Remedial Payments in Agency Enforcement

Abstract

During the Obama Administration, the government settled many enforcement cases involving alleged violations of the nation’s federal statutes. The settlements have several requirements, including that the defendants pay money for beneficial projects to mitigate or offset harm directly or indirectly caused by defendant’s actions. For example, the government settled an environmental enforcement case against Volkswagen that included payments for environmental projects, and a mortgage enforcement case against Bank of America that included payments for housing education projects. These payments have spawned renewed criticism amongst conservative groups who have long claimed that payments for projects are mechanisms for agencies to get vulnerable defendant corporations to fund pet projects, outside of available agency statutory authority and the Congressional budget appropriations process. This article examines payments for projects in agency settlements, using Clean Air Act enforcement as an example, and argues for additional clarity and transparency surrounding the purpose of such payments. The law most clearly allows for payments for projects in statutory enforcement cases when they serve a clear remedial purpose. Yet, payments for projects have often tried to achieve multiple goals at the same time, including deterrence and compensation. As a result, it is sometimes difficult to see the remedial purpose of payments for projects, particularly in settlement where the process of resolution is not as apparent as in litigation. A legislative solution could provide for obvious legal authority for payments for projects. However, in the absence of such legislative fix, agencies should focus on a better identification of harm, earlier in the enforcement process, and articulation of the connection between harm and projects in the settlement process. Payments for projects serve a key role in making the public whole from statutory violations. Clarity and transparency on the purpose of projects can help alleviate the concerns surrounding authority and appropriations and ultimately strengthen the review of projects by courts.

Keywords: statute, regulatory, consent decree, agency, enforcement, compliance, settlement, supplemental environmental project, mitigation, injunctive relief