This month’s Pipeline Technology Podcast episode sponsored by Pipeline & Gas Journal features James (Jim) Bowe discussing his recent article published in the Pipeline & Gas Journal over “FERCs Pipeline, LNG Project Evaluations Looking at Environmental Justice,” and going into detail on environmental justice and its impacts on historically overburdened communities.

In this month’s episode, you will learn what environmental justice is and how it has become more prominent since the Biden administration, how different impacts have varying severities in developing projects. 

LNG Project Evaluations looking at Environmental Justice Show Notes, Links, and Insider Terms:

• James (Jim) Bowe is a Law Partner at King & Spalding. Connect with Jim on LinkedIn.
  • King & Spalding helps leading companies advance complex business interests in more than 160 countries. Working across a highly integrated platform of more than 1,300 lawyers in 23 offices globally, we deliver tailored commercial solutions through world-class offerings and an uncompromising approach to quality and service.
• Pipeline & Gas Journal is the essential resource for technology, industry information, and analytical trends in the midstream oil and gas industry.  For more information on how to become a subscriber, visit pgjonline.com/subscribe.
• Check out Jim’s February 2023 Pipeline and Gas Journal article titled, “FERCs Pipeline, LNG Project Evaluations Looking at Environmental Justice.“
• FERC (Federal Energy Regulatory Commission) regulates, monitors, and investigates electricity, natural gas, hydropower, oil matters, natural gas pipelines, LNG terminals, hydroelectric dams, electric transmission, energy markets, and pricing.
  • FERC Order 636 was issued in 1992 to relax service requirements on pipeline firms and gave customers greater purchasing flexibility by separating gas sales from transportation. The order also extended transportation to include storage and allowed end-users with firm transport contracts to sell unused capacity.
• Environmental justice is 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 no group of people should bear a disproportionate share of the negative environmental consequences resulting from industrial, governmental and commercial operations or policies.
• Historically Overburdened Communities are minority, low-income, tribal, or indigenous populations or geographic locations in the United States that potentially experience disproportionate environmental harms and risks.
• Liquefied Natural Gas (LNG) is natural gas that has been cooled to a liquid state (liquefied), at about -260° Fahrenheit, for shipping and storage. The volume of natural gas in its liquid state is about 600 times smaller than its volume in its gaseous state in a natural gas pipeline.

• EPA (Environmental Protection Agency) is an independent organization within the federal U.S. government designed to take measures to protect people and the environment.
• Visual Impacts are changes to the scenic attributes of the landscape brought about by the introduction of visual contrasts and the associated changes in the human visual experience of the landscape.
• Natural Gas Act of 1938 was the first occurrence of the United States federal government regulating the natural gas industry. It permits the Federal Energy Regulatory Commission to regulate interstate pipeline construction and transportation of natural gas.
• NEPA (National Environmental Policy Act) was the first major environmental law in the United States and is often called the “Magna Carta” of Federal environmental laws. NEPA requires Federal agencies to assess the environmental effects of proposed major Federal actions prior to making decisions.

LNG Project Evaluations looking at Environmental Justice Full Episode Transcript:

Announcer: “The Pipeline Technology Podcast,” brought to you by “Pipeline and Gas Journal,” the decision making resource for pipeline and midstream professionals.

And now, your host, Russel Treat.

Russel Treat: Welcome to The Pipeline Technology Podcast, episode 32. On this episode, our guest is Jim Bowe with King & Spalding LLP.

We will be talking to Jim about his February 2023 Pipeline and Gas Journal article titled, “FERCs Pipeline, LNG Project Evaluations Looking at Environmental Justice.“

Jim, welcome to The Pipeline Technology Podcast.

Jim Bowe: Russel, thank you very much for inviting me to join you.

Russel: It’s great to have you. If you would, would you tell the listeners a little bit about yourself, what you do, and how you got there?

Jim: Sure. I’m a lawyer. I hope people don’t hold that against me. I’ve been practicing in the energy law space for 40 years. I got involved in it because, after my four years of college, I decided to do some public service. I went with an agency that became part of the Department of Energy working on petroleum pricing and allocation.

I went to law school expecting to become an environmental lawyer but, because I had worked in the oil and gas space, people thought I knew something about natural gas when I got out into private practice. That was not true, but at that time we were just beginning the journey toward deregulating the natural gas industry.

Because everyone was new, nobody had a particular advantage over me in terms of what they knew, as in, none of us knew what was going on. We were making up the rules as we went along.

I got involved in the natural gas industry from the early days of deregulation through the development of gas as our major source of power generation, through international project development of various sorts. Now I spend a lot of my time in the areas of renewables, hydrogen, that sort of thing.

I’ve always stuck pretty close to the natural gas industry and the development of natural gas infrastructure.

Russel: Interesting. I well remember FERC Order 636. At that time, I was working in measurement. It was driving a lot of very significant change in how measurement custody transfer was happening back at that time.

Jim: It is true. In fact, people recognized at the time that we didn’t have in place the tools to follow what the industry was doing once we began to decide to desregulate it. You must have been a busy guy.

Russel: I was. I was doing a lot of reading and I was doing a lot of educating because people didn’t believe that the change that was coming was really coming.

Jim: It’s remarkable. We now take it for granted. I think it was the most successful exercise in deregulation that’s been undertaken in North America.

Russel: I don’t call it deregulation. I call it reregulation because it’s not like it’s no longer regulated. It’s just the rules changed.

Jim: They did change, for sure.

Russel: I would agree with you, in terms of taking something that was a managed market and turning it into an open market, I think that FERC did an excellent job with that.

Jim: We take it for granted now, but it was a pretty hairy time, as you’ll recall.

Russel: There was a lot of change occurring.

I asked you to come on and talk about environmental justice and the article that you recently had in Pipeline and Gas Journal on this subject. I thought it might be helpful to start with a few definitions, maybe.

First, how would you define environmental justice? What is that?

Jim: I would define it as paying particular attention to the impacts of energy or other infrastructure development on what are now known as environmental justice communities, communities that have been disproportionately burdened by development, and by adverse environmental impacts, over time.

The official definition of environmental justice is a little bit more technical, but not much more. Basically, the focus is on communities that have been in the path of development. The focus is on taking into account impacts on historically overburdened communities of development of all sorts.

Not just energy infrastructure development, but we’re particularly focused here on energy infrastructure and development, and in particular on gas infrastructure and development.

For the developer of a new interstate natural gas pipeline or a liquefied natural gas import or export terminal, environmental justice really is an area on which the developer has to focus to ensure that impacts of its project are ideally not disproportionately brought to bear on historically overburdened communities.

To the extent that there are those impacts, they need to be mitigated to the maximum extent possible.

Russel: Can you give me some examples of who would be a historically overburdened community?

Jim: Sure. Oftentimes communities that are on the fenceline of industrial projects, particularly in areas of large scale industrial development. Communities near petrochemical facilities, refineries, and LNG terminals these days would tend to bear the impacts of petroleum industry activity to a greater degree than communities in Chevy Chase, Maryland, where I live.

Those communities tend to, because they are exposed to more impacts in terms of air pollution, water pollution, hazardous waste disposal activities, noise, and visual impacts have, in a sense, already been asked to take on more than what some might consider to be their fair share of the costs of industrial activity.

Those communities are ones that now, in particular, the Biden administration, has directed all of the federal agencies to pay particular attention to.

Russel: I’m processing what you’re telling me. I have to try and simplify this a bit. When I think of what you’re talking about, it’d be the distinction…

If I’m trying to build a processing facility along the Houston ship channel, that’s less impactful in this way than building some kind of industrial facility at the gate of Yellowstone.

Jim: That would be true, although you would have fewer environmental justice communities to deal with at the gate of Yellowstone than you would on the Houston ship channel. That may be what you’re getting at. 

There is greater acceptance of industrial activity in regions like the Houston ship channel. There are also larger numbers of environmental justice communities in those areas, those that are disproportionately burdened, that are also socioeconomically disadvantaged. That’s another definition of an environmental justice community.

Russel: I think I understand what that’s getting at. It’s a new classification of those impacted by development that might not have the means or the voice to participate in the way they would like in the process.

Jim: That’s right. One of the things that federal agencies are not focused on, again at the direction of the president, is to give those sorts of communities more of a voice to ensure that regulators are paying attention to those communities in their decision making.

Russel: You mentioned this is being driven by the Biden administration. How is that conversation or that directive being manifested in what FERC does?

Jim: There’s been an environmental justice directive in place since 1994. So this isn’t new, in the sense that there has been a direction that National Environmental Policy Act impact analyses include environmental justice considerations.

What is new is that very early on, essentially in the first week of his term, President Biden issued an Executive Order directing federal agencies to pay special attention to environmental justice considerations in their decision making.

I mentioned that in the article that you referred to in The Pipeline and Gas Journal. That Executive Order, which the President issued, has told all agencies across the federal government, including FERC, the Environmental Protection Agency, the Department of Justice, to pay special attention to impact environmental justice communities.

For that matter, in the case of the Department of Justice and the EPA, the focus should be on disproportionate impacts that could be viewed as potentially violating civil rights laws.

You now have not only a directive to pay attention to environmental justice impacts and permitting, but also pay attention to the degree to which federal actions could be viewed as potentially violating the civil rights laws.

Russel: Interesting. That spins up a whole conversation in my head that I don’t know that I want to get into right now.

Jim: It does indeed.

Russel: I think what it does illustrate is just how impactful the administration is, the executive branch, the presidency in directing policy.

Jim: That’s correct. In the environmental area, there is an overarching agency of the White House, the Council on Environmental Equality, which is now much more active than it was in the previous administration in providing overall direction.

As well, the Department of Justice has now got people who are tasked specifically with focusing on environmental justice considerations. There’s an emphasis across government now on ensuring that federal decisions take into account environmental justice considerations.

Russel: It might be helpful for listeners to talk about a specific case. In your article, you talk about Commonwealth LNG in particular. What I found interesting about that is the objection that gummed up the works, I guess, is visual impacts.

I’ve not heard that in the context of an environmental concern in the past. Is that new?

Jim: It’s not new, although the emphasis is, if not new, it’s certainly much more focused.

I’ll back up just for the audience, a bit of FERC 101, if you will. The Natural Gas Act authorizes the Federal Energy Regulatory Commission to review and approve applications for authorization to construct interstate natural gas pipeline facilities, as well as facilities that would either receive or export liquefied natural gas, so-called LNG terminals.

Those reviews are conducted under different sections of the Act, but fundamentally they have in common the requirement that the proposed action be evaluated under the Natural Environmental Policy Act, or NEPA.

There are a variety of impacts that FERC is required to consider under the National Environmental Policy Act. Impacts on air emissions, water, soils, geological resources, noise, wetlands, wildlife.

Among the things that are considered in the course of an environmental evaluation are the actual visual impacts associated with the facility. What do observers in the area see when they look at a proposed facility?

The Commonwealth LNG project is to be constructed in an area that, let’s just say, is not a…This won’t be its first large industrial facility. There are a number of other LNG facilities and other petrochemical facilities visible in an area of Louisiana that’s pretty flat. You can’t miss a flare tower or a large LNG tank if you’re looking from just about anywhere.

In the case of the Commonwealth LNG facility, which was pretty much standard…

Actually, it’s a somewhat modularly designed LNG facility, the impacts associated with the construction and operation of the project were judged to be limited and subject to mitigation with the exception, in the case of the Commonwealth LNG facility, of visual impacts.

Those impacts will be particularly pronounced for members of environmental justice communities, people who lived in census block groups that are relatively close to the facility, that use resources near the facility like a beach, and whose enjoyment of those resources or whose view from their front porch would now include parts of the Commonwealth LNG facility that couldn’t be screened from general view.

In performing its analysis, the Federal Energy Regulatory Commission staff went through all of the various environmental resources that potentially could be affected by construction and operation of the facility, and concluded that pretty much down the line, although there might be impacts of, for example, air emissions on environmental justice communities, those impacts were mitigated and would not be significant.

The one area in which the Commission staff found the impacts would be disproportionate relative to environmental justice communities was their visual impacts.  Staff found those impacts would be significant because, even with a screening plan and a facility lighting plan, the facility would nevertheless be pretty visible.

Therefore, the staff found that the visual impacts of the Commonwealth LNG facility would be disproportionately high, adverse, and significant, and that there was nothing that the facility really could do to mitigate those impacts to the point at which they would not be significant.

The facility will still be visible and it would be particularly visible for people who live in environmental justice communities.

What’s significant about the significance finding, if you will, is that that could be a signal that the project’s in trouble, but both the staff and then the Commission on review of the staff’s work and its environmental impact statement concluded that, although the impacts on environmental justice communities and the views that they would have of the facility would be significant, the project could nevertheless be approved.

There wasn’t anything to be done about it, but that wasn’t fatal. An interesting question is whether if there were disproportionately high and adverse and significant impacts on an environmental justice community, say, resulting from hazardous air pollution or discharges into waterways, whether you could make that same finding that it may be significant, but we can still allow it.

We haven’t seen that case yet, but that could be coming.

Russel: That’s a really interesting distinction, Jim, because normally, in a permitting process, when you start hearing words like significant, adverse, those types of things that means you’re quickly running to, well, you’re not going to get approved.

Jim: That’s right. That’s what didn’t happen here, which again I use the word a lot, is significant. In this case, although it was significant it wasn’t significant enough to result in disapproval.

Russel: I think the distinction would be, and I mean to frame this as a question. I think the distinction would be air quality, water quality, go to health.

Jim: That’s correct.

Russel: Where visual impact goes to lifestyle, right?

Jim: Right, aesthetics versus ability to breathe or drink the water.

Russel: I don’t mean to minimize that because in a community that is a significant thing, particularly if you’re thinking about, “Well, I’m going to go to the beach. I don’t want to be looking down at the beach and seeing a big industrial plant as I look down at the beach.” If there’s a way to stop that or mess with the sightlines so that I don’t see it, that actually provides some value.

Jim: That’s right.

Russel: That’s not necessarily a particularly costly mitigation. It can provide a lot of value to the local community. Is that what we’re driving at here?

Jim: Yes. There have been other projects, for example, some compressor facilities on interstate pipelines, that were evaluated and that would have imposed visual impacts on environmental justice communities but that were mitigated by plantings or by siting such that the facilities couldn’t be seen or were going to be screened. Therefore, they weren’t significant.

Russel: I’m not a lawyer but I work with enough lawyers that I understand words mean specific things. When you talk about significant and when you talk about adverse…I think there was one other word you were using. I’m not recalling what…

Jim: Disproportionate.

Russel: Disproportionate, yeah.

Those words have specific meanings.

Jim: That’s true.

Russel: I guess the thing that’s interesting to me about this conversation is when I first read the article, my first reaction was, “They’re going to make visual impacts significant, adverse, and disproportional? Wow, that seems kind of crazy.”

As I read through the bottom and it says, “Yes, they did but they still approved the project.”

Do you want to talk about what were some of the mitigating actions that were done? Even though they couldn’t fully mitigate them, they did take some actions.

Jim: A lighting plan that tries to direct lighting only on task as opposed to making the whole thing look like a Christmas tree. Of course, there’s only so much of that you can do. Planting only could do so much because the area is so flat and the predominant vegetation does not grow very tall.

I think we’ve probably all seen the occasional cell phone tower that’s tricked up to look like a very large, tall, scrubby pine tree but doesn’t really hide the fact that it’s a cell phone tower. I think there’s only so much you can do in coastal Louisiana. You don’t get a lot of a couple of hundred foot high trees that can shield a contact tower.

Russel: Coastal Louisiana, you stand up and you’re above the vegetation.

Jim: That is correct.

There have been some other projects that are still pending. These are also liquefied natural gas terminals down in the Brownsville area that have been approved, then were challenged before the D.C. Circuit Court of Appeals. The Court of Appeals took the Federal Energy Regulatory Commission to task for limiting its evaluation of impacts on environmental justice communities to a two mile radius around the plant.

The court said, “You looked at air impact over 30 miles around the plant. Why would you limit your environmental justice analysis to just two miles?” The court concluded that the agency had not justified that in any way.

It sent the case back for FERC to consider air emissions impacts on any environmental justice communities located in about a 31 mile radius of the project. Two miles went to 31 miles. That’s, again to use that word, significant because a lot more environmental justice communities can be found as you move away from a particular point.

That analysis is still ongoing. It’s been two years.

One of the LNG projects that was authorized by the commission that the Court of Appeals took issue with was supposed to be on the FERC agenda for tomorrow’s meeting and then was pulled off. I think they were hoping to get their high sign from FERC, but for reasons that we don’t know that will be put off for another day.

In that sense, environmental justice reviews can really be significant because they begin to turn into time.

Russel: It’s all fascinating. Maybe a good conversation to have to bring this all together is what should those that are attempting to get pipeline projects or LNG projects permitted…What should they take away from this conversation? How might they plan for and better navigate these waters?

Jim: That’s a good question. The thing I would say is environmental justice considerations are definitely here to stay. Project developers should plan on performing a robust environmental justice screening analysis in the very early stages of site selection.

Moving a site a little bit, where you can. Obviously, there are water dependent sites like LNG terminal locations that can’t be moved very easily. A few, for example, have a compressor station site that could be moved up or down a pipeline a few miles in either direction.

You might look at siting that facility where it’s least likely to have impacts on communities that have historically been overburdened or that are socioeconomically disadvantaged.

Site selection now ought to have environmental justice as one of the gating criteria, if you will. Early on, developers need to develop a robust community outreach and stakeholder communication plan.

One of the things that the government has made it clear it expects is for project proponents to be proactive in identifying and reaching out to community groups, particularly community groups associated with environmental justice communities, to discuss project plans early on, to discuss ways in which the community’s voice can be heard, as you were saying earlier. That seems to be something that is increasingly important.

The developers need to take potential impacts on environmental justice communities seriously because those impacts have the potential to either torpedo a project or at least make the approval process a lot longer.

It puts a little bit more of a burden than was already on project developers to do their homework up front. They should not expect the agencies to do their work for them. The developers need to know what they’re getting into, be able to evaluate impacts, and come up with ways of mitigating those impacts wherever possible.

Air emissions impacts, noise impacts, traffic impacts, for example, are something that FERC looks at in connection with development of, in particular, LNG projects.

Russel: Interesting.

I think my big takeaway from this conversation is the more you can fully understand what you’re getting yourself into, the better prepared you’re going to be to navigate the process.

Jim: Absolutely right.

Russel: It would be so easy to miss one piece and have that one piece really throw a wrench in a work.

Jim: Right.

Identify, engage, and incorporate environmental justice considerations into your analysis from the very beginning.

Russel: I think that’s the key takeaway.

Look, Jim. This has been great. I’ve certainly learned something. I appreciate your time.

Jim: I’m glad to be able to join you. I enjoyed it myself.

Russel: I will mention for the listeners that the article that we’re talking about in the February edition of Pipeline and Gas Journal. It’s titled FERC’s Pipeline, LNG Project Evaluations Looking At EJ, environmental justice. I’d encourage you to read it. We’ll link that up in the show notes. We’ll also link up Jim’s contact information so if anybody wants to connect with him they can.

I guess that’s it.

Jim: Thank you, Russel. I enjoyed it.

Russel: Thank you.

Announcer: I hope you enjoyed this month’s episode of The Pipeline Technology Podcast and our conversation with Jim. If you’d like to support this podcast, please leave us a review on Apple Podcast, Google Play, Stitcher, SoundCloud, or wherever you happen to listen.

You can find instructions at pipelinepodcastnetwork.com. If there is a Pipeline and Gas Journal article where you’d like to hear from the author, please let me know either on the Contact Us page at PipelinePodcastNetwork.com, or reach out to me on LinkedIn.

Thanks for listening. I’ll talk to you next month.

Transcription by CastingWords