Negotiating Environmental Penalties: Guidance on the Use of Supplemental
Environmental Projects

[Christopher D. Carey\*]{.smallcaps}

# I. INTRODUCTION 

Federal agencies and, in particular, the military services have
enthusiastically adopted the concept of accomplishing a Supplemental
Environmental Project (SEP) in lieu of the payment of an environmental
penalty.[^1] The opportunities presented by the use of SEPs have made
them a popular tool with non-governmental entities as well.[^2] Unlike
their counterparts in the private sector, federal facilities face unique
legal issues and policy concerns that can affect their ability to agree
to and implement a SEP. These concerns should be carefully evaluated to
ensure military installations realize the greatest possible benefit from
SEPs while ensuring that all actions taken are consistent with agency
authority.

The need for this evaluation and the development of comprehensive
guidance is made apparent by recent Congressional interest in the
military's resolution of environmental enforcement actions. This
interest was concretely demonstrated by the issuance of a report on the
topic by the General Accounting Office (GAO).[^3] By itself,
Congressional attention to the payment of environmental penalties by
military installations is certainly unremarkable. It dates back well
before the passage of the Federal Facility Compliance Act of 1992[^4]
and continues to be focused.[^5] What is surprising is the perspective
from which the recent attention comes. Historically, most of the
discussion regarding the payment of penalties by federal facilities has
been aimed at ensuring that such facilities are subject to fines and
penalties to the same extent as all other facilities. More recently,
there are indications of an interest in ensuring that the amount of
Department of Defense (DoD) dollars spent resolving environmental
enforcement actions is not excessive.[^6] There are two potential
sources of this interest. The first is a desire to ensure that the
services have improved in their compliance with environmental laws. A
great deal of attention and effort has been devoted by DoD and the
individual services to stress and improve compliance. Significantly less
attention within DoD has been paid to the second potential source of
heightened interest. It is important that an effective mechanism exists
for ensuring that the resolution of a military installation's liability
for an environmental penalty is accomplished in an appropriate manner
that makes efficient use of federal resources.

Given the difficult and frequently contentious nature of any negotiation
concerning an environmental penalty, the last sentence recites a very
broad goal. The military services have taken effective steps to
implement that goal, generally.[^7] With regard to the accomplishment of
SEPs, however, there is very little guidance to direct an installation
on such issues as: when should a SEP be considered; what type of project
can be considered; what resources are available to help accomplish that
project; how much should such a project cost; and how much penalty
reduction should be expected.[^8]

# II. OVERVIEW OF SEPS

## Benefits of Agreeing to a SEP

\"\[T\]urning lemons into lemonade" is how one regulator described the
use of SEPs.[^9] This is an accurate description in that an overriding
purpose of SEPs from a regulatory perspective is to affirmatively create
an environmental benefit as the result of an action that was detrimental
to the environment.[^10] More importantly, a settlement agreement
involving a SEP will accomplish all of the traditional goals of punitive
action,[^11] but also will directly further the "goals of protecting and
enhancing public health and the environment."[^12] A benefit shared by
the regulator and the regulated entity is the enhancement of the
regulatory relationship that is generally achieved during the
negotiation and accomplishment of a SEP. Thus, the accomplishment of a
SEP represents a situation in which the regulator and the regulated
entity work together to achieve a result which both sides find superior
to the result that would be achieved through pure arms-length
negotiation.

From the perspective of a violator, accomplishment of a SEP can serve
multiple purposes as well. Generally, the primary purpose served is the
resolution of an enforcement action. By resolving this action through
the use of a SEP, the violator can accomplish an action that is
otherwise desirable but, to date, has not been independently justified.
Additional benefits flowing to the violator may include an enhanced
public image[^13] and the ability to productively use funds that would
otherwise be lost. Another intangible benefit realized by a military
service is the promotion of the federal policy favoring the
accomplishment of SEPs. The Administration has repeatedly expressed its
support for the expanded use of SEPs in the resolution of environmental
violations,[^14] and this support is shared by policy makers within
agencies other than EPA.[^15]

It is the thesis of this article that a military installation's primary
focus in the negotiation process should be on resolving its
environmental liability efficiently. This will not always mean an
installation will spend the least amount of money possible. Often the
payment of a larger amount of money will be justified by the benefits
received. In deciding whether to agree to accomplish a SEP, a military
installation will have to weigh these benefits against the proposed cost
of the SEP, which will, to some degree, be offset by a reduction in
penalty. Because the benefits are so often intangible, this cost-benefit
analysis can be difficult. The analysis will be simplified if the
benefit that is considered almost exclusively by an installation
deciding whether to accomplish a SEP is the ability to make productive
use of funds that would otherwise be lost as a penalty. This is not
intended just to ease the decision-making process, nor is it designed to
minimize the importance of the public and regulatory relations benefits.
While they are unquestionably of value, a concentration on these
benefits in the decision making process could easily lead to a project
that is, at best, inconsistent with the interests of the military
service in question and, at worst, outside of the scope of that
service's legal authority.

## What is a SEP?

It is not possible to provide a single definition to encompass all
projects a regulator might accept in lieu of payment of a penalty. The
United States Environmental Protection Agency (EPA) has changed its
policy twice and is scheduled to implement another revision in the
spring of 1998.[^16] These changes have altered what EPA and its regions
will accept. In any event, state regulatory agencies are under no
obligation to follow EPA\'s guidance and retain the freedom to develop
and implement their own policies. Many states have formally implemented
policies,[^17] while other states have chosen to implement the concept
without adoption of a formal policy.

In order to facilitate discussion, this article will rely primarily on
EPA\'s current policy in explaining the concept and will note some
significant departures by state policies. It is important to be aware of
these differences, because as will be demonstrated, the current EPA
policy is written in a manner that would alleviate several legal
concerns that might be relevant to a military installation. The ability
of state regulators to negotiate for SEPs without the same legal or
policy constraints creates the potential for accomplishment of a SEP by
a military installation that is outside of an installation's legal
authority. While it may be unrealistic to assume that development of
formal guidance will completely eliminate this problem, such guidance
would, at the very least, enable the military departments to demonstrate
that an appropriate degree of control is being exercised.

## EPA\'s Policy

As stated above, the rise in the popularity of SEPs has been rapid. This
popularity first led EPA to issue an extensive free-standing policy[^18]
to replace the three page discussion of "Alternative Payments" that had
been only a minor portion of EPA\'s general enforcement policy.[^19]
Despite its popularity, the implementation of SEPs by EPA has not been
without controversy. In the face of questions presented by an opinion of
the Comptroller General, EPA was forced to revise its policy in
1995.[^20] The interim revised policy issued in 1995 is scheduled to be
supplanted by a new policy in the spring of 1998.[^21]

EPA's current policy defines a SEP as an "environmentally beneficial
project which a defendant/respondent agrees to undertake in settlement
of an enforcement action, but which the defendant/respondent is not
otherwise legally required to perform."[^22] This is a useful operating
definition, because it is broad enough to encompass the typical state
regulatory view.[^23] Beyond the simple definition, however, the states
and EPA can diverge on the types of activities that will qualify as a
SEP and the requirements and details surrounding the accomplishment of
such activities.

Although there is divergence, it is helpful, regardless of the
regulatory body that has authority over an installation, for that
installation to be familiar with the specifics of EPA\'s current policy.
That policy has in some way been relied upon by all of the states that
have developed their own policies[^24] and is used as the default
guidance for many states that do not have their own policies.[^25]
Additionally, the process that EPA has followed in developing the policy
is instructive for federal facilities that, although they are on the
other side of the bargaining table, are faced with many of the same
legal constraints identified by the Comptroller General. Thus, a
military installation should not only be aware of the contents of EPA\'s
policy, it should also understand the origins of the policy's
requirements.

Issued in 1992, the Comptroller General's decision called into question
EPA\'s authority to resolve environmental violations by requiring the
violator to accomplish actions in addition to, or in lieu of, the
payment of a penalty.[^26] The decision generally challenged EPA\'s
authority to settle violations through the use of SEPs. It also
specifically identified legal problems with the manner in which EPA had
implemented this questionable authority. These specific concerns were
primarily based on fiscal law. The decision pointed out that, among
other things, the original policy created the potential for
circumvention of the "miscellaneous receipts" statute.[^27] The statute
requires, with limited exception, that any "official or agent of the
Government receiving money for the Government from any source shall
deposit the money in the Treasury as soon as practicable without
deduction for any charge or claim."[^28] The Comptroller General opined
that EPA\'s decision to allow a violator to spend amounts that would
otherwise be collected as penalties violated this principle regardless
of the purpose for which the money was spent.[^29]

Often the flip side of the miscellaneous receipts issue is a prohibited
augmentation of an appropriation. A federal agency is prohibited from
using funds obtained from some other source to augment the
appropriations provided that agency by Congress.[^30] The miscellaneous
receipts statute focuses only on whether the money in question is placed
into the Treasury and is violated if the money is not so deposited.
However, in order to evaluate whether an augmentation has resulted, it
is necessary to consider the use of the funds that were inappropriately
retained or diverted. The prohibition of augmentation is rooted in the
Congressional "power of the purse."[^31] That is, the United States
Constitution gives Congress the authority and responsibility to
determine how federal money can be spent.[^32] This power not only
encompasses the permissible purposes for which appropriations can be
used, but also the amount and timing of these uses. The rule against
augmentation prevents executive agencies from assuming some of that
power by developing additional or alternate sources of funding for
agency programs.[^33] In the eyes of the Comptroller General, EPA ran
afoul of this principle when it allowed violators to reduce their
penalties by performing activities which were intended to be
accomplished using EPA\'s appropriations.[^34] For example, SEPs
designed to increase public awareness of the importance of environmental
protection accomplished an action that properly should be funded from
agency appropriations.[^35]

The nature of EPA\'s response to the decision is a strong indication of
the importance of the SEP program to the agency. The agency revised its
policy[^36] to address the issues raised and produced a lengthy and
detailed legal opinion[^37] to support its revised policy. The legal
opinion recognized the legitimacy of the concerns, provided support for
EPA\'s authority to agree to SEPs, and explained the manner in which EPA
had addressed the legal issues in the development of the new policy. EPA
demonstrated its authority to negotiate for accomplishment of a SEP by
pointing to the broad discretion that it is accorded as part of its
enforcement authority.[^38] To demonstrate that the use of SEPs is
within that discretion, EPA relied on statutory language, judicial
precedent, and Congressional report language.[^39] The result is a
convincing argument that should put to rest challenges to EPA\'s
authority to agree to SEPs.

To ensure that any SEP agreed to is a reasonable exercise of its
discretion, EPA created controls designed to ensure that any SEP could
be demonstrated to further the objectives of the statute being
enforced.[^40] From EPA\'s perspective, the requirement was to
demonstrate that a policy favoring SEPs furthered the overall
environmental protection mission and, at the same time, showed that any
SEP agreement to be implemented under the policy would not reduce the
effectiveness of the subject enforcement action.[^41] By establishing
general limitations on the types of projects that can be approved, EPA
satisfied this goal and has created a level of comfort that any specific
project accomplished as a SEP is within its authority.

A significant environmental protection based limitation imposed by the
policy is the "nexus" requirement.[^42] All proposed projects must have
an adequate relationship with the violation in question.[^43] "This
relationship exists only if the project remediates or reduces the
probable overall environmental or public health impacts or risks to
which the violation at issue contributes, or if the project is designed
to reduce the likelihood that similar violations will occur in the
future."[^44] A similarly intended limitation is that a SEP must
"advance at least one of the declared objectives of the environmental
statute\[\] that \[is\] the basis of the enforcement action"[^45] The
policy's limitation on the amount of offset a violator can realize, and
the prohibition of the acceptance of an action the violator was
otherwise obligated to take, seeks to ensure that the effectiveness of
enforcement is not diminished.[^46]

In order to address the Comptroller General\'s specific fiscal law
concerns, EPA first established a list of the permissible types of
projects that can be considered.[^47] Excluded from the list are the
types of projects that were specifically questioned,[^48] any project
that EPA, itself, is required to perform, and any project that would
provide additional resources in a manner that would augment EPA\'s
appropriations.[^49] These limitations alleviate augmentation concerns,
while miscellaneous receipts concerns are addressed by providing that a
project cannot result in the transfer of money to EPA or any other
federal agency.[^50] With an understanding of the issues reviewed by EPA
in developing its policy, it is easier to address the concerns the
military services will be required to address.

# III. ISSUES FACING MILITARY INSTALLATIONS

As stated above, military installations are faced with many of the same
types of legal concerns that EPA was forced to address. However, EPA
analyzed its ability to accept a SEP, while military installations must
understand their ability to offer a SEP. Thus, complete reliance on
EPA\'s policy will not satisfy the needs of the military services.
Installations faced with an environmental penalty need guidance that
generally outlines the situations in which it should consider
accomplishment of a SEP, the types of projects it can consider, the
amount of money that can be spent, and the appropriate method of funding
the project.

## A. When Should an Installation Consider Offering a SEP? 

### *Installation's Authority to Accomplish a Project*

### 

A preliminary issue that must be evaluated is the extent of an
installation's authority to execute a SEP. As indicated above, a SEP
agreement can entail a wide range of activities. When considering an
activity, an agency must evaluate its authority to accomplish the
action. Depending on the nature of the proposed activity, this may
present a difficult issue. Several examples can be cited of situations
in which agencies in the name of SEPs have taken actions ranging from
providing training to the employees of regulatory agencies to
constructing a public park in the center of town (not, in any way,
related to the agency's facility). Absent liability for a penalty, such
actions would clearly be unauthorized. What, if anything, about the
requirement to pay a penalty provides the authority that is otherwise
obviously lacking?

The language contained in the expanded waivers of sovereign immunity in
Solid Waste Disposal Act, more commonly known as the Resource
Conservation and Recovery Act (RCRA)[^51] and the Safe Drinking Water
Act (SDWA)[^52] is virtually identical. There is no mention of the
accomplishment of SEPs. However, covered federal entities are subject to
"Federal, State, interstate, and local *requirements*, both substantive
and procedural . . . ."[^53] Because a SEP is by definition an
"agreement,"[^54] it is difficult to characterize its accomplishment as
a requirement envisioned by the statutes. Since this is clearly not an
explicit authorization, it is helpful to look for indications that the
accomplishment of SEPs would be consistent with the intent of the
legislature that passed the waivers.

The most persuasive argument concerning legislative intent centers
around the designated uses of funds received by states in the form of
environmental penalties.[^55] With limited exception, [^56] any penalty
amounts so received can be used by the state "only for projects designed
to improve or protect the environment or to defray the costs of
environmental protection or enforcement."[^57] This language has been
broadly cited as the basis of authority under which a federal agency
could accomplish a SEP in resolving a regulatory action brought by a
state. The argument is that in using the penalty amount to actually
accomplish a "project\[\] designed to improve or protect the
environment," an agency furthers the obvious intent of Congress. This
argument has some logical appeal in that the agency seems to "cut out
the middleman" and ensure that appropriated funds are used as Congress
intended.

Recognizing this logic does not overcome the fundamental difficulty of
the argument, however. The legislative history behind the Federal
Facility Compliance Act,[^58] which was the first statute to enact the
limitation on the use of funds, clearly demonstrates the purpose of the
limitation on the use of funds, by a state. This language was included
in the statute at the urging of federal agencies concerned that the
requirement to pay penalties would equate to the opening up of the
agency budgets to attack from state governments hungry for federal
dollars. The language was intended to limit the desire of states to
treat environmental facilities as cash cows, the penalties from which
could make up for a shortage of federal money available through other
means.[^59] It appears that the limitation has been in some measure
successful, because the feared onslaught of enforcement actions and
penalties has not occurred. It is ironic, then, that this language would
be cited as support for the accomplishment of a SEP, such as the
construction of a public park. The wisdom of a federal facility seeking
to bypass the limitation to allow a regulator to directly determine how
the funds will be spent is questionable. Providing such control over the
expenditure of funds could certainly affect the incentive structure of a
regulator charged with enforcing environmental statutes.[^60]

This legislative history does not preclude the citation of the funds
limitation as an indication of legislative intent. It does, however,
provide grounds for rejection of that argument and practical support for
reliance on the plain language of the statute. The statute provides for
the payment of penalties. Further, the provision in question makes it
clear that the penalty amounts will be "*collected by* a \[s\]tate" and
"*used by* the \[s\]tate" for the purposes discussed above.[^61] Thus,
while the view that the requirement/ authority to pay penalties also
independently authorizes the accomplishment of SEPs cannot be dismissed,
the better legal view is that no such authority was provided. Since
there is historical support for the conclusion that the better legal
view is that alternative selected by agency heads,[^62] this article
will continue with the presumption that no independent legal authority
to accomplish a SEP has been provided.

Since the existence of a penalty does not authorize SEPs, what authority
*does* an installation have to accomplish a SEP? In answering this
question, it is helpful to point out that the relevant waivers of
sovereign immunity specifically define the term "requirement" to include
"all civil and administrative penalties and fines."[^63] While EPA\'s
authority to negotiate penalty amounts and to perform SEPs has been the
subject of question,[^64] there can be no serious question regarding the
authority of a federal facility to minimize its monetary liability in
the face of an environmental penalty.[^65]

EPA\'s policy of allowing 100% credit for federal agencies[^66] will
provide strong support to a federal official who seeks to maximize the
benefit received from the expenditure of agency appropriations by
agreeing to complete a SEP. Thus, while there is no specific
authorization for accomplishment of SEPs, the accomplishment of a SEP
seems to clearly fall within the parameters of an installation's
authority to negotiate. Limitations on that authority are dependent on
issues, like the type of project, that will be discussed below.

### *Requirement that SEP Reduce Penalty*

Generally, the requirement to pay a penalty has been a practical, rather
than a legal, prerequisite to the accomplishment of a SEP. The
definition of a SEP is broad enough to include projects performed where
there is no underlying penalty.[^67] Indeed, some agencies have
accomplished SEPs in situations where no underlying liability for
payment of a penalty existed. For example, there have been several
instances in which an agency agreed to perform a SEP as part of Consent
Decree for a Clean Water Act[^68] (CWA) violation, for which it could
not have been held responsible for the payment of a penalty.[^69] The
most likely explanation is that the agency did not realize that it was
immune to penalties. However, it is possible to envision a scenario in
which an agency is aware that it is not liable to pay a penalty, but
chooses to accomplish a SEP anyway. Such a decision could be based on a
desire to foster cooperative relations with the regulatory agency or on
public relations concerns, in general. This is because SEP projects are
generally desirable projects standing alone, but are prioritized below
other funded projects. The ability to accomplish the several purposes
discussed above, including the satisfaction of environmental liability,
increases the priority of the project in question and, ultimately, forms
the basis for the decision to fund the SEP. However, there is
significant question as to whether the law requires the existence of
monetary liability before an agency can accomplish a SEP. These legal
questions can be addressed by providing, as a matter of policy, that
SEPs are only to be accomplished in lieu of all or part of a penalty for
which an installation is liable.

This practical recommendation is directly related to the overall goal of
this article--to ensure that environmental violations are resolved in
the most efficient manner. It might be possible to argue in a given
circumstance that the goal of efficiency is accomplished by the
execution of a SEP despite the non-existence of liability for a penalty.
That is, given the protracted disputes that can occur when a regulator
insists that an installation is liable for a penalty and refuses to
accept legal arguments to the contrary, it may actually result in cost
savings for the installation to agree to a small SEP rather than to
continue the dispute. Despite the possibility that, in an isolated
circumstance, such an agreement could save time and money, the overall
impact to the military services will likely be detrimental. Such a
capitulation to regulatory pressure would not only encourage further
enforcement action by that regulator against military installations, it
would make an already obstinate regulator more persistent in future
negotiations. Federal facilities immune from penalties are already very
familiar with the regulator that, despite a Supreme Court decision
directly on point,[^70] refuses to accept the validity of the
installation's position because another federal facility within the
jurisdiction has paid a penalty or accomplished a SEP for the same type
of violation.

While sovereign immunity precludes the payment of many environmental
penalties,[^71] a regulator may seek to force an installation to
reimburse the regulator for the costs incurred in taking enforcement
action. The liability for payment of such a fee is less clear than the
liability for the payment of a penalty.[^72] This is an issue of
particular sensitivity, because of the natural concern that a regulator,
frustrated by the inability to collect a penalty, will seek to "replace"
this money by assessing an excessive or unjustified administrative
enforcement fee. The concern was summarized by the Supreme Court in
another context when it concluded that a state could not subvert the
waiver of sovereign immunity simply by providing a different name to an
assessment that is inconsistent with the principle of sovereign
immunity.[^73] In order to avoid such a disguised penalty, an
installation will require evidence that a fee, similar in both type and
amount, is assessed all violators. While it generally is very difficult
to demonstrate discrimination against federal facilities, evidence a
state has treated an installation differently would provide grounds to
refuse payment.[^74]

Some installations have been offered the opportunity to perform SEPs in
lieu of payment of such fees. There is no legal obstacle to such an
offset, but policy considerations demand that such offers be rejected
without exception. Given the concern that regulators use these fees as a
means to circumvent sovereign immunity, it would be unquestionably
unwise for an installation to increase the regulatory incentive to
assess such fees. Instead, since the assessment is appropriate only if
it is designed to reimburse costs incurred by a regulator as a result of
a violation, an installation should force the regulator to support, in
detail, each aspect of the claimed cost and should provide monetary
reimbursement only for costs that can be demonstrated to be legitimate.
It should also firmly advise the regulator that its willingness to
accept a SEP rather than monetary reimbursement is inconsistent with the
purpose of the fee.

### *Installation Control Over SEP Negotiation*

Having determined that a SEP will only be accomplished in lieu of all or
a portion of liability for a penalty for which an installation may be
liable, it is helpful to briefly introduce matters concerning the
offset. In order to fully understand the concept of penalty offset, it
is helpful to first understand the regulator's policy regarding the
underlying penalty. A discussion of regulatory penalty policy is beyond
the scope of this article, but it is strongly recommended that an
installation be fully apprised of the applicable policy at the outset of
negotiations. A more thorough discussion of the offset is provided
below. The offset is perhaps the aspect of SEP negotiation over which an
installation will have the least control. For this reason, the guidance
called for will merely make recommendations rather than imposing
requirements regarding the offset. Because the installation cannot
unilaterally control the flow of penalty negotiations, it is suggested
that when a regulator raises the potential for agreement on a SEP, the
installation advise that while it may be interested in discussing the
potential for accomplishment of a SEP, it will not do so until agreement
is reached on the amount of penalty liability. This ensures that any
agreement reached actually offsets penalty liability rather than amounts
that would have been conceded by the regulator through the negotiation
process. However, it will not always be possible for an installation to
control the timing of discussions regarding a SEP.[^75] While the timing
is important in ensuring the efficiency of the resolution, it is not
essential. On the other hand, an installation may experience greater
difficulty in controlling the types of projects that the regulator is
willing to discuss as potential SEPs. On this issue, the willingness of
the regulator to allow the installation to control the type of project
to be accomplished will likely determine whether agreement will be
reached on the accomplishment of a SEP.

The importance of exercising control over the type of project to be
executed stems from both legal and policy oriented concerns. Of course,
the authority issues discussed above will go a long way toward
determining what an installation will be willing to do. Added to any
authority based limitations are concerns imposed by fiscal law. Beyond
these legal constraints, the recommended guidance will attempt to
balance considerations regarding the immediate interest of the
installation in question with the overall interest of the military
services. Even a SEP that is permissible from a legal perspective may
not be in the best interests of the military service.

Since the type of project proposed will be the single most critical
factor in shaping its decision, an installation facing an enforcement
action will be well served by, early in the negotiation process,
becoming familiar with what it can agree to do. There may appear to be
an element of "hurry up and wait" in the seemingly contrasting
recommendations that an installation immediately consider its
opportunities to accomplish a SEP while trying to delay discussion of
the prospect of a SEP until late in the negotiation process. The essence
of both recommendations, however, is to confine what can be a difficult
and time consuming negotiation. Ideally, an installation with a
sufficient understanding of its limitations will be able to select a
project that will provide maximum benefit to the military service and
acceptance by the regulator. Even if the parties cannot agree on a
particular project, an installation can largely control this portion of
the process by clearly explaining what it can and cannot do to the
regulator. Forthrightly advising the regulator of the types of projects
that can be accomplished (and, if necessary, supporting this advice by
showing written guidance from the headquarters level) should make it
relatively easy to reach agreement on the type of project. Negotiations
will, thus, be limited to the amount of any penalty that will be
required in addition to the SEP. These negotiations will, in turn, be
simplified and provide the greatest benefit to the military service if
the amount of the penalty to be paid (as distinguished from the amount
initially assessed) has been finally determined before the SEP is
discussed.[^76] By focusing discussion on the mitigation percentage to
be applied to a pre-determined penalty, the process should be eased
thereby permitting the installation to minimize its expenditure of
funds.

## B. What Types of Projects Can Generally Be Considered?

As discussed, the types of project a regulator will accept as a SEP can
vary from jurisdiction to jurisdiction. Because of EPA\'s careful policy
development in the face of many similar policy constraints, it is
helpful to briefly review the types of projects allowed by EPA and to
use EPA\'s list as a starting point. The Interim Revised Policy
establishes seven acceptable categories of SEPs. The seven EPA
categories are: (1) public health projects which promote human health
care in a manner that is related to the violation; (2) pollution
prevention projects, which reduce the generation of pollution; (3)
pollution reduction projects, which result in a decrease in the amount
and/or toxicity of pollution after it has been generated; (4)
environmental restoration/protection projects, which enhance the
condition of the ecosystem or area adversely affected by the violation;
(5) assessments/audits of pollution prevention opportunities, the
overall environmental condition of the site, existing environmental
management policies, and/or the current state of environmental
compliance; (6) provision of training or technical support (that
promotes environmental compliance) to other members of the regulated
community; and (7) emergency planning and preparedness projects, which
provide assistance, generally in the form of equipment, to a state or
local emergency response or planning entity.[^77]

As noted above, states are not limited by EPA's guidance, so many other
types of projects can be and have been accomplished as SEPs.[^78] An
installation will, of course, have to be familiar with whatever policy,
formal or informal, is followed by the regulator in question. It is
therefore advisable for the installation, as a routine matter, to retain
current information on the relevant policy, without regard to any
potential or ongoing enforcement action. Once equipped with this
information, an installation can identify areas of overlap between the
regulator's policy and the recommended guidance. Within this overlap,
the installation can then prioritize projects that will benefit the
installation.

It is intended that in this typical scenario, the needed guidance would
act as the primary limiting factor on the scope of projects considered.
Experience has shown that regulators are often willing to consider a
very broad range of projects, and that installations have been able to
find interesting justifications for a conclusion that projects proposed
by regulators are also beneficial to the installation. The projects
accepted by EPA serve as a useful starting point in determining what
kind of projects a military installation should be able to consider.

This article has already concluded that the existence of a penalty or a
SEP agreement does not provide any independent authority to accomplish
the subject project. Since an installation will be relying upon its
inherent authority to accomplish a SEP, it necessarily follows that some
of the categories of SEPs accepted by EPA can be excluded from
consideration. As a general matter, it is possible to eliminate the
following: public health projects; training or technical support
projects; and emergency planning and preparedness projects.

With the possible exception of public health projects, the excluded
categories of projects are clearly outside of the authority provided to
military installations. Nevertheless, both training projects and
projects that fit within EPA\'s description of emergency planning and
preparedness have been accomplished. It is essential that the military
services acknowledge either that those situations involved unique
circumstances that made them permissible,[^79] or that the project in
question was accomplished at a time when the services did not understand
the limits on their authority and, thus, were not subject to the same
legal and policy oriented requirements. For instance, in more than one
circumstance, a military installation has provided training either to
employees of the regulator or to other non-federal parties. While
arguments can be made that such training is within the authority of
EPA,[^80] there can be little question that the provision of such
training is outside the authority of the military services.

Public health projects are defined as activities that provide "human
health care which is related to the actual or potential damage to human
health caused by the violation,"[^81] including medical examinations of
potentially affected persons. It is possible to envision a situation in
which a violation affects active duty service members. In this
situation, EPA might agree to a SEP that entails the provision of some
authorized medical services. Because this is a somewhat strained
hypothetical and, in any event, not typically the kind of project EPA
would accept,[^82] public health projects will not be discussed as an
acceptable SEP. As will be discussed in the waiver provision below, this
will not absolutely preclude the accomplishment of such projects. But it
will, however, subject them to a more stringent analysis and a higher
level of approval authority.

The types of projects that EPA has identified as acceptable and that are
potentially within the authority of a military installation to
accomplish are: pollution prevention projects; pollution reduction
projects; environmental restoration/protection projects; and assessments
or audits. Each of these categories is discussed individually below.

### *Pollution Prevention Project*

A pollution prevention (P2) project is any practice that "reduces the
amount of any hazardous substance, pollutant or contaminant . . .
released into the environment."[^83] EPA has formally announced a
preference for the accomplishment of P2 projects as SEPs[^84] and, in
return for this accomplishment, will provide a higher mitigation
percentage than is available for all other types of projects.[^85]
Following EPA\'s lead, other regulatory bodies have also placed emphasis
on the accomplishment of P2 projects.[^86] The explanation for this
preference is that the other types of projects will likely not lead to a
decrease in the amount of waste generated. The result can be
"multi-media transfer of wastes and contaminants, continued
environmental impact, continued oversight by the government and the long
term expense to violators that is associated with waste generation and
control."[^87] As stated above, DoD also has a preference for pollution
prevention projects,[^88] which is at least partially explained by this
potential for continued expense.

### *Pollution Reduction Projects*

While P2 projects are designed to prevent the generation of pollution, a
pollution reduction project improves the management and disposal of
waste that has already been generated.[^89] Because both types of
projects result in a decrease in the amount and/or toxicity of releases
into the environment,[^90] they are easily confused. A reduction project
generally involves installation of more effective end-of-process control
or treatment technology, such as recycling, or improved treatment,
containment or disposal techniques.[^91] Clearly, such projects have the
potential to enhance an installation's environmental stewardship and
should receive strong consideration, although they are generally less
favored than P2 projects.

### *Audit or Assessment*

Within this broad category, EPA groups four types of actions: pollution
prevention assessments; site assessments; environmental management
system audits; and compliance audits. Any of these actions could be
determined by the installation to be within its authority and
beneficial, so further discussion is warranted. It is noted at the
outset that EPA\'s policy requires that the results of the
audit/assessment be provided to the regulator.[^92] Although a
discussion of this requirement is beyond the scope of this article,
depending on the service or installation in question, such a requirement
could preclude this type of project from being considered.[^93]

Related to the P2 type of SEP, pollution prevention assessments are
"systematic, internal reviews of specific processes and operations
designed to identify and provide information about opportunities to
reduce the use, production, and generation of toxic and hazardous
materials and other waste,"[^94] and can prove very beneficial to an
installation. The close relationship to P2 projects not only leads to
the conclusion that they fall within DoD's most favored category of
SEPs,[^95] but they are likely to qualify for greater credit under some
of the regulatory policies.[^96]

Compliance audit is an "independent evaluation of a defendant/
respondent\'s compliance status with environmental requirements"[^97]
and will be accepted by EPA only when the offering party is a small
business. Although this clearly excludes military installations, there
is the possibility a state regulator would accept such a project.

An environmental management system audit is defined as an "independent
evaluation of a party\'s environmental policies, practices and
controls."[^98] This broad category can encompass evaluations of the
need for:

> \(1\) a formal corporate environmental compliance policy, and
> procedures for implementation of that policy; (2) educational and
> training programs for employees; (3) equipment purchase, operation and
> maintenance programs; (4) environmental compliance officer programs;
> (5) budgeting and planning systems for environmental compliance; (6)
> monitoring, record keeping and reporting systems; (7) in-plant and
> community emergency plans; (8) internal communications and control
> systems; and (9) hazard identification, risk assessment."[^99]

The final type of project included in this broad category are site
assessments. By investigating the condition of the environment at the
installation and the potential for any threats to human health or the
environment stemming from the installation, a penalty can be
reduced.[^100] "To be eligible for SEPs, such assessments must be
conducted in accordance with recognized protocols, if available,
applicable to the type of assessment to be undertaken."[^101]

### *Environmental Restoration / Protection Projects*

Defined as a project that "goes beyond repairing the damage caused by
\[a\] violation to enhance the condition of the ecosystem or immediate
geographic area adversely affected,"[^102] many restoration/protection
projects will fall within an installation's authority. EPA makes it
clear that restoration projects can focus on man-made environments, such
as facilities and buildings, as well as natural environments or
ecosystems.[^103] Protection projects "protect\[\] the ecosystem from
actual or potential damage resulting from the violation or improve\[\]
the overall condition of the ecosystem."[^104] Protection projects that
arguably fall within an installation's authority include restoration or
creation of a wetland on the installation, purchase and management of a
watershed area, or a project that protects the habitat of endangered
species located on the installation.[^105]

### *Projects not Included in EPA\'s Guidance*

It would be short-sighted to strictly limit an installation's
consideration to only projects that would be considered by EPA. EPA\'s
list, even when narrowed to be consistent with an installation's
authority, provides a broad spectrum of projects to choose from.
However, it should not be considered an exclusive list of the types of
projects an installation might be able to accomplish. A review of some
of the state policies raises some possibilities not included in EPA\'s
guidance. For this and other reasons, all designed to permit some
flexibility at the installation level, it is advisable to establish a
procedure by which an installation can seek a waiver from the
limitations in the new guidance. Such a waiver provision is discussed
more fully below.

## Selection and Prioritization of Projects

Because the circumstances surrounding a given situation can be so
diverse, the scope of the necessary guidance should be limited to
identifying the types of projects an installation should consider and
should leave it to the installation to determine which of these
alternative types it prefers. Since any proposed project will require
regulatory concurrence, the installation would be wise to identify and
prioritize several potential projects. The installation can then decide
whether to inform the regulator only of the preferred project, or to
negotiate two or three projects with the regulators in an effort to
determine which project will result in the greatest reduction in
penalty.

It is helpful to identify a number of the considerations an installation
may face in defining and prioritizing potential projects. The
installation should consider: the mission enhancement that would be
realized through the accomplishment of a potential action; the
installation's ability to accomplish the proposed action; the
willingness of the regulator to reduce the penalty for the project in
question; and the amount of penalty reduction that could be achieved for
that project. In the end, it is likely the installation will need to
balance these considerations in selecting its project.

### *Mission Enhancement*

The relationship between mission enhancement and an installation's
authority is such that if a project is authorized, it is very likely to
enhance the mission. Beyond that general statement, mission enhancement
is such a fact-specific consideration that very little discussion is
warranted in this article. It is important to stress, however, that on a
general level, DoD has conducted an analysis of mission enhancement and
has established a priority for the accomplishment of a P2 projects as
SEPs.[^106] This priority does not bind the hands of the service or
installation making a decision regarding a SEP, but an installation
should be aware of DoD's policy as it weighs its options.

### *Ability to Accomplish the Project*

It is quite possible that individuals working on the installation will
have ideas for improvements in operation that should be considered as
potential SEPs. Because P2 projects are the preferred type of SEP, there
are significant resources specifically designed to promote P2 projects
within DoD.[^107] The inquiry may be eased significantly because an
installation should have already identified a "to-do list" of desirable
P2 projects, in accordance with Executive Order 12,856.[^108] A typical
requirement of these strategies is that each installation develop its
own pollution prevention plan.[^109] In this plan, an installation will
have a series of previously identified activities it intends to
undertake at a specified time in the future.[^110]

Another source of previously identified projects specific to the
installation is the list of desired environmental projects prepared
pursuant to Office of Management and Budget (OMB) Circular A-106
(hereinafter A-106).[^111] This list includes, but is not limited to, P2
projects.[^112] By drawing from this list of desirable projects that
have not yet been accomplished, an installation can ensure the SEP has
previously been determined to be inherently valuable to the
installation. This would, in turn, address questions about the authority
to accomplish the project. However, this means of resolving the mission
enhancement question has the potential to create funding issues that can
affect the installation's ability to accomplish the activity as well as
the regulator's willingness to provide penalty mitigation.[^113]

In deciding on a SEP, an installation will necessarily address its
ability to fund or ensure the availability of funding for a proposed
project. The general principles of fiscal law can be appropriately
categorized as purpose, time, and amount limitations and will be
discussed individually. The view of the military services has
traditionally been that since the primary purpose of a SEP is the
resolution of liability for a penalty, SEPs should be funded in the same
manner as the underlying penalty.[^114] This traditional position
requires analysis.

When it waived sovereign immunity for the payment of penalties, Congress
could have created an additional appropriation available for the payment
of penalties or specifically designated an existing source of funds that
would be available for this purpose, but it did not. Instead, it elected
to remain silent on the appropriate source of funds to be used to
satisfy this newly created responsibility.[^115] This silence did not
leave military installations unable to pay the costs of penalties; nor
did it provide installations the unfettered discretion to choose the
source of funds from which to pay penalties. Instead, agencies were
given the implicit authority to use appropriated funds and were required
to determine which appropriation is the proper source.

The principle that enables agencies to use appropriated funds to pay
penalties even though no appropriation is specifically available for
this purpose is the "necessary expense doctrine." This principle
provides a federal agency with "reasonable discretion in determining how
to carry out the objects of \[its\] appropriation\[s\]."[^116] In order
to determine whether a specific expenditure falls within the deference
accorded an agency, three tests must be passed. First, the proposed
expenditure must be reasonably related to the purpose for which Congress
appropriated the funds. Second, the proposed expenditure must not be
prohibited by law. Finally, the expenditure must not fall within the
ambit of another appropriation.[^117]

The Comptroller General addressed the payment of environmental penalties
in 1978 in response to a question from the National Oceanic and
Atmospheric Administration (NOAA). Although the issue in 1978 regarded
the payment of Clean Air Act penalties,[^118] the discussion has
generally been applied to penalties under RCRA and undoubtedly will
apply to the SDWA. The Comptroller General concluded that the penalties
could be funded from NOAA's appropriation for "necessary expenses"
assuming the penalties were "incurred in the course of activities
necessary and proper or incidental to fulfilling the purposes for which
the appropriation was made."[^119]

That decision continues to guide the payment of penalties by the
military services. Although the military services do not have a
"necessary expense" appropriation, each service does receive an
appropriation of Operation and Maintenance (O&M) funds annually. This
appropriation is used to fund the day-to-day operations of most military
facilities. Since environmental penalties are generally incurred as a
result of the daily operations of military facilities, penalties will
generally be paid using O&M funds. Because the military has viewed SEPs
primarily as an alternative means of satisfying penalty liability, the
default position for the services has been that SEPs should be funded
from an installation's O&M account.

This logical leap is not justified in every circumstance, however. Since
the "necessary expense rule" can be applied only on a case-by-case
basis,[^120] it is possible to review the limitations placed on SEPs by
the use of O&M funds only by considering the type of project involved.
This evaluation is a multi-step inquiry. The first consideration,
whether the project to be performed is authorized by law, has been
thoroughly discussed above. Since one of the intentions of the needed
guidance is to ensure that any action taken as a SEP is within the
authority of the installation, the remaining discussion will assume that
this condition has been satisfied.

The next consideration is that the proposed project must bear a
relationship to the purpose of the appropriation intended to be charged.
The purpose of an installation's O&M funds is to cover expenses that are
necessary for the operation and maintenance of the installation in
question and for which Congress has not otherwise provided.[^121] Since
the primary purpose behind the accomplishment of a SEP is to satisfy
existing liability for payment of a penalty, any expenditure on a SEP
will likely satisfy the necessity requirement. However, a SEP is, by
definition, a multi-purpose expenditure. Thus, it is quite possible that
Congress has otherwise provided for the accomplishment of one of the
purposes of the expense.

The most obvious example involves the accomplishment of a military
construction project. Annually, each service receives a military
construction appropriation.[^122] Many of the types of projects that
have been identified as possible SEPs to be accomplished by the military
services would involve construction. For instance, EPA\'s discussion of
P2 projects specifically envisions equipment or technology
modifications.[^123] Such modifications often entail changes to the
design of a military facility. EPA describes pollution reduction
projects to include installation of more effective end-of-process
control or treatment technology.[^124] Finally, examples of
environmental restoration/protection projects are "restoration of a
wetland" and "purchase and management of a watershed area".[^125]
Operation and maintenance funds are available to fund minor military
construction projects, but larger projects must be funded using the
military construction appropriation.[^126]

While an installation can control its O&M budget, it can not be certain
military construction funds will be available. Military construction
projects intended, for instance, to promote environmental compliance
will compete with all other compliance oriented construction projects
for funding. Under the A-106 process, identified projects are
prioritized by the military services. For example, a compliance project
is classified with regard to its effect on the compliance status of the
installation.[^127] It is this categorization that largely determines
whether a project will be accomplished. That is, unless it can be said
that a project is necessary to bring an installation into compliance,
there is a very good chance the project will not be funded. Because a
SEP agreement creates an enforceable obligation,[^128] the agreement
could conceivably elevate the status of a project in a manner that
enables its accomplishment, but the Air Force has specifically precluded
the possibility of using this logic to leapfrog other projects.[^129]
The bottom line is that reliance on military construction appropriations
introduces uncertainty in the SEP process.

The basic principle that an installation should never agree to a permit
condition or compliance agreement when there is some question about its
ability to satisfy the terms of that permit or agreement[^130] is
directly applicable. An installation could place itself in a precarious
position by entering into an enforceable obligation to accomplish an
action that will necessarily be funded externally. This is not to say
that an installation should be discouraged from considering the
availability of external resources to accomplish a SEP. Depending on the
type of project in question, funds could be available. The needed
guidance would include the possibility of a waiver for an appropriate
SEP. The application for this waiver will identify the source of funds
and demonstrate that these funds have been secured in advance. By
requiring higher level approval of any part of a SEP that will be funded
externally, the services can ensure that any SEP agreed upon can
actually be accomplished.

As discussed above, an installation should ensure that negotiations in
response to a penalty proceed in two distinct phases. The first phase of
the negotiation will address the amount of the penalty that is
acceptable to both parties. After this amount is determined, the parties
then discuss the potential for reducing the amount of the penalty
through the execution of a SEP agreement and the specifics of such an
agreement.[^131] Negotiations of this type are often lengthy, and it is
reasonable to assume that discussions could carry over into a subsequent
fiscal year.

It is quite likely an installation that receives a notice of violation
(NOV) with an assessed penalty in fiscal year (FY) 1997 (October 1,
1996, to September 30, 1997) will agree to the execution of a SEP in FY
1998 or later. It is possible to conclude that while the underlying
penalty should be paid using O&M funds that were current at the time an
NOV was received (FY 1997 in the above example), the cost of the SEP
should be funded from the O&M appropriation current at the time the SEP
agreement was signed (FY 1998). However, the penalty would be paid from
expired FY 1997 funds. The shifting of the financial burden into the
current fiscal year reduces the installation's incentive to accomplish
the SEP, because, given the scarcity of available funds, even the
environmentally aware commander, fully recognizing the potential
benefits of a SEP, will have a strong incentive to simply pay the
penalty using expired funds.

The Air Force General Counsel has determined that the obligation for a
SEP should be recorded in the fiscal year in which the underlying
penalty would have been obligated.[^132] This policy was developed after
significant debate[^133] and thorough legal review,[^134] and will be
advanced in the proposed guidance.

Given the historic reluctance of the government to accept liability for
the payment of penalties, GAO's finding that federal facilities were so
enthusiastic in their use of SEPs that they actually spent more money in
resolving violations than the amount that was originally assessed as
penalties is somewhat surprising.[^135] In light of the strict legal
limits on the use of funds appropriated by Congress, there has been some
concern over whether such expenditure are inappropriate. Because a SEP
can only be accomplished pursuant to the installation's independent
authority, it is that independent authority, rather than the existence
of a penalty action, which provides the authority to accomplish a SEP.
Therefore, one should not conclude that the penalty amount sets the
legal limit on the agency's authority. It is possible that the military
services would want to establish a policy-based limit on the total
amount of money an installation will be allowed to spend on a SEP.
However, for many of the same reasons discussed above, installations
should retain some flexibility to determine for themselves whether the
value of a SEP satisfies all other aspects of the guidance. It is clear
that the installation is the entity most capable of evaluating the
several complex considerations that determine this value on a
case-by-case basis.

### *Available Penalty Reduction*

A factor that will often be very important for an installation to
consider in prioritizing possible projects is the amount of penalty
reduction that will be provided for each project. While this can only be
determined in negotiation with the regulator, it is possible to identify
in advance significant factors that are likely to have an affect on the
credit awarded.

With regard to the amount of offset that should be received, it is not
possible or even desirable to establish a minimum amount of reduction an
installation should be allowed to accept, because the amount of penalty
mitigation regulators will consider granting can vary greatly among
jurisdictions. In some jurisdictions, the amount of credit is actually a
two part consideration. For instance, the State of Texas provides that,
generally, a SEP will result in a maximum penalty reduction of
50%.[^136] That is, an installation faced with a \$200,000 liability
would be expected to pay a penalty of at least \$100,000, in addition to
the SEP it accomplishes. The second issue that must be considered is how
much money must be spent on the SEP to receive the penalty reduction
offered. In other words, how much penalty reduction credit will the
regulator allow for each dollar spent by the violator. Staying within
the State of Texas, depending on the benefits of the SEP in
question,[^137] the permissible "mitigation percentage" can vary from
25% to 100%. Using the example posited above, in order to receive the
maximum penalty reduction of \$100,000, it would be necessary to spend
between \$100,000 (assuming 100% credit) and \$400,000 (assuming 25%
credit) on a SEP, in addition to paying \$100,000 as a penalty.

EPA's policy does not specify a maximum penalty reduction. Instead it
requires that, regardless of the accomplishment of a SEP, a penalty must
be paid that exceeds the economic benefit realized by the violator as a
result of its violation.[^138] The maximum mitigation percentage is
generally 80% of the cost of the SEP.[^139] The percentage can go as
high as 100% based on a number of circumstances including the type of
project accomplished.[^140] One of the circumstances under which EPA
will allow 100% credit is the situation where the violator is a
government or other non-profit entity.[^141] EPA\'s deference to the
specific circumstances of government agencies is reflected in varying
degrees by the state policies.[^142]

The vast difference among regulatory bodies with respect to the credit
to be provided is perhaps the strongest argument against specifying the
minimum credit for an installation as a condition precedent to a SEP
agreement. To establish a minimum credit would require comparing the
policies of all the regulators, and finding the common amount that would
be acceptable to all regulators and beneficial to all installations
regardless of circumstance. If the minimum amount was set too high, it
would likely rule out the accomplishment of beneficial SEPs in states
that have unyielding policies, which preclude extending the credit
insisted upon by the needed guidance. On the other hand, if the limit
was set too low, a regulator that might otherwise be inclined to offer
more credit could easily turn the floor into the ceiling. That is, if
the policy notifies the regulator of the amount of credit an
installation can accept, the regulator may become convinced it should
not offer a higher amount. The general regulatory willingness to treat
government entities in a more favored manner demonstrates that such
entities have some persuasive arguments in favor of receiving higher
credit than is accorded other parties.

Thus, if the amount of credit required is left open to determination on
a case-by-case basis by each installation, a regulator will not have a
pre-conceived notion of what the installation will be willing to accept.
Perhaps, more importantly, the installation will be able to decide for
itself the value of the SEP. It is in this limited aspect of the
decision-making process that it is appropriate for the installation to
consider the public and regulatory relations benefits available through
the accomplishment of a SEP. While these considerations should not
impact the decisions as to whether a SEP is appropriate and the type of
project to be accomplished, they are certainly relevant to an
installation's determination of how much it is willing to pay for the
SEP.

One suggestion of this article has been that installations strongly
consider as SEPs projects that have been previously identified as
beneficial for the installation. While making this suggestion, the
article noted concerns that a service may have internally with the
accomplishment of such projects. An additional concern external to the
military services, and thus largely beyond their contro, is the
potential that a regulator could refuse to reduce a penalty or
significantly limit the amount of penalty reduction that will be
realized by such a project.

EPA will not accept as a SEP any project that is required by any law or
regulation.[^143] This would clearly preclude credit for actions that an
installation is required to undertake pursuant to the Endangered Species
Act,[^144] for instance, which imposes requirements on installations
beyond those faced by non-government entities. Even requirements that
are imposed internally could prevent accomplishment of an action as a
SEP. Depending on the type of project and the regulatory interpretation
of the installation's legal position, a regulator might refuse a project
which it views as a regulatory requirement. For example, an Air Force
installation is required to periodically "assess all pollutant sources
and determine opportunities to reduce or minimize waste."[^145] Although
such P2 "opportunity assessments"[^146] clearly fit the definition of a
"pollution prevention assessment" under EPA\'s policy,[^147] it is quite
likely that EPA or another regulator would refuse to provide the credit,
citing the provisions of the Air Force's own regulation. Similar
regulatory reluctance can be anticipated with regard to the Air Force's
Environmental Compliance Assessment and Management Program
(ECAMP).[^148] EPA does allow \"accelerated compliance\" projects, which
it defines as "activities which the defendant/respondent will become
legally obligated to undertake two or more years in the future."[^149]
The State of New York, on the other hand, is significantly more strict.
Its policy specifically precludes the acceptance of any action the
violator intended to accomplish (without regard to the ongoing
enforcement action) within the next five years.[^150] Obviously, that
could encompass a much broader range of actions than those that were
required by law. EPA\'s original policy was similarly broad. It provided
that a project the violator would undertake for normal business reasons
without regard to the existence of an enforcement action could not be a
SEP.[^151] The current policy does not explicitly rule out such
projects, but does state that "the primary goal of SEPs is to secure a
favorable environmental or public health outcome which would not have
occurred but for the enforcement case settlement."[^152] These specific
limitations should not prevent an installation from offering the
projects as potential SEPs, but can be used to tailor the proposal to
address these concerns in advance.

### *Waiver Provision*

Certainly it is not possible to anticipate all the circumstances an
installation might face in negotiating its environmental penalty
liability and considering the possibility of a SEP. For this reason, it
is important to ensure that the needed guidance carefully avoids
inhibiting the flexibility an installation should exercise to
efficiently resolve its liability. This concern has been recognized
through this article's recommendations that the installation not be
unduly restricted with regard to the timing of SEP negotiations and the
amount of penalty mitigation that is realized. Perhaps the most
important concern with regard to leaving the installation with the
necessary flexibility relates to the selection of the project in
question. Unfortunately, this is the area with the greatest potential
for abuse of authority and in which an installation can most benefit
from guidance. The necessary balancing between these concerns indicates
that except where specified (*e.g.,* timing of negotiations and amount
of penalty reduction), mandatory guidance be established with the
possibility of approval of variances from higher headquarters. The
necessary waiver provision will allow an installation to, for instance,
seek approval of and ultimately propose a type of project that is not
generally approved by the guidance. In order to receive the waiver, such
a project will be subjected independently to the same type of evaluation
that has been conducted above.

# IV. CONCLUSION

Military installations and the military services will benefit greatly
from guidance that provides an installation insight on the benefits
available through the accomplishment of a SEP, identifies the necessary
issues that must be evaluated, addresses some of the resources
available, and defines general limitations on an installation's ability
to accomplish a SEP. It is anticipated that the guidance will be
prescriptive where necessary but will not preclude consideration of
projects outside of its parameters. Given the complexity that is created
by the sheer number of regulatory authorities military installations
could have to deal with, and the significant differences among these
regulators, it is beneficial to draft the guidance in a manner that is
intended to be limiting. This will avoid the need for higher level
review of all potential projects, while exercising the appropriate level
of control. It is in this manner that the military services can take the
first step to ensuring that any SEP accomplished is within the
installation's authority and promotes the best interests of the
installation in question and the military service, in general. That is,
it will be an important element in the military's effort to efficiently
resolve its liability in environmental penalty actions.

[^1]: *\*Mr. Carey (A.B., University of Notre Dame; J.D., University of
    Virginia) is a civilian attorney with the Air Force in Arlington,
    Virginia. He is a member of the Bar in the Commonwealth of Virginia
    and the District of Columbia.*

    ^?^ *See, e.g.,* Department of Defense Instruction 4715.6,
    Environmental Compliance [¶ D.4 (]{.smallcaps}Apr[. 24, 1996)
    \[]{.smallcaps}hereinafter DODI 4715.6\][; Environmental Law
    Division, U.S. Army Legal Services Agency, Environmental Criminal
    and Civil Liability Handbook]{.smallcaps} ¶ 7(g)(1) (1^st^ ed[.
    1997) \[]{.smallcaps}hereinafter [Army Handbook\].]{.smallcaps}

[^2]: In 1993, ten percent of all of the Environmental Protection
    Agency's (EPA or EPA's) settlements of enforcement actions included
    SEPs. *Supplemental Environmental Projects Said Increasingly Used by
    EPA, States*, [Daily Environ. Rep.]{.smallcaps} (Jun. 9, 1994).

[^3]: [United States General Accounting Office]{.smallcaps}, [Federal
    Facilities: EPA\'s Penalties for Hazardous Waste
    Violations]{.smallcaps}, GAO/RCED-97-42 (Feb. 1997) \[hereinafter
    GAO Penalty Report\]. The findings of this report, some of which are
    quite surprising, will be mentioned throughout this article.

[^4]: Federal Facility Compliance Act of 1992, Pub. L. No. 102-386, 106
    Stat. 1505 (Oct. 6, 1992) (codified as amended in scattered sections
    of 42 U.S.C.) \[hereinafter FFCA\]. The controversy surrounding the
    doctrine of sovereign immunity as it applies to the payment of
    environmental penalties came to a head as the result of the Supreme
    Court's decision in *Department of Energy v. Ohio,* 112 S. Ct. 1627
    (1992). This article will make further reference to that case, which
    held that federal agencies were not subject to punitive fines under
    the Clean Water Act or the Solid Waste Disposal Act.

[^5]: The waiver of sovereign immunity in the Safe Drinking Water Act,
    42 U.S.C.A. § 300j-6 (1997), was expanded to include the payment of
    penalties by the Safe Drinking Water Act Amendments of 1996, Pub. L.
    No. 104-182, 110 Stat. 1613 (Aug. 6, 1996). Proposals to expand the
    waivers in other statutes continue to be introduced.

[^6]: National Defense Authorization Act for Fiscal Year 1998 § 344,
    Pub. L. No. 105-85, 111 Stat. 1629 (1997).

[^7]: [Army Handbook]{.smallcaps}, *supra* note 1.

[^8]: [Army Handbook]{.smallcaps}, *supra* note 1, has an excellent
    discussion of SEPs, but does not provide the detailed discussion of
    these issues that is envisioned by the author in order to answer the
    above questions.

[^9]: EPA Region I Administrator, John P. DeVillars *as quoted in
    Military To Pay \$170,000 Fine For Hazardous Waste Violations At
    MMR,* [Defense Environ. REP.]{.smallcaps} (Aug. 27, 1997).

[^10]: Interim Revised EPA Supplemental Environmental Projects Policy ¶
    A.1 (May 8, 1995) \[hereinafter Revised Policy\].

[^11]: 1 [Barry M. Hartman, EPA Enforcement Manual]{.smallcaps} ¶ 102
    (Nov., 1994) outlines the overall enforcement objective. It is to
    ensure compliance with all environmental laws. Within this objective
    are several goals: (1) ensure future compliance; (2) punish
    non-compliance; (3) deterrence of non-compliance; and (4) correction
    of the harm caused by non-compliance. *Id.*

[^12]: Revised Policy, *supra* note 10.

[^13]: *See, e.g.,* Revised Policy, *supra* note 10. EPA attempts to
    limit the somewhat mixed message that is sent when a violator is
    able to enhance its public image as an environmental steward as a
    result of noncompliance. Its revised policy provides, "\[t\]he
    defendant/respondent should agree that whenever it publicizes a SEP
    or the results of the SEP, it will state in a prominent manner that
    the project is being undertaken as part of the settlement of an
    enforcement action." *Id. ¶ G.*

[^14]: *See, e.g.,* United States Environmental Protection Agency,
    Office of Water, President Clinton's Clean Water Initiative, EPA
    800-R-94-001, 100 (February 1994).

[^15]: *See, e.g.,* DODI 4715.6 ¶ D.4, *supra* note 1; Memorandum from
    James E. McCarthy, Major General, USAF, The Civil Engineer, to
    National Guard Bureau Civil Engineer, Payment of Supplemental
    Environmental Projects (February 21, 1995) (discussing the
    accomplishment of SEPs) (on file with the author).

[^16]: Steven Herman, Environmental Protection Agency, Assistant
    Administrator For Enforcement And Compliance Assurance, Epa\'s FY
    1997 Enforcement and Compliance Assurance Priorities [¶ II (1996)
    \[]{.smallcaps}hereinafter 1997 Priorities Letter\][.]{.smallcaps}

[^17]: *See*, *e.g.,* Maine Department of Environmental Protection,
    Supplemental Environmental Projects Policy [(]{.smallcaps}Aug. 1,
    1996) \[hereinafter Maine Policy\]; New York State Department of
    Environmental Conservation, Environmental Benefit Project Policy
    (May 27, 1997) \[hereinafter New York Policy\].

[^18]: Memorandum from Mr. James M. Strock, Assistant Administrator,
    Office of Enforcement, Environmental Protection Agency, to Regional
    Administrators, Deputy Regional Administrators, Regional Counsels,
    Regional Program Division Directors, Assistant Administrators,
    General Counsel, Program Compliance Directors, and Associate
    Enforcement Counsels, Policy on the Use of Supplemental Enforcement
    Projects in EPA Settlements (transmitting EPA Policy on SEPs)
    (February 12, 1991) \[hereinafter Original Policy\].

[^19]: [A Framework for Statute-Specific Approaches to Penalty
    Assessments: Implementing EPA\'s Policy on Civil Penalties,
    24-27]{.smallcaps} (February 16, 1984).

[^20]: Memorandum from Robert Van Heuvelen, Director, Office of
    Regulatory Enforcement, United States Environmental Protection
    Agency to Joan Nelson, General Counsel, Deputy Regional
    Administrators, Regions I-X, Draft Revised SEP Policy for Regional
    Review, (Oct. 6, 1994) (on file with the author).

[^21]: 1997 Priorities Letter ¶ II, *supra* note 16.

[^22]: Revised Policy ¶ B, *supra* note 10.

[^23]: *See, e.g.,* Maine Policy and New York Policy, *supra* note 17.

[^24]: *Id*.

[^25]: Telephone Interview with Mr. Frederick R. Dowsett, Jr.,
    Compliance Coordinator, Hazardous Materials and Waste Management
    Division, Colorado Dept. of Public Health and the Environment (Sept.
    10, 1997).

[^26]: Decision of Comptroller General of the United States, B-247155
    (July 7, 1992) \[hereinafter Comptroller General Decision\].

[^27]: 31 U.S.C.A. § 3302(b) (1997).

[^28]: *Id.*

[^29]: Comptroller General Decision, *supra* note 26.

[^30]: [Office of the General Counsel, United States General Accounting
    Office, Principles of Federal Appropriations Law*,*]{.smallcaps}
    6-103 (2^nd^ ed., Dec. 1992) \[hereinafter [The Red
    Book]{.smallcaps}\].

[^31]: *Id.*

[^32]: U.S. [Const.]{.smallcaps} art. I, §§ 8, 9, cl. 7.

[^33]: [The Red Book]{.smallcaps} at [6-103,]{.smallcaps} *supra* note
    30.

[^34]: Comptroller General Decision, *supra* note 26.

[^35]: *Id.*

[^36]: Revised Policy, *supra* note 10.

[^37]: Memorandum from Mr. James C. Nelson, Associate General Counsel,
    Pesticides and Toxic Substances Division to Mr. Steven A. Herman,
    Assistant Administrator, Office of Enforcement and Compliance
    Assurance, Review of 1995 Revised Policy on Supplemental
    Environmental Projects (May 3, 1995) (on file with author)
    \[hereinafter EPA Legal Opinion Supporting the Use of SEPs\].

[^38]: *Id.* at 3-11.

[^39]: *Id.* at 11-12.

[^40]: *Id.* at 12-15.

[^41]: *Id.*

[^42]: Revised Policy ¶ C.1, *supra* note 10.

[^43]: *Id.*

[^44]: *Id.*

[^45]: *Id.* ¶ C.2.

[^46]: EPA Legal Opinion Supporting the Use of SEPs at 13-14, *supra*
    note 37.

[^47]: Revised Policy ¶ D, *supra* note 10.

[^48]: For example, public education programs. EPA Legal Opinion
    Supporting the Use of SEPs at 16-19, *supra* note 37.

[^49]: Revised Policy ¶ D.8.

[^50]: EPA Legal Opinion Supporting the Use of SEPs at 16-19, *supra*
    note 37.

[^51]: 42 U.S.C.A. § 6961 (1997).

[^52]: 42 U.S.C.A. § 300j-6 (1997). The waiver in the SDWA was modeled
    after and is nearly identical to the waiver in RCRA.

[^53]: *See, e.g.,* 42 U.S.C.A. § 6961(a) (1997) (emphasis added).

[^54]: Revised Policy ¶ B, *supra* note 10.

[^55]: *See, e.g.*, 42 U.S.C.A. § 6961(c) (1997).

[^56]: *Id.* The only way that a state can avoid the limitation placed
    by Congress on the use of amounts received as environmental
    penalties is to demonstrate that prior to the expansion of the
    waiver of sovereign immunity to include the payment of penalties
    (*e.g.,* Oct. 6, 1992 for RCRA), state law required the funds to be
    used in a different manner.

[^57]: *Id.*

[^58]: Federal Facilities Compliance Act of 1992, Pub. L. No. 102-386,
    106 Stat. 1505 (Oct. 6, 1992).

[^59]: *See, e.g.,* Letter from Secretary of Defense, Richard Cheney,
    Secretary of Energy, James Watkins, and EPA Administrator William
    Reilly to Sen. John Chafee, Attachment A, page 9 (May 29, 1991) (on
    file with the author) \[hereinafter Letter Regarding the Use of
    Penalties Paid to States\].

[^60]: It can be assumed that most states have implemented a means for
    determining the usage of funds received as penalty amounts. *See,
    e.g.,* [Army Handbook]{.smallcaps} ¶ 7(g)(1), *supra* note 1. It is
    difficult to see why it would, generally, be in the interest of the
    federal government to bypass the state's system.

[^61]: 42 U.S.C.A. § 6961(c) (1997) (emphasis added).

[^62]: Letter Regarding the Use of Penalties Paid to States, *supra*
    note 59.

[^63]: 42 U.S.C.A. § 6961(a) (1997).

[^64]: *See, e.g.,* Decision of Comptroller General, *supra* note 26.

[^65]: When negotiating monetary liability due to environmental
    violations, EPA and other federal agencies are in opposite positions
    with regard to the Federal Treasury. While federal agencies are
    trying to ensure that the *expenditure from the Treasury* is kept
    down to a level most beneficial to the agency, EPA is charged with
    ensuring that an amount of money commensurate with the violation is
    *deposited into the Treasury.*

[^66]: Revised Policy ¶ E, *supra* note 10.

[^67]: *Id.* ¶ B.

[^68]: Clean Water Act, 33 U.S.C.A. §§ 1251-1387 (1986 & Supp. 1997).

[^69]: Department of Energy v. Ohio, 112 S. Ct. 1627 (1992).

[^70]: *Id.*

[^71]: *Id.*

[^72]: *See*, *e.g.,* 33 U.S.C.A. § 1323(a) (1997), which subjects
    federal facilities to the payment of "reasonable service charges."
    While not directly applicable, 42 U.S.C.A. § 6961(a) (1997) defines
    "reasonable service charges" as any "nondiscriminatory charges that
    are assessed in connection with a Federal, State, interstate or
    local solid waste or hazardous waste regulatory program."

[^73]: Library of Congress v. Shaw, 106 S. Ct. 2957, 2965 (1986).

[^74]: *See, e.g.,* 42 U.S.C.A. § 6961(a), which provides that, in order
    to be considered a "reasonable service charge" within the waiver of
    sovereign immunity, a fee must be a "nondiscriminatory charge."

[^75]: An indication that an installation may face difficulty in
    controlling the time that a SEP is proposed is the policy
    implemented by the State of Maine, which requires "\[a\]ny proposal
    to incorporate a SEP into a settlement should be made early in the
    settlement discussions in order to provide sufficient time for
    consideration . . . ." Maine Policy[,]{.smallcaps} *supra* note 17.

[^76]: It is noted that the Commonwealth of Pennsylvania requires that a
    penalty amount be decided upon before a SEP can be considered. Its
    policy provides, "\[t\]he \[Pennsylvania\] Department \[of
    Environmental Protection (PADEP)\] will . . . calculate the proposed
    penalty without regard to whether a CEP \[Pennsylvania refers to
    them as Community Environmental Projects\] will be considered. As a
    general rule the Department will not solicit or suggest a CEP.
    However, the Department may suggest a specific project once the
    alleged violator has suggested the use of a CEP."
    [PADEP]{.smallcaps} Office of Policy and Communications, Policy for
    the Acceptance of Community Environmental Projects in Lieu of a
    Portion of Civil Penalty Payments, Document Number: 012-4180-001
    (Sept. 1, 1997) (on file with author).

[^77]: Revised Policy ¶ 10, s*upra* note 10.

[^78]: A good example of the breadth of projects that can be accepted as
    a SEP is provided by a recent enforcement action completed by the
    Los Angeles, California District Attorney's Office. The SEP required
    a direct payment of money to the Los Angeles District Attorney Crime
    Prevention Foundation. *Company To Pay \$1 Million For UST Spill*[,
    Daily Environ. Rep.]{.smallcaps} (May 2, 1995).

[^79]: For example, a military service expended several hundred dollars
    to purchase computer software for a local regulator as a SEP.
    However, because the service had specific authorization from
    Congress to accomplish a SEP in those circumstances, there is legal
    support for the action taken. *Military to Pay \$170,000 Fine for
    Hazardous Waste Violations at MMR,* [Daily Environ. Rep
    (]{.smallcaps}Aug 27, 1997).

[^80]: Matter of: Use of Appropriated Funds in Connection with National
    Solid Waste Management Association Convention*,* B‑166506 (July 15,
    1975).

[^81]: Revised Policy ¶ D.1., *supra* note 10.

[^82]: Revised Policy ¶ B, *supra* note 10, provides that the project
    must not be something that the violator is otherwise legally
    required to perform (*i.e.,* the project cannot be independently
    required by any federal, state or local law or regulation).

[^83]: *Id.* ¶ D.2.

[^84]: *Id.* ¶ A.2. Whereas, depending on the nature of the violator
    (*e.g.,* corporation vs. government entity), the mitigation
    percentage is limited for other types of SEPs, EPA will consider
    granting 100% credit for the accomplishment of a pollution
    prevention project.

[^85]: *Id.* ¶ E.3.

[^86]: *See, e.g,* Ohio Environmental Protection Agency, Office of
    Pollution Prevention, Pollution Prevention in Ohio Environmental
    Enforcement Settlements--Analysis and Update (Sept 1, 1995) (on file
    with author).

[^87]: *Id.* at 1.

[^88]: DODI 4715.6 ¶ D.4, *supra* note 1.

[^89]: Revised Policy ¶ D.5, *supra* note 10.

[^90]: *Id.*

[^91]: *Id.*

[^92]: *Id.*

[^93]: The services may have formal or informal policies that prohibit
    sharing the results of audits in this manner. An installation should
    evaluate any applicable policy before agreeing to provide the
    results of an audit or assessment as a condition of a SEP. It is
    helpful at this point to note Air Force guidance regarding the type
    of audits that are most frequently conducted by Air Force
    installations. The general policy is that the results of assessments
    conducted pursuant to Air Force Instruction 32-7045, Environmental
    Compliance Assessment and Management Program ¶ 3.4 (Apr. 5, 1994)
    \[hereinafter AFI 32-7045\], will, subject to exception, be made
    available upon request. Of course, this guidance is not applicable
    to any other type of audit or assessment.

[^94]: Revised Policy ¶ D. 5, *supra* note 10.

[^95]: DODI 4715.6 ¶ D.4, *supra* note 1.

[^96]: *See, e.g.,* Revised Policy ¶ E.3, *supra* note 10.

[^97]: *Id.* ¶ D.5.d.

[^98]: *Id.* ¶ D.5.c.

[^99]: *Id.*

[^100]: *Id.* ¶ D.5.

[^101]: *Id.*

[^102]: *Id.* ¶ D.4.

[^103]: *Id.*

[^104]: *Id.*

[^105]: *Id.*

[^106]: DODI 4715.6 ¶ D.4, *supra* note 1.

[^107]: For example, the Air Force Center for Environmental Excellence
    (AFCEE) is "the lead Air Force agency in providing installations
    technical services supporting the Air Force pollution prevention
    program" and the Air Force Civil Engineering Support Agency is also
    available to provide technical support. Air Force Instruction
    32-7080, Pollution Prevention Program ¶ 1.3.2.1-2 (May 12, 1994)
    \[hereinafter AFI 32-7080\].

[^108]: Exec. Order No 12,856, Federal Compliance with Right to Know
    Laws and Pollution Prevention Requirements, 58 Fed. Reg. 41,981
    (August 4, 1993). This Executive Order established August, 1994 as
    the deadline for each installation's pollution prevention strategy.

[^109]: *Se,e e.g.,* *Air Force Pollution Prevention Strategy Leads with
    Training, Education,* [Defense Environ. rep.]{.smallcaps} (Aug. 23,
    1995).

[^110]: *See, e.g.* AFI 32-7080, *supra* note 107.

[^111]: OMB Circular A-106, Reporting Requirements in Connection With
    the Prevention, Control, and Abatement of Environmental Pollution at
    Existing Federal Facilities (December 31, 1974). An example of how
    this requirement has been incorporated into a service's
    environmental program is provided by AFI 32-7001, Environmental
    Budgeting (May 9, 1994) \[hereinafter AFI 32-7001\].

[^112]: For instance AFI 32-7001, *supra* note 111, discusses
    environmental compliance, cultural resource, and cleanup projects in
    addition to P2 projects. It is an especially helpful resource in
    that it provides examples of each type of project.

[^113]: *See infra* note 143 and accompanying text.

[^114]: Memorandum from James E. McCarthy, Major General, USAF, The
    Civil Engineer to National Guard Bureau Civil Engineer, Payment of
    Supplemental Environmental Projects (February 21, 1995) (discussing
    the accomplishment of SEPs) \[hereinafter Air Force Civil Engineer
    Memo\] (on file with the author); [Army Handbook ¶
    7(]{.smallcaps}g[)(6),]{.smallcaps} *supra* note 1[.]{.smallcaps}

[^115]: President Bush's signing statement accompanying the FFCA stated
    that agency appropriations would be used to pay the costs of fines
    and penalties pursuant to the FFCA. 28 Weekly Comp. Pres. Doc. 1868
    (Oct. 6, 1992) It did not direct the specific source of funds within
    each agency's appropriation to be used. This statement considered
    the available alternatives to be the Judgment Fund (31 U.S.C. §
    1304) and agency appropriations.

[^116]: [THE Red Book]{.smallcaps} at 4-15, *supra* note 30.

[^117]: *Id.*

[^118]: Matter of: National Oceanic and Atmospheric Agency Payment of
    Civil Penalty for Violation of Local Air Quality Standards, B-191747
    (June 6, 1978) \[hereinafter NOAA Decision\].

[^119]: *Id.*

[^120]: [THE Red Book]{.smallcaps} at 4-15, *supra* note 30.

[^121]: *See, e.g.*, Pub. L. No. 101-148, 103 Stat. 920 (Nov. 10, 1989).

[^122]: Military Construction Appropriations Act of 1997, Pub. L. No.
    104-196 (Sept. 16, 1996). This appropriation is available for
    "acquisition, construction, installation, and equipment of temporary
    or permanent public works, military installations, facilities, and
    real property for the \[military service\] as currently authorized
    by law . . . ." "Military construction" is defined to include "any
    construction, development, conversion, or extension of any kind
    carried out with respect to a military installation." 10 U.S.C.A. §
    2801 (1997). The "nexus" requirement of the EPA policy renders it
    likely that any project performed pursuant to a SEP agreement with
    EPA will be performed "with respect to" the installation. Revised
    Policy ¶ C.1, *supra* note 10. The scope of military construction is
    further defined by the term "military construction project," to
    include all "military construction work, or any contribution
    authorized by this chapter, necessary to produce a complete and
    usable facility or a complete and usable improvement to an existing
    facility." 10 U.S.C.A. § 2801 (1997). "Facility," in turn, is
    defined as "a building, structure, or other improvement to real
    property." 10 U.S.C.A. § 2801 (1997).

[^123]: Revised Policy ¶ D.2, *supra* note 10.

[^124]: *Id.* ¶ D.3.

[^125]: *Id.* ¶ D.4.

[^126]: 10 U.S.C.A. § 2805(c)(1) (1997) defines "minor military
    construction project" as generally authorized projects costing no
    more than \$500,000.

[^127]: *See, e.g.,* AFI 32-7001, ¶ 3.3.2, *supra* note 111.

[^128]: Revised Policy ¶ G, *supra* note 10.

[^129]: Air Force Civil Engineer Memo, *supra* note 114.

[^130]: *See, e.g.,* [Army Handbook]{.smallcaps} ¶ 8(g), *supra* note 1.

[^131]: Revised Policy, *supra* note 10

[^132]: Memorandum from the Deputy General Counsel of the Air Force for
    Civilian Personnel and Fiscal Law to Staff Judge Advocate, Pacific
    Air Force, Proper Fiscal Year of Funds for Supplemental
    Environmental Projects and EPA Assessed Penalties (Oct. 20, 1995)
    (on file with the author).

[^133]: Memorandum From Staff Judge Advocate, Pacific Air Force, to
    Deputy General Counsel of the Air Force for Civilian Personnel and
    Fiscal Law, Proper Fiscal Year of Funds for Supplemental
    Environmental Projects in Lieu of Cash Fines (Apr. 29, 1995) (on
    file with the author).

[^134]: *See, e.g.,* Chris Carey, *Implementing Air Force Policy
    Favoring SEPs: Are They a Nonstarter Fiscally?,* 7 [Fed. Fac.
    Environ. Journal]{.smallcaps} 71-83 (Spring 1996).

[^135]: GAO Penalty Report, *supra* note 3.

[^136]: Texas Natural Resource Conservation Commission
    [(TNRCC),]{.smallcaps} Environmental Enforcement Policy Statement
    (Oct. 26,1995) (hereafter Texas Policy) (on file with author).

[^137]: For example pollution prevention and remediation projects may
    generally qualify for a 100% credit, while projects that clearly
    benefit the violator or that have only indirect benefits will
    receive less credit. Id[.]{.smallcaps} at 1-2.

[^138]: Revised Policy ¶ E.1, *supra* note 10.

[^139]: *Id.* ¶ E.3.

[^140]: *Id.* If a project has P2 benefits, the credit ratio can be 1:1
    (*i.e.,* \$1 penalty reduction for each \$1 spent on the SEP).

[^141]: *Id.* The permissible mitigation percentage is also increased
    for small businesses and for any party that accomplishes a pollution
    prevention project as its SEP.

[^142]: Texas, for example, will consider providing 100% credit to state
    agencies and other political subdivisions, but not to federal
    facilities. Texas Policy at 2, *supra* note 136.

[^143]: Revised Policy ¶ B, *supra* note 10.

[^144]: Endangered Species Act, 16 U.S.C.A. §§ 1531-1534 (1997).

[^145]: AFI 32-7080 ¶ 2.2.1., *supra* note 107.

[^146]: *Id.*

[^147]: Revised Policy ¶ 5.a., *supra* note 10.

[^148]: AFI 32-7045, *supra* note 93, establishes the Environmental
    Compliance Assessment and Management Program (ECAMP) to implement
    DoD's policy to "\[c\]onduct internal and external compliance self
    assessments at installations." DODI 4715.6 *¶* D.9, *supra* note 1.
    The ECAMP is a process to help commanders assess the status of
    environmental compliance, and to identify and track solutions to
    compliance problems. AFI 32-7045 ¶ 1.2. Installations are required
    to implement an ECAMP unless specifically exempted by higher
    headquarters. *Id.* at 1.1.1. This demonstration of environmental
    responsibility could inadvertently lead a regulator to reject an
    assessment or audit that could be encompassed under an
    installation's ECAMP.

[^149]: Revised Policy ¶ B, *supra* note 10.

[^150]: New York Policy[,]{.smallcaps} *supra* note 17.

[^151]: Original Policy, *supra* note 18.

[^152]: Revised Policy ¶ E.2, *supra* note 10.