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Caleb J. Holmes shareholder with Greenberg Traurig. Caleb J. Holmes shareholder with Greenberg Traurig.

In August 2019, the U.S. Department of Justice’s Environment and Natural Resources Division (ENRD) issued a memorandum curtailing the use of supplemental environmental projects (SEPs) in consent decrees and settlement agreements with state and local governments. I wrote about that memorandum at the time. In March, ENRD issued a follow-up memorandum, extending the prohibition on SEPs to all enforcement cases involving civil settlements with private defendants.

SEPs, which permit a defendant to undertake an environmentally beneficial project in lieu of paying penalties—or in exchange for reduced penalties—have been seen as benefiting defendants, enforcement agencies and communities at the same time. SEPs have given enforcement agencies and defendants additional flexibility in negotiating consent decrees and settlement agreements, while also providing communities potentially affected by violations with public benefits. ENRD’s policy will foreclose the Justice Department—and the EPA—from including these projects in settlements in which the Justice Department is representing the EPA.

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