On June 5, 2017, Attorney General Sessions issued a one page memorandum (“the Sessions Memo”), stating that the Department of Justice (“DOJ” ) will no longer agree to settlements that include “payments” by a defendant to a third party organization. The prohibition applies to civil suit settlements, plea agreements, and deferred prosecution agreements.
The prohibition does not apply to payments for restitution to a victim or to remedy the harm sought to be addressed, and specifically mentions remedying “harm to the environment” as an exception to the prohibition.
How Will It Apply to SEPs?
The Sessions Memo has already attracted significant attention among lawyers who handle environmental enforcement matters. It is common for settlements in significant environmental cases to have a supplemental environmental project (“SEP”) as part of the settlement. Several of my own matters for clients have involved SEPs.
How Closely Related Must a SEP Be to the Violation?
The Sessions Memo appears to raise some significant questions relating to SEPs. For example, how closely related must a payment be, in order to meet the standard of remedying “harm to the environment?” Will payment to a local community organization to install air monitoring equipment constitute remedying past illegal emissions?
Will SEPs that Require Work Be Allowed?
Additionally, what does the term “payment” mean? Many SEPs require the defendant to perform some task, such as increasing beneficial vegetation in a stream bed. These SEPs do not require any “payment” by the defendant. However, if the defendant uses a qualified contractor to perform the work, would payments to the contractor constitute prohibited “payments” under the Sessions Memo?
Clarifications Are Being Sought
Members of the American Bar Association Section of Environment, Energy and Resources (in which I am active) have initiated contacts with DOJ, trying to get clarification on these and other questions raised by the Sessions Memo.
State and Local Entities Like SEPs
State and local entities generally seem very supportive of SEPs when settling environmental enforcement matters. SEPs often provide a way to keep the penalty dollars in the community where the violations occurred, and allow those dollars to go toward environmental improvement, rather than get lost in state or federal treasuries. Depending on how it gets interpreted, the Sessions Memo may be yet another reason why enforcement is better done by state and local, rather than federal, entities.
For a copy of the Sessions Memo click here.