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Biden Could Revive Enforcement Tool, With New Focus on Climate

Nov. 16, 2020, 11:01 AM

The incoming Biden administration could not only resurrect a recently nixed environmental enforcement tool—but also wield it to fight climate change, former government officials say.

A memo from the Climate 21 Project—a initiative from more than 150 former officials identifying levers for climate action across the U.S. government—recommends the Justice Department reinstate supplemental environmental projects, or SEPs, a popular settlement option the Trump administration nixed in March.

The department could then “amplify the administration’s climate agenda by prioritizing cases with a climate nexus and negotiating supplemental climate projects in settlements,” the report says. Some outside lawyers have endorsed the recommendation.

The move, if embraced by Biden administration officials, would both reinvigorate a longstanding approach for addressing alleged environmental violations, and encourage government lawyers to seek more creative deals that reduce greenhouse gases.

‘Spirit of SEPs’

If a power plant exceeds limits for local air pollutants, for example, enforcement lawyers could take into account the additional greenhouse gases accompanying those emissions and craft a settlement deal in which the power plant operator agrees to invest in electric school buses or community solar, said Kate Konschnik, the study’s lead author.

“Making use of the SEPs to invest in those kinds of projects would meet the spirit of SEPs, and could really be done with this focus on climate change,” she told Bloomberg Law.

Konschnik, who leads the Climate & Energy Program at Duke University’s Nicholas Institute for Environmental Policy Solutions, was an environmental enforcement lawyer at the Justice Department from 2002 to 2009.

Justice Department and Environmental Protection Agency lawyers have used SEPs for decades in settlement agreements, allowing companies accused of pollution violations to voluntarily conduct environmentally beneficial projects in affected communities—sometimes in exchange for lower fines.

Despite the projects’ popularity among government, nonprofit, and industry lawyers alike, the Trump administration in March decided to prohibit them. Assistant Attorney General Jeffrey Bossert Clark, the political appointee atop the Justice Department’s Environment and Natural Resources Division, said the projects unlawfully divert money that would otherwise flow to the U.S. Treasury.

Many lawyers in private practice and government are eager to see SEPs return. Beveridge & Diamond PC attorney John Cruden, who led the environment division under President Barack Obama, called on the Biden administration to quickly rescind Clark’s policy.

If SEPs are revived, “they are a perfect place to advance environmental justice, a central platform issue for the Biden Administration,” Cruden said in an email. “And, in appropriate cases, you could also use SEPs to advance climate/greenhouse gas issues.”

‘Always a Nexus’

The Climate 21 Project memo recommends that Justice Department officials draft a new legal analysis to revive SEPs within the first 100 days of President-elect Joe Biden’s term. But swift incorporation of climate-oriented projects would depend on the cases on the department’s docket.

King & Spalding LLP attorney Granta Nakayama, who led EPA enforcement during the George W. Bush administration, noted that SEPs traditionally must have a nexus with the actual environmental violations alleged—meaning a climate-centric project might not be appropriate for a settlement addressing emissions of conventional air pollutants.

And with few greenhouse gas restrictions currently on the books, climate-specific violations that would support a climate SEP may be limited, he said.

But some interpret the nexus requirement more broadly. Konschnik maintained that lawyers “could make a plausible hook” for a climate-oriented SEP in any case where Clean Air Act violations are at play because of the broad adverse impacts.

“This is something that even back in the George W. Bush administration we were thinking about in some of our supplemental environmental projects,” she said.

Bruce Buckheit, former director of EPA’s air enforcement division, recalled using clean energy development in SEPs for air pollution cases as far back as the Clinton administration. “There’s always a nexus,” he said.

Once Biden takes office, the administration may craft a new SEP policy and update the nexus analysis guidelines with greenhouse gas-reducing projects in mind, Nova Southeastern University law professor Joel Mintz said.

Legal, Political Risk

But there’s reason for the Biden administration to exercise caution on climate SEPs, said Baker Botts LLP lawyer Jeffrey H. Wood, who was acting head of the Justice Department’s environment division at the beginning of the Trump administration.

“A new approach based on an overly aggressive demand for costly climate SEPs could face some skepticism in the courts and in some corners of Congress, especially if those projects are seen as diverting dollars away from monetary penalties or from actual mitigation,” he said.

But a legal challenge to a SEP may be difficult, King & Spalding’s Nakayama said. SEPs are voluntary, so the companies involved wouldn’t mount a legal attack, he said, and outside parties could have trouble establishing standing to sue.

Plus, he said, the nexus between climate-oriented SEPs and environmental violations will likely become more frequent and straightforward as the Biden administration crafts various greenhouse gas regulations as part of its climate change focus. Biden has pledged to act quickly to address emissions from the transportation and power sectors.

“This really is an all-hands-on-deck project, and we really don’t have any time to spare to avert catastrophic climate change,” Konschnik said. “Using all of the tools at the government’s disposal to mitigate greenhouse gases makes sense to me.”

To contact the reporter on this story: Ellen M. Gilmer in Washington at egilmer@bloomberglaw.com

To contact the editor responsible for this story: Anna Yukhananov at ayukhananov@bloombergindustry.com

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