Supplemental Environmental Projects (SEPs)
Most federal actions against businesses or individuals for failure to comply with the environmental laws are resolved through settlement agreements. As part of a settlement, an alleged violator may propose to undertake a project to provide tangible environmental or public health benefits to the affected community or environment, that is closely related to the violation being resolved, but goes beyond what is required under federal, state or local laws. The voluntary agreement to perform a Supplemental Environmental Project (SEP) is one factor that is considered in determining an appropriate settlement penalty, and may be the basis for a reduction in the final penalty. EPA supports the inclusion of SEPs in appropriate settlements.
Policy and Background Guidance
EPA's Supplemental Environmental Projects (SEP) was updated on March 2015: 2015 Update to the 1998 U.S. Environmental Protection Agency Supplemental Environmental Projects Policy (Update)
The 2015 Updated SEP Policy (Update) fully revises and supersedes all prior versions of the SEP Policy. It also reflects and incorporates by reference other previously issued SEP-related memoranda and guidance documents and are maintained for reference purposes because they may contain more detailed discussions of certain issues. However, the Update supersedes any inconsistencies between these documents and the Update.
Facts About SEPs
- SEPs are projects included as part of an enforcement settlement that provide a tangible environmental or public health benefit.
- SEPs are projects that could not be required or compelled by EPA, and are not otherwise legally required (at the federal, state or local level), and thus provide benefits that go beyond compliance obligations.
- To ensure that EPA is appropriately extending its prosecutorial discretion in the matter of SEPs, projects submitted by a defendant for consideration must have a strong “nexus”, or connection, to the violations being resolved, and advance the goals of the statute from which the violations stemmed.
- Generally, the project must involve the same pollutant or same health effects as were involved in the violations being resolved, addressing the same adverse impacts or risks to which the violations contributed, or preventing future similar violations.
- Accordingly, each SEP proposed in a settlement must be evaluated in the context of the facts of that specific case, and project ideas cannot be completely analyzed without that context.
- There is no SEP “program: EPA does not develop, fund or implement SEPs, and they are not a “funding mechanism” for projects. The SEP Policy is an enforcement settlement policy only.
- Defendants/respondents may use contractors or other third-parties to help implement the projects. However, a SEP is a project a defendant/respondent has committed to perform, and cannot simply be cash payments or donations (absent explicit statutory authorization).
- SEPs are voluntary, and EPA may not demand or require that a defendant perform a SEP.
- SEPs are developed and implemented by a defendant/respondent, and are included in a settlement only if a defendant/respondent is interested, and proposes a project that meets the legal and other requirements of the SEP Policy.
- EPA maintains the right to reject a SEP, but the Agency does not impose its preference for particular projects on defendants/respondents.
- SEPs may not be directed, controlled or managed by EPA.
- SEPs cannot “augment” any existing federal funding or appropriations, by providing additional resources to perform the same activity or supplementing the resources Congress has provided to perform federal functions. SEPs cannot be undertaken using federal loans, federal grants, or any other form of federally-provided financial assistance.
- SEPs are not a diversion of penalty funds. Under EPA’s penalty policies, factors such as self-disclosure, cooperation, or good faith efforts to comply may result in a downward adjustment of an initial penalty calculation. The SEP Policy provides for such consideration of a defendant/respondent’s willingness to implement a SEP.
- Settlements with SEPs always include a final settlement penalty that retains the deterrent value of the settlement. The penalty includes a component that addresses the gravity of the violation, and a component that recoups the economic benefit that the violator realized from its non-compliance, to maintain a level playing field with competitors who remained in compliance.
- In many cases, defendants enter into negotiations with a SEP proposal already in mind. EPA encourages defendants to reach out to the affected communities about project ideas, and, if the Agency is aware of projects with community support, provides such information to defendants, for their consideration.
Settlements with SEPs
Information on settlements that included SEPs can be found in EPA’s Enforcement and Compliance History Online (ECHO) database. ECHO includes information, including a description of any SEP, for settlements concluded from FY 2001 to the present. Such information is illustrative of successful SEPs, but, since the circumstances of individual cases differ, and “one-size-does-not-fit-all,” inclusion of a certain project in a settlement does not mean it will be appropriate in another context.
To access information about SEPs in concluded settlements:
1. Go to: ECHO
2. Click on Find Cases
3. Click on More Search Options.
4. Use the pull down menus to fill in search parameters:
- Facility Locations: Users can search for SEPs in settlements that occurred in specific EPA Regions, or by City and State.
- Case Attributes: Users can search for SEPs in settlements for violations of specific statutes and/or sections. In addition, search parameters include type of settlement (judicial/administrative, federal facility, multimedia, voluntary self-disclosure, enforcement program and type, and national priority area.)
- Case Milestones and Dates: Users can search for judicial or administrative settlements by status (lodged, filed, etc.,) by fiscal year or by date range.
- Enforcement Outcomes/Settlements: Users can search for settlements that included SEPs by penalty amount, cost recovery awarded, complying action, SEP activity category, and/or total value of SEP.
5. ECHO will generate a report listing all settlements that meet the search parameters. From this list, links to more detailed settlement information will be available.