September 28, 2020

Volume X, Number 272

September 28, 2020

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September 25, 2020

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So Long to SEPs

The Department of Justice’s Environment and Natural Resources Division (ENRD) will no longer allow Supplemental Environmental Projects (SEPs) to be used in its civil settlements. In a 19-page memo dated March 12, 2020, ENRD Assistant Attorney General Jeffrey Bossert Clark makes clear his views on SEPs, building on his previous memorandum dated August 21, 2019, which prohibited the use of SEPS in settlements with state and local governments. The new memo expands the scope of affected settlements, now prohibiting the use of SEPS in settlements with private parties, based on his argument that these popular projects violate the spirit, if not also the letter of the law, and “depart [] from sound enforcement practices.”

While federal agency attorneys are familiar with the arcane Miscellaneous Receipts Act and the Anti-Deficiency Act, most others are not. Yet it is these two laws that AAG Clark uses to sound the death knell for federal SEPs in judicial consent decrees during this Administration. His memorandum argues that SEPs allow the executive branch to usurp the appropriation authority granted to Congress. The Miscellaneous Receipts Act requires that funds going to the federal government are deposited into the Treasury. Similarly, the Anti-Deficiency Act prohibits expenditures beyond those that Congress has authorized. Together, these laws ensure all agency funding is directed by Congress and not supplemented by other funds. AAG Clark believes that SEPs inappropriately reduce penalties that should in fact go to the Treasury and divert those funds to other activities in violation of these two statutes.

The Clark memo is intentionally broader in scope than the earlier one. In addition to prohibiting SEPs in consent decrees, AAG Clark analyzes EPA’s SEP policy and rejects the bases on which EPA supports SEPs. This leaves EPA no room to modify its policy to conform to DOJ guidelines. Given DOJ’s very definitive legal views, it is unlikely that EPA will be able to continue SEPs in administrative settlements.

SEPs have long been used to successfully resolve complicated and protracted litigation and have been supported by the government, NGOs, and the business community alike. They have resulted in significant environmental benefits, and for some SEP supporters, they are viewed as a more beneficial use of funds than placing them in the Treasury because they are intended to address the environmental harm arising from underlying violations. This Administration previously evaluated SEPs and found they were allowed. After former Attorney General Jeff Sessions prohibited settlement payments to third parties in a 2017 memo, then Acting ENRD AAG Jeffrey Wood concluded in part that the prohibition on payments to third parties “does not prohibit, as part of a settlement, a defendant from agreeing to undertake a supplemental environmental project related to the violation, so long as it is consistent with EPA’s Supplemental Environmental Projects (SEP) Policy, which already expressly prohibits all third-party payments.” The Clark memorandum represents a change in policy within ENRD. 

The Clark memo contains one narrow exception for the use of SEPs in ENRD settlements. AAG Clark notes that Congress has authorized the EPA to use SEPs to encourage the retrofitting or replacement of diesel engines to reduce diesel emissions and are lawful. The memo makes clear, however, that he believes that even this congressionally authorized SEP may be used only in mobile source cases.

The memo is effective immediately. It allows already signed consent decrees to stand and does not require re-opening any settlements based on the inclusion of SEPs. However, the memo is clear that no additional consent decrees will be approved if they contain SEPs, no matter how close to completion they might be. AAG Clark concludes his memo by stating that his focus to date has been “exclusively on civil SEPs,” noting that he will next “review of the use of SEP-like devices in the criminal sphere,” so there is likely more to come.

Importantly, this internal DOJ memorandum does not apply to States, many of whom have developed their own independent SEP authorities. And, it does not address the previously common practice wherein federal consent decrees resolved state claims by including state SEPs, which the federal government need not approve. 

© 2020 Beveridge & Diamond PC National Law Review, Volume X, Number 76

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About this Author

John Cruden Environmental Attorney Beveridge Diamond
Principal

John offers clients the benefit of decades of experience as a top environmental lawyer, a leader of major bar and environmental organizations, and a distinguished military career.

John provides strategic counsel on high-stakes environmental and natural resources litigation, civil and criminal enforcement, and compliance. Working with clients makes the practice of law worthy and valuable to him as they advance strategic needs while protecting human health and the environment.

For more than two decades, John served as a senior leader on environment and natural resource matters...

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Allyn L. Stern Environmental Attorney Beveridge & Diamond Seattle, WA
Of Counsel

Allyn brings over 30 years of insider understanding of government operations.

Her experience as former Region 10 Counsel at the Environmental Protection Agency (EPA) informs her deep policy, regulatory, and enforcement knowledge. Allyn draws on her breadth and depth of expertise to help clients comply with an array of environmental statutes and regulations applicable to their businesses, including Clean Water Act (CWA) and Resource Conservation and Recovery Act (RCRA) permit approvals, risk management under the Clean Air Act 112(r), civil and criminal enforcement, Superfund cleanup and redevelopment, and pollution prevention strategies.

Allyn's in-depth knowledge of EPA policies and Department of Justice protocols enables her to capably advise clients on their interactions with these agencies. She guides clients through environmental issues arising in business operations, real estate development and permitting, or litigation. She has extensive experience with many environmental statutes, particularly the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA); RCRA; and CWA.

As Regional Counsel at EPA, she was the senior executive covering litigation strategy and counseling for all matters in the states of Washington, Oregon, Idaho, and Alaska. She also spent over 20 years as an EPA line attorney, then as a managing attorney in EPA’s San Francisco office covering California, Arizona, Nevada, Hawaii, and the territorial islands. She provided legal advice and strategy on hundreds of EPA decisions including tribal treaty rights and consultation, CWA permits, water quality standards, Total Maximum Daily Load allocations, Superfund removal and remedial actions, and many enforcement cases. She also focused on incident response and was selected to be a part of the investigation team following the Gold King Mine release. In San Francisco, she also served as Deputy Director for the regional air program.

Allyn has taught law since 2005, with positions at the University of California Hastings School of Law, Seattle University, and Seattle University Law School. She has taught courses on Negotiation Skills, Environmental Law, and Environmental Enforcement.

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Joshua H. Van Eaton Environmental Litigation Attorney Beveridge & Diamond Washington, DC
Principal

Joshua H. Van Eaton helps clients resolve high-stakes compliance, enforcement, and litigation matters.

He brings the perspective gained from a distinguished U.S. government service career to provide clients with strategic counsel on air, water, and waste issues with a focus on mobile source emissions. He also litigates those matters and advises on proactive environmental compliance strategies.

Prior to joining Beveridge & Diamond, Josh served as Senior Trial Attorney in the Environmental Enforcement Section of the Environment and Natural Resources Division (ENRD) of the U...

202-789-6033