In Print: Volume 86: Number 4
Expanding the Use of Supplemental Environmental Projects
By Brooke E. Robertson
86 Wash. U. L. Rev. 1025 (2009)
(PDF)
On June 11, 2003, the Environmental Protection Agency (EPA) released a memorandum announcing its goal to encourage and expand the use of Supplemental Environmental Projects (SEPs) in settlements. SEPs are “environmentally beneficial projects which a defendant . . . agrees to undertake in settlement of an enforcement action, but which the defendant . . . is not otherwise legally required to perform.” In settlements of environmental enforcement actions, the EPA generally requires alleged violators to comply with federal environmental regulations and to pay a monetary penalty. The EPA will reduce the required payment in certain enforcement actions if the alleged violator agrees to perform a Supplemental Environmental Project as part of the settlement. The inclusion of SEPs in settlements furthers the “EPA’s goals to protect and enhance public health and the environment.” In its June 2003 memorandum, the EPA noted that SEPs are being underutilized and that there is tremendous potential to achieve even greater benefits for the environment with the increased use of SEPs in settlements.
In order for an SEP to be included as part of the settlement, the defendant must propose and agree to carry out a project that the EPA determines qualifies as an SEP. The project must meet several requirements to qualify. One of the most limiting of these requirements is the nexus requirement, which states that there must be an adequate “relationship between the violation and the proposed project.” In some situations, there is simply no feasible project that meets this nexus requirement; therefore, an SEP cannot be included in the settlement. After the EPA accepts the proposed project, it determines the appropriate percentage to lower the penalty. The current SEP policy does not allow the mitigation percentage to exceed 80% of the SEP cost; therefore, a defendant who agrees to perform an SEP will end up paying more than it would have if it had simply paid the penalty. The EPA’s current SEP policy fails to maximize the benefits that could be realized from the use of SEPs in settlements. This Note argues that the EPA’s current SEP policy could be improved by creating and managing an Environmental Trust that would be used to complete SEPs, increasing the mitigation percentage to 100% and relaxing the nexus requirement, and allowing third-party contractors to bid on and carry out SEP contracts.
This Note consists of five parts. Part I provides a brief historical overview of SEPs and explains the current SEP policy in greater detail. Part II explores the reasons for the underutilization of SEPs in settlements despite the EPA’s policy on expanding the use of SEPs. Part III suggests that the EPA should alter the SEP policy by creating an Environmental Trust, increasing the mitigation percentage, relaxing the nexus requirement, and allowing third-party contractors to bid on SEP contracts in order to increase the utilization of SEPs. Part IV focuses on whether or not the EPA has the authority to make the alterations suggested in Part III. Part V of this Note highlights how creation of the Environmental Trust, changes to the mitigation percentage and nexus requirement, and use of third-party contractors improve the EPA’s current SEP policy and discusses some of the weaknesses of the proposal.
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