The Justice Department will prioritize prosecuting individuals who commit corporate environmental crimes, a top agency official said in what one attorney called a departure from traditional prosecutorial practice.
“Only individuals can go to jail, and we have found that criminal corporate accountability starts with accountability for individuals responsible for criminal conduct,” Todd Kim, the assistant attorney general for the department’s Environment and Natural Resources Division, said in a speech to be broadcast at the American Bar Association’s National Environmental Enforcement Conference.
Kim’s pre-recorded keynote address, a component of the conference scheduled for Tuesday, was first made available to registrants on Dec. 10.
DOJ won’t restrict its criminal enforcement to environmental statutes and will consider Title 18 crimes of fraud, conspiracy, and obstruction of justice when committed alongside environmental violations, Kim said.
“A genuine threat of criminal prosecution can and will change the conduct of individuals and corporations who would not be deterred by the threat of civil enforcement alone,” he said.
Kim’s remarks echo comments by Deputy Attorney General Lisa Monaco, who in October told the ABA’s White Collar Crime National Institute that the criminal prosecution of individuals was a top priority of the Biden administration.
The threat of criminal enforcement from DOJ also makes agencies’ administrative and civil enforcement programs more effective, Kim said.
“Agency queries are taken more seriously, and inspectors get more respect and greater cooperation on site,” he said. “In this way, criminal enforcement leads to greater civil compliance.”
Prosecutors have always wielded the threat of criminal charges, but “it is usually unspoken,” said Steven Holtshouser, a former supervisor in the U.S. Attorney’s Office specializing in white-collar crime.
“What is a departure is the overtness of DOJ’s publicly embracing the dynamic and announcing to business targets that individuals could pay the price for what is, in reality, collective actions of an entity that cannot—as Assistant Attorney General Kim correctly points out—be sent to jail,” said Holtshouser, now a partner at Husch Blackwell LLP in St. Louis.
The policy raises the risk that a company with minor criminal exposure and some civil exposure will agree to onerous civil settlement terms in order to protect individuals threatened with prosecution, Houltshouser said.
“It is a matter of leverage,” and Kim’s remarks “leave no doubt as to DOJ’s willingness to use that leverage,” he said.
He added that the policy may lead to cases in which a company refuses to agree to the government’s terms, but the DOJ carries through on a threat that otherwise wouldn’t result in individual criminal prosecutions.
“Especially in the case of lower-level individuals, DOJ’s policy has the definite risk of going too far,” he said.
Matt Leopold, a former EPA general counsel, said companies that play by the rules deserve a level playing field. He also said the U.S. has a long track record of environmental compliance.
“We’ve achieved this, historically, relying on mostly administrative or non-criminal enforcement, with criminal enforcement being reserved for egregious conduct,” said Leopold, now a partner with Hunton Andrews Kurth LLP in Washington, D.C.
Corporate Track Record
Kim also said his office’s assessment of a corporation’s track record “may not be limited to its environmental misdeeds.” For example, if a corporate supply chain “originates from a criminally tainted source, then my division will consider the criminal responsibility of all parts of that supply chain,” he said.
To illustrate, he pointed to the Lacey Act, a century-old statute that bars the trade of timber and other natural resources that have been illegally taken. DOJ enforces the law throughout a company’s supply chain, and a corporate actor can be held responsible if he or she “knew or, in the exercise of due care, should have known that there is unlawfully sourced timber in its supply chain,” he said.
A corporation seeking credit for cooperating with DOJ will need to identify all the individuals involved in misconduct, including those outside the company, according to Kim.
DOJ is also “paying particular attention” to environmental justice, Kim said. It’s working with the Environmental Protection Agency to develop a strategy that gives timely relief for systemic violations and contamination in environmental justice communities, he said.
Melissa Hoffer, principal deputy general counsel at the EPA, said in October that the agency was “taking a fresh look” at the legal tools at its disposal to reduce pollution in environmental justice communities. The agency won’t hesitate to invoke Title XI of the Civil Rights Act on regulatory and permitting decisions, she said.