AN OVERVIEW OF PROSECUTIONS OF ENVIRONMENTAL CRIMES

A Brief History of Environmental Prosecutions

Twenty years ago, no one prosecuted "environmental crimes". Despite the fact that penalty provisions existed for illegal disposal of oil and other hazardous materials as early as 1889, when the Rivers and Harbors Act became law, cases were rarely prosecuted. When a violation was found and the relevant regulatory agency despaired of achieving "compliance", charges were generally filed against the corporation responsible for the violation. On the rare occasion that individuals were charged, they were dismissed in exchange for pleas from the corporations. Dramatic change in prosecution practices began in the early 1970's, as organizers of the first Earth Day used the event to press enactment of a series of tough criminal sanctions in the new environmental laws.

In 1974, the first environmental prosecution program was established in a local prosecutor's office. The new Los Angeles City Attorney was elected with a campaign pledge to do something about air pollution in the city with the worst air pollution in the nation. The City Attorney's Office, and later the Los Angeles District Attorney's Office, established a presence at the cutting edge of environmental prosecutions, forming the first multi-agency task forces to facilitate investigations and effective prosecutions, and obtaining the first jail sentences for corporate officers and managers.

Even with the engagement of prosecutors who saw prosecutions as a key deterrent to environmental degradation, criminal prosecutions came slowly. In the early 1970's, regulatory agencies such as the then Los Angeles Air Pollution Control District were more interested in working with industry than the prosecution, and actually protested the concept of seeking maximum penalties or charging individuals. In contrast, today there is a strong commitment by most regulatory agencies to use criminal or civil prosecutions as one in a panoply of tools used to protect the environment.

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A Growing Commitment of Resources

Special divisions for the investigation and prosecution of environmental crimes have been created in the United States Department of Justice, the Federal Bureau of Investigations, and Environmental Protection Agency. According to the head of EPA's Office of Criminal Enforcement, 110 special criminal agents are now employed, and EPA has a goal of deploying 200 by 1995. In California, local involvement in environmental prosecutions is extensive. For example, the Los Angeles District Attorney commits nine attorneys, and seven criminal investigators, to environmental cases. Almost every county in the State, and most major city prosecutors, have some commitment to these cases. When local resources are thin, the enforcement arm of Cal/EPA, headed by former Los Angeles District Attorney environmental crimes prosecutor Bill Carter, is there to provide technical and legal assistance.

For years, the California District Attorney's Association has conducted an annual two day conference on advanced criminal prosecutions, as well as a similar program on introduction to environmental violations. In addition to a forum for keeping up on the latest developments in statutory and case law, the seminars provide panels on such topics as chemistry for lawyers, and the use of highly technical expert witness testimony. The California District Attorney's Association also has a standing Committee on the Environment, which meets several times a year, in both the north and the south, and provides a valuable opportunity for the exchange of ideas on investigations and prosecutions. In the Spring of 1992, the Committee even initiated an environmental prosecutor's advisory hotline.

The National District Attorney's Association and the National Association of Attorneys General have their own environmental committees and regional programs, such as the Western States Hazardous Waste Project. Less than two years ago, the American Prosecutors Research Institute established the National Environmental Crime Prosecution Center.

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Greater Involvement in Investigations

Today prosecutors no longer are dependent almost entirely on agency referrals. Many tips of criminal activities come from current or former employees of suspects, or from competitors who resent the unfair economic advantage another business may enjoy from short cutting environmental compliance. The public frequently reports suspected illegal activity. Environmental Crimes Task Forces operate at the local, state, and federal levels. California has even statutorily created a Strike Force. Health and Safety Code ? 25197.2. Sophisticated undercover or sting operations are not uncommon, and agencies and prosecutors use scientific monitoring equipment. Since business documents provide evidence of the elements of many environmental crimes, use of search warrants and subpoena are routine. Increasingly, prosecutors make use of grand juries to obtain testimony from the reluctant witnesses who may be employed by a company under investigation. For some types of cases, it is almost essential to retain an expert in the investigatory stage. For example, for an air exposure Prop 65 case for civil penalties and injuncitve relief, an expert is normally required to assess or conduct dispersion modeling.

Recent Statistics on Environmental Prosecutions

What has been the result of this commitment of resources? At the federal level, there has been a slow but steady increase in the number of prosecutions. On the other hand, local prosecutions in large cities throughout the country have increased dramatically. The following charts, obtained from the National Environmental Crime Prosecution Center, report on Department of Justice prosecutions, and prosecutions by a group of urban area local prosecutors.

Perhaps more significant than the number of prosecutions is the increase in sentences, both in terms of monetary penalties imposed, and periods of incarceration. EPA's 1991 Enforcement Accomplishments Report, issued in May of 1992, reported that in 1991 48 criminal cases were completed, 82 defendants were convicted, and 28 of those defendants were sentenced to jail. Los Angeles County's data is perhaps the most impressive local prosecution program. The following chart shows prosecutions between 1987 and mid-year 1992:

According to Michael Delaney, the Head Deputy for the Los Angeles District Attorney's Environmental Crimes Division, penalties for fiscal year 1992-93 were $4,300,00. This figure includes fines and restitution totalling $2.5 million in a joint prosecution with Cal/EPA, in a case involving the illegal transportation and disposal of waste in Mexico. In addition to the penalties obtained by the Los Angeles District Attorney, thirty defendants were sentenced to a total of 3,550 days in custody, with several sentences of one year in jail for smog check fraud, and two years in a conviction involving the illegal handling of asbestos.

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Types of Prosecutions

A constantly widening array of laws is being prosecuted. In the 1980's, almost all criminal prosecutions were for the disposal of hazardous wastes. Although there were prosecutions for air pollution violations, they almost never resulted in jail time. Although most prosecutions still involve hazardous wastes, and other hazardous materials, there is an increasing number of prosecutions for destruction of natural resources and endangered species. For example, in 1991, the Los Angeles District Attorney obtained an eighteen month jail sentence against a developer who filled a streambed in the Santa Monica Mountains. While there has been relatively little use of California's criminal nuisance law, or the California Corporate Criminal Liability Act, which makes it a felony to fail to report a serious concealed danger, those laws remain in the prosecutors arsenal.
At the federal level, there has been considerable interest in the use of the Racketeer Influenced and Corrupt Organizations Act (RICO), although the penalties already are quite substantial under various federal laws, including the Clean Air Act; the Clean Water Act; the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA); the Resource Conservation and Recovery Act (RCRA); and the Toxic Substances Control Act.

This year the California legislature focused attention on creating a favorable climate for business, with a major effort in revising the California Environmental Quality Act. Although there was a significant focus on regulatory reform, there was no weakening of the penalty provisions of California's environmental laws, which have become increasingly stringent in terms of the penalties imposed; the limitation, and sometimes elimination, of the scienter required; and the scope of individual liability.

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Standards of Liability

The erosion of the traditional requirement of scienter for environmental and other public welfare prosecutions has been well documented. In short, the courts have repeatedly affirmed the concept that criminal sanctions in public welfare, or malum prohibitum crimes, including environmental crimes, may be based upon simple, as opposed to criminal negligence, or even strict liability. Two significant California cases deal with liability under California's Hazardous Waste Control Act.

In 1989, the power of the Legislature to base liability for disposal of hazardous wastes on a "should have known" standard was upheld. The court stated:

Lawmaker have wide latitude to declare an offense and to exclude, or include, elements of knowledge and diligence. People v. Martin, (1989) 211 C.A. 3d 699, at 714.

A further extension of criminal liability for "responsible corporate officers" is discussed in People v. Matthews (1992) 7 C.A. 4th 1052, where the court held:

"(P)ersons holding significant shares of corporate responsibility and power are subject to prosecution and conviction for strict liability crimes unless they have exercised their responsibility and power so as to have undertaken all objectively possible means to discover, prevent and remedy any and all violations of such law."

The fact that courts have acknowledged the authority to impose such strict liability based upon an officer's or manager's position or authority only in misdemeanors involving "light penalties and no moral obloquy or damage to reputation..."(Id., at 1058) is no doubt of little comfort to those corporate managers contemplating up to one year in County jail.

When "knowledge" is statutorily required, the courts have interpreted the term restrictively. For example, under RCRA, early cases held that the law required knowledge both that the waste was hazardous and that the regulation had been violated, but held that knowledge "may be inferred by the jury as to those individuals who hold the requisite responsible positions with the corporate defendant." U.S. v. Johnson & Towers, Inc. (3rd. Cir., 1984) 741 F.2d 662. Subsequent cases limited the requirement for showing knowledge. In U.S. v. Hayes (11th Cir. 1986) 786 F.2d. 149, the court held that RCRA did not require proof that individuals transporting wastes knew that the wastes were hazardous under the regulations, saying "it is completely fair and reasonable to charge those who choose to operate in such areas with knowledge of the regulatory provisions." U.S. v. Hayes, supra, at 1--. Subsequently, the 9th Circuit held that in RCRA prosecutions for illegal disposal of hazardous waste it was not necessary to show that defendants knew or should have known that a waste facility lacked proper permits, but it was only necessary to show knowledge that the waste was hazardous. U.S. v. Hoflin (1989) 880 F.2d 1033, cert. denied 110 S. Ct. 1143.

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Filing Decisions

Once prosecutors determine that the elements of a crime are present, a number of filing decisions must be made. Some prosecution offices routinely elect to proceed to prosecute civilly for illegal business practices under Business and Professions Code ? 17200, based upon a violation of a criminal law. Stated rationale for such an election include the lower burden of proof, and the authorization for injunctive relief, but for many jurisdictions, a major factor in the decision is the greater flexibility the law allows in recovering costs of investigation and prosecuting the violation, and in the distribution of penalties. This is somewhat less of an issue under the Hazardous Waste Control Act, which specifies a distribution of the penalties that includes apportionment to the prosecuting and investigating agencies. (Health and Safety Code ? 25192.)

Other significant decisions, which are made on a case by case basis, are which individuals should be charged, and whether felony or misdemeanor charges are more appropriate. Perceptions of culpability, the seriousness of the violation, goals of deterrence, and regulatory history, are the primary factors that come into play.

THE ROLE OF THE PRIVATE PRACTITIONER

The Practice of Preventive Law and the Environmental Audit

Corporate counsels for large and small companies involved in the transportation, production, or use of chemicals and other hazardous substances, the combustion of fossil fuels, or other activities triggering the application of environmental law already may spend a large portion of their time practicing preventive law with regard to preventing or remedying environmental violations. Commercial real estate attorneys focus on potential liability of sellers and buyers of property. Government attorneys, in addition to regulating, may look at the consequences of operations of public works departments, airports, municipal utilities, and ports. Today, it is incumbent on all who are advising potential polluters not just to identify potential liability, but to assist the business or government in reducing or eliminating liability in the most cost-effective method possible. Encouraging the client to conduct an environmental audit is one of the most effective methods of achieving environmental compliance. It also may save the client money by reducing or eliminating wasteful practices which result in pollution.

An environmental audit requires managers and their counsel to work closely with environmental professionals in a systematic identification of potential sources of pollution and applicable law; an assessment of the adequacy of methods of compliance in use at the time of the audit; and development of a plan for better environmental or risk management. Even when there is substantial in-house environmental expertise, it is usually desirable to bring in an outside professional on a periodic basis, or at least once, in order to provide a fresh perspective. Someone with knowledge of the particular type of industry is preferred. Ideally the person also either can personally assess, or will know when to identify the need for a related safety and health professional. When there is an environmental problem, occupational safety and health issues often exist.

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After evaluation of all sources of pollution, the management team, with the help of the environmental professional, will focus on a plan for assuring compliance. Industries are increasingly finding that pollution prevention, including elimination of unnecessary chemicals, or substitution of less toxic alternatives, is more cost-effective than post-use pollution control. The process of developing and implementing an environmental or risk management plan includes institutionalizing and documenting routine procedures for assuring on-going compliance; documenting timely corrective action, and the resources committed to achieving environmental compliance; and establishing a clear chain of command for these purposes. A system to encourage employee participation in the identification and elimination of environmental problems can be an important part of such a plan.

When a problem is identified, it is imperative to carefully evaluate the alternative methods of abatement. Too often one problem is solved by creating a new one. For example, it is not in the long-term interest of the client to eliminate use of a Prop 65 carcinogen or reproductive toxin by substituting a chemical which may soon be on the list, or a chemical that will create other worker exposure problems.

When an environmental audit is completed, and the recommendations of the auditor or auditing committee implemented, counsel should discuss with management a schedule for periodic reassessment, which at the very least should include a procedure for reviewing the impact of introduction of any new or expanded use of chemicals or hazardous substances or processes, and an annual review of new environmental laws and regulations.

One of the legitimate concerns of managers and their counsel is whether the results of an environmental audit can be kept confidential in case of a governmental investigation. Although the subject of the confidentiality of environmental audit supervised by counsel has been much debated, the consensus seems to be that there is a very high likelihood of its disclosure if there is a criminal investigation. As a result, most counsel urge their clients to conduct the audits only when there is a serious commitment to implement all reasonable recommendations necessary to eliminate any violations or potential violations which are identified.

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Clearly, despite the risks inherent in conducting an audit without a good faith commitment to implementation, there are substantial benefits to an audit even when violations occur notwithstanding the audit. Under the U.S. Sentencing Guidelines, fines for violation of federal law may be reduced from the base fine when the company has an effective program to prevent and detect violations of law. 18 U.S.C. Appendix 4, ? 8C2.4. Although the specific Sentencing Guidelines for environmental crimes have not yet been issued in final, an effective program requires the exercise of due diligence in seeking to prevent and detect criminal conduct by the organizations's employees and agent. According to the commentary to the Sentencing Guideline, such due diligence must include:

1) Compliance standards and procedures;

2) Specific high level personnel assigned responsibility for compliance;

3) Exercise of due care not to delegate to those with a propensity for violations;

4) An effective communication program regarding standards and procedures;

5) Use of monitoring and auditing systems reasonably designed to detect criminal conduct, including a system for employees and agents to report such conduct without fear of retribution;

6) Consistent enforcement of standards; and

7) Implementation of all reasonable steps to respond appropriately to an offense which is detected, and prevent further similar offenses.

Determination of the precise actions necessary for an effective program depends upon factors including the size of the corporation; the likelihood of offenses based upon the nature of the business; and the organization's prior history.

Voluntary compliance efforts also are considered by the Department of Justice in their filing decisions. On July 1, 1991, the Justice Department issued a policy statement entitled FACTORS IN DECISIONS ON CRIMINAL PROSECUTIONS FOR ENVIRONMENTAL VIOLATIONS IN THE CONTEXT OF SIGNIFICANT VOLUNTARY COMPLIANCE OR DISCLOSURE EFFORTS BY THE VIOLATOR. The stated purpose of the document is to "describe the factors that the Department of Justice considers in deciding whether to bring a criminal prosecution for a violation of an environmental statute, so that such prosecutions do not create a disincentive to or undermine the goal of encouraging critical self-auditing, self-policing, and voluntary disclosure." FACTORS memorandum at p. 1.

Cal/EPA also has issued enforcement guidelines to encourage environmental audits, a subject discussed in the June 1993 Environmental Law Reporter, Issue No. 6.

In addition to the view of the prosecutor, regulatory agencies routinely consider compliance efforts, and cooperation once a violation is identified, when assessing administrative penalties and deciding whether to make a referral for civil or criminal prosecution.

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When A Violation Occurs

Even when an audit is undertaken, violations can occur. Counsel should work with managers in advance to establish procedures to be followed when either a routine inspection or a criminal investigation occur. Procedures for the prompt abatement of violations are necessary, but if hazardous materials are involved, agency approval for remedial action may be necessary. Before action is taken, the issue should be discussed with counsel, unless delay would jeopardize public health, employee safety, or the environment.

When a violation is uncovered without regulatory agency involvement, the issue of voluntary disclosure must be carefully considered. Disclosure sometimes is required by a specific law (eg. oil spill laws). Even when disclosure is not compelled, it may be desirable as evidence cooperation and of a good faith effort to avoid repeat violations. In any case, abatement should be carefully documented.

If a violation is not identified and abated by the client, but is instead discovered by the regulatory agency or prosecutor, then the counsel's role changes dramatically. Today, if the prosecutor is involved, or the violation particularly serious, most companies will retain, or corporate counsel associate, an experienced white collar criminal defense attorney. This should be done promptly, since such action may assist in putting the violation in perspective, and in developing facts that will reduce the likelihood of a filing, or reduce its seriousness. It also may help assure that any information or evidence necessary for a defense is preserved.

The first order of business must always be finding out what actually happened, by a systematic, thorough internal investigation. Witness interviews should be conducted, with counsel bearing in mind that they do not have the right to be present during investigatory interviews conducted by prosecutors or their agents. 92 AG Ops 223. If hazardous materials are involved, samples should be obtained.

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Finally, if a criminal or civil case is filed, counsel may find it beneficial to initiate early discussions with the prosecutor, and the regulatory agency or agencies, on ways to prevent further violations. If multiple agencies are involved, or may become involved, it may be possible to enlist the prosecutor in fashioning a remedy that will meet the concern of all the agencies. Finally, creative counsel may wish to explore with the client their willingness to contribute to the greater resolution of environmental problems within the community or industry through creative sentencing such as contributing funds for educational programs or environmental enhancement or clean-up programs. Many prosecutors are extremely responsive to such suggestions.

By becoming fully engaged in the identification and elimination of environmental violations, and potential violations, counsel may find themselves serving the interests of their community at the same time that they protect the interests of their client.

According to the National Environmental Crime Prosecution Center, a recent survey of jurisdictions with populations exceeding 250,00 showed the following civil and criminal prosecutions:

1990: 286 civil -- 381 criminal

1991: 318 civil -- 756 criminal

1992: 470 civil -- 882 criminal

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