Within its traditional command-and-control framework, the U.S. Environmental Protection Agency (USEPA) has developed innovative ways to reduce payments (to the Government) as punishment and to encourage environmentally desirable expenditures.
In the final step of calculating a violator’s penalty, USEPA will offer to reduce the punitive component of the final penalty assessment by an amount up to what the violator agrees to pay for a Supplemental Environmental Project (SEP), which is calculated using a computerised economic model. SEPs are extra-ordinary actions to protect the environment or to assure future good behavior.
To qualify for such a penalty reduction, a SEP must satisfy four criteria. First, the SEP cannot take the place of required compliance with USEPA’s laws. Second, the SEP must “go beyond compliance” and thus be even more protective of the environment than is legally required. Third, the SEP must cost at least as much as the amount of the penalty reduction. And, fourth, the cost of the SEP can only be applied to reduce the punitive component of the total penalty. Where the total penalty includes any economic benefit of non-compliance (BEN), this must always be paid. For a discussion of BEN, see the case study on “Setting Appropriate Administrative and Civil Monetary Penalties in the United States” following Guideline 40(c)
. For example, SEPs may include:
- 1) production-process (e.g., source reduction or waste minimization) changes to prevent pollution, thus exceeding U.S. legal requirements merely to control it;
- 2) restoration or clean-up of nearby environmental damage caused by others (for whose actions the violator has no legal responsibility); and
- 3) community emergency planning and preparedness assistance, such as providing hazardous materials control equipment or training to local governments that must respond to emergencies.
USEPA experience has been that in the settlement of enforcement cases often a violator, at least one concerned about its public image and truly intending to reform, will opt to exceed legal requirements by performing a SEP and to enjoy a substantial penalty reduction.
EPA works with the Environmental and Natural Resources Division of the Department of Justice to negotiate SEPs as part of settlement in judicial enforcement cases. These SEPs are thereby made juridically enforceable.
For more information, see http://www.epa.gov/Compliance/resources/
publications/civil/programs/sebrochure.pdf