The Federal Perspective on Environmental Criminal Enforcement: How to Remain on the Civil Side

F. Henry Habicht II

Editors' Summary: Since the early 1970s, environmental issues in this country have changed significantly. Moreover, the passage of time has resulted in the institutionalization of the once-new ideas. New environmental agencies now oversee substantial proportions of the federal budget. Environmental impact assessment, once seen in some quarters as a procedural impediment, is now a respected method of analyzing developmental impacts and has been imported by otherr countries for their own use. But the environmental laws are more than just the existence of new agencies and new legislation: they require strategies for effective enforcement. In this Article, the federal government's approach to criminal enforcement of those laws is analyzed and compared to civil strategies. The author reviews the development of criminal enforcement, which began much later than its civil counterpart for the same statutes, and lays out the factors that are considered relevant in environmental cases for determining which avenue to pursue.

Mr. Habicht, Of Counsel to Perkins Coie in Washington, D.C., prepared this Article while serving as Assistant Attorney General in charge of the Land and Natural Resources Division of the United States Department of Justice. The valuable contributions of David Bullock, Daniel Levin, and Helen Brunner, prosecutors in the Environmental Crimes Section of the Land and Natural Resources Division, and the advice of Judson Starr, Chief of the Section, are gratefully acknowledged.

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Over the last decade, the American business community has confronted several significant changes in the marketplace, including a low inflation economy, aggressive federal deregulation, and a reformed tax structure. During this period, there has been anotherr important but more subtle change in the world in which business must operate: federal environmental enforcement has matured, expanding and altering its character dramatically. Not surprisingly, the most profitable businesses of the last decade have been those that identified the economic changes in the marketplace and adapted to them. Similarly, the successful businesses of the future will be those that recognize the significance of the civil and criminal sanctions now prescribed for environmental violations and make efforts through compliance to avoid prosecution.

This Article will review the current state of federal environmental criminal enforcement, with particular emphasis on the evolution of the current enforcement structure within the key agencies, the process by which the government decides to pursue civil or criminal sanctions, and the substantive factors that characterize an environmental criminal case. It is part of the government's function to educate the public on its priorities and the significant issues in this field in order to promote certainty and a more thorough resolution of unsettled issues, and to enable members of the regulated public more easily to conform their activities to the requirements of the law.

Evolution of Environmental Criminal Enforcement

The First Phases of EPA Enforcement

The first series of modern environmental laws were passed by Congress during the early 1970s.¹ The newly created Environmental Protection Agency (EPA)² started the momentous task of administering these novel statutes. EPA had to construct an administrative structure from scratch and establish "technology-forcing" standards based on complex scientific judgments.³ Accordingly, the regulated community faced a fledgling agency charged with implementing a new statutory scheme that demanded substantial technical breakthroughs in sophisticated scientific fields.

These factors combined to make regular criminal enforcement of the environmental laws both premature and impractical. Industry was adjusting to a novel, complex, and often confusing regulatory scheme. Until the regulated community could develop an adequate understanding of its obligations under the new laws, fairness and the traditional proof requirements in the criminal law meant that few early cases were appropriate for criminal prosecution. Moreover, the courts were also experiencing their first introduction to the complexities of modern environmental legislation at this time.⁴ Confronted with technical and unfamiliar statutes, it was unlikely that the judiciary would have welcomed visiting criminal sanctions on the business community.

The nation's environmental enforcement efforts therefore originally focused almost exclusively on civil remedies. The environmental regulatory programs devised by Congress work through self-monitoring, disclosure, and source-by-source compliance.⁵ Yet, experience has shown that in [17 ELR 10479] the absence of consistent enforcement, firms have undue incentives to gain competitive advantage through noncompliance. Through the imposition of civil penalties for violations, the government sought to erase any economic or competitive advantage secured by a firm that delayed environmental compliance until pursued by the Justice Department. Accordingly, large civil penalties and negotiated consent decrees with strict time schedules for compliance have characterized the primary means of ensuring not only adherence to the requirements of the environmental statutes, but also deterrence of future misconduct.⁶

The statistical record provides an instructive perspective on the evolution of enforcement, and how enforcement strategies must follow and build upon established regulatory programs in order to ensure that those programs work. In the entire decade of the 1970s, only 25 criminal environmental cases were prosecuted. From 1977 through 1980, the civil docket comprised a total of 358 filed cases and 77 consent decrees. In contrast, from 1981 through 1985, the Department filed 852 civil enforcement complaints and 600 judicial consent decrees, in addition to innumerable EPA administrative actions. Moreover, from fiscal year 1983 to 1987 the Department secured 339 criminal indictments. Some are still pending, but 262 convictions or guilty pleas already have resulted.⁷

These figures reflect the entirely new landscape brought by the 1980s. First, the regulatory programs established during the early 1970s have matured. The EPA administrative system has been in place for years. The regulated community has become largely familiar with its environmental legal obligations, and the courts have become accustomed to enforcing detailed environmental statutes.

Second, Congress has enacted additional environmental legislation in the form of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or Superfund)⁸ and amendments to the Resource Conservation and Recovery Act (RCRA).⁹ These laws led to the creation of new regulatory programs, and the enforcement docket expanded to include a large number of hazardous waste cases. The new cases were qualitatively different than actions brought under the Clean Air and Clean Water Acts of the 1970s. The careless disposal of toxic waste presented the potential for more immediate and serious harm to the public health than did many of the violations that were typically the basis of civil litigation under the earlier statutes. Finally, it is important to bear in mind that these program developments were accompanied by the growth of a compelling bipartisan public sentiment in favor of vigorous enforcement of environmental performance standards.

Characteristics of Environmental Criminal Enforcement Since 1981

By early 1981, the Department of Justice and EPA were poised to move into criminal enforcement of the federal environmental laws. And move they did, in a very aggressive fashion. In January 1981, EPA created a new Office of Criminal Enforcement and the Department of Justice's Land and Natural Resources Division created a special Environmental Crimes Unit. Both of these units were designed to focus exclusively on the investigation and prosecution of environmental crime. EPA received a Department of Justice attorney on detail to ensure that evidence of pollution-related criminal activity would be developed by EPA and Justice on a coordinated basis. After several successful cases,¹⁰ EPA hired specialized, full-time criminal investigators, bringing to the agency for the first time individuals trained in traditional law enforcement techniques. EPA's elite cadre has now grown to over 40 experienced criminal investigators who operate out of every EPA Regional Office. Each member of EPA's criminal investigations office is fully deputized and vested with the law enforcement powers of a United States Marshal, armed and authorized to execute search and arrest warrants.¹¹ Moreover, interagency understandings developed among the Federal Bureau of Investigation (FBI), the Land and Natural Resources Division, and EPA have led the FBI to target environmental crimes as a special priority,¹² generating FBI investigative activity in at least several dozen environmental cases every year. Concentrating on organized criminal activity in the environmental area, the Bureau will make its considerable investigative experience, technical expertise, and forensic facilities available to the Lands Division and EPA to build successful prosecutions.¹³

As a sign of the government's commitment to criminal enforcement, the Environmental Crimes Unit was elevated by order of Attorney General Edwin Meese III to the status of a Section within the Land and Natural Resources Division in April 1987. In addition to increased coordination with EPA and FBI investigators, the Lands Division and its Environmental Crimes Section, with the strong support of the Attorney General, has helped to promote a structure for extensive cooperation between federal and state authorities. This initiative has included working closely with the Northeast Hazardous Waste Project,¹⁴ the National [17 ELR 10480] Environmental Enforcement Council,¹⁵ and United States Attorney coordinating committees,¹⁶ as well as increased joint training for hazardous waste investigators at the Federal Law Enforcement Training Center (FLETC).¹⁷

There can be little doubt that this commitment of law enforcement resources has already paid substantial dividends. In the four years between October 1982 and September 1986, the Environmental Crimes Section secured over 215 indictments.¹⁸ Of these 215 indictments, 65 have been against corporations; the remaining 150 indictments named individuals, often corporate officers, directors, or employees. The 175 convictions that have already resulted have yielded more than $3.2 million in criminal fines and sentences in excess of 145 years, 10 months. In fact, individual defendants have cumulatively served a total of 55 years, 8 months in prison.

Although the foregoing statistics alone are imposing, they provide only the broadest overview of the docket of the Environmental Crimes Section. To round out this overview, it is necessary to understand the priorities of the Lands Division. These priorities currently fall into two general categories. Investigators and prosecutors first seek to identify persons who try to operate outside the system. These persons are those who clearly deal with toxic or hazardous substances, but attempt to dispose of them without notifying the government, thereby saving enormous sums in legal compliance costs. Discharging or disposing materials without a permit are fundamental criminal offenses in the principal EPA regulatory statutes.¹⁹ These offenders can be either businessmen or impecunious "midnight dumpers" who dispose of ther businesses' waste for profit.²⁰

The second general category is composed of those who do operate within the regulatory system, but who undermine the regulatory scheme by materially misrepresenting or concealing the extent of toxic substances or pollutants with which they deal.²¹ In both classes of cases, knowing violations can create costly undisclosed hazards to health and to the environment. This also undermines the regulatory program, eroding respect for the program since companies and individuals perceive that competitors are gaining an unfair competitive advantage through noncompliance with these costly regulatory requirements.

The government's increased resort to criminal enforcement of the environmental laws has one principal, overarching goal: deterrence. The stigma that attaches to a criminal conviction and the dislocation inherent in actual incarceration combine to make the threat of criminal prosecution a major tool in obtaining greater compliance with the nation's environmental laws. The Justice Department and EPA strongly believe that members of the regulated community will be less likely to consider willful or calculated evasion of environmental standards when they know that discovery may lead to a prison term.

It is no accident, therefore, that three times as many individuals have been prosecuted by the Environmental Crimes Section as corporate defendants. Corporations cannot go to prison, and they can readily pass the costs associated with a criminal fine along to consumers. On the otherr hand, individuals acutely feel the personal impact of imprisonment and a criminal record. This strategy and the philosophy of deterrence are not unique to environmental cases, but rather govern Department of Justice prosecutional policy in all areas of criminal enforcement, including white collar and traditional crimes.

Similarly, when the Section prosecutes a corporate defendant, the indictment commonly also names the highest ranking officials in the organization that have personal culpability. As already noted, a majority of the individuals prosecuted by the Environmental Crimes Section have been officers or directors or have held otherr positions of authority in the corporations involved.²² It has been, and will continue to be, Justice Department policy to conduct environmental criminal investigations with an eye toward identifying, prosecuting, and convicting the highest ranking, truly responsible corporate officials.

Avoiding the Criminal Track — Understanding the Factors That Distinguish the Criminal from the Civil Violation

The Environmental Crimes Section's impressive conviction rate and the Justice Department's determination to seek large fines and incarceration for convicted environmental criminals, when taken in combination, counsel strongly in favor of avoiding any involvement in environmental criminal activity. The best way for the regulated community to prevent coming to the attention of the Environmental Crimes Section is to comply strictly with the nation's environmental statutes. A discussion of how the government assesses whether a particular case warrants criminal prosecution should assist those seeking to conform their conduct to the letter and spirit of the environmental laws.

Factors in the Government's Assessment

One sign of maturity in the Justice Department's program is that civil enforcement attorneys no longer sporadically pick up criminal cases; there are now separate civil and criminal enforcement sections in the Land and Natural Resources Division. Additionally, both EPA and Justice have adopted a more holistic view of enforcement, selecting [17 ELR 10481] the appropriate tool based on an overall assessment of the conduct involved and a judgment about what response appears to be necessary to make the EPA programs work. Generally, law enforcement officials select an enforcement strategy in light of how that response will serve primary law enforcement objectives, such as protection of the public, compensation, deterrence, or retribution. Put anotherr way, enforcers are well aware that society clearly wants certain types of violators treated differently. If the government were not to use escalating sanctions, those who do spend enormous sums of money to comply with the law would lose respect for the process.

The sensitive legal and practical questions relating to parallel civil and criminal proceedings are always important factors in a prosecutor's analysis of a case. In the environmental area, unlike some otherrs, the government increasingly sees the need to proceed contemporaneously on both civil and criminal tracts; this strategy is advisable, for example, when civil injunctive relief is needed promptly to protect public health and the environment.²³ But generally, prosecutors first look for criminal potential in a fact pattern and, if a case is appropriate for criminal investigation, will withhold a civil response unless injunctive relief is necessary.²⁴

The decision whether to proceed criminally or civilly is a discretionary judgment. Prosecutors are motivated by their desire first to do the right thing. Practically, however, prosecutors like to win and are less likely to proceed to indictment and expend litigation resources unless a case looks strong immediately prior to indictment. In making the judgment about whetherto proceed criminally, prosecutors will focus on several key factors. The first concerns evidence of knowledge or intent. This subject will be addressed in more detail below,²⁵ but it bears noting that environmental crimes are not strict liability crimes, but rather are public welfare statutes requiring knowledge or volitional conduct, as opposed to specific intent.²⁶ Thus, mistakes made in honest corporate compliance efforts are not criminal; but operating policies that encourage cutting corners, fail to meet government standards, and shield managers from the facts clearly can produce criminal liability. Therefore, the structure of the decisionmaking process and the route of information flow in a corporation is relevant to ensuring effective internal oversight of business compliance efforts.

Other factors that prosecutors look for include the harm that flows from a violation,²⁷ the economic gain to the violator as a result of the violation, and whether the violations were aggravated or extensively repeated. EPA seeks cooperation and voluntary compliance; continued violation in the face of repeated notices from EPA are therefore viewed especially seriously. Violations after receipt of notice also help establish the knowledge element of environmental crimes. Of course, the overall strength of the evidence is always a critical factor. A review of the foregoing factors should convey to a prosecutor an impression whether a company that deals in hazardous or dangerous substances or materials has conducted itself responsibly or not. Prosecutors believe that society expects vigorous prosecution of irresponsible and harmful conduct that meets the elements of an environmental statute's criminal proscription. By the same token, the government will likely lose a criminal prosecution if it seeks to charge criminally conduct that appears to be an isolated error, of minor impact, and aberrational in terms of a corporation's overall compliance posture.

Based on a review of the cases thus far prosecuted by the Environmental Crimes Section, it is fair to say that a company is unlikely to be prosecuted if it has diligent reporting and environmental compliance policies and information systems; is forthcoming on a regular basis on its dealings with the government; and, in addition, has a record of responding promptly — including, where appropriate, the disciplining of employees — when it detects contamination problems at its facilities. It should also be noted that the biggest mistakes made by executives who have cut corners or discovered environmental violations occur when these executives, often responsible members of thecommunity, take action to conceal the violation. Actions to conceal or to mislead the government, along with a substantive violation of pollution laws, will virtually guarantee felony indictment and conviction, and should always be avoided.²⁸

With this context established, we can focus on the specific types of cases likely to be pursued. As noted earlier,²⁹ the two major categories involve those who operate without a permit, and those who make false statements or otherrwise mislead the government. In the eyes of EPA and the Justice Department, both are extremely grave offenses that will commonly trigger aggressive criminal enforcement.

The "Midnight Dumpers"

Two cases illustrate the first priority category of discharging or dumping without a permit. One of the Section's earliest prosecutions targeted an individual named Donald Distler, the owner of a liquid waste disposal company, for unlawfully discharging pesticide wastes into the sewer system of Louisville, Kentucky. The presence of the pesticides in the system caused sewer control employees to complain of chemical fumes that burned their eyes, throats, and skin. The pesticide residue ultimately blocked and forced the abandonment of portions of the city's sewerage [17 ELR 10482] control system. As a result, for several months approximately 100 million gallons of untreated sewage passed into the Ohio River daily. After an Environmental Crimes Section investigation and prosecution, Distler was convicted of a felony under the Federal Water Pollution Control Act (FWPCA) and served a lengthy jail sentence.³⁰

The prosecution of Robert Burns and Robert Ward for illegally dumping PCB-laden waste oil over hundreds of miles of North Carolina roadsides is anotherr example of the Section's work in this area. Eager to be rid of thousands of gallons of PCB-contaminated oil, Ward and Burns outfitted a 750-gallon tank truck with an extension pipe and spray nozzle. After loading the tank with the hazardous waste, the truck was repeatedly driven over desolate rural roads at about 30 miles per hour, while the oil was dumped in a black band along the roadside. Burns and Ward were convicted under the Toxic Substances Control Act and sentenced to a total of over six years in prison.³¹

Of course, not all of the Justice Department's enforcement docket involves violations as seriously damaging to the environment and public health as the illustrations outlined above, but these examples show why enforcers view any unpermitted disposal as presenting a potential for harm to citizens that government is obligated to prevent.

Undermining the Reporting System

The knowing misuse of the regulatory apparatus by those within the regulatory system — most often accomplished through making knowing false statements to the government — represents the second major area of prosecution priority. EPA's nationwide regulatory program can only function effectively with widespread voluntary compliance and honest self-reporting. Sources in the regulated community that make knowing false statements in documents submitted to EPA strike at the heart of the Agency's regulatory program by undermining its integrity.

Perhaps the best illustration of this type of case is the federal prosecution of the A.C. Lawrence Leather Company.³² This New Hampshire-based firm regularly by-passed its wastewater treatment facility and dumped raw waste directly into a local river. The defendant not only concealed this from EPA inspectors, but actually applied for and was awarded a grant to study the effectiveness of its wastewater treatment facility as a model for the leather processing industry. When the violation was finally discovered by EPA inspectors, the company stood trial, was convicted, and paid the largest criminal fine in New Hampshire history.³³ Five company officials, including the president and vice president, also pled guilty.³⁴

The lesson of this story is that concealment only compounds a violation and will often be viewed as a prime reason for criminal enforcement. Deliberate false reporting, like deliberate failure to obtain necessary permits and file required reports, erases the protection for the public that Congress incorporated into the environmental statutes. Moreover, this type of activity is typically the result of a calculated decision by individuals to avoid the considerable expense inherent in regulatory compliance and, thereby, secure a competitive advantage over law-abiding firms. Accordingly, prosecutors view stiff criminal sanctions as a necessary and proper means of making conscious noncompliance an expensive proposition and of recapturing any profits enjoyed as a result of criminal behavior.

Finally, it bears reemphasis that cooperation in disclosing a serious violation, and in remedying the hazard, is regularly weighed in the decision whether to proceed civilly or criminally. Even if a criminal prosecution is unavoidable, substantial assistance rendered to the government may lead to immunity or a favorable plea bargain for cooperative defendants in appropriate cases.

Requisite Mental State for Conviction — The Liability of "Responsible Corporate Officers"

Evidence of the mental state of a potential defendant is critical to the government's decision to proceed civilly or criminally. The Supreme Court has established that in public health and welfare statutes, Congress has broad authority to define standards of intent sufficient to support criminal prosecution, subject to constitutional due process requirements, even if the result may appear harsh.³⁵ A major issue for litigation in this area concerns the circumstances under which improper supervision of production or waste disposal activities by a senior corporate official can constitute a "knowing" violation of an environmental criminal statute. To assess what standards may emerge from future litigation of this issue, it is important to note that existing case law clearly requires a showing of more than mere negligence, but less than specific intent, for a "knowing" violation of an environmental statute.

The Meaning of "Knowingly" and "Willfully" in the Environmental Statutes

"Knowingly" in a criminal statute generally requires knowledge of one's actions. Whether it also requires knowledge of otherr elements of the offense, including [17 ELR 10483] knowledge that one is violating the law, depends on the language of the statute and the context in which "knowingly" is used.³⁶ Similarly, "willfully" in a criminal statute generally requires that one's actions be voluntary as opposed to accidental. Whether it also requires an intent to violate the law depends on a determination of Congress' intent in the particular statute involved.³⁷

These definitions apply to malum prohibitum offenses. With respect to malum in se offenses (crimes of moral turpitude), "knowingly" generally requires knowledge that one's actions are in violation of the law, or an "evil-meaning mind."³⁸ Similarly, with respect to malum in se offenses "willfully" generally connotes specific intent to violate the law.³⁹ These higher intent requirements can be contrasted with regulatory or public welfare statutes, in which it has repeatedly been held that "willfully" and "knowingly" mean only intentionally (i.e., with knowledge of one's actions) and voluntarily, and do not require specific knowledge of the law or an intent to break it.⁴⁰

As the Court stated in United States v. Illinois Central Railroad Co.:

In statutes denouncing offenses involving turpitude, "willfully" is generally used to mean with evil purpose, criminal intent or the like. But in those denouncing acts not in themselves wrong, the word is often used without any such implication …. [I]t often denotes that which is "intentional or knowing or voluntary as distinguished from accidental," and that it is employed to characterize "conduct marked by careless disregard whether or not one has the right so to act."⁴¹

The Court's treatment of public welfare offenses thus indicates that "knowingly" and "willfully" as used in the criminal environmental statutes will not likely be construed to require specific intent to violate the law.⁴² Rather, they are being interpreted to require only that the individual acted voluntarily and with knowledge of his actions and, where the crime involves dealing with a heavily regulated hazardous substance, knowledge that the individual was dealing with something dangerous as opposed to something harmless.⁴³

Case Law on Proof of Intent Under the Environmental Statutes

The law in this area is not absolutely fixed, however, as certain recent decisions indicate. In United States v. Hayes International Corp.,⁴⁴ the court rejected the defendant's argument that "knowingly" in RCRA required knowledge of the regulations:

section 6928(d)(1) is undeniably a public welfare statute, involving a heavily regulated area with great ramifications for the public health and safety. As the Supreme Court has explained, it is completely fair and reasonable to charge those who choose to operate in such areas with knowledge of the regulatory provisions…. Accordingly, in a prosecution under 42 U.S.C. § 6928(d)(1) it would be no defense to claim no knowledge that the paint waste was a hazardous waste within the meaning of the regulations; nor would it be a defense to argue ignorance of the permit requirement.⁴⁵

The court did, however, hold that the defendant had to know that the facility to which the wastes were being transported had no permit,⁴⁶ thereby refusing to read "knowingly" with the minimum content possible. However, the court also made it clear that knowledge could fairly readily be inferred from appropriate circumstantial evidence.⁴⁷

Perhaps more significantly, the court in United States [17 ELR 10484] v. Johnson & Towers, Inc.,⁴⁸ interpreted "knowingly" in RCRA to require knowledge of both the requirement for a permit and the lack of one.⁴⁹ The case law is not yet extensive on this issue and will surely be subject to refinement in future prosecutions.

In Clean Water Act prosecutions, courts have generally rejected defense arguments that the government must prove specific intent to violate the law. In United States v. Frezzo Brotherrs, Inc.,⁵⁰ the district court held that the FWPCA

is not the type of criminal statute which requires the government to prove the defendants specifically intended to violate the statute. To sustain a conviction under Section 1311, it is necessary only that the defendants acted willfully or negligently and that they intended to do the acts for which they were convicted. In order to convict, it is not necessary that the defendants intended to violate the law.⁵¹

In United States v. Ouelette,⁵² the court refused defendant's request for a "specific intent" instruction under the false reporting provision of the FWPCA.⁵³. The court held that the FWPCA was a public welfare statute,⁵⁴ and that with respect to such offenses, "courts have generally refused to infer specific criminal intent as an essential element"⁵⁵ of such offenses. Consequently, the court concluded, to satisfy the "knowingly" requirement of the false statement provision

the government will have to prove that the defendant knowingly (i.e., voluntarily and intentionally) made the false statement, but it will not have to prove that the defendant, in doing so, knowingly violated the law or purposely intended to violate the law.⁵⁶

Similarly, the court in United States v. Corbin Farm Service⁵⁷ rejected an argument that the Federal Insecticide, Fungicide, and Rodenticide Act's criminal provisions required specific intent:

Congress was enacting a general provision, using the word "knowingly" as it had in the context of otherr statutes creating malum prohibitum crimes. The word was used to reflect the requirement that general intent be proved in order to establish a violation.⁵⁸

In sum, it is likely that the courts will continue to require the government to prove only general intent. While specific intent will not be required, it is not likely in the face of felony sanctions that the courts will relax these proof standards further.

Standards for Proving Knowledge or Willfulness on the Part of Responsible Corporate Officers

Although corporations can be held criminally liable based upon imputed knowledge of their employees — even when no single employee alone has the requisite mental state — the general rule is that there is no imputed knowledge to individuals in criminal cases; rather, individuals must be judged on the basis of their personalized knowledge.⁵⁹

Prosecutors, however, have increasingly employed two doctrines to address the realities of proving requisite intent in a business setting. The first is the "avoidance of truth" doctrine.⁶⁰ Under this theory, a proof standard that is less than direct, actual knowledge or willfulness is allowed as a substitute for proof of actual knowledge or willfulness. The situations in which the doctrine is most likely to be applied are those where the defendant deliberately avoided learning the truth so that proof of actual knowledge or willfulness could not be made.

The second is actually a group of related doctrines. More commonly applied than the substitution theory, these doctrines allow a jury to infer knowledge or willfulness based on various kinds of evidence.⁶¹ The inferential doctrines most relevant here include: (1) those permitting an inference of knowledge from the defendant's position in the corporation, particularly inferences that can be drawn from applicable corporate policies and the existence of the regulatory scheme (structural doctrines);⁶² and (2) those permitting an inference that, by virtue of position in the corporation and reporting and compliance responsibility, the defendant knew what he or she would have known through the exercise of due diligence (diligence doctrines).⁶³

These distinctions between doctrines of substituted and inferred proof of intent are by no means well established. Indeed, the courts are often imprecise on whether the item they are discussing is a means to infer knowledge or a substitute [17 ELR 10485] for it. The cases discussed in this Article and otherrs thus far prosecuted by the Environmental Crimes Section, however, indicate the courts' willingness to permit the inference of knowledge from circumstances showing that individuals with compliance responsibilities promoted policies and practices inconsistent with environmental compliance and deliberately avoided knowing the true compliance status of company operations. Correspondingly, the courts should be less hospitable to the notion that some proof can "substitute" for proof of knowledge, unless it can be established that such proof manifestly is consistent with the intent of Congress in establishing the requisite culpability level in the statute.

It bears emphasis that environmental criminal cases prosecuted to date have involved testimonial or otherr compelling evidence that the individuals involved clearly were aware of and directed or encouraged the illegal disposal activities. Therefore, a corporate manager cannot and should not be surprised by criminal liability. One can confidently say that businesses with effective compliance and environmental audit programs, and which are generally forthcoming with the government about those programs, are likely to be subject to civil rather than criminal sanctions. The issues briefly described above will likely continue to be a significant topic of debate and litigation as to the proper evidentiary standards for inferring knowledge of intent. Substantial duties in the public welfare field will continue to be imposed on those in a position in an organization to direct compliance or to prevent harm. But courts and prosecutors will continue to look for blameworthiness, rather than simple negligence, as a predicate for criminal liability. Requiring an awareness by defendants of their wrongful actions is an extremely important criminal law principle, and as a practical matter means that managers should in fact be able to control their own destinies in this area.

Conclusion

In a recent poll sponsored by the Justice Department, 60,000 people were asked to rank the seriousness of various types of criminal activity. Contamination of public water supplies through pollution was ranked ahead of scores of traditional crimes.⁶⁴ Given the level of public concern about environmental criminal activity and the potential damage that results to the public health from improper disposal of toxics, criminal environmental enforcement will unquestionably be a permanent and substantial element in the federal enforcement equation. As discussed briefly above, all the tools of modern law enforcement are being brought to bear on environmental criminal activity, in the hope that real deterrence can be achieved in this area. Prosecutions in the next few years will refine the law concerning the elements of these statutory offenses, particularly the evidence of knowledge or intent that will establish the liability of responsible corporate officers. Thus, while Congress, the courts, and citizens are demanding special vigilance on the part of companies dealing with hazardous substances, no one under our rule of law can or should be surprised by a criminal prosecution — blameworthiness and awareness of wrongdoing are still required. Moreover, a mistake will not be visited with criminal sanctions if the company has a responsible compliance and audit record and a pattern of being forthcoming with EPA. The government wants to encourage responsible people to serve as corporate directors and officers, and government investigators and prosecutors are highly competent, rational and dedicated professionals. Consequently, members of the regulated community with foresight and vision can indeed arrange their operations to comply with the environmental laws and avoid criminal liability.

1. Leading examples include the Clean Air Act Amendments of 1970, Pub. L. No. 91-604, 84 Stat. 1713 (codified as amended at 42 U.S.C. §§ 7401-7642, ELR STAT. 42201), and the Federal Water Pollution Control Act Amendments of 1972 (FWPCA or Clean Water Act), Pub. L. No. 92-500, 86 Stat. 816 (codified as amended at 33 U.S.C. §§ 1251-1376). While these statutes amended earlier laws and were themselves amended, the 1970 and 1972 enactments can be viewed as seminal in the evolution of the programs of EPA.

2. EPA was created in 1970 by a reorganization that transferred and consolidated duties that had previously been performed by a number of different agencies. Reorg. Plan No. 3 of 1970, 35 Fed. Reg. 15623 (1970), reprinted in 5 U.S.C. app. at 1132 (1982), 84 Stat. 2086 (1970), and ELR STAT. 41023.

3. For an excellent discussion of the structure of the major environmental programs and their characteristics of requiring state-of-the-art pollution control technology in a command-and-control regulation format, see 1 ENVIRONMENTAL LAW INSTITUTE, THE LAW OF ENVIRONMENTAL PROTECTION, chs. 2-3 (1987).

4. See generally MELNICK, REGULATION AND THE COURTS: THE CASE OF THE CLEAN AIR ACT (1983).

5. See, e.g., FWPCA § 308, 402, 33 U.S.C. §§ 1318, 1342 (discharge monitoring report requirements).

6. EPA recently compiled a comprehensive study of penalty practices for the period 1975-1987. The study reveals substantial increases in the levels of penalties collected during 1983-1987. This can be attributed to the use of computer modeling during that period to ensure recovery of the economic benefits to the polluter from noncompliance. See Memorandum from Thomas L. Adams, EPA Assistant Administrator for Enforcement, Re: Report on Federal Penalty Practices (July 29, 1982).

7. The sources of statistics for criminal indictments and convictions are the Environmental Crimes and Environmental Enforcement Sections internal unpublished statistics as of September 30, 1987.

8. 42 U.S.C. §§ 9601-9675, ELR STAT. 44001.

9. Pub. L. 98-616, 98 Stat. 3224 (codified at 42 U.S.C. §§ 6901-6987, ELR STAT. RCRA 001).

10. See, e.g., United States v. Ralston Purina Co., 12 ELR 20257 (W.D. Ky. Jan. 4, 1982), and United States v. Distler, 9 ELR 20700 (W.D. Ky. Sept. 14, 1979), aff'd, 671 F.2d 954, 11 ELR 20340 (6th Cir.), cert. denied, 454 U.S. 827 (1981).

11. Law enforcement powers were first conferred on EPA criminal investigators in June 1984 by their designation as Special Deputy U.S. Marshals. Since then, they have been redeputized annually.

12. A March 1982 Memorandum of Understanding between EPA and the FBI committed the FBI to investigate 30 environmental cases per year upon request of the EPA. While formal statistics are not available, FBI activity in 1986-87 has clearly exceeded this commitment.

13. Case referrals to the Environmental Crimes Section come from both EPA and the FBI. A referral may initially be made solely to the Section, jointly to the Section and the appropriate U.S. Attorney's Office, or only to the U.S. Attorney's Office. See infra note 16.

14. The Northeast Hazardous Waste Project is a cooperative project consisting of 11 states and EPA that shares information on the movement of hazardous waste throughout the region and on the regulation and enforcement of hazardous waste activities. Similar projects are being formed in otherr regions of the country. See NAT'L ENVTL. ENFORCEMENT J., July 1987, at 30 (establishment of Western States Hazardous Waste Project).

15. The National Environmental Enforcement Council is a joint project of the federal government and the National Association of Attorneys General that coordinates enforcement activities and encourages the sharing of information. The Council consists of U.S. Attorneys, state attorneys general, district attorneys, EPA officials, and otherrs. See generally The National Environmental Enforcement Council, NAT'L ENVTL. ENFORCEMENT J., August 1987, at 18.

16. Coordination between the Environmental Crimes Section and U.S. Attorneys' Offices is handled on a case-by-case basis. Primary responsibility for some cases will lie with the U.S. Attorney's Office, and the Section will simply monitor progress; in otherr cases, the Section will take the lead and the U.S. Attorney's Office will take the back seat. In some circumstances the offices will conduct a joint investigation and trial.

17. The FLETC is an interagency training facility located in Glynco, Georgia, serving 59 federal law enforcement organizations. It provides both basic and advanced training programs, and can tailor a program to an individual agency's needs. Although administered and financed by the Department of the Treasury, policies and programs are determined by an interagency Board of Directors. OFFICE OF THE FEDERAL REGISTER, NATIONAL ARCHIVES AND RECORDS ADMINISTRATION, THE UNITED STATES GOVERNMENT MANUAL 458 (1986).

18. The information in this paragraph is culled from internal Section statistics. See supra note 7.

19. See, e.g., FWPCA § 309(c), 33 U.S.C. § 1319(c); RCRA § 3008(d), 42 U.S.C. § 6928(d), ELR STAT. RCRA 020.

20. See infra discussion of specific prosecutions at text accompanying notes 30-31.

21. See infra discussion of specific prosecutions at text accompanying notes 32-34.

22. See supra text accompanying note 18.

23. Examples of cases in which the United States proceeded under RCRA and CERCLA to ensure proper cleanup relief in conjunction with criminal prosecutions include United States v. Wyckoff Co., No. 84-167V (D. Wash. plea agreement dated March 11, 1985); and United States Pacific Hide & Fur Depot, Inc., 768 F.2d 1096, 15 ELR 20851 (9th Cir. 1985).

24. This subject is currently under review in the Justice Department. The Land and Natural Resources Division will issue a formal directive on parallel civil and criminal proceedings in environmental cases before the end of 1987 (personal communication with Judson Starr, Chief of the Environmental Crimes Section).

25. See infra text accompanying notes 35-43.

26. See generally Riesel, Criminal Prosecution and Defense of Environmental Wrongs, 15 ELR 10065 (Mar. 1985).

27. The Lands Division and EPA attempt to focus federal criminal enforcement efforts on cases involving illegal activity that create, or threaten to create, serious environmental contamination or human health hazards. These violations reflect a deliberate disregard for public health and safety. Naturally, in many cases, the Division intervenes early in order to prevent a potentially dangerous health hazard from occurring. In those instances, the government will often judge the seriousness of the offense in terms of the potential harm that might have resulted without the government's timely intercession.

28. See, e.g., United States v. A.C. Lawrence Leather Co., No. Cr. 82-00037 (D.N.H. sentencing Apr. 29, 1983); United States v. Robert E. Direktor, No. Cr. 86-22 (D.R.I. sentencing Dec. 29, 1986).

29. See supra text accompanying notes 19-21.

30. United States v. Distler, 9 ELR 20700 (W.D. Ky. Sept. 14, 1971), aff'd, 671 F.2d 954, 11 ELR 20340 (6th Cir.), cert. denied, 454 U.S. 827 (1981).

31. See United States v. Ward, 676 F.2d 94, 12 ELR 20285 (4th Cir. 1982). See also United States v. Ward, 14 ELR 20804 (E.D.N.C. May 14, 1984), and United States v. Ward, 618 F. Supp. 884, 16 ELR 20127 (E.D.N.C. 1985) (CERCLA response costs).

32. United States v. A.C. Lawrence Leather Co., No. Cr. 82-00037 (D.N.H. sentencing Apr. 29, 1983).

33. The convictions were for violations of the FWPCA and False Statements Act, 18 U.S.C. § 1001. The fine was $75,000 for the corporation and $238,420 was paid in restitution for damage to the river.

34. The sentences for individuals included the following:

President: 1 year (suspended), 2 years probation, $17,500 fine ($2,500 suspended), 200 hours community service.

Vice President: 1 year (suspended), 2 years probation, $22,500 fine, 200 hours community service.

Director: 1 year (suspended), 2 years probation, $27,000 fine.

Director of maintenance: 2 years (suspended), 4 years probation, $17,500 fine.

Facility supervisor: 1 year (suspended), 2 years probation, $25,000 fine ($20,000 suspended).

35. United States v. Park, 421 U.S. 658, 673 (1975). See also United States v. Ouelette, 11 ELR 20899 (digest) (E.D. Ark. Sept. 19, 1977) (citations omitted):

Historically, courts have held that statutes which proscribe common law offenses require specific intent as an essential element. However, in recent years a growing number of statutes have been enacted to proscribe what have been termed "public welfare offense." Due to the "very different antecedents and origins" of these statutes, courts have generally refused to infer specific intent as an essential element.

36. United States v. Hayes International Corp., 786 F.2d 1499, 1503, 16 ELR 20717, 20718 (11th Cir. 1986) (citing Liparota v. United States, 471 U.S. 419, 424-25 n.7 (1985).

37. United States v. T.I.M.E.-D.C., Inc., 381 F. Supp. 730, 740 (W.D. Va. 1974) (lesser showing of willfulness required for regulatory, malum prohibitum offenses).

38. Morissette v. United States, 342 U.S. 246, 251 (1952).

39. See, e.g., United States v. Illinois Central Railroad Co., 303 U.S. 239, 242 (1938); United States v. Wells, 766 F.2d 12, 20 (1st Cir. 1985). Thus, Judge Learned Hand's famous dictum that "the word 'willful,' even in criminal statutes, means no more than that the person charged with the duty knows what he is doing. It does not mean that, in addition, he must suppose that he is breaking the law," American Surety Co. v. Sullivan, 7 F.2d 605, 606 (2d Cir. 1925), is overstated, though accurate, in many areas where the law imposes a duty to act — such as with public welfare statutes.

40. See, e.g., United States v. International Minerals Corp., 402 U.S. 558, 562-64 (1971) (transportation of hazardous materials); United States v. Illinois Central Railroad Co., 303 U.S. 239, 242-43 (1938) (transportation of animals); United States v. Brown, 578 F.2d 1280, 1284 (9th Cir.), cert. denied, 439 U.S. 928 (1978) (securities regulation); United States v. Dye Construction Co., 510 F.2d 78, 81-82 (10th Cir. 1975) (Occupational Safety and Health Act); United States v. Schwartz, 464 F.2d 499, 509 (2d Cir.), cert. denied, 409 U.S. 1009 (1972) (securities regulation); United States v. Gris, 247 F.2d 860, 864 (2d Cir. 1957) (Federal Communications Act). Cf. United States v. Freed, 401 U.S. 601, 607-09 (1971) (strict liability for possession of hand grenades); United States v. Balint, 258 U.S. 250, 253-54 (1922) (strict liability for drug manufacture).

41. 303 U.S. at 242-43; see also United States v. Johnson & Towers, Inc., 741 F.2d 662, 669, 14 ELR 20634, 20638 (3d Cir. 1984), cert. denied, 469 U.S. 1208 (1985). A good example of the effect of the public welfare doctrine can be seen by comparing United States v. International Minerals & Chemical Corp., 402 U.S. 558 (1971), with Liparota v. United States, 471 U.S. 419 (1985). In both cases, the statutes at issue essentially prohibited knowingly violating regulations. Because the statute in International Minerals was a public welfare statute, no specific knowledge of the regulations was required; because the statute in Liparota was held not to be a public welfare statute, knowledge of the regulations was required. See also United States v. Hayes International Corp., 786 F.2d at 1502-03, 16 ELR 20718; United States v. Ouelette, 15 ELR 20899 (digest) (E.D. Ark. Sept. 19, 1977).

42. In Liparota v. United States, the Court described the category of statutes where lesser mens rea is required as follows:

the Government contends that the … offense [charged] is a "public welfare" offense, which the Court [has] defined to "depend on his mental element but to consist only of forbidden acts or omissions." Yet the offense at issue here differs substantially from those "public welfare offenses" we have previously recognized. In most previous instances, Congress has rendered criminal a type of conduct that a reasonable person should know is subject to stringent public regulation and may seriously threaten the community's health or safety.

471 U.S. at 432-33 (citation omitted).

Similarly, in United States v. International Minerals & Chemical Corp., the court described the category of public welfare statutes as follows:

[W]here, as here and as in Balint and Freed, dangerous or deleterious devices or products or obnoxious waste materials are involved, the probability of regulation is so great that anyone who is aware that he is in possession of them or dealing with them must be presumed to be aware of the regulation.

402 U.S. at 565. See also Brickey, Criminal Liability of Corporate Officers for Strict Liability Offenses — Anotherr View, 33 VAND. L. REV. 1337, 1356 (1982).

43. See United States v. International Minerals & Chemical Corp., 402 U.S. at 563-64; United States v. Johnson & Towers, Inc., 741 F.2d at 668, 14 ELR at 20637.

44. 786 F.2d 1499, 16 ELR 20717.

45. 786 F.2d at 1503, 16 ELR at 20718-19.

46. Id. at 1503-04, 16 ELR at 20719.

47. Id. at 1504-05, 16 ELR at 20719.

48. 741 F.2d 662, 14 ELR 20634.

49. Id. at 669-70, 14 ELR at 20638. However, at anotherr point the court implied that only knowledge of the permit status was required, and that ignorance of the law was no defense:

However, our conclusion that "knowingly" applies to all elements of the offense in section 6928(d)(2) (A) does not impose on the government as difficult a burden as it fears. On this issue, we are guided by the Court's holding in United States v. International Minerals & Chemical Corp., that under certain regulatory statutes requiring "knowing" conduct, the government need prove only knowledge of the actions taken and not of the statute forbidding them.

Id. at 669, 14 ELR at 20638 (citation omitted).

50. 546 F. Supp. 713, 12 ELR 21133 (E.D. Pa. 1982), aff'd, 703 F.2d 62, 13 ELR 20584 (3d Cir.), cert. denied, 464 U.S. 829 (1983).

51. 546 F. Supp. at 720, 12 ELR at 21136.

52. 15 ELR 20899 (digest) (E.D. Ark. Sept. 19, 1977).

53. FWPCA § 309(c)(4), 33 U.S.C. § 1319(c)(4).

54. Id.

55. Id.

56. Id.

57. 444 F. Supp. 510, 8 ELR 20333 (E.D. Cal.), aff'd, 578 F.2d 259, 8 ELR 20615 (9th Cir. 1978).

58. 444 F. Supp. at 519, 8 ELR at 20335. Accord, del Junco v. Conover, 682 F.2d 1338, 1342 (9th Cir. 1982), cert. denied, 459 U.S. 1146 (1983).

59. See, e.g., United States v. Interstate Engineering Corp., 288 F. Supp. 402, 412 (D.N.H. 1967); see also Gordon v. United States, 347 U.S. 909, 910 (1954) (per curiam) (court agrees with government's confession of error where instruction allowed partners to be convicted of willful violations based on knowledge of employees being chargeable to them); Olds, Unkovic & Lewin, Thoughts on the Roles of Penalties in the Enforcement of the Clean Air and Clean Water Act, 17 DUQ. L. REV. 1, 23 (1978).

60. See, e.g., Spurr v. United States, 174 U.S. 728, 735 (1899); United States v. DeVeau, 734 F.2d 1023, 1028 & n.2 (5th Cir. 1984); cert. denied, 469 U.S. 1158 (1985); United States v. Cincotta, 689 F.2d 238, 243 & n.2 (1st Cir.), cert. denied, 459 U.S. 991 (1982); United States v. Hanlon, 548 F.2d 1096, 1100 (2d Cir. 1977); United States v. Jewell, 532 F.2d 697 (9th Cir.), cert. denied, 426 U.S. 951 (1976).

61. The terms in this Article — "inferential," "structural," and "diligence" — have not been used by the courts, but are suggested as a convenient shorthand terminology.

62. See, e.g., United States v. International Minerals & Chemical Corp., 402 U.S. at 565; United States v. Johnson & Towers, Inc., 741 F.2d at 670; United States v. Hayes International Corp., 786 F.2d at 1503-05, 16 ELR at 20718-19. See generally Comment, The Criminal Responsibility of Corporate Officials for Pollution of the Environment, 37 ALB. L. REV. 61, 73 (1972).

63. See, e.g., United States v. Amrep Corp., 560 F.2d 539, 546 (2d Cir. 1977), cert. denied, 434 U.S. 1015 (1978); United States v. Weiler, 385 F.2d 63, 65 (3d Cir. 1967); United States v. Meyer, 359 F.2d 837, 839 (7th Cir. 1966), cert. denied, 385 U.S. 837 (1967); Stone v. United States, 113 F.2d 70, 75 (6th Cir. 1940).

64. The poll, the National Survey of Crime Severity, was conducted over a six-month period beginning in July 1977 by the Center for Studies in Criminology and Criminal Law, Wharton School, University of Pennsylvania. A total of 60,000 people aged 18 or older participated in the survey. The participants were members of households that comprised half of the National Crime Survey sample of 60,000 households that forms a stratified representative random sample. Participants ranked a pollution incident resulting in deaths as the seventh most severe crime, ahead of crimes like skyjacking and drug smuggling. Pollution of a city's water system in which there were no specified adverse health results ranked 64th, ahead of roughly 70 otherr crimes.