Appropriations by Any Other Name: The Illegality and Unconstitutionality of Supplemental Environmental Projects

Andrew Olson*

On May 17, 2023, the U.S. Department of Justice announced—on behalf of itself and the Environmental Protection Agency—a settlement under the Clean Air Act with BP Products North America Inc. (BPP).¹ The settlement concerned BPP’s operations at its refinery in Whiting, Indiana, and the announcement promised the implementation of control technology at that plant estimated to result in a reduction of over 400 tons of various pollutants and emissions per year.² On the same day, the government simultaneously filed both a 22-page complaint against BPP and a 168-page consent decree with BPP in the Northern District of Indiana.³ The complaint detailed the government’s allegations against BPP,⁴ while the consent decree contained a variety of provisions that would be expected in light of the allegations in the complaint: a civil penalty, compliance requirements, reporting and recordkeeping requirements, stipulated penalties, and so forth.⁵ But also nestled among the terms of the consent decree was a requirement for BPP to carry out a “Supplemental Environmental Project” (SEP).⁶

This was not a hidden provision of the settlement: the government proudly announced in the press release that BPP had “agreed to undertake a $5 million supplemental environmental project to reduce diesel emissions in the communities surrounding the Whiting Refinery.”⁷ This project would “replace existing diesel vehicles . . . with alternative fuel vehicles resulting in decreased emissions.”⁸ BPP stipulated that this project was not one which it was already required to perform (whether by law, regulation, or other preexisting obligation), nor one that it had had any prior intention to perform.⁹ This stipulation raises the question of whether this project was appropriate matter for a settlement decree, whether it was the kind of relief that the government could have obtained by litigating its complaint against BPP to final judgment. BPP further stipulated that it “would have agreed to perform a comparably valued, alternative project other than a diesel emissions reduction SEP, if EPA were precluded by law from accepting a diesel emission [sic] reduction SEP.”¹⁰

What light, if any, did these stipulations shed on the government’s claim that BPP had “separately agreed to undertake [this] $5 million supplemental environmental project”?¹¹ Given the stipulation that BPP would perform some other “comparably valued” SEP should some problem arise with the specified one, it appears rather that the government saw BPP’s expenditure of at least $5 million on some kind of supplemental environmental project to be a vital part of the deal between them. In other words, the government saw the $5 million SEP as an integral part of its calculation of the value of the claims it was settling against BPP.

But what’s really at stake here? Consent decrees are tools which the government commonly uses in enforcement actions in a wide variety of public law contexts, including environmental law.¹² They differ from private settlement agreements in several key ways. Most fundamentally: “A consent decree is simply a settlement that includes an injunction.”¹³ This injunction serves to enforce the terms of the settlement, so a consent decree can also be described as “a settlement that is backed by the contempt power of the courts and amenable to modification by court order even over objections of the parties.”¹⁴ Practically, while the terms of a private settlement agreement “can be kept secret by the parties” and are not policed by the presiding judge at all, the terms of a consent decree are “generally available to any interested party,” and the judge entering the decree has an obligation to “determine that [it] is fair and consistent with the public interest.”¹⁵ The use of consent decrees in regulatory enforcement in general has been subject to criticism,¹⁶ but SEPs provide a more specific target, which critics have homed in on for decades.

The SEP in the Whiting refinery consent decree represented an attempt by the government to set up a diesel emissions reduction SEP as authorized by federal law.¹⁷ The relevant statute, however, requires that such a SEP be “related to the underlying alleged violations,”¹⁸ and it’s not clear how replacing vehicles with diesel engines owned by local governments or nonprofits in the general vicinity of the refinery is “related” to emissions violations at the refinery. Of course, BPP already stipulated that it would perform some other SEP if the diesel emissions reduction SEP turned out to be precluded by law.¹⁹ But there are no other provisions of federal law which authorize the government to accept SEPs of any kind as part of any settlement,²⁰ which raises the question of what other SEP the Department of Justice thought it might be able to accept. Does the government require statutory authorization to accept a SEP in a settlement agreement?

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*J.D., Notre Dame Law School, 2025. I am grateful to Professor Jeffrey Pojanowski for his supervision of this Note and to Michael Buschbacher (NDLS ’13) and Jared Kelson for introducing me to the world of supplemental environmental projects. Thanks also to Susan Carlson (NDLS ’24), Jacqueline Kamel (NDLS ’24), Athanasius Sirilla (NDLS ’24), and Linda Olson for their feedback. And of course, a big thank you to Drew Garden (NDLS ’25), Laura Li (NDLS ’25), and my colleagues on the Notre Dame Law Review for their tireless work in bringing this Note to publication. Any errors are my own. Ad maiorem Dei gloriam.

1 Press Release, U.S. Dep’t of Just., Justice Department and EPA Announce Settlement to Reduce Hazardous Air Emissions at BP Products’ Whiting Refinery in Indiana (May 17, 2023), https://www.justice.gov/opa/pr/justice-department-and-epa-announcesettlement-reduce-hazardous-air-emissions-bp-products [https://perma.cc/AB7G-T2A5].

2 Id. (claiming a reduction in benzene emissions of 7 tons per year, in other hazardous air pollutant emissions of 28 tons per year, and in other volatile organic compound emissions of 372 tons per year).

3 Id.; Complaint, United States v. BP Prods. N. Am. Inc., No. 23-cv-166 (N.D. Ind. May 17, 2023); Consent Decree, BP Prods., No. 23-cv-166.

4 See Complaint, supra note 3, at 12–19; cf. Press Release, supra note 1 (explaining the allegations in the complaint).

5 See Consent Decree, supra note 3, at 17–19 (civil penalty), 19–56 (compliance), 59–63 (reporting and recordkeeping), 63–74 (stipulated penalties).

6 Id. at 56–59, app. E. The term “SEP” is pronounced as a word rhyming with pep.

7 Press Release, supra note 1.

8 Consent Decree, supra note 3, app. E at 1–2 (referring to vehicles “within the local government itself” or “owned and used by non-profits within each community”).

9 Id. at 57.

10 Id. The stipulation is required by statute. 42 U.S.C. § 16139 (2018) (“In any settlement agreement regarding alleged violations of environmental law in which a defendant agrees to perform a diesel emissions reduction Supplemental Environmental Project, the Administrator of the Environmental Protection Agency shall require the defendant to include in the settlement documents a certification under penalty of law that the defendant would have agreed to perform a comparably valued, alternative project other than a diesel emissions reduction Supplemental Environmental Project if the Administrator were precluded by law from accepting a diesel emission [sic] reduction Supplemental Environmental Project.”); see also Memorandum from Walker B. Smith, Dir., Off. of Civ. Enf’t, U.S. Envt’l Prot. Agency, to Reg’l Couns., Reg’l Enf’t Coordinators, Reg’l Enf’t Div. Dirs. & OECA Off. Dirs. 1 (July 18, 2008) [hereinafter Smith Memorandum], https://www.epa.gov /sites/default/files/2018-10/documents/dieselepslegislation-memotoregions.pdf [https://perma.cc/L8LS-6MUQ] (requiring “all administrative and judicial settlements not concluded as of the date of this memorandum that include diesel SEPs” to include the specified language).

11 Press Release, supra note 1 (emphasis added).

12 Larry Kramer, Consent Decrees and the Rights of Third Parties, 87 Mich. L. Rev. 321, 321 (1988).

13 Douglas Laycock, Consent Decrees Without Consent: The Rights of Nonconsenting Third Parties, 1987 U. Chi. Legal F. 103, 103.

14 Courtney R. McVean & Justin R. Pidot, Environmental Settlements and Administrative Law, 39 Harv. Envt’l L. Rev. 191, 200 (2015).

15 Id.; cf. C. Boyden Gray & Michael Buschbacher, In the Name of ‘Environmental Justice,’ DOJ Betrays the Public Trust, Newsweek (May 13, 2022, 7:00 AM EDT), https://www.newsweek.com/name-environmental-justice-doj-betrays-public-trust-opinion-1705802 [https://perma.cc/FKW8-R8YS] (“Judges typically don’t scrutinize settlement agreements, and courts are skeptical of direct attacks on government enforcement policies.”). Those who defend SEPs often seem to make no distinction between consent decrees and private settlement agreements, arguing as if anything the parties agree to should be accepted in a consent decree, but the Tenth Circuit has ruled otherwise:

Put briefly, a settlement agreement or consent decree designed to enforce statutory directives is not merely a private contract. It implicates the courts, and it is the statute—and ‘‘only incidentally the parties’’—to which the courts owe their allegiance. The primary function of a settlement agreement or consent decree, like that of a litigated judgment, is to enforce the congressional will as reflected in the statute. The court should modify or refuse to enforce a settlement agreement or proposed decree unless it is ‘‘in furtherance of statutory objectives.’’ The agreement or consent decree is contractual only to the extent that it represents an agreement by the parties regarding the most efficient means of effectuating their rights under the statute.

Biodiversity Assocs. v. Cables, 357 F.3d 1152, 1169 (10th Cir. 2004) (emphasis added) (quoting Sys. Fed’n No. 91 v. Wright, 364 U.S. 642, 651 (1961)); cf. The Federalist Society, The Return of Supplemental Environmental Projects, YouTube at 5:03 (June 21, 2022) [hereinafter Return of SEPs], https://youtu.be/YkZoaXBTX-o [https://perma.cc/7DPV-CKW6] (“SEPs are by definition not a form of relief that any court can enter if the case is litigated to judgment . . . .”). Applied to SEPs, the Tenth Circuit’s approach would practically wipe them
out since they are, in an important sense, always beyond the relevant statutory objectives.

16 See, e.g., Kramer, supra note 12; McVean & Pidot, supra note 14.

17 42 U.S.C. § 16138 (2018) (authorizing the EPA Administrator to accept “diesel emissions reduction Supplemental Environmental Projects . . . as part of a settlement of any alleged violations of environmental law”).

18 Id. § 16138(2).

19 Consent Decree, supra note 3, at 57.

20 Memorandum from Jeffrey Bossert Clark, Assistant Att’y Gen. (ENRD), Env’t & Nat. Res. Div., U.S. Dep’t of Just., to ENRD Deputy Assistant Att’ys Gen. & Section Chiefs 5 (Jan. 13, 2021) [hereinafter 2021 Clark Memorandum], https://www.justice.gov/d9/2023-06 /memo_re._28_c.f.r._s._50.28_public_version_1.13.2021.pdf [https://perma.cc/86LZY7DL]. But for an interpretation of federal law finding a second instance of something which could be described as a SEP being authorized, see infra note 83.