October 01, 2002

Criminal Enforcement

11 min

The new environmental enforcement officials at the Department of Justice and EPA will be under the gun from their first day in office. During the 1992 Presidential campaign, three Congressional subcommittees investigated whether the Bush Justice Department, for political reasons, impeded EPA's criminal prosecution efforts. In particular, they questioned whether Justice insisted on an unreasonably high standard of intent -- specific intent -- in deciding whether or not to initiate a criminal investigation or seek an indictment.

Congress keeps score through a body count. In return for augmented appropriations, the oversight committees demand increases in the number of cases brought, the amount of penalties collected, and the number of people sent to jail. This is a false metric for evaluating the success or failure of an environmental enforcement program. But like many able officials before them, the Clinton appointees may conclude that they have no option but to accept the grading system and to play the numbers game.

Front-line prosecutors will encounter substantial legal and policy problems as they attempt to translate this pressure for larger numbers into actual cases. However laudable the goal of promoting strict compliance with environmental laws, the ambiguity and complexity of these statutes make them imperfect instruments for criminal enforcement. The danger is that, in determining whether close cases should be prosecuted under civil or criminal law, the agencies will decide to err on the side of being perceived as aggressive criminal enforcers, and thereby initiate prosecutions that in several respects are unfair, unnecessary and counterproductive.

In this article, we analyze two of the most significant problems enforcement officials will face: (1) lack of precision in EPA implementing regulations, which makes it difficult to define what constitutes a violation; and (2) legal and prudential problems involved in determining the showing of intent that warrants criminal prosecution.

I. AMBIGUOUS SUBSTANTIVE STANDARDS. As Federal agencies shift from civil to criminal enforcement of the environmental laws, the current regulatory structure will be subjected to stresses it may not be able to bear. In many areas of law, EPA has been unable to define with precision what constitutes a violation. This degree of ambiguity is in part purposeful, to allow EPA to cast a broad net for civil enforcement purposes. But in many cases, the problem is inherent in the statute. The infrequency of criminal prosecution, such as under the Clean Air Act prior to its amendment in 1990, may thus have reflected sound prosecutorial judgment, rather than sloth or political favoritism. If Justice and EPA strain to prosecute borderline cases criminally, they may find that courts and juries reject their efforts due to the imprecision of the standards whose violation must be proved beyond a reasonable doubt.

The problems are best illustrated by the Resource Conservation and Recovery Act, which regulates the management of hazardous waste. The EPA implementing rules have been called "the most complex environmental regulations ever written." Despite exhaustive efforts over 16 years, EPA has never been able to delineate what constitutes a "hazardous waste" subject to regulation. The problem lies with RCRA itself, which relies on the "apparently plausible" but incorrect notion that "it was possible [to] classify wastes as either hazardous or not hazardous." But hazardousness is contextual, rather than absolute. It depends upon the circumstances of disposal, which in turn control such critical factors as the concentrations to which people are exposed and their effects. Unlike the Clean Air Act and the Clean Water Act which establish ambient standards, treatment requirements under RCRA are not dependent on the state of the receiving eco-system.

The RCRA rules instead adopt a complex definitional and classification scheme to determine whether a waste must be managed as hazardous. The system does not depend upon the actual risk presented to the public. The same material may or may not be classified as hazardous, depending upon minor changes in the manner in which it was generated. The hazardous waste system is substantially underinclusive, because of the high costs of managing wastes that fall within its coverage. But in other respects, the hazardous waste system is overinclusive, and applies to many waste streams that contain only small amounts of hazardous constituents and that do not pose an actual risk to the public.

The system is further complicated by a large number of formal and informal interpretations issued by EPA to companies over the years concerning specific waste streams. This guidance often was issued to avoid litigation or to avoid irrational results from a wooden application of a rule. But these interpretations contain many apparent inconsistencies that can only be squared with a detailed knowledge of the actual production processes involved. The resulting regulatory system is difficult for industry, especially small business, to understand and follow.

Efforts to increase the number of criminal prosecutions will reveal substantial legal and policy problems that are inherent in this regulatory scheme.

Legal Problems. In many cases, it is difficult even for an expert to determine whether a specific waste stream is or is not properly classified as hazardous. Many applications of the RCRA rules therefore may be vulnerable to constitutional challenge, on the ground that the EPA rules did not provide adequate notice to the public of what the law required. Further, judges and juries may look skeptically on criminal charges for technical violations of highly complex regulations. The apparent disproportion between the harm, if any, to the environment and the gravity of the sanction may cast an aura of unfairness over the case. Finally, the body of prior, apparently inconsistent EPA interpretations will provide defense counsel significant grounds for defending these cases successfully.

Policy Problems. Under pressure to increase the number of criminal prosecutions, Justice and EPA will inevitably be tempted to develop plausible interpretations of the rules to fit a particular fact situation, and then to seek enforcement of that theory for the first time in a criminal case. In another context, former Assistant Attorney General Don Baker has demonstrated persuasively that such an approach would be an abuse of prosecutorial discretion. "Criminal proceedings seem less appropriate where the Department's theory of . . . liability is entirely new. Criminal indictments, particularly felony indictments, in such cases raise important issues of fairness which in turn may affect the likelihood of obtaining a conviction."

These problems with trying to force criminal prosecutions through the existing regulatory maze are perhaps most evident in RCRA, but they are common to all Federal environmental statutes.

II. WHAT SHOWING OF INTENT IS NECESSARY? There currently is with no theoretical distinction between which violations of the environmental laws are civil and which are criminal, because the laws do not have a standard of intent that requires some element of willful violation of the law. The question of which cases to pursue criminally is left to the discretion of the prosecutor. Federal environmental criminal prosecutions are already very aggressive. Efforts to force more cases into the criminal process may well produce unintended consequences that make the outcome counterproductive for society.

What showing of intent is required to make out a criminal, as opposed to a civil, violation of environmental laws or regulations? The statutes themselves generally require proof that the defendant "knowingly" violated the law -- that he or she knew that the act violated legal requirements. This is the showing of intent (known as "specific intent") traditionally required to prove felony offenses. However, the Federal courts have concluded that, under environmental and other public welfare laws, a prosecutor can prove a felony by merely showing that the defendant knew that he or she was doing what was done -- that is, that the defendant knew that he or she was putting factory floor sweepings in a dumpster or sending industrial wastes off-site for disposal.

As a result, there is little practical difference between the standard for proving a civil violation and that required to show a criminal offense. The environmental criminal prosecutor thus has tremendous discretion to seek felony sanctions based on acts undertaken with no criminal intent at all, or undertaken without knowledge of the legal requirements. Accordingly, critical decisions in this area must be controlled by well established, but little publicized, Department of Justice standards. The Bush Administration did not articulate these standards well in attempting to justify its enforcement record.

The Justice Department has sought to guide the exercise of discretion in environmental cases in several ways. Internal policy has always emphasized the importance of evidence of guilty knowledge or intent in making the decision whether to proceed criminally, despite the fact that judicial decisions had progressively lowered the standard of knowledge of law or regulation required for conviction. Officials in charge of the criminal enforcement program have described their policy as generally targeting persons operating outside the regulatory program, without any compliance (such as the "midnight dumper"), or companies and individuals operating within the system, but surreptitiously avoiding or violating regulatory requirements. This would include, for example, acquiring required permits and making required reports but with false or incomplete information, with both categories involving highly intentional acts. In a 1987 Memorandum outlining the justifications for using incarceration as a sanction in environmental criminal cases, the responsible Assistant Attorney General stated that "these (environmental) cases . . . mainly involve blatant failures to obtain any of the required permits for toxic pollutant disposal or deliberate falsification of required discharge-monitoring reports . . . . "

However, even if Justice currently is guided by a standard of willful conduct in deciding whether to pursue environmental criminal prosecutions, it also has reserved its discretion to proceed in certain cases on the basis of lesser facts.

The fairness of instituting a criminal investigation or obtaining an indictment with less than evidence of some intent or willfulness is addressed by a longstanding Justice policy, known as the "Principles of Federal Prosecution." They recognize that "(t)he manner in which federal prosecutors exercise their decision-making authority has far-reaching implications, both in terms of justice and effectiveness in law enforcement and in terms of the consequences for individual citizens." They recognize "both that serious violations of federal law must be prosecuted, and that prosecution entails profound consequences for the accused and the family of the accused whether or not a conviction ultimately results."

Measuring the profound consequences for an individual or company of an environmental criminal investigation in terms of the defense costs, the hiring of criminal and environmental lawyers required to defend and seek to ward of indictment can easily exceed $100,000. A trial with necessary expert witnesses can easily exceed $250,000. These figures ignore costs associated with the pall that an investigation, seizure of documents, and subpoenaing of employees and officers for testimony before a grand jury casts on company operations. Thus, the bare decision to investigate can have profound consequences indeed.

Furthermore, small businesses are, perhaps disproportionately, the focus of environmental criminal prosecutions. This is not because the Justice Department targets small businesses for prosecution. Rather, economists have long noted that there are substantial economies of scale in responding to environmental controls. Because environmental compliance requirements have come to affect all aspects of industrial activity and are, at the same time, terribly complex, even a small company may need a full-time employee with environmental expertise. Many small companies have been unable or unwilling to make that commitment. Increased emphasis on criminal prosecution thus may, inadvertently, impose greater relative burdens on this part of industry, at a time when Clinton economic team is looking to small business to lead the way in job creation.

Finally, the threat of more aggressive enforcement, coupled with the reality that a prosecutor can treat almost any environmental violation as criminal, may have counterproductive effects. For example, given the definitional complexities of RCRA, a policy decision to bring more cases criminally may adversely affect the creation of a new hazardous waste recycling operations. Despite the environment advantages of recycling over current disposal methods, now facilities may not be built, due to executives' fear of incarceration for operator error, and capital market fears of adverse financial impacts, since criminal actions are not covered by insurance.

Similarly, increased threat of criminal enforcement may deter companies from voluntary auditing of environmental compliance. Defense counsel and corporate managers already have substantive reservations about the wisdom of a company's auditing, where the government can and does seek to obtain the audit results in an investigation and will use the audit as a roadmap to find violations to prosecute. Companies concerned about even greater exposure under a self-consciously aggressive program may take elaborate steps to keep audit reports confidential. This may impede remedial followup to any problems that are found, thereby producing counterproductive environmental effects.

III. CONCLUSION More aggressive criminal enforcement of the environmental laws may look like a costless way for the Clinton Administration to distinguish itself from its predecessors and to respond to Congressional wishes. Before committing themselves, the new appointees would be well advised to study carefully whether the Congressional critique of prior enforcement efforts was, in fact accurate. There are substantial potential negative effects that could result from blind adherence to a strategy of erring on the side of increased criminal enforcement. The new officials would do well to study the possible unintended consequences and to devise a targeted plan for improving on prior efforts.