Several recent events at EPA, and within the Administration more broadly, forecast an emphasis on environmental criminal investigations. Recent EPA enforcement guidance, the nomination of David Uhlmann as the new EPA Assistant Administrator for the Office of Enforcement and Compliance Assurance (OECA), the Justice Department’s (DOJ) withdrawal of certain Trump-era policies, a new “Environmental Crime Victim Assistance Program”, and the Administration’s emphasis on Environmental Justice (EJ) all signal a renewed focus on criminal investigations and strongly suggest that it is a very good time for companies to make sure that they are in compliance with environmental laws and regulations.
It is not always easy to make a distinction between a criminal case and a civil one in the context of environmental investigations. Criminal cases tend to involve lying, cheating, and stealing, and there are tactical advantages for the government to pursue civil cases over criminal ones, not the least of which is a lower burden of proof. That said, the penalty provisions of most environmental statutes criminalize “knowing” violations – i.e., these are “general intent” public safety crimes where the government merely needs to demonstrate that the violator knew what they were doing when they acted, and not that they knew the act was unlawful. Companies can he held liable for the actions of employees who act within the scope of their employment and for the benefit of the corporation (both broadly interpreted) under the doctrine of respondeat superior. Certain statutes, like the Clean Water Act and Clean Air Act, include “Responsible Corporate Officer” liability that holds managers criminally accountable where they could have prevented a violation but failed to do so. All of these decisions – whether to handle a case administratively within EPA or refer it to DOJ, whether to pursue a matter as a criminal or civil case (or both), and what charges to bring against whom in a criminal case – are within the government’s broad enforcement discretion and require a responsible exercise of that authority.
EPA – OECA Guidance
OECA’s Acting Assistant Administrator recently issued three noteworthy internal guidance memos. The first was an April 26, 2021 memo titled Using All Appropriate Injunctive Relief Tools in Civil Enforcement Settlements that promoted the use of a broad array of enforcement tools, including advanced monitoring, audits and third-party verification, electronic reporting, increased transparency of compliance data, and the use of Supplemental Environmental Projects (SEPs) in administrative settlements.
A second memo dated April 30, 2021, titled Strengthening Enforcement in Communities with Environmental Justice Concerns implemented an April 7, 2021, directive from the EPA Administrator to EPA offices requiring them to clearly integrate environmental justice into their plans and actions, including to “[s]trengthen enforcement of violations of cornerstone environmental statutes and civil rights laws in communities overburdened by pollution” The OECA memo called for increased facility inspections in EJ communities, stronger enforcement (including use of “early and innovative relief” and restitution for victims of environmental crimes), and community engagement.
Of particular note in the context of criminal investigations was a June 21, 2021, directive to Senior Managers and Special Agents of EPA’s Office of Criminal Enforcement, Forensics, and Training (OCEFT) and Regional Criminal Enforcement Counsel titled Strengthening Environmental Justice Through Criminal Enforcement.That memo called for increased detection of environmental crimes in communities with EJ concerns, improved outreach to victims of environmental crime, and enhancing the remedies sought in environmental criminal cases.
Beyond the clear message of increased criminal enforcement in EJ communities, the June 21 memo included a few interesting particular provisions. One was its direction to investigators and EPA Regional Criminal Enforcement Counsel “to equip prosecutors to advocate for the appropriate application of federal sentencing guidelines.” This likely means that the government will increasingly advocate for sentencing enhancements where offenses “resulted in a substantial likelihood of death or serious bodily injury”. Those can be significant enhancements. For example, an offense involving mishandling of a hazardous substance with a “Base Offense Level” of 8 can be increased by 9 levels where it involved “imminent and substantial endangerment” (see U.S.S.G. § 2Q1.2). That alone would mean that an individual with no prior criminal history would be ineligible for probation and subject to a 24-30 month sentence in federal prison.
The June 21 memo also instructs investigators and EPA Regional Criminal Enforcement Counsel to “[s]eek restitution and/or community service” and to “include a full accounting of the gain or loss from the offense”. Seeking restitution is self-explanatory, but “community service” is likely a reference to requiring payments to outside third parties as a condition of a guilty plea – a practice that was prohibited during the Trump Administration and that is discussed further below. The directive that investigators “include a full accounting of the gain or loss from the offense” is a reference to the “alternative fine” provision of 18 U.S.C. § 3571(d). That provision allows the government to seek fines well above statutory maximums where it can show what the gain (or loss, but usually the gain) was from the criminal conduct (and then double it). For example, if the government can demonstrate that a company’s environmental violations enabled it to stay in business, the company’s revenue (or at least profit) for that period might be the “gain”.
Add to the mix is the recent nomination of Mr. Uhlmann to lead OECA. Prior to his current position as Director of the Environmental Law and Policy Program at the University of Michigan, Mr. Uhlmann spent 17 years as a federal prosecutor and served as the Chief of DOJ’s Environmental Crimes Section. If confirmed, he would bring a strong understanding of criminal investigations and practice to EPA and could be expected to aggressively pursue criminal cases.
DOJ – “Community Service” Payments
DOJ’s recent actions reflect agreement with EPA that “community service” payments should be back on the table in criminal resolutions. These are different from, but are in some cases similar to, Supplemental Environmental Projects (SEPs) in civil cases. Community service payments in this context are payments to outside third parties that have no direct connection to the offense as a condition of a plea agreement (or non-prosecution agreement or deferred prosecution agreement). Because requiring such payments presents the potential for corruption and abuse (which charitable organizations are selected to receive the payments and why) and because “penalties” should be paid to the Treasury, former Attorney General Jeff Sessions prohibited them on June 5, 2017. That directive was echoed in a memo from the Acting Assistant Attorney General (AAG) for the Justice Department’s Environment & Natural Resources Division (ENRD) on January 9, 2018 The former Attorney General’s directive was incorporated into DOJ’s Justice Manual at Section 1-17.000, and it remains there, at least for now. The ENRD memo, on the other hand, was one of several Trump-era policies that were withdrawn on February 4, 2021, by the current ENRD Acting AAG.
Environmental Crime Victim Assistance Program
On April 21, 2021, DOJ’s Acting Associate Attorney General announced a new DOJ/EPA “Environmental Crime Victim Assistance Program” at an event with the EPA Administrator. The program extends rights and services under the Victims’ Rights and Restitution Act and the Crime Victims’ Rights Act to victims of environmental crime and directs Victim-Witness Coordinators in U.S. Attorneys’ Offices and others to identify victims of environmental crime, provide access to services, and to honor procedural rights, such as being advised of proceedings and having an opportunity to address a court at sentencing.
While there has long been a structure in place to assist crime victims, and there should be little, if any, controversy about extending those rights to victims of environmental crime (if they are not already eligible), the Acting Associate Attorney General’s announcement included some interesting language about who qualifies as such a victim:
Victims of environmental crime have long been an underserved and often overlooked type of victim in our criminal justice system. Some are casualties of large-scale, high-profile incidents like the Deepwater Horizon disaster or the Volkswagen emissions scandal. But the majority are victims of crimes that receive much less public attention:
- The low-wage worker given no or inadequate protective gear and exposed to asbestos fibers from a renovation or demolition project;
- The farmworker exposed to an illegal application of a pesticide;
- The family whose exterminator illegally applies pesticides and causes permanent brain injury to children in their home; and
- The community located near a cluster of industrial facilities, where one polluter knowingly violates the law by exposing that community to carcinogens while the other facilities follow the law, to name but a few examples.
We serve and seek justice for all of these victims.
Some of those victims are easier to identify than others. Identifying the victim of an oil spill, or a worker exposed to asbestos, for example, should be fairly straight-forward. It is far less clear how one might identify victims of a diesel emissions prosecution like Volkswagen, where it would be nearly impossible to quantify specific health impacts on individual victims. Identifying “the community” as a victim because it is “located near a cluster of industrial facilities, where one polluter knowingly violates the law” presents similar issues.
So, what does this mean in practice? Presumably, it means financial assistance, such as access to the Crime Victim’s Fund – for which the Administration seeks an additional $635,000,000 to total $2,650,000,000 see DOJ OJP FY 2022 Budget Request at p. 129-30 . To whom would those funds be distributed where “the community” is the identified victim? Would funds distributed to “the community” be at the expense of identifiable victims of fraud or violent crime? How would “the community” be permitted to address the court at a defendant’s sentencing? Would that come from a community representative? How would that person be chosen, and would there be any limitations on what they could say? In the absence of a specifically identifiable individual victims, would a federal prosecutor not be able to make any legitimate arguments at sentencing about community impacts?
It will be interesting to see how the Environmental Crime Victim Assistance Program is implemented, but at a minimum it creates a financial incentive for communities to identify as victims of environmental crime.
The recent directives and announcements from EPA and DOJ implement a broader Environmental Justice initiative from the White House. In particular, Executive Order 14008 (January 27, 2021) focused substantially on EJ, directing all agencies to incorporate EJ into their missions, programs, and policies. It created a White House Environmental Justice Interagency Council and a White House Environmental Justice Advisory Council. It directed EPA, DOJ, and DHHS to enforce EJ initiatives. It created the “Justice40 Initiative” directing 40% of overall benefits to EJ communities. It also directed the creation of a “Climate and Environmental Justice Screening Tool” that will be modeled from EPA’s EJSCREEN tool.
Suffice it to say that increased focus on EJ and community engagement will be a certainty, as indicated by EPA’s Environmental Justice in Your Community webpage, and as demonstrated by an “Environmental Justice Team” that was recently created by the Acting U.S. Attorney for the Eastern District of New York.
Companies can expect to see:
- An increasing tendency to exercise enforcement discretion to refer cases to DOJ and to pursue environmental violations as criminal violations;
- More inspections and criminal investigations, particularly in EJ communities;
- Aggressive use of federal sentencing guidelines and the statutory alternative fines provision to enhance sentences for individuals and companies;
- A revival of “Community service” payments to unrelated third parties as a condition of plea agreements and other criminal resolutions;
- Financial assistance for community victims of environmental crime;
- Community representatives addressing courts at sentencing hearings; and
- Active community participation in efforts to identify and report environmental violations.
If you are a company – especially one with facilities in EJ communities – now would be a very good time to conduct a confidential environmental audit and risk assessment under the Attorney-Client Privilege, and to make sure that your environmental compliance policies and procedures are up to date.
In short, “Hope you … got your things together.” – CCR 1969 (Creedence Clearwater Revival, that is, not Coal Combustion Residuals).