DOJ Enforcement UpdateApril 27, 2018 – Newsletters
Settlement Payments to Third Parties
As previously reported in the Dinsmore AIR QUALITY Letter, on June 5, 2017 the United States Attorney General signed a memorandum that disallowed settlement payments to third-party organizations that were neither victims nor parties to lawsuits brought by the Department of Justice (DOJ). On January 9, 2018, a memorandum was issued to Environment & Natural Resources Division Assistant Attorneys General and Section Chiefs that clarified the June 5, 2017 memorandum for exceptions to the general policy that may apply to environmental cases. Included in the June 5 memorandum is an exception for payments that directly remedy the harm that is sought to be addressed in the lawsuit “including, for example, harm to the environment.” The January 9 memorandum specifies “that third-party payment provisions must incorporate specific requirements to ensure that the payment will directly remedy the harm that is sought to be redressed.”
Examples for Clean Air Act enforcement cases included payments which would be used to reduce the same type of harm through the funding of actions at the source where the facility is located or in the area reasonably expected to have been affected by or where remedial action should have been taken to remedy harm from the violations for which mitigation is being sought. For cases involving mobile sources, DOJ specified that the scope of a mitigation project undertaken by third-parties nationwide would require additional care “to ensure that the project directly remedies environmental harm, which should include assurances that the project does not mitigate harm out of proportion with the harm that resulted from the unlawful conduct.”
The memorandum specified payments to government entities, while not restricted, must have a clear nexus to the environmental harm that is sought to be remedied. Also, the policy does not apply to administrative enforcement actions not referred to DOJ or that require DOJ consent or agreement. The memorandum also clarified that Supplemental Environmental Projects (SEP) undertaken by a defendant in an enforcement action are not prohibited as long as the SEP conforms to EPA’s supplemental environmental projects policy.
Agency Guidance Documents Limited in Civil Enforcement Cases
On January 25, 2018, DOJ issued a memorandum directing DOJ attorneys that they may not use “non-compliance with guidance documents as a basis for proving violations of applicable law” in civil enforcement cases. The memorandum specified that guidance documents may be used for “proper purposes” as “some guidance documents simply explain or paraphrase legal mandates from existing statutes or regulations, and the Department may use evidence that a party read such a guidance document to help prove that the party had the requisite knowledge of the mandate.” The memorandum goes on to say that a party’s non-compliance with agency guidance documents should not be treated as presumptive or conclusive evidence that the party violated the applicable statute or regulation. The intent of the memorandum is to protect the tenant that guidance documents cannot create requirements where requirements do not exist in the statute or regulation. However, it remains to be seen how DOJ will implement the directive for agencies such as EPA who depend in large part on guidance documents to specify appropriate means for meeting regulatory requirements.