demonstrates EPA’s commitment to EJ and protecting “clean air for those living in vulnerable and overburdened communities.”

In Chicago, EPA Administrator Regan requested that the City hold off on permitting a car-shredding facility in the southeast area of the city. Regan recommended that the state “conduct a robust analysis to assess the full environmental justice implications of siting this facility in a community already burdened by pollution, and then use that analysis to inform any permitting decision.” In making these recommendations, Regan emphasized the agency’s commitment to advancing EJ and incorporating equity considerations in analysis, permitting and enforcement activities.

Other recent project developments highlight the need to engage the local community during project planning and the environmental permitting process. For instance, community members in Wallace, Louisiana, have announced opposition to a proposed grain mill, arguing that it would add unacceptable environmental burdens to a community that is already disproportionately impacted by pollution. The project will require a permit from the Army Corps of Engineers. Public opposition to the project and alleged EJ impacts are likely to factor heavily into the permitting and environmental review process. Failure to anticipate and avoid EJ concerns contributed to the cancellation of the Byhalia Pipeline—a proposed crude oil pipeline in Memphis, Tennessee. Although the developers cited pandemic-induced demand changes as the cause of cancellation, the project faced strong opposition from EJ advocates who argued the project would endanger the water supply in disadvantaged communities along the project route.

Proactive community engagement and careful planning to identify and avoid EJ concerns in advance of agency involvement can help companies streamline agency reviews.

III. Anticipate EJ Measures in a Wide Variety of Agency Actions

Agencies are proposing programmatic changes to incorporate EJ into agency practices across a variety of regulatory programs. For example, the Department of Interior’s Bureau of Ocean Energy Management is considering including lease stipulations in offshore wind leases in the waters off the coast of New York to “direct benefits to underserved communities.” The Bureau is seeking comments on stipulations that would incentivize investments in workforce training and development and encourage contracting with minority- and woman-owned businesses. And the Army Corps of Engineers is considering changes to its “benefit-cost ratio” that could make it easier for the agency to fund projects in underserved and disadvantaged communities.

These early examples demonstrate how EJ considerations may expand into the farthest and most diverse agency programs under President Biden’s “whole of government” EJ agenda. Companies should follow suit and take a holistic view of potential opportunities to provide benefits in disadvantaged communities.

IV. Apply Principles From White House Justice40 Guidance to Project Design and Assessments

While EPA and DOJ have taken tangible steps to strengthen environmental enforcement to advance EJ and agencies are factoring EJ into permitting decisions and environmental reviews, progress at the White House has been slower. The White House recently released overdue recommendations for implementing the Justice40 Initiative—which seeks to ensure that 40 percent of the benefits from certain federal investments flow to disadvantaged communities—on July 20. The recommendations will directly affect federal investment decisions and will likely guide other agency EJ efforts including enforcement, permitting and environmental review.

The Interim Implementation Guidance—jointly issued by Acting Director of the Office of Management and Budget Shalanda Young, Chair of the Council on Environmental Quality Brenda Mallory and National Climate Advisor Gina McCarthy—outlines a set of actions required of agencies that manage programs covered by the Justice40 Initiative. While the guidance provides key foundational principles about the types of programs that qualify for inclusion in the initiative, it tasks agencies with filling in important details over the coming months.

The guidance provides an interim definition of “disadvantaged community” to help agencies determine where to direct funds while the Administration develops a new Climate and Economic Justice Screening Tool. The screening tool will include interactive maps with indicators to “assist agencies in defining and identifying disadvantaged communities.” Until the tool is available, the guidance directs agencies to consider several characteristics in identifying disadvantaged communities, including socioeconomic indicators (such as low income and high unemployment), environmental indicators (such as disproportionate impacts from climate change and high cumulative environmental impacts), and other racial and cultural indicators. This definition, and the forthcoming Climate and Economic Justice Screening Tool, will improve the consistency of EJ efforts across the government. Agencies will likely use this tool in guiding permitting and enforcement decisions, too.

Under the guidance, Justice40 “covered programs” create benefits in at least one of seven categories: (1) climate change; (2) clean energy and energy efficiency; (3) clean transportation; (4) affordable and sustainable housing; (5) remediation and reduction of legacy pollution; (6) critical clean water and waste infrastructure; and (7) related training and workforce development. The guidance provides additional examples of the types of benefits that “covered programs” would create. It identifies 21 initial programs across a range of agencies that it believes make covered investments—including the Department of Homeland Security’s Building Resilient Infrastructure and Communities Program, the Department of Energy’s Weatherization Assistance Program and EPA’s Reducing Lead in Drinking Water Program. Agencies with covered programs must submit an assessment of covered programs and a description of benefits by mid-September.

While these threshold definitions provide helpful detail about the scope of the Justice40 Initiative, benefit accounting will be critical to successful implementation. The guidance directs agencies with covered programs to develop methodologies for calculating overall program benefits and benefits that accrue in disadvantaged communities to ensure that 40 percent of the benefits of covered investments are directed to disadvantaged communities. This calculation will vary by program, and agencies must consult with stakeholders (including state, local and Tribal governments) in making these determinations. Agencies with covered programs must provide a methodology for calculating benefits by mid-December.

Overall, these recommendations establish a framework for agencies to begin evaluating their investment programs related to EJ. But many program-specific details will be further defined in the coming months. Companies seeking federal funding from a covered program should engage with agencies as they develop their methodologies for calculating benefits. Additionally, projects designed to provide the types of covered benefits highlighted in the guidance may be eligible for increased federal funding. The guidance provides valuable insight even for companies not seeking federal funding. As agencies continue to incorporate EJ into enforcement, permitting and environmental reviews, the Administration’s interim definition of “disadvantaged communities” will likely inform future regulatory action. And agencies will almost certainly look to the forthcoming Climate and Economic Justice Screening Tool to guide agency actions. Proactively incorporating the principles of this interim guidance into business decisions may help companies adapt to the changing regulatory environment.

V. Takeaways

After President Biden established his ambitious EJ agenda six months ago, government-wide implementation has proceeded at a steady and measured pace.

EPA and DOJ have outlined tangible steps to advance EJ through environmental enforcement, specifically with regard to environmental crimes and cleanup projects. Companies should prepare for increased enforcement of violations affecting disadvantaged communities. Mapping tools like EPA’s EJSCREEN and the anticipated Climate and Economic Justice Screening Tool can help companies identify potential EJ-related concerns.

Agencies and local communities are also demanding increased attention to EJ—and community engagement—in the permitting and environmental review processes. EJ concerns have delayed projects, and EPA has requested additional analysis of cumulative pollution in at least one instance. Although agencies have not developed specific guidance for considering EJ in environmental reviews, proactive engagement with the local community can help avoid pitfalls.

EJ measures are appearing in a variety of agency programs and actions. Even before the White House issued its Justice40 guidance, agencies were taking steps to advance EJ through a broad array of programs pursuant to the Administration’s “whole of government” approach. Agencies will likely continue these actions pursuant to the additional White House guidance. Regulated entities should similarly integrate EJ holistically into planning and business decisions and prepare for heightened attention to EJ in a variety of settings.

Key guidance for implementing the Justice40 Initiative will likely make EJ actions across the government more consistent. Initial guidance regarding the definition of “disadvantaged communities” and the types of programs and benefits that will be covered will guide agencies not only in funding decisions but also in enforcement, permitting and environmental reviews. Regulated entities should engage with agencies as they determine how to calculate program benefits and apply key principles in assessing projects and business operations.

WilmerHale is closely monitoring these developments and is at the forefront of advising businesses in navigating permitting, enforcement and environmental, social and corporate governance (ESG)-related risks in this space.