October 14, 2015
Environmental violations are the result of inspections or the aftermath of a toxic release to the air; water or soil. Depending on the circumstances; the citing agency and the time length of the release of environmental violations penalties can range from simply corrective action to millions of dollars in fines and corrective action. The more egregious environmental violations are usually publicized to the affected community and beyond. Publicly held companies also have to report these environmental violations in their annual report according to The Sarbanes-Oxley Act of 2002. In several cases the corrective action and restoration of the environment happens a lot quicker that the repair to a company’s reputation to the community, stakeholders and shareholders. Textbook examples are the BP and Exxon Valdez spills. To help with the process of mending fences with the affected community and stakeholders, there is a program called a Supplemental Environmental Project or SEP.
A SEP is a project that benefits the environment or public health. It must improve, restore, protect, or reduce risks to public health and/or the environment beyond compliance with environmental laws. Communities where environmental laws have been violated can directly benefit from SEPs. As part of the settlement, the agreement may require the defendant/respondent to undertake supplemental environmentally beneficial expenditures that exceed regulatory requirements.
Most federal or state actions against businesses or individuals for failure to comply with the environmental laws are resolved through settlement agreements. As part of a settlement, an alleged violator may voluntarily agree to undertake an environmentally beneficial project related to the environmental violations in exchange for mitigation of the penalty to be paid. In settlement of environmental enforcement cases federal, state and local agencies insist upon terms that require defendants/respondents achieve and maintain compliance with environmental laws and regulations and where appropriate, pay a penalty for violations.
Although federal and state agencies may have different types, here are the basic categories of SEPs:
- Public Health: SEPs may include examining residents in a community to determine if anyone has experienced any health problems because of the company’s environmental violations.
- Pollution Prevention: These SEPs involve changes so that the company no longer generates some form of pollution. For example, a company may make its operation more efficient so that it avoids making a hazardous waste along with its product.
- Pollution Reduction: These SEPs reduce the amount and/or danger presented by some form of pollution, often by providing better treatment and disposal of the pollutant.
- Environmental Restoration and Protection: These SEPs improve the condition of the land, air or water in the area damaged by the violation. For example, by purchasing land or developing conservation programs for the land, a company could protect a source of drinking water.
- Emergency Planning and Preparedness: These projects provide assistance to a responsible state or local emergency response or planning entity to enable these organizations to fulfill their obligations under the Emergency Planning and Community Right-to-Know Act (EPCRA.) Such assistance may include the purchase of computers and/or software, communication systems, chemical emission detection and inactivation equipment, HAZMAT equipment, or training.
- Assessments and Audits: A violating company may agree to examine its operations to determine if it is causing any other pollution problems or can run its operations better to avoid violations in the future. These audits go well beyond standard business practice.
- Environmental Compliance Promotion: These are SEPs in which an alleged a violator provides training or technical support to other members of the regulated community to achieve, or go beyond, compliance with applicable environmental requirements. For example, the violator may train other companies on how to comply with the law.
Other acceptable SEPs would be those that have environmental merit but do not fit within the categories listed above. These types of projects must be fully consistent with all other provisions of the citing agency’s SEP Policy and be approved on a case-by-case basis.
Projects that are generally not allowed as SEPs for the purpose of settlements include:
- General educational or environmental awareness projects that are not specifically related to violation
- Projects that lack a nexus to the enforcement action
- Studies with results that are not intended to be implemented by any party or utilized by the citing agency in developing environmental policy
- Projects required by statute or regulation
- Cash donations to local or state emergency response organizations.
Ditthavong & Steiner, P.C. has a strong reputation in helping companies that are being threatened by SEP related environmental violations. Ditthavong & Steiner work with clients to develop a customized legal strategy that fits the economics of the client.
The author Leonard Robinson is a former Gubernatorial appointee serving served under four California Governors and is currently the Senior Sustainability Strategist for Ditthavong & Steiner