New York Drafts Policy for Evaluating Permitting Impacts on Disadvantaged Communities

New York's groundbreaking Climate Leadership and Community Protection Act (the Climate Act) is known for being the country's most aggressive climate and clean energy statewide agenda. It calls for a mandated goal of a "zero-emission" electricity sector by 2040, including 70 percent renewable energy generation by 2030 and a reduction of statewide greenhouse gas (GHG) emissions by 85 percent from 1990 levels by 2050. A cornerstone of the Climate Act is the recognition that low-income and diverse communities have historically and unfairly borne the burdens of environmental impacts. To help address environmental injustices, the Climate Act incorporates various mechanisms to promote environmental equity and uplift the voices of marginalized communities, one of which is reforming permitting evaluations and decision-making to consider the disproportionate burdens on disadvantaged communities.

Under Section 7(3) of the Climate Act, state agencies, divisions and other approving bodies must not disproportionately burden disadvantaged communities when issuing permits, licenses and other administrative approvals and decisions. Importantly, Section 7(3) of the Climate Act also requires that state entities prioritize the reduction of GHG emissions and co-pollutants in disadvantaged communities in all approvals and decisions.

Applicability of the DAC Permitting Policy

The New York State Department of Environmental Conservation (DEC) on Sept. 28, 2023, released its Draft Policy for Evaluating and Averting Disproportionate Impacts of Permitting Actions on Disadvantaged Communities (DEP-23-1 or DAC Permitting Policy). The DAC Permitting Policy will guide DEC's approval process for how and when to consider emissions impacts on disadvantaged communities for various permits, licenses and other approvals under the State Uniform Procedures Act (UPA), Article 70 of the Environmental Conservation Law (ECL). Practically speaking, this means that the DAC Permitting Policy will apply to a broad set of permit applications that involve "sources and activities that result in direct or indirect GHG or co-pollutant emissions," including "major permits" for the following activities:

• Major Water Withdrawal: facilities withdrawing and using more than 20 million gallons per day (MGD) of water for cooling purposes
• Air Emissions: stationary sources that produce air emissions such as municipal incinerators, power plants and other facilities
• Liquefied Gas: liquefied natural and petroleum gas production or conversion facilities
• Landfill and Waste Management: landfills and other solid waste recovery facilities
• Hazardous Waste Management: industrial hazardous waste facilities

In addition to "major permits," the draft policy also provides that DEC will consider permitting impacts on disadvantaged communities to any permits administered under the UPA for a broad range of projects, including:

• Energy Projects: projects involving the construction of all energy production, generation, transmission or storage facilities
• GHG or Co-Pollutant Emissions: projects with sources or activities that may result in GHG emissions or co-pollutants, directly or indirectly
• Catch-All Per DEC Discretion: generally, non-UPA "major permit" facility registrations "where DEC determines an analysis is necessary or appropriate"

The draft policy notes that approvals subject to the DAC Permitting Policy include sources and operations "of a continuing nature associated with any new emission sources, permit renewals, or permit modifications that would result in actual increases of GHG and co-pollutants." This includes both stationary and mobile sources of pollution "directly related to and essential to the proposed action."

To be sure, the DAC Permitting Policy will be broadly applied. Virtually all permits, licenses and administrative approvals for facilities that generate air emissions appear to be covered under the DAC Permitting Policy.

Preliminary Screening, "Disproportionate Burden" Report and Project Design

The DAC Permitting Policy instructs that DEC staff will conduct a "preliminary screen" to identify whether the proposed action is a project covered by the DAC Permitting Policy and "likely to affect" a disadvantaged community. The screening methods will involve the use of New York's "Disadvantaged Communities Map," finalized in March 2023, and air dispersion modeling to determine offsite impacts.

The standard for "likely to affect" as suggested by the draft policy is that "the permit involves a facility that is not located in the disadvantaged community but involves offsite GHG or co-pollutant impacts within a disadvantaged community in close proximity to the proposed action." This standard will likely be the subject of significant public comment and criticism due to the fact that virtually any covered activity could result in "off-site GHG impacts" to environmental justice (EJ) communities. One should expect a legal challenge to be lodged by the regulated community if DEC finalizes the policy without substantive revisions to this provision of the DAC Permitting Policy.

If a permit application is not covered by the DAC Permitting Policy – that is, if the permittee is not a covered entity, no disadvantaged community is identified within the affected area and/or the proposed action is unlikely to affect a disadvantaged community – the permitting review process will proceed independent of the DAC Permitting Policy.

If DEC determines that a proposed action is covered by the DAC Permitting Policy, applicants will be required to prepare a "disproportionate burden report" (burden report). The draft policy notes that the burden report must identify and "address" disproportionate burdens on the disadvantaged community. Applicants are encouraged to propose conditions on the project that would reduce emissions, thereby reducing or otherwise addressing any disproportionate burdens on affected communities. DEC may also impose conditions on the project to prioritize reductions in GHGs and co-pollutants in affected disadvantaged communities.

The burden report must include the following, among other requirements:

• identification of GHG and co-pollutant emissions from the project affecting the disadvantaged community
• "relevant" baseline data on existing burdens to the disadvantaged community
• identification of GHG- and co-pollutant-related environmental or public health stressors already borne by the disadvantaged community
• projected contribution of the proposed action to GHG and co-pollutant burdens in the EJ community
• project design considerations to minimize or eliminate disproportionate burdens associated with GHG or co-pollutant emissions
• mitigating factors such as existing and potential benefits of the proposed action to the community (e.g., increased housing, environmental amenities, alleviation of existing pollution burdens, etc.)
• confirmation that public participation has been completed, including any proposed changes to the project resulting from community outreach and participation

The DAC Permitting Policy notes that when a proposed project is determined to potentially impose a disproportionate burden on an EJ community, the burden report "must include project design measures that ensure that the project will not disproportionately burden the disadvantaged community." To that end, DEC will require that project design measures be "real, quantifiable, permanent, verifiable, and enforceable," and should result in a reduction of emissions that is "at least equivalent to the increases from the project." The draft policy does not define the terms "real" or "permanent."

DEC provides in the draft policy a non-exhaustive list of examples of potential project design measures that can be applied to reduce GHG and/or co-pollutant emissions. These include:

• use of electric-powered equipment/vehicles in lieu of fossil-fueled powered equipment/vehicles
• use of lower-emissions technologies or imposing "operational mitigation" measures such as limitations on the amount of fossil fuel combusted at the facility
• using alternative process technologies that would reduce emissions
• financial mitigation (i.e., providing resources for other emission-reduction projects in the potentially affected EJ communities)
• enhancing environmental amenities such as adding electric vehicle charging stations at the facility or in the impacted community or engaging in "physical mitigation" (e.g., planting and upkeep of trees, green infrastructure or other carbon sequestration measures)

The burden report and all supporting materials provided to satisfy Section 7(3) of the Climate Act will be made available for public review and comment. DEC will consider permit applications filed under the UPA as incomplete if the burden report is required and is not submitted.

Next Steps

The draft DAC Permitting Policy is one of several regulatory and policy actions taken by the state to implement the Climate Act, including the finalization of DEC Commissioner's Policy 49 (CP-49), "Climate Change and DEC Action," and DEC Division of Air Resources Policy 21 (DAR-21), "CLCPA and Air Permit Applications," both finalized in 2022. On Dec. 31, 2022, New York Gov. Kathy Hochul also signed a "cumulative impacts" bill into law, amending the State Environmental Quality Review (SEQR) Act and the UPA, requiring the consideration of the effects of inequitable pollution distribution – not just air emissions – on disadvantaged communities. The cumulative impacts law goes into effect on Jan. 1, 2025, and any associated regulations will be incorporated into the DAC Permitting Policy per the draft policy.

The general public and the regulated community are encouraged to submit written comments on the proposed DAC Permitting Policy before Nov. 27, 2023.

For more information or any questions about the draft policy, please contact the authors or another member of Holland & Knight's Environmental Team.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.