A stitch in time

It's rarely pretty to watch a search warrant being executed in a corporate headquarters. Teams of U.S. Federal Bureau of Investigation (FBI) or U.S. Environmental Protection Agency (EPA) enforcement agents arrive suddenly. They seal the exits. They methodically seize documents, computers, accounting records and everything else that is essential to managing a business. Then the requests for interviews come. The U.S. Attorney, the FBI and EPA invite you to their offices or the grand jury room and there ask you to give a statement or testimony concerning why it is your company has violated federal environmental laws.

It is important to understand who the likely targets of an enviornmental criminal investigation are and what knowledge makes them potentially liable.

Is this fiction? The answer, sadly, is no. Federal authorities regularly prosecute individuals and corporations for violations of environmental statutes. Some of the targets are not surprising. No one would pay particular attention to the prosecution of a hazardous materials transporter or landfill operator. Others can be very surprising. For example, a hospital had to be defended against claims that it violated the Clean Air Act by allegedly releasing asbestos containing material into the air during a renovation project. Since anyone can be the target of a criminal investigation, it is important to understand who the likely targets of an environmental criminal investigation are and what knowledge makes them potentially liable. Knowing this, potential targets can take steps to avoid liability in advance.

The debut of the knowing endangerment statute

Prior to 1980, violators of the Clean Air Act and Clean Water Act received only modest criminal penalties. Prosecutors rarely enforced these provisions because the penalties were too small to justify the expenditures necessary to make a case. To put teeth into what it saw as an important statute, Congress radically strengthened these penalties, beginning in 1980 with the Resource Conservation and Recovery Act (RCRA). RCRA made certain specific acts illegal. It also added a new crime, knowing endangerment, to the prosecutor's arsenal. As originally promulgated, knowing endangerment required prosecutors to show that the defendant, whether an individual or an organization:
  • Knowingly handled any hazardous waste in violation of RCRA;
  • Knew at the time that he or she thereby placed another person in imminent danger of death or serious bodily injury; and
  • In the circumstances, manifested an unjustified and inexcusable disregard or extreme indifference toward human life or injury.

However, this three-part test was too restrictive, and there were no indictments under RCRA until 1984, when Congress removed the third element. Since then, the RCRA knowing endangerment standard has required prosecutors to prove only that a person knowingly transported, treated, stored, disposed of or exported hazardous waste in violation of any of seven provisions in 42 United States Code (USC) 6928(b) and "knew at the time he thereby placed another person in imminent danger of death or serious bodily injury." This has remained the benchmark for criminal environmental culpability ever since. Similar knowing endangerment language was included in the Clean Water Act in 1987 see 33 USC. § 1319(c)(3) and the Clean Air Act in 1990 see 42 USC § 7413(c).

Who can be responsible for knowing endangerment?

The Clean Air Act defines who can be liable for criminal penalties as, "an individual, corporation, partnership, association, state, municipality, political subdivision of any state, and any agency, department, or instrumentality of the United States and any officer, agent or employee thereof (42 USC 7602e).

Managers who choose to discount information that proves to be true are not doing the same as those who purposefully avoid learning the truth.

In previous cases under various environmental statutes it has been made clear that anyone who is directly involved in illegal conduct is a "person" for purposes of environmental crimes. The person who actually dumps, discharges, pollutes or otherwise directly participates in a violation of the law can rationally expect that criminal charges may follow if the other elements of an environmental crime are met, but the statutes go beyond those who participate directly to include any responsible corporate officer.

The profile for an environmentally responsible corporate officer is an officer (although non-officer employees who participate can be personally liable if they meet the statutory criteria or are subject to liability as aiders and abetters or conspirators) with authority or responsibility to supervise the allegedly illegal activities (as opposed to someone who has no contact with the discharge), who participates or acquiesces in the illegal conduct or fails to prevent it from happening and with the requisite degree of knowledge.

A possible exception to the rule is when a corporate officer is acting under orders from his or her employer. Courts have not construed the "only following orders" exception, but it appears to be a safe harbor only for employees who lack any discretion to influence events short of insubordination.

As for shareholders, absentee owners and the like, cases on shareholder liability under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and RCRA suggest that liability could be imposed only if the individual has immediate and practical ability or formal authority to influence, direct or control the practices at issue.

Clearly, those with responsibility for environmental matters, facility management, maintenance, engineering or processes can meet the profile. However, plant managers, persons in charge of remodeling, lab supervisors or even janitors may also qualify. Any corporate officer with the immediate power to say "stop" can be a responsible corporate officer.

What must they know?

Being a responsible corporate officer is not enough to result in criminal liability. Environmental criminal statutes require that the individual also act knowingly and that the knowing requirement apply to all elements of an offense. Further, the statutes often state that only the defendant's own knowledge may be evaluated in assessing liability. (See, e.g., the Clean Air Act's provision on this point, 42 USC § 74135B). The government is not required to prove that the defendant knew his or her conduct was illegal. It is enough that the defendant knew factually what he or she was doing.

A difficult and potentially important issue in these cases is a concept that has come to be known as willful blindness — when an individual has taken affirmative steps to be shielded from relevant information. A standard jury instruction used in a federal criminal case on this issue reads: "The element of knowledge may be satisfied by inferences drawn from proof that a defendant may have deliberately closed his or her eyes to what otherwise would have been obvious to him or her."

Also called an "ostrich" instruction, it embodies the concept that a person may not avoid responsibility by purposely avoiding the truth. However, mere negligence or mistake in not learning the facts or misinterpreting what one learns is insufficient to constitute willful blindness. Managers who choose to discount information that proves to be true are not doing the same as those who purposefully avoid learning the truth.

What Should Be Done?

To avoid liability for willful blindness, a corporation should be able to show that responsible corporate officers were neither willful nor blind.

Establish environmental monitoring and reporting procedures. Comply with state and federal statutory record-keeping requirements. Establish a procedure for reporting complaints and problems, educate employees about it and keep it current and accurate. Log in reports and complaints. Ensure that responsible managers read and understand what is going on and initial the records.

Follow up on environmental reports and complaints. Establish a procedure for addressing environmental complaints, concerns or problems, regardless of the source, and check to make sure that it is being followed. Failing to address concerns — whatever the source — looks like willful ignorance.

Explain why. Always presume that you are going to have to explain. In the context of willful blindness, the explanation must at least be rational, if not correct.

If necessary, report to the appropriate authorities. The genesis of willful blindness in the environmental arena is probably fear of the costs or consequences of reporting the problem. Many problems now can be resolved through voluntary cleanup programs, generally lowering the cost of remediation. Even if they cannot, don't hid. It suggests culpability.

Try to comply. Mistakes that happen in the context of a conscientious compliance program are more likely to be seen for what they are and not misinterpreted as something more.

As much as we would like to think otherwise, there is no going back to a philosophy of benevolent neglect in managing environmental problems. Vigilance and involvement by management today are the surest steps to avoid problems tomorrow.

U.S. Environmental Protection Agency - Office of Enforcement and Compliance Assurance — www.epa.gov/oeca/enforcement

This article appeared in Environmental Protection, Volume 11, Number 9, September 2000, Page 56.

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This article originally appeared in the 09/01/2000 issue of Environmental Protection.