CHAPTER 6 CRIMINAL LAW AND PRACTICAL CORPORATE STRATEGIES
| Jurisdiction | United States |
(Feb 1993)
CRIMINAL LAW AND PRACTICAL CORPORATE STRATEGIES
Haddon, Morgan & Foreman, P.C.
Denver, Colorado
TABLE OF CONTENTS
INTRODUCTION
I. The Initiation of the Criminal Process
II. The Grand Jury Process.—Issues for Consideration
A. Representation by Counsel
B. Factual Investigation
C. Subpoenas for Documents.
D. Search Warrants.
E. Subpoenas to Individuals
F. Scope and Duration of Grand Jury Proceedings/Objectives.
III. Bases of Criminal Liability
A. Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 -6987 (RCRA)
B. Water Pollution Control Act, a/k/a Clean Water Act, 33 U.S.C. §§ 1251 -1376 (CWA)
C. Toxic Substances Control Act, 15 U.S.C. §§ 2601 -2629 (TOSCA)
D. Comprehensive Environmental Response, Compensation and Liability Act,
E. Clean Air Act, 42 U.S.C. §§ 7401 -7491 (CAA)
F. False Statements, 1842 U.S.C. § 1001
G. Conspiracy to Commit Offense or to Defraud United States, 18 U.S.C. § 371
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IV. Selected Current Problems Presented by Environmental Prosecutions
A. The Weakening "Knowledge" Requirement for Environmental Criminal Liability
B. The Responsible Corporate Officer Doctrine
C. Knowing Endangerment
V. Negotiations and Resolutions of Criminal Cases/Sentencing Considerations
VI. Conclusion
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INTRODUCTION
The criminal prosecution of American corporations, their officers and employees, for environmental offenses is being seen with increasing frequency. The purpose of this paper is not to present a detailed legal analysis of the bases for criminal prosecution or a detailed listing of the reported cases of such prosecutions. Rather, this paper is intended to discuss the criminal process from beginning to end, and to highlight some of the practical problems and considerations that may be encountered by an organization or an individual who becomes the subject of a federal criminal environmental investigation.
I. The Initiation of the Criminal Process
Nearly every business involved with manufacturing or the development of mineral resources is subject to inspection and oversight by various regulatory agencies. The Environmental Protection Agency has the most obvious environmental jurisdiction, but other agencies with oversight responsibility may utilize Inspectors General as investigative or "police" personnel charged with compliance/enforcement of various federal laws including those focusing on environmental protection.
Most environmental statutes provide both civil and criminal penalties upon proof of violation. Accordingly, any police agency charged with compliance and enforcement has the jurisdiction to investigate both civil and criminal violations, and these agencies are acutely aware of the potential for criminal prosecution.
A formal criminal investigation is initiated only after a "criminal referral" by the investigating agency to the local U.S. Attorney's Office. Such a referral will include a summary of the investigator's findings, along with an analysis/argument as to why criminal prosecution is appropriate. The reviewing Assistant U.S. Attorney may "decline" the referral, in which case the matter is sent back to the agency for possible initiation of a civil/administrative enforcement action. Should the AUSA "accept" the referral, the formal criminal investigation will begin.
II. The Grand Jury Process. — Issues for Consideration
Pursuant to the Fifth Amendment to the United States Constitution, every person has the right to grand jury scrutiny of proposed criminal charges, and to an indictment before such criminal charges may be initiated. At any given time in Colorado, there are two or three active grand juries which receive evidence on a broad range of criminal matters. A grand jury's commitment generally requires it to sit and receive evidence one week each month for a 18 month period.
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A.Representation by Counsel.
Though there is no constitutional right to counsel during the grand jury process, it is a critical stage at which no person should be unrepresented.
The receipt of a grand jury subpoena may be the first indication to a company or individual that an investigation has gone criminal. Upon inquiry, the AUSA will usually advise whether the subpoenaed individual is viewed as a mere witness, or is considered a "subject" or "target" of the investigation. Such an initial designation is not binding and may change during the grand jury's investigation. It must be assumed that any company involved in a federal grand jury proceeding is a target of the investigation.
The involvement of criminal defense counsel should occur at the earliest opportunity. A decision to use "in-house" counsel for representation before the grand jury is dangerous, and is not recommended. Similarly, an initial inclination to hire as counsel an expert in environmental laws, rather than a criminal defense lawyer, may be disadvantageous. Remember that the Government has already made a threshold determination that a criminal prosecution will occur.
B.Factual Investigation.
Interviews of all knowledgeable employees and other fact witnesses should be conducted both before and after any scheduled grand jury appearances. Police investigators often use the delivery of a grand jury subpoena as an opportunity for an on-the-spot interview. Service of subpoenas are commonly made at the witness' home, rather than at the place of employment.
There are practical reasons why the company's in-house lawyers should not conduct witness interviews themselves. Such interviews can become self-serving, and can fail to fully explore the limits of a witness's knowledge harmful to the company's or individual's interest. Interviews by the FBI will be harder edged. Additionally, a lawyer involved in the interview process runs the risk of later disqualification as counsel, should the content of the interview become important as evidence at a trial.
C.Subpoenas for Documents.
Most grand jury subpoenas for the production of documents are drafted broadly, and compel the production of voluminous materials within a very short time frame. The desire to appear cooperative with the grand jury investigation sometimes conflicts with a
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company's self-interest. Documents should never be delivered to the grand jury unless they are "Bates" stamped, and unless the company retains a complete set of the documents produced. Documents delivered pursuant to grand jury subpoena may subsequently be construed as "grand jury materials," and access to these materials by the entity producing them may later be denied absent court order.1
Consider whether the subpoena should be strictly construed, and the delivery of responsive documents thereby limited. The delivery of documents not expressly demanded by the subpoena may broaden the areas under scrutiny unnecessarily.
Consider whether the subpoena purports to reach documents protected by the attorney-client, work product or other privilege. The delivery to a grand jury of privileged documents, disclosing an awareness of environmental laws or problems may not only waive the privilege for all time, but may actually advance the theory of prosecution.
Though a business entity does not itself possess a valid Fifth Amendment privilege against self-incrimination, grand jury subpoenas must be reasonable. The volume of documents ordered to be produced, the difficulty of assembly, the oppressive and burdensome nature of the subpoena's scope may give rise to legal challenges, and often may result in delay in subpoena compliance or a limitation upon the requirement to produce.
D.Search Warrants.
This alternative to the subpoena process means that a judge has already ruled that probable cause exists to believe that federal crimes have been committed, and that the documents or other items authorized to be seized are relevant to those crimes. The warrant requirement of the Fifth Amendment to the United States Constitution requires that the places to be searched and the things to be seized be described with particularity. Though an affidavit filed with the Court in support of the warrant may outline the Government's theories and proof to date, it may be sealed at the Government's request for an extended period.
Seizure of items described by a search warrant may not be resisted, refused or limited, except by agreement with the
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Government. Even materials legally protected by a valid attorney-client privilege are subject to seizure. Should this circumstance be presented, the Government attorney supervising the search will be more likely to recognize and deal with a "privilege" issue than will the policeman executing the warrant. The execution of a warrant, and the seizure and corresponding loss of documents impairs not only a firm's ability to conduct its business, but impairs the ability of defense counsel to understand the investigation and properly defend against it.
E.Subpoenas to Individuals.
Individuals identified as subjects or targets of the investigation, or who are known to have potential personal criminal exposure, should be separately represented at the earliest opportunity. Though it has been a traditional practice for corporate counsel to provide representation to broad classes of employees, that approach is increasingly under Government attack.
On June 8, 1989, Attorney General Richard Thornburgh issued a memorandum concerning Government communication with persons represented by counsel. (Exhibit A, attached). Simply put, that memorandum declares that contacts and interviews by Government investigators with persons represented by counsel are "authorized by law," and therefore Government prosecutors are not subject to any prohibition set forth in the Code of Professional Responsibility against the same.2
The early assembly of an effective defense team not only ensures that the rights of...
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