Internal Investigations of Environmental Crimes

Date01 April 2015
Investigations of
by Craig D. Galli
Craig D. Galli is a Partner at the Salt Lake City
oce of Holland & Hart LLP, adjunct professor of
law at Brigham Young University, and former senior
trial attorney at the U.S. Department of Justice,
Environment and Natural Resources Division.
e initiation of a government environmental crimi-
nal investigation or discovery of a serious compliance
issue often triggers the need to conduct an internal
investigation. e decision to conduct an internal
investigation entails complex issues regarding the
scope of the investigation, who conducts the internal
investigation, how to conduct the investigation in par-
allel with an ongoing government investigation, how
to use experts to assist in the investigation, how to
manage whistleblowers, when and how to disclose the
results of the investigation to regulators and prosecu-
tors, and many other issues. is Article addresses
internal corporate investigations in the environmen-
tal compliance context and provides practical tips for
handling the investigations.
I. Introduction
Much has been written regarding the techniques and legal
considerations associated with conducting internal inves-
tigations in the context of employment law claims, securi-
ties issues, and general corporate crimes.1 Environmental
criminal investigations and compliance issues pose dif-
cult, often unique, challenges due to the complexity of
the governing law and the highly technical nature of envi-
ronmental regulatory requirements. is Art icle addresses
internal corporate investigations in the environmental
compliance context and provides practical tips for han-
dling the investigations.
Everything about internal investigations of alleged
environmental crimes is complex, multivariable, and high
stakes. In play a re substantial possible civil or criminal
nes and penalties, or even injunctive relief, against the
company; t he ca reers a nd (in a worst-case scenario) even
the liberty of employees, executives, and in-house counsel;
company debarment from governmental contracts; and the
good name and reputation of all involved. ere are many
potential pitfalls in commencing, conducting, and com-
pleting a proper internal investigation, and many decision
points where a ne balancing of competing goals, risks,
and unknowns is required. Successfully navigating these
shoals requires extensive experience in managing internal
investigations, sound judgment, and credibility with reg-
ulators and government lawyers that comes only from a
well-deserved reputation for integrity and ethics.
II. Whether and When to Conduct an
Internal Investigation
No matter how stringent a company’s internal compliance
program and its environmental management practices,
from t ime to time, complex industria l operations invari-
ably run afoul of environmental regulatory requirements.
is may be due to upset conditions, ambiguous regula-
tory requirements or permit conditions, negligence, or the
intentional conduct of a rogue or misguided employee.
Launching an internal investigation every time that any
environmental compliance issue is detected or suspected,
however, would distract company personnel, demand
excessive resources, and ultimately be of little value. Other
compliance tools exist to detect and manage routine com-
pliance issues, including routine compliance audits, robust
training, and competent environmental management per-
sonnel.2 ere are multiple factors that a company should
1. See, e.g., B F. MN  B D. B, I C I-
 (3d ed. 2007).
2. A compliance audit may be the best prophylactic means to reduce risks of se-
rious environmental violations requiring an internal investigation. Routine
Author’s Note: e author wishes to thank his law rm colleagues
who provided valuable assistance with this Article: Gregory E.
Goldberg, Paul D. Phillips, Elizabeth A. Mitchell, and H. Douglas
Owens. Also, a special thanks to our associate Kristin A. Butler for
her expert cite checking. is Article reects solely the views of the
author and does not constitute legal advice.
Copyright © 2015 Environmental Law Institute®, Washington, DC. Reprinted with permission from ELR®,, 1-800-433-5120.
4-2015 NEWS & ANALYSIS 45 ELR 10351
consider in assessing whether to conduct an internal inves-
tigation, including:
• e seriousness and credibility of the allegation of
environmental noncompliance;
• Potential consequences if the allegation proves
• Whether investigating the allegation is mandated by
law or corporate policy;
• Whether disclosure of the a llegation to shareholders
or regulators is mandatory;
• e cost and time required to conduct the
• e company’s ability to mitigate or reduce conse-
quences by conducting the internal investigation;
• Whether identif ying and disclosing the violation to
regulators represents the best strategy to avoid or
minimize civil penalties or criminal liability;
• Whether informed decisions can be made without
conducting an investigation; and
• Whether the investigation would assist the company
in defending subsequent related litigation or a gov-
ernment enforcement action.
In addition to these factors, at least four situations
exist in which many companies would normally con-
sider it prudent to conduc t an intern al inves tigat ion.
First, the company receives notice or ot herwise learns
that the U.S. Environmenta l Protection A gency (EPA),
a state attorney general, or s tate environmenta l agenc y
has opened a criminal investigation of the company or
its compliance practices. Second, a high-pr ole in cident
occurs that involves signic ant environment al harm,
persona l injury, or substantia l risks to human health,
usually bringing media a ttention and increased regula-
tory scrutiny.  ird, duri ng a government civil -
ment action, some circumst ances warra nt a para llel
interna l investi gation. Four th, the company identies
periodic compliance audits are generally performed by third-party techni-
cal consultants (often with help from internal environmental management
personnel) to evaluate a company or a facility’s environmental performance
and compliance against regulatory requirements and a company’s stated en-
vironmental policies and objectives. Compliance audits can be multimedia
or limited to specic media such as waste management, Clean Water Act, or
Clean Air Act. Environmental audits can be performed with assistance from
counsel under the attorney-client privilege to identify and correct specic
compliance deciencies or address the adequacy of environmental manage-
ment systems. See generally L B. C  R W. K,
E H  S A (9th ed. 2011). e results
of an environmental audit, like that of an internal investigation, can be self-
reported, as discussed below.
seriou s violations not yet known to re gulatory ocials.
Each scenar io is briey add ressed below.
A. Government Criminal Investigation of Alleged
Environmental Crimes
Various environmental statutes give EPA the authority
to initiate administrative, civil, or criminal enforcement
actions as well as to recover certain response and cleanup
costs for contamination.3 If a company receives informa-
tion t hat EPA or a state regulatory agency has opened a
criminal investigation into its conduct or practices, an
internal investigation is almost always warranted. Most
sophisticated companies immediately engage counsel to
conduct an internal investigation upon learning that a gov-
ernment environmental criminal investigation has been
initiated. An internal investig ation provides additional
detailed information regarding the extent of knowledge or
acquiescence within t he company, identies any weakness
in management systems that should be addressed, and pro-
vides needed information to assert legal defenses to defend
or settle the enforcement action.
Companies t hat fai l to remain actively aware of a gov-
ernment criminal investigation and cooperatively engaged
in a dialogue with the government risk nding themselves
at-footed with exposure to t he company a nd its ocers,
senior management, and possibly parent companies. By
contrast, companies that quickly gather facts, cooper-
ate with government investigators and prosecutors, and
aggressively assert legal defenses with government pros-
ecutors, stand the best cha nce to convert a criminal inves-
tigation to an administrative or civ il enforcement action,
or to negotiate a more reasonable plea should the matter
remain crim inal.
Cooperation during a government investigation often
provides little downside and can greatly reduce exposure.
e U.S. Department of Justice (DOJ) has issued guidance
describing mitigating factors considered by the government
in the exercise of crimina l environmental enforcement
discretion. e three principal factors include: (1)timely
and complete voluntary disclosure; (2)cooperation; and
3. ese environmental laws include: Comprehensive Environmental Re-
sponse, Compensation, and Liability Act (CERCLA or Superfund), 42
U.S.C. §§9601-9675, ELR S. CERCLA §§101-405; Clean Air Act
(CAA), 42 U.S.C. §§7401-7671q, ELR S. CAA §§101-618; Clean Wa-
ter Act (CWA), 33 U.S.C. §§1251-1387, ELR S. FWPCA §§101-607;
Safe Drinking Water Act (SDWA), 42 U.S.C. §§300f-300j-26, ELR S.
SDWA §§1401-1465; Resource Conservation and Recovery Act (RCRA),
42 U.S.C. §§6901-6992k, ELR S. RCRA §§1001-11011; Oil Pollution
Act (OPA), 33 U.S.C. §§2701-2761, ELR S. OPA §§1001-7001; En-
vironmental Planning and Community Right-To-Know Act (EPCRA), 42
U.S.C. §§11001-11050, ELR S. EPCRA §§301-330; Federal Insecti-
cide, Fungicide, and Rodenticide Act (FIFRA), 7 U.S.C. §§136-136y, ELR
S. FIFRA §§2-35; and the Toxic Substances Control Act (TSCA), 15
U.S.C. §§2601-2692, ELR S. TSCA §§2-412.
Copyright © 2015 Environmental Law Institute®, Washington, DC. Reprinted with permission from ELR®,, 1-800-433-5120.

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