Chief compliance officers have enough on their plate without having to worry about another risk.  The Obama Administration came into power promising to increase enforcement of environmental laws and regulations.  On the civil and regulatory side, they have done that and more. 

The EPA has been aggressive and increased civil enforcement and regulations.  Civil penalties increased from $110 million in FY2010 to $168 million in FY 2011.  Republicans in Congress have been able to slow down the EPA and it will be interesting to see what happens in the next few years (aside from the outcome of the election).

The Obama Administration also has re-focused criminal enforcement of environmental laws.  However, this effort has been slowed somewhat by the assignment of attorneys to handle the Gulf Spill case.  That case appears to be close to wrapping up, and we may see a reassignment of resources back to “traditional” environmental crime enforcement.

Even with fewer resources available for environmental crime enforcement, the Justice Department was able to increase the average period of incarceration from 72 months for FY2010 to 89 months for FY2012 for individual defendants. 

The Environmental Crimes Section in the Department of Justice has had a tortured history because of the controversy surrounding criminal enforcement.  The ECS is required to work closely with local US Attorneys and coordinate prosecutions.

When you consider the allocation of resources to a government enforcement program, it is a very valid predictor of future actions.  The EPA now has assigned a record number of criminal investigators.  With the reassignment of ECS attorneys, and the availability of criminal investigators, criminal enforcement of environmental laws is likely to pick up.

Aside from the additional resources, ECS has expanded its efforts by increasing prosecution of environmental crimes using other weapons aimed at prosecuting companies and individuals for record-keeping failures, false statements, obstruction of justice and other statutes related to “ministerial” duties.  There is no question that companies face a multitude of regulations and record-keeping requirements for compliance with environmental laws.  This is a fertile area for the Justice Department to focus enforcement efforts. 

As part of its new strategy, the Justice Department often combines charges involving violations of environmental regulations with record-keeping, and false statement charges involving false certifications of accuracy of compliance records. 

In some cases, the Justice Department is prosecuting companies for record-keeping violations without any substantive violation of environmental laws or risk to the public.  Specifically, the Justice Department is employing a doctrine referred to as a “Klein conspiracy” which was originally used in tax prosecutions and later applied to firearms cases and most recently health care regulatory cases.  The Klein conspiracy theory allows the government to string together misdemeanor regulatory and paperwork violations into a felony charge for conspiracy against the US government under 18 USC 371, which is a broad statute used by the government to turn otherwise “petty” conduct into a felony conspiracy centering on record-keeping violations.

The Justice Department cites these record-keeping violations as a cause for concern to the public, because of the significant impact that a failure to accurately monitor water purity or air purity can have on the community. 

For Chief Compliance Officers, this new enforcement strategy requires companies to devote even greater attention and resources to the ministerial parts of compliance programs.  As a result, CCOs respond by increasing internal audits of record-keeping, improving training program on record-keeping procedures, and elevating record keeping responsibilities and supervision to senior managers.