01.11.2021 Biden Administration Could Quickly Adopt Many Environmental Enforcement Policy Changes
Federal environmental policies are likely to undergo significant changes at DOJ and EPA under the Biden administration, including alteration of many Trump administration enforcement policies. Since many of these existing policies are not regulations, it likely will not be difficult for the incoming administration to reverse or alter them. For policies that have been adopted as regulations, any attempt to alter them will have to be done using the Administrative Procedures Act (APA). For policies that have been issued as guidance or internal agency requirements, they can be altered with the stroke of a pen. Discussed below are some of the environmental enforcement-related policy changes that can be anticipated from the Biden administration.
The most significant change that could affect environmental enforcement is the Biden administration’s stated goal to create a new litigating division at DOJ devoted to environmental and climate justice. The role of environmental justice in enforcement has been a complicated and controversial topic. How this new division would coordinate with DOJ’s existing Environment and Natural Resources Division (ENRD) and with EPA would have to be determined, but the stated goal to create such a division indicates that environmental justice and climate-related issues can be expected to receive significant enforcement resources.
In addition to this potential structural change, the Biden administration can be expected to focus on increased federal environmental enforcement. Consequently, a number of existing DOJ and EPA policies are likely to be changed as well. These are discussed below.
A significant Trump policy that affected all federal enforcement was announced by OMB in August 2020. OMB Memorandum M-20-31 requested that all federal agencies implement changes in their enforcement practices to conform to the “best practices” described in the memorandum. Among the most significant requests were provisions for a good-faith defense to enforcement actions, implementation of disclosures of exculpatory evidence (a practice that previously applied only to criminal trials), and limitations on the use of tolling agreements. The memorandum was issued to implement the May 19, 2020 Executive Order 13924, Regulatory Relief to Support Economic Recovery but many of its aspects echo the October 9, 2019 Executive Order 13892, Promoting the Rule of Law Through Transparency and Fairness in Civil Administrative Enforcement and Adjudication. The memorandum requested agencies to issue final rules by November 26, 2020. Neither EPA nor DOJ have issued any new rules in response, and even if there is any last minute rulemaking, agency procedural rules can be modified or rescinded without notice and comment rulemaking (see below), meaning any rule issued pursuant to the memorandum could quickly be altered. Moreover, the document, as a White House memorandum, could be rescinded on the first day of the Biden administration. Whether any of these practices will be re-implemented by the new President will have to await developments.
There are several DOJ policies, some specifically directed at environmental enforcement and other more general policies that affect enforcement, that likely will be rescinded or altered by the Biden administration. Perhaps the most significant polices are those that concern Supplemental Environmental Projects (SEPs). SEPs have been used for decades as an enforcement tool, allowing environmental defendants to trade penalty reductions for environmentally beneficial projects that go above and beyond regulatory requirements. While SEPs have not been without controversy over the years, it appeared EPA had addressed many of the concerns in a series of policies, the most recent of which was issued in March 2015. DOJ under the Trump administration, however, was more critical of SEPs.
The first action to curtail SEPs was issuance of a DOJ memorandum on June 5, 2017 by Attorney General Sessions which generally prohibited settlement payments to third parties in federal litigation. It was feared this policy would severely curtail SEPs in judicial settlements because implementation of SEPs often involves third party payments. EPA was not subject to the policy as it applied only to judicial settlements in cases handled by DOJ (unless an administrative case required DOJ approval). However, there was concern among many that DOJ’s policy would have a chilling effect on the use of SEPs in settling administrative actions. To address these concerns, the acting Assistant Attorney General (AAG) of ENRD issued a lengthy memorandum on January 9, 2018 that appeared to substantially approve the use of SEPs that involved third-party payments. This reprieve was relatively short-lived. In August of 2019, after confirmation of the new ENRD AAG Jeffrey Clark the previous October, ENRD issued a policy that prohibited SEPs in settlement of enforcement actions with state and local governments. This change was arguably required to conform to a general November 2018 DOJ policy. That policy prohibited settlements with state and local governments that resulted in greater relief than could be obtained if the case were litigated to judgment. While the overarching DOJ policy was seen as primarily directed at federal consent decrees with police departments, it was also viewed by ENRD as prohibiting SEPs with state and local governments. The ENRD policy was also hostile to SEPs in general, and this hostility was born out by a subsequent ENRD memorandum in March 2020 that prohibited the use of SEPs altogether in judicial settlements. Again, while not binding on EPA administrative settlements, this policy was viewed as a severe blow to SEPs, as they are most often implemented through judicial consent decrees.
All the DOJ enforcement policies discussed above are subject to being overturned by a new administration. While the March 2020 memorandum prohibiting SEPs goes to some length to argue that SEPs are not just bad policy but illegal, it is not a formal opinion of DOJ’s Office of Legal Counsel. As set out on EPA’s SEP policy webpage, the issues that Trump’s ENRD found troubling had previously been explicitly considered and addressed in the revisions to the SEP policy. EPA never rescinded its SEP policy in the face of the DOJ memorandum, so even in the Trump administration SEPs were still an option in administrative settlements.
Recent litigation in the U.S. District Court for the District of Massachusetts illustrates the underlying ephemeral nature of the SEP prohibition, and why such prohibition could and likely will be reversed. The Conservation Law Foundation filed suit against Trump Administration officials in October 2020 seeking to have the SEP prohibition overturned. In its first substantive filing in response, a motion to dismiss filed November 24, 2020, one of the government’s principal arguments was that the decision to use or not use SEPs is a “civil enforcement decision committed to agency discretion by law.” The motion echoes the Clark March 2020 memorandum by alluding to concerns about the legality of SEPs, but ultimately basing its argument on the position that SEPs are a discretionary enforcement mechanism, and, as such, their use cannot be compelled.
But the converse of this position also is true. If the decision not to use SEPs is committed to enforcement discretion and not ultimately dictated by law, then a Biden Administration ENRD also has the enforcement discretion to reimplement SEPs. Given this background, the criticism from many quarters that surrounded DOJ’s March 2020 SEP prohibition policy, and the evident popularity of their use in settling enforcement cases, a Biden DOJ can be expected to reimplement SEPs, and the Trump administration’s stated justification for its prohibition policy does not hinder but rather supports the authority of the new administration to do so.
Given this background and the criticism that surrounded DOJ’s March 2020 SEP prohibition policy, a Biden DOJ can be expected to re-implement SEPs, including allowing payments to third-parties for such things as mitigation projects. (See the EPA settlement with Harley-Davidson, where the government deleted the originally required $3 million mitigation payment to a third party in light of the June 2017 policy discussed above. The policy was issued and the deletion occurred after the consent decree had been lodged but before it had been entered).
Another DOJ enforcement policy that is likely to be revisited is a January 2018 DOJ policy that limits the use of agency guidance as a basis for enforcement actions. Again, this was a policy of general application, not just environmental enforcement, and is subject to revision by a new Attorney General. The policy is of limited utility for defendants, as it has the standard disclaimer that it is not intended to create any rights in a party subject to an enforcement action, meaning it cannot be raised as a defense. Still, it can be used by defendants in negotiations with government personnel if they feel it is not being followed.
EPA Enforcement Policies
EPA has issued several enforcement policies that are likely to be revised by the new administration. Among the most significant is EPA’s July 11, 2019 policy regarding the respective role of EPA and the states in enforcement and compliance assurance. This memorandum was viewed as a culmination of a series of policy announcements that signaled a reduced role for EPA compared to the states in environmental enforcement. Previously, EPA issued interim guidance in January of 2018 providing for a decreased role for EPA in enforcement. Later in August 2018, EPA announced that it was transitioning from National Enforcement Initiatives (NEI) to National Compliance Initiatives (NCI). All of these actions were seen as diminishing the role of EPA in environmental enforcement, and all can be expected to be revised or altered by a Biden EPA, which is likely to have a more assertive enforcement presence and grant less deference to the states.
In addition to these directives, EPA made other policy changes that affected its role in enforcement. In March 2018, EPA issued procedures requiring EPA headquarters to receive briefing papers from the EPA regional offices on all judicial referrals from EPA to DOJ. This altered a practice that had been in place since the Reagan administration which allowed cases to be referred directly from EPA regional offices to DOJ without headquarters review. This March 2018 action constituted a possible headquarters check on enforcement referrals. The following April, EPA issued a memorandum rescinding a prior January 2015 memorandum regarding the use of so-called Next Generation compliance tools in enforcement settlements. Next Generation compliance and enforcement was a creation of the Obama EPA and was an attempt to use technology and other approaches to leverage EPA’s diminishing resources. Singled out for criticism in the April 2018 memorandum were advanced monitoring and third-party verification of settlement obligations, both of which were encouraged in the 2015 memorandum. Again, these alterations of prior practices were viewed as part of a de-emphasis on enforcement by the Trump administration. They undoubtedly will come under scrutiny by the Biden administration.
In addition to the policy and guidance discussed above, EPA has engaged in at least one enforcement-related rulemaking which could be altered by the new administration. On March 2, 2020, EPA issued a rule governing on-site civil inspection procedures. This rule was adopted pursuant to an Executive Order, and as a rule regarding agency procedure it was exempt from notice and comment rulemaking. The rule basically codified practices that were already in place in EPA guidance. Whether a Biden EPA would want to revisit this rule is not clear, but it could do so easily using the same abbreviated rulemaking procedure as was used for the original rule. It is important to note that EPA’s October 19, 2020 final rule regarding processes and procedures applicable to the development of guidance documents is not an internal enforcement policy but is instead a regulation promulgated under the APA that has an indirect effect on enforcement. Unless negated using the Congressional Review Act, which is not likely for several reasons, alteration or rescission of this rule would require notice and comment rulemaking.
While much attention will be focused on potential changes in substantive legal and regulatory requirements under the Biden administration, many of these changes will have to go through detailed and potentially lengthy rulemaking and the inevitable litigation that goes with it. In contrast, there are many enforcement-related policy pronouncements at DOJ and EPA that could be changed literally overnight. With a likely increased focus on enforcement in a Biden administration, the policies discussed above may not have much continued viability.