Let’s say a factory illegally dumps waste into a river that runs through a neighborhood where people fish, swim, and draw drinking water. The EPA steps in, investigates, and fines the company. That’s justice, right? Maybe. But what if the company goes further—like funding a local wetland project to help purify the water and restore wildlife? That’s not just paying a penalty. That’s taking responsibility in a way that actually helps the community heal. This kind of outcome is called a Supplemental Environmental Project, or SEP.
SEPs aren’t just technical terms buried in legal documents. They’re real actions that can improve real lives—especially in communities most affected by pollution and industrial harm. In the past, many neighborhoods, particularly lower-income or historically marginalized ones, were left with the consequences of environmental violations long after the fines were paid. SEPs give communities a way to see—and feel—justice.
In this guide, we’ll explore how SEPs work, where they come from, and why they matter now more than ever. With environmental justice taking center stage in both policy and public awareness, SEPs are evolving from niche legal tools into powerful pathways for change.
What Is a SEP?
A Supplemental Environmental Project (SEP) is a community-focused environmental project that a company or individual voluntarily agrees to carry out as part of settling an environmental violation. Instead of just writing a check to the federal government, violators can put resources into something that directly helps the environment or public health in the affected area.
These projects must meet specific criteria set by the U.S. Environmental Protection Agency (EPA). They must be directly related to the original violation, offer measurable benefits to the environment or public health, and go beyond what the violator is already required to do by law. Importantly, SEPs can’t replace a penalty—they supplement it.
“SEPs are not a ‘get out of jail free’ card. They’re about accountability with purpose.” — Lisa Garcia, Former EPA Senior Advisor
The Legal and Ethical Framework Behind SEPs
SEPs are guided by EPA’s SEP Policy, which outlines several criteria:
- Direct Benefit: The project should directly improve or protect public health or the environment.
- Connection to the Violation: There must be a clear link between the violation and the project. For example, if a company polluted a river, a related SEP might involve cleaning up that river.
- Beyond Legal Obligations: The project should be something the company isn’t already required to do by law.
- Company’s Responsibility: The company must cover all costs associated with the SEP.
While implementing a SEP doesn’t erase the penalties for the original violation, it can lead to reduced monetary fines. This approach benefits both the community, through environmental improvements, and the company, by helping to rebuild trust and improve its reputation.
A Shift in SEP Policies
In 2020, the Department of Justice (DOJ) under the Trump administration limited the inclusion of SEPs in federal enforcement settlements, citing concerns over the Miscellaneous Receipts Act. This act mandates that federal officials deposit received funds into the Treasury, and there were worries that SEPs diverted these funds improperly.
However, in February 2021, the Biden administration reversed this policy, reinstating SEPs as a tool in environmental enforcement. This move aligns with President Biden’s focus on environmental justice, aiming to provide direct benefits to communities disproportionately affected by environmental violations.
Learn More: Three Pillars of Sustainable Development?
Types of Supplemental Environmental Projects
1. Pollution Prevention
This involves projects aimed at reducing or eliminating the creation of pollutants at their source. For instance, a manufacturing plant might upgrade its equipment to minimize emissions beyond what regulations require. Such proactive measures not only ensure cleaner air and water but also often lead to operational efficiencies and cost savings for the company.1
2. Environmental Restoration
These projects focus on restoring ecosystems or habitats that have been degraded. An example would be reforesting an area previously affected by illegal logging or industrial activities. Restoration efforts can rejuvenate local biodiversity, improve air quality, and provide communities with green spaces for recreation and well-being.
3. Public Health Initiatives
SEPs can also target public health by addressing environmental factors that pose health risks. For example, in the aftermath of the Aliso Canyon natural gas leak in California, funds were allocated to install air filtration systems in public schools within affected communities. This initiative aimed to reduce students’ exposure to harmful pollutants, thereby promoting better respiratory health.
4. Environmental Education
Educating the public about environmental issues is crucial for fostering long-term stewardship. Companies might fund programs that integrate climate change education into school curriculums, especially in areas impacted by environmental violations. By empowering students with knowledge, these programs cultivate a generation that is more conscious of and engaged in environmental protection.
5. Emergency Planning and Preparedness
Supporting communities in preparing for environmental emergencies is another avenue for SEPs. This could involve providing local fire departments with hazardous material suits and training, enhancing their readiness to respond to chemical spills or industrial accidents. Such preparedness not only safeguards first responders but also the broader community by ensuring swift and effective responses to emergencies.
6. Energy Efficiency
Projects that promote energy conservation and efficiency can significantly reduce environmental footprints. Retrofitting buildings with energy-efficient systems, such as installing solar panels or advanced insulation, decreases energy consumption and greenhouse gas emissions. For example, a comprehensive retrofit of a century-old home in London led to zero energy bills, showcasing the potential of such initiatives.
Examples: Real-World Case Studies
Duke Energy’s Dan River Coal Ash Spill (North Carolina)
In February 2014, Duke Energy’s Dan River Steam Station in Eden, North Carolina, experienced a significant spill, releasing approximately 39,000 tons of coal ash and 27 million gallons of ash pond water into the Dan River. This event posed serious environmental threats, contaminating water supplies and harming aquatic life. To address the damage, Duke Energy entered into a $3 million cleanup agreement with EPA. The company committed to a comprehensive assessment and removal of coal ash deposits along the river. Additionally, Duke Energy agreed to purchase up to 64 acres of floodplain and riverbank along the Mayo River, contributing to the expansion of Mayo River State Park. This initiative aimed to restore habitats and provide recreational opportunities for the community.
Chevron Richmond Refinery Fire (California)
In August 2012, a fire erupted at Chevron’s Richmond refinery, sending toxic smoke into the surrounding areas and leading to health issues for thousands of residents. In response, Chevron reached settlements totaling approximately $160 million to address claims of Clean Air Act violations and to implement safety improvements across its U.S. refineries. The company also agreed to pay a $2.95 million civil penalty and to provide specialized training to local fire department personnel on incident command and hazard recognition. Furthermore, Chevron settled a lawsuit with the city of Richmond by agreeing to pay $5 million, which the city planned to allocate towards community programs and initiatives aimed at improving public health and safety.
Volkswagen Dieselgate Scandal (National)
In 2015, Volkswagen was found to have installed defeat devices in their diesel vehicles to cheat emissions tests, leading to excessive nitrogen oxide emissions. As part of a $14.7 billion settlement, Volkswagen committed $2 billion to promote Zero Emission Vehicle (ZEV) infrastructure and awareness. This led to the creation of Electrify America, an initiative focused on expanding electric vehicle charging networks and promoting clean transportation. For example, in North Carolina, the Department of Environmental Quality utilized over $13 million from the settlement to fund nearly 1,000 EV charging ports across the state, significantly enhancing the state’s green transportation infrastructure
An Expert Voice: Why SEPs Matter
David M. Uhlmann, Assistant Administrator for the EPA’s Office of Enforcement and Compliance Assurance, emphasizes the importance of community involvement in SEPs:
“We want to hear from communities scarred by pollution about what projects best address the public health and environmental harms they have endured.”2
This approach ensures that the projects undertaken are not only relevant but also restorative, directly addressing the specific damages caused by the violations.
Research indicates that SEPs are generally favored by the public and offer benefits to the offending firms. However, it’s noteworthy that these projects predominantly occur in high-income, white communities, highlighting a disparity that needs to be addressed to ensure environmental justice for all.
By facilitating SEPs, the EPA not only enforces compliance but also promotes restorative justice, ensuring that communities most affected by environmental violations receive direct and meaningful benefits.
Learn More: What is a Supplier Code of Conduct?
Challenges and Controversies
Perception of Leniency
Some critics argue that SEPs may allow companies to evade full accountability. By funding projects instead of paying hefty fines, there’s a concern that businesses might view SEPs as a more palatable alternative to traditional penalties, potentially undermining the deterrent effect of environmental regulations.
Implementation Challenges
Effective oversight is crucial for SEPs to achieve their intended outcomes. Without rigorous monitoring, there’s a risk that projects may not be completed as promised or fail to deliver meaningful environmental benefits. Ensuring that SEPs are not only well-intentioned but also effectively executed remains a significant challenge.
Political Volatility
The trajectory of SEPs can be heavily influenced by the prevailing political climate. For instance, in April 2025, EPA Administrator Lee Zeldin criticized the previous administration’s environmental justice initiatives, labeling them as misuses of taxpayer funds and redirecting focus toward what he described as “concrete environmental issues” . Such shifts show how political changes can lead to reevaluations or even rollbacks of SEP-related policies.
Future of SEPs: Environmental Justice and Community-Led Projects
The Biden administration has prioritized environmental justice by empowering communities to lead projects that address local environmental challenges. In December 2024, EPA announced nearly $1.6 billion in Environmental and Climate Justice Community Change Grants, funding 105 projects aimed at reducing pollution and enhancing climate resilience in disadvantaged areas. This initiative marks a significant increase from previous efforts, reflecting a commitment to community-driven solutions. EPA Administrator Michael Regan emphasized this approach, stating, “We’re shifting from top-down enforcement to community partnership. That’s where real change happens.” These grants represent a substantial investment in addressing longstanding environmental inequities through active community involvement.
Actionable Advice: How Communities and Companies Can Engage with SEPs
For Communities:
- Report Violations: If you suspect environmental misconduct, promptly report it to the EPA. They provides an online platform for reporting suspected violations, ensuring concerns are addressed efficiently.
- Organize: Forming coalitions amplifies community voices. For instance, the SETX Strong Families Coalition in Southeast Texas expanded from 16 to 32 organizations, uniting efforts to tackle local challenges. Such collaborations can effectively advocate for SEPs tailored to community needs.
- Propose Ideas: Collaborate with environmental attorneys to develop SEP proposals that address local environmental concerns. Legal experts can navigate the complexities of SEP policies, ensuring projects align with regulatory standards and genuinely benefit the community.
For Companies:
- Be Proactive: Integrate SEPs early in settlement discussions. Proactively proposing beneficial projects can demonstrate corporate responsibility and potentially mitigate penalties.
- Engage Locals: Partner with community leaders to identify projects that resonate with local needs. This collaboration ensures SEPs have a lasting, positive impact and fosters goodwill.
- Track and Share Impact: Maintain transparency by regularly reporting SEP outcomes. Sharing progress not only builds trust but also showcases the company’s commitment to environmental stewardship.
Conclusion: Restoring More Than Just Compliance
Supplemental Environmental Projects are powerful tools that transform enforcement into empowerment. By channeling penalties into public good, they offer a blueprint for healing ecosystems and communities simultaneously.
Whether you’re an environmental advocate, legal professional, community leader, or business owner, understanding and leveraging SEPs is a critical step toward more equitable, sustainable outcomes.
“We may not be able to undo the damage, but we can choose to repair and rebuild, together.” — Final Thought from the Author
Sources:
- Michigan Department of Environment, Great Lakes, and Energy. (n.d.). Supplemental Environmental Projects for Penalty Mitigation (Policy No. 04-002) (PDF). ↩︎
- EPA enforcement program seeks public ideas for supplemental environmental projects | US EPA. (2023, December 7). US EPA. ↩︎
