Developing an Effective Environmental and Monitoring Compliance Program

• Author: Judson W. Starr/Amy J. McMaster/John F. Cooney/Joseph G. (Jerry) Block/David G. Dickman
• Pages: 467-470

Page 467

Environmental Compliance Programs

Companies can mitigate the risks presented by a government criminal investig ation by developing and implementing

a comprehensive environmental compliance prog ram because:

• an eective compliance program wi ll prevent many incidents that could lead to government investigation, and

thus avoid not only criminal l iability, but potential civil or adm inistrative sanctions as well;

• violations discovered t hrough an eective compliance progr am will give the company the opport unity to

disclose violations or incidents voluntarily, potentially allowin g the company to take advantage of government

voluntary disclosure provisions that could result in a recommendation against crimi nal prosecution and/or

reductions in civil pena lty assessments;

• the existenc e of an eective c ompliance progra m will be an important bargainin g tool in trying to convince

the government that an environmental violation is most appropriately handled as a civil or administr ative mat-

ter rather than a cri minal case;

• if the case is ha ndled civilly or admini stratively, the compliance prog ram will help in reducing civi l penaltie s

and in avoiding administr ative sanct ions, such as suspen sion and de barment from obtaining government

contract s or subsidies;

• an eective corporate compliance program ca n be the basis of a good defense at trial, particu larly if a company

is charged with neg ligence or intentional misconduct; and

• even if an environmental violation is cri minally prosecuted, a comprehensive, eective corporate compliance

program could head o a highly intrusive, court-mandated compliance program that is often i mposed as a

condition of probation for corporations in the event of a conviction, or as a cond ition of a plea agreement.

A. The Importance of Having an Effective Compliance Program

In 1999, the Deput y Attorney General of the United States, Eric Holder, issued a Memora ndum entitled, “Bring-

ing Crim inal Charges Against Corporations.”1 is memorandum promulg ated guidance to prosecutors, “Federal

Prosecution of Corporations,” regarding the factors that should generally be considered when making cha rging deci-

sions agai nst a corporation. ere have been subsequent iterations of this guidance, 2 but with each reiteration, the

existence a nd eectiveness of a c orporate complianc e program that addres ses the subject of the suspected violation

has consistently been on of the factors t hat is required to be considered by the prosecutor. e guidance notes that

while no complia nce program can ever prevent all c riminal activity, the “critica l factors in evaluati ng any program

are whether the program is adequately designed for max imum eectiveness in preventing and detecting wrongdoing

by employees and whether corporate mana gement is en forcing the program or is tacitly encouraging or pressu ring

employees to engage in misc onduct to achieve business object ives.”3

e g uidance also establishes other factors to be considered . In some instances, the ability to meet these fac-

tors will also, by necessity, rely heavi ly on the existence of a comprehensive and eective compliance progr am. For

instance, one factor to be considered is the pervasiveness of wrongdoing within the corporation, with the most

important aspec t being the role of management in esta blishing a c orporate culture that either discourages or tacit ly

encourages criminal conduct.4 Obv iously, the promulgat ion and implementation of a comprehensive and eect ive

corporate c ompliance program is a strong management statement that it is doing e veryth ing it can to discourage

criminal or other aber rant conduct, and to discover and appropriately deal with inst ances of noncompliance.

1. U.S. DOJ, Memorandum from Eric Holder, Deputy Attorney General, to Heads of Department Components and All U.S. Attorneys,

Subject: Bringing Criminal Charges Against Corporations (June 16, 1999), available at http://www.justice.gov/criminal/fraud/documents/

reports/1999/charging-corps.PDF.

2. e second iteration was the so-called “ompson Memo,” Memorandum from Larry D. ompson, Deputy Attorney General, to Heads

of Department Components and United States Attorneys, Subject: Principals of Federal Prosecution of Business Organizations (Jan. 20, 2003),

available at http://www.americanbar.org/content/dam/aba/migrated/poladv/priorities/privilegewaiver/2003jan20_privwaiv_dojthomp.au-

thcheckdam.pdf. e current guidance, the so-called “McNulty Memo,” was promulgated on August 28, 2008, and has been incorporated

into the U.S. Attorney’s Manual. Dept. of Justice, U.S. Attorneys’ Manual, Title 9, ch. 9-28.000, Principles of Federal Prosecution of Business

Organizations, available at http://www.justice.gov/usao/eousa/foia_reading_room/usam/title9/28mcrm.htm (last visited Mar. 27, 2014)

[hereinafter USAM Principles].

3. USAM Prinicples, supra note 2, at §9-28.800 B.

4. Id. §9-28.500 B.