[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
87-577 U.S. GOVERNMENT PRINTING OFFICE
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
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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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