The Growing Web of Environmental Criminal Liability: Are Environmental Consultants Next to be Entangled? George L. O’Connell, Attorney Craig C. Allison, Attorney In the early years of environmental regulation, criminal prosecutors typically focused their attention only on those who clearly and intentionally violated environmental laws, the notorious “midnight dumpers.” No longer. In recent years, we have seen an explosion of environmental criminal investigations and prosecutions against companies and individuals. All too frequently, these cases are being pursued against those who are making good faith attempts to interpret and comply with the myriad of complex and often changing environmental rules. Alleged violations of environmental law in the past were typically handled administratively with the imposition of modest civil penalties. Increasingly, however, alleged environmental violations are being pursued in the criminal courts. And criminal prosecutions are not limited to actions against the company. Prosecutors are regularly seeking severe criminal sanctions, including substantial monetary penalties and jail time, against managers and higher levels who were in a position to prevent the alleged environmental violations, but failed to do so. All signs indicate that the trend towards increased criminal prosecutions for environmental noncompliance will continue at both the federal and state level. The State Attorney General is in the early stages of working with the California District Attorney’s Association to further strengthen environmental prosecutions by state prosecutors. Moreover, many district attorney's offices have full time environmental units staffed with deputy district attorneys who are knowledgeable about environmental laws, and committed to criminal prosecutions. On the federal level, the United States Attorney’s offices in Los Angeles and Sacramento have been bringing criminal indictments and are actively pursuing Grand Jury investigations in numerous environmental cases. Indeed, the United States Attorney for the Eastern District of California, which covers Sacramento and the Central Valley, has publicly announced that environmental crimes, together with medicare fraud, are the top priorities of his office. Further, the U.S. Environmental Protection Agency has hired several additional criminal investigators in Region IX. And nationwide, the FBI has assigned between 75 and 100 agents to work on environmental criminal cases. All of these developments illustrate the high priority given to environmental crimes by local, state, and federal prosecutors. What is the significance to the environmental consultant or contractor of the government’s zealous new efforts to criminally prosecute alleged environmental violations? Does the environmental professional need to worry about this recent trend of increased prosecutions in the environmental arena? The answer to this question is a resounding “yes.” Part I of this article below discusses three undesirable ways in which the environmental consultant may unwittingly come in contact with environmental criminal laws: When the consultant’s own actions make him or her a direct target of a criminal investigation or prosecution; When the consultant’s advice is raised as a defense in a later criminal enforcement action against the consultant’s clients; and When the consultant is criminally prosecuted for providing a client erroneous advice on environmental matters. Part II of this article, which will appear in a later volume of Hydrovisions, will identify some warning signs that may indicate that an environmental consultant’s client is the subject of an environmental criminal investigation. It will also discuss the consultant’s role in assisting counsel in the pre-indictment and pre-trial phase of defending a criminal environmental matter. The Environmental Consultant as a Direct Target of a Criminal Investigation The government’s increased aggressiveness in prosecuting environmental crimes has disturbing implications for environmental consultants. Consultants need to be aware of the very real possibility that a consultant’s own actions may become the focus of a prosecutor’s next environmental criminal investigation. All environmental consultants understand that much of their work is governed by environmental laws and regulations. Virtually all of these same laws also provide the government the option of seeking stiff criminal sanctions as an enforcement tool against violators of these environmental laws and regulations. For instance, many environmental consultants must contend with drill cuttings or producevdwater in connection with assessing or characterizing the contamination problem at a project site. This waste material may contain contaminants in concentration that render the waste “hazardous” under federal and/or state law. If so, numerous requirements are triggered concerning the labelling, handling, storage, transportation, and disposal of such “hazardous wastes.” Failure to comply with these requirements may result in the consultant facing criminal charges if a zealous prosecutor learns of the violations. It also would be a mistake to assume that consultants will be immune from scrutiny because the government has “bigger fish to fry” in the environmental area. In our experience, criminal investigators and prosecutors at both the state and federal level have not hesitated to closely scrutinize the work of environmental consultants and contractors. At least one environmental consultant is presently under criminal investigation for transporting a mercury contaminated waste without a manifest, and for disposing of such waste at an unpermitted landfill. In another case, a state agency has taken the position that an environmental contractor or consultant hired to clean up a contaminated site was the “generator” of the waste. It is the government’s position in that case that the generator is the person who “caused” the activity or material to become regulated. In short, we see no indication that the government intends to give the environmental consultant any sort of break in its quest to prosecute criminal environmental wrong doing. Because environmental consultants are fair game in the growing arena of environmental crimes, there are three important points for the environmental consultant to understand and appreciate. Knowledge That Conduct Was Unlawful is Not Necessary Most environmental crimes are considered to be “general intent” crimes. This means that the defendant can be convicted even if he does not realize that he was engaging in illegal or improper conduct. Although many state and federal environmental criminal statutes require the defendant to have “knowingly” engaged in the alleged improper activity, most courts have broadly interpreted the “knowing” element of the crime to mean that the defendant merely knew he was engaging in the conduct in question. See United States v. Weitzenhoff, 1 F.3d 1523 (9th Cir. 1993). So, for example, courts have upheld felony convictions under RCRA for disposing of hazardous waste without a permit where the evidence showed that the defendant did not know that the material in question was “hazardous” within the meaning of the RCRA regulations or that the disposal location did not have a valid disposal permit. See United States v. Hoflin, 880 F.2d 1033 (9th Cir. 1989) (Government not required to show that defendant knew that facility lacked a permit as element of the RCRA disposal crime); See also United States v. Hays International Corporation, 786 F.2d 1499 (11th Cir. 1986). In the Hays case, the defendant was found guilty of a RCRA crime for knowingly transporting hazardous waste to an unpermitted facility simply because he knew what the waste was (a mixture of paint and solvent). The court did not require proof that defendant knew that the paint waste was a “hazardous waste” within the meaning of RCRA regulations. Another court has held that the individual defendants’ knowledge that sewage from a treatment plant was going into the ocean was all the government needed to show to obtain a felony conviction under the Clean Water Act. The government was not required to prove that the defendants knew that such discharges violated the law or the terms of the treatment facility’s NPDES permit. Evidence that the defendants reasonably believed that such discharges fell within the terms of their permit was not relevant. See United States v. Weitzenhoff, 1 F.3d 1523 (9th Cir. 1993). Criminal Sanctions Are Stringent Most criminal environmental statutes are serious crimes: they carry heavy criminal penalties, including lengthy periods of incarceration. The violation of any rule, regulation, or requirement governing the management of hazardous waste under California law, for instance, constitutes a misdemeanor offense which carries a fine of $1,000 and imprisonment of up to six months. See Health & Safety Code §25190. Further, certain specific conduct involving the improper handling of hazardous waste triggers much harsher criminal sanctions. For instance, the knowing or negligent disposal or transportation of hazardous waste to a facility without a permit carries a criminal fine of up to $100,000 for each day of the violation and imprisonment for up to three years under the California Health & Safety Code. See Health and Safety Code §§25189.5(b) and (c). Similarly, severe criminal penalties attach to violations of federal environmental laws, including the Safe Drinking Water Act, the Clean Water Act, and the Resource Conservation and Recovery Act. See, e.g., 42 U.S.C. §6928. Conduct Need Not be Egregious to be Handled Criminally The government can and does file criminal charges in circumstances where no real harm to the environment has occurred and where no evidence exists that the defendants knew that their actions violated the law. Businesses have been threatened with felony charges under state law for such trivial events as allegedly failing to report the “spill” of incidental drippages of hydraulic fluid from heavy equipment at a quarry site. Such charges were threatened even though the drops of hydraulic fluid did nothing more than cause a stain on the surface of the soil no larger than the spots of motor oil present in most of our driveways. In another case, the United States Attorney criminally indicted a business and its owner for placing inert concrete rip-rap along the banks of a river-front property without a permit from the Army Corp of Engineers. Charges were brought even though the riprapping actually served to enhance environmental protection by preventing silt and sediment from entering the river. Further, the fact that the businessman did not know that he needed a permit for this activity did not save him from criminal indictment. What is The Significance of All This for the Environmental Consultant? All of this means that the environmental consultant must be constantly aware of the risks involved in non-compliance with the environmental laws. A hypothetical will illustrate this point: Suppose an environmental consultant completes a site characterization project and elects to leave behind produced water or drill cuttings in sealed drums thinking that the material is not hazardous waste under Federal or California law. The consultant further believes that the property owner will properly dispose of the waste. Also suppose that the drill cuttings or waste water in fact contain levels of benzene or other contaminants which render the material a regulated hazardous waste. Under both state and federal law, the “abandonment” of hazardous waste is considered a “disposal” for purposes of criminal penalties. See California Health & Safety Code §25113. If felony charges are later brought against the consultant for the improper “disposal” of a hazardous waste, the fact that the consultant did not realize that the waste was “hazardous” or that leaving it behind was a type of “disposal” likely would not be a defense. Further, in our experience, the fact that the hazardous waste was safely contained in sealed drums and did not cause any environmental damage would be of little value in dissuading the government from criminal prosecution. Finally, arguments that the property owner should have been responsible for the proper disposal of the waste likely would have little bearing on the consultant’s potential criminal liability for the abandonment of the hazardous waste. The above scenario serves to demonstrate just one of the many possible ways that an environmental consultant may gain unpleasant, first hand experience with environmental criminal laws. The work of the environmental professional is regulated by numerous and varied laws and regulations. As most consultants can attest, many such laws contain technical and arcane requirements, and do not always comport with common sense. Yet many of these same laws contain very serious criminal penalties. And, at an alarming rate, prosecutors are quick to seek such criminal penalties against companies and individuals alike who have not followed these requirements to the letter. A Consultant's Faulty Advice to a Client May Have Hazardous Consequences An environmental consultant may also unwittingly be exposed to the criminal justice system if a client who is charged with an environmental crime defends himself with the claim that he engaged in the allegedly wrongful conduct on the advice of the environmental consultant. Further, under such circumstances, the prospect exists that an overly zealous prosecutor may consider the consultant’s environmental advice to be so faulty that he pursues criminal charges directly against the consultant for “causing” a violation of environmental laws. This possibility is not far-fetched; there are signs prosecutors are moving in this direction. The “Advice of Professional” Defense Generally, a defendant’s otherwise unlawful conduct is excused where he reasonably relied on the advice of his attorney that his conduct was proper and lawful. Although this defense has typically been limited to the “advice of counsel,” courts recently have recognized a defense based on the advice of other qualified professionals. A defendant may be able to avoid criminal liability for tax fraud, for instance, by showing that he reasonably acted on the advice of his accountant. When such a defense is raised, the government and the defendant are usually granted an unhampered right of access to the advisor’s entire file and the advice given will be closely evaluated and critiqued. It is never a pleasant experience for a professional to have his or her advice called into question under such circumstances. In view of the legal issues inherent in the advice and recommendations given to clients by environmental consultants, we are beginning to see the emergence of an “advice of environmental consultant” defense in some environmental criminal matters. Property owners and companies generating waste frequently turn to environmental consultants to answer questions of a legal nature, such as: Is my waste stream “hazardous?” Is the pond on my property a “wetland?” Have I spilled a “reportable quantity” of a hazardous material? If a consultant renders advice on such issues and the client relies on it, such advice will undoubtedly be raised as a defense to any future enforcement actions. Faulty Advice May be Considered Criminal With the number of environmental criminal cases multiplying every year, an aggressive prosecutor may well attempt to take the “advice of professional” defense one step further and seek to hold the environmental consultant directly liable for environmental crimes committed by the client in reliance on the consultant’s advice. Indeed, we have already seen a disturbing case of this sort filed against environmental attorneys by the Solano County District Attorney’s Office. In 1991, the Solano County District Attorney’s office charged a San Francisco law firm and a 28 year old associate with three felonies for advising a client who filed bankruptcy that it should not remove drums of hazardous waste after being evicted from the site it was leasing. The prosecutor claimed that by giving this erroneous advice to “abandon” the waste, the law firm knew or reasonably should have known that it was “causing” a disposal of hazardous waste. While this case was eventually dismissed by the court, it does send a chilling signal of the willingness of eager prosecutors to prosecute faulty advice by environmental professionals. For example, as many of you undoubtedly are aware, various state and federal statutes require the “immediate” reporting of a spill of a hazardous substance in excess of a specified “reportable quantity.” The case law demonstrates that the government has not hesitated to file criminal charges against businesses who fail to observe these reporting requirements. And if a consultant were to incorrectly advise a client not to report a spill, such conduct might well come within the scope of criminal statutes. It goes without saying that any advice or recommendation given by an environmental consultant must be sound. The consultant can only do so by staying well informed of ever-changing environmental laws and regulations. Further, while some judgment must be exercised, it is usually advisable to document in detail the thought process and rationale underlying a consultant’s advice or recommendations. If, for instance, the consultant advises a client that a spill need not be reported because it did not involve a reportable quantity, the consultant’s documented summary of observations and calculations would be very useful. Similarly, the consultant should closely document information received from clients as well as the advice given, so that the basis for such advice is well documented. And if there are any doubts or uncertainties, the consultant should be sure that qualified environmental counsel is involved to review the situation. Conclusion: The Bottom Line The Government has shown an increased willingness to respond even to minor violations of environmental laws with criminal charges. Further, courts have broadly construed the criminal provisions of these laws to allow convictions even if the person charged did not know his or her action was unlawful or improper. Thus, it is more important than ever that environmental consultants continuously stay informed of, and rigorously observe, all environmental rules and regulations governing their work. Taking such rules and regulations lightly in this day and age is a high risk gamble which could have devastating criminal consequences for your company and you personally as the person in charge of your company’s consulting activities. George L. O’Connell is a senior partner at the Sacramento law firm of Downey, Brand, Seymour & Rohwer where he specializes in the defense of White Collar Criminal Matters and Complex Civil Enforcement Actions. Craig C. Allison is a senior associate at Downey, Brand, Seymour & Rohwer and is principally involved in environmental litigation, including private cost recovery actions and environmental criminal defense. Copyright © 1996 George L. O’Connell and Craig C. Allison. All rights reserved.