Supplement Environmental Projects (SEP) Policy

This is an overview of EPA's Supplemental Environmental Projects Policy. As such, it does not contain all the terms, conditions, and limitations of the Policy. However, a copy of the policy in full can be found on EPA's SEP Home Page.

What is a Supplement Environmental Project (SEP)?

A supplemental environmental project (SEP) is an environmentally beneficial project which a violator voluntarily agrees to perform as part of a settlement of an enforcement action. In return, EPA agrees to reduce the monetary penalty that would otherwise apply as a result of the violation(s).

For example, a facility in Region 2 was found to be in violation of the hazardous waste regulations under the Resource Conservation and Recovery Act. The facility voluntarily agreed to analyze their waste antifreeze monthly and to recycle all waste antifreeze found to be nonhazardous. In addition, they agreed to subsidize recycling of used antifreeze at two of their auto shops to make antifreeze recycling cost effective in comparison with the purchase of new antifreeze by shop users, thereby removing the barrier to on-site recycling. As a result, their monetary penalty was reduced from $13,200 to $10,760. The cost of the two SEPs were $4,880.

Similarly, another facility in Region 2 was issued an enforcement action for pretreatment program violations under the Clean Water Act. The facility voluntarily agreed to replace an existing precious metal plating production line with a new precious metal plating line that will result in water conservation and reduced toxic discharges to the local Publicly Owned Treatment Works. As a result, their monetary penalty was reduced from $39,580 to $9,500. The cost of the SEP was $145,000.

Categories of SEP

A regulated entity should consider the following categories of SEPs when deciding on potential projects. Other SEPs, however, may be approved by the Region.

Public Health - provides diagnostic, preventive, or remedial aspects of human health care related to actual or potential damage caused by the violation.
Pollution Prevention (P2) - reduces the generation of pollution through "source reduction".
Pollution Reduction - reduces the amount and/or toxicity of releases into the environment by means other than P2, such as installation of end-of-process control or treatment equipment or recycling.
Environmental Restoration and Protection - enhances the condition of the ecosystem or geographic area adversely affected; includes man-made environments.
Assessments and Audits - identifies opportunities to reduce emissions and improve environmental performance.
Environmental Compliance Promotion - provides training or technical support to other members of the regulated community to help achieve and maintain compliance, or to reduce pollutants beyond legal requirements.
Emergency Planning and Preparedness - provides technical assistance and training to state or local emergency planning and response organizations to enable them to prepare for and respond to chemical emergencies.

Requirements For a SEP

Since SEPs are part of a settlement, they must meet certain legal requirements, such as:

SEP must improve, protect, or reduce risks to public health, or the environment at large. While in some cases a SEP may provide the alleged violator with certain benefits, there must be no doubt that the project primarily benefits public health and/or the environment;
A relationship between the SEP and the violation(s) must exist. For example, a company that violates the Clean Water Act may propose a SEP that reduces the amount of pollutants it discharges into a river to an amount below what the law requires;
SEP must be voluntary. The project CANNOT be required by any federal, state, or local law or regulation. SEPs may include activities which the violator will become legally obligated to undertake two or more years in the future as long as the regulation or statute does not provide a benefit to the violator for early compliance;
SEP cannot have been committed to or started before EPA identifies the violation(s) (e.g., issued a notice of violation, administrative order or complaint) This is because the primary purpose of this Policy is to obtain environmental or public health benefits that may not have occurred "but for" the settlement;
EPA plays no role in managing funds or controlling performance of SEP. EPA may, of course, perform oversight to ensure that a project is implemented pursuant to the provisions of the settlement and have legal recourse if the SEP is not adequately performed;
Type and scope of project are determined in signed agreement. In other words, one cannot just agree to pay a certain sum of money on project(s) to be defined later; and
SEP must not increase EPA's or any federal agency's resources to perform activities which the Agency is legally required to perform itself. Similarly, a project cannot provide a federal grantee with additional funds to perform a specific task identified in an assistance agreement.

Penalty Mitigation

The amount of penalty mitigation is based on the cost of the SEP and whether or how effectively the SEP:

benefited the public or the environment;
was innovative;
considered input from affected community;
factored in environmental justice issues;
reduced emissions to more than one media (e.g. air, land, water); and
implemented P2 techniques and practices.

The actual percentage of penalty mitigation given is within EPA's discretion. However, it cannot exceed 80% of the cost of the SEP unless the violator is a small business, a government agency/entity or a non-profit organization, or the SEP implements P2. Furthermore, in all cases, the final settlement penalty must equal or exceed: a) the economic benefit of non-compliance plus at least 10% of the gravity component; or b) 25% of the gravity component only, whichever is greater regardless of the cost or environmental value of the SEP.


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