The regulated community in California may soon have additional reasons to implement supplemental environmental projects (SEPs) when settling an administrative environmental enforcement action. Under a 2009 State Water Resources Control Board (Water Board) policy, settling parties may voluntarily undertake an environmentally beneficial project in return for an offset of a portion of any civil penalty, provided that the project meets certain criteria. The Water Board has now released sweeping proposed amendments to its Policy on Supplemental Environmental Projects (draft SEP Policy) that will incentivize more projects. Most notably, the draft SEP Policy:

Will consider projects that address climate change, such as greenhouse gas emissions reductions or those that build resilience to climate change impacts on ecosystems or infrastructure.

Will allow—subject to approval—greater than 50% of any monetary assessment in administrative enforcement cases to be allocated towards SEPs that are located in or benefit disadvantaged or environmental justice communities, or communities suffering from a financial hardship, or that further the Water Board’s priority of ensuring a human right to water. Under the original policy adopted in 2009, the maximum civil penalty reduction available via performance of a SEP is capped at 50%.

Will allow up to 10% of oversight costs to be included as part of the total SEP amount for the same reasons above. Otherwise, oversight costs are paid in addition to the total SEP amount.

Establishes a new category of SEPs called “Other Projects” to allow educational outreach and other “non-traditional” water quality or drinking water-related projects to be considered for approval.

Expands the applicability of SEPs to enforcement actions prosecuted by the Division of Drinking Water and its Districts and the Division of Water Rights.

Continue Reading California’s State Water Board Unleashes New Supplemental Environmental Project Policy for Public Comment

A new policy directive issued earlier this week by the Department of Justice (Justice) has raised concern among regulated industry that the availability of Supplemental Environmental Projects (SEPs) in civil settlements could be severely reduced, or even largely eliminated.  If the directive is applied to restrict the availability of SEPs, it would remove a useful, and at times powerful, tool routinely used by the regulated community to negotiate acceptable settlement agreements in civil enforcement actions. It could also eliminate tens of millions of dollars of annual funding of such projects—which typically benefit local communities or address niche environmental issues—currently provided through the use of SEPs in consent decrees.  Because applicable policies preclude Justice from requiring parties to include SEPs in settlements, it is difficult to identify any upside in any potential narrowing or elimination of SEPs as an optional tool to assist in the resolution of civil environmental enforcement actions.

Continue Reading DOJ Directive May Squeeze the Life Out of Supplemental Environmental Projects