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Environmental Lawyers Split on DOJ Debt Policy for Pandemic (1)

April 15, 2020, 8:32 PMUpdated: April 15, 2020, 10:04 PM

Some environmental lawyers are raising alarms about the Justice Department’s decision to halt civil debt collection during the coronavirus pandemic, while others say the approach is reasonable.

The Executive Office for United States Attorneys announced the policy March 31 and clarified its application in an April 13 memo, according to documents the agency provided to Bloomberg Law.

The Justice Department routinely collects money from parties with various debts, including fines for violating settlement agreements. Now government lawyers are notifying debtors that they’re off the hook through May 31.

Center for Biological Diversity senior attorney Hannah Connor criticized the Justice Department’s approach, calling it “beyond absurd” to provide relief for companies with vast financial resources.

“It’s unclear why that is something that they cannot comply with and fulfill at this time,” she said Wednesday.

But King & Spalding LLP attorney Granta Nakayama said he viewed the policy as an appropriate accommodation during the pandemic.

“I don’t find it that remarkable,” he said. “They’re not changing what they owe.”

On Tuesday, the Justice Deaprtment’s Environment and Natural Resources Division told BP Plc subsidiary BP Products North America Inc. that the government, for now, wouldn’t collect stipulated penalties the company owes for allegedly violating a settlement related to air pollution from a northern Indiana refinery.

Stipulated penalties are the agreed-upon payments parties owe when they fail to meet terms of a consent decree with the government.

The letter to BP, first reported by Inside EPA, notes that the suspension could be extended “depending upon future circumstances or other administrative action,” and says BP is welcome to make a payment anyway. The company didn’t respond to a request for comment.

Not Just Environmental Cases

Industry lawyers say they’ve received similar notices in environmental cases, but declined to share them.

The notices aren’t posted on public court dockets because the government and defendants typically hash out stipulated penalties through direct letters.

A Justice Department spokesman said “the measure is temporary and is intended to mitigate the financial impact of the coronavirus pandemic.”

He also noted that the policy applies to all civil penalties, “so is not particular to environmental matters.”

The April 13 memo says the suspension doesn’t affect government lawyers’ ability to “investigate, file complaints, litigate to judgment, or settle” any affirmative civil enforcement matters.

Former Environmental Protection Agency enforcement official Eric Schaeffer, who now leads the Environmental Integrity Project, said the Justice Department’s approach isn’t necessarily problematic, “so long as they aren’t actually waiving the stipulated penalties that are due.”

Arnold & Porter Kaye Scholer LLP lawyer Jonathan S. Martel said he’s fielded a similar notice in once case so far, but the client declined to take advantage of it.

“My overall perspective is that it’s not really that big a deal,” he said, noting that companies still have to pay interest on what they owe.

Vinson & Elkins LLP attorney Ronald J. Tenpas, former head of the Justice Department’s environment division and a former U.S. attorney, added that the Justice Department’s policy has some effect on big companies but was likely designed with other debt collection, like student loans, in mind.

Nova Southeastern University law professor Joel Mintz said the policy is overly broad.

“There’s no harm in giving companies, anybody who can’t pay the money they owe because of coronavirus, a break,” he said. “On the other hand, I’m not sure that everybody who owes the government money needs that break.”

The EPA has pledged to coordinate with the Justice Department on exercising “enforcement discretion” for stipulated penalties for consent decree violations—part of a broader effort to be flexible with companies during the pandemic.

(Adds comment from Ronald Tenpas in 19th paragraph.)

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

To contact the editors responsible for this story: Gregory Henderson at ghenderson@bloombergenvironment.com; Rebecca Baker at rbaker@bloomberglaw.com

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