It is odd... I have had my engineering degree for more than 5 years now, and out of three instances of being on the job market, I have yet to get a single offer for a private-sector engineering job. My last two positions have been state government bureaucrat jobs (environmental engineering from a regulatory standpoint), where I can at least get experience toward a PE, but I would have preferred a private-sector position. But I had no trouble at all getting the state jobs -- in fact they were practically begging for engineers. I have yet to figure out why it was so easy to get a gov't job and so hard to get a private job.
Environmental engineering is probably one of those fields that is more heavily tied to government regulations than others. As a result, you tend to have more positions available in government oversight and/or compliance roles than you might have in other fields.
I wouldn't be so hesitant about taking a government position in a field like yours -- once you get your P.E. (and maybe some work toward a graduate degree as well), you will be a very attractive candidate for a private sector job.