March 16, 2020
The Department of Justice (DOJ) will no longer allow polluting companies to reduce their fines by footing the bill for environmental projects, putting an end to a tool that’s been popular with both industry and government agencies.
Special Environmental Projects (SEPs), which have been used for roughly 30 years, let businesses reduce their civil penalties by taking steps such as cleaning streams or replacing old gas-guzzling school busses.
But a DOJ memo on Friday said the program violates the Miscellaneous Receipts Act, which requires money acquired by the government go to the U.S. Treasury. DOJ argued that SEPs could only legally be allowed with express authorization from Congress.
The agency said the special projects have been “controversial for decades” and suspended their use “both in light of their inconsistency with law and their departure from sound enforcement practices.”
That characterization has drawn criticism from former officials at both DOJ and the Environmental Protection Agency (EPA), which oversees most enforcement cases against polluting businesses.
“Everybody likes these for a reason,” said Cynthia Giles, who served as the assistant administrator of EPA’s Office of Enforcement during the Obama administration, adding that industry often asked her to do offer more SEPs.
“Communities like them because they are the people who have been harmed — this is their way to get redress. Companies like them — yes, because it helps them improve their public image but because it gives them a chance to give something back,” she said. “And government likes them because they help to resolve these cases in a way that benefits everyone.”
DOJ announced in August that it would limit certain types of SEPs while reviewing the program overall.
SEPs credit 80 percent of what companies spend on a project as a discount on whatever civil fines have been imposed by the government. Companies typically agree to projects that correspond with parts of the environment they polluted, such as air or water.
Francis Lyons, an environmental lawyer who previously worked on enforcement at DOJ and later at EPA, said the projects began to be rapidly adopted in the early 90s, when the concept was first rolled out.
“In that very short time they went from being the exception to pretty much the norm, so this is going to be a disappointment to the regulated community and the enforcement teams in the government,” he said.