A “SEP” in the Right Direction, Part 1

Why in the aftermath of a chemical accident does the government seek enormous cash penalties for accident prevention, when instead they could do more to reap the benefits of improving the environment and the communities surrounding an incident, and at the same time the government could be more proactive in avoiding future environmental problems?

The EPA has provided the ideal vehicle to address the avoidance of environmental harm in the guise of Supplemental Environmental Projects (SEPs).  A SEP is an environmentally beneficial project or activity that is not required by law, but that a defendant agrees to undertake as part of the settlement of an enforcement action.  A violator may pay a reduced cash penalty amount, but rather than simply writing a big check, they invest the would–be penalty amount in the affected community.  The SEP shifts the focus toward a model where the offender works to right the harm caused by their actions.   Environmental violators are encouraged to consider SEPs in communities where there are environmental justice (EJ) concerns.  EJ is defined as the equitable distribution of environmental risks and benefits.  EPA has always been keen to address harms done to communities disproportionally burdened by exposure to pollutants.

After a chemical accident, it makes logical sense to seek to repair the harm done to the community and to obtain measurable benefits ― by seeking to facilitate quicker and more efficient responses associated with emergency events; by seeking to provide technical support to the impacted community; by developing plans to respond to releases associated with emergency events and by working to enhance local coordination with emergency responders.  If using a SEP can be viewed as a vehicle designed to make an aggrieved community whole, and if a particular SEP can enable a community to feel better equipped to handle an impending disaster, then why shouldn’t a SEP be the premier mitigation tool in the enforcement arsenal, and the preferred tool to a large cash penalty.

With a SEP, an alleged violator voluntarily agrees to undertake an environmentally beneficial project related to a violation.  The undertaking is not required by law, but is typically part of the settlement of an enforcement action.   The SEP encourages environmental protection and public health benefits to the community that has been harmed.   EPA insists that some nexus exists between the SEP and the violation.   For example, a company that violates the Clean Air Act may propose a SEP that reduces toxic air pollutants into the environment.  A SEP furthers EPA’s goal of protecting and enhancing the public health and the environment.  The environmental project must not be something that the violator is legally required to do. The SEP must, too, advance one of the objectives of the environmental statute that is the basis for the enforcement action.

For fiscal years 2017-2019 EPA’s National Enforcement Initiative (NEI) added Reducing the risks and impacts of industrial accidents and releases as one of three new initiatives.  EPA indicated in the notice announcing the initiative that approximately 2,000 facilities are currently considered “high risk” because of their proximity to densely populated areas, the quantity and number of extremely hazardous substances they use, or their history of significant accidents.  EPA’s stated goal is to increase industry attention to preventing accidents, instead of addressing problems after the accidents occur.  So in settling an environmental enforcement action, it makes good sense to use a SEP.

On September 21, 2015 EPA announced a proposed settlement with Bayer CropScience (BCS) to resolve GDC (General Duty Clause) and RMP (risk management program) under The Clean Air Act (CAA) 112 (r) (1) and (7) for violations at its Institute, West Virginia plant arising from a chemical explosion, where two persons died, and some residents of the surrounding area needed to be evacuated.   BCS will fund over $4 million in SEPs, spend $450,000 in safety improvements at it chemical storage facilities across the United States and pay a fine of $975,000.  On August 9, 2016 the WV federal court finalized the settlement, by entering the consent decree.  The next blog will expand upon the details of BCS settlement with the government and focus on the specific SEPs agreed upon.

It is no accident that EPA’s 2017-2019 National Enforcement Initiative includes risks from the impacts of industrial accidents and releases.  In many ways EPA is looking to beef up its response to chemical releases.  Operations in various industries still present significant risks of accidental chemical releases. The Clean Air Act General Duty Clause (GDC) requires facilities with extremely hazardous substances present in any amount to know the chemical hazards, assess the consequences of releases, design, and operate the facility to prevent accidental releases and minimize the consequences of any release.

Companies can derive enormous benefits from implementing auditing programs for ensuring compliance with regulations, reviewing their chemical use, storage and handling practices, and whether their non-regulated chemical can be substituted for regulated ones or whether they can reduce quantities to below applicable RMP thresholds. All of these actions can compliment the good results supplemental environmental project could bring to a facility, and the surrounding community.

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