Nov 2nd, 2023

Pro Tips to Reduce Regulatory Penalties

Today, we're diving into a discussion for anyone facing potential penalties for envi...

November 3, 2023

Today, we're diving into a discussion for anyone facing potential penalties for environmental law and regulation violations.

First, let's recap some key lessons about penalties. Penalties under environmental laws are imposed for several reasons: among them, penalties seek to punish the offender, compensate for harm, act as a deterrent, and set an example to deter violations by others. Penalties are only partly about the person or entity who’s being punished. By the time any enforcement matter reaches that point, we’re really talking about how the government needs to address both the specific offender as well as uphold the enforcement scheme overall. As we often tell our clients, at this point, it’s not just about you.

Turning to the actual penalties issue, it’s true that there are situations where penalties are mandatory, and the amounts are non-negotiable. Often, however, government agencies have some discretion to lower penalties where circumstances warrant. While we can’t guarantee than these will apply in any specific situation, these are areas where we’ve seen agencies take additional facts and circumstances into account.

So what can you do to protect yourself?

1. Rebut The Violation Claims: penalties are often calculated based on the assumed number of violations and the perceived level of harm. If you have evidence that disputes the number of violations or can demonstrate that the alleged violations are not of significant concern, you can potentially reduce the penalty amount. Let the facts speak for themselves.

2. Demonstrate Good Faith Compliance: to assess the necessity of penalties for deterrence, regulatory agencies consider a business's compliance history. Show that you or your business actively identifies and rectifies compliance issues promptly. If your company generally maintains good compliance but has encountered isolated mistakes or one-time violations, this can help convince regulators that additional penalties are unnecessary.

3. Shift Costs to Environmental Projects: some agencies allow businesses to invest in Supplemental Environmental Projects (SEPs) in lieu of, or in combination with, monetary penalties. SEPs can involve funding essential studies, education, or paying for other projects that mitigate environmental harm. While this won't eliminate penalties entirely, it can reduce the financial burden and demonstrate a commitment to environmental responsibility. It certainly feels more palatable to know that penalty money is going towards a better environment and not just into a government agency’s bank account.

4. Leverage Legal Arguments: If your business has strong legal arguments that dispute the amount or necessity of penalties, consider using them in good faith negotiations. Resolving issues through negotiation is usually more cost-effective and efficient than protracted litigation. However, it's crucial to approach this strategy with fairness and a willingness to find common ground.

And this also means that you need to be thinking about your legal leverage as soon as you realize you may have a problem. We cannot emphasize this enough. For certain government actions, you have to move quickly to preserve any legal challenges. If you wait too long, you completely lose that leverage and litigation will not help you.

Navigating environmental law and regulations can be complex, but with the right strategies and legal representation, you can work towards reducing the financial burden of penalties while ensuring environmental compliance and protecting your bottom line.

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