Internal investigations and criminal enforcement

Internal investigations and criminal enforcement

A federal agent's perspective

By Fred L. Burnside

Since the early 1980s, special agents with the U.S. Environmental Protection Agency (EPA) criminal enforcement program have investigated cases under virtually every environmental statute, protecting human health and the natural environment by deterring criminal noncompliance. The criminal program resides in the Office of Criminal Enforcement, Forensics and Training OCEFT) within the EPA Office of Enforcement and Compliance Assurance (OECA). I have served as a special agent with the EPA Office of Criminal Enforcement for the past twenty years and have seen the criminal enforcement program at EPA consistently increase its deterrent impact with high-quality investigations and resulting prosecutions. This article discusses where the EPA criminal enforcement program has been, where it is going, and the relationship between criminal and internal investigations.

OCEFT is composed of four divisions: the Criminal Investigation Division (CID), the National Enforcement Investigations Center (NEIC), the Legal Counsel Division, and the Homeland Security Division. Currently, there are 185 special agents stationed in forty-three locations across the United States, including ten CID Area Offices which are co-located in each EPA Regional Office. Agents work in close partnership with EPA regional personnel as well as with other federal, state, tribal, and local law enforcement and regulatory ag3encies during the investigative process. EPA special agents are federal law enforcement officers authorized to conduct investigations, carry firearms, serve warrants, and make arrests for offenses against the United States. They not only enforc3e all federal environmental statutes but also U.S. Criminal Code (Title 18) violations associated with environmental crimes, such as conspiracy, false statements, obstruction of justice, and fraud. In addition to their own scientific training, special agents rely on the expertise of a skilled team of forensic specialists, such as NEIC chemists and engineers, computer specialists, expert program personnel, and prosecutors.

EPA special agents are the national experts on environmental crimes investigations, and their efforts have resulted in impressive indictment and conviction rates. In a review of all "closed" environmental crimes investigations where OCEFT served a search warrant, it was determined that criminal charges were filed against violators 67 percent of the time. Of those charged, convictions were obtained in 94 percent of the cases. Currently, CID has an active docket of over 800 environmental crimes cases nationwide.

Strategic direction of OCEFT criminal enforcement program - "High impact" cases

The primary reason OCEFT exists is to support the EPA program offices by providing a significant deterrent effect within the regulated community. Administrative enforcement is effective in encouraging compliance for the portion of the regulated community that is willing to comply but needs some education or clarification. Civil enforcement, with fines and injunctive relief, corrects noncompliance that falls short of criminal behavior. Criminal enforcement of environmental laws ensures a level playing field for the regulate4d community and "draws a line in the sand" for knowing and/or negligent violators.

OCEFT has increased its efforts to incorporate the agency's broader enforcement strategy into criminal case selection. While the criminal program will continue to maintain an overall enforcement presence by addressing the agency's "core programs" under all environmental statues (waste, water, air, toxics, and pesticides), OCEFT emphasizes "high-impact" cases. These cases have significant environmental or human health impacts or risks and make an exceptional contribution to the deterrence of environmental violators.

The criminal enforcement process: From detection to prosecution

OCEFTS's criminal case selection criteria emphasize the most serious environmental violations. Once an investigation is opened, it is managed by the regional CID office but monitored for national consistency by the headquarters office in Washington, D.C. When a case warrants the assistance of a prosecutor, for example, to issue subpoenas or to obtain a search warrant, OCEFT requests prosecutorial assistance from the Department of Justice, a state Attorney General's Office, or a local District Attorney's Office. The decision whether to prosecute a case ultimately resides with the prosecutor. Only after the completion of this process of case evaluation and development is an indictment presented to a grand jury for consideration or are plea negotiations initiated.

As the Abramoff and Enron investigations and convictions demonstrate, the prosecution of culpable corporate executives provides significant deterrence. OCEFT works to support the prosecutions of senior managers and executives whenever appropriate, based on the facts of the case. Senior decision makers who deliberately break the law should understand that their criminal conduct raises the prospect of incarceration, not simply a corporate fine. During the early years of the EPA criminal program, corporate defendants made up approximately 70 percent of the total defendants charged, and individual defendants made up the other 30 percent. The current data show a reversal of these figures: 70 percent individual and 30 percent corporate defendants.

What happens when there are both civil and criminal violations?

OECA continues to coordinate efforts between the civil and criminal enforcement programs to ensure that the enforcement program as a whole responds to violations in an effective manner. Better coordination between the civil and criminal enforcement programs is accomplished by co-locating offices and establishing a more effective screening process to identify whether a violation should be handled civilly, criminally, or both. Additionally, the agency's Audit Policy clearly states that self-disclosures can be reviewed for criminal conduct.

Noncompliance at facility may include both criminal and civil violations. A common question is, "How does EPA address both type sof noncompliance and how does it prevent conflicts between parallel civil and criminal enforcement investigations?" Although most criminal cases have no parallel civil counterpart, in some circumstances there is a need for action by civil enforcement personnel. Examples would be the need to remediate a threat to human health and the environment or some other reason prompting the need for civil enforcement to proceed simultaneously with a criminal investigation.

When criminal and civil cases proceed simultaneously, the primary means of preventing conflicts is through coordination required by EPA's Parallel Proceedings Policy. Initial consultation between the civil and criminal enforcement managers generates an agency-level agreement on the goals of each action. Subsequent coordination ensures that those pals can be met without undue interference with the parallel effort. All communications between civil and criminal personnel are subject to the secrecy constraints that apply whenever the criminal matter includes federal grind jury activity.

Tips for planning and conducting internal environmental investigations

Over the past twenty years, I have conducted environmental crimes investigations as an EPA special agent in the field and supervised two CID Area Of fires as the special agent in charge. During that time, I have observed the effect of corporate internal investigations on numerous criminal cues. Some internal investigations were submitted to EPA under the Voluntary Disclosure Program and others were provided as a result of a criminal investigation. In each case, tile internal investigation was an important factor in the criminal case and in any subsequent prosecution. Information derived from these corporate internal investigations led me and agents under my supervision, to form one of several opinions: (1) the company did a thorough job and was trying to come into compliance with environmental laws and regulations, (2) the company did a partial and/or limited investigation, which might lead an agent to think there was more to the violation then reported, or (3) the company did not do a thorough investigation and in fact was trying to mislead the government,

The lesson here is that every corporate internal investigation has the potential to positively, or negatively, affect the outcome of an environmental crimes investigation. It is up to company executives, corporate counsel, and, potentially, outside counsel to determine which approach to take. Much has been written about various legal strategies related to this topic, and there are many factors to he considered before initiating an internal investigation. From my experience, I've witnessed criminal behavior with tragic consequences on human health and the environment. So the most important tip to remember is this: If your client is doing the right thing that is, taking am honest, hard look at their operations and identifying violations—take the high road and promptly disclose the violations to EPA. More often than not, your client's bottom line as well u the environment will benefit.

Here are some tips to consider when planning or conducting internal environmental investigations:

Internal investigations are opportunities. Knowledge is power. Your client should take the opportunity to identify fine problems and maximize the benefits of voluntarily disclosing violations to EPA.

Mergers & acquisitions—A good time to do an internal investigation. EPA just launched an "Interim Approach to Applying the Audit Policy to New Owners 73 Fed. Reg. 44,991 (Aug. 1, 2008). The interim Approach describes Audit Policy incentives specifically tailored to encourage new owners to make a clean start at their recently acquired facilities, by addressing environmental noncompliance that began before acquisition and by implementing pollutant reductions.

Disclose, disclose, disclose. When making a disfeature, your client should disclose all it knows to maximize the benefits of volumtary disclosure. Partial disclosures tend to necessitate additional and thorough investigations of every aspect of the company's operations with corresponding consequences.

Be prompt. Your client is advised to disclose violations it discovers promptly rather than lose the opportunity of a voluntary disclosure and face am investigation with traditional law enforcement methods.

Examine the entire corporate Hierarchy. Just as all operational violations should be fully disclosed, all violators should be identified, from line workers to plant mangers to corporate executive of officers.

Conduct thorough investigation. Your client is well advised no turn over every rock and discover what lies beneath them rather than conduct a superficial investigation and leave it to the government to discover the rest.

Listen to employees. Your client's employees are often in the best position to identify violations and systematic problems.

Correct violations when discovered. Your client is better positioned when disclosing violations if it has already taken steps to correct them.

Implement environmental management systems. Similarly, your client is even better positioned if it goes beyond correcting violations and institutes systematic environmental management practices.

If you find yourself advising a client that is conducting an internal environmental investigation, I hope you consider these tips. If you want to learn more, refer to the EPA Web site at for the most up-to-date information on the Audit Policy, e-disclosure, OECA, and Of EFT.

This content is not meant to constitute advice of any kind, including without limitation, legal advice of any kind. If you require advice in relation to any legal matter you should consult an appropriately qualified lawyer.