KEY CHARACTERISTICS OF A SEP • Projects must improve, protect or reduce risks to public health or environment. • Be undertaken in settlement of an enforcement action. • Must be projects that alleged violator is not otherwise legally required to perform. • If a court is likely to order a particular activity as injunctive relief, then such action does not qualify as a SEP.
Federal Considerations for SEPS: • Project cannot be inconsistent with any provision of the underlying statute. • All penalty payments must be deposited into the U.S. Treasury unless otherwise authorized by law. • All projects must advance at least one of the objectives of the environmental statutes that are the basis of the enforcement action and must have adequate nexus.
What is Adequate Nexus? • Nexus is the relationship between the violation and the proposed project. • Relationship exists only if: • project reduces likelihood that similar violations will occur in the future; OR • project reduces adverse impact to public health or environment to which the violation at issue contributes; OR • project reduces the overall risk to public health or environment potentially affected by the violation at issue.
Federal Considerations Continued . . . • Agency may not play any role in managing or controlling funds that are set aside to perform the SEP. • Type and scope of the project must be defined in the signed settlement agreement. • Project cannot be used to satisfy the Agency’s statutory obligation to perform a particular activity. • Project may not provide any federal agency/federal grantee with additional resources to perform a particular activity for which Congress has specifically appropriated funds.
Categories of SEPS approved by EPA • Pollution Prevention – reduces the generation of pollution through “source reduction.” • Examples: • equipment or technical modifications • process or procedure modifications • reformulation or redesign of products • improvements in housekeeping, maintenance, training, inventory control or other operation and maintenance procedures • Pollution Reduction • May include the installation of more effective end-of-process control or treatment technology, or improved containment.
SEP Categories Continued … • Public Health -- diagnostic, preventative and/or remedial components of human health care. • acceptable where the primary benefit of project is the population that was harmed or put at risk by the violations. • Example: Violator agrees to hook up a non-filtered water system which poses health risks to the communities being served to a filtration plant meeting SDWA requirements.
SEP Categories Continued … • Environmental Restoration and Protection -- enhances the condition of the ecosystem or immediate geographic area adversely affected. • Examples: • Restoration of a wetland in the same ecosystem in which the facility is located. • Violator purchases and manages watershed area to protect drinking water supply that was affected by unreported discharges.
SEP Categories Continued . . . • Assessments and Audits • Emergency Planning and Preparedness • Environmental Compliance Promotion – provides training or technical support to other members of the regulated community • Example: • Violator developed website to educate college laboratories on RCRA compliance issues.
Projects Which Are NOT Acceptable SEPS • General public educational or public environmental awareness projects. • Contributions to environmental research at a college or university. • Conducting a project which is beneficial to a community but is unrelated to environmental protection. • Assessments without a requirement to address the problems identified in the study. • Projects which violator will receive federal financial assistance (i.e., low-interest federal loans, federal contracts, federal grants).
Final settlement penalty may be lower for a violator who agrees to perform an acceptable SEP compared to the violator who does not agree to perform a SEP.
Calculation of the Final Penalty • Net Costs to be incurred by a violator in performing a SEP may be considered as one factor in determining an appropriate settlement amount. • Final settlement penalty (cash paid) must equal or exceed either: • the economic benefit of noncompliance plus 10% of the gravity component; or • 25% of the gravity component only; whichever is greater. • Dollar for Dollar credit for SEP cost is generally not consistent with policy. • Generally penalty mitigation percentage should not exceed 80% of the SEP Cost.
EPA Policy and Guidance • Documents can be found at : • http://cfpub.epa.gov/compliance/ • resources/policies/civil/seps