White Collar Crime Prof Blog

Environmental Prosecutions Continue to Decrease

Syracuse Trac just reported the number of environmental criminal prosecutions is continuing to drop.  (see here).  Based upon first quarter statistics, the "annual total [projected] prosecutions will be 220 for this fiscal year."  This would be down from 338 for FY 2017 and 393 for FY 2016. In 2007 the number was above 900 prosecutions for the year.

(esp) (w/ disclosure that she is a B.S. graduate of Syracuse U.- home of the Trac Reports). 

Peanut Company Officers Case Emanating From Salmonella Outbreak - Affirmed

The 11th Circuit affirmed the convictions of three defendants coming from a 2009 investigation of a peanut production plant that was identified as the source of a nationwide salmonella outbreak. The court in United States v. Parnell stated in an unpublished opinion:

"The jury found Stewart and Michael guilty of several counts of fraudulently introducing misbranded food into interstate commerce, interstate shipment and wire fraud, and conspiring to commit these offenses. The jury also found Stewart guilty of fraudulently introducing adulterated food into interstate commerce. The jury found Stewart and Wilkerson guilty of obstruction of justice. The district court sentenced Stewart to 336 months [28 years] in prison, to be followed by three years of supervised release; sentenced Michael to 240 months [20 years] in prison, to be followed by three years of supervised release; and sentenced Wilkerson to 60 months [5 years] in prison, to be followed by two years of supervised release."

The convictions were based on conduct related to food safety and conduct during the investigation. The appellants were found to have "not [been] forthcoming with the FDA during its investigation."

"The court rejected arguments related to "juror exposure to extrinsic evidence."  The court also rejected a discovery argument made by one of the defendants. This defendant objected to the government "producing a large hard drive of documents in late June 2014 when the trial was set to begin on July 14th." The defendant argued that this was "one of many untimely data dumps, where the Government produced hard drives containing hundreds of thousands of documents..." The court found that the district court had made a finding that the documents were searchable and that the government had provided a Bates index seven months prior to trial, and that "an IT consultant helped" the defendant and counsel "search and review the documents." The Court stated that "[g]iven that [the defendant] was able to search the documents, they were not suppressed for purposes of Brady."

See also opinion - here

R. Robin McDonald, 11th Circuit Upholds Convictions in One of Nation's Largest Criminal Food Safety Prosecutions, Daily Report, Jan. 26, 2018.

(esp)

DOJ Ends Third Party Settlement Practice - But What is No Longer Allowed?

Attorney General Jeff Sessions issued a press release today here putting an end to settlements that had payments to third parties as a condition of settlement. The press release says that " [w]ith this directive, we are ending this practice and ensuring that settlement funds are only used to compensate victims, redress harm, and punish and deter unlawful conduct.”  

Will this mean that Chris Christie's agreement as US Attorney with Bristol-Myers Squibb and the University of Medicine and Dentistry of New Jersey, the former of which included an endowment of an ethics chair to Seton Hall Law School, will no longer be allowed in future agreements(see here, here, and here - see para. 20)? 

And will all the groups receiving funds from the BP Plea Agreement find that innovative resolutions will no longer be allowed in the future agreements?  For example the BP plea agreement included $350 million to the National Academy of Sciences for the purposes of Oil Spill prevention and response in the Gulf of Mexico. (see here)  The Court stated there -

"The National Academy of Sciences is required to use the funds to advance scientific and technical understanding to improve the safety of offshore oil drilling, production and transportation in the Gulf of Mexico." 

"Of course, the Court realizes that the fines and other penalties provided by the plea agreement can do nothing to restore the lives of the 11 men who were killed. But in the payment to the National Academy of Sciences, the agreement at least directs money towards preventing similar tragedies in the future. That the bulk of the payments to be made under the plea agreement are directed toward restoring the Gulf Coast and preventing future disasters, contributes to the reasonableness of the plea agreement."

AG Sessions says that "[u]nder the last Administration, the Department repeatedly required settling parties to pay settlement funds to third party community organizations that were not directly involved in the litigation or harmed by the defendant’s conduct.  Pursuant to the Attorney General’s memorandum, this practice will immediately stop."

It remains to be seen what will get included and what will be omitted in future non-prosecution, deferred prosecution, and plea agreements.  The actual memo is here.

(esp) 

Environmental Crime Prosecutions Down

Trac reports - "The latest available data from the Justice Department show that during the first six months of FY 2017 the government reported 152 new environment prosecutions. If this activity continues at the same pace, the annual total of prosecutions will be 304 for this fiscal year. According to the case- by-case information analyzed by the Transactional Records Access Clearinghouse (TRAC), this estimate would be the lowest ever recorded since the Justice Department started tracking its environmental prosecutions over two decades ago."  For more information and data see here.

(esp)(w/disclosure that she received her BS degree from Syracuse University).

No "Fowl" Play: Fifth Circuit Overturns Migratory Bird Treaty Act Convictions

Guest Blogger - Erin Okuno Foreman Biodiversity Fellow, Institute of Biodiversity Law and Policy, Stetson University College of Law

Recently, the U.S. Court of Appeals for the Fifth Circuit overturned convictions under the Migratory Bird Treaty Act ("MBTA") and the Clean Air Act ("CAA") in the case of United States of America v. CITGO Petroleum Corp., Case No. 14-40128 (5th Cir. Sept. 9, 2015). The U.S. District Court for the Southern District of Texas had previously found CITGO Petroleum Corp. and CITGO Refining and Chemicals Company, L.P. ("CITGO") guilty of three counts of violating the MBTA for "taking" migratory birds because birds (including pelicans, ducks, and cormorants) had died in uncovered equalization tanks at CITGO’s petroleum refinery. A jury had also found CITGO guilty on two CAA counts. The district court issued a $15,000 fine for each violation of the MBTA and a $2 million fine for the CAA violations. CITGO appealed, and the Fifth Circuit reversed the MBTA and CAA convictions.

In reversing the MBTA convictions, the Fifth Circuit focused largely on the definition of "take" under the MBTA and concluded that "the MBTA’s ban on ‘takings’ only prohibits intentional acts (not omissions) that directly (not indirectly or accidentally) kill migratory birds." As noted by the court, under the MBTA, it is "‘unlawful at any time, by any means or in any manner, to pursue, hunt, take, capture, kill, attempt to take, capture, or kill . . . any migratory bird,’ in violation of regulations and permits." The Fifth Circuit reasoned that while Congress had expanded the definition of "take" in both the Endangered Species Act ("ESA") and the Marine Mammal Protection Act ("MMPA"), it had not done so in the MBTA. A "take" under the ESA and the MMPA includes terms ("harm" and "harass") that encompass negligent acts or omissions, but these terms are not included in the MBTA’s "take" definition. Instead, the Fifth Circuit determined that the MBTA applies a more limited common law definition of "take."

Those who violate the MBTA are subject to strict liability, but a circuit (and district) split exists about the scope of liability under the act. The Fifth Circuit joined the Eighth and Ninth Circuits by focusing on the meaning of "take" and concluding that "a ‘taking’ is limited to deliberate acts done directly and intentionally to migratory birds." The court chose not to follow the Second and Tenth Circuits’ broader interpretations, which did not focus on the meaning of "take": the Fifth Circuit disagreed "that because misdemeanor MBTA violations are strict liability crimes, a 'take' includes acts (or omissions) that indirectly or accidently kill migratory birds." It was the Fifth Circuit’s position that the Second and Tenth Circuits had confused mens rea and actus reus. As the court explained, a strict liability crime does not require mens rea, but an actus reus is still required to hold a defendant criminally liable.

The district court had also distinguished this case from other MBTA oil field cases because CITGO’s underlying conduct violated the CAA and state law. The Fifth Circuit rejected this argument, explaining that the MBTA provides no basis for such an argument, but even if it did, the Fifth Circuit held that CITGO had not committed a CAA violation (and CITGO was not charged or convicted of any state law crimes). The court concluded its MBTA discussion by suggesting that a broader interpretation of the statute would lead to absurd results, such that people who own windows, power lines, cars, and domestic cats could be potentially liable for misdemeanors under the MBTA. Interpreting the statute more narrowly and relying on a limited common law meaning of "take," the Fifth Circuit reversed CITGO’s MBTA convictions.

A few thoughts:

• The Fifth Circuit’s decision about the scope of criminal liability under the MBTA further contributes to the split on this issue. The Fifth Circuit may have interpreted the MBTA narrowly, but other circuits have been, and may be, willing to interpret the statute more broadly, which could have serious implications for companies operating in those circuits. The statute’s effectiveness in preserving migratory birds could also vary circuit to circuit.
•  What effect might the Fifth Circuit’s interpretation of "take" under the MBTA have on other courts’ interpretations of the term under the ESA and the MMPA? Although the Fifth Circuit distinguished the use of the term in the MBTA from the ESA and the MMPA, it is conceivable (although probably unlikely) that another court could find the Fifth Circuit’s reasoning persuasive and interpret the term under the ESA and MMPA a bit more narrowly. Conversely, a court could also use the Fifth Circuit’s distinction to bolster an even broader interpretation of the term under the ESA and MMPA.
•  Will the Fifth Circuit’s reasoning about strict liability and the mens rea/actus reus distinction have any implications for other environmental statutes that contain strict liability provisions, such as the Clean Water Act?

(eo)

Second Circuit Reverses Convictions Due to Prosecutorial Misconduct and Exclusion of Good-Faith Evidence

The Second Circuit Court of Appeals, which issues complete reversals in only about five percent of the criminal cases it hears, last week in an opinion by Judge Jed S. Rakoff (sitting by designation) reversed the trial conviction of two individuals and a corporation for environmental crimes involving asbestos removal, and ordered a new trial.  United States v. Certified Environmental Services, Inc., et al. (see here).  The reversal was based on the denial of a fair trial due cumulatively to the exclusion of evidence of good faith to demonstrate the defendants' lack of intent (an issue not discussed here) and prosecutorial misconduct in improper "bolstering" during the opening and closing arguments.  The Court denied that part of the defendants' appeal based on Brady v. Maryland.

The decision does not concern any novel legal grounds.  Perhaps most significant in the white-collar area is its detailed discussion of the proper and improper use by prosecutors of the cooperation agreements their witnesses commonly enter into with the government.  Since many, probably most, white-collar cases involve cooperating government witnesses, prosecutorial introduction of and comments on cooperation agreements frequently occur in white-collar trials.  Here, the prosecutor improperly bolstered the witnesses' testimony on numerous occasions, both in the opening and closing arguments, by referring directly and indirectly to the self-serving language that prosecutors routinely place in the cooperation agreements they draft to the effect that the witnesses are obligated to tell the truth.  Prosecutors and defense attorneys would do well to review the opinion to determine when and how the government may disclose and use the truth-telling requirement language of cooperation agreements during testimony and in argument.

The opinion also excuses, but does not condone, the improper failure of the government to turn over handwritten notes by a testifying agent which were discovered in the later examination of another agent and belatedly revealed to the defense.  The notes should have been revealed earlier, says the Court, not only since they included evidence favorable to the defense, but also pursuant to Fed. R. Crim. Pro. 16(a)(1)(B)(ii), a discovery rule, and 18 U.S.C. 3500, the Jencks Act.  However, since the notes were, however belatedly, turned over and the defense had an opportunity to review them, examine the later-testifying agent about their content, and recall the earlier witness if it chose, and since their timely disclosure would not have changed the verdict, in any case there was no Brady violation.  The opinion thus demonstrates that late provision of Brady (or Rule 16 or Jencks) by the government during trial will virtually never be grounds for reversal, at least not in the Second Circuit.

 (goldman)

BP: Can Civil Remedies Be More of a Sting

We recently saw BP settling with a record $4 billion in criminal fines and penalty. See here. And as noted then -

"The guilty plea entered by BP provides that the 'Department agrees
that, if requested to do so, it will advise any appropriate suspension or
debarment authority that, in the Department's view, the defendant has accepted
criminal responsibility for its conduct relating to the Deepwater Horizon
blowout, explosion, oil spill and response by virture of this guilty plea and
that BP is obligated pursuant to this agreement to cooperate in any ongoing
criminal investigation by the Department relating to the Deepwater Horizon
blowout, explosion, oil spill and response.'  But it does state that '[n]othing
in this agreement limits the rights and authority of the United States of
America to take further civil or administrative action against the defendant
including but not limited to any listing and debarment proceedings to restrict
rights and opportunities of the defendant to contract with or receive
assistance, loans and benefits from United States government agencies.'" 

Reports are showing now that it is federal regulators that are temporarily suspending BP from government contracts.  Although as noted on law.com by Jenna Greene, Feds slam BP's ethics, bar oil giant from contracts  it is unclear how long of a period  this suspension will last. (see also Michael Pearson, CNN, The spill: How much should BP suffer?)

The real question will be whether the criminal fine or the civil suspension will carry the most deterrence and punishment.  This raises an important issue of whether corporate criminal liability is really the best route, or whether civil remedies can provide better compliance with the law and regulations. Most importantly, it is good to see regulators acting.  It would be even better if regulatory actions were proactive, as opposed to reactive - after something has occurred.

(esp)

BP Settlement & Individuals Charged

According to a DOJ press release - BP agreed "to pay a record $4 billion in criminal fines and penalties."  BP had an Information filed against it for "seaman's manslaughter," and violations of the "clean water act, migratory bird treaty act, and obstruction of congress."

The guilty plea entered by BP provides that the "Department agrees that, if requested to do so, it will advise any appropriate suspension or debarment authority that, in the Department's view, the defendant has accepted criminal responsibility for its conduct relating to the Deepwater Horizon blowout, explosion, oil spill and response by virture of this guilty plea and that BP is obligated pursuant to this agreement to cooperate in any ongoing criminal investigation by the Department relating to the Deepwater Horizon blowout, explosion, oil spill and response."  But it does state that "[n]othing in this agreement limits the rights and authority of the United States of America to take further civil or administrative action against the defendant including but not limited to any listing and debarment proceedings to restrict rights and opportunities of the defendant to contract with or receive assistance, loans and benefits from United States government agencies." 

The agreement includes an attachment for monitors. It also provides that the North American Wetlands Conservation Fund will receive $100 million. As a part of the probation, special conditions are included in an Order which includes $350 million to the National Academy of Sciences and $2.394 billion to the National Fish and Wildlife Foundation.

While at the same time that we see the company pleading guilty, we see that individuals are indicted - two "BP supervisors onboard the Deepwater Horizon on April 20, 2010 – are alleged to have engaged in negligent and grossly negligent conduct in a 23-count indictment charging violations of the federal involuntary manslaughter and seaman’s manslaughter statutes and the Clean Water Act."  Another is "charged with obstruction of Congress and making false statement to law enforcement officials."

(esp)

United Water Case: Not Guilty. All Defendants. All Counts.

by: Solomon L. Wisenberg

In a major environmental prosecution out of the Northern District of Indiana, a great white collar team proves once again that you CAN go to trial and beat the government. The indictment alleged a conspiracy to violate the Clean Water Act and 26 substantive violations by United Water Services and two of its employees. Some counts were dropped along the way by the government. All three defendants were acquitted of all remaining charges by the jury.

This was a complete victory for the defense. The jury deliberated about 8 hours over two days. Congratulations go to the following members of the respective white collar/environmental defense teams:

Representing United Water Services were my colleagues at Barnes & Thornburg: Larry Mackey, George Horn, Pat Cotter, Harold Bickham, Meredith Rieger, and Tim Haley.

Representing Dwain Bowie were Jackie Bennett and Bob Clark of Taft Stettinius & Hollister.

Representing Gregory Ciaccio were J.P. Hanlon and Kevin Kimmerling of Faegre Baker Daniels.

The case was tried in Hammond, Indiana.

Here is the Post-Tribune story.

(wisenberg)

ABA 2012 White Collar Crime Conference - Environmental Enforcement

This panel was moderated by Joseph G. Block (Venable). Panelists were Richard E. Byrne (Exxon), Marc R. Greenberg (Keesal, Young, & Logan), Gregory F. Linsin (BlankRome), and Stacey H. Mitchell (Chief, Environmental Crimes Section of the Environment and Natural Resources Division of the Department of Justice). The panel covered issues related to the ongoing investigation into Deepwater Horizon, Lacey Act violations, vessel pollution, and a host of other white collar related environmental matters.

The panelists talked about how to handle legal issues arising with emergency responders. Several panelists noted that the most important thing is to mitigate damages to injured, being candid to first responders, and telling them what they need to know - such as where folks may be.

When there is death or significant environmental damage occurs, you can expect that the government might investigate. Richard Bryne said you need to presume investigation - you need to set up a privileged internal investigation

The panelists talked about how to handle searches. Some panelists on the corporate side commented that you should have a developed plan in place; get to the facility as quickly as possible; instruct individuals to cooperate with the search warrant but also telling them that there is no way they must agree to be interviewed. The importance of truthfulness was stated. From the government perspective there is concern about the safety of agents.

The corporate and defense attorney panelists discussed approaches in giving Upjohn warnings to employees being interviewed. It was noted that Upjohn warnings can trigger questions from the employees being interviewed. It may be difficult for the company because they may not know at this point whether they will cooperate with the government in resolving the matter. There is also the question of whether to appoint counsel for company employees.

(esp)(blogging from Miami Beach, Florida)

Not Guilty of OSHA Violations

It is not often that companies are criminally charged, and usually when it happens, regardless of the merits, we see the company enter a guilty verdict or enter into a deferred prosecution agreement (see here).  But not Xcel Energy, Inc. and Public Service Company of Colorado.  They were charged, they exercised their right to a jury trial, and were found not guilty after close to a month-long trial. 

The Justice Department brought criminal charges against this Fortune 250 public company alleging safety violations - OSHA violations - in the deaths of five contractors at a hydro-electric power plant in Colorado.  

Clearly this is an incredibly sad situation, with many families suffering and one cannot help but have the deepest sympathy for each person who has suffered here. 

But one also has to wonder whether our criminal justice system should be used for prosecutions alleging OSHA violations from industrial accidents.  Would these matters be better left for the administrative and civil process? And would our scarce resources be better spent educating companies on how best to keep workers' safe?

The company was represented by Cliff Stricklin, Chair of Holme Roberts & Owen's White Collar & Securities Litigation Group in Denver, Colorado. Stricklin also is an adjunct professor teaching white collar crime at University of Colorado School of Law.

See also John Ingold, Denver Post, Xcel Energy Found Not Guilty in 2007 Deaths of Five Workers in Colorado

(esp)

Should This Be A Crime

A DOJ Press Release here reports on a Massachusetts fish packer being "found guilty of falsely and misleadingly labeling frozen fish fillets." Clearly this conduct sounds improper?  But is this the kind of conduct we want to criminalize and spend funds for prosecution?  Could we accomplish the same deterrence in a less costly way by proceeding civilly with fines?

(esp)  

Aggressive Environmental Crime Enforcement Expected for 2011

Guest Blog - Michael L. Volkov - Mayer.Brown

The Obama Administration was expected to increase environmental crime enforcement as part of its overall commitment to environmental justice.  For the first two years, the record has been mixed and the expected increase against corporate defendants never materialized.  That may soon change. 

FY 2010 saw an increase in the number of individuals, as opposed to corporations, charged with environmental crimes, from 74 percent in FY 2009 to 76 percent in 2010.   Criminal charges were brought against 289 defendants during FY 2010 and, of those 289 defendants, 251(87 percent) included charges against individual criminal defendants. These enforcement results are consistent with the EPA/DOJ’s renewed emphasis on maximizing the deterrent effect of its prosecutions. 

In 2010, the number of criminal prosecutions against companies declined, but the number of individual prosecutions increased in the last year.  Additionally, both individual and corporate criminal defendants can expect stiffer penalties for environmental crimes, in keeping with the EPA’s mission to achieve maximum deterrence.  

The EPA’s Strategic Plan outlines a planned 20 percent increase in criminal prosecutions against individuals and corporations.  The increased focus on criminal prosecutions reflects a decision by the EPA to increase criminal cases involving waste dumping and other statutory violations where significant harm to the environment or death or serious injury do not occur.  In addition, electronic reporting will become a new area ripe for criminal enforcement, as the EPA shifts away from paper records and moves toward requiring regulated entities to certify compliance via e-filing.  

In any year, there are only a handful of environmental crime incidents involving death or serious bodily injury. While the agency will certainly investigate and prosecute those serious, the new effort is aimed at increasing the less glamorous environmental crimes – i.e. false reporting or illegal storage or disposal of waste that may not cause serious environmental harm. 

In order to carry the increased caseload, the EPA has increased its staff of criminal investigators – 25 new agents are scheduled to start in the beginning of the year, bringing the total staff to over 200 criminal investigators, and another 25 new agents are scheduled to begin in May 2011.  During the early 2000s, EPA cut its number of agents to well below 200 in violation of the 1990 Pollution Prosecution Act—following which the agency embarked upon a three-year hiring strategy to restore EPA CID to present numbers. 

Corporate compliance officers would be well informed to review their company’s environmental compliance programs, increase compliance efforts, and allocate additional resources to prevent any possible criminal investigation. 

(mv)

Glenn Straub: Not Guilty!

The federal government charged Glenn Straub, and his company Palm Beach Polo Holdings, Inc., with filling in two wetlands within the jurisdiction of the United States in violation of the Clean Water Act, 33 USC 1319. The case involved two pieces of property in Wellington, Florida.

In fact, Straub engaged a contractor to remove Melaleuca trees and Brazilian Pepper trees from two of his properties.  The State of Florida recognizes these plants as invasive noxious weeds which destroy wetlands. Straub obtained a vegetation removal permit from the Village of Wellington prior to starting the work, and hired a contractor who used a rotary cutter specially designed to avoid any impact on the soil.  

The case was brought in the Southern District of Florida. The trial, in Ft. Lauderdale, lasted six days. Yesterday, after deliberating four hours, the jury found both defendants not guilty on all counts. Congratulations to Straub’s attorney, Stephen Binhak, of Miami, and Palm Beach Polo Holdings’ attorney, Craig Galle, of Wellington.  

(wisenberg)

Feds are armed and dangerous in BP criminal investigation

Guest Blogger - Dan Cogdell  

As the Justice Department prepares a grand jury investigation of possible crimes involved in the BP oil spill, ex-CEO Tony Hayward is looking smarter for leaving this country for reasons beyond his lack of popularity. 

Multiple indictments are likely to be sought, charges could reach well up the corporate ladder and British citizens who are not in this country when indicted might have protection from “double criminality,” which prevents extradition unless the same action is a criminal offense in both countries. It’s very possible the Justice Department will stretch the envelope and that could put their use of U.S. laws in a place not covered by European Union law.

There is no question the federal government is taking dead aim at environmental crimes in the BP oil spill or that the legal artillery is formidable. Federal prosecutors were already ramping up their environmental crime filings before the Deepwater Horizon started spewing oil into the gulf. Now, with massive public pressure, this could be the environmental version of the Enron prosecutions.

This week (8/23-8/27) the U.S. Coast Guard and the Interior Department are holding hearings in Houston to further investigate the BP disaster. Witnesses who invoke the Fifth Amendment may not look like team players, but they will be taking the smartest path.

Expect prosecutors to take fullest advantage of the powerful and far-reaching tools they have available. Expect them to issue more than just wrist slaps and corporate fines out of the Refuse Act, the Migratory Bird Treaty Act and the Clean Water Act. Expect them to seek jail time. There is a lot going in their favor.

Prosecutors will most assuredly rely on the “Responsible Corporate Officer Doctrine,” which allows Clean Water Act violations to be directed at even top corporate officers. Prosecutions under this theory have resulted in convictions of people who were not even at work sites and, in one case, not even working for a company but had “honorary power.” (See United States v. Hanousek, 176 F. 3^rd 1116 (9^th Cir. 1999), cert. denied, 528 U.S. 1102 (2000), and United States v Brittain, 931 F2d 1413 (10^th Cir. 1991)) The “Responsible Corporate Officer Doctrine” may be the prosecutor’s ticket to tag BP’s hierarchical elite while soothing the related political nightmare currently facing the U.S. government.

In a Clean Water Act misdemeanor case, the government does not have to prove that anyone intentionally caused this enormous harm. Negligence is a comfortably lower bar for these prosecutors. And this isn’t BP’s first rodeo. A company culture that prosecutors contend encourages money-saving over safety has landed BP in the government’s sights time and time again, and will only bolster the prosecutor Howard Stewart’s efforts.

Whether BP employees or contractors believe they are targets or not, they must balance the idea of seeing justice done with protecting themselves and their employer. Taking the Fifth at this point may be the least popular but most prudent move.

Dan Cogdell is a Houston-based criminal defense attorney with Cogdell & Ardoin who has represented numerous clients in environmental and white-collar criminal cases.

(DC)

BP Redux

Guest Blogger - Benson Weintraub

The daily images of oil soaked wildlife and soiled beaches—not to mention the loss of human life from British Petroleum’s Deepwater Horizon explosion on April 20, 2010—is a reminder that corporate crime can only be reduced by a change in corporate culture. However, BP failed to heed this organizational imperative.

In United States v. BP Products of North America, Inc., 610 F.Supp.2d 655, 660 (S.D. TX. 2009),"BP Products North America, Inc. entered a plea of guilty to an information charging a felony violation of the federal Clean Air Act. The charge arises from the March 23, 2005 explosion at the Texas City, Texas plant that killed 15 and injured scores. The plea agreement stipulates the sentence: a $50 million fine and three years of probation with the conditions that BP Products comply with a Settlement Agreement reached with the Occupational Safety and Health Administration ("OSHA") and an Agreed Order imposed by the Texas Commission on Environmental Quality ("TCEQ")."). BP also paid more than $1 billion in restitution.　

The 74 page decision addresses restitution, corporate fines, Apprendi, and claims under the CVRA.

DOJ has now commenced a criminal investigation of BP’s handling of the 2010 explosion and events leading up to it.

Be assured that one focus of BP’s counsel is on application of the Corporate Sentencing Guidelines and the firm’s prior criminal history. One point would be assessed under USSG §8C2.5(c)(1) because the instant offense was committed by "the organization (or separately managed line of businesses)" after a "criminal adjudication based on similar misconduct" within the past 10 years. Id.

Before the threat of receivership takes hold, BP’s lawyers would be well-advised to get ahead of this problem by enforcing their compliance programs and making voluntary disclosures rather than obstructive comments.

(bw)

W.R. Grace - Not Guilty

See Grace Case, A Joint Project of the School of Law & the School of Journalism,   W.R. Grace not guilty on all counts (and hats off to all the students and professors involved in the wonderful blog coverage of this trial).

(esp)

Note above website seems to be down. See also WSJ Blog here

Fifth Circuit Rules on Executing Administrative Warrants

John Wesley Hall, at FourthAmendment.com  tells of a recent OSHA case that held that "[t]here is no constitutional right to a pre-execution contempt hearing and that administrative warrants, like criminal warrants, can be executed by means of reasonable force." Attorney Hall talks about the recent Fifth Circuit decision in Trinity Marine Products v. Chao which held that:

"Over the objection of Trinity Marine Products, Inc. ("Trinity"), but pursuant to an administrative search warrant, compliance officers from the Occupational Safety and Health Administration ("OSHA") inspected a workplace owned by Trinity and issued citations. Trinity claims that the search violated the Fifth Amendment because OSHA threatened to arrest Trinity personnel who interfered with the search, but the constitutionally required method to execute administrative warrants when the targeted party refuses to acquiesce is to commence a civil contempt proceeding, which OSHA did not do.

An administrative law judge ("ALJ") heard and rejected Trinity’s argument. Trinity petitions for review. Because Trinity’s contention finds no support in the Constitution or precedent, we deny the petition."

(esp)

Environmental Indictment

A DOJ Press Release reports on the indictment of a Texas company and two individuals associated with the company. The Press Release states that "the president and owner of [a Texas Oil Company], and .... the company’s operations manager, were arrested and charged today with illegally disposing of hazardous waste at facilities only approved to take oil and gas production waste. [The company], a licensed hazardous waste transporter and used oil handler, was also named in the indictment."  They were "charged with 14 felony counts including conspiracy, violating the Safe Drinking Water Act and violating the Resource Conservation and Recovery Act."

(esp)

What is a Navigible Water

The 11th Circuit Court of Appeals reversed an environmental conviction, and in the process provided a clearer understanding of what constitutes navigable waters. Finding that a "significant nexus" test was not used in the jury instruction, the court found error and further found that the government had not met its burden of showing this as harmless error. The case was remanded for a new trial. The opinion can be found here.

(esp)(w/ a hat tip to Steve Glassroth)