New Trump Administration Ban on Third-Party Settlements Could Cripple Future Environmental Projects

AG Jeff Sessions Issues Memo Prohibiting Federal Settlements Often Used to Fund Cleanup Projects

Washington, D.C. – In a decision that will reduce funding for environmental cleanups,  U.S. Attorney General Jeff Sessions has banned all future settlements of pollution violation cases that include money for cleanup efforts managed by third-party organizations.

Under both Republican and Democratic administrations over the last four decades, prosecutors have negotiated settlement agreements with polluters that pay for projects, often managed by community groups or nonprofit organizations, that help compensate for illegal pollution by restoring wetlands and streams, protecting critical habitat, monitoring air pollution, treating asthma victims and other efforts.

All such future projects are prohibited under a memo issued by Sessions on Monday.

“The Attorney General’s action will deprive poor and under-represented communities of environmental improvements paid for by polluters who violate our laws,” said Eric Schaeffer, executive director of the Environmental Integrity Project and former Director of Civil Enforcement at EPA.

The new ban may make it much harder in the future to secure the kind of investments in “zero emission” vehicles and other clean transportation projects that Volkswagen agreed to fund at a cost of $4.7 billion last year to settle charges that it manipulated pollution controls on nearly 600,000 diesel vehicles.

While the zero emissions projects funded by the VW settlement do not require any payments to third parties, the Justice Department has so far refused to clarify that its new policy would allow for similar agreements in the future.

On May 23, the federal government sued Fiat Chrysler for similar violations while other auto companies are under investigation for the same kind of cheating.   A Seattle-based law firm filing a class action lawsuit against GM on May 25, claiming that the company installed software to cheat on emissions tests for about 705,000 of its diesel trucks from 2011 to 2016.

“Attorney General Sessions apparently wants to make sure that unlike Volkswagen, these other violators won’t be required to support development of low emission vehicles to compensate for illegal pollution from the dirty engines they designed,” Schaeffer said.

The move by the Trump Administration comes after the U.S. House Judiciary Committee approved legislation called HR 732 (the misleadingly-labelled “Stop Settlements Slush Fund Act of 2017”) that would achieve similar ends and prohibit environmental projects funded by settlements. There is no evidence such funds have been used for improper purposes or anything other than environmental improvements.  (For more information, see report on the legislation by the Environmental Integrity Project, “House Bill Bans VW-Style Settlements.”)

“The Attorney General’s letter mimics language in a House bill that is enthusiastically supported by Freedom Works, Heritage Foundation, the Chamber of Commerce and other groups that are quick to defend the rights of large corporations caught violating our laws,” Schaeffer said.  “It’s disheartening to see the Justice Department reading from their playbook.  Whose government is this anyway?”

Nonprofit and community organizations for decades have received settlement funds from pollution lawsuits that have helped the environment.  For example, in 1977, after the disastrous spill of the pesticide Kepone into the James River at Hopewell, Virginia, Allied Chemical agreed to pay $8 million of a $13.2 million fine to fund a nonprofit organization, the Virginia Environmental Endowment. Over the 40 years since then, the endowment has paid for Chesapeake Bay cleanup efforts, land conservation, and environmental education, among other projects.

Such efforts, funded by settlements, would be halted in the future under the Attorney General’s order. For a copy of the memo, click here.

The Environmental Integrity Project is a 15-year-old nonprofit, nonpartisan organization, based in Washington D.C., dedicated to enforcing environmental laws and holding polluters and governments accountable to protect public health.

Media Contact: Tom Pelton, Environmental Integrity Project, or 202-888-2703