Environmental Crimes Blog

Changes at the DOJ

This is a guest post from my friends at K&L Gates, Barry Hartman and Varu Chilakamarri.  As many of you may know, Barry Hartman served as Deputy Assistant Attorney General and Acting Assistant Attorney General for the Environmental Division from 1989-1992 and Varu Chilakamarri  served in the Justice Department for 17 years, including as Deputy Assistant Attorney General in the Civil Division and as an appellate attorney in the Environment Division.

On March 25, 2025, the Deputy Attorney General proposing massive reorganization and reduction in force ("RIF") at the Department of Justice ("DOJ").  The memo touches many areas that may be of interest, including environment criminal enforcement. 

Among other things, the reorganization would streamline and consolidate various offices including all separate legal policy offices and appellate offices, as well as criminal work that is done outside the DOJ’s Criminal Division or the U.S. Attorneys’ Offices ("USAOs").  This means, for example, that the Environment Division would no longer have their own policy, appellate, or criminal enforcement sections.  The memo also proposed that the Environment Division field offices in Denver, Seattle, San Francisco and Sacramento will be eliminated.

While many USAOs handle environmental matters, as practitioners know, more often than not there is some level of coordination with the Crimes Section to ensure reasonable consistency in enforcement – especially given the amorphous nature of "knowing" violations. This is a goal that the business community, especially companies with nationwide operations, supported.  Whether there will continue to be coordination like this is an open question, especially given the unconfirmed rumors that the Administration is also considering eliminating the EPA Office of Enforcement and Compliance Assurance ("OECA").

More later.

As always, feel free to contact me at [email protected].

WDJiii

LABELS: What’s up With That?

At the outset of any investigation, counsel will want to know if the client is a witness, a subject or a target of the investigation.  And counsel will usually receive offer one of three responses, identifying the client as one of the three.  How the client is classified will typically dictate how the client and counsel interact with prosecutors and investigating agents.

First, the “witness.”  A witness is a person who may have information that the government considers important to its investigation.  It does not mean that a crime was actually seen or witnessed and typically a prosecutor (or the investigating agents) does not believe a witness has committed any crime.  Risk of criminal exposure is usually very low, which allows the client and counsel to make a decision to cooperate.  The cooperation is typically through an interview and/or testifying before the grand jury. 

Now, at the opposite end is someone classified as a “target.”  When a client is identified as a target, it means the government believes there is substantial evidence that the client has committed a crime.  When identified as a target, the client will most likely face criminal charges.  So when the client is identified as a target, a more adversarial approach will be taken, which includes asserting the Fifth Amendment right against self-incrimination and outright refusal to cooperate.

In the middle of that spectrum is the client identified as a “subject.”  The prosecutor and the investigating agents believe that the “subject” is a person whose conduct is within the scope of a criminal investigation.  What that means is that the government considers the client’s behavior suspicious (which means that there is some risk that the government believes that the client has engaged in illegal activity). 

More later.

As always, feel free to contact me at [email protected]

WDJiii 

VOTE!!

VOTE!!

WDJiii

Executive Order of May 19

On May 19, 2020, the White House unveiled Trump’s executive order (“EO”) that instructs federal agencies to consider the economic effects of the current pandemic in undertaking enforcement and regulatory compliance.  The EO means that the USEPA will, more than likely, revise its recent March 26 general guidance related to enforcement during the pandemic.

The EO directs agencies to promote “regulatory relief” during gradual reopening of the economy.  Specifically: 

• The EO directs agencies to exercise “appropriate temporary enforcement discretion or appropriate temporary extensions of time.”

• The EO requests agencies to issue guidance to the regulated community on how each agency plans to “decline enforcement against persons and entities that have attempted in reasonable good faith to comply with applicable statutory and regulatory standards, including those persons and entities acting in conformity with a pre-enforcement ruling.”

• The EO authorizes agencies to formally identify and invoke emergency authority under current law to modify existing regulatory requirements.

• The EO directs agencies to revise their procedures in administrative adjudications to, among other things, reflect that the government bears the burden of proving an alleged violation rather than the subject of compliance being required to prove compliance.

For the regulated community, the EO provides a basis for arguing for pandemic relief in enforcement proceedings and settlements.

In that regard, the US EPA’s March 26, 2020, guidance is subject to litigation filed in the Southern District of New York, by various state attorneys general and environmental organizations, in New York v. EPA, No. 20-cv-03714 (S.D.N.Y May 13, 2020), and Natural Resources Defense Council v. Bodine, No. 20-cv-03058 (S.D.N.Y. Apr. 16, 2020).

Please feel free to contact me at [email protected]

More later.

WDJiii

USEPA Enforcement is Declining

The enforcement activities by the USEPA have declined in a significant way, under the current administration.  Look no further than the USEPA Inspector General’s report  “EPA’s Compliance Monitoring Activities, Enforcement Actions, and Enforcement Results Generally Declined from Fiscal Years 2006 Through 2018” (Report No. 20-P-013) (“Enforcement and Compliance Report”).  And this comes on the heels of the USEPA announcing plans to “exercise discretion” in the face of COVID-19.  The announcement has been met with mixed responses; some have welcomed the policy statement while others have vilified it.  The announcement will result in a further decline in enforcement. 

In the Enforcement and Compliance Report, from FY 2007 to FY 2018, inspections decreased by thirty-three (33) percent and enforcement actions decreased over fifty (50) percent %.  That trend is continuing in the USEPA’s fiscal year 2019 in 11 of 15 compliance monitoring and enforcement measures.  

The decrease in enforcement is not explained away merely by referring to a decrease in resources (i.e. budget cuts).  It runs deeper.  The Enforcement and Compliance Report, however, sheds light on this declining trend. 

More later.

As always, feel free to contact me at [email protected]

WDJiii

Internal Investigations – It Happens

Nike began an internal investigation in 2017 into allegations that some of its executives had made illegal payments to athletes. The internal investigation went on for over one year.  Then in March 2019, “celebrity” lawyer Michael Avenatti raised the allegations to Nike while allegedly trying to extort millions of dollars from Nike presenting text messages, e-mails and other evidence of the illegal payments.  

Avenatti is now on trial for the extortion allegations. During the trial the DLA Piper lawyer for Nike that conducted the internal investigation, testified that the internal investigation had not uncovered the text messages, e-mails and other evidence Avenatti presented at the March 2019, meeting. 

The take away, I guess, is that when you are hired by a client to do an internal investigation and even if you think you are doing a thorough job, it is quite possible you missed a whole lot. You need to be vigilant as people will affirmatively try to hide and destroy evidence that implicates them; that people may engage in fraudulent behavior in the face of an internal investigation (as that is exactly what happened in one internal investigation I headed up – we uncovered the fraudulent behavior and the attempted cover-up).  

Always be vigilant!

More later. As always, feel free to contact me at [email protected]

WDJiii 

Citizen Suits and Stormwater Pollution Prevention Plans

Enforcement by the USEPA is down by just about any metric measuring the enforcement of environmental laws. This has left an enforcement void.  But that void is being partially filled. 

Environmental groups and enterprising plaintiffs’ firms are now using the citizen suit provisions of the Clean Water Act as a business model. And it seems that California is leading the way.  Numerous sixty-day notices have been served on businesses.  In one instance, the requested damages of $200,000,000.00 are being sought. See Lunsford v. Arrowhead Brass Plumbing (No. 16-cv-08373, N.D. CA). 

The Clean Water Act authorizes citizens to hold regulated entities accountable through private actions in federal court for violations of the Clean Water Act.  Any penalties assessed against the defendant must be paid into the United States; however, the Court can also order a losing party to pay attorneys’ fees to the plaintiff’s firm that brought the case. In a lot of instances, it is nothing more than a form of legalized extortion (settlement pressure is high when there is a possibility of penalty amounts up to $51,570.00 per day).    

The latest iteration of these Clean Water Act citizen suits target rain-induced discharges that are alleged to be in violation of “general permits” that regulate a broad range of conduct contributing to stormwater runoff rather than activities unique to a specific facility. They also include allegations of deficient Stormwater Pollution Prevention Plans or SWPPPs which are generally required by the general permits.  

If you receive a sixty-day citizen suit notice, I would welcome the opportunity to discuss strategies for responding to the threatened litigation.

More later.

As always, feel free to contact me at [email protected]

WDJiii

A Terminal goes up in Flames – Are you prepared for the Aftermath?

The news this week was on the Intercontinental Terminals Company plant in Deer Park, Texas – and it was not good news. A fire, potential air exceedances, release of water and foam used to fight the fire – in general, a huge mess.

So now what happens? Based on the premise that the only difference between a criminal violation and civil enforcement is who gets to your door first, preparation is key.

The first action should be (after making sure everyone is safe) is to begin the internal investigation to determine what happened, if there was fault who’s was it, and any potential root causes. The internal investigation will allow the entity to be a responsible corporate citizen. Other benefits will allow the entity to address liability (to agencies and third-parties), take remedial actions and figure out if there is a way to prevent future issues.

For all of this, pre-planning is a must. And a couple of things flow from this:  

1. The company should have a written policy on internal investigations. It does not have to cover the specific event; however, there should be a policy in place. 
2. The internal investigation should be structured as a legally privileged investigation and should be all-inclusive. You can always choose late to waive the privilege, but a non-privileged investigation cannot later be made privileged.
3. Are there governmental agencies/regulations/orders that require an investigation? Think the Pipeline and Hazardous Materials Safety Administration or the Chemical Safety and Hazardous Investigation Board.
4. What will the investigation include? Will it include Root Cause Failure Analysis?
5. In line with Item 2 above, the investigation should be managed and directed by outside counsel as this will eliminate many questions regarding whether the investigation is legitimate or not.

Initial decisions impact the internal investigation through the end of the investigation. The goal should be a thorough, high-quality investigation that addresses the issues while ensuring the appropriate protections.

More later.

As always, feel free to contact me at [email protected]

WDJiii

A Search of a Residence in Oakland, California

I have previously blogged about the use of passwords on cell phones and how there was an issue with using finger prints of biometrics as your password (as opposed to an actual password).

Now, consider In the Matter of the Search of a Residence in Oakland, California, Case No. 4:19-mj-70053-KAW, in the United States District Court for Northern District of California. A federal magistrate judge, Judge Kandis Westmore, has ruled that law enforcement cannot force a person to unlock a mobile phone with their face or finger. Other courts have previously held that law enforcement could force a person unlock a mobile device with biometrics (fingerprints, facial recognition or irises) as biometric features, unlike passcodes, were not “testimonial.” Judge Westmore found that the government did not have the right, even with a warrant, to force suspects to incriminate themselves by unlocking a device with biometrics. The rationale seems that since a suspect would have to willingly and verbally give up a passcode, the suspect should also have to be willing to give the biometrics. A “password” has been deemed “testimony.” Body parts have not been previously deemed “testimony.”

I am sure the order will probably be appealed . . ..

More later.

As always, feel free to contact me at [email protected]

WDJiii

Arkema Indictment

On August, 3, 2018, Arkema (a French chemical company), Richard Rowe (Arkema CEO) and Leslie Comardelle (Arkema’s plant manager), were indicted by a Harris County grand jury for the reckless emission of an air contaminant in violation of the Texas Water Code. A few friends have already written about the indictment (Mark L. Farley and Paige Gallaspy at Katten Muchin Rosenman LLP and Benjamin H. Patton and Mary M. Balaster at Reed Smith LLP). Here are links to the two blog posts:

https://www.lexology.com/library/detail.aspx?g=d7dbcb23-7887-409d-8966-573a3a50f874&utm_source=lexology+daily+newsfeed&utm_medium=html+email+-+body+-+general+section&utm_campaign=lexology+subscriber+daily+feed&utm_content=lexology+daily+newsfeed+2018-08-13&utm_term and https://www.lexology.com/library/detail.aspx?g=7bcf0547-0738-4120-a377-9f228924ac1c&utm_source=Lexology+Daily+Newsfeed&utm_medium=HTML+email+-+Body+-+General+section&utm_campaign=Lexology+subscriber+daily+feed&utm_content=Lexology+Daily+Newsfeed+2018-08-13&utm_term=

From my perspective, this indictment continues a trend that began shortly after the September 11, 2001, terror attacks: the criminalization of industrial accidents. Could Arkema been better prepared for the after-effects of a hurricane? Perhaps. Was industry as a whole prepared? No. Interestingly, the federal agency responsible for the enforcement of the environmental laws has not criminally investigated Arkema to the point of indictment. And interestingly, the TCEQ was not involved in the investigation either. The investigation was solely that of the Harris County Sheriff’s Office, the Houston Police Department’s Environmental Investigations Unit, and the Harris County District Attorney’s Office Environmental Crimes Division.

The company and the individuals have all retained excellent counsel. And I am sure one of the first things the counsel will do is check and see if the TCEQ was consulted.  Section 7.203 of the Texas Water Code requires a peace officer investigating an alleged environmental violation by a person who holds a permit from the TCEQ to refer the case to the commission before a criminal prosecution can begin. Tex. Water Code Ann. § 7.203 (Vernon 2010). In other words, before a peace officer may refer an alleged criminal environmental violation to a prosecuting attorney for criminal prosecution, the peace officer must notify the TCEQ in writing for the TCEQ to determine whether civil or administrative duties will adequately and appropriately address the violations. Id. A peace officer must follow this procedure anytime the alleged criminal environmental violations involve a person, or an employee of a person, who holds a permit issued by the TCEQ and the activity constituting a violation is related to the activity for which the permit was issued. Id.  

Time will tell, but if I was a betting man, I am willing to bet that this procedure was not followed.

More later.

As always, feel free to contact me at [email protected]

WDJiii