DEP Proposes to Fine Tune CEP Policy to Promote Environmental Justice

On October 26, 2013, the Pennsylvania Department of Environmental Protection published notice of its draft revised “Policy for the Consideration of Community Environmental Projects in Conjunction with Assessment of Civil Penalty” in the Pennsylvania Bulletin.  43 Pa.B. 6389  Similar to the Supplemental Environmental Project penalty settlement feature used by the U.S. Environmental Protection Agency and many states, this policy enables regulated entities that run afoul of the law or regulations and are obliged to pay a civil penalty to fund a project that will provide a substantial public health or environmental benefit to a community or the general public in lieu of paying a portion of the civil penalty.   DEP established the policy in 1997 and is proposing to revise the policy to encourage regulated entities to propose projects that will promote “environmental justice” which is defined in the proposed revisions as “the fair treatment and meaningful involvement of all people regardless of race, color, national origin or income with respect to the development, implementation and enforcement of environmental laws, regulations and policies.”  DEP developed this revised policy in consultation with its Citizens Advisory Council and the Environmental Justice Advisory Board.  DEP will accept comments on this draft policy until November 25, 2013. 

The policy applies to all enforcement actions but does not alter existing mining and oil and gas programs that allow operators to reclaim abandoned mine land or plug abandoned wells in lieu of paying civil penalties.  Unlike a law or regulation, this CEP policy, which is embodied in a “technical guidance document”, is not binding on DEP but DEP advises that its staff will follow the policy consistently in appropriate situations in the exercise of its enforcement discretion.

The proposed policy slightly revises the definition of CEP as a “project which substantially improves, protects, restores or remediates the environment, or which improves, protects or reduces risks to the public health or safety.”  The original definition included the phrase “environment at large” which is inconsistent with DEP’s preference to target environmental justice areas.  Every proposed CEP must provide a substantial public health and safety or environmental benefit and include actions or activities the party is not otherwise legally required to do.  The policy explains that DEP will show a preference toward projects that have long-term rather than temporary benefits.  Projects should be performed in the same geographic area, airshed or watershed as the violation unless the project is intended to have a regional or statewide benefit.  The proposed revised policy advises that DEP may give additional consideration to proposed projects in areas that are susceptible to disproportionate environmental impacts and projects that will benefit environmental conditions in an environmental justice area.  The entity proposing the CEP must quantify the expected benefits.

Acceptable projects include remediation of contaminated sites; restoration of land or water resources not owned by the person or regulated entity; purchase or donation of land for a local park, state park or forest land; programs that advance DEP’s educational goals; assistance to a municipality in the establishment or implementation of a household hazardous waste or small quantity generator collection program; assistance to a municipality or NGO for the cleanup of illegal road side dumping or assistance to the local emergency response agency for a specific need.  A project is unacceptable if it targets property owned by the entity or if the project is necessary for compliance. However, the project may provide the person or entity with a collateral benefit provided that it primarily and substantially benefits the public health or the environment.  The person or entity must agree that if it publicizes the CEP it will state that the project is being undertaken as part of the settlement of an enforcement action and cannot deduct the costs as a business expense or charitable deduction for federal or state taxe purposes.

DEP advises that it will not actively solicit or compel the regulated entity to perform a CEP but may inform the entity that a CEP may be an option.  DEP will calculate the initial proposed penalty without regard to whether a CEP will be considered.  If an acceptable CEP is proposed, the CEP will be an additional factor DEP will consider in determining the final amount of a civil penalty.  However, the CEP will not satisfy the entire civil penalty liability as DEP will require payment of a civil penalty in every case.  The civil penalty will recover DEP’s costs incurred and should not be less than the economic benefit gained from noncompliance.  The penalty may account for DEP’s anticipated costs to inspect or monitor the CEP which will be set forth in a Consent Order and Agreement, Consent Decree or other enforceable document.

While it is better to conduct operations that are subject to environmental laws, regulations, and permits in compliance with all applicable obligations, this CEP policy may be useful if a permittee finds itself negotiating a settlement of a civil penalty.   Proposing an acceptable CEP may impact (lessen) the overall penalty and engender positive relations with DEP and the community.

Stephen Smith focuses his practice on environmental and energy-related matters including regulatory counseling and litigation, administrative law, governmental affairs and lobbying. He represents clients before federal and state courts and administrative agencies. He provides client counseling and advice on compliance, permitting and agency communications as well as business transactions.
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