Eligibility

A SEP penalty is a measure that generally is not available to “bad actors” or to a company that has caused a toxic air pollution violation. If the source fits the “bad actor” profile set forth below, a SEP penalty may not be pursued unless expressly approved by the General Counsel's Office. This exception is to handle circumstances where a Supplemental Environmental Project may be extremely useful and/or necessary.

In determining whether a source is a “bad actor,” the General Counsel’s Office applies the following:

1. Compliance History. The overall number, frequency, and severity of past violations demonstrate a clear disregard for South Coast AQMD rules and regulations, or; 
2. Violation in Question. The type and severity of the violation(s) in question is/are such that a serious risk to public health and safety or to the environment was threatened or occurred, or; 
3. Response to Violation. Following receipt of the Notice of Violation, the source operator failed or refused to acknowledge the violation, mitigate the harm, and/or cooperate with the South Coast AQMD in investigating or resolving the matter.

Crafting the Penalty

The Supplemental Environmental Project (SEP) fashioned as a penalty must be designed to produce the broadest air quality benefit possible. Offers to the District of products or benefits are never allowed. The SEP penalty must benefit the public and/or the environment.

The SEP penalty must be a measure over and above the cost to the source operator to come into compliance with District Rules. A fundamental tenet of the General Counsel’s Office's settlement practice is that a settlement is possible only after the source operator has come into compliance. No part of the cost or effort undertaken to achieve compliance may be considered to be part of the SEP penalty (or any penalty) because although the penalty may be creative, it is nevertheless a penalty.

SEP penalties must not be designed to “reward” the violator. Accordingly, each measure undertaken as a SEP penalty is designated in writing by the District with a compliance date, and increments of progress, if applicable.

As stated above, these measures must be designed to produce the broadest air quality benefit possible. In furtherance of this, the General Counsel’s Office coordinates, where appropriate, with relevant South Coast AQMD divisions to design and designate the appropriate SEP penalty assessment. Such divisions receive a copy of the settlement agreement ten days after completion in order to facilitate compliance tracking. The General Counsel’s Office Investigations Unit also tracks the settlements to ensure compliance.