Earlier this week, Attorney General Sessions issued a brief memorandum barring DOJ from entering into any civil or criminal settlement that would provide for a payment by a defendant to any non-governmental person that is not a party to the dispute.
Where does this leave the common practice of mitigating enforcement penalties through the implementation of Supplemental Environmental Projects? Hanging on by a thread, I’d say.
The memo does have two exceptions potential relevant to environmental cases. First, it only applies to “non-governmental” persons and entities. Thus, if a SEP can be structured so that a governmental entity receives the benefit of the SEP, that would still seem to be kosher. Second, the prohibition does not apply to:
an otherwise lawful payment that directly remedies the harm that is sought to be redressed, including, for example, harm to the environment.
As practitioners know, EPA and DOJ have historically required some kind of nexus between the SEP and the alleged harm resulting from the alleged violation, but in my experience DOJ would be hard-pressed in most cases to demonstrate that the SEP payment “directly remedies the harm.”
Corporate defendants often want to implement SEPs, either because they think that the money is better spent on the SEP than on a penalty or because they believe that they will receive a public relations benefit. This thus seems an example of biting off the corporate defendant’s nose to spite the NGO’s face, but what do I know.
Finally, I love the sentence in which the AG states that “[i]t has come to my attention that certain previous settlements” involved SEPs. It’s not as though EPA or DOJ were hiding the fact that SEPs are frequent part of settlements. In fact, they are generally trumpeted by the government. This feels to me a little like Claude Rains in Casablanca. “I am shocked, shocked, to find that SEPs are being entered into here.”
Sadly ironic that this comes less than a month after the death of Robert Boyle, who, beginning in 1965, used shared penalty money from Hudson River settlements to found Riverkeeper ( then the Hudson River Fishermen’s Association) and set in motion the evolutionary process that resulted in SEPs.