Is there a Role Anymore for Supplemental Environmental Projects in Environmental Enforcement Settlements?

The Purpose of a SEP

Supplemental Environmental Projects (SEPs) are voluntary, environmental or public health projects that parties subject to environmental enforcement proceedings can propose as part of an administrative, civil, or criminal settlement. SEPs are unique and used specifically in environmental enforcement cases in part because (1) many environmental law statutes do not require a showing of harm to prove a violation; thus, redressing harm, outside of equitable relief, is not usually statutorily required; and (2) pollution is a public harm that is hard to redress, both individually and collectively.

How does one calculate or prove actual harm to an individual or community when a company has violated its air permit for years resulting in community exposure to excess toxic emissions? SEPs are seen as a way a company can attempt to redress the harm it caused to a community through voluntary projects that have a nexus to the violations at issue and directly benefit the community harmed.

SEPs have been used as an enforcement remedy for decades, in both federal and state proceedings, resulting in numerous examples of successful SEPs. They have enjoyed perennial support from regulators, prosecutors, regulated industry, NGOs, and communities, across administrations. Companies in particular have appreciated the opportunity and relationship-building that comes from proposing SEPs that provide tangible, beneficial projects to the local community harmed instead of monies all going towards a penalty or fine.

SEPs Under Trump Versus Under Biden

The first Trump administration ended the longstanding practice based in part on a belief that SEPs violated federal law, conclusions that differed from past legal counsel. As a result, both EPA and DOJ ceased the practice of allowing SEPs to be a considered remedy. (There is an exception for diesel emission cases as the Clean Air Act expressly authorizes their use.)

The Biden administration reinstated SEPs in 2022. While the practice returned, SEPs were not included in nearly as many settlements as had been seen prior to Trump’s first administration. EPA and DOJ nonetheless advocated for their use, including EPA establishing a public inbox where the public could submit ideas for potential projects to include in future settlement agreements.  

Weeks into the second Trump administration, DOJ again prohibited the use of SEPs and community service projects, the term used for federal criminal cases. The Attorney General in a February 5, 2025, memorandum stated that the agency will seek to “eliminate the illegal or improper use [of] memoranda to direct payments to non-governmental, third-party organizations that were neither victims nor parties to the lawsuits.” As a result, DOJ is again prohibited from incorporating SEPs into civil and criminal settlements. Although there have yet to be any changes to EPA SEP Policy, we may see EPA cease incorporating SEPs into their administrative settlements as well.

SEPs or Mitigation as Forms of Relief

While SEPs will no longer be welcomed in cases brought by the federal government, mitigation as a form of equitable relief will likely still play a role. Mitigation projects are intended to remedy, reduce, or offset past harms caused by violations in a case. A 2012 EPA memo set forth a two-prong analysis for determining the appropriateness of mitigation projects:

(1) Does the case warrant mitigation (i.e., have the violations in this case resulted in harm that can be redressed), if so, would a court order such relief; and

(2) Can the project be tailored to effectively redress the violations’ harm?

There are three primary differences between mitigation and SEPs:

1. Mitigation is action that the government believes a court could order as injunctive relief were the case litigated;
2. Mitigation requires a closer, more direct nexus between the mitigation project and the harm it redresses with the goal being to restore the status quo ante as opposed to providing a more broadly-defined environmental or public health benefit; and
3. Mitigation, unlike SEPs, does not entitle the defendant to a civil penalty reduction.

Both DOJ and EPA under the Biden administration emphasized the use of mitigation projects when warranted in enforcement actions. Going forward, absent further DOJ guidance, we are likely to see DOJ and EPA continue to require mitigation projects for unlawful emissions or discharges, though requirements could be less stringent based on policy preferences to reduce burdens on industry.

SEPs and Their Application in State Matters

DOJ’s prohibition on SEPs does not apply to states. Given numerous states have successful SEP programs, California being a prime example, companies can continue to propose SEPs during settlement discussions if the facts warrant it. Also, because of fewer restrictions on the use of SEPs in state cases, companies have more freedom to propose SEPs that respond to the specific needs of a community resulting from said harms, and provide often more direct, on-the-ground benefits to affected communities, all of which can result in fostering stronger community relations. The latter is especially true if companies engage with the community before proposing a specific SEP to better understand local needs.

SEPs in Citizen Suit Matters

Given the current Trump administration’s rejection of SEPs, it is possible that companies’ efforts to include SEPs in citizen suits, including those where the United States is not a party, could be impacted. Under federal law, parties settling a citizen suit where the United States is not a party, must give the federal government 45-days’ notice of the settlement before entering judgment. In Trump’s first administration, we saw DOJ object when a company and NGO, who were also parties to the federal enforcement action, struck a side agreement which required additional SEPs outside of those DOJ demanded. DOJ unsuccessfully argued that the federal court overseeing the enforcement action had jurisdiction over the private settlement agreement. See Press Release announcing the DOJ’s decision not to appeal. While both parties in that matter were able to lodge their separate settlement, there was considerable delay given the DOJ objection. One could see similar objections including for citizen suits where the United States is not also a party.

The Role of SEPs in 2025 and Beyond

SEPs provide companies facing an environmental enforcement action a unique opportunity to direct and control part of the overall remedy and in a way that provides some measure of relief to neighboring communities. Experience has shown that companies often welcome the ability to propose and fund a project that directly benefits the community versus going straight towards monetary penalties. Communities also greatly appreciate efforts by companies to remediate past harms through beneficial, on-the-ground projects, all of which can bolster community relations.

At this time, companies negotiating enforcement settlements can only propose SEPs in state cases, citizen suits, or where a federal statute authorizes it. There are numerous resources for companies to find an appropriate SEP should the facts warrant it, including at the state level. The best resource, however, in determining an appropriate SEP is the affected community. Companies should seek counsel familiar not only with environmental enforcement generally but ideally experience in community engagement.  

In federal enforcement actions where SEPs are now prohibited, companies should explore mitigation projects that could provide similar relief, relying on many of the same tools used to craft successful SEPs.