The Nickel Report

EPA’s Office of Enforcement and Compliance Assurance (OECA) recently announced a major shift in the agency’s approach to environmental enforcement, emphasizing swift, efficient achievement of compliance over punitive or expansive enforcement measures. The “Reinforcing a ‘Compliance First’ Orientation for Compliance Assurance and Civil Enforcement Activities” memo (not publicly available as of this writing) clarifies that EPA’s primary goal is to ensure compliance with federal environmental laws using the most defensible and clear interpretations of statutory or regulatory mandates, thereby reducing ambiguity and regulatory uncertainty to industry’s benefit. The memo has implications for future compliance and enforcement activity as well as ongoing cases.

Key Elements of EPA’s “Compliance First” Policy

1. Compliance First Principle: The memo establishes “compliance first” as the guiding principle for all EPA civil judicial and administrative enforcement activities. Compliance should be achieved through the most efficient, economical, and prompt means available. Enforcement actions are to focus on resolving noncompliance quickly, rather than pursuing prolonged punitive measures or interpretations that stretch beyond the plain meaning of the law.

2. Alignment with National Priorities: The policy aligns with the current administration’s “Powering the Great American Comeback” initiative and the “Five Pillars” announced by EPA Administrator Zeldin earlier this year. The memo expands on a previous OECA memo issued in March of this year, which directed that the program’s National Enforcement and Compliance Initiatives be implemented to accord with administration priorities.

3. Principles of the Compliance First Operating Framework

• Compliance Assistance Toolkit: EPA will deploy outreach, technical assistance, and training to help regulated entities understand and meet their obligations. Voluntary compliance is encouraged, including through self-reporting and voluntary audits.
• State Partner Coordination: Emphasis is on deference to state authorities for most compliance and enforcement work, requiring cooperation and communication with state agencies to avoid duplicative efforts and ensure consistency. EPA also will provide technical assistance, training, and collaborative tools to strengthen co-regulator capacity.
• Open Communication: Emphasis is on transparent, two-way communication between EPA, states, Tribes, and regulated entities. EPA’s objective is to operate in a “no surprises” environment, giving entities advance notice and clear expectations so they can address issues proactively.
• Clear Findings of Violation and Elevation of Issues: EPA must assert violations based on the “best reading” of applicable laws to avoid compliance delays and costs from litigating expansive or ambiguous interpretations. Under the policy, “[w]here a regulated entity raises concerns about how EPA has applied a statute or regulation to its specific case . . . such questions must be elevated immediately for further analysis.” While the memo does not specify to whom such issues will be “elevated,” OECA’s practice since the beginning of this administration has been to resolve such issues at the highest levels of OECA.
• Enforcement and Injunctive Relief: The memo rescinds EPA’s 2021 guidance document “Using All Appropriate Injunctive Relief Tools in Civil Enforcement Settlements” and prohibits supplemental environmental projects (SEPs) in settlement agreements pending further guidance. OECA’s Assistant Administrator approval is required for various forms of injunctive relief, such as third-party audits, verification, or monitoring, as well as any proposed settlement containing mitigation or stipulated remedies. To the extent injunctive relief is approved, it must be narrowly tailored to the violation and not create unnecessary burdens.
• Reasoned Decision-Making: Enforcement decisions must be logical, transparent, and based on a structured analysis that includes Law, Evidence, Analysis, Programmatic impact, and Stakeholder impact (the “LEAPS” factors). EPA uses as an example of stakeholder impacts, “act[ing] swiftly to limit actions from third parties who, through citizen suit litigation, unfairly impact policy through abusive litigation tactics.”

4. Implementation and Applicability: The memo is effective immediately for all EPA civil enforcement activities. The memo does not create enforceable rights or obligations for regulated entities but according to EPA is intended to improve EPA’s internal management and consistency.

Implications for Regulated Entities

The memo shows an important and notable shift in EPA’s enforcement approach. The focus on achieving compliance quickly and basing findings of violations on the “best reading” of the law may reduce regulatory uncertainty, litigation risk, and the time and cost associated with enforcement proceedings. The emphasis on open communication and transparency offers regulated entities more opportunities to understand regulatory expectations and address potential compliance issues proactively, which could reduce costs and mitigate potential penalties. That said, the policy has already been criticized by some in industry who see a potential for companies with less robust compliance systems and programs to benefit, effectively removing the incentive to invest in compliance programs. The agency’s moratorium on SEPs and limitations on other forms of injunctive relief may result in more predictable enforcement outcomes, though respondents may lose the opportunity to negotiate novel remedies and face steeper monetary penalties in the absence of injunctive offsets. But whether these concerns become reality remains to be seen based on how EPA actually implements the new policy.

Likewise regulated entities must realize, however, that changes in enforcement policy do not change the underlying law or regulations. As the memo makes clear, EPA will act swiftly and firmly in cases of egregious, repeated, or knowing noncompliance, particularly if there is a risk to public health or the environment, or if entities are uncooperative. Entities remain obligated to comply with all applicable laws, regulations, and permits. And it remains imperative to develop and maintain a robust compliance program and to be prepared for inspections and other interactions with regulators, including local, state and federal regulators.  Recall too that this policy could be supplemented or revoked once the current administration ends.

While it is common for new administrations to issue policy memoranda related to enforcement and compliance priorities, this “Compliance First” policy is unusual in that it requires EPA staff to elevate issues of interpretation or application. As noted above, the policy is not clear on where staff would elevate the issues, but our experience with pending enforcement actions shows that all issues are being reviewed at the highest levels within OECA. This new compliance first policy is likely to result in more issues being elevated, which may create significant case backlogs and further uncertainty for entities that are facing an enforcement action.

EPA’s mention of limiting citizen suits does not include any explanation or discussion of how the agency might do so. The typical statutory bar to citizen suits requires EPA or a state agency to be “diligently prosecuting” a matter which, at a minimum, requires filing an enforcement action. This language could be interpreted as EPA encouraging regulated entities settle with EPA to avoid a citizen suit even where EPA otherwise might not have taken enforcement action under this new policy. Regulated entities must continue to be aware of third-party interest in their operations to be in a position to best avoid and, if necessary, defend a citizen suit.

Finally, within compliance programming, regulated entities should note EPA’s continued emphasis on self-reporting and voluntary audits to identify and correct compliance gaps as appropriate, before any gaps become enforcement issues. And, where violations are alleged, entities should consult with counsel early in the process to evaluate strategies for engaging with EPA.