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IDEM Unveils Draft Revisions to Supplemental Environmental


On February 1, 2008, the Indiana Department of Environmental Management (“IDEM”) released a draft version of a Non-Rule Policy Document (“NPD”) setting forth revisions to IDEM’s policy regarding Supplemental Environmental Projects (“SEPs”). The 2008 Draft SEP NPD (08-003-NPD) is intended to replace the original SEP NPD that became effective on April 5, 1999. SEPs are environmentally beneficial projects that enhance public health or the environment which a violator agrees to perform in return for a penalty reduction.

The 2008 Draft SEP NPD contains significant changes from the original 1999 SEP Policy including: (1) clarification of the when a SEP proposal must be made; (2) additional and revised categories of acceptable SEPs; (3) additional and revised explanations of the criteria used by IDEM in approving or denying proposed SEPs; and (4) revised criteria regarding the extent to which assessed gravity-based civil penalties may be reduced by performance of a SEP. IDEM intends to present the 2008 Draft SEP NPD to the Indiana Solid Waste Management Board (“SWMB”) at its meeting scheduled for May 20, 2008. The new NPD will be effective 30 days after it is presented to the last of the three rulemaking boards.

With regard to the timing of submission of proposals to perform SEPs, the 2008 Draft SEP NPD provides some flexibility by requiring that SEP proposals must be made “as early as possible in the enforcement process.” The 1999 SEP Policy required that a SEP proposal be submitted “shortly after the enforcement process begins.” Neither the original NPD nor the revised NPD fix a specific time for a SEP submittal and the acceptance of a SEP remains discretionary on the part of the IDEM.

The 2008 Draft SEP NPD includes two new categories of acceptable SEPS not listed in the 1999 SEP Policy: community involvement and public health. According to the 2008 Draft SEP NPD, community involvement SEPs “support community environmental projects or outreach, or promote emergency planning and preparedness” and a public health SEP “provides diagnostic, preventative and/or a remedial component to human health care which is related to the actual or potential damage to human health caused by a Violation.” In addition to these newly listed SEPs, the 2008 Draft SEP NPD expands the acceptable SEP projects related to environmental restoration by including projects that involve conservation and protection of an ecosystem or geographic area.

Unlike the 1999 SEP Policy, the 2008 Draft SEP NPD provides detailed explanations of the criteria to be used by the IDEM in determining whether to approve a SEP. Specifically, the 2008 Draft SEP NPD states that IDEM staff must consider certain enumerated criteria in assessing a proposed SEP. The 2008 Draft SEP NPD includes specific conditions under which a SEP may be rejected by the IDEM even if the project appears to satisfy all the provisions of the Draft 2008 SEP NPD and lists examples of specific projects that are not appropriate for SEPs, including projects that were started or for which funding was identified before the violation was identified by the IDEM and projects where the violator will be the primary recipient of the benefits from the project.

Under both the Draft 2008 SEP NPD and the 1999 SEP Policy, Respondents that perform SEPs are generally allowed offsets of gravity-based civil penalties in a ratio of 2:1. That is, for every $2 spent on an approved SEP the gravity-based penalty is typically reduced by $1. However, unlike the 1999 SEP NPD, the 2008 Draft SEP NPD provides a list of specific instances in which the performance of a SEP may offset a gravity-based penalty by a 1:1 ratio. These instances include: (1) pollution prevention SEP proposals; (2) environmental conservation, protection, and restoration SEPs involving a proposal to donate funds to an Internal Revenue Code § 501(c)(3) environmental or natural resources not-for-profit organization; (3) SEP proposals submitted by governmental entities, small businesses, or not-for-profits; (4) SEPs proposed by respondents that have been issued their first Notice of Violation; (5) where small gravity-based civil penalties (less than $10,000) are assessed; (6) SEPS proposed in response to violations of non-federally delegated programs; and (7) when a 1:1 offset is requested for a project which goes beyond any legal requirement and results in direct reductions of pollutants entering the environment or the actual remediation of contaminated sites. It should be noted that the use of 1:1 offsets is completely within the discretion of the IDEM.

Additional information regarding the Draft 2008 SEP NPD may be obtained from Lori Kyle Endris, Chief, Office of Enforcement, at 317-234-1819.

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