Louisiana Court Denies Air Permits for a Greenfield Plastics Complex on Clean Air Act and Environmental Justice Grounds: What are the implications?

On September 12, 2022, a Louisiana court rejected 14 air permits for a new plastics manufacturing complex to be developed by Formosa Plastics Group (Formosa). The nearly $10 billion complex, known as the “Sunshine Project,” would include 10 chemical manufacturing plants and supporting facilities spanning over 2000 acres. In the decision by Judge Trudy White in the case of Rise St. James, et al. v. Louisiana DEQ, the judge sided with the petitioners and rejected the permits on three grounds:

• That Louisiana Department of Environmental Quality (LDEQ) violated the mandate of the Clean Air Act (CAA) by allowing the use of Significant Impact Levels (SILs) to demonstrate that the facility would not cause or contribute to a violation of the National Ambient Air Quality Standards (NAAQS) or Prevention of Significant Deterioration (PSD) class II increments.
• That LDEQ did not consider the cumulative impacts of the emissions of air toxics from not only the new complex, but also the emissions from other nearby facilities.
• The court also rejected as false LEDQ’s conclusion in its Environmental Justice (EJ) analysis that the nearby community, which is predominantly minority, would not be disproportionately affected by air pollution.

These three issues all have potential ramifications that are much more far reaching than just this individual case. This article takes a look at each and discusses how they might impact permitting of facilities in the future.

Clean Air Act “Cause or Contribute” Mandate

Possibly the most important of the three factors in the decision is the ruling that LDEQ wrongly determined that it could use the SILs to determine whether the proposed facility would cause or contribute to an exceedance of the relevant air standards. The key issue, one which has been the subject of debate for many years, is the definition of “contribute.” The SILs, de minimis thresholds set well below the air quality standards, have long been used to show that a project will not significantly contribute to air quality issues or that the project is not culpable for causing or contributing to an air quality standard exceedance; if the impacts from a project are below the SILs, it is concluded that the project will not have a significant impact on air quality, or cause or contribute to a NAAQS or PSD increment violation. SILs are also often used to determine which subset of a large receptor grid in a modeling exercise where there is any potential for a facility to cause or contribute to a standards violation at all. This SIL analysis assists in simplifying the process of determining which nearby facilities should be included in any cumulative modeling exercise, an important step because many states have poor databases of off-site sources that erroneously estimate their true potential impacts. Because of these issues and problems with off-site source characteristics, it is not uncommon for these off-site sources to have model-predicted impacts that exceed the standards when during normal refined modeling they would not. Demonstrating that a project’s contribution to such an exceedance is below the applicable SIL has long been the accepted method used to show the project does not significantly contribute to such an exceedance.

The basis for the court’s denial on these grounds comes from a decision by the U.S. Court of Appeals for the District of Columbia rejecting a U.S. EPA SIL for PM_2.5 in 2013. This ruling at the time vacated the PM_2.5 SILs but did not reject the concept of the use of SILs as a whole, leading to the eventual creation of new U.S. EPA SIL guidance for PM_2.5 (and ozone) in 2018. LDEQ used the 2018 guidance that allows the use of SILs. That 2018 guidance was also challenged in another lawsuit, but the D. C. Circuit held that the guidance was not a final action and therefore was not subject to litigation, thus leaving it up to the courts to assess whether the use of SILs was appropriate in permitting actions on a case-by-case basis. This decision is the basis for this denial.

Cumulative Impacts of Air Toxics

The second grounds for denial were that the permits allowed “excess air toxics,” specifically citing benzene and ethylene oxide (EtO). Additionally, the court noted that LDEQ did not conduct a cumulative impact analysis of not only the toxics emissions of the proposed facility but also the existing nearby facilities around the project site before concluding that they “together with those of nearby sources . . . would not allow for air quality impacts that could adversely affect human health or the environment.” The court again sided with the petitioners and found that statement to be false. The LDEQ Toxic Air Pollutants (TAPs) program, while it does require air dispersion modeling for non-criteria pollutants, does not require that nearby facilities also be included in the modeling. This is consistent with state toxics programs all across the United States: those that do require modeling rarely, if ever, require offsite sources to be included.

Environmental Justice

Finally, the court found that LDEQ’s conclusion in its EJ analysis that the nearby community is not disproportionately affected by air pollution was “…arbitrary and capricious.” The subject of EJ is on the one hand the highest profile (along with climate change) element of the Biden administration’s environmental agenda, but on the other is the least concrete in the sense that most states have no specific requirements around EJ in their permitting rules other than perhaps a policy statement that says that EJ must be considered in issuing permits near overburdened communities. In this specific case, while LDEQ concluded that “residents of the community closest to the (Formosa) complex do not bear a disproportionate share of the negative environmental consequences resulting from industrial operations, the EJSCREEN analysis of the area performed by both LDEQ and the petitioners suggests it is, even though U.S. EPA has regularly stated that the tool is a screening tool and should not be used to determine whether a community is or isn’t overburdened. The petitioners’ and ALL4’s EJSCREEN review of the area show that numerous EJ Indexes are over the 80^th percentile, the line that many agencies including U.S. EPA often use for such determinations (again, even though the documentation says you shouldn’t). LDEQ did not dispute the demographics shown by EJSCREEN in their decision but argued that the information in the tool does not reflect substantial reductions in emissions that have occurred since the information was published in 2014. The court reacted to this assertion by noting that the LDEQ ignored the situation in the immediate community by quantifying emission reductions in an area of 27 miles or 100 miles, depending on the pollutant, from the community in its assessment. Regardless of LDEQ’s decision, the EJ evaluation is further complicated because there is no specific regulation that says what would need to be done to mitigate or prevent additional levels of burden on an overburdened community in Louisiana’s, or federal, law.

What’s next?

On September 27, 2022, LDEQ and Formosa announced that they would appeal the court’s ruling, the chief argument being that the agency and Formosa followed all required agency and U.S. EPA procedures in issuing the permits. Regardless of how the appeal plays out, it appears that this project, which has been the subject of years of litigation already, will not be getting out of the courts any time soon.

What does the decision mean to permit applicants?

Each of the grounds for denial might have long term impacts on permitting actions across the United States. The potentially most impactful, in my opinion, is the denial of the use of the SILs in the cause and contribute analysis. Not only has this approach been standard practice for decades, but the denial of the use of SILs based on the grounds of the 2013 court decision leaves open the door for the potential denial of the use of SILs at all. Taken to an extreme, this could mean that a project might be required to execute cumulative modeling for every criteria pollutant regardless of how limited the increase in emissions from a project was, leading to a large increase in the permitting effort and agency review requirements with little or no real benefit. On the other hand, the 2013 lawsuit found that the validity of use of the SILs was left to the court’s discretion on a case-by-case basis, which could mean that this single decision is not likely to lead to an across-the-board end to the use of SILs. It does, however, give those opposing specific permit applications another legal decision to cite in their complaints, and ALL4 already has first-hand experience with a non-government organization citing this case in a permit appeal.

The denial on the grounds that LDEQ did not require cumulative modeling of toxics emissions is less onerous immediately: unless a state decided to revise its toxics program guidance to make such cumulative assessments a requirement, it seems unlikely that a court would be able to deny a permit solely on these grounds due to a lack of active regulations or laws that require it. However, we continue to await U.S. EPA’s guidance on cumulative impact assessments around permit actions located near overburdened communities. Stay tuned for more on this guidance as it is likely that it may include not only modeling requirements for toxics that include multiple facilities, but also a cumulative assessment of the impacts of several toxics to determine their combined impacts.

Finally, the denial on the grounds that the project would adversely affect an overburdened community is a continuation of activity we’re seeing in several permitting cases, where additional requirements or delays, or outright denials are occurring on EJ grounds when there are not specific requirements in the reviewing agency’s permitting rules. These cases have begun to trigger U.S. EPA review of state’s permitting rules under the 1964 Civil Rights Act’s Title VI provisions that state that no government agency may undertake an action that would disproportionately impact an overburdened community; the current investigation of Michigan’s permitting rules being a prime example. Additionally, back in August the U. S. EPA’s External Civil Right Compliance Office (ECRCO) published its Interim Environmental Justice and Civil Rights in Permitting FAQ, which provides details on how permitters should assess cumulative impacts and provides options for assessing the EJ impact of a project and potentially denying a permit under Civil Rights law even if it meets all other environmental requirements. The Formosa case is an example of how this concept might be used by the courts.

If you have concerns about the potential implications of this court decision and you’d like to discuss them, feel free to contact your ALL4 Project Manager or Rich Hamel. We’ll continue to monitor this case and others like it for their potential impact on permitting in the future. We can also help you evaluate permitting risks from EJ concerns to regulatory issues and assist in developing a strategy to make the permitting of your project as efficient as possible.