FEDERAL prosecutions involving Environmental Protection Agency (EPA) regulation violations, whether companies had criminal intent or not, can be tough on corporations and their employees. “That is the reality that we are dealing with today,” said Shaun Clarke of Liskow and Lewis.
Clarke emphasized the importance of understanding and meeting environmental regulations and responding promptly and appropriately if prosecutions occur. He made the remarks at the Independent Liquid Terminals Association International Operating Conference in Houston, Texas.
“Ignorance of the law is no excuse,” he said, adding, “But does this make sense in a complex regulatory environment.” He quoted three judges who commented that the situation is “a regulatory cuckoo land of definitions,” “a scheme of mind-numbing complexity,” and “worthy of Alice in Wonderland.” Despite regulation complexity, he added, the laws remain in force and companies cannot afford to avoid addressing them.
Added to the lack of criminal intent defense in environmental cases, individual members of a corporation are more likely to be prosecuted than the company itself — 80% of environmental defendants are individuals and only 20% are corporations, he pointed out.
“If that scares you, it should,” he said.
The energy industry not only has to comply with standard corporate laws, it falls under additional regulations because of its environmental profile. Federal criminal statutes have doubled in recent years, and of those, half are related to environmental laws, Clarke said.
Making a false statement to a federal agent can result in felony charges, and sometimes companies that have teams working on a project can be viewed as forming a conspiracy, if prosecution occurs. An employee's action can make a company liable if the action is proven to be “in part” on the company's behalf. Furthermore, fallout from the Enron scandal that ended with the company's collapse, and many of its executives prosecuted and convicted for crimes, has prompted increased penalties for white collar crime.
The good news in all of this is the Department of Justice and EPA are trying to limit prosecution to the most egregious environmental cases. However, companies should prepare in advance in the event they find themselves involved in a criminal investigation as a result of environmental regulations. A search warrant plan should be in effect, and its objectives should be to minimize workplace disruption, limit the search to the scope of the warrant, and to gather evidence to prepare for a legal defense, Clarke said.
If officials do arrive at a corporation with search warrants in hand, managers are advised to review the warrants, request a delay of the search in order to contact attorneys, advise employees of their legal rights, request to observe the search, identify privileged information, request split samples of evidence that are taken, and obtain a search inventory of the evidence that is taken.