Environmental Justice Legislation: How New Jersey’s Lead Sets the Stage for Nationwide Change and the Role of Environmental Insurance

This article explores New Jersey’s groundbreaking environmental justice legislation and its impact on overburdened communities. It highlights the key provisions of the state’s Environmental Justice Law and the significance of environmental insurance as a risk management tool. The article emphasizes the need for comprehensive coverage to protect businesses from pollution risks and legal liabilities. Overall, it showcases New Jersey’s leadership in environmental justice and the importance of insurance in promoting sustainable practices.

Environmental justice addresses the equitable treatment and involvement of all people, regardless of demographic, in the development and application of environmental laws and policies.  The aim for Environmental Justice laws is to give regulators and those historically and disproportionately affected low-income, minority communities new tools to mitigate negative environmental impacts from exposure to pollutants in their communities.  As of 2021, there were at least 24 states that were either developing or have already enacted Environmental Justice Legislation.

New Jersey’s Environmental Justice Law: Setting the Standard

New Jersey has taken a definitive lead in enacting strong legislation and may serve as a role model for other states.  New Jersey’s Environmental Justice Law (EJL), N.J.S.A 13:1D-157, et seq., addresses environmental permits that are issued in overburdened communities and how New Jersey intends to protect those vulnerable residents from bearing a disproportionate share of adverse environmental and public health consequences. 

New Jersey’s EJL requires its Department of Environmental Protection (DEP) to evaluate environmental and public health impacts of certain facilities on overburdened communities (OBCs) when reviewing certain applications to limit the future placement and expansion of such facilities in those communities.

New Jersey is the first state required to issue permit denials for new facilities that cannot avoid disproportionate impacts on OBCs or serve compelling public interest.  New Jersey’s Environmental Justice Rules, N.J.A.C. 7:1C, went into effect April 23, 2023, and establish the specific requirements and procedures that must be followed when seeking permits for certain pollution-generating facilities

Defining Environmental Justice by the EPA

The U.S. Environmental Protection Agency (EPA) defines environmental justice as “the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies.”

“Fair treatment” means that no group of people should bear a disproportionate share of the negative environmental consequences resulting from industrial, governmental, and commercial operations or policies.  Id.

“Meaningful involvement” means that people have an opportunity to participate in decisions about activities that may affect their environment and/or health; the public’s contribution can influence the regulatory agency’s decision; community concerns will be considered in the decision-making process; and decision makers will seek out and facilitate the involvement of those potentially affected. Id.

“Overburdened community” is any community, as determined by the most recent US Census, where 35% of households qualify as low-income (at or below twice the poverty threshold as determined annually by the US Census Bureau, 40% of households are minority, or 40% of households have limited English proficiency. Id. NJ has identified a map and criterion.  Link to the current list of overburdened communities and map.

Scope of “Facilities” under Environmental Justice Laws

“Facility” is any:

1. major sources of air pollution (as determined by the Clean Air Act, 42 U.S.C. s7401 et seq., or in rules or regulations adopted by the department pursuant to the Air Pollution Control Act, P.L.1954 c212 (C.26:2C-1 et seq.) or which directly emits, or has the potential to emit, 100 tons per year or more of any air pollutant, or the criteria set forth in the Clean Air Act, 42 U.S.C. s.7401 et seq.);

2. resource recovery facility or incinerator;

3. sludge processing facility, combustor, or incinerator;

4. sewage treatment plant with a capacity of more than 50 million gallons per day;

5. transfer station or other solid waste facility or recycling facility intending to receive at least 100 tons of recyclable material per day;

6. scrap metal facility;

7. landfill, including but not limited to a landfill that accepts ash, construction or demolition debris, solid waste; or

8. medical waste incinerators (excluding a medical waste incinerator connected to a hospital or university and intended to process self-generated regulated medical waste). Id.

Permitting Process for New Jersey Facilities

NJDEP cannot consider complete for review any permit application for a new facility or for the expansion of an existing facility, or any application for the renewal of an existing facility’s major source permit if the facility is located or proposed to be in an OBC unless the permit applicant:

1. Submits an Environmental Justice Impact Statement (EJIS) that assesses the potential and public health stressors associated with the proposed new or expanded facility, or with the existing major source, as applicable, including any adverse environmental or public health stressors that cannot be avoided if the permit is granted, and the environmental or public health stressors already borne by the OBC as a result of existing conditions located in or affecting the OBC;

2. Sixty (60) days prior to the public hearings required as part of the permit application process, submit the EJIS to the DEP who will publish the EJIS on its website;

3. Organizes and conducts a public hearing in the OBC.  Notice for the hearing must be published in two (2) local newspapers in that community, including one local non-English language newspaper, if applicable, not less than sixty (60) days prior to the hearing date.  Notice requirements in the newspaper include a summary of the EJIS, a description of the new or expanded facility proposed, a map of the location of the facility, and an invitation for written comments on the permit application.

4. The municipality and the public are to be invited to the public hearing and given the opportunity to speak.  Following the hearing, NJDEP will consider the testimony and written comments and evaluate the issuance of, or conditions to, the permit as necessary to avoid or reduce the adverse environmental or public health stressors affecting the OBC.

Historical Challenges for New Jersey’s Vulnerable Communities

Historically, New Jersey’s low-income communities and communities of color have been subject to a disproportionately high number of environmental and public health stressors, including pollution from numerous industrial, commercial, and governmental facilities located in those communities and, as a result, suffer from increased adverse health effects including, but not limited to, asthma, cancer, elevated blood lead levels, cardiovascular disease, and developmental disorders.

New Jersey facility owners and their consultants overseeing the environmental due diligence process for projects involving regulated facilities should be mindful of this EJL and determine if the facility is in an OBC, and if so, conduct and include an EJIA of the facility’s probable cumulative impacts on the surrounding population within the OBC when involved in the facility permitting process.

Environmental Insurance as a Risk Management Tool

Development of new facilities or expansions of existing facilities generally requires soil disturbance and construction.  Does your insured carry environmental insurance to protect their business operations or property from the unforeseen discovery of pollutants or a pollution condition?  Does your insured have an environmental policy in place to provide liability protection and legal defense coverage against costly environmental activism lawsuits or other third-party claims?

A historic pollution condition in soil or water could be found during development or in the building itself, including, for example, asbestos, lead, mold, or legionella.  A pollution condition could be created by the contractors involved or the business operations themselves. 

Brokers and insureds should also be mindful of local activist groups that regularly test waterways and soil for pollutants and then target businesses for clean-up, which form the basis of costly and protracted lawsuits against business tenants, owners, and operators.  EJL hearings on permits in OBCs will place the involved business into the community spotlight with razor-sharp focus.  As more EJL laws are enacted across the country, we may see more environmental claims and activist lawsuits aimed at these businesses as a result.

How Distinguished Can Help

Specialized environmental site insurance policies are a valuable and necessary risk management tool for businesses and landowners.  Although environmental insurance has been in the marketplace since the 1970s, it is estimated that only a small portion of environmental risks are properly insured.  A wide range of coverage is available to structure a policy that meets the unique needs of your insurers at attractive prices. 

At Distinguished, we pride ourselves on our expertise, responsiveness, best-in-class coverage forms, and claims handling in this market space.  Reach out to us to see how we can help you structure an environmental site pollution policy to meet the needs of your insureds, their business, and their operations.

To learn more about our specific policies, you can also explore some of our product pages below: 

About the Author: Cathy Cleary, JD, CPCU, RPLU is a Senior Vice President with the Environmental and Construction Professional Division at Distinguished Programs.  Ms. Cleary has over 27 years of combined experience in underwriting, claims and legal servicing in support of environmental and construction insureds.

About Distinguished Programs

Distinguished Programs is a leading national insurance Program Manager providing specialized insurance programs to brokers and agents with specific expertise in Fine Art and Collectibles, Environmental and Construction Professional, Executive Lines, Inland Marine, Real Estate & Builder’s Risk, Community Associations, Hotels, and Restaurants. Property and Liability products are distributed through a national network of agents and brokers. Serving the same core markets and partnering with the most stable and reputable carriers, Distinguished’s high-limit Umbrella programs remain the clear choice in its area of specialty for superior coverage, competitive pricing, and attentive service. Through thoughtful innovation, stemming back to 1995, Distinguished Programs fosters growth and opportunities for its brokers, carriers, and employees.

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The opinions expressed in this article are solely those of the author. Only the applicable policy contains a complete description of all the provisions of the coverage.