The Nickel Report

On October 13, 2023, the US Department of Justice (DOJ) published its first annual report detailing the implementation of its Comprehensive Environmental Justice Enforcement Strategy (EJ Strategy). As we reported, in mid-2022, DOJ established an Office of Environmental Justice (OEJ), and the US Environmental Protection Agency (EPA) established a new Office of Environmental Justice (EJ) and External Civil Rights. DOJ’s OEJ is housed in the Environmental and Natural Resources Division (ENRD). DOJ intended its EJ Strategy to extend throughout the Department, in that OEJ’s mandate is to engage all DOJ bureaus, components, and offices in the collective pursuit of environmental justice. DOJ’s new report cites two main executive branch agencies involved in environmental protection and community development: EPA and the Department of Housing and Urban Development (HUD). The report touts efforts that DOJ views as EJ-related “successes” and details a number of authorities DOJ has relied upon in EJ-focused enforcement, including Title VI of the Civil Rights Act, the Clean Air Act, the Safe Drinking Water Act, and the Affordable Care Act. Building on these highlighted successes, DOJ states that it will continue its focus on enforcement proceedings where there is a nexus with environmental justice and will seek EJ-focused mitigation to resolve such proceedings. 

In a wide-ranging interview on environmental justice (EJ) issues with Inside EPA, Hunton Andrews Kurth LLP partner Matt Leopold discussed the US Department of Justice (DOJ) and Environmental Protection Agency’s (EPA) new enforcement strategy.

On August 11, the US Department of Justice (DOJ) released a new report that promotes constructive recommendations to modernize and improve the Administrative Procedure Act (APA).  In 1946, Congress enacted the APA to establish procedures as a check on administrative power, and to provide the public with some degree of due process in the face of regulatory action.  As it relates to the Clean Water Act, Clean Air Act, Endangered Species Act, and other relevant environmental regulatory programs, the APA provides the framework under which federal agencies develop and promulgate regulations to implement these programs.  Since Congress passed the APA over 70 years ago, the size and scope of federal regulatory authority has ballooned in size, leading at times to inefficiencies in the rulemaking process and a lack of accountability.  To address these shortcomings, DOJ hosted a summit in December 2019 that brought together leading regulatory practitioners, scholars, and policymakers to discuss possible reform.  Although legislative action in the near future is unlikely given the polarized political climate in Congress, the report puts forward a “rich menu of options” for Congress to revise the APA.

Last week, the US Environmental Protection Agency (EPA) released its annual enforcement results for the 2018 fiscal year (ranging from October 1, 2017, to September 30, 2018). The report, prepared by EPA’s Office of Enforcement and Compliance Assurance (OECA), highlights the results of the agency’s civil and criminal enforcement of the nation’s federal environmental laws over the past year. The 2018 results mark the first full fiscal year of enforcement results, including inspections and compliance evaluations, under the Trump administration. A statement in the report from Susan Bodine, the Assistant Administrator for OECA, summarizes EPA’s enforcement priorities, explaining, “[i]n fiscal year 2018, we continued our focus 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 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.

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.