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Supplemental Environmental Projects (SEPs)

 

What is a SEP?

A SEP is an environmentally beneficial project that a respondent voluntarily agrees to perform as a condition of settling an enforcement action. A SEP is an activity that the violator would not otherwise have been required to perform, and in which the public or the environment is the primary beneficiary.  

While punitive penalties play an important deterrent role, a SEP that supplements a reduced penalty at cost to the respondent can have a similar effect, while playing an additional role in securing significant health or environmental protection, improvement, or enhancement for the members of the public impacted by environmental violations. When used appropriately, a SEP allows the Department to offset the negative effects of violations more directly, remedy harms to communities most directly affected by violation of the environmental laws the Department is responsible for enforcing and deter future violations. 

Inclusion of a SEP in a settlement agreement is an opportunity to maintain deterrence for noncompliance while encouraging regulated entities to take actions that achieve direct environmental improvement that would not have occurred otherwise. For this reason, SEPs can be powerful tools for advancing the Department’s overarching goals, particularly in furthering environmental justice.

Who can apply for a SEP?

A facility that has committed violations subject to a penalty assessment. The cost of a Supplemental Environmental Project may be used to offset a portion of such a penalty, or under certain circumstances, the full amount of the penalty. Approval of SEPs is at the discretion of the Department. The SEP must primarily benefit the public through concrete and measurable environmental benefits and have a nexus to the alleged environmental violation being resolved in the settlement.

Key Features of Updated SEP Policy

The Department has now implemented a final policy entitled “Standard Operating Procedures for Incorporating Supplemental Environmental Projects into Settlement Agreements and Administrative Consent Orders,” which became effective on February 15, 2024.

DEP’s Supplemental Environmental Projects Policy
Compliance Advisory

In part, this new policy:

  1. Bolsters the requirement that SEPs have a nexus to the underlying violation at issue in the enforcement action and maintains the strong commitment that SEPs must be for the benefit of the public through concrete and measurable environmental benefits;

  2. Furthers the Department’s pursuit of climate resilience in requiring the Department to consider the extent to which climate change would impact a SEPs performance and encourages SEPs that would improve the resilience of vulnerable communities;

  3. Continues the Department’s commitment to Environmental Justice by strongly encouraging responsible parties to consider community input in the development of a SEP, including the potential for a full penalty reduction (within statutory restrictions and within the enforcement program’s discretion) if a responsible party completes a detailed Community Needs Assessment as part of their SEP proposal; and

  4. Encourages completion of approved SEPs by providing for additional stipulated penalties if an approved SEP is abandoned by a responsible party.

Community Outreach

In developing a SEP, responsible parties are encouraged to involve the local community early in the process. The final SEP policy establishes a procedure for completing a Community Needs Assessment as part of the project proposal that can, at the Department’s discretion, further reduce the overall penalty liability.

Responsible parties are encouraged to coordinate with the Department’s Community Collaborative Initiative (“CCI”) to assist in community outreach in areas covered by CCI

For a SEP that addresses violations that have occurred in overburdened communities, as defined by New Jersey’s Environmental Justice Law at N.J.S.A. 13:1D-158 and implementing regulations, the strong preference is for a project completed in or directly benefitting members of the overburdened community.

Where have SEP’s been completed ?

Environmentally beneficial Supplemental Environmental Projects have been completed throughout New Jersey.  Below are some recent examples, which showcase some of the benefits these have had for the environment and the community.



How do I apply for a SEP?

Coordinate with the enforcement program that is addressing the underlying violation to express your interest in completing a SEP. Complete SEP proposals, developed in consultation with the Department and based on feedback from the community, must be presented as part of any settlement discussions so that a fully articulated project can be included in the final settlement agreement.

General SEP Requirements General SEP Requirements 

The threshold requirements for an acceptable SEP proposal are as follows.

  1. The project must provide concrete and measurable environmental benefits.
  2. The project must have a nexus to the alleged environmental violation being resolved in the settlement, as more specifically outlined below in Paragraph VII. For SEPs that address violations that have occurred in overburdened communities, the strong preference is for projects completed in or directly benefiting members of the overburdened community.
  3. A SEP shall not allow for potential further harm to the environment.
  4. A SEP must be a voluntary activity and shall not include activities that the respondent had previously planned, initiated, budgeted for, or completed and shall not include actions required by law or regulation or part of activities required to return to compliance. Examples of projects that a respondent may be legally required to perform that do not qualify as SEPs include:
    • Projects undertaken to satisfy the requirements of a settlement or order in any other administrative or judicial legal action;
    • Projects that could be ordered as injunctive relief to restore the pre-violation status quo in the enforcement proceeding or in another legal proceeding concerning the same violation; or
    • Projects that consist of the performance of actions that are required by federal, state or local law or are part of permitting requirements.

  5. A SEP cannot be inconsistent with any provision of the environmental statutes or regulations being enforced or any other applicable requirements.
  6. DEP encourages input on project proposals from members of the community where the violation(s) occurred and may have been adversely impacted by the violations. Respondents are strongly encouraged to incorporate community input into any SEP proposal.
  7. A monetary donation to a charity, environmental organization, or other non-governmental organization is not an approvable SEP. However, a SEP may include payment to such entities, if the entity is acting as a third party for the purpose of completing a specific activity related to the SEP and the Department has reasonable assurances the project will be completed. In such instance, the respondent will be required to guarantee performance.
  8. A respondent shall not use any federal or state funding, including grants or loans, for the completion of a SEP.
  9. Failure to complete a SEP fully in compliance with an approved SEP proposal will result in a complete forfeiture of any penalty reduction, making the full penalty amount due and payable.
  10. A respondent may contract with a third party to execute the SEP on behalf of the respondent provided the Department receives sufficient assurances that the SEP will be completed. Permitting and oversight costs to perform the SEP, including third-party consulting and design costs directly related to obtaining any required permits required to return to compliance, may not be attributed to any penalty reduction provided by the completion of the SEP. The respondent maintains full responsibility for completing the SEP regardless of the third party’s role.



 


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Last Updated: March 28, 2024