What to Expect From ENRD's New "Back to Basic" Approach

The Environment and Natural Resources Division at the Department of Justice functions as the nation’s environmental law firm, with additional responsibilities for Indian law and land acquisition. Its 400+ attorneys represent federal agencies in civil and criminal cases that arise under more than 150 federal statutes. And its alumni go on to key positions in the public and private sectors.

How has ENRD fared under the new administration? Its predominant clients continue to be EPA and Interior (two thirds of its docket), and its caseload continues to be largely defensive (78 percent in FY 2017). ENRD faces budget constraints, but not as severe as other agencies. Its request for FY 2019 seeks funding for 419 attorneys, a loss of 20 attorneys compared with three years ago. The division reported $4.8 billion in civil and criminal fines, penalties, and costs recovered during FY 2017, which includes cases from the end of the previous administration. But the numbers only tell part of the story.

On March 12, Acting Assistant Attorney General Jeffrey H. Wood issued an important framework statement of ENRD’s principles and priorities. Wood’s “back to basics” approach prioritizes conventional pollution cases that produce “concrete environmental benefits,” ensure the integrity of monitoring and reporting requirements, and promote the “impartial rule of law.” It also disavows enforcement actions premised on “novel theories of liability.”

Wood elaborates on DOJ’s previous directive restricting the use of payments to “nongovernmental third-party” organizations as part of settlements, with narrow exceptions. As Attorney General Jeff Sessions explained: “When the federal government settles a case against a corporate wrongdoer, any settlement funds should go first to the victims and then to the American people — not to bankroll third-party special interest groups or the political friends of whoever is in power.” Wood emphasizes that although third-party payments will be “disfavored,” an important exception exists for payments that “directly remed[y] the harm that is sought to be redressed, including . . . harm to the environment.” He gives examples of acceptable mitigation projects, but notes that payments must be geographically related and proportionate to the harm.

Some indication of how ENRD will apply this policy is provided by a recent case, in which the division retracted a $3 million third-party payment from a consent decree negotiated during the prior administration. In 2016, ENRD resolved allegations that a manufacturer had violated the Clean Air Act by illegally selling aftermarket parts that defeat emissions controls on motorcycles. In addition to injunctive relief and a $12 million civil penalty, the settlement required a $3 million payment to the northeast chapter of the American Lung Association to retrofit or replace highly-polluting wood-burning appliances. ENRD explained that the wood-stoves provision was inconsistent with its new policy because it lacked a sufficient nexus to the harm being remedied — while the defendant’s activities and the wood stoves produced the same types of pollution, there was a geographic disconnect between the nationwide emissions increases caused by defendant, and the single-state area targeted by the project.

ENRD also incorporates recent directives from DOJ leadership restricting the use of guidance documents. In November, Sessions prohibited DOJ components from issuing guidance documents that bind the public without undergoing notice-and-comment rulemaking. Associate Attorney General Rachel Brand went further, prohibiting DOJ litigators from using civil law enforcement authorities to convert guidance documents into binding rules, for example, by using a defendant’s non-compliance with guidance as a basis for establishing violations. She clarified that guidance documents may appropriately be used to explain existing legal mandates, and that DOJ may use the fact that a party read such a document as evidence of mental state.

DOJ’s “guidance on guidance” has raised numerous questions for environmental practitioners. Any number of EPA programs — from Superfund, to New Source Review, to Section 404 of the Clean Water Act — rely on guidance to fill gaps. Questions have been raised, for example, as to how this policy will affect the 2008 post-Rapanos guidance that EPA and the Army Corps of Engineers say they will continue to rely on for purposes of identifying jurisdictional wetlands, while the administration considers a replacement Waters of the United States rule.

Application of the DOJ policy does not mean that clients can ignore agency guidance; but new attention will be paid to whether the department can establish the underlying legal obligations based on statutory and regulatory language alone. Notably, the DOJ policy is only directed at the government; nothing prevents regulated entities from arguing, as part of their defense, that they reasonably relied on an agency’s interpretation of its regulations.