April 1999

Environmental Crimes Bulletin - The Latest on the "Responsible Corporate Officer" Doctrine

3 min

A Ninth Circuit opinion in December of 1998 directed the spotlight once again on an unsettling aspect of environmental criminal law that had largely slipped into the background in recent years – the “responsible corporate officer” doctrine. When defining the parameters of the doctrine in its United States v. Iverson opinion, the Court cast a very broad net:

Under the [Clean Water Act], a person is a ‘responsible corporate officer' if the person has authority to exercise control over the corporation's activity that is causing the discharges. There is no requirement that the officer in fact exercise such authority or that the corporation expressly vest a duty in the officer to oversee the activity.

This language once again raises the specter of whether high-level corporate officials may be exposed to environmental criminal liability simply by virtue of their position. For some, it undoubtedly triggers visions of the Pennwalt prosecution — a 1989 case in which four corporate officers were indicted for Clean Water Act violations based upon their failure to prevent the collapse of a chemical holding tank, even though three of the officers were based several thousand miles from the facility in question and their only link to the defective tank was a memo they had received noting the problem. The Pennwalt case marked what many consider to be the most expansive application the “responsible corporate officer” doctrine and represented everything that could go wrong in applying it.

Since Pennwalt, however, most developments concerning the doctrine had brought some measure of reason to what had become a frighteningly unpredictable source of liability for high-level corporate officials. The United States v. White decision in 1991 clarified that the doctrine is not based simply on the theory of respondeat superior (i.e., an officer with direct responsibility to supervise the handling of hazardous waste is not liable for acts of his underlings simply because he “should have known” about them). The United States v. MacDonald & Watson Waste Oil decision in 1991 reinforced this analysis, permitting criminal liability under the doctrine only where officers directly responsible for supervising the activities in question “have known or believed that the illegal activity of the type alleged occurred” [emphasis added]. In the years following these decisions, the United States Department of Justice even announced that, as a matter of policy and notwithstanding the broad interpretation of the doctrine by some courts, corporate officers would not be prosecuted for knowing violations of the environmental laws unless they met the liability standards established in the MacDonald & Watson Waste Oil decision. Indeed, the most reasonable statutory interpretation of the phrase “responsible corporate officer” would require such a prosecutorial policy in the environmental context. The Clean Water Act and Clean Air Act both use the phrase “responsible corporate officer” (though neither specifically defines it). Under both Acts, “any person who. . . knowingly violates” may be held criminally liable. Under both Acts, “person” is defined to include “responsible corporate officers.” Therefore, any application of the doctrine that would allow conviction of a responsible corporate officer without evidence of actual knowledge of the events in question would appear to fly in the face of the express intent of Congress.

In short, any debate about whether a company official can be liable for environmental crimes by virtue of his or her position should be long over. The focus of any meaningful discussion should be the types and amount of evidence required to establish actual knowledge.