Thursday, December 16, 2021
Two senior U.S. Department of Justice (DOJ), Environment and Natural Resource Division (ENRD), officials spoke to the American Bar Association’s annual National Environmental Enforcement Conference. They conveyed a clear message: criminal enforcement and environmental enforcement are back. Individuals and businesses can expect more robust investigations that draw from the expertise and jurisdictions a variety of federal agencies. Meanwhile, enhanced DOJ criminal enforcement policies will drive prosecutions.
While we have previouslywrittenthat many enforcement metrics have declined over at least the last four years, criminal enforcement didnt go away. The most recent trend of declining enforcement metrics is due in part to the prior administrations’ focus on incentivizing conformity rather than emphasizing enforcement action, among others. Deborah Harris, Chief of DOJs Environmental Crimes Section, stated Wednesday that this is no longer the case. Instead, the federal government will focus more on enforcement than just compliance. Harris stated that the federal government is returning to more of a stick-and-carrot enforcement approach. Harris stressed the importance of prosecuting white collar offenses like making false statements and committing fraud. These crimes often go hand in hand with environmental crimes.
Todd Kim, the ENRD’s Assistant Attorney General, spoke in his keynote about both civil and criminal enforcementAddress. Kim highlighted the importance and power of criminal enforcement to deter illegal behavior. This is more than the threat from civil enforcement. Kim also discussed the dual nature between corporate and individual enforcement. Kim noted that most often the entity to the V. from the United States, is a business organization and sometimes a corporation. Kim pointed out that criminal corporate accountability begins with the accountability of those responsible for criminal conduct. Kim makes it clear that ENRD prosecutors and DOJ have been prosecuting individuals for environmental crimes for a long time and will continue to do so. Kim’s emphasis on this point is consistent in Deputy Attorney General (DAG Lisa Monaco’s recent remarks that accountability begins with the individuals responsible. Attorney General Merrick Garlands made clear that his first priority in corporate criminal cases is to prosecute individuals who profit from corporate malfeasance. Monaco’s comments are notable because the DOJ is returning under its previous guidance.MemorandumThe Yates Memo requires that companies under investigation provide information about their individual accountability for corporate wrongdoing in order to be eligible for cooperation credit.AllIndividuals who were involved in the alleged misconduct. Since 2018, DOJ has only required companies that they provide information on individuals who are directly involved or responsible for the misconduct. This week’s comments by Kim and Harris indicate that the ENRDs intend to closely follow this guidance.
Kim’s discussion on corporate environmental crime and criminal enforcement was perhaps the most notable. Kims warning about the importance of a corporation exercising due care throughout its supply chain was especially noteworthy. If a company fails to meet its due-care obligation (i.e. Failure to take responsibility for products and to fully understand their supply chain could result in serious consequences. This includes the possibility of criminal sanction, the potential seizure or forfeiture of illegally-sourced timber, goods and other equipment, and the inability to provide an innocent owner defense. The example Kim used to illustrate this was the Lacey Act prosecutions of illegally harvested timber. However, the message is applicable to industries other than timber.
Kim also discussed key shifts in DOJs corporate criminal enforcement as well as the creation of the Corporate Crime Advisory Group within DOJ. These were announced earlier this autumn in a memorandum by DAG Lisa Monaco. The DAGs also addressed key shifts.MemorandumIn Kims speech are considered[ing]A corporation’s entire criminal history is available. This clarifies that cooperation credit is only possible if all individuals involved in corporate misconduct are provided. Monitorships can also be used. The corporate criminal history modification will significantly increase the amount of misconduct that prosecutors will consider when deciding whether and how to solve a corporate crime investigation. Numerous companies are regularly subject to regulatory scrutiny from different authorities, domestic and international. DOJ is now open to considering all prior actions, even if they are not related. These and other possible changes to DOJ’s approach to corporate environmental crime prosecution were the purpose of the Corporate Crime Advisory Group. These three factors may result in a significant shift of how cases are handled, how resolutions are reached, and what forward-looking compliance steps may be necessary.
The principle of fairness is one of the motivations that seems to guide ENRDs enforcement ethos. Kim said that vigorous and robust enforcement is required to. . . businesses that comply with the law enjoy an equal playing field. Kim also stated that criminal enforcement leads to greater civil compliance. Kim’s comments clearly supported Harriss belief that DOJ will prioritize enforcement, particularly criminal enforcement, over compliance assistant approaches seen during the previous administration.
Kims address focused on civil environmental enforcement. It included sector-wide enforcement as well as the use of corporate monitors. ENRD uses sectoral enforcement (i.e. ENRD uses sector-wide enforcement to address compliance issues. As a way to ensure compliance, ENRD is including corporate monitors in its cases resolutions.
While this week’s presentations are a good indicator about DOJs environmental enforcement priorities it is not clear how they will be implemented in practice. In the coming months, a few things will shed more light on this. First, the confirmation of President Bidens nominee for the EPAs Office of Enforcement and Compliance Assurance Office (OECA) by the Senate committee, David Uhlmann. He has already been approved by the Senate and is now awaiting a vote from all chambers. This nomination will provide strong direction and guidance for the office. Uhlmann, the former Chief ENRDs Environmental Crimes Section chief and noted scholar on environmental criminal enforcement trends, will likely work to increase EPA’s number of criminal investigative agents and refocus OECAs resources on strong enforcement enforcement training, investigation and prosecution (civil, or criminal) for all violations. Kim also mentioned Tuesday that the DOJ and OECA were developing a strategy as directed by President Bidens.Executive Order 12898, to aid in the remediation of systemic environmental violations. Third, OECAs annual enforcement report, which covers the previous federal fiscal (ending September 30), is released by the OECA.Th) and is traditionally released in January or February, should give the first holistic picture of the Biden administrations first nine months.
Kims and Harris’ messages should be taken by companies as a reminder that it is vital for them to actively comply with environmental laws. Companies can avoid enforcement action by taking compliance seriously. As both DOJ officials warned the company, there is a greater risk of enforcement if violations are linked to priority areas such as climate or environmental justice. We will continue to monitor federal environmental enforcement to keep you informed of developments.
Copyright 2021, Hunton Andrews Kurth LLP. All Rights Reserved.National Law Review, Volume I, Number 350