For decades prior to the Trump Administration, Supplemental Environmental Projects (“SEPs”), have been incorporated into environmental enforcement settlements by the U.S. Department of Justice (“DOJ”) as an efficient way to achieve environmental progress following an environmental violation, and mitigate civil penalties. However, starting in June 2017, the legality of SEPs began to be questioned by DOJ and its Environment and Natural Resources Division (“ENRD”). After a series of memorandums issued by DOJ and ENRD that followed, the use of SEPs in federal settlements was gradually restricted, and ultimately prohibited in March 2020.
In the days before the transition to the Biden Administration, ENRD issued two final memorandums on January 12 and 13, 2021 to present its position on the legality of SEPs, and provide the new administration with an alternative to SEPs that it asserts is legally defensible. The addition of these two memorandums provides a complete picture of the impacts to the SEP policy over the past four years, and the following article on the Chicago Bar Association’s @theBar blog provides an overview of where the SEP policy stands at the conclusion of the Trump Administration.
As the article notes, the Trump Administration left a carefully crafted legal justification for its policy prohibiting SEPs and for a compromised equitable mitigation approach, but these are still almost entirely reversible. Thus the Biden Administration now has the opportunity to either return to a policy of permitting SEPs in federal settlements, or to proceed with filling in the details of the Trump Administration’s compromised mitigation approach.
In just the first few weeks, the Biden Administration’s ENRD has already started to take action towards changing the SEP Policy — On February 4, 2021, ENRD withdrew the memorandums representing the Trump Administration’s position on the legality of SEPs. ENRD states that the withdrawal is appropriate because the referenced memorandums are “inconsistent with longstanding Division policy and practice and because they may impede the full exercise of enforcement discretion in the Division’s cases.”
The legal authority for the February 4th Memorandum is based on Executive Order 13,990, “Protecting Public Health and the Environment and Restoring Science To Tackle the Climate Crisis” which President Biden signed on the day of his inauguration. The Executive Order directs agencies to “immediately review and, as appropriate and consistent with applicable law, take action to address” regulations or agency actions “that conflict with these important national objectives.”
The February 4th memorandum does not automatically reinstate SEPs because it only withdraws the ENRD policy memorandums. The DOJ regulation prohibiting third party payments that is described by the January 13th Memorandum is still in effect, therefore the “separate, legal basis” for the prohibition on SEPs still exists and would need to be addressed by DOJ. Instead, this is a first step towards forming a new SEP or mitigation policy for which additional ENRD guidance is expected.
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