ARTICLES
54 ELR 10382 ENVIRONMENTAL LAW REPORTER 5-2024
The U.S. Environmental Protection Agency (EPA)
and U.S. Department of Justice (DOJ) have many
options to address a violation of federal envi-
ronmental law. Statutes may allow for civil or criminal
penalties, and generally a llow federal ocials to exercise
discretion when pursuing these penalties. DOJ and EPA
also have broad general discretion when prosecuting and
settling cases.
For decades, supplemental environmental project s
(SEPs)—volu ntar y comm itments proposed by def endant s
to benet third parties— have been a part of DOJ’s and
EPA’s settlement tool kit. ese projects allow defendants
to provide health and environmental benets “beyond
those ach ieved by compliance,”1 allowing defenda nts and
government attorneys exibility to “more fully compen-
sate victims, remedy harm, and punish and deter future
1. U.S. EPA, S E P P 2015 U
1 (2015), https://www.epa.gov/sites/default/les/2015-04/documents/sep
updatedpolicy15.pdf [hereinafter 2015 SEP P].
violations.”2 Despite this long-standing practice, some law-
makers and think-tanks continue to question the legality
of SEPs.3
EPA began formalizing its SEP policy during the Ron-
ald Reagan Ad ministration, and has periodically rened
that policy in the years since. Similarly, DOJ’s Oce of
Legal Counsel (OLC) issued a series of memos starting in
1980 providing guidance on when third-party payments,
including SEPs, were permissible in settlement agree-
ments. DOJ attorneys have been involved in hundreds of
settlements involving SEPs that followed EPA’s policies. As
with numerous other seemingly settled issues, the Donald
Trump Administration reversed decades of DOJ precedent
2. Attorney General Memorandum, Guidelines and Limitations for Settle-
ment Agreements Involving Payments to Non-Governmental ird Parties
(May 5, 2022) [hereinafter 2022 DOJ TPP Memo].
3. See, e.g., Stop Settlement Slush Funds Act of 2023, H.R. 788, 118th Cong.
(2023); Webinar, Federalist Society’s Regulatory Transparency Project, e
Return of Supplemental Environmental Projects (June 15, 2022), https://
fedsoc.org/events/the-return-of-supplemental-environmental-projects; Paul
Larkin Jr. & Zack Smith, Brother, Can You Spare a Million Dollars?: Resur-
recting the Justice Department’s “Slush Fund,” 19 G. J. L. P. P’ 447,
465 (2021).
by Daniel Alvarez, Hannah Perls, and Jonas Monast
Daniel Alvarez is an Attorney with the Center for Applied Environmental Law and Policy.
Hannah Perls is a Senior Staff Attorney with the Harvard Environmental and Energy Law Program.
Jonas Monast is an Associate Professor at the University of North Carolina School of Law (on leave
2023-2024), and is the Executive Director of the Center for Applied Environmental Law and Policy.
SUMMARY
Supplemental environmental projects (SEPs) have received a growing amount of attention in recent years,
from the Donald Trump Administration banning their use in settlements, to regulation and guidance from the
Joseph Biden Administration reversing the ban, to legislative proposals prohibiting them altogether. This Arti-
cle examines SEPs’ legality under existing law, focusing on claims that they violate the Miscellaneous Receipts
Act and the Antideficiency Act. It begins with a brief history of SEPs’ policy evolution and the limitations on
the U.S. Environmental Protection Agency’s and U.S. Department of Justice’s (DOJ’s) settlement discretion.
It then examines claims that SEPs are unlawful, focusing on arguments made in a 2020 DOJ policy memo. It
concludes that the 2020 analysis is flawed, masking policy preferences under the guise of statutory interpre-
tation; and that opponents’ arguments ignore long-standing legal distinctions between payments negotiated
in settlements and penalties assigned by a judge following a finding of liability.
Authors’ Note: The authors thank Sarah Hart, Harvard Law
School J.D. 2024, for her research supporting this Article.
CLEARING THE AIR
ON SUPPLEMENTAL
ENVIRONMENTAL PROJECTS
