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Elements of a Elements of a SettlementSettlement

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Elements of a SettlementElements of a Settlement Typically, cases are resolved Typically, cases are resolved

with:with: Injunctive reliefInjunctive relief Civil penalties (and sometimes Civil penalties (and sometimes

SEPs)SEPs) We are more regularly We are more regularly

considering mitigation.considering mitigation.

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Injunctive ReliefInjunctive Relief Relief necessary to return the company to Relief necessary to return the company to

compliance.compliance. Very case specific:Very case specific:

Control technologiesControl technologies Operational standardsOperational standards Work practice standardsWork practice standards TrainingTraining

Can sometimes be “enhanced” requirements.Can sometimes be “enhanced” requirements. E.g., for a leak detection and repair program E.g., for a leak detection and repair program

violation, we require monitoring more often and violation, we require monitoring more often and require relief for lower leak rates.require relief for lower leak rates.

Justification is that you were unable to comply with Justification is that you were unable to comply with the existing work practice standard.the existing work practice standard.

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PenaltiesPenalties

Discussed separately.Discussed separately. One way to offset penalty amount One way to offset penalty amount

is to do a Supplemental is to do a Supplemental Environmental Project (SEP).Environmental Project (SEP).

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MitigationMitigation Although we ask for injunctive Although we ask for injunctive

relief (e.g., pollution controls or relief (e.g., pollution controls or other steps to return to other steps to return to compliance) on a “going compliance) on a “going forward” basis, we historically forward” basis, we historically have not consistently asked for have not consistently asked for relief to remedy the past harm relief to remedy the past harm caused by the violations.caused by the violations.

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MitigationMitigation

What is our authority to get mitigation? What is our authority to get mitigation? Clean Air Act Section 113(b): “such court Clean Air Act Section 113(b): “such court

shall have jurisdiction to restrain such shall have jurisdiction to restrain such violations, to require compliance, to assess violations, to require compliance, to assess such civil penalty…and to such civil penalty…and to award any other award any other appropriate relief.appropriate relief.” ”

Caselaw: Cinergy Court held that “it has Caselaw: Cinergy Court held that “it has authority to take appropriate actions that authority to take appropriate actions that remedy, mitigate and offset harms to the remedy, mitigate and offset harms to the public and the environment caused by the public and the environment caused by the Defendants’ proven violations of the CAA.”Defendants’ proven violations of the CAA.”

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MitigationMitigation Examples of mitigation obtained in Examples of mitigation obtained in

EPA settlements:EPA settlements: American Electric Power (2007): American Electric Power (2007):

Required to spend $60 million in projects Required to spend $60 million in projects to mitigate the adverse effects of its past to mitigate the adverse effects of its past excess emissions.excess emissions.

MTD (2008): Required additional MTD (2008): Required additional controls, emission allowance retirements.controls, emission allowance retirements.

CD Violations/Extensions:CD Violations/Extensions: Delayed compliance (“benefit of the bargain”): Delayed compliance (“benefit of the bargain”):

United States, et al. v. Motiva Enterprises LLC, United States, et al. v. Motiva Enterprises LLC, No. H-01-0978 (S.D. Tex.) (shortfall of 7 tons No. H-01-0978 (S.D. Tex.) (shortfall of 7 tons NOx by original deadline; 3 month extension NOx by original deadline; 3 month extension allowed, plus 62 tons in additional NOx allowed, plus 62 tons in additional NOx reductions required).reductions required).

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MitigationMitigation

What criteria should apply to What criteria should apply to mitigation projects? mitigation projects?

(1)(1) Actual, permanent reductions;Actual, permanent reductions;(2)(2) Amount equal to or greater than Amount equal to or greater than

the total aggregate excess the total aggregate excess emissions;emissions;

(3)(3) Same pollutant or pollutant(s) with Same pollutant or pollutant(s) with the same health or environmental the same health or environmental impact;impact;

(4)(4) At the facility or in areas affected At the facility or in areas affected by the facility’s pollution;by the facility’s pollution;

(5)(5) Implemented in (3? 5?) years from Implemented in (3? 5?) years from the effective date of the settlement.the effective date of the settlement.

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MitigationMitigation

What other considerations?What other considerations? The source must not:The source must not:

Have a legal obligation;Have a legal obligation; Donate money to a third-party to perform Donate money to a third-party to perform

the project but it can contract with a third-the project but it can contract with a third-party to implement the project.party to implement the project.

Negotiate the projects prior to Negotiate the projects prior to finalizing the settlement.finalizing the settlement.

Consent Decree must require the Consent Decree must require the source to report the total tons reduced.source to report the total tons reduced.

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MitigationMitigation

What information do we need to What information do we need to include mitigation? include mitigation?

How is mitigation different from How is mitigation different from SEPs?SEPs?

What basic modeling tools are What basic modeling tools are available to identify areas affected? available to identify areas affected?

Do we need to offset 100% of the Do we need to offset 100% of the calculated excess emissions?calculated excess emissions?

What if it costs too much?What if it costs too much?

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DiscussionDiscussion