[Senate Hearing 107-938]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 107-938

                   CRIMINAL AND CIVIL ENFORCEMENT OF
                   ENVIRONMENTAL LAWS: DO WE HAVE ALL
                           THE TOOLS WE NEED?

=======================================================================

                                HEARING

                               before the

                    SUBCOMMITTEE ON CRIME AND DRUGS

                                 of the

                       COMMITTEE ON THE JUDICIARY
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 30, 2002

                               __________

                          Serial No. J-107-97

                               __________

         Printed for the use of the Committee on the Judiciary




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                            WASHINGTON : 2003
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                       COMMITTEE ON THE JUDICIARY

                  PATRICK J. LEAHY, Vermont, Chairman
EDWARD M. KENNEDY, Massachusetts     ORRIN G. HATCH, Utah
JOSEPH R. BIDEN, Jr., Delaware       STROM THURMOND, South Carolina
HERBERT KOHL, Wisconsin              CHARLES E. GRASSLEY, Iowa
DIANNE FEINSTEIN, California         ARLEN SPECTER, Pennsylvania
RUSSELL D. FEINGOLD, Wisconsin       JON KYL, Arizona
CHARLES E. SCHUMER, New York         MIKE DeWINE, Ohio
RICHARD J. DURBIN, Illinois          JEFF SESSIONS, Alabama
MARIA CANTWELL, Washington           SAM BROWNBACK, Kansas
JOHN EDWARDS, North Carolina         MITCH McCONNELL, Kentucky
       Bruce A. Cohen, Majority Chief Counsel and Staff Director
                  Sharon Prost, Minority Chief Counsel
                Makan Delrahim, Minority Staff Director
                                 ------                                

                    Subcommittee on Crime and Drugs

                JOSEPH R. BIDEN, Jr., Delaware, Chairman
PATRICK J. LEAHY, Vermont            CHARLES E. GRASSLEY, Iowa
DIANNE FEINSTEIN, California         ORRIN G. HATCH, Utah
HERBERT KOHL, Wisconsin              MIKE DeWINE, Ohio
RICHARD J. DURBIN, Illinois          JEFF SESSIONS, Alabama
MARIA CANTWELL, Washington           SAM BROWNBACK, Kansas
JOHN EDWARDS, North Carolina         MITCH McCONNELL, Kentucky
                 Neil MacBride, Majority Chief Counsel
                   Rita Lari, Minority Chief Counsel


                            C O N T E N T S

                              ----------                              

                    STATEMENTS OF COMMITTEE MEMBERS

                                                                   Page

Biden, Hon. Joseph R., Jr., a U.S Senator from the State of 
  Delaware.......................................................     1
Feingold, Russell D., a U.S. Senator from the State of Wisconsin, 
  prepared statement.............................................    68
Grassley, Hon. Charles E., a U.S. Senator from the State of Iowa, 
  prepared statement.............................................    70
Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah, 
  prepared statement.............................................    75

                               WITNESSES

DiPasquale, Nicholas A., Secretary, Delaware Department of 
  Natural Resorces and Environmental Control, Dover, Delaware....    29
Penders, Michael J., President, Environmental Protection 
  International, Washington, D.C.................................    27
Sansonetti, Thomas L., Assistant Attorney General, Environment 
  and Natural Resources Division, Department of Justice; 
  accompanied by Timothy M. Burgess, U.S. Attorney for the 
  District of Alaska, Anchorage, Alaska, and Leo D'Amico, 
  Director, Office of Criminal Enforcement, Forensics and 
  Training, Office of Enforcement and Compliance Assistance, 
  Environmental Protection Agency, Washington, D.C...............     4
Sarachan, Ronald A., Ballard Spahr Andrews and Ingersoll, LLP, 
  Philadelphia, Pennsylvania.....................................    24
Schaeffer, Eric, Director, Environmental Integrity Project, 
  Rockefeller Family Fund, Washington, D.C.......................    15
Starr, Judson W., Venable, LLP, Washington, D.C..................    22

                         QUESTIONS AND ANSWERS

Responses of Thomas L. Sanonetti and Leo D'Amico to questions 
  submitted by Senator Biden.....................................    43
Responses of Thomas L. Sanonetti to questions submitted by 
  Senator Cantwell...............................................    52

                       SUBMISSIONS FOR THE RECORD

Citizens for Pennsylvania's Future, Harrisburg, Pennsylvania, 
  statement......................................................    54
DiPasquale, Nicholas A., Secretary, Delaware Department of 
  Natural Resorces and Environmental Control, Dover, Delaware, 
  prepared statement.............................................    59
Penders, Michael J., President, Environmental Protection 
  International, Washington, D.C., prepared statement............    76
Sansonetti, Thomas L., Assistant Attorney General, Environment 
  and Natural Resources Division, Department of Justice; 
  accompanied by Timothy M. Burgess, U.S. Attorney for the 
  District of Alaska, Anchorage, Alaska, and Leo D'Amico, 
  Director, Office of Criminal Enforcement, Forensics and 
  Training, Office of Enforcement and Compliance Assistance, 
  Environmental Protection Agency, Washington, D.C., prepared 
  statement......................................................    98
Sarachan, Ronald A., Ballard Spahr Andrews and Ingersoll, LLP, 
  Philadelphia, Pennsylvania, prepared statement.................   112
Schaeffer, Eric, Director, Environmental Integrity Project, 
  Rockefeller Family Fund, Washington, D.C., prepared statement..   119
Starr, Judson W., Venable, LLP, Washington, D.C., prepared 
  statement......................................................   127

 
                   CRIMINAL AND CIVIL ENFORCEMENT OF
                   ENVIRONMENTAL LAWS: DO WE HAVE ALL
                           THE TOOLS WE NEED?

                              ----------                              


                         TUESDAY, JULY 30, 2002

                                       U.S. Senate,
                           Subcommittee on Crime and Drugs,
                                Committee on the Judiciary,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to notice, at 2:22 p.m., in 
room SD-226, Dirksen Senate Office Building. Hon. Joseph R. 
Biden, Jr., Chairman of the Subcommittee, presiding.
    Present: Senators Biden and Sessions.

OPENING STATEMENT OF HON. JOSEPH R. BIDEN, JR., A U.S. SENATOR 
                       FROM THE DELAWARE

    Chairman Biden. The Subcommittee will come to order. Let me 
begin with an opening statement here and then introduce our 
first panel.
    Today, the Crime and Drugs Subcommittee will be addressing 
the criminal and civil enforcement sides of the Federal 
environmental laws. We will be asking whether or not law 
enforcement has all the tools they need to combat those who 
would pollute our Nation's air and water knowingly and in a 
criminal manner.
    We recently concluded a series of three hearings on the 
devastating impact of the recent spate of scandals involving 
corporate America, and as part of the larger issue this 
Subcommittee heard testimony from a wide range of experts on 
whether or not penalties for white collar crime are sufficient 
to deter corporate wrongdoing. We found that there was a bit of 
what one might call a penalty gap that existed.
    I was at the White House today when the President signed 
the Corporate Responsibility Act, and the first thing he 
mentioned was the same thing Mr. Greenspan did that he thought 
the single most--I am quoting Greenspan paraphrasing the 
President--paraphrasing them both, actually--the most important 
element of the Accountability Act we passed were the criminal 
penalties--and the President cited this--where a CFO and a CEO 
have to certify when a document is filed before the SEC four 
times a year that the information contained in the document is 
accurate.
    If you knowingly lie in that submission, you go to jail for 
10 years, and if you willfully alter that document and still 
submit it, then you go to jail for up to 20 years. The 
President cited that as the most significant deterrent, giving 
investors reason to believe that the filing is accurate, at 
least to the best knowledge of the corporate officials.
    As Samuel Johnson once said, and I am paraphrasing, there 
is nothing like a hanging to focus one's attention. I have 
found since my days on this committee, going back to the early 
1970's when we were dealing with the international bribery 
statutes, that when you have CEOs in this country susceptible 
to a criminal penalty if they engaged in responding to bribe 
offers from abroad, all of a sudden things started to change.
    So the real question here--and I have not reached a 
decision myself--is do we need any additional tools that we 
need to give the Justice Department and the EPA which they can 
bring to bear for those who knowingly and intentionally violate 
the Clean Air Act and the Clean Water Act, so that they know 
their violations will not be treated as merely a cost of doing 
business.
    I find that when an individual is held responsible, they 
focus a lot more than the corporation being held responsible. 
But as I said, and I mean this sincerely, I am not sure we 
don't have enough laws already on the books relating to that, 
and the purpose of this hearing is to begin to discuss that 
issue.
    There are three basic questions I hope our distinguished 
panel of witnesses will address today. First, are the existing 
Federal environmental laws sufficient to cover a full range of 
potential polluting of our air and our land and our water? Have 
we struck the right balance in terms of delegating the 
important enforcement activities from the Federal to the State 
governments? And do those statutes set the right standard of 
proof, or is the current standard too high to hold corporate 
polluters criminally responsible?
    The second question is are existing environmental penalties 
adequate to deter polluters? For example, I understand that in 
many environmental contexts civil and criminal enforcement 
often overlaps. For that reason, we have an expert on civil 
enforcement here today as well. I want to ensure that we are 
using all the tools in our toolbox--tough criminal penalties, 
where appropriate, quick and forceful civil penalties, where 
appropriate, and in some circumstances a combination of both.
    Third, are there sufficient resources to carry out the 
critically important job of protecting our Nation's air, land, 
and water? I know that the Justice Department and the EPA have 
incredibly dedicated and talented prosecutors who are staunchly 
committed to defending the environment. I want to make sure 
that we give them all the tools they need, just as we have done 
in the financial fraud cases. With the whole new emphasis, 
understandably, on terrorism and environmental terrorism, I 
want to know whether you have enough resources to do this job, 
as well as the new job you are being asked to do.
    In conclusion, the recent spate of corporate scandals has 
reminded us that we can't take corporate integrity and 
responsibility for granted anymore. Likewise, we can't take for 
granted that on the environmental side of the equation there 
won't be similar activity.
    Just as we crack down on white collar crime, we have to 
crack down on so-called green collar crime. Just as Congress 
needs to make sure that pensions and investments are protected, 
we need to make sure that our statutory and penalty system is 
sufficient to protect the environment.
    I am very pleased that we have such distinguished panels 
with us today, several of whom have been willing to make it 
back to the committee.
    Senator Grassley, who was going to be here and who is not 
able to be here right now--I would ask unanimous consent--and 
since I am the only one here, I am sure I will get it--that his 
statement be placed in the record.
    Our first panel is Tom Sansonetti, Assistant Attorney 
General for the Environment and Natural Resources Division of 
the Department of Justice. Mr. Sansonetti has a long history of 
government service. He was Associate Solicitor on Energy and 
Natural Resource Issues in the Interior Department under 
President Reagan. He was then nominated in 1990 to be Solicitor 
for the Interior. He also is the founding partner of his law 
firm, which specialized in energy concerns. We are very glad to 
have him here today.
    Timothy M. Burgess is the United States Attorney for the 
District of Alaska.
    Thanks for making the trip. I hope you had other reasons to 
come. I hope we weren't the only reason, but welcome. I know it 
is a long trip, having made it.
    He is a U.S. Attorney and Chairman of both the Attorney 
General's Advisory Council Environmental Subcommittee and the 
Department of Justice's Environmental Criminal Task Force. Mr. 
Burgess previously served as an Assistant U.S. Attorney in the 
District of Alaska, since 1989, and was an associate in the law 
firm of Gilmore and Feldman, in Anchorage, from 1987 to 1989. 
He received his undergraduate degree and his MB and A--you can 
tell I am from Delaware--MBA from the University of Alaska and 
his J.D. from Northeastern University. We want to thank him for 
coming.
    I might point out to him that when I first got here, 
facetiously, when I was in another State they would slip and 
say ``now I want to introduce the Senator from DuPont--I mean 
Delaware.''
    Leo A. D'Amico is the Director of the Office of Criminal 
Enforcement, Forensics, and Training, and leads the Criminal 
Investigation Division at the EPA. Mr. D'Amico has been working 
at the EPA for 9 years doing criminal enforcement, and he is 
submitting joint testimony with Mr. Sansonetti, on behalf of 
both the Department of Justice and EPA. So Mr. D'Amico will not 
be testifying, as I understand it, but we are eager to have you 
respond to questions, if you may, since you have 9 years of 
experience here. We thank you, as well, for coming.
    With that, why don't we begin with you, Tom--I should be 
more formal--General, why don't we begin with you and then we 
will go our friend from Alaska and we will move from there? The 
floor is yours.

STATEMENT OF THOMAS L. SANSONETTI, ASSISTANT ATTORNEY GENERAL, 
   ENVIRONMENT AND NATURAL RESOURCES DIVISION, DEPARTMENT OF 
   JUSTICE, WASHINGTON, D.C.; ACCOMPANIED BY HON. TIMOTHY M. 
  BURGESS, UNITED STATES ATTORNEY FOR THE DISTRICT OF ALASKA, 
    ANCHORAGE, ALASKA, AND LEO D'AMICO, DIRECTOR, OFFICE OF 
    CRIMINAL ENFORCEMENT, FORENSICS AND TRAINING, OFFICE OF 
ENFORCEMENT AND COMPLIANCE ASSISTANCE, ENVIRONMENTAL PROTECTION 
                    AGENCY, WASHINGTON, D.C.

    Mr. Sansonetti. Chairman Biden, I am pleased to be here 
today to discuss the Department of Justice's environmental 
crimes program.
    Firm and fair enforcement of the laws is an important 
component of environmental protection. It helps ensure that, 
one, our citizens can breathe clean air, drink pure water, and 
enjoy our Nation's natural resources; two, that law-abiding 
businesses have a level economic playing field on which to 
compete; and, three, that those who fail to comply with the law 
know that they will be penalized and will be deterred from non-
compliance.
    Attorney General Ashcroft has identified protection of our 
natural resources through strong enforcement of the 
environmental laws as a top priority for the Department, and 
our environmental crimes program is a crucial part of those 
enforcement efforts.
    Tim Burgess, as you noted, the U.S. Attorney from Alaska, 
is also the head of the Department's Environment Subcommittee 
of the Attorney General's Advisory Council. Of course, he will 
be here today and joining me in responding to questions that 
you may have, along with Leo D'Amico, from the U.S. EPA. As you 
noted, he is the head of the EPA's criminal enforcement 
efforts.
    In my situation, the Environment and Natural Resources 
Division has ten sections. Two of those sections are 
responsible for prosecuting environmental crimes: the 
Environmental Crime Section, known as ECS, which is responsible 
for prosecuting individuals and corporations that have violated 
the major environmental and pollution control laws; and, 
second, the Wildlife and Marine Resources Section, which is 
responsible for cracking down on the major worldwide black 
market in wildlife.
    The Environmental Crime Section has about 28 attorneys that 
are devoted full-time to criminal enforcement, whereas the 
Wildlife Section has 5 full-time prosecutors. To leverage the 
tremendous expertise of these prosecutors and to enhance our 
enforcement efforts, we also act as a resource for the training 
of and the dissemination of information to investigators and 
prosecutors across the Nation.
    In this regard, we have forged partnerships with the 94 
U.S. Attorneys' offices, the Environmental Protection Agency, 
the FBI, and other Federal, State and local agencies across the 
Nation. Through law enforcement coordinating committees and 
environmental task forces developed in the United States 
Attorneys' offices across the country, we have increased 
cooperation among local, State and Federal environmental 
enforcement offices.
    I want to emphasize to the Subcommittee that we in the 
Division share responsibility with the U.S. Attorneys' offices 
around the country for bringing prosecutions. In fact, as a 
general rule, the U.S. Attorneys' offices initially decide 
whether they wish to handle cases referred by investigators.
    Sometimes, they decide to handle a case entirely on their 
own, while in other cases they prosecute them jointly with 
attorneys from ECS. In other instances, the Environmental Crime 
Section ends up handling a case in its entirety. Regardless of 
which office ends up handling a given case, we cooperate and 
offer assistance to one another as needed.
    One example of successful cooperation very recently in May 
of this year was United States v. Ashland Oil. Ashland, which 
owned and operated an oil refining facility in Minnesota, pled 
guilty to negligent endangerment under the Clean Air Act for 
the draining of hydrocarbons into a sewer that subsequently 
ignited into a fire ball that engulfed several company 
firefighters, injuring one severely.
    Under the terms of the plea agreement, Ashland will pay a 
criminal fine of $3.5 million, sponsor a workshop at a national 
petroleum conference dealing with the Clean Air Act's new 
source performance standards for petroleum waste water, take 
out full-page notices in the two major Twin Cities newspapers 
acknowledging what happened and how it was resolved, and pay 
$50,000 to each of the three local fire departments that 
responded to the fire, and another $50,000 to their own 
emergency response team. They have also agreed to spend another 
$3.7 million upgrading their facility to help prevent similar 
incidents in the future and to pay restitution to the victims. 
The primary victim, who happens to be a former Ashland 
employee, will receive $3.5 million and medical coverage for 
him and his family.
    Cooperation with the U.S. Attorneys' offices and other law 
enforcement agencies has led to the development of initiatives 
to address problems as diverse as vessels polluting our oceans, 
environmental testing laboratories engaging in systemic fraud, 
and the smuggling of chlorofluorocarbons, CFCs, that destroy 
the protective ozone layer in our atmosphere.
    I have described these initiatives in much greater detail 
in my written testimony, but I would like to take a moment to 
talk about our most recent success in our Underground Storage 
Tank Initiative.
    The Underground Storage Tank Initiative is an aggressive 
effort to address the problem of widespread fraud by 
environmental contractors cleaning up sites contaminated by 
leaking underground storage tanks and non-compliance with UST 
regulations.
    In another terrific example of coordination between my 
Division and the U.S. Attorneys' offices, last week we 
announced that Tanknology International, Incorporated, has 
agreed to plead guilty to ten felony counts of presenting false 
claims and making false statements to Federal agencies.
    The guilty pleas were for false underground storage tank 
testing services performed by their employees at Federal 
facilities in ten different Federal districts; ten different 
States we are talking about here. Tanknology has also agreed to 
pay a $1 million criminal fine and restitution of $1.29 million 
to the U.S.
    So in connection with Tanknology, and more generally, I 
want to tip my hat to the investigators out there in the field. 
As in other areas of law enforcement, the environmental 
prosecutors depend on the investigators who initially develop 
the evidence for a case. The investigators in our cases are 
typically agents from the EPA's Criminal Investigation Division 
and the FBI, but we also receive substantial support from other 
agencies, including the Department of Transportation, the Coast 
Guard, the Fish and Wildlife Service, the Army Corps of 
Engineers, the U.S. Customs Service, and the DOD's Criminal 
Investigative Service, as well as State and local environmental 
protection-related officials and agencies. So it is these 
agencies, frankly, that are critical to the success of our 
criminal enforcement efforts.
    In conclusion, the Department of Justice takes seriously 
its obligation to protect health and the environment, and it is 
committed to strong enforcement of the laws. In my written 
testimony, I provided the Subcommittee with a big picture of 
how the environmental criminal prosecutions fit into the larger 
picture of environmental enforcement.
    Criminal enforcement is a crucial part of that picture 
because there are some individuals and companies who will 
always see a civil or administrative penalty, as you said 
earlier, as little more than the cost of doing business. We are 
committed to making them see the light regarding environmental 
compliance and the vigorous protection of public health and the 
environment.
    So Mr. D'Amico, Mr. Burgess, and I would now be happy to 
answer any questions that you may have about the Department's 
environmental crimes program.
    Chairman Biden. Thank you very much.
    Let me ask you a question, and maybe the best place to 
start is with Ashland Oil. Did you charge individuals in the 
corporation with a criminal offense or was the corporation 
charged with a criminal offense?
    Mr. Sansonetti. I recall offhand that it was the 
corporation that we did, and I can look up the individual 
details as to what happened.
    Chairman Biden. Do you remember, Mr. D'Amico?
    Mr. D'Amico. I believe it was only the corporation in 
Ashland Oil. Principally, the Criminal Investigation Division 
in our office focuses our cases on individuals. The most recent 
statistics I can give you from 2000 show that 80 percent of our 
defendants are individuals, versus 20 percent being 
corporations, and in some of those cases where it is 
corporations, it is also corporations and individuals.
    Chairman Biden. Now, can you tell me--you may not know off 
the top of your head--what is the largest corporation where an 
individual officer in the corporation was charged with a 
criminal offense?
    I asked my staff that. They came up with a number of 
instances where relatively small corporations that were 
essentially wholly owned by an individual, a major stockholder, 
were criminally held accountable. Has there been any Fortune 
100 company or Fortune 500 company where a CEO or a plant 
manager or anybody, in the 9-years you have been there that you 
can think of, crossing both administrations, Democrat and 
Republican, has gone to jail?
    Mr. D'Amico. I believe so. There was a CEO that just comes 
to me right now without having anything prepared from Sable 
Labs who was one of the senior officers, either the CEO or the 
chief financial officer for that particular corporation. I 
would have to verify that and get back that information to you.
    Chairman Biden. Well, I would very much appreciate it, and 
take your time, but if you could check to see when the last 
time anyone from a Fortune 100 company or an individual was 
sued.
    Let me tell you, the cynics among us assume that there is 
not any difference between being criminally fined, like in the 
Ashland Oil case, and being civilly fined. As long as no one is 
going to jail and it is not coming out of anybody's pocket--it 
may impact the job prospects for someone moving up the 
corporate ladder, but it is not their money and it is not their 
time in jail.
    Let me ask you a question. Mr. Burgess, you are from 
Alaska. If, in fact, you had a circumstance, for reasons 
relating to convenience, where a major supertanker was purging 
their bilges, violating the law, into the ecosystem or into the 
bay within the territorial waters of the United States, do we 
go after that outfit based upon the captain of the ship 
knowingly doing it, and criminally, or do we go after it based 
upon the civil responsibility that they have under the 
environmental laws and seek a civil penalty.
    Mr. Burgess. Well, Senator, first, we would have to start 
with the assumption that we have got evidence to support a 
criminal prosecution. If it is there, we would certainly look 
to see who made the decisions that led to those discharges that 
you mention.
    Corporations don't make decisions. People do, and 
corporations act through their employees and their officers and 
directors. And it is funny you should mention that because we 
just recently had a series of prosecutions in Alaska in which 
we had foreign freighters coming into Dutch Harbor that were 
directly discharging overboard, as you suggested, and we have 
prosecuted and sent to jail the chief engineers who ordered 
that misconduct and the captain of one of the vessels. They 
have all been personally prosecuted and they are all facing 
jail time.
    Chairman Biden. Good, good. Now, as a prosecutor, Mr. 
Burgess, would it make any difference whether or not major 
environmental criminal laws had an ``attempt'' provision in 
them? Right now, there is no attempt; we have to wait until the 
violation occurs before we can go after them, whereas I can be 
arrested for attempted bank robbery, I can be arrested for 
attempted murder, I can be arrested for attempted a lot of 
things.
    Would the ``attempt'' standard give you more ammunition? Is 
it necessary, is it useful, is it counterproductive?
    Mr. Burgess. It would certainly depend upon the factual 
situation we were looking at in a particular case and it would 
be something that we would look at in making a decision on a 
particular case. I think most environmental cases almost always 
involve a host of Federal violations, not just environmental 
violations.
    They frequently involve false statements, they frequently 
involve obstruction, so that would be another arrow, obviously, 
in the quiver of prosecutors that we would take a look at in 
making a decision as to whether or not to prosecute a case or 
if we could prosecute a case.
    Chairman Biden. Yes?
    Mr. Sansonetti. In thinking about your comment about 
criminal attempt, I think that that is definitely worth taking 
a look at. I mean, right now the laws are written in such a 
fashion that you have to have harm occur before we can really 
pursue them down that line.
    Attempted criminal violations can still be pursued, but 
usually, as I recall, under a conspiracy theory in Title 18, 
and it is a little more difficult to prove that. Particularly 
with conspiracy, you need two individuals to start with, as 
opposed to a situation where just one individual may be trying 
to pollute the water or something like that.
    So I think that it is certainly worth taking a look at. 
Obviously, we would want to work with the other U.S. Attorneys 
to see what they thought about it and, of course, with your 
staff, but that might be one to take a look at.
    Chairman Biden. Mr. D'Amico?
    Mr. D'Amico. I concur with Mr. Sansonetti. It would be to 
our advantage and the environment's advantage if we could stop 
the act prior to taking place if it is just one individual 
involved where we don't have the benefit of using the 
conspiracy statutes and charge that individual.
    Chairman Biden. Now, help me out because I think average 
people wonder about this. A manufacturing facility has a 
process whereby the discharge into the air, the flaring of 
gases or whatever, is a violation of the Clean Air Act, but 
there is a consent decree--not a consent decree--a permit where 
they are allowed to do it under certain limited circumstances.
    But beyond those limited circumstances, they knowingly make 
a decision to flare the gases outside of the permit because the 
cost of shutting down and not flaring the gases is so 
prohibitive for their overall company that it is cheaper to pay 
the civil penalty that is a fine that is attached to flaring 
those gases.
    In your experience, is conduct affected, decisions like 
that affected, based on whether or not the manager of the plant 
or the policy of the officers of the corporation would be 
affected by a criminal prosecution versus a civil prosecution?
    Mr. D'Amico. No, sir. We would take a look at the 
information provided and try to do the necessary fact-finding 
to make a criminal referral to the appropriate U.S. Attorney's 
office or the Environmental Crime Section.
    Chairman Biden. Most of the enforcement of the Clean Air 
Act and the Clean Water Act is left to the States, right, or is 
it?
    Mr. Sansonetti. Most of the States have their own laws, so 
they can, of course, prosecute individuals under their own laws 
through their State attorney generals' offices. The Federal 
Clean Air Act is one that can be enforced both by the U.S. 
Attorneys and by Main Justice, and it is, but there is a lot of 
coordination that occurs between those different groups.
    Our Division sponsors, for instance, an annual event this 
last year where we invite in each of the States to send someone 
here, whoever their chief environmental crimes enforcer is from 
Delaware, Wyoming, or wherever, and we sit and actually have 
presentations for two, 3 days on how we are handling not only 
Clean Air Act cases, but Clean Water Act cases, Superfund, 
RCRA, things like that. We share tales of different trials and 
how you go about it.
    We also do that with the States. In fact, yesterday I just 
gave a talk to the Council of Western Attorneys General from 
the 14 Western States on environmental crimes and how we want 
to work with the State AG offices to go ahead in the 
hypothetical that you put forward working on helping to stop 
the flaring. So it is a coordinated effort at this point and 
either can take the initiative.
    Chairman Biden. According to a report to Congress issued in 
April 2001 by the Environmental Council of States, between 1995 
and 1999 States conducted over 90 percent of the environmental 
enforcement actions taken by the States and the EPA combined. 
Does that sound right?
    Mr. D'Amico. They may be speaking of facility inspections, 
not necessarily criminal investigations.
    Chairman Biden. In certain areas of criminal law, say 
financial fraud, the statute of limitations doesn't begin to 
toll until the victim learns of the offense. Do you think that 
the statute of limitations for environmental crimes should be 
extended in cases where the polluter takes affirmative action 
to conceal the crime?
    Mr. Sansonetti. I think that this falls into the category 
of your other comment about whether or not legislation might be 
valuable in the area of attempts. I think that certainly it is 
a problem. I recognize and understand where you are coming from 
in the sense where a defendant has acted to conceal his crime 
from the law enforcement official.
    Right now, the burden rests on the government to prove that 
there was an affirmative act of concealment. So I think that it 
would be, again, worth taking a good look at to basically put 
an additional time limit there. Of course, the question is how 
many more years. I have to see the exact language, but I think 
that we would definitely like to work with your staff on that 
one.
    Chairman Biden. In terms of judgments requiring 
restitutions, I assume there are some where you seek both a 
civil and/or criminal penalty and restitution for the damage 
done. Is that correct?
    Mr. Sansonetti. That is correct.
    Chairman Biden. Is there anything in the law that allows, 
while the case is being taken, for a defendant to dispose of 
their property so that they are not able to pay restitution, or 
to shield their property or to shield their assets? Do you have 
any recourse in that circumstance?
    Mr. Sansonetti. I guess I would have to look at the exact 
provisions because, of course, one way of protecting one's 
assets in those situations is to file bankruptcy. That is a 
whole different area of the ability to discharge a potential or 
future penalty or fine through bankruptcy, but if a person is 
just charged and you are in the midst of the case, maybe there 
hasn't been the final sentencing or final determination. To my 
knowledge, there is no law that would prevent an individual 
from selling his car or selling his house in the interim.
    If it can be, of course, shown that the activities taken 
were totally fraudulent in nature, so you just passed all of 
your property off to your third cousin to avoid restitution, I 
think that there is an opportunity to try and crack that 
transfer of assets.
    Chairman Biden. Do you have enough personnel, in light of 
the changed priorities after 9/11, to vigorously do the job?
    Mr. Sansonetti. Right now, our resources are adequate. To 
give you a couple of numbers, we have got 400 lawyers in my 
Division. We have about 190 that are devoted to the two topics 
we have talked about today, that is civil and criminal 
environmental enforcement, through our civil and criminal 
sections and through the Wildlife Section.
    We, of course, interact with the U.S. Attorneys. Tim can 
speak for them, but you have to really look at this as really a 
big picture. It is not just my ECS group or Tim's U.S. 
Attorneys.
    I think one of the things that has happened since post-9/
11, which, of course, has strapped everyone's resources, is 
that it is making us pay more attention to leveraging the cases 
we have got and the good results that we have. I am trying to 
take special pains to work with our Office of Public Affairs so 
that when we do have a winning case like Ashland or Tanknology 
here last week that we put the word out as far and as 
widespread as possible, because I think there is a deterrent 
effect, as you noted, when you have got a criminal case where 
someone has had to pay a rather high fine. We are going to, of 
course, continue to work within the Department of Justice and 
the OMB process for budget to get the resources that we need, 
but right now we are doing OK.
    Chairman Biden. As I understand it, the EPA Criminal 
Investigation Division is supposed to have an agent work force 
of approximately 250 agents. Last year, before 9/11, the work 
force was approximately 170, and after 9/11 approximately 40 
agents were assigned to anti-terrorist activities. The work 
force has since increased to approximately 210, with the 
infusion of anti-terrorism funds.
    What is the current work force of the Criminal 
Investigation Division?
    Mr. D'Amico. The number of agents today is about 220. 
Actually, a couple of years ago we were down to about 170 
agents, and that includes me and other non-case-carrying agents 
that are with the Criminal Investigation Division and overall 
with the Office of Criminal Enforcement.
    Over the last year or so, we have been able to hire 60-plus 
agents. We are at about 200 right now, and it is a very active, 
very hard-working group of people. They not only have picked up 
their homeland security responsibilities, but they continue to 
provide leadership to the environmental task forces around this 
country.
    To date, Senator Biden, as of third quarter this year, we 
have 100 more investigations initiated than we did as of third 
quarter last year. Our folks work very hard and they do take 
the opportunity to work with State, local, and other Federal 
agencies in a number of task forces throughout this country.
    Chairman Biden. Thank you. As I understand it, though, you 
work very closely with the FBI, as well, correct?
    Mr. D'Amico. We do, sir.
    Chairman Biden. And has their diversion of agents, 572 
agents, affected you much?
    Mr. D'Amico. Where we had joint investigations with the 
FBI, some of their people have been redirected to other 
responsibilities and we and the other partners are picking up 
those cases. I am aware that the FBI is still dedicating some 
resources across country and it is a field office-by-field 
office decision as to who remains with environmental crimes, 
who can be pulled away from a particular investigation right 
now.
    Is it best to bring in more State people or other Federal 
agencies to contribute to an investigation along with EPA? 
Those types of decisions are being made on a case-by-case 
basis.
    Mr. Sansonetti. Senator, if I may add on to that one, as I 
have noted, while between Tim's U.S. Attorneys and my folks in 
ECS, we have got the prosecutors ready to go, you are right. If 
we don't get the cases referred to us, there is no, as they 
say, grist for the mill.
    So I was concerned post-September 11 as to what was going 
to happen this coming budgetary year, so I actually wrote the 
FBI Director and said, as I understand it, you have been 
supplying the equivalent of almost 40 full-time employees to 
environmental crime referrals. Are we going to be able to 
sustain that or not?
    We have had some discussions. Letters have gone back and 
forth, and I am pleased to say that he has contacted me and the 
answer is yes, there is going to be a continuing----
    Chairman Biden. So they are going to be able to sustain 
that effort?
    Mr. Sansonetti. We are going to be able to sustain the FBI 
agents for this coming year, and I am delighted, because they 
are in every State, in every one of the districts in the United 
States, whereas Mr. D'Amico's people, at the number of 220 or 
so, cannot cover the entire United States. It makes it much 
more difficult for you to do so, compared to 11,000 FBI agents.
    Chairman Biden. I apologize. We have a vote on and there is 
about 4 minutes left. I was going to submit questions to you in 
writing, but Senator Schumer is coming from the vote here. I 
ask whether or not your guys would stick for a few minutes. It 
will take me about 9 or 10 minutes to get back, but I authorize 
Senator Schumer, if he comes back, just to convene the hearing 
and ask those questions.
    We will recess until the call of the Chair, which I hope 
will be about 10 minutes while I go over and vote and come 
back. Thank you.
    [The Subcommittee stood in recess from 3:10 p.m. to 3:30 
p.m.]
    Chairman Biden. The Subcommittee will come back to order. I 
indicated I would keep the first panel because Senator Schumer 
had questions. I got over to the floor and Senator Schumer had 
questions for me, not for you. He has questions for you, as 
well, but he is tied up on the upcoming amendment. He will not 
be here.
    Fortunately, Senator Sessions, who also had questions, is 
here, so I will yield to my friend from Alabama.
    Senator Sessions. Thank you, Mr. Chairman. I think you have 
raised some good questions here.
    In the matters that I faced as a United States Attorney, it 
was often difficult to make a case criminally. It was very, 
very frustrating, and I would like to raise a couple of issues 
with the panel.
    One of them--I guess, Mr. Sansonetti, you would be the 
person to do it, or U.S. Attorney Burgess, maybe you, but it 
seems to me there is a problem with the statute of limitations. 
As I recall, it is a 5-year statute, but that is from the 
commission of the crime, and often it may be years before this 
deposit or leakage is discovered to have occurred and by then 
you look at it and the statute has run. Most people may not 
know, but in a bank robbery, 5 years passes and if you can get 
away with it for 5 years, you can never be prosecuted for the 
crime.
    Do either of you have any thoughts about how we might 
provide more ability for prosecutors to prosecute cases that 
have gone beyond the current statute?
    Mr. Sansonetti. First of all, Senator, I think it is a 
great question. Actually, we visited in the first session here 
today a little bit about some changes that might be made. The 
one about the proposed extension of statute of limitations on 
environmental crimes that involve concealment is certainly an 
area that we should take a look at.
    You are exactly correct. The burden rests on the government 
to prove that an affirmative act of concealment occurred. But, 
boy, if the most egregious crimes involve affirmative acts of 
concealment by the violators and allow the criminals to hide 
their wrongdoing long enough for the statutes to foreclose 
prosecution, then we have really got ourselves a problem.
    Tim, do you think that that is one worth looking at?
    Mr. Burgess. I agree. I think that would be something we 
should look at, and I can also talk with the other U.S. 
Attorneys through the Attorney General's Advisory Committee.
    Senator Sessions. Well, I remember a case in which you 
could see a brown thin line between the grass in the lower area 
where this pollution had washed and seeped over the years, and 
the company had gone bankrupt and they had been gone for quite 
a number of years. A person who has gone bankrupt or has no 
money cannot be punished with a fine, or any kind of other 
enforcement for that matter. He really needed to have gone to 
jail if, as it appeared to me at the time, he had deliberately 
allowed this toxic substance to be deposited outside the normal 
procedures.
    I could see it being done as just a flat extension. I 
believe we extended the statute in savings and loan cases to 7 
years because they take so long to develop, S and L cases and 
bank frauds. You could just extend or you could focus on from 
date of discovery, as long as maybe the damage was still 
existing. If it was maybe biological, like sewage or something, 
maybe you wouldn't want to extend it.
    Would you consider submitting me a memorandum on some 
things we might do to deal with the statute of limitations 
problem?
    Mr. Sansonetti. We would be glad to work with you and your 
staff, Senator, certainly.
    Senator Sessions. I was talking to Mr. D'Amico as we were 
waiting for Senator Biden to get back from the vote. Are we 
satisfied, Mr. Sansonetti, in your mind that there is 
sufficient cooperation between EPA's limited number of criminal 
investigators and the FBI or State attorney generals' offices 
and others to investigate cases?
    I know it is easy for us to say, well, we will just give 
more criminal investigators to EPA and they can have a lot 
more. But in my observation, you have got FBI agents in 
virtually every community in America. They are trained criminal 
investigators. I think from what I saw in my experience, they 
like these cases. They are the kind of cases that generate 
community interest and they like to work them and they are good 
at that.
    Could we do a better job of working with other Federal and 
State and local investigative agencies to produce these cases?
    Mr. Sansonetti. I think the answer is my observation, after 
the first 7 months on the job, is that the folks at EPA and the 
Criminal Investigation Division and those at the FBI do work 
very well together.
    Your point is well taken. There are, as I understand it, 
some 11,000 FBI agents nationwide. There is no place where they 
don't have a presence. Of course, Mr. D'Amico's shop has got to 
leverage his 220 agents to the best of their ability.
    Without the cases being investigated and referrals 
resulting from them, Tim's folks and mine don't have anything 
to do. So it is very key that those referrals keep coming and 
that the investigations do as well.
    Maybe Mr. D'Amico wants to talk about his own dealings with 
the FBI.
    Mr. D'Amico. Our dealings with the FBI, Senator, are very 
positive. We participate in a number of environmental crimes 
task forces throughout the country. There are about 94 such 
task forces, probably 40 or 50 active ones that we are 
participating in with the FBI, Coast Guard, and State and local 
investigators and regulators, all looking to put our best 
effort forward to build these environmental cases. We also 
charge under Title 18--not only under the environmental laws, 
but our agents and FBI agents charge under Title 18, such as 
false statements, et cetera.
    Senator Sessions. Well, I believe you can do that. I 
suspect it takes the driving force from EPA to make it really 
move because in the cases that I recall, we had delays in 
getting chemical analyses.
    Mr. Burgess, what about the cases that you have dealt with 
that you are familiar with in your area? Who are the primary 
people that did most of the work, and have you had any problem 
getting laboratory work done and does that delay 
investigations?
    Mr. Burgess. We work primarily with EPA and the FBI. We 
also work on a number of cases with the Coast Guard. Those are 
the primary agencies for investigating environmental crimes in 
my experience.
    As Mr. D'Amico mentioned, the cases often involve not just 
environmental offenses, but what are more typical, Title 18 
offenses--fraud, false statements, and conspiracies. So the 
involvement of the FBI is very important. We have also been 
able to use not only EPA's labs, but the Coast Guard's and the 
FBI's. Between those labs, we can generally get our lab 
analysis done in a timely fashion for prosecutions.
    Senator Sessions. That was a problem in my experience. Of 
course, a good false statement case is just as good as a so-
called environmental case sometimes for putting people in the 
slammer.
    Mr. Burgess. Absolutely. As I mentioned, invariably when 
you have an environmental crime, the perpetrator is going to 
try to cover up their activity and that leads to false 
statements and conspiracies. So we almost always see those 
types of offenses in conjunction with the underlying 
environmental offense.
    Senator Sessions. Well, I just believe that a lot of 
different times we are late identifying, or we find out the 
pollution has occurred, a company has gone bankrupt. There is 
material that somebody checks the soil and it is clearly 
improperly disposed. But years have gone by and there is 
nothing that can be done, except the criminal sanction, going 
to jail. They have no money, they have gone away. The company 
is bankrupt, or whatever.
    I think the public does deserve to know that there was some 
punishment meted out, because what really happens is the 
taxpayer or some relatively innocent person has got to come in 
and clean up the site. So we all pay for it and the person who 
caused it is not caught.
    Is there anything else that you have or would like to 
comment on?
    Mr. Sansonetti, if you have any ideas on the statute, 
either extending it or going from some sort of date of 
discovery, probably under the conditions that the damage is 
still there, it would be something we could think about.
    Mr. Sansonetti. I would be glad to do so, Senator.
    Senator Sessions. There has been a historical basis for 
having a fairly limited statute of limitations. We don't want 
to just play around too blithely with that historical 
principle, but I think in these cases we could extend it.
    Thank you, Mr. Chairman.
    Chairman Biden. Thank you very much.
    Gentlemen, I appreciate your time and your effort. With 
your permission, we will submit to you several questions in 
writing.
    Mr. Burgess, I thank you for making the long trip. It is a 
long way to come. I thank you for being here and I appreciate 
your effort, and we will look forward to working with you to 
see if we can suggest some of these changes from the 
possibility of ``attempt'' to statute of limitations and a few 
other things.
    Mr. Burgess. Thank you, Senator.
    Chairman Biden. Thank you very much.
    [The prepared statement of Mr. Sansonetti appears as a 
submission for the record.]
    Chairman Biden. Our next panel consists of Eric Schaeffer, 
Director of the Environmental Integrity Project of the 
Rockefeller Family Foundation. Before that, Mr. Schaeffer 
worked for 12 years for the EPA. His last position was Chief of 
Civil Enforcement, a position he held from 1997 t0 2002. He 
resigned from the EPA earlier this year, citing differences 
with the administration's environmental policy. We are glad to 
have him here and to hear his take on the issues, particularly 
the intersection between civil and criminal enforcement in the 
environmental area.
    Judson W. Starr is a partner in the law firm of Venable, 
LLP, where he is the head of their environmental and energy 
practice group. He is a former head of the Environmental Crime 
Section of the Department of Justice, having served in that 
position from 1978 to 1988. He has also written books on 
environmental crime and advised the United States Sentencing 
Commission on environmental crime issues. We are glad to have 
him here as well.
    Mr. Ronald A. Sarachan is a partner in the law firm of 
Ballard Spahr Andrews and Ingersoll and a member of the firm's 
environmental group. Before that, Mr. Sarachan was the Chief of 
the Environmental Crime Section of the Department of Justice 
from 1994 to 1997. Prior to that, Mr. Sarachan worked as an 
Assistant United States Attorney and chief of the major crime 
section in the Eastern District of Pennsylvania. He is a 
graduate of Brown University and Michigan Law School. We look 
forward to his testimony as well.
    Michael Penders is President and CEO of Environmental 
Protection International, an environmental consulting firm. He 
is a graduate of Cornell University and the Seton Hall Law 
School. He brings to us experience in two areas: first, as a 
New Jersey State prosecutor for 5 years who had to enforce laws 
on a daily basis. Second, he worked for EPA for 8 years, most 
recently as Director of Legal Counsel in the Office of Criminal 
Enforcement. We look forward to his testimony as well.
    And an old friend of mine, Nicholas DiPasquale, is the 
Secretary of the Delaware Department of Natural Resources. Mr. 
DiPasquale is a graduate of the State University of New York at 
Brockport and Washington University. He previously worked in 
the Missouri Department of Natural Resources, and for the last 
9 years has worked with DNREC in our State. I have known and 
worked with Nick for a long time, and can tell you he is a 
smart enforcer and knows the circumstances well in my State. I 
am delighted to have him here today.
    I understand that Mr. Schaeffer has a 4:30 departure time. 
Is that correct?
    Mr. Schaeffer. I think maybe I can make it quarter of five. 
It is a six o'clock flight.
    Chairman Biden. Well, no. We can work it out.
    Why don't we begin with each of you in the order I have 
called you with your opening statements. If you can keep them 
to 5 minutes, we would very much appreciate it, and then we 
will go to questions.
    Mr. Schaeffer, thank you for being here.

STATEMENT OF ERIC SCHAEFFER, DIRECTOR, ENVIRONMENTAL INTEGRITY 
       PROJECT, ROCKEFELLER FAMILY FUND, WASHINGTON, D.C.

    Mr. Schaeffer. Thank you, Mr. Chairman and Senator 
Sessions, for the chance to testify, and I will take you up on 
the invitation to summarize and ask that my statement be 
included in the record.
    Chairman Biden. It will be.
    Mr. Schaeffer. I want to start by thanking you for just 
having the hearing and asking some of these important 
questions. Whether or not we end up agreeing, I think the kind 
of objective and critical oversight that you can bring to the 
enforcement program can do a lot for both EPA and the Justice 
Department, and I do hope you keep asking questions.
    I am going to bring a civil enforcement perspective to the 
table. I understand you are focusing a lot on criminal 
authorities and resources for the criminal program, but I think 
we have to answer a threshold question first for some of our 
more important problems.
    If we can't prove that a violation occurred in the first 
instance, we don't even reach the issue of whether the conduct 
was intentional or knowing, whether it rises to a criminal 
standard. That is the kind of problem I want to focus on.
    Very briefly, I think we have extremely poor monitoring in 
some areas of the law, especially under the Clean Air Act. I 
would like to speak to that quickly. The ability of EPA and 
States to challenge that monitoring, to act as a check, to 
perform an oversight function, is hamstrung by lack of 
resources.
    We have a major loophole in the law that allows some 
companies to repeatedly have the same accident over and over 
again, to flare--I think you are familiar with that problem--
over and over, in the hope that they can claim an exemption 
under the Clean Air Act, and I will speak briefly to that.
    First, to the monitoring issue. I would just send you to 
the attachment, the last page in my testimony, which compares, 
in one area where we were able to get out and do some agency 
inspections, what companies reported to what EPA inspectors 
found.
    In this instance, we are talking about fugitive emissions. 
These are volatile organics and toxic compounds that leak from 
equipment, sometimes at very high rates. That amounts to half 
of our air pollution burden. It is a very significant source of 
our problem.
    Chairman Biden. Say that again. Half of the air pollution 
is attributable to what?
    Mr. Schaeffer. I am talking in terms of the volume of 
emissions, and that is a ballpark estimate.
    Chairman Biden. What are the emissions you are referring to 
again?
    Mr. Schaeffer. I am talking about criteria pollutants, but 
also I think that is accurate for toxic chemicals, as well. By 
criteria pollutants I mean sulfur dioxide and nitrogen oxide 
from industrial sources, not including utilities, and volatile 
organic compounds, in particular, which are smog-forming.
    In general, if you leak above a certain amount at a valve 
or a pump or a flange, you are required to fix that leak so it 
doesn't keep recurring. That is a critical requirement in the 
law. Companies, if you look at this chart, will generally 
report that somewhere between a half percent to one-and-a-half 
percent of the valves and pumps that they monitor are leaking. 
EPA found the true number was between 5 and 10 percent. That is 
a substantial difference, in some cases an order of magnitude 
between what the company reported and what EPA found when it 
went onsite.
    I want to emphasize this isn't one or two data points. This 
is an intense evaluation of refineries by EPA's National 
Enforcement Investigation Center. This is data that was checked 
off and seconded by companies. They had to follow EPA around 
and approve the results.
    Now, why did the problem occur? The law says you have got 
to take a wand to measure the emissions, and hold it at a 
prescribed distance above the leaking equipment for 30 seconds. 
You have to take a reading before you move that wand. It turns 
out a lot of companies had contracts for people to do this 
scratch-and-sniff test and these contractors were paid by the 
valve. So the faster they got through the monitoring, the more 
they made money. So what do you think they did? Of course, they 
just passed the wand over the area they were supposed to 
monitor quickly and moved to the next valve, because that meant 
cash to them.
    I think the companies themselves were interested in fixing 
this problem when we presented them with it, but it is an 
illustration of something we see very frequently in the air 
program--very poor-quality monitoring data. You can't decide 
whether or not the conduct is criminal if you can't establish 
that there is a violation in the first place.
    The second problem is resources: I have also attached to 
the testimony a set of statistics from the agency about the 
number of industries and transactions that both Federal and 
State programs are supposed to cover. For example: there are 
100 million acres of wetlands in the lower 48 States but only 
two States have authority to run that program. The rest of it 
is managed by EPA. I am talking about enforcement to keep 
people from illegally filling wetlands. We have about 30 people 
in the agency to do that job.
    There are over 300,000 sources the EPA is expected to 
monitor to make sure fuel standards are met, for example, that 
the fuel is oxygenated or is low in sulfur content. Two dozen 
staff do that job. We are just not able to get out there. I 
apologize, I keep saying ``we,'' and I've left EPA. EPA is not 
able to get out there with the resources they have.
    I have heard the statistic about States conducting 90 
percent of the enforcement actions coming from a study by ECOS. 
I take issue with that, and don't think it is accurate. There 
is no question that States do most of the inspections, but if 
you get into the major cases that involve substantial 
injunctive relief and the expenditure of millions of dollars of 
pollution control equipment to get companies back into 
compliance, I think you will find EPA is carrying more like 
half the load.
    That is no knock on States. I think some States have 
excellent enforcement staff, very aggressive enforcement staff, 
and Delaware is certainly one of those. It is just not true 
everywhere, and there are a large number of programs for which 
EPA is the only authority, and that is something that can't be 
overlooked.
    So whether you have a dozen or two dozen people chasing 
300,000 fuel stations or 100 million acres of wetlands, your 
chances of finding a violation are pretty remote. The kind of 
statute of limitations issue that I think Senator Sessions 
rightly raises becomes a problem. You are not catching up with 
problems when you should. You are not on the case when you 
should be. You can't even make good regulatory decisions 
because we don't know what we have out there.
    The last point I want to make is to speak to the flaring 
problem, something we have seen in refineries, but which also 
occurs in other industries. Sometimes in the middle of the 
night, sometimes during the day, it goes off with a boom. Big 
flares turn on and understandably upset and agitate neighboring 
communities.
    Often, you will see hundreds of tons of sulfur dioxide come 
off these flares in really a short period of time, contributing 
to asthma, and creating other problems for the neighboring 
communities. I think at the Premcor plant in the Port Arthur 
area, over 400 tons of sulfur dioxide in a 3-month period were 
released just from these so-called accidents.
    One question is how can the same accident occur over and 
over at the same facility? At what point do we stop calling it 
an accident and say that this results from some kind of 
negligence?
    The problem embedded in our regulations is that we 
recognize an exception for malfunctions, and that has become 
lodged, I think, in some industry heads as an entitlement to 
continue to have these flaring incidents without any 
enforcement or any liability. That should be challenged, and I 
think the agency has started challenging it.
    The law says if that kind of accident is reasonably 
foreseeable and could have been prevented, it is not an 
accident, and we need to start stepping in, doing some 
analysis, and establishing when these kinds of problems could 
have been seen and avoided. If you look at some of the 
settlements EPA has with Motiva, as one example, I think you 
will see some examples of the relief that can be obtained when 
we do that.
    I think a second problem that I think would require a 
statutory solution is if you spill a million barrels--or let's 
call it more realistically 10,000 or 100,000 barrels of oil 
into a bay or a river, you pay by the volume. That spill can 
happen in a three- or 4-hour time period, but we recognize that 
is a lot of oil. You pay by the volume; you pay in relation to 
the hazard you have created.
    If you have a flaring event, it can cause an evacuation, it 
can require people to be sheltered in place, it can result even 
in injury and death. And under the law, we are limited to a 
single penalty for a single day's violation. That is $27,500. 
That just plainly seems inadequate.
    Senator Sessions. That is the maximum?
    Mr. Schaeffer. That is the maximum, yes, sir. It may have 
adjusted up slightly for inflation, but that is the maximum. So 
there is no relationship between the harm and the sanction at 
this point. Even if you get over the malfunction defense, you 
face that single-day limit on penalties.
    Chairman Biden. Can a malfunction defense be offered if you 
end up malfunctioning 12 days out of 20?
    Mr. Schaeffer. I think that is an excellent question. When 
I was at EPA, and I think this is still shared, our 
investigators didn't think so. Our investigators think if you 
have a problem that is repeated, then you are obligated to get 
on it and fix it.
    Chairman Biden. Let me ask you a question. At refineries, 
the flaring that you are referring to which puts sulfur dioxide 
into the air, which seriously affects those who are asthmatic 
and many others--and studies done show it shortens life 
expectancies and the like--if you have a contract with another 
company that, rather than flare this, they are going to process 
this by-product and in effect contain it, producing a second 
product, and you know them to be incompetent in that they are 
constantly having malfunctions--in every other endeavor, if I 
contact with a supplier or I contract with a second party and I 
know them to be incompetent based upon the track record, I am 
able to be held liable under a contract or I am able to be held 
liable in other ways.
    Why isn't that the case with EPA? Why isn't that the case 
under the law now? Isn't there some responsibility with the 
outfit you contract with that you, the oil refinery, have 
reason to believe that they are able to do the job?
    Mr. Schaeffer. I am not sure that isn't the law today; in 
other words, that you cannot contract away your environmental 
liabilities, at least when you are dealing with such an obvious 
connection between the plant and the contractor, where the 
contractor is, say, just across the river and you are sending 
your waste right across the State line to that contractor and 
there is clearly a repeated pollutant. I would like to give you 
a more thoughtful answer, but I don't see that as a loophole 
even today.
    Chairman Biden. Well, I don't want to turn this into a 
particular concern, but in the neighborhood I grew up in there 
is an outfit that is flaring hundreds of tons of sulfur dioxide 
into the air, and the fines are a cost of doing business. It is 
going to cost them $35 million to do this in-house and they 
haven't spent the money to do it. In the meantime, my old 
neighbors are choking.
    I am very upset about it, so part of the reason for this 
hearing is to try to figure out how we strengthen the laws to 
not only go civilly, but maybe the Chairman of the board of 
that company or the CEO goes to jail. That is what I am looking 
to do. I hope they hear what I just said because I mean it.
    Mr. Schaeffer. I understand.
    Chairman Biden. At any rate, I interrupted your testimony.
    Mr. Schaeffer. I think I have taken at least my 5 minutes 
and then some.
    Chairman Biden. Well, in the interest of your schedule, do 
you have any questions for Mr. Schaeffer? He can stay as long 
as he wants, then, and we can let him go, maybe. He is the only 
one that has this very tight time constraint.
    Senator Sessions. Mr. Schaeffer, it seems to me that the 
meshing of the civil enforcement team and the criminal could be 
better. In other words, civil is out there all the time. There 
are a lot of them in a lot of different places. It seems that 
as soon as they identify something that could be potentially 
criminal, it needs to be looked at by the criminal 
investigators, and the United States Attorneys' offices. Most 
U.S. Attorneys' offices are quite eager to prosecute 
environmental cases.
    Do you think there is some way that we could move it 
quicker from the civil to the criminal side for a criminal 
evaluation?
    Mr. Schaeffer. I think that is a really good question. I 
wasn't really very satisfied with it when I was there in the 
agency. I thought we could improve it. I think from a civil 
enforcement perspective, we would say if criminal is going to 
decline the case, we would like to get the case back before it 
is too stale. So it is a two-way street.
    The problem we struggled with--and you might help the 
agency think through this--is making sure not to taint the 
criminal case. As you well know, you have grand jury 
proceedings and you have issues of confidentiality in the 
criminal program that to a degree you may not have in the 
civil. So there is always that concern about maintaining a 
Chinese wall, and that is something I am sure the agency is 
still struggling with. Could it be better, though? Sure. I 
wouldn't want to argue with that.
    Senator Sessions. I think that is a bit exaggerated, that 
fear. If done properly, it should not be a problem, or if it 
is, you should be able to anticipate it in advance, maybe, and 
make a call one way or the other.
    How many civil enforcement people does EPA have? Do you 
know?
    Mr. Schaeffer. I would say if you added up the resources in 
the field, around 1,200, outside of Superfund.
    Senator Sessions. And maybe 200 are criminal.
    Mr. Schaeffer. Right.
    Senator Sessions. So if they worked more as a seamless web 
in which as soon as the civil finds something is tipping into 
criminal and criminal has an opportunity to review it, it might 
work better.
    Mr. Schaeffer. Right. To be fair to the agency--and that 
question, I am sure, you will direct to them--a fair amount of 
that does go on. I did see civil cases move quickly to the 
criminal side. Could it be improved? I can't argue with that.
    Senator Sessions. Thank you, Mr. Chairman.
    Chairman Biden. How far off are we in terms of the 
monitoring capability? It seems to me there is this gigantic 
discrepancy? It is like having one meat inspector for the 
United States. In proportion, how far off are we, and how much 
do you then rely on the States to fill this void?
    I assume you monitor and the States monitor, right?
    Mr. Schaeffer. Right, and EPA tries to divide the work. 
Sometimes that works better, sometimes maybe not so well. But I 
think the States will tell you for the most part they are under 
the same kinds of pressures, have lots and lots of ground to 
cover, and are often forced to do inspections that are too 
quick. I know that was true at EPA because they have got so 
much territory to cover. Also, the States cover issues like 
septic tanks and open burning and real environmental problems 
that aren't under Federal law. So they have got their own 
workload.
    It is worth some analysis. The General Accounting Office 2 
years ago--actually, just last summer--said EPA really needs a 
work force analysis before making the kinds of cuts the 
administration has been proposing. They need to step back, look 
at the work, figure out how much States can reasonably cover, 
how much EPA is going to do, and match the resources against 
the problem. That would be well worth doing.
    Chairman Biden. A last question and then we will get to the 
rest of the panel. In my experience, the fines that are levied 
by States, particularly in air pollution cases, are 
considerably less under their State laws, whether it is 
Pennsylvania, New Jersey, Delaware, or Maryland, than for 
violations of the Clean Air Act under Federal law.
    For example, in my State, under the Clean Air Act 
violations imposed where the State moves, the maximum State 
fine is $10,000 a day. We have federally $27,500 a day.
    Mr. Schaeffer. That is right.
    Chairman Biden. Does any State ever yield to you guys? They 
may monitor it and find the violation. What do they have to do? 
Do they have to come to you and say you take the case over? 
Explain how that works?
    Mr. Schaeffer. It is not, I am sure, as smooth as it could 
be, but generally there is a planning cycle where EPA regional 
offices will sit down with States and try to shake out the 
workload and divide the labor. Sometimes, the States will refer 
cases to EPA and say, please do this.
    Increasingly, EPA will find a multi-State violator, 
somebody that is spread across six or seven States, and then it 
is EPA's job to get the States to work together with the 
agency, and vice versa. EPA has to be sensitive to what the 
States need.
    The problem you are referring to, the $10,000 a day penalty 
limit, is the minimum required in the Clean Air Act. I am doing 
this from memory, but I believe Title 5 of the Clean Air Act, 
which speaks to what enforcement authorities States have to 
have, says $10,000 a day. There is a disconnect between that 
and the Federal dollar amount, which also by law has to be 
indexed for inflation. So you see the Federal dollars go up, 
while the State numbers stay relatively low.
    One important fact is--again, this is guesswork--EPA 
probably gets 10 to 15 cents on the dollar typically in a 
settlement. It may be $27,500 a day. If it were a flaring 
incident and you were only getting a single day, hopefully you 
would get the maximum. But for a major violation that may run 
for several years, in order to get a settlement, and in part 
because the agency will lack sometimes the resources to go to 
trial and in part because the agency is balancing litigation 
risk, the EPA will settle for 10, 15, 20 cents on the dollar.
    So I guess you could raise the statutory authority for 
States, the limit. That may be a good idea. You do need the 
resources and the will to take that to a limit when you think 
you have got a good case, and that is going to vary State by 
State.
    I have to put in one plug for Delaware because I think I 
have noticed penalties work best where EPA and the State team 
up. The company understands there is not going to be any forum-
shopping, there is not going to be any bait and switch. The 
federal and state governments come to the table together, know 
what they want, and insist on an adequate penalty.
    In the experience I had with one company, the State od 
Delaware was stronger than EPA as far as their demand for 
penalties. So I want to recognize that and say sometimes you 
will see a push from the other direction. Typically, if you 
look at penalties recovered, I think there is no question that 
Federal penalties are larger.
    A little bit of a long-winded answer, but it's kind of a 
complicated issue.
    Chairman Biden. No, no. It is a very important answer and I 
appreciate it because part of the confusion here with the 
public at large is whose responsibility is this, especially 
when you have a circumstance where it is coming across a State 
line or when you have one facility in one State and the 
polluting side of that facility in another State. I think it is 
very confusing to people, and occasionally to me.
    Mr. Schaeffer. That is a classic case for EPA, again 
working with the States, when it crosses State lines and when 
you have a multi-State actor.
    Chairman Biden. Well, again, you are welcome to stay. I 
know your time is tight.
    Mr. Schaeffer. Thank you. I appreciate that.
    [The prepared statement of Mr. Schaeffer appears as a 
submission for the record.]
    Chairman Biden. I will now, with the permission of my 
colleague, ask each of the following four to stick to your 
statements. We will hear everyone and then we will go to 
questions.
    Please, Mr. Starr.

  STATEMENT OF JUDSON W. STARR, VENABLE, LLP, WASHINGTON, D.C.

    Mr. Starr. Senator Biden, good afternoon. Thank you very 
much for your kind invitation to be here this afternoon and to 
express my perceptions and observations about the Federal 
environmental crimes program.
    Senator Sessions, it is particularly nice to see you again. 
I remember fondly, when I was with the Justice Department and 
you were the U.S. Attorney in Birmingham, working with you. I 
should say that while I can't remember the particular case, I 
do remember the barbecue.
    As you mentioned, Senator Biden, in the kind introduction, 
I have spent a good deal of time working in the field of 
environmental crimes, over a decade at the Department of 
Justice, first as the Director of the Environmental Crimes 
Unit, and then as chief of the Environmental Crimes Section.
    Since I have left the Justice Department, most of my work 
has been in the field involved with environmental crimes, 
whether it is advising clients on management compliance systems 
or whether it is in representing individuals or corporations 
who are the focus of a problem by the Federal Government.
    During this period of time, I have watched or participated 
in all the growing pains that have gotten the environmental 
crimes program to the point where it is today. You referred to 
them as the tools, Senator Biden. I have watched as Congress 
has upgraded each of the environmental statutes from 
misdemeanors to felonies, which caused attention to be given to 
environmental cases which up to that point hadn't been given by 
judges, U.S. Attorneys' offices, and investigative agencies.
    I have seen the responsible corporate officer doctrine be 
refined as it as wound its way through the courts of appeals. 
And particularly in today's environment focusing on corporate 
responsibility, I have seen the responsible corporate officer 
doctrine become a very significant tool in how the Government 
pierces the corporate veil to determine individual officer 
liability.
    I have seen the application of the Sentencing Guidelines 
since 1987. Up to that point, judges traditionally thought or 
expressed through their sentencing that environmental crimes 
were no more than mere regulatory violations. The Sentencing 
Guidelines have changed that by imposing strict and severe 
penalties on individuals who have been convicted of 
environmental offenses.
    I have seen EPA agents get law enforcement authority, when 
they didn't have any and were treated as a poor stepchild 
within the investigative community. After a lot of hard work 
and a long fight they got law enforcement powers. I have seen 
their training at the Federal Law Enforcement Training Center 
and elsewhere go from none to a very sophisticated component.
    I have also seen the prototypical defendant in these cases 
go from the mom-and-pop company to a household name company, as 
the investigative capabilities have been developed and 
prosecutions have focused less on those who were operating 
outside the regulatory system and more on those who were 
operating within in.
    Last, I have seen what I would call the political baptism 
of environmental crimes, when over a lengthy period Congressman 
Dingell, through his oversight committee, held hearings on how 
cases were handled at the end of the Bush administration and 
the beginning of the Clinton administration.
    However, my observations about where it is today cause me 
great concern. I believe it is my perception, and the 
perception, I think, across the country from those with whom I 
have been in contact, those in the business and those in the 
field, that the perception is that there has been a change 
since 9/11.
    I am concerned about the direction of the environmental 
crimes program, particularly whether the definition of villain 
has changed from something that it was to something else after 
9/11 and environmental crimes is not within the definition of 
villainous.
    I understand obviously that the redeployment of resources 
post-9/11 had to occur. We have heard in the earlier session 
about the dependency on the Coast Guard and on the FBI by the 
EPA and the Justice Department in the development of these 
cases. It is very obvious to anybody that the Coast Guard and 
the FBI have had to reprioritize their resources, and I am 
wondering what effect that will have on the environmental 
crimes program and whether there will be a reprioritization.
    But if so, I think that will be a wrong step. When I say 
that I am taking the perspective of those people who day-in and 
day-out do environmental compliance work within corporate 
America. Within the regulated community, that person generally 
is a vice president for EHS. He may be in headquarters, or she 
may be in any one of the facilities for any large corporation.
    Environmental compliance, I think, is critically related to 
anti-terrorism and internal security in ways that I think 
Congress should examine. Most companies, when they beefed-up 
after 9/11 their compliance programs, did so to affect anti-
terrorism and internal security issues, but they did so on the 
backs of the environmental compliance programs and units within 
the various corporate structures.
    Policing pipelines or ports or terminals or hazardous waste 
transportation is an extension of environmental compliance; it 
is not a departure. The chemical industry itself has put out 
several publications post-9/11 which are all directed to how 
you can extend your environmental compliance program to ensure 
that you are also protecting yourself and others from anti-
terrorist activity.
    People who work in the field of compliance are not a profit 
center themselves. They do not derive their powers within the 
corporate structure by virtue of anything other than the power 
that they have because of the threat of criminal enforcement. 
It is the threat that if they don't do their jobs well, their 
bosses may be charged with a crime. So it is the importance 
that I place on the power and effect of a good environmental 
crimes program that also empowers those individuals.
    Case selection is my last point, and then I want to turn it 
over to my colleague, and also former chief of the 
Environmental Crime Section, Ron Sarachan, who will speak more 
about the selection of cases.
    I think all the resources in the world--no matter how many 
investigators you have, no matter what kind of system you have 
for developing cases or prosecuting cases, if you are not 
selecting cases that pin-point and have a point and have a 
message, then all else fails.
    The Department of Justice has been criticized, sometimes 
with justification, sometimes while I was there, and sometimes 
by me for its case selection process. The wide discretion that 
prosecutors have in the field of environmental crimes is just 
that, wide and deep, probably wider and deeper than any other 
field of criminal enforcement.
    If the goal is to get better compliance and if it is not 
just to get more pelts, more fines and more jail time with 
individuals, then case selection is the key. And I know my 
colleague, Ron Sarachan, is going to talk more about case 
selection.
    Thank you very much and I would be glad to answer any 
questions.
    [The prepared statement of Mr. Starr appears as a 
submission for the record.]
    Chairman Biden. I might add when they put two family 
members in Philadelphia in handcuffs and took them out, I 
promise you in every board room in America people paid 
attention. It was instantaneous. It was case selection, but it 
was instantaneous. Had that same company been fined $4 million, 
it would have been a yawn in every board room in America.
    Mr. Sarachan, please.

  STATEMENT OF RONALD A. SARACHAN, BALLARD SPAHR ANDREWS AND 
           INGERSOLL, LLP, PHILADELPHIA, PENNSYLVANIA

    Mr. Sarachan. Good afternoon, Mr. Chairman. Thank you for 
this opportunity to speak on this very important issue today.
    I would like to keep my remarks brief and talk on two 
issues. One is the one that Senator Sessions brought up about 
meshing criminal and civil. There were questions about whether 
resources are sufficient. I think it is also important to talk 
about the use of the resources that there are, and case 
selection is at the heart of that. Then I would also like to 
address the ``attempts'' provision that there have been 
questions about.
    I have written testimony, and also I have brought an 
article on the criminal negligence prosecutions under the 
Federal Clean Water Act, and I would ask if those might be made 
part of the record.
    Chairman Biden. They will be placed in the record.
    [The article referred to appears as a submission for the 
record.]
    Mr. Sarachan. Case selection is obviously very important in 
this area because there aren't a great number of criminal 
environmental cases being brought every year. The way the case 
selection process should work is part of a coordinated, 
integrated enforcement process, and there are two reasons for 
that.
    One, obviously EPA has a broad range of enforcement tools, 
everything from education and compliance assistance, to 
administrative enforcement, civil, and then ultimately 
criminal. When there is a violation, the agency should be 
looking at that full array and deciding which of those tools 
are the right ones to bring. And when there is an enforcement 
initiative, like a Clean Air Act initiative, the planners 
should be getting together and be deciding what is the best way 
to use each of those tools to maximize the impact and to get 
the greatest compliance.
    It is especially important to have an integrated, 
coordinated system in the environmental area because of the 
nature of environmental regulation. The environmental 
regulatory program is based in significant part on self-
monitoring and self-reporting. It depends on the honesty of the 
regulated community.
    The agency and the State agencies cannot have inspectors at 
every facility everyday watching what is going on. They have to 
depend on the honesty of the regulated facilities, and when 
there is dishonesty, when there are intentional violations and 
falsehoods to hide them, that undermines the entire system and 
that is when the criminal program comes in. It is their job to 
go after those intentional violations and to police the 
integrity of the system.
    There was a former U.S. Attorney who used to refer to it 
as, the criminal program in the environmental area goes after 
lying, cheating, and stealing, just like in other white collar 
crime. For that to work, you need an integrated system. The 
regulatory program people need to identify the weaknesses in 
their program and they need to provide that information to the 
criminal program. They need to make those referrals so the 
criminal people can put resources in those areas.
    Unfortunately, in large part that is not the way the system 
has worked. Most of the criminal cases that have been brought 
through the years have not come from within EPA. One of the 
most common sources of criminal cases is a disgruntled former 
employee. That employee calls EPA-CID or the FBI to complain 
about the company. He has been fired. He may have been denied 
benefits. He has got a grudge. It may not really reflect the 
seriousness of the environmental conduct of the company.
    There have been a lot of good cases that have come from 
that, but we don't have confidence that those were the best 
cases for the maximum impact. One of the experiences when I was 
prosecuting these cases that we would commonly have is we would 
go and talk to the field inspectors while we were building the 
case, and it would be a case against company x. The inspector 
would say, why are you prosecuting company x? Company y down 
the street is far worse.
    Well, the simple answer was the call we got from the 
disgruntled employee was from company x. Because there wasn't 
an integrated system, we didn't know about company y.
    Chairman Biden. When you say integrated system, so it 
doesn't sound like Washington-speak----
    Mr. Sarachan. Sorry.
    Chairman Biden. No, I am not being critical. I mean that 
sincerely. But to someone listening to this hearing, do you 
mean why didn't the inspector in the field pick up the phone 
and call the Criminal Division?
    Mr. Sarachan. No.
    Chairman Biden. What do you mean?
    Mr. Sarachan. There is that that goes on, and that is what 
happens in task forces and it is a good thing, a good channel 
between usually State and local inspectors and Federal special 
agents and Federal prosecutors.
    What I am really talking about is not that system, but 
within EPA itself, the program people, the regulators, the 
managers who run those systems making it a point to sit down 
with the criminal managers to screen cases, to screen them 
early to make joint decisions about how to use the different 
enforcement tools, to coordinate the civil enforcement, the 
administrative, and the criminal. That is what has not been 
happening enough.
    There have been steps, a lot of hard work to go in that 
direction. For example, at DOJ there was an integrated 
enforcement policy passed in 1999 to avoid the Chinese wall 
problems that Mr. Schaeffer and Senator Sessions were referring 
to a moment ago. In EPA, there have been attempts to do this 
kind of screening, but it has varied a lot individual by 
individual, from region to region.
    Today, generally it is still true, I believe, that if a 
case begins on the civil side, if it happens to enter the 
agency on that side, it will stay civil, and the criminal cases 
are cases that began on the criminal side. So you don't have 
enough communication.
    I would also like to address the ``attempt'' provision for 
a moment. This was an area that we discussed when I was chief 
of the Environmental Crimes Section and it grew out of a 
specific experience. There were two EPA agents who were 
conducting surveillance of a truck that had a bunch of friable 
asbestos in it, and the driver of the truck took that to a 
wooded area, a forested area--there are a lot of those in 
Pennsylvania--and was about to dump it. And if he had succeeded 
in dumping it on the ground, there would have been a crime, but 
the agents couldn't let that happen and so they stopped him 
right before he dumped.
    It was an attempt, but it wasn't a completed crime, and 
under the statutes as they exist there was no prosecution that 
could be brought. Because of that specific experience, those 
sorts of experiences, we talked a lot about an ``attempt'' 
provision.
    Reflecting on it, it seems to me that that sort of 
situation where you have a clear attempt and where it is halted 
by law enforcement officers, that is a clear case where, had 
they not interceded, that attempt would have been completed. It 
is one where I think everyone is frustrated that the criminal 
case could not be brought.
    I also had experience when I was prosecuting as chief of 
major crimes, not only environmental crimes, but bank 
robberies. We had a lot of bank robberies in Philadelphia at 
the time. We prided ourselves on our very high conviction rate, 
but the one set of cases that we consistently had problems with 
was attempted bank robberies.
    Even though from a prosecutor's point of view it seemed 
clear to me that this bank robbery was a clear attempt and 
there should have been a conviction, juries had problems with 
those cases. What I took from that is they were telling us that 
when you don't have the completed crime, it is open to 
interpretation; it is open to different interpretations. There 
are a lot of ambiguities. It interjects a lot of subjectivity.
    So a broad ``attempt'' provision is something that I think 
should be looked at, but looked at with a good deal of caution. 
A narrower provision that is tailored around the law 
enforcement officer interceding, to me, makes a lot more sense.
    Thank you, Mr. Chairman, and I am prepared to answer any 
questions.
    [The prepared statement of Mr. Sarachan appears as a 
submission for the record.]
    Chairman Biden. Thank you.
    Mr. Penders?

   STATEMENT OF MICHAEL J. PENDERS, PRESIDENT, ENVIRONMENTAL 
           PROTECTION INTERNATIONAL, WASHINGTON, D.C.

    Mr. Penders. Mr. Chairman, thank you for this opportunity 
to testify on the subject of environmental law enforcement at 
this critical time of the Congress considering the 
accountability of individuals and corporations under the law 
and reassessing the Federal Government's role in fostering 
environmental protection and security.
    I am the President of Environmental Protection 
International, a consulting firm which conducts internal 
environmental investigations, audits, and vulnerability 
assessments, and designs environmental management and security 
systems.
    About a year-and-a-half ago, I was the Director of Legal 
Counsel of the EPA's Office of Criminal Enforcement. I was at 
EPA from a time when there were 45 agents, in 1992, to 200 
nationally in fulfillment of the Pollution Prosecution Act of 
1990, signed by President Bush that same year.
    If you look at the legislative history of the Pollution 
Prosecution Act, they drew on the DEA example of having Federal 
expert agents facilitate State and local cooperation and 
investigating cooperatively environmental crimes in a task 
force setting. It was a recognition that with the limited 
resources on the State and local level, and even with 200 
agents, it was critically important to work together to make 
these cases, particularly the big cases against big companies 
under complex statutes like the Clean Air Act, where one or two 
agents won't be able to get at the culpable individuals behind 
the corporate structures.
    The deterrent of criminal sanctions imposed in practice is 
well-known to this committee. The Senate recently voted 
unanimously to enhance the criminal sanctions for corporate 
fraud in a bill signed into law by the President today. I don't 
think it was mere coincidence, as the Chairman has noted, that 
the stock market turned around the same day that Adelphia 
officials were led away in handcuffs.
    In recent years, standards for auditing, reporting, and 
managing environmental compliance, environmental risk and 
liabilities, have been subject to similar concerns as auditing 
in a financial context, including concerns about how these 
environmental liabilities are reported as part of SEC filing.
    Just last week, Assistant Attorney General Sansonetti 
announced that Tanknology, the Nation's largest tester of 
underground storage tanks, pled guilty to ten felony counts of 
falsifying test results in several different States. This is an 
example of the Federal case selection that is important for EPA 
and the Department of Justice to be able to bring.
    The integrity of the environmental laws themselves depends 
upon the capacity to detect and investigate false reporting, 
and there needs to be a credible national presence and scope 
that proceeds fully in partnership with State and local 
officials. Without adequate capacity and agents, you cannot 
make the bigger cases which are more appropriate for Federal 
prosecution of environmental laws.
    Criminal enforcement has had a powerful impact in achieving 
compliance with environmental laws over the last 20 years in 
the United States. The real prospect of criminal prosecution of 
individuals and corporations has been a principal driver of 
safer and more secure environmental management practices, 
including the current generation of environmental management 
systems which reduce or prevent pollution at the source.
    As this committee considers changes to the criminal law and 
other committees consider next-generation environmental 
legislation, it is critical to preserve direct accountability 
for individuals and entities that knowingly violate 
environmental laws, particularly where there is risk of harm 
and economic benefit to violators.
    This requires the capacity to detect violations, 
investigate complex technical requirements, and enforce these 
laws fairly and consistently across the Nation. Otherwise, 
those who pay costs associated with environmental compliance in 
one area will be put at a competitive disadvantage to 
violators.
    At the same time, in order for the criminal enforcement 
deterrent to have maximum impact, it must be made as clear as 
possible what an individual or organization must do to avoid 
criminal liability after discovering a compliance issue, other 
environmental risks, or historical contamination through a 
voluntary audit, assessment, or other means.
    I would note a couple of points in closing that have been 
addressed previously; for example, the ``attempt'' provision. 
In 1996, the Environmental Crimes Act which Mr. Sarachan 
alluded to was the considered work of dozens of career 
professionals in environmental law enforcement. The ``attempt'' 
provision was included with a couple of clear examples in mind, 
one of which now has resonance in the homeland security 
context; that is, hazardous waste or chemicals crossing 
national borders illegally as precursors to acts of terrorism 
or environmental crimes. If a shipment is stopped at the 
border, it would not constitute a crime until it was illegally 
disposed of or used as a weapon of destruction. The ``attempt'' 
provision will be important to be able to stop and prosecute 
such shipments before the harm occors so long as there was a 
specific intent to use them illegally. Importantly, that bill 
also provided a mechanism for funding State and local law 
enforcement, who are often the first responders, as part of 
settlements and fines.
    Mr. Chairman, thank you. I just remain available for 
questions and submit the testimony into the record at this 
point.
    [The prepared statement of Mr. Penders appears as a 
submission for the record.]
    Chairman Biden. Mr. DiPasquale?

   STATEMENT OF NICHOLAS A. DIPASQUALE, SECRETARY, DELAWARE 
  DEPARTMENT OF NATURAL RESOURCES AND ENVIRONMENTAL CONTROL, 
                        DOVER, DELAWARE

    Mr. DiPasquale. Mr. Chairman, thank you very much, and 
thank you for the generous comments in your introductory 
remarks earlier.
    I would like to share some experiences as a practitioner. I 
am not an attorney. I have been responsible for environmental 
enforcement for the past 15 years in a variety of capacities 
and I kind of fancy myself as a street cop that is out there 
bringing the cases in and having the attorneys prosecute them.
    I also would like to clarify a comment earlier about 90 
percent of the enforcement actions being taken by States. To 
clarify, that included everything from notices of violation to 
administrative actions, civil complaints, as well as criminal 
cases, and it is a number count. I think Eric Schaeffer made 
the point that EPA and DOJ typically get more involved directly 
in criminal cases or high-profile cases, and sometimes do so 
cooperatively with the States, but just to put that number in 
perspective.
    As was mentioned earlier, some of the financial scandals of 
recent months have raised questions about corporate integrity 
and responsibility in accounting and reporting practices. I 
think similar questions can be raised about corporate 
responsibility for environmental compliance. In the first 
instance, such practices put shareholders' financial health at 
risk. In the latter, the public's physical health is placed in 
jeopardy.
    Fortunately, this type of behavior involves only a small 
percentage of the corporations that do business in the United 
States. There is a myth, however, that compliance among large 
corporations is inherently better than that of small and 
medium-size corporations that may lack adequate resources, 
expertise, or the will to comply with the country's complex 
environmental requirements.
    It has been my experience in administering these programs 
over the last one-and-a-half decades that large corporations, 
with more than sufficient resources and expertise, routinely 
are found to be in violation of our environmental laws. There 
are a number of reasons for this.
    Corporate mergers and acquisitions can create incentives to 
delay maintenance and repairs and making other needed capital 
investments. In the petroleum refinery business that we have 
talked about several times today, industry competition and the 
need to keep national refineries operating at near full 
capacity often creates a situation where it is easier and 
cheaper for the company to pay a fine than it is to limit or 
interrupt production to comply with environmental requirements.
    The fines that are levied against these companies are 
considered a cost of doing business. You have heard that 
several times today and it is a fact. Fines alone are not 
sufficient to get the attention of plant managers and corporate 
executives who are focused almost exclusively on the bottom 
line. Other mechanisms to hold these managers and executives 
directly accountable and responsible for their actions, or for 
their failure to act in many cases, need to be considered, and 
I appreciate the fact that you are holding these hearings to 
explore some of those possibilities.
    Another observation I would like to share with you is that 
the Nation's environmental laws do not reach into the 
industrial processes themselves. Typically, we regulate at the 
end of a pipe or at the top of a smoke stack. We impose 
emission or discharge limitations that have to be exceeded in 
order for us to take action. That point was made earlier.
    By and large, these laws and requirements do not impose 
standards for inspection, maintenance, or repair of the 
industrial process equipment itself, and I am talking about 
things that are integral to the manufacturing process--pumps 
and valves and motors and those sorts of things. We do have a 
leak detection and repair program that attempts to identify 
emission sources, but we don't have a program that goes to the 
maintenance and repair of equipment that is absolutely vital 
and when it breaks down results in a release and an 
environmental violation.
    In Delaware, for example, an accident that you are very 
familiar with at a petroleum refinery that resulted from an 
explosion and a catastrophic collapse of a tank and the release 
of sulfuric acid was not covered under any State or 
environmental program. The tank itself, an above-ground storage 
tank, contained material that was not a regulated substance 
until after it was released. So we couldn't regulate the tank. 
We have moved forward in Delaware to pass an above-ground 
storage tank regulation that will give us the authority to do 
that, but by and large our environmental laws don't reach into 
the industrial processes themselves.
    In this particular case, the company admitted that the tank 
had a history of corrosion problems. Work orders for repairs 
had been submitted and the work simply had not been initiated. 
The tank collapse and release, as you aware, killed one worker 
and injured eight others, and caused widespread contamination 
at the facility.
    We went back and looked at the compliance history of this 
facility and we determined that approximately 70 percent of the 
environmental violations and releases that this company had had 
over the last 6 or 7 years could be directly attributed to the 
lack of an effective maintenance and repair program for the 
industrial process equipment. We were essentially powerless to 
do anything about it.
    The Governor did, however, say as a condition for 
continuing to do business in the State of Delaware that that 
company had to undertake a mechanical integrity audit of its 
complete facility, and also pay for a refinery expert, a 
consultant who is an expert in refinery systems and operations, 
to work for the State to review their programs and determine 
where those deficiencies occur. But we didn't have the ability 
to require that directly under any of our statutes.
    [The prepared statement of Mr. DiPasquale appears as a 
submission for the record.]
    Chairman Biden. You know, that confuses me. You can walk in 
and shut down an automobile dealership if they have overhead 
doors that aren't functioning right. You can walk in and shut 
down a grocery store if it has a circumstance that is unsafe 
for the customers.
    When it is clear that some companies, because of their 
financial circumstance, are not maintaining the facilities, why 
can't you go in and say this is an unsafe circumstance, that 
this tank is corroded? I thought that was covered, that you 
guys on the prosecutorial side of the equation for EPA or 
Justice could go in and enforce basic standards. Is that not 
the case?
    Mr. Sarachan. What you are addressing is occupational 
safety and health as much as environmental problems, and I am 
not an expert in that area and I don't know. It may be that 
OSHA inspectors do have some of those powers.
    Chairman Biden. But from an environmental standpoint, you 
don't? You know there is a pipeline coming from the Delaware 
River for crude oil into a refinery in Marcus Hook, 
Pennsylvania--I mention that because you are in Philadelphia--
or at the port of Philadelphia. You know, because you have 
checked it out, that the pipe is corroded; it could burst at 
any time, it could leak any time and you could have significant 
environmental damage, with thousands of gallons of oil seeping 
into the Delaware, into the marshland.
    EPA couldn't do anything about that, Justice couldn't do 
anything about that, or is that OSHA?
    Mr. Sarachan. There is also the Office of Pipeline Safety. 
The criminal program on the environmental side is dealing with 
those catastrophes after the fact. In that particular case, it 
wouldn't be an intentional violation. It would be an issue of, 
if that accident did occur, was it a criminal negligence case 
under the Clean Water Act? There have been not a lot, but a few 
of those cases brought, typically I think tanks that have been 
extremely corroded, that there was information that they were 
about to fail, and nothing was done.
    Chairman Biden. That would constitute criminal negligence, 
wouldn't it, if you could prove that?
    Mr. Sarachan. You would have to look at the particular 
facts of that case. You would have to look at what information 
did the people have, what was the standard of care, what were 
they told by engineers. You would have to look at all the 
evidence case by case.
    Chairman Biden. I find our lack of resolve kind of 
incredible. I used to be a criminal defense lawyer. If a guy is 
driving a tractor trailer carrying ``x'' thousand gallons of 
some contaminated substance legally and he has no brakes and he 
knew he had no brakes--he knew he hadn't had his truck 
inspected or falsified the records for the inspection--and he 
has an accident and that stuff is released, he is in real 
trouble.
    Yet, you can have a tank on your property that you own, 
knowing you didn't maintain it, having been given warnings, 
just like you can by the State trooper. You are given warnings 
that you didn't get your brakes inspected on your tractor 
trailer.
    Am I missing something here?
    Mr. Starr. Senator, there is a process is in place, and as 
was referred to earlier about the tension between civil and 
criminal enforcement and the Chinese wall or the wall that has 
to be erected between them, I think that has been lowered to a 
certain degree over the years and I think that is appropriate.
    One of the things that occurred at the Justice Department 
when I was there, and I am sure is still in effect, is the 
first action is to, if there is harm likely or certain to 
occur, stop it. Don't wait on the nicety of making a criminal 
case if that is going to take place, but stop the harm from 
occurring.
    There is a system in place for that, and while I am not an 
expert on civil environmental enforcement, they are in court 
day in and day out seeking injunctive relief on likely harm 
reasonably certain to occur. So I do think that it may be a 
question addressed to the wrong people.
    Chairman Biden. I misspoke. Assuming that there is a 
circumstance where there has been negligence in maintaining a 
part of the process, part of your facility, whether it is a 
storage tank, a pipeline, a holding basin, whatever, and then 
an accident occurs, how often would you guess is that turned 
into a criminal violation? My experience of observing it is 
seldom is it turned into a criminal prosecution. It is viewed 
as an accident and there is a civil case brought and there is a 
fine imposed.
    Mr. Sarachan. In the environmental area--this is actually 
what this article is about--the number of environmental 
criminal negligence cases that have been brought is extremely 
small. We are talking about a number between 100 and 150 
throughout the history of the Clean Water Act, since 1987.
    Chairman Biden. Yes.
    Mr. Sarachan. I think there are a number of reasons for 
that.
    Chairman Biden. Well, I would like to know what they are.
    Mr. Sarachan. Part of it is that, again, the focus of the 
criminal statutes is to go after the intentional violators, the 
people who are falsifying things, the people who are 
deliberately violating the law.
    In the case of an accident--and you gave us the given that 
there is negligence here. Well, when you are talking about a 
corporation, it gets complicated quickly. What did they really 
know? In hindsight, after an accident, it is very easy to come 
in and say this was going to happen and somebody should have 
done something about it.
    In fact, when you come into a facility, particularly an old 
facility, there are levels of risk with almost everything going 
on at that facility, especially if it is a refinery or 
something where danger is inherent. So you have to look at the 
individuals involved, and there may be cases where you have a 
facility that has problems. You may have individuals who come 
to that facility new and they are trying to repair it.
    You may have situations where they are trying to fix things 
according to a schedule. You may have situations where they sit 
down with the government agencies and say, look, we have a 
problem that we need to be fixing, we need to improve our 
maintenance, we need a year, we need 2 years to get back up to 
speed.
    Chairman Biden. I got that part, but I tell you what, you 
go up a 12-story building and the elevator hasn't been expected 
15 times and it is clear it hasn't been inspected and the 
elevator collapses and there was reason to believe that the 
elevator hadn't been expected. I tell you what, we go after 
that person criminally, the guy who owns the building. That is 
the record in most States. Why don't we do that with a 
refinery?
    I am not being critical of you guys, in particular, but I 
am concerned. Why don't we do that more often? This gets down 
to the cost of doing business. The part that bothers me about 
this--and I am having trouble getting my hands around it. I 
don't want to, one the one hand, start making a populist 
argument here. I want to be reasonable and rational and very, 
very thorough about this. But the flip side of this is what I 
am observing is these repeated, chronic violations that are 
always chalked off as, hey, we had a malfunction. One of the 
reasons you had a malfunction is you wouldn't spend the money.
    Let me give you my observation and ask you to comment. And 
this is not directed at you. I am expressing my frustration 
here. Finally, when things collapsed with Enron and WorldCom, 
we said, you know what? There is a systemic problem here. The 
systemic problem is that--and I am going to overstate it in the 
interest of time--CEOs get summoned up to Wall Street and they 
sit down with a group of four or five young analysts who say, 
what does the next quarter look like? And they say, well, it is 
going to be as good as last quarter. They say that is not good 
enough; if you don't do better, then we are going to downgrade 
your stock.
    So what does the CEO do? He or she either goes back and 
says we have got a new product on the shelf that is going to 
bring in more revenue, we go back and we cut costs, or we 
expense this stuff.
    So as I said earlier in a different context, the nuns used 
to say avoid the occasions of sin. They usually were talking 
about girls when you are in grade school. What you are talking 
about here is we provide these, as the nuns would say, the 
occasions of sin. The system builds it in so that what happens 
is the CEO goes back and says, hey, look, I need a pay raise, 
but, God, if I do a pay raise directly and expense it, it is 
going to make the bottom line look smaller again. So what we 
will do is we will give me a stock option and I don't have to 
expense it.
    Why do you think there is a ballooning in these stock 
options? It is estimated that 20 percent of the bottom line, 
and as much as 40 percent of the bottom line of the top 100 
corporations in America would be reduced if stock options were 
expensed. I mean, this isn't rocket science. The same thing is 
happening with these companies who are having pressure put on 
them.
    Let's take Amtrak. I am trying to get money for Amtrak to 
keep them running. Guess what? We nickel and dime them to 
death, so they don't maintain the tracks. They are $5 billion 
behind in maintenance, because it is so heavily toward 
maintenance costs because it is such a heavy industry. So they 
put the money into operating costs.
    Well, what happens to the corporation that is sitting there 
and they look? What do they do? They say, look, the maintenance 
of this facility is going to cost us another $2, 7, 20, 50, 
100, 200 million. Oh, let it go, Charlie; don't inspect the 
elevator this week. Let it go.
    I respectfully suggest, until we start to put somebody in 
jail for that, you are going to find out that there is no 
incentive. What is the incentive to spend the big bucks? For 
example, I will be very blunt with you. There is a company 
called Motiva in Delaware. These guys come along and the people 
who ended up purchasing this facility are saying to me, hey, 
look, we came along as good guys, we tried to do the right 
thing, we inherited this mess.
    I take it for granted. Let's assume that is the case, but 
how many cases are there where there isn't any of that, where 
there isn't any change of hands? Same outfit, same proprietor, 
same corporation continues to milk every single ounce out of 
that facility instead of maintaining it and there is ample 
evidence that, in fact, that they have not maintained the 
facility, and then a catastrophic accident occurs.
    Do you think it bothers a CEO--it probably bothers them; I 
shouldn't be so callous--if the bottom line is the corporation 
pays a fine? It is the stockholders that get nailed. Put him 
jail and that gets his attention. Why is it we don't do more of 
that?
    You guys prosecuted these cases. It is like complicated 
white collar crime that prosecutors don't want to do. Hear me: 
You all don't want to do it. I have been doing this for 30 
years. They don't want to do it. It is really hard. It really 
is difficult. It really is a hard case to make. Is that the 
reason why this doesn't happen, or is it because there is a 
mindset that this is civil, this is business, these aren't bad 
guys like drug dealers, these aren't bad guys like bank 
robbers? What is it?
    Mr. Starr. Senator, you anticipated my answer to your 
question and your frustration, which I can understand, by 
saying is it a mindset? There is an expression that has often 
been used in this case. Where the case first starts is where it 
is going to end up, and if it happens to catch up on the 
criminal, if it happens to land on the criminal investigator's 
desk, it generally stays in that channel.
    However, in those so-called accident situations, which in 
the fact pattern that you have given a criminal investigator 
would love to have and would love to put in the grand jury--who 
knew what, when, about that facility and those particular 
problems? And you are right, it is very difficult and it takes 
a great deal of tenacity.
    I have always seen the unfettered approach at the 
Department of Justice where pressure is not put on people just 
to close cases if it takes time to do that. I think it is one 
of the proud attributes of that institution to not monkey with 
that if something is going to take a long period of time.
    I think the problem is in the mix. You have State and 
Federal entities, both EPA and the State and local levels, and 
at the Federal level you have the criminal and you have the 
civil side. And there is no time, no place, where one sits down 
and says how is this case on these facts best handled? If it is 
a good case, everybody is going to want it and the information 
may not be shared. If it is not a good case, or a tough case, I 
should say, then they are going to take the easiest route to 
get there.
    Chairman Biden. Well, again, I am not only revealing my 
frustration, but my ignorance here as well. I have almost spent 
half my life sitting in this seat. I will be 60 years old. I 
got elected when I was 29 years old. I have spent 95 percent of 
the time I have been here dealing with the criminal justice 
system.
    The one place I have not gained any expertise or spent a 
whole lot of time--it has mostly been on the violent crime side 
of things and it has mostly been in the white collar crime 
relating to organized crime connections and the banking 
industry. It has not been here on the environmental side of the 
equation.
    So part of what you are observing is also my lack of 
knowledge about practically how this works. I know practically 
how drug cases work. I know practically how major conspiracy 
cases work. And I am having difficulty getting my hands around 
dealing with this.
    I will end with this and invite any comment. If I were 
sitting here today wanting to have the single most significant 
impact I could have on making sure that corporate America 
understood that--and they are not bad guys, by the way. They 
have got a lot of pressure on them. There is overwhelming 
pressure on a lot of these folks.
    But if, in fact, I could find--just as what this 
administration did, by the way; the reason they went for 
Adelphia quickly is to make a point. You have been prosecuting 
and you know why they went to Adelphia. And guess what? It is a 
useful thing to do.
    I would be looking for the biggest case I could make to 
find the biggest guy I could find, representing the most 
significant environmental violation I could find, and put 
someone in jail, were I the Attorney General of the United 
States. So you had better hope we don't have a Democratic 
administration and I become Attorney General. Well, I wouldn't 
accept the job.
    But all kidding aside, I wonder why it has not been--and by 
the way, this is Democrat and Republican. I am not making a 
comment about the Bush administration or the Clinton 
administration. I mean, when was the last truly high-profile 
criminal case relating to an environmental crime that has 
occurred, other than what happened with the Valdez?
    You don't have to be a detective to figure if you are 
cutting corners on making sure you don't expense your stock 
option, you sure in the devil are likely cutting corners in 
dealing with the maintenance of facilities that are 
complicated, expensive, and hard to detect and prove.
    Mr. Sarachan. Senator, I think you have put your finger on 
a number of points when you asked the question about whether 
the legal tools are there to prosecute executives. In fact, as 
the law exists right now, executives who have knowledge of 
violations and simply fail to act when they have the power to 
act are liable under the statute. So the legal standards are 
extremely strong for the prosecution.
    Part of the problem, and I think you also put your finger 
on it, is these are hard cases. Part of the problem, as I 
mentioned earlier, is the lack of integrated enforcement. If 
you have all the parties in the agencies looking at things, 
they can graduate the responses up as violations continue.
    You are frustrated by repeated violations. You begin with 
administrative, then civil and you work your way up. That is 
fairer to the defendant. It saves resources because most people 
will respond before you get up those steps, and it is a good 
use of criminal because you are using it when you know you need 
it because you are using it against people who are 
recalcitrant.
    Chairman Biden. If you are sitting in my chair and we 
switch roles here, what do you do? What do you propose? Is 
there anything you can do from the congressional side or is 
this purely an executive judgment to be made by the executive 
department as to how to go about doing this and there is 
nothing we can do to prompt it?
    Mr. Sarachan. I think there is one other factor here, and I 
should disclose, by the way, that I represent one of the 
managers at the Motiva facility. The question you ask, 
shouldn't people be held responsible, which is a natural 
reaction when there is a horrible accident like that and 
someone is killed--but when you look at the individuals, then 
you have to ask, who is it?
    It is not somebody who didn't have knowledge of the 
specific problems. It is not somebody who came to that facility 
trying to fix things and make them better and work with the 
agencies. Part of the reason why I think there is not as much 
of the prosecutions as you would like to see and it seems 
frustrating is because of these problems in the system and 
people's reluctance, but part of it is that prosecutors are 
exercising discretion.
    When they look at the detailed facts, they see that 
sometimes responsibility gets dispersed and you can't identify 
a single individual or group of individuals who are 
responsible, even if it is a terrible accident.
    Chairman Biden. I wasn't talking about Motiva at all in 
this. I don't know enough about who is responsible or what. I 
am not talking about Motiva, in particular.
    If, in fact, I walk in and I take over a facility--I 
purchase a bar, a nightclub, a liquor store, a casino, and I 
get in there and find out that it is corrupt and I say, look, 
we are going to try and work this thing out. I inherited this 
thing and I am going to try to work it out. Look, I want you 
selling less cocaine here now; slow this process down. You will 
put my rear end in jail.
    I walk in and buy a company and I find out that this 
tanker, this ship I just bought--my God, it has holes rusted 
through it and if I carry one more load of crude oil in this 
thing, it may burst. I will try to fix it. I am going to try to 
fix it, but in the meantime we are going to do one more 
shipment. You say, well, that guy was trying to do the right 
thing.
    If it was carrying cocaine and I didn't know it, but I find 
out and I go, well, wait a minute, we will just get this one 
more load and we will take this in, we will be OK and then I am 
going to clear the house here--we just seem to think 
differently about these things.
    With your permission, I have a very quick call I have to 
answer here that is an emergency. I am going to recess for 2 
minutes. I am just going right to this room.
    [The Subcommittee stood in recess from 5 p.m. to 5:03 p.m.]
    Chairman Biden. I appreciate you all giving me this much 
time.
    Let me phrase it a different way here because I am trying 
to get a sense of how we seem to as a Government and Government 
agencies view environmental damage differently than we view 
other things. Let me give you an example.
    I as a businessman purchase a trucking company and I have 
40 trucks. It is an ongoing business. I get in there and 
because I didn't do due diligence, I find I own a company that, 
out of my 40 trucks, 28 of them have serious maintenance 
violations. They have the records; they are sitting on my desk. 
They are such serious maintenance problems that they could 
cause a serious accident on the road--brakes, lights, 
undercarriage, whatever they happen to be.
    But I have a business. I have ``x'' number of loads I have 
to pick up. I have got customers relying on me. I am going to 
cost people jobs if, in fact, I shut this thing down, and I 
don't have the resources immediately and I don't have the time.
    But guess what? If, in fact, in my State one trooper pulls 
over one of my trucks and pulls the records and they find out 
that there is a problem, then they go look at my whole company 
and they shut the company--they don't say, look, that is OK, we 
got it, we know you have problems, run all 40 trucks until you 
get time and enough money to fix it.
    I am oversimplifying it, but that seems to me what we do 
with the Clean Air and Clean Water Act. We seem to say, you 
know, I realize you bought this outfit and it is in bad shape. 
You didn't know it at the time. We have a problem here.
    It is like Metachem. You have a problem here. I misspoke 
when I said Motiva. I meant to say Metachem, in Delaware. You 
have a problem here, but you know what? If you shut us down 
until we fix it, we don't have the money to fix it all right 
now. All these people are going to lose their jobs. Granted, 
something bad can happen here. Granted, we are going to do 
environmental damage while we continue to work, but it is OK, 
let us keep going.
    Or there is no disclosure, no consent decree entered into. 
They just keep going, and in good faith try to fix it while 
they are going. They are trying to be good guys, but they keep 
it going, so you have dioxin leaching into the ground. So you 
have an unsafe condition where you are putting the stuff into 
the air and you are not reporting it in a timely way, or you 
are reporting it after the fact.
    I sit there and I say, you know, it is a lot cheaper for me 
to pay this fine than it is for me to shut down. I lose my 
whole investment here. And we seem to say, well, you know, you 
are right, we sure don't want to move on this guy criminally. 
He is a good guy. He didn't do this. He didn't fail to maintain 
it. It is beyond his control now.
    Am I missing something?
    Mr. Penders. Senator, one of the obstacles you identified 
is the environmental laws themselves were not integrated. The 
Clean Water Act, the Clean Air Act, and the waste laws 
developed separately in separate programs to regulate discreet 
problems without addressing the relative risks involved in the 
management of chemicals or allowing an integrated approach to 
analyze risk, much less legislate on that basis and require 
that.
    In recent years, advances in environmental management, a 
holistic, risk-based approach of the facility, have found 
emissions and risks that are not regulated at all. There has 
been a bill introduced, the Chemical Security Act, and other 
measures that have been mandated by the executive branch.
    Now, to do vulnerability assessments to look at all of the 
statutes, but actually prioritize and measure the relative 
risks from regulated and unregulated aspects that are important 
from a security perspective and develop a plan for implementing 
measures to reduce that risk--that is something that can be 
addressed legislatively. There have been bills introduced.
    It has been part of the new focus on vulnerability 
assessments to look at the risk in a holistic way and begin to 
take measures, and perhaps require measures, as some of the 
bills introduced have done, to address the risks in a measured 
way.
    Mr. Sarachan. Senator, I think the facts that you posit, an 
owner who knows that a facility is continually violating the 
environmental laws----
    Chairman Biden. Only after he buys it. I mean, he didn't 
know it beforehand.
    Mr. Sarachan. But he knows now.
    Chairman Biden. He knows now.
    Mr. Sarachan. And he knows that day after day it is 
polluting the environment, that he is in violation of the law, 
whether it is a permit or a regulation, and he knows that.
    Chairman Biden. Or he knows that there is a disaster about 
to happen. Nothing has happened yet, but he knows that the 
pipeline is seriously corroded. He knows that some other aspect 
of the operation could never pass inspection and is about to 
blow up. He doesn't have the money to fix it. He keeps going, 
in the hope that he gets it done. And it goes, and we say, OK, 
there is a fine, it caused all this environmental damage, 
instead of saying, hey, you are criminally negligent. You knew 
this. Even though you tried your best, it still blew up. You 
should have shut the sucker down. You should have taken your 
loss. You should have gone bankrupt. We do that in every other 
business.
    Mr. DiPasquale. Mr. Chairman, again, I am not a practicing 
attorney. I am not an attorney by training, but there is this 
growing body of Federal case law that is helping to define what 
is referred to as the responsible corporate official doctrine 
where an individual who, by virtue of his or her position, 
should have known that these situations needed to be corrected 
could be found criminally liable, and that would include fines 
and imprisonment.
    I think in this case, what I would suggest is that we look 
at that standard of proof and that it be reduced to simple 
negligence and that the fines be increased, the penalties be 
increased. I think if the managers and the corporate executives 
know that they are going to be held liable for these failures, 
they are going to pay a lot more attention to what is going on 
and not making decisions based on, well, we have to put off 
this capital investment, we can't make these repairs right now, 
we will run the risk and we will see what happens, and then 
only having to pay fines if there is some kind of a release.
    I think they need to understand that they face criminal 
prosecution if they fail to address problems. Whether or not 
they knew it, by virtue of their position in the corporation 
they should have made it their business to know and they should 
have made it their business to get it corrected.
    Chairman Biden. I am going to sound counterintuitive here. 
I am very reluctant to do that. Maybe I did too much defense 
work, but I think there has to be not a negligence standard to 
find someone criminally liable, but criminal negligence is a 
term of art and that is different.
    My question really is why do you not have more prosecutors 
deposing, seeking records, going in with truckloads, pulling 
out all the records and uncovering whether or not the CEO had 
reason to know. I am not looking for a negligence standard. I 
am wondering why we don't go at this more.
    I think one of the reasons we don't is it is just a lot 
easier to fine them. It doesn't take nearly as much work. But 
to go in and indict them, padlock their offices, confiscate the 
books, and look at all the records, just like we do in other 
major white collar crime areas--we don't seem to do that on the 
environmental side, is I guess my only point. Maybe we do and I 
just don't know about the cases.
    Mr. Starr. A couple of points, if I may, Mr. Chairman. One 
is that in environmental prosecutions, criminal negligence is 
simple negligence, and so the standards can't get any lower. So 
the tool is there, in keeping with our theme.
    The second thing is I think those cases are prosecuted. 
Putting the padlock on the door is always a harsh remedy, I 
think, in part because you are not busting a cocaine lab when 
you are doing this. You have an ongoing organization that may 
be producing something that is of great benefit, and oftentimes 
in the government contracting field that is the case.
    Second, you have that tension that you always have in these 
cases of where and what and who did the particular act and when 
did they do it. But I am confident that the Justice Department 
hasn't changed, Ron, since you were there or since I was there 
and they are looking and would take that case.
    Without sounding at all like I am patronizing, one of the 
ways to get that done, Senator, is to do just what you have 
done here in holding this hearing and focusing on environmental 
criminal enforcement. I know from my experience over a decade 
in the Justice Department that it does listen to these kinds of 
issues and these kinds of questions that you ask, and I 
wouldn't be at all surprised to see within the next 6 months to 
a year your question being answered by a case just like you 
describe.
    Chairman Biden. Well, I am just getting started. I have got 
a lot to learn. I am just getting started in this area. I have 
not drawn many conclusions yet, but I am just getting started.
    I used to say to my mother, can I go down and hang out at 
Buffington's, hang out on the corner with the guys? And she 
would say, you know those guys down there; everybody knows they 
are trouble. And I say, I am not like them, mom, I am not going 
to do anything. And she would say, you know, if it looks like a 
duck and walks like a duck and quacks like a duck, it is a 
duck. You go down there and you are duck.
    Well, let me tell you I just can't imagine that in the 
environment we are in today--no pun intended--in the 
environment we are in today, with all of the difficulties that 
are being faced, there isn't a lot more that we can and should 
be doing because of the extent of the damage being done to the 
environment that right now is thought of as basically a cost of 
doing business; that we could not begin to change the 
environment, literally, if we were more aggressive.
    My only question is do we need any more laws, or do we just 
need more resources or a change of attitude, or all of the 
above in order to begin to change the way in which we are 
approaching. White collar crime prosecutions and criminal 
referrals are way down, by the way. Is anybody telling me white 
collar crime is way down? Is anybody telling me that the damage 
done by white collar crime to the economy is way down?
    All the other indicia out there you would look at would 
suggest it is probably up, not down, and yet prosecutions are 
down. It either means they have gotten a lot smarter and more 
sophisticated, it isn't happening, we are not pursuing it, or 
the standard that has to be met is so high, it is too 
difficult. That is the part I haven't figured out yet, but it 
is a duck. I figured that part out. I just don't know how to go 
about it yet. I am just not sure where the weakness is.
    It is a little bit like we used to do when I first got 
involved in this business with organized crime. I am not 
compared corporations to organized crime. At the FBI, we had a 
guy named J. Edgar Hoover when I got here. That is how long I 
have been here. J. Edgar Hoover was in charge when I got here 
as a United States Senator.
    He didn't like to fool with organized crime. Remember why? 
You guys are prosecutors.
    Mr. Starr. It was too hard.
    Chairman Biden. Too hard, and it would corrupt his agents, 
so he didn't want them involved. So it took me 8 years, but I 
started; not just me alone, but just speaking for myself, I 
started. The attitude changed. We started to break up some of 
the organized crime families. We have new organized crime 
families now, but it was an attitude. It wasn't that they were 
bad guys. There weren't dishonest people at the FBI. It wasn't 
that enforcers were afraid of the Mafia, but it was hard and it 
was dangerous. That is the systemic kind of thing I am talking 
about.
    I just, for the life of me, have not put this little 
Rubic's cube together here about why we are not doing a whole 
lot more in an increasingly fragile environment, with 
increasingly devastating results to the environment, with 
knowledge on the part of operators of those facilities, and the 
cost clearly being less than the cost it would take to fix it.
    Without getting into specifics, one of the outfits out our 
way can pay that fine for a lot longer before it equals the 
amount of money they have to spend to see to it that they don't 
have to engage in the action that pollutes the air.
    You are sitting there and what are you going to do? We hope 
they are all moral. One of the things I have found out is they 
are just like politicians, priests, doctors, rabbis, 
housewives. They are like everybody else. I don't ask a lot of 
human nature. I don't ask a lot of people who have a fiduciary 
responsibility to produce one thing for their stockholders and 
themselves, and maybe that might be at odds with what is in the 
interest of the community at large. I don't want to make it 
hard for them to make the right decisions.
    You have all been kind with your time. My staff is 
perplexed because they had at least three or four very good, 
pointed questions for each of you. But very bluntly, I am going 
to submit the questions to you in writing. It will not take 
much time.
    Until you get by the first layer here of how do we better 
coordinate and organize this--unless, as I said, someone can 
come along and tell me don't worry, Joe, the environment is 
getting better, people aren't polluting as much, the problems 
we face with degrading infrastructure are not a problem, people 
are going to take care of that, that is going to be their first 
priority--convince me of that and I will feel a lot better.
    That is not your obligation, but if I am convinced of that, 
that is one thing. But I don't get that sense at all. There are 
a lot of disasters waiting to happen here, and the incentives 
are not sufficient, it seems to me, to promote the kind of 
vigilance that is needed in order to make sure that I can 
breathe cleaner air and drink cleaner water.
    Would anyone like to make a closing comment on anything at 
all you would like to speak to?
    Mr. Penders. Just one thing, Senator. There have been big 
cases against companies like BP in Alaska, where there were 
very real limitations on what one EPA agent or other agencies 
could do in managing hundreds of thousands of documents between 
them, trying to make the case against individuals and other 
organizations. So resources are certainly a part of the 
equation and a practical aspect.
    Chairman Biden. It seems to me they are a big part. It 
seems to me there is resources, will, commitment, coordination. 
Just the ability to monitor what is going on is staggering. So 
in every other area where that occurs on the criminal side, 
what do people do? They pick out, they pick out.
    There are a couple of ways to do this. One is have the 
resources to be able to monitor all these facilities, which 
means we are not doubling or tripling or quadrupling, but we 
are increasing by a factor of 100, 150, 500. It is like meat 
inspectors. There aren't a whole lot of them and you can't 
possibly inspect them all. So what do they do? They pick 
facilities and they go in and they just pick them.
    Mr. Starr. Case selection.
    Chairman Biden. It is case selection.
    Well, you have all been very, very helpful. Again, I am not 
being solicitous when I say this: I want the record to show I 
have made no judgment and have no opinion at this moment about 
any company that has been mentioned here or about any 
culpability on the part of any individual or any single 
company. I am speaking in generic terms.
    At any rate, I thank you all very much for your 
participation. I have, as I said, several questions in writing 
for each of you, if you wouldn't mind submitting them for the 
record.
    Senator Hatch would like his statement inserted in the 
record at this point.
    [The prepared statement of Senator Hatch appears as a 
submission for the record.]
    Chairman Biden. With your permission, I may come back to 
you and ask you for some more input before this is over while I 
try to digest where this is going. Thank you all very much.
    We are adjourned.
    [Whereupon, at 5:23 p.m., the Subcommittee was adjourned.]
    [Questions and answers and submissions for the record 
follow.]
    [Additional material is being retained in the Committee 
files.]

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