On August 4, 2017, at the 29th Annual Texas Environmental Super Conference, I heard presentations from Patrick Traylor, Deputy Assistant Administrator for the EPA’s Office of Enforcement and Compliance Assurance and Jeffrey Wood, Acting Assistant Attorney General of the Environment and Natural Resources Division of the U.S. Department of Justice (“DOJ”).
These federal officials spoke just for themselves and did not purport to relay policy. Comments regarding the June 5, 2017 memorandum issued by Attorney General Jeff Sessions (“the Sessions Memo”) seemed to suggest that the Sessions Memo would not significantly affect the EPA’s Supplemental Environmental Projects (“SEP”) policy, although additional clarification or guidance may still be helpful.
Settlements Cannot Include Payments to a Third Party
As I discussed in a prior Alert, the Sessions Memo states that the 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. The Sessions Memo specifically mentions remedying “harm to the environment” as an exception to the prohibition.
Among the comments at the Super Conference was a reference to the existing EPA SEP policy, which requires SEPs to have a sufficient nexus; that is, the supplemental project must relate to the underlying violation. These comments seemed to suggest that the nexus requirement in the EPA’s SEP policy was essentially consistent with the “harm to the environment” exception in the Sessions Memo.
Projects to Mitigate Harm Are Not SEPs
While I hope that the Sessions Memo will not significantly change federal policy regarding SEPs, a review of the EPA policy documents raises lingering questions. Fundamentally, the Sessions Memo’s exception for remedying “harm to the environment” seems more applicable to mitigation projects, as opposed to SEPs. The EPA’s policy documents make a clear distinction between SEPs and mitigation projects.
Most notably, the EPA’s November 14, 2012 memorandum “Securing Mitigation as Injunctive Relief in Certain Enforcement Settlements,” states that mitigation projects are what the government believes a court would order as injunctive relief to remedy harm from violations, while a SEP is a voluntary project beyond what the government could get a court to order. A mitigation project is to restore the environment to conditions that existed before the violation. A SEP goes beyond mitigation. The EPA memorandum further states “the same action should never be considered both mitigation and a SEP in the same case.”
A strict read of the Sessions Memo suggests that it will allow for payments to third parties when appropriate as mitigation, that is, to remedy “harm to the environment” due to the violation. Nothing in the Sessions Memo suggests that this exception would apply to voluntary projects that would not constitute mitigation.
Further Clarification or Guidance Seems Warranted
Distinguishing between a mitigation project and a SEP can be difficult, especially when SEPs need to have a nexus to the violations. If the DOJ will consider any proposed SEP that meets current nexus requirements as not affected by the Sessions Memo, it would be helpful to hear that.