ENREL Section Luncheon presentation by Michael Zody

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 M
ENREL Section Luncheon
Investigating, Prosecuting and
Defending Environmental Crimes:
What You Need to Know
Michael A. Zody, Defense Counsel
May 4, 2012
Salt Lake City

2. The Leap to Criminal Cases
 The Number One Rule for Criminal
Defense Counsel?
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3. Wildlife Cases
 Often resolved with pleas to misdemeanors and
fines, with significant dollars invested in
developing 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 death
incidental to lawful commercial activity
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4. Pollution Cases
 The rest of this presentation is focused on
pollution cases
 And is predominantly designed for counsel
who represent companies
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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?
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6. Issues/Tactics
 Communicate early and at appropriate
intervals with prosecutor
 Use credible complexity and ambiguity to
your advantage
– complexity in regulatory terms, e.g.,
“hazardous waste”
– ambiguity in regulatory programs, particularly
local ordinances
– poorly drafted permits
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7. Issues/Tactics
 Hope it stays local (DOJ-Environmental
Crimes Section in DC)
 Federal and state criminal enforcement
agencies tend to coordinate, communicate
with each other
– State A.G.‟s as acting federal prosecutors
– Feds usually take the lead
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8. Issues/Tactics
 False data in environmental cases
– Beware of continued use, such as in emissions
inventories, 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 fraud
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9. How Did We Get Here ?
 Whistleblowers: recently terminated
employees, contractors
 Self-Disclosure
 Civil matter that catches the eye of
criminal side
– EPA often is copied, even on locally issued
civil enforcement matters
– Large dollar civil fines can trigger follow-on
criminal investigation
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10. Typical First Contact
from Client
 Frantic calls or emails
 Agents showed at homes in the evening
 Agents showed up and served subpoena
at facility
 Enforcement team showed up with warrant
and gathered records, photos, videos,
samples, interviewed people
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11. Goals from the get go
 No indictment
 Civil resolution, if there is something to
resolve
 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, shareholders
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12. Build Your Team
 Critical components
– Criminal defense lawyer
– Environmental lawyer: substance and
regulatory players/relationships
– Experienced litigation paralegal
– Client that appreciates seriousness and
allocates resources as appropriate
– White collar defense lawyers available for
individuals if necessary
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13. First Steps
 Assess subpoena
 Memos to employees
 Contact prosecutor, negotiate scope, timing, format
of subpoena response
– Listen and get as much information as the prosecutor
will share
 Get document control and collection process in
place
– Contact IT department immediately to stop automatic destruction
 Interview witnesses, starting with those interviewed
by government
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14. Memos to Employees
 Who needs to receive?
 Topics (can be one or more memos)
– Fact of subpoena, documents requested, consider
attaching subpoena
– Duty to preserve documents, electronic records
– Rights in an investigation: their decision whether to
talk to government, must be truthful, can ask for
counsel, advise company if you have been contacted
– Name of counsel for company
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15. Documents
 Read the subpoena instructions, they
usually ask for documents in original files
= entire files can be responsive if only one
document is covered
 This is not a civil discovery matter, be
overly cautious and err on side of
production
 Do not let the client control document
collection
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16. Documents
 Consider unique electronic information,
that might not be controlled by IT
– Environmental monitoring equipment with
some memory on the device
 As you gain understanding, consider
communicating with prosecutor about
burden, and phasing or limiting scope
– Clearly document agreements
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17. Documents
 Use tracking sheets for each person or
location, designed to allow you to control
and produce records with required
information
 Develop a form or checklist for document
collectors to use, covering required
categories
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18. Interviews
 Take paralegal/associate as witness
 Advise at outset: you represent the company not
them, conversation is privileged, company holds
privilege and company can decide to waive
privilege
 Do not record the interview
 Indicate in your notes: contains thoughts,
impressions, avoid verbatim formats so it does
not equal a “witness statement”
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19. Debriefing interviews
 Trying to mirror what the government
learned
 Ask witness to recreate: name of
investigator (usually leave cards), exact Q
& A‟s, be a stickler and go back through it,
any documents shown to you or gathered
from you?
 If appears they engaged in wrongdoing,
advise of right to counsel
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20. Meet with Prosecutor?
 Consider arranging meeting with prosecutor
(who will likely bring investigator) when you
make the production
 Do you have a credible case to present on why
prosecution is not warranted?
– Obviously, be flat out honest on any disclosures, give
the bad with the good
– Run it by the criminal defense lawyer first
 Be careful on privilege waiver, consider non-
waiver agreement
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21. Meet with Prosecutor?
 Is there clear criminal behavior and does
an indictment appear likely?
 Consider controlling client‟s destiny
through negotiation
– Criminal defense lawyer is a must!
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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 potential
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23. Parallel Civil and
Criminal Proceedings
 Pressure to stay or delay civil if there is
pending criminal investigation
 Global civil and criminal resolutions are
not favored by government but possible in
some instances
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24. Resolution Options
 Happiest ending, government declines to
prosecute
 Less happy endings, government is
heading towards indictment
– If statute of limitations pressure, tolling agreements
can 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 sentencing
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25. Resolution Options
 Even less happy, Indictment issued
– Plea or trial
– Sentencing
 Don‟t overlook
– Suspension and debarment possibilities for
companies that do work with government
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26. A Few Resources
 U.S. Attorneys Manual (in general, and specifically)
– Chapter 9-28.100, Principles of Federal Prosecution of Business
Organizations (“Principles”)
 Joseph Block and Judson Starr, “Knock, Knock.” “Who‟s There?” “EPA Criminal
Agents, That‟s Who.”, 55 RMMLI 12-1 (2009)
 Sheila Finnegan, “The First 72 Hours of a Government Investigation: A Guide to
Identifying Issues and Avoiding Mistakes,” National Legal Center for the Public
Interest (2007) (note, since publication there have been revisions to Principles in
bullet one above on privilege waiver issue)
 Sandra Snodgrass, “It‟s for the Birds: Recent Developments under the Migratory
Bird Treaty Act and Bald and Golden Eagle Protection Act,” Federal Regulation
of Cultural Resources, Wildlife and Waters of the U.S., Paper No.10, RMMLF
(2012)
 Michael Zody, “Responding to Environmental Whistleblowers: Listen Carefully to
that Sound Coming „Round the Bend,” 51 RMMLI 6-1 (2005)
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