Integral Consulting Inc. – Lofty Environmental Justice Goals Versus Practical Implementation| Integral Consulting Inc.

A recent article in Law360 by Bill Wichert, (“Hexcel Faces Pollution Suit Over NJ Manufacturing Site” (April 4, 2022) highlights the role that environmental justice plays in claims for natural resource damages (NRDs) filed by the State of New Jersey.

The lead paragraph of the Wichert’s article notes that the lawsuit cited “… the impact on the surrounding “overburdened community” of largely low-income and minority residents.” Mr. Wichert’s provides quotes from Acting New Jersey Attorney General Matthew J. Platkin that emphasizes the linkage between environmental justice and NRD actions and concludes that “addressing contamination in overburdened communities is a cornerstone of the state’s environmental justice efforts.”

Wichert goes on to quote DEP Commissioner Shawn LaTourette as stating that “Natural capital like our groundwater is always working for us; and the growth and success of our communities demands that we maintain the free public services that clean, healthy and equally accessible natural capital provides” and that “…when you pollute the environment, not only must you stop and clean up your pollution, you also must restore the natural resources and compensate the public for their loss.”

It is both fascinating and important to see the concepts of natural capital and environmental justice juxtaposed. According to LaTourette, the value of natural capital (such as the groundwater at issue in the Hexcel case) is increased when it’s bio-physical condition is improved as well as when it is more equally accessible. These sources of value should be considered when determining the appropriate compensation for injuries to natural resource.

The obvious conclusion is that 1) natural resource forms are also called natural capital and 2) such capital is valuable to society. 3) at least one value attaches itself to providing benefits to overburdened community members that suffer multiple sources (cumulative burdens) and 4) compensation for lost value will be sought via NRD cases against those who were responsible for the pollution. This is a useful explanation.

The modern economic textbook theory of capital and labor explains the concept of natural capital. It states that the production of socially valuable goods depends on capital, land, and labor. This formulation was created during a time when most countries were agrarian. Economists were primarily concerned with modeling agricultural production. Land was land used for growing crops and grazing livestock. Labor was a group of farm workers. Capital consisted of tools such plows. The modern formula notes that the production of goods and services is derived from capital stocks of many forms.

Capital is both in its classical and modern forms. StocksProducive resources are used to produce and consume products. Flow concepts – a rate over a period of time. The value of any capital stock comes from the flow of services it offers, whether to be enjoyed directly or in the production of other value goods and/or services. Therefore, groundwater’s value as a capital stock in an NRD matter is measured by its value over time, minus an appropriate discount rate.

This well-known reasoning explains that NRD is not focused on the resources but the service they provide to the public. In New Jersey’s view, the value of nature’s Services is enhanced when they are more equally accessible to all rather than provided to a select few.

Following through the implications of the State’s line of thought so explicated, a first task of a NRD assessment is to determine how pollution caused an impairment of the servicesDifferent members of the populace are provided with natural resources either directly or indirectly. A second task is to determine how these natural resources are used. Social valueThe pollution reduced the availability of these services to those people. A third task is to determine how to provide them. Equivalent social value in compensationThese reductions will be compensated. NRD cases usually provide this type of compensation in-kind, through the enhancement or restoration of similar services. Consider the public value to be considered when evaluating NRDs. It is important to consider environmental justice.

For insight into this latter source of value, the New Jersey Environmental Justice Law (cited in the Hexcel NRD claim) notes the existence of a large number of stressors in disadvantaged communities that collectively “impede the growth, stability, and long-term well-being” of individuals, and states that “…it is past time to for the State to correct this historic injustice.”

In NRD cases in New Jersey, the relevant question is whether compensation provided increases the quantity and/or the bio-physical quality services as well as the fairness in their distribution across communities.

The problem with this approach to NRD is that the State doesn’t specify how justice will be considered. The State’s Environmental Justice Mapping Tool shows communities as overburdened if at least 35% of residents are low income, 40% of residents who identify as minority, or 40% of residents have limited English proficiency. Based on these criteria, Lodi, the home of Hexcel, is considered overburdened. It is both low-income and minority.

This mapping tool cannot be used for determining how much the public is likely to be affected by pollution. It also cannot be used for determining how compensatory actions may make the public better off. Tourette does not believe that a community should be considered as being inaccessible to the same natural capital. This task is simply not possible.

How can the state ensure that those who are disadvantaged receive fair and equal treatment when implementing NRD assessments in matters affecting their environment and community? (NJ Executive Order No. 23 April 20. 2018)? How can the state then determine the size of NRDs?

Although a topic for another day, I note in passing that this same logical difficulty applies to considering environmental justice in New Jersey’s permit approval process. This requires that the community is able to determine if a proposed new or expanded facility in an already overburdened area will not further disadvantage it or include measures that prevent or eliminate adverse effects. Demonstrating this in combination with multiple environmental stressors and other stressors would require going beyond the Mapping Tool to examine the extent of injustice with or without the proposed facility and any mitigation measures.

One solution to these problems is to use a measure to assess the public’s well-being in baseline conditions. Then, compare this with the well-being in conditions reflecting the combined effects of an event or action and any mitigation or compensatory measures. NRD refers to the impact on natural resources services by the release of pollutant. It is also combined compensation in one form. Permitting refers to a new or expanded facility which may be combined in mitigation measures to offset any impacts. This general approach may not be appropriate in all cases. Any rational method for evaluating public actions, to be additionally responsive the State’s concerns for equal accessibility of the disadvantaged to natural capital, the measure of public wellbeing should incorporate a concern for justice.

If justice responded positively to an increase of equality in the distribution of resources (of a certain amount and quality) across members of society, then the measure of wellbeing would include concerns about justice.

These measurement methods can be found in a vast economic literature on measuring poverty and inequality that has been published over the past 100-years. [1]The measures available could be modified to assess new developments in overburdened populations. They have been adapted to NRD context [],[]. Although the question of environmental justice in groundwater assessment has not been addressed, the theoretical and empirical foundations are well-developed.

The economic approach reveals that society values reducing inequality. If a natural resource is damaged or restored to correct it, this will either exacerbate inequality or ameliorate it. A proper concern for environment justice should acknowledge and embrace these values in resource decision making.