The Nickel Report

The US Environmental Protection Agency (EPA) released its annual enforcement and compliance results for the most recent fiscal year (FY) on February 8, 2018. The results, which cover the period from October 1, 2016, to September 30, 2017, are the Trump administration’s first annual statistical report on federal environmental enforcement. The results provide insight into the administration’s focus and priorities for enforcement.

For instance, the report includes the following statistics:

• EPA assessed roughly $1.6 billion in federal administrative and civil judicial penalties in FY 2017. Of this total, $1.45 billion is attributed to the Clean Air Act settlement with Volkswagen. At first glance, this total is a sharp decline from the $5.9 billion in administrative and civil judicial penalties reported in FY 2016. However, FY 2016 was dominated by a roughly $5.7 billion settlement in connection with the Deepwater Horizon incident. With the exception of last year, FY 2017’s administrative and civil judicial penalties were greater than any year in the past decade.
• For FY 2017, EPA reported $2.98 billion in criminal fines, restitution and court ordered environmental projects. The criminal fine against Volkswagen, reached via settlement, accounted for $2.8 billion of this total.
• EPA inspections and compliance evaluations in FY 2017 dropped to 11,700, continuing a yearly decline over the past decade.
• The number of civil judicial and administrative cases EPA initiated declined to roughly 1,900, down from over 2,400 in FY 2016.

It is difficult to draw fully formed conclusions about trends in the coming years from the FY 2017 statistics because the reported results include cases initiated during the Obama administration that carried into the Trump administration, as well as some cases that concluded during the Obama administration’s final four months. The decreases in inspections and cases initiated may, however, be a harbinger for a decline in federal enforcement in the remaining years of the current administration.

EPA’s press release announcing the results includes a statement from Susan Parker Bodine, Assistant Administrator of the Office of Enforcement and Compliance Assurance (OECA), stating, “In fiscal year 2017, we focused on expediting site cleanup, deterring noncompliance, and returning facilities to compliance with the law, while respecting the cooperative federalism structure of our nation’s environmental laws.” The statistics reflect some of these priorities. For instance, EPA has made Superfund cleanup a top priority under the current administration, and the annual results show more than $1.2 billion in private party commitments toward site cleanup, roughly a $200 million increase from FY 2016.

The results likewise show a marked decrease in the value of agreements to undertake Supplemental Environmental Projects, dipping to $17 million this year, from $32 million in FY 2016. This may be the result of the administration’s new policies related to payments to third parties in settlement agreements to resolve federal claims or charges as we have previously reported.

Notably, the FY 2017 results do not include actions where EPA has provided assistance or otherwise deferred to state enforcement under the principal of cooperative federalism. The current administration has emphasized its position that EPA’s enforcement efforts should be focused on situations where states and tribes are not authorized, unable, or unwilling to take the lead in implementing and enforcing environmental programs. More recently, Bodine has also extolled the importance of informal enforcement. As EPA ramps up its efforts on informal enforcement actions and further defers to state led environmental enforcement, federal enforcement results in future fiscal years may show a continued drop in total number of cases and funds received.

FY 2018 statistics, expected in early 2019, will reflect the first full fiscal year of results under the Trump administration and may provide more insight into unfolding enforcement trends. In the meantime, every indication is that EPA continues to pursue higher profile enforcement cases and is increasing efforts to work directly with and provide funding to states in furtherance of its cooperative federalism priorities. Despite an appearance of a decline in federal enforcement, the statistics show that companies should remain vigilant in environmental practices and compliance.