Environmental Enforcement

By Jeryl L. OlsonPatrick D. Joyce, and Craig B. Simonsen

Seyfarth Synopsis:  In another business-friendly move, the U.S. Department of Justice (USDOJ) recently directed its Attorneys to not use its civil enforcement authority for violations based on agency guidance documents.

On January 25, 2018, Associate Attorney General Rachel Brand released an Department memo “Limiting Use of Agency Guidance Documents In Affirmative Civil Enforcement Cases.” (“Brand Memo”), directed to the Heads of Civil Litigating Components within the USDOJ directing that the Department no longer prosecute cases based solely on violations of various agencies’ “guidance documents”.

The USDOJ, (which effectively acts as “outside counsel” to departments and agencies including the DOL, EPA, OSHA, ATF and DEA, among others, in cases exceeding certain penalty thresholds and other criteria) may no longer prosecute cases against alleged violators unless the violations are of properly promulgated regulatory requirements, not agency guidance documents or policies. The practice of agencies, such as EPA, pursuing enforcement actions against companies who have failed to comply with “guidance” has long been a concern of the regulated community and their defense counsel; we frequently challenge and object to EPA’s efforts to enforce “guidance” that has not gone through public notice ad comment rulemaking. It is a relief that the USDOJ will no longer be a party to such enforcement cases.

The Brand Memo is a follow-up to an earlier memo issued by Attorney General Jeff Sessions on November 16, 2017 (“Guidance Policy” or “Sessions Memo”), which instituted a new policy that prohibits the Department of Justice from using its civil enforcement authority to convert agency guidance documents into binding rules. The Sessions Memo “prevents the Department of Justice from evading required rulemaking processes by using guidance memos to create de facto regulations. In the past, the Department of Justice and other agencies had blurred the distinction between regulations and guidance documents.”

The Brand Memo states that “…consistent with our duty to uphold the rule of law with fair notice and due process, this policy helps restore the appropriate role of guidance documents and avoids rulemaking by enforcement.” “Although guidance documents can be helpful in educating the public about already existing law, they do not have the binding force or effect of law and should not be used as a substitute for rulemaking.”

Under the USDOJ’s new policy, USDOJ civil litigators are “prohibited from using guidance documents—or noncompliance with guidance documents—to establish violations of law in affirmative civil enforcement actions.”The Brand Memo also indicates that “the Guidance Policy . . . prohibits the Department from using its guidance documents to coerce regulated parties into taking any action or refraining from taking any action beyond what is required by the terms of the applicable statute or lawful regulation.” Finally, the Brand Memo confirms that the USDOJ “…should not treat a party’s noncompliance with an agency guidance document as presumptively or conclusively establishing that the party violated the applicable statute or regulation.”

While the Brand Memo applies only to future affirmative civil enforcement actions brought by the Department, as well as, “wherever practicable,” those matters pending as of January 25, 2018, we see the Guidance Policy and the Brand Memo as welcome relief from arbitrary use of guidance by departments and agencies such as the DOL, OSHA, or EPA in enforcement proceedings of regulated industry.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the Seyfarth OSHA Compliance, Enforcement & Litigation Team or the Environmental Compliance, Enforcement & Permitting Team.

By Andrew H. Perellis, Patrick D. Joyce, and Craig B. Simonsen

Seyfarth Synopsis: EPA has promulgated its new per violation penalty rules for 2018.

The U.S. Environmental Protection Agency (EPA) has again issued final regulations adjusting the maximum civil penalty dollar amounts for violations of various environmental regulations. 83 Fed. Reg. 1190 (January 10, 2018).

The action is mandated by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (2015 Act), which not only required an adjustment from 2015 penalty maximum levels to account for inflation, but also included a catch-up provision for inflation. The provision required each agency to evaluate and provide for an inflation adjustment dating back to the enactment of the relevant statute’s effective date. Section 5(b)(2)(C) of the 2015 Act provided that the maximum amount of any initial catch-up increase shall not exceed 150 percent of the level that was in effect on November 2, 2015. See related Implementation of the Federal Civil Penalties Inflation Adjustment Act, OMB Memorandum M-16-06 (February 24, 2016).

The 2015 Act required that, in addition to the initial catch-up, beginning January 15, 2017, each agency was required to make subsequent annual adjustments for inflation. The 2018 penalty adjustments will be effective January 15, 2018 for all violations which occur or occurred after November 2, 2015 and are assessed after January 15, 2018.

The 2018 rulemaking sets the maximum penalty by statute. For example, the $25,000 per-violation maximum penalty under the Clean Air Act will now be inflation-adjusted to $46,192; under the Clean Water Act will now be $46,192; under RCRA will now be in a range of $58,562 to $72,718, and under CERCLA (including most EPCRA violations) will now be $55,907. Other maximum penalties are also adjusted.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the Environmental Compliance, Enforcement & Permitting Team.

By Andrew H. PerellisPatrick D. Joyce, and Craig B. Simonsen

Seyfarth Synopsis: Businesses and industries across the country which own or have interests in facilities and properties that may come under the broad scope of these new Superfund “Recommendations” will need to stay attuned and involved with what the Agency is doing relating to your interests. 

The U.S. Environmental Protection Agency recently released its Superfund Task Force Recommendations Report (Report). The report, ambitiously, provides “42 specific and detailed recommendations to streamline and improve the Superfund program.” Along with the Report, EPA Administrator Scott Pruitt also released a directive to EPA leaders and offices across the Agency of eleven “specific actions that should be implemented right away, with renewed focus,” including the identification, within 60 days, of the “sites where the risk of human exposure is not fully controlled.”

The Agency claims in its news release on the Report that “the recommendations of the Superfund Task Force, when implemented, will improve and expedite the process of site remediation and promote reuse.” The 42 Superfund Task Force recommendations are organized into five goals:

  1. Expediting Cleanup and Remediation;
  2. Re-invigorating Responsible Party Cleanup and Reuse;
  3. Encouraging Private Investment;
  4. Promoting Redevelopment and Community Revitalization; and
  5. Engaging Partners and Stakeholders.

In addition, the goals in the Task Force Report are accompanied by a set of strategies that include actions which are to commence in as little as 30 days from the Report’s approval.

A few of the notable recommendations include:

  • Providing “reduced-oversight incentives” to cooperative, “high-performing PRPs,” and use of enforcement tools as disincentives for protracted negotiations, or slow performance under cleanup agreements, including”
    • actively using enforcement authorities, including more prevalent issuance of unilateral orders to recalcitrant parties to discourage protracted negotiations
    • prohibiting PRPs from multiple chances to revise the same document when initial submittal is subpar
  • Focusing on sites which have “taken far too long to remediate” including:
    • establishing an “Administrator’s Top Ten” list which will get Administrator Pruitt’s weekly attention and
    • directing additional resources to sites that have been on the National Priorities List (NPL) for five years or longer;
  • Identifying third parties to invest in NPL sites and other “innovative tools” to “accelerate cleanups and promote reuse” such as:
    • utilizing alternative approaches to financing site cleanups, including environmental liability transfer and protections for third party investors and
    • working with PRPs to better integrate reuse needs into cleanup activities;
  • Prioritizing NPL sites where remedies have already been selected;
  • Encouraging the use of new technologies and clean up approaches by PRPs; and
  • Incentivizing PRPs who perform “timely, high quality cleanup” such as:
    • reducing oversight costs for PRPs that perform timely, high quality work and
    • increasing PRP and Agency adherence to project deadlines.

For businesses and industries across the country which own or have interests in facilities and properties that may come under the broad scope of these new Recommendations, diligence and attention are the key words. Stay tuned and involved with what the Agency is doing relating to your interests.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the Seyfarth Environmental Compliance, Enforcement & Permitting Team.

By Andrew H. Perellis, Kay R. Bonza, and Craig B. Simonsen

EPA SignSeyfarth Synopsis: The EPA and Army Corps of Engineers have proposed to rescind the 2015 Clean Water Rule defining “Waters of the U.S.,” and recodify the pre-existing rule, then engage in a subsequent rulemaking to re-evaluate and revise the definition of WOTUS presumably intended to decrease in the number of water bodies subject to EPA permitting obligations.

The U.S. Environmental Protection Agency and the Army Corps of Engineers have published a proposed rule on the “Definition of “Waters of the United States” – Recodification of Pre-Existing Rules.”

We had previously blogged about the EPA’s monumental final rule, in June 2015, expanding the definition of “Waters of the United States” (WOTUS) under the Clean Water Act, thereby increasing the number of water bodies subject to protection by the EPA through permitting obligations. The final rule was based on EPA’s Science Advisory Board’s draft scientific report, “Connectivity of Streams and Wetlands to Downstream Waters: A Review and Synthesis of the Scientific Evidence.” EPA/600/R-11/098B (September 2013).

In commenting on the proposed rule to rescind the WOTUS rule, EPA Administrator Scott Pruitt said, “we are taking significant action to return power to the states and provide regulatory certainty to our nation’s farmers and businesses …. This is the first step in the two-step process to redefine ‘waters of the U.S.’ and we are committed to moving through this re-evaluation to quickly provide regulatory certainty, in a way that is thoughtful, transparent and collaborative with other agencies and the public.”

The proposed rescission follows President Trump’s February 28, 2017, Executive Order on “Restoring the Rule of Law, Federalism, and Economic Growth by Reviewing the ‘Waters of the United States’ Rule.”  The effect of the rescission would be to recodify the regulatory text that was in place prior to the 2015 Clean Water Rule and that is currently in place as a result of a U.S. Court of Appeals for the Sixth Circuit’s stay of the 2015 rule. Therefore, according to the EPA press release, this action, when final, “will not change current practice with respect to how the definition applies.”

EPA also notes that the agencies have begun deliberations and outreach on the second step of the rulemaking involving a reevaluation and revision of the definition of WOTUS in accordance with the Executive Order.

The regulated community — industry, municipalities, developers, builders, and a host of others — should watch and monitor this rulemaking effort closely.  While this initial step will recodify the pre-existing rule, the subsequent rulemaking to re-evaluate and revise the definition of WOTUS presumably is intended to reduce the number of regulated water bodies constituting “waters of the United States,” thereby decreasing permitting obligations, or subjecting fewer entities to permitting requirements as a result of a narrower definition of WOTUS.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the Seyfarth Environmental Compliance, Enforcement & Permitting Team.

By Andrew H. Perellis, Kay R. Bonza, and Craig B. Simonsen

iStock_000009254156LargeSeyfarth Synopsis: The U.S. Attorney General has directed the Department of Justice to no longer allow payments to third parties as part of resolving federal cases.  For environmental cases, this prohibition could significantly limit, if not ban, the use of SEPs.

Attorney General Jeff Sessions issued a memo last week to all Department of Justice staff and 94 U.S. Attorney’s Offices, prohibiting payments to nongovernmental entities that are not a party to the litigation as part of a negotiated settlement.  Several environmental groups have interpreted this memo to altogether ban supplemental environmental projects (SEPs) in matters where DOJ is involved.

We previously blogged about EPA’s updated policy documents involving SEPs.  In the environmental context, SEPs are used to allow an alleged violator to voluntarily undertake an environmentally beneficial project related to the violation, in exchange for mitigation of the penalty to be paid.  EPA has traditionally viewed SEPs as furthering “EPA’s goal of protecting and enhancing public health and the environment.”  For example, one company paid for soil restoration on federal land as part of its compensation for air pollution violations at some of its power plants in North Carolina.  Corporate defendants have been agreeable to SEPs as they promote positive public relations.

Not every environmental settlement requires the involvement of DOJ, so for these matters, at least for the moment, SEPs remain available in resolving an alleged violation.  But for matters that require referral to DOJ for resolution, it is a different outcome.  The Attorney General’s memo prohibits DOJ attorneys from entering into “any agreement on behalf of the United States in settlement of federal claims or charges…that directs or provides for a payment or loan to any non-governmental person or entity that is not a party to the dispute.”  By doing this, Sessions is seeking to curb settlement funds from being used to benefit third-party special interest groups or political friends of those in power.

The Sessions’ memo includes two exceptions that may allow SEPs to be utilized in narrow circumstances – when structured so that a governmental entity, instead of a non-governmental organization, receives the SEP benefit, and when the benefit “directly remedies the harm.”  It remains to be seen how DOJ will apply these exceptions as the Sessions’ memo does not elaborate as what constitutes a “governmental entity” or the nexus needed to “directly remedy the harm.”  What is clear is that corporate defendants will see a reduction in the use of SEPs as part of environmental settlement agreements that are negotiated by the DOJ.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the Seyfarth Environmental Compliance, Enforcement & Permitting Team.

By Andrew H. Perellis, Kay R. Bonza, and Patrick D. Joyce

Seyfarth Synopsis: With a dramatic change from a progressive democratic to a conservative republican administration, we anticipate that EPA is not only likely to pivot away from an enforcement heavy to a more business friendly agenda, it is also likely to abandon many of the previous administration’s landmark climate regulations and take a more measured approach to climate change.

The U.S. presidential election outcome has left many with questions about what to expect with the new administration and a Republican-controlled Congress. However one thing is certain: we will experience a 180 degree shift in current environmental policy when Donald Trump takes office in January 2017.  Below is a synopsis of the key environmental changes we expect to see under the Trump administration, although, of course, nothing is certain given the overall lack of information regarding Mr. Trump’s policy proposals and no background as to how he will act as an elected official.

Regulatory Reform

Mr. Trump has stated that he will likely issue a temporary moratorium on all new environmental regulation, and plans to strike regulations which his administration deems “unnecessary” and that “kill jobs and bloat government.”  Specific rules Mr. Trump has singled out to “eliminate” include: the Interior Department’s proposed Stream Protection Rule to safeguard communities from coal mining operations; the EPA and Army Corps of Engineers’ Clean Water Rule redefining water bodies subject to federal jurisdiction and protection; and EPA’s Clean Power Plan which requires states to develop strategies to reduce carbon dioxide emissions from power plants.

In addition, currently proposed EPA rules will likely not be made final, and environmental regulations facing challenges in the courts could be weakly defended by the Justice Department at the direction of the new administration. It is also possible any regulations that make it to the U.S. Supreme Court will be struck down by a conservative Court. Rescinding regulations that do not fall in line with the new administration is a possibility, but one that requires another EPA rulemaking process that may face challenges by environmental groups and states in support of the regulations.

Energy

Mr. Trump has indicated he has plans to revamp U.S. energy policies to make the U.S. a net energy exporter by opening onshore and offshore leasing on federal lands and waters to encourage production of energy resources. He also has hinted at plans to review all “anti-coal regulations,” rescind the coal mining lease moratorium on new federal coal leases announced in January 2016, and open up more public land for fossil fuel extraction. Eliminating the proposed Stream Protection Rule will remove regulatory requirements for the coal mining industry to consider the effects of their operations on groundwater, surface water, and endangered species, making it cheaper and easier to mine coal.  At the same time, the new administration is likely to focus on promoting policies and regulations to develop the infrastructure necessary for the export of fossil fuels.

While the fossil fuel industries may receive less scrutiny under environmental regulations under the Trump administration, the new administration may not change the renewable energy sector significantly because individual states have made significant progress in this area. For example, many states now require utilities to draw a percentage of their generation capacity from renewable energy sources and have implemented policies and set future goals to increase the use of renewable sources.  Corporations are increasingly procuring their own power, from rooftop solar energy to utility-scale wind farms, all of which are contributing energy to the electric grid.  Federal regulation that may interfere with states’ progress in the renewable energy sector is unlikely given Mr. Trump’s disfavor for regulations and the Republican position against limiting states’ rights.

Climate Change

Under the new administration, and with climate change skeptic Myron Ebell on the shortlist to become EPA Administrator, regulations for controlling greenhouse-gas emissions face a high likelihood of being scrapped, including the Clean Power Plan, mentioned above, and the Obama administration’s Climate Action Plan.  It is also highly like the U.S. will back out of the Paris Agreement, where more than 190 countries agreed to reduce their carbon dioxide emissions and limit global warming to below two degrees Celsius.  The agreement calls for “appropriate financial flows, a new technology framework and an enhanced capacity building framework” to support action by developing and vulnerable countries.  While formally withdrawing from the agreement may prove difficult due to a time-specific exit clause barring exit for three years from the date of ratification, followed by a one-year waiting period upon a request to withdraw, the new administration could opt to ignore the agreement and refuse to provide financial aid.  Without the participation of the U.S., the world’s second-largest greenhouse gas polluter, the goal to limit global warming may be unattainable.

Supreme Court and Agency Decision-making

With a Republican president and Republican-controlled Congress, a conservative Justice will almost certainly be appointed to the U.S. Supreme Court and as a result, we expect the Court to be less deferential to agency decision-making. We had previously blogged about the U.S. Supreme Court’s decision in Perez v. Mortgage Bankers Association and indicated that conservative leaning Supreme Court justices have called into question whether agency interpretations of their own regulations should be given any judicial deference.  The appointment of a conservative Justice could tip the scale in favor of curbing the level of deference given to agency interpretations, thereby prompting agencies like the EPA to undertake the formal rulemaking process more frequently to amend their interpretations of existing rules.

EPA’s National Enforcement Initiatives

The EPA selects National Enforcement Initiatives (NEIs) every three years, to prioritize its resources on the most significant environmental risks that can be mitigated by government action, and those issues where noncompliance is a significant contributing factor.  The NEIs for fiscal years 2017 – 2019 went into effect on October 1, 2016, and include: a focus on reducing air pollution from the largest sources and reducing hazardous air pollutants; ensuring energy extraction activities comply with environmental laws; reducing pollution from mineral processing operations and reducing risks of accidental releases at industrial and chemical facilities; and protection the nation’s waters from industrial pollutants, raw sewage, contaminated stormwater, and animal waste.

These enforcement priorities will very likely shift under the new administration which has the ability to redirect resources from one priority to another. Given Mr. Trump’s focus on revamping the U.S. coal industry, he is likely to de-emphasize the enforcement of environmental laws in the energy extraction sector and instead opt for a business-friendly approach.  The EPA as a whole may begin to approach enforcement more reactively when incidents prompt intervention, rather than proactively to prevent environmental disasters.  Enforcement may be replaced by increased agency initiatives to promote compliance assistance and more heavily consider the costs of environmental compliance on the regulated community.  Decreased enforcement activity could in turn lead to citizen suits to force the EPA to enforce its regulations.

Conclusion

Navigating environmental policy under the new administration will likely involve paying closer attention to state regulatory regimes that will move to the forefront in instances of reduced federal regulation. EPA could shift a large portion of environmental regulation and enforcement to the states, subjecting multi-state companies to different state-specific regulatory requirements.  We will continue to monitor the changes sure to take place for environmental compliance and enforcement under the Trump administration and will provide more clarity as the situation unfolds.  However, keep in mind that the EPA is like a cargo ship out on the ocean; it takes time to change course.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the Seyfarth Environmental Compliance, Enforcement & Permitting Team.

By Andrew H. Perellis, Patrick D. Joyce, and Craig B. Simonsen

Compliance Concept on İnterface Touch ScreenSeyfarth Synopsis: EPA finalized its new per violation penalty rules that in some cases now increase by substantial amounts.

In a federal rulemaking published last week, the U.S. Environmental Protection Agency (EPA) issued interim final regulations adjusting the maximum civil penalty dollar amounts for violations of various provisions of law. 81 Fed. Reg. 43091 (July 1, 2016).

The recently enacted Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (2015 Act), not only required an adjustment form current penalty maximum levels to account for inflation, but also included a catch-up provision for inflation. That requires each agency to evaluate and provide for an inflation adjustment dating back to the enactment of the relevant statute’s effective date. (Section 5(b)(2)(C) of the 2015 Act provides that the maximum amount of any initial catch-up increase shall not exceed 150 percent of the level that was in effect on November 2, 2015.) See related Implementation of the Federal Civil Penalties Inflation Adjustment Act, OMB Memorandum M-16-06 (February 24, 2016). In addition, beginning January 15, 2017, each agency must make subsequent annual adjustments for inflation.

EPA’s interim final rule revises Table 2 to 40 CFR 19.4, showing the results of the Agency’s calculations and adjustments, that include: (1) the maximum or minimum penalty level established when each statutory section was originally enacted or last adjusted by Congress; and (2) the statutory maximum or minimum civil penalty level, adjusted for inflation under the 2015 Act, that applies to statutory civil penalties assessed on or after August 1, 2016 for violations that occurred after November 2, 2015.

Readers familiar with EPA’s penalty structure know that statutory penalties of $25,000 per day per violation were previously adjusted for inflation to $37,500. With the catch up provision under the interim final rule, the maximum penalty will vary by statute. For example, the $25,000 per violation penalty under the Clean Air Act is now $44,539; under the Clean Water Act is now $44,539; under RCRA is now in a range of $56,467 to $70,117, and under CERCLA (including most EPCRA violations) is now $53,907. Other maximum penalties are also adjusted.

The new civil penalty amounts are applicable only to civil penalties assessed after Aug. 1, 2016, whose associated violations occurred after Nov. 2, 2015.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the Environmental Compliance, Enforcement & Permitting Team.

By Andrew H. Perellis, Patrick D. Joyce, and Craig B. Simonsen

US Supreme Court Capitol Hill Daytime Washington DCSeyfarth Synopsis: The Supreme Court decided that Army Corps’ jurisdictional determinations are judicially reviewable. This decision leaves open the question of whether other types of administrative decisions are immediately judicially reviewable.

In a significant victory for owners of private property, the Supreme Court of the United States (SCOTUS) decided this week that an Army Corps of Engineers (Corps) jurisdictional determination (JD) is a final agency action judicially reviewable under the Administrative Procedure Act (APA).  U.S. Army Corps of Engineers v. Hawkes Co., Inc., et al., No. 15-290, 578 U.S. ____ (May 31, 2016).

The issue presented was whether a so-called “approved” jurisdictional determination — the government’s determination that a wetland is regulated under the Clean Water Act (CWA) thereby requiring a permit to dredge or fill — is immediately reviewable. The Hawkes decision builds on the holding of Sackett v. EPA, 132 S. Ct. 1367 (2012) (see our earlier blog on the Sackett decision) where SCOTUS concluded that an EPA compliance order issued under the CWA requiring that a developer cease its filling activity of an allegedly regulated wetland was judicially reviewable. SCOTUS rejected the Government’s contention that the landowner has to await EPA’s judicial enforcement of that order.

Following Sackett, the Circuit Courts of Appeal have split as to whether a landowner receiving a JD finding the wetland to be CWA-regulated is final and reviewable — with the Eighth Circuit holding yes, and the Fifth Circuit holding no.

In Hawkes, the plaintiffs sought to mine peat from wetland property. The Corps upset that plan when it issued an approved JD that the property constituted “waters of the United States” (WOTUS), requiring the plaintiffs to obtain a permit to discharge dredged or fill materials into these “navigable waters.” Approved JDs present a definitive statement that waters of the United States are, or are not, present. The Corps also issues “preliminary” JDs that only tell a landowner that waters of the United States “may” be present. Preliminary JDs were not at issue in this case. An approved JD is binding upon the Corps and EPA. For example, where the JD concludes that a CWA-regulated wetland is not involved, it provides the landowner with a “safe-harbor” for five years, under which it is free to develop its property without need to obtain a permit. For this reason, SCOTUS concluded that the JD affects the plaintiffs’ rights and obligations and has legal consequences, making it reviewable.

This SCOTUS determination could have heightened importance in the context of the EPA’s and the Corps’ recent release of the Final Clean Water Rule: Definition of “Waters of the United States.” We blogged about this new rule when it was published. The new WOTUS rule will substantially increase the number of potential wetlands, making a challenge to the Corps’ Jurisdictional Determinations more likely now that SCOTUS has decided that they are judicially reviewable.

The Hawkes decision also leaves open questions of whether other types of administrative decisions are immediately judicially reviewable. In a related Law360 Expert Analysis (Water Case Shows Justices Warm To Review Of Fed. Agencies), Andy Perellis notes that “there is potentially a universe of agency actions such as guidance documents or opinion letters that in the past have evaded judicial review that may be reviewable because those agency determinations have immediate consequences.”

By Andrew H. Perellis, Patrick D. Joyce, and Craig B. Simonsen

Supreme CourtThe Supreme Court of the United States (SCOTUS) agreed on Friday to review an important Clean Water Act (CWA) decision issued by the Eighth Circuit in Hawkes Co., Inc., et al. v. U.S. Army Corps of Engineers, No. 13-3067 (April 10, 2015).

The issue presented for SCOTUS is whether an Approved Jurisdictional Determination — the first step in the wetlands permitting process — is immediately reviewable. The Supreme Court showed similar interest in  Sackett v. EPA, 132 S. Ct. 1367 (2012). See our earlier blog on the Sackett decision.  At issue in Sackett was an EPA compliance order issued under the CWA requiring that the developer cease its filling activity of an allegedly regulated wetland. Later, rather than sooner, judicial review can leave the landowner open to considerable expenses.

In Sackett, SCOTUS found the compliance order to be reviewable once issued, so that the landowner did not have to await EPA’s judicial enforcement of that order. Following Sackett, the courts have split as to whether  an Approved Jurisdictional Determination is similarly reviewable — with the Eighth Circuit holding yes, and the Fifth Circuit holding no.

In Hawkes, the plaintiff sought to mine peat from wetland property. The U.S. Army Corps of Engineers (Corps) upset that business plan when it issued an Approved Jurisdictional Determination that the property constituted “waters of the United States” (WOTUS), and therefore the company was  required to obtain a permit to discharge dredged or fill materials into these “navigable waters.”

Review of the Approved Jurisdictional Determination was brought before the District Court. The District Court concluded that an Approved Jurisdictional Determination, although the consummation of the Corps’ decisionmaking process, was not a “final agency action” subject to judicial review within the meaning of the Administrative Procedure Act, 5 U.S.C. § 704. While the appeal of that decision was pending before the Eighth Circuit, a panel of the Fifth Circuit reached a similar conclusion. Belle Co., LLC v. U.S. Army Corps of Engineers, 761 F.3d 383 (5th Cir. 2014), cert. denied, 83 U.S.L.W. 3291 (U.S. Mar. 23, 2015) (No. 14-493).

The Eighth Circuit concluded that the District Court (as well as the Fifth Circuit in Belle) “misapplied the Supreme Court’s decision in Sackett v. EPA, 132 S. Ct. 1367 (2012),” and reversed the District Court opinion.

The SCOTUS determination could have heightened importance in the context of the EPA and the Corps recent release of its Final Clean Water Rule: Definition of “Waters of the United States.” We had blogged about the new rule when it was published. The new WOTUS rule will substantially increase the number of potential wetlands, making challenges to the Corps’ Approved Jurisdictional Determinations more likely if SCOTUS determines that such a determination is judicially reviewable.

By Andrew H. Perellis, Patrick D. Joyce, and Craig B. Simonsen

The U.S. Environmental Protection Agency recently updated its Supplemental Environmental Project (SEP) Policy.

Most federal actions for failure to comply with the environmental laws are resolved through settlement agreements. As part of a settlement, an alleged violator may voluntarily undertake a supplemental environmental project (SEP), which is an environmentally beneficial project related to the violation in exchange for mitigation of the penalty to be paid.

SEPs are projects or activities that go beyond what could legally be required in order for the defendant to return to compliance, and secure environmental or public health benefits in addition to those achieved by compliance with applicable laws. According to EPA, SEPs generally “further EPA’s goal of protecting and enhancing the public health and the environment.”

SEPs can also help to further the EPA’s mission to protect public health and the environment, which includes, but is not limited to:

  • Improving Children’s Health – SEPs that reduce children’s exposure to, or health impacts from, pollutants, and/or that reduce environmental risks to children in the community impacted by a violation are actively sought and encouraged.
  • Furthering Environmental Justice – SEPs that help promote environmental justice through a variety of projects is an overarching goal of EPA, because environmental justice is one of the six critical factors on which SEP proposals are evaluated. SEPs that benefit communities with environmental justice concerns are actively sought and encouraged.
  • Encouraging Pollution Prevention – Projects that prevent the generation of pollution often provide the chance to utilize new and innovative technologies. Effectiveness in developing and implementing pollution prevention techniques and practices is also a factor in evaluating a SEP, and can be reflected in the degree of consideration accorded to the defendant in the calculation of the final settlement penalty; such projects are actively sought and encouraged.
  • Developing Innovative Technology – SEPs provide defendants with an opportunity to develop and demonstrate new technologies that may prove more protective of human health and the environment than existing processes and procedures. SEPs also provide the EPA with a unique opportunity to observe and evaluate new technologies which might, should they prove effective and efficient, lead to better standard industry practices. Technology innovations may also be a means to assure that future industry and other commercial practices are sustainable, reflect the best available technology, and lead to continued long-term pollution reductions and improved public and environmental health. Innovative technology can take a variety of forms and may be applied broadly across environmental media and commercial, industrial and municipal activities, processes and practices.
  • Preventing Climate Change – Projects that address the causes of climate change and reduce or prevent emissions of climate change pollutants and greenhouse gases, such as carbon dioxide are encouraged as SEPs. In addition, projects that address the impacts of climate change and help increase a community’s resilience in the face of these impacts on ecosystems or infrastructure are also encouraged as SEPs.

The 2015 Update applies to all civil judicial and administrative enforcement actions taken under the authority of the environmental statutes and regulations that the EPA administers. The Update also applies to federal agencies that are liable for the payment of civil penalties.

Under the 2015 Update, to include a proposed project in a settlement as a SEP, Agency enforcement and compliance personnel are expected to ensure:

  1. That the project conforms to the basic definition of a SEP);
  2. That all legal guidelines are satisfied;
  3. That the project fits within one (or more) of the designated categories of SEPs;
  4. That the penalty mitigation amount is appropriate as reflected in the project’s environmental or public health benefits using the evaluation criteria; and
  5. That the project satisfies all of the EPA procedures, settlement requirements, and other criteria.

The 2015 Update notes that “in some cases, strict application of this Policy may not be appropriate…In such cases, the litigation team may use an alternative or modified approach, with advance approval from the Assistant Administrator for the Office of Enforcement and Compliance Assurance (OECA).”

EPA has identified eight broad categories of projects that may be acceptable for SEPs:

(1) public health, (2) pollution prevention, (3) pollution reduction, (4) environmental restoration and protection, (5) emergency planning and preparedness, (6) assessments and audits, (7) environmental compliance promotion, or, generally, (8) other types of projects.

EPA has also identified several types of projects that are not appropriate for SEPs including, but not limited to, general public educational or public environmental awareness projects, contributions to environmental research at a college or university, cash donations to community groups or environmental organizations, and projects which are undertaken, in whole or in part, using funds obtained from the federal government.

Seyfarth Shaw has negotiated numerous SEPs with EPA as part of a settlement agreement. If you have questions about SEPs or would like assistance negotiating a settlement with EPA, please contact your Seyfarth Shaw attorney for guidance.

The 2015 Update supersedes the 1998 Policy, and is effective immediately.