Earlier this month, the Acting Assistant Attorney General supervising the Environment and Natural Resources Division (ENRD) at the U.S. Department of Justice (DOJ) has issued a memorandum rescinding nine policy or guidance documents issued for ENRD over the past three years. The documents generally concerned enforcement priorities and discretion and payments to third parties as part of settlements. The memorandum cites Executive Order 13,990, signed by President Joe Biden on January 20, 2021, which directs agencies to review agency agencies that may conflict with a range of environmental goals.
Some kind of shift in enforcement priorities may be expected for any particular division of DOJ during a change in administrations. But the rescission of documents related to third-party payments represents a bigger proxy fight in environmental enforcement. Third-party payments are relevant to two common components of environmental settlements: mitigation and supplemental environmental projects (SEPs). Mitigation typically involves offsetting alleged environmental harm — for example, where the Environmental Protection Agency determined a party’s air emissions have exceeded regulatory standards, that party may agree as a condition of settlement to implement measures that produce offsetting emissions reductions in addition to paying a civil penalty. SEPs generally allow for a settling defendant to complete environmentally beneficial projects that have a nexus with the underlying alleged violations to offset the civil penalty assessed.
Starting in 2018, ENRD issued a series of policy documents that prohibited conditioning environmental settlements on payments to third parties, which could affect mitigation or SEPs. Two additional policies in 2019 and 2020 targeted SEPs in particular, essentially barring their use in ENRD settlements. This policy was subsequently codified in a DOJ rule, effective in December 2020, that provides that “in no case shall any such agreements require defendants in environmental cases, in lieu of payment to the Federal Government, to expend funds to provide goods or services to third parties for Supplemental Environmental Project.” 28 C.F.R. § 50.28(c)(1). Although two of the rescinded policy documents concerning mitigation and SEPs were issued in January 2021, it remains to be seen whether the new regulation — which survives rescission of the various policy documents — may curtail future use of SEPs.