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ENREL Section Luncheon presentation by Michael Zody

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  1. 1. S A L T L A K E C I T Y | R E N O | B O I S E | L A S V E G A S | P A R S O N S B E H L E . C O MENREL Section LuncheonInvestigating, Prosecuting andDefending Environmental Crimes:What You Need to KnowMichael A. Zody, Defense CounselMay 4, 2012Salt Lake City
  2. 2. The Leap to Criminal Cases The Number One Rule for CriminalDefense Counsel?2
  3. 3. Wildlife Cases Often resolved with pleas to misdemeanors andfines, with significant dollars invested indeveloping ways to reduce the incidental takes The beginning of the end of strict liability?– U.S. v. Brigham Oil & Gas, 2012 WL 120055 (D.N.D.2012) “take” under MBTA does not equal deathincidental to lawful commercial activity3
  4. 4. Pollution Cases The rest of this presentation is focused onpollution cases And is predominantly designed for counselwho represent companies4
  5. 5. Issues/Tactics Government has broad discretion– general intent and negligence standards• CAA, 42 USC § 7413; RCRA, 42 USC §6928; CWA, 33 USC § 1319– but, is generally looking for “lying, cheating,stealing”– competitive advantage gained?– harm to environment? ongoing or corrected?5
  6. 6. Issues/Tactics Communicate early and at appropriateintervals with prosecutor Use credible complexity and ambiguity toyour advantage– complexity in regulatory terms, e.g.,“hazardous waste”– ambiguity in regulatory programs, particularlylocal ordinances– poorly drafted permits6
  7. 7. Issues/Tactics Hope it stays local (DOJ-EnvironmentalCrimes Section in DC) Federal and state criminal enforcementagencies tend to coordinate, communicatewith each other– State A.G.‟s as acting federal prosecutors– Feds usually take the lead7
  8. 8. Issues/Tactics False data in environmental cases– Beware of continued use, such as in emissionsinventories, that can repeat false statements– Title V and other broad certifications “Responsible corporate officer” issue Don‟t overlook Title 18, including– Section 371 - conspiracy– Section 1001 – false statements– Sections 1341, 1343 – mail and wire fraud8
  9. 9. How Did We Get Here ? Whistleblowers: recently terminatedemployees, contractors Self-Disclosure Civil matter that catches the eye ofcriminal side– EPA often is copied, even on locally issuedcivil enforcement matters– Large dollar civil fines can trigger follow-oncriminal investigation9
  10. 10. Typical First Contactfrom Client Frantic calls or emails Agents showed at homes in the evening Agents showed up and served subpoenaat facility Enforcement team showed up with warrantand gathered records, photos, videos,samples, interviewed people10
  11. 11. Goals from the get go No indictment Civil resolution, if there is something toresolve No add-ons: avoid obstruction risks No one goes to jail If there are problems, correct and mitigate– generally cooperation is the best route– client takes its lumps and repairs relationships• regulators, media, employees, shareholders11
  12. 12. Build Your Team Critical components– Criminal defense lawyer– Environmental lawyer: substance andregulatory players/relationships– Experienced litigation paralegal– Client that appreciates seriousness andallocates resources as appropriate– White collar defense lawyers available forindividuals if necessary12
  13. 13. First Steps Assess subpoena Memos to employees Contact prosecutor, negotiate scope, timing, formatof subpoena response– Listen and get as much information as the prosecutorwill share Get document control and collection process inplace– Contact IT department immediately to stop automatic destruction Interview witnesses, starting with those interviewedby government13
  14. 14. Memos to Employees Who needs to receive? Topics (can be one or more memos)– Fact of subpoena, documents requested, considerattaching subpoena– Duty to preserve documents, electronic records– Rights in an investigation: their decision whether totalk to government, must be truthful, can ask forcounsel, advise company if you have been contacted– Name of counsel for company14
  15. 15. Documents Read the subpoena instructions, theyusually ask for documents in original files= entire files can be responsive if only onedocument is covered This is not a civil discovery matter, beoverly cautious and err on side ofproduction Do not let the client control documentcollection15
  16. 16. Documents Consider unique electronic information,that might not be controlled by IT– Environmental monitoring equipment withsome memory on the device As you gain understanding, considercommunicating with prosecutor aboutburden, and phasing or limiting scope– Clearly document agreements16
  17. 17. Documents Use tracking sheets for each person orlocation, designed to allow you to controland produce records with requiredinformation Develop a form or checklist for documentcollectors to use, covering requiredcategories17
  18. 18. Interviews Take paralegal/associate as witness Advise at outset: you represent the company notthem, conversation is privileged, company holdsprivilege and company can decide to waiveprivilege Do not record the interview Indicate in your notes: contains thoughts,impressions, avoid verbatim formats so it doesnot equal a “witness statement”18
  19. 19. Debriefing interviews Trying to mirror what the governmentlearned Ask witness to recreate: name ofinvestigator (usually leave cards), exact Q& A‟s, be a stickler and go back through it,any documents shown to you or gatheredfrom you? If appears they engaged in wrongdoing,advise of right to counsel19
  20. 20. Meet with Prosecutor? Consider arranging meeting with prosecutor(who will likely bring investigator) when youmake the production Do you have a credible case to present on whyprosecution is not warranted?– Obviously, be flat out honest on any disclosures, givethe bad with the good– Run it by the criminal defense lawyer first Be careful on privilege waiver, consider non-waiver agreement20
  21. 21. Meet with Prosecutor? Is there clear criminal behavior and doesan indictment appear likely? Consider controlling client‟s destinythrough negotiation– Criminal defense lawyer is a must!21
  22. 22. Self-Reporting? EPA and State civil penalty relief– Utah, UCA 19-7-109– EPA, 65 FR 19618 (April 11, 2000) Criminal cases– One factor that prosecutor weighs Reasons to self report and discipline bad actors– Consistent with stated corporate compliance policies– Mitigates repeat violation potential22
  23. 23. Parallel Civil andCriminal Proceedings Pressure to stay or delay civil if there ispending criminal investigation Global civil and criminal resolutions arenot favored by government but possible insome instances23
  24. 24. Resolution Options Happiest ending, government declines toprosecute Less happy endings, government isheading towards indictment– If statute of limitations pressure, tolling agreementscan be used– Deferred or Non-Prosecution Agreements?• Pros: no indictment, no criminal liability• Cons: terms can be difficult, fact statements,compliance corrections burdensome– Plea deal and sentencing24
  25. 25. Resolution Options Even less happy, Indictment issued– Plea or trial– Sentencing Don‟t overlook– Suspension and debarment possibilities forcompanies that do work with government25
  26. 26. A Few Resources U.S. Attorneys Manual (in general, and specifically)– Chapter 9-28.100, Principles of Federal Prosecution of BusinessOrganizations (“Principles”) Joseph Block and Judson Starr, “Knock, Knock.” “Who‟s There?” “EPA CriminalAgents, That‟s Who.”, 55 RMMLI 12-1 (2009) Sheila Finnegan, “The First 72 Hours of a Government Investigation: A Guide toIdentifying Issues and Avoiding Mistakes,” National Legal Center for the PublicInterest (2007) (note, since publication there have been revisions to Principles inbullet one above on privilege waiver issue) Sandra Snodgrass, “It‟s for the Birds: Recent Developments under the MigratoryBird Treaty Act and Bald and Golden Eagle Protection Act,” Federal Regulationof Cultural Resources, Wildlife and Waters of the U.S., Paper No.10, RMMLF(2012) Michael Zody, “Responding to Environmental Whistleblowers: Listen Carefully tothat Sound Coming „Round the Bend,” 51 RMMLI 6-1 (2005)26