For the companies and their lawyers, the headlines were awful and kept getting worse: 300,000 people suffering without drinking water; changes in corporate ownership just days before the chemical spill; and accusations that a company founder had felony convictions and a shady past. Add to that mix a federal prosecutor under heavy public pressure to extract swift punishment, and multiple agencies clamoring to investigate, and the stakes got even higher. The dynamics of the West Virginia chemical spill and its aftermath highlight the unique challenges facing lawyers who advise companies involved with environmental accidents.
Background of the West Virginia Spill
On Jan. 9, 2014, 7,500 gallons of a relatively mysterious chemical known as “MCHM” (4-Methylcyclohexane Methanol) leaked into the Elk River from a storage facility in Charleston, W.Va., eventually shutting down drinking water to 300,000 residents. Within one day of the incident, the United States Attorney for the Southern District of West Virginia, Booth Goodwin, announced that his office had launched an investigation and that “a negligent release of this kind could be a criminal violation.” (Greg Botelho and Tom Watkins, Chemical levels in West Virginia water drop, but still no end in sight to ban according to CNN (Jan. 11, 2014).
Some key dynamics that could play into how the Elk River incident is handled include:
West Virginia is an economically depressed state with a complicated history of labor relations and environmental incidents.
There appears to be complex corporate histories and recent ownership changes at the company that owns the facility where the spill occurred.
A key corporate entity declared bankruptcy shortly after the spill.
There are allegations that company officials did not report all of the chemicals involved in the spill.
Although it is impossible to accurately predict all of the outcomes of this incident, recent environmental accidents provide insight into what may be coming in West Virginia. Based on the legal narrative of the BP Horizon oil platform and West Texas fertilizer explosions, the Wal-Mart criminal prosecution for Clean Water Act violations, and other environmental accidents, certain actions by the government should be expected.
The critical question for lawyers advising companies in these situations is how to prepare for and respond to those actions, particularly when a criminal investigation is ongoing. Some important issues to consider:
The Federal Prosecutor Has Presumed Negligence and Appears Predisposed to Filing Criminal Charges.
Under environmental laws, which protect the public welfare, company officials and employees are subject to criminal liability for negligent violations. See, e.g., 33 U.S.C. § 1319(c)(1) (criminal liability for negligent violations of the Clean Water Act); 33 U.S.C. § 1319(c)(6) (persons who may be criminally prosecuted under the Clean Water Act include “responsible corporate officers”); 42 U.S.C. § 7413(c)(4) (criminal liability for negligent violations of the Clean Air Act); 42 U.S.C. § 7413(c)(6) (persons who may be criminally prosecuted under the Clean Air Act include “responsible corporate officers”).
Thus, no specific intent, or mens rea, is required to be found guilty. United States v. Hanousek, 176 F.3d 1116 (9th Cir. 1999) (ordinary negligence — as opposed to criminal negligence — is sufficient to sustain a conviction under the Clean Water Act); United States v. Brittain, 931 F.2d 1413, 1419 (10th Cir. 1991) (to be held criminally liable under the Clean Water Act, a “responsible corporate officer” need not have willfully or negligently caused a permit violation, but may have “the willfulness or negligence of the actor ... imputed to him by virtue of his position of responsibility.”).
When a spill or accident happens, prosecutors may assume that there must have been negligence for the event to have occurred, as in, it seems, the West Virginia case. This may or may not be true in any given instance, but the reality is that the prosecutor’s state of mind could set the stage for the investigation, and to some extent the findings. If a prosecutor begins an investigation believing that negligence or criminal conduct exists, the evidence gathered may be viewed through that lens, and conformed to that story line. Part of a prosecutor’s job is to build a case and then prove it beyond a reasonable doubt, so predispositions can shape the outcome. And, it is harder to shift a mindset than to influence an open mind, so to the extent a prosecutor believes from the beginning that negligent acts caused the spill, companies and their lawyers have their work cut out for them.
For a defense team facing a presumption of negligence or other criminal conduct, it is critical to conduct an independent, robust and unassailable internal investigation and to present the findings in the most objective and technically persuasive way possible. To do this, companies are well-advised to use specialized outside counsel, hire quality technical experts and use investigators for interviews (in case testimony is needed later). The more objective and detailed the investigation, the more likely it will be to influence the government’s choice of enforcement options.
One tricky question is whether to proactively disclose any internal findings of noncompliance while under the microscope of multiple investigations, including a criminal one. The answer depends on the nature of the identified violations, the actions taken to address them, the impact, if any, of the violations on the incident and its aftermath — and counsel’s relationship with the prosecutor’s office. If those relations are open and positive, the benefit of disclosure and collaboration — to the extent appropriate under these circumstances — is increased.
Regardless of disclosure, identified problems should be fixed immediately with the help of specialized consultants if necessary. For example, if the tank leak at Elk River was associated with corrosion, experts in tank preservation and inspections could be retained to address the issues and show the government that this will never happen again at this facility.
The good news is that federal authorities have many courses of action at their fingertips, including civil enforcement, administrative enforcement, referral to state agencies for enforcement and deferred prosecution agreements. The challenge is to convince the prosecutor that the case at hand is not the type of case that warrants criminal charges because there was no “lie, cheat or steal” factor at play.
Prosecutors are generally less inclined to file criminal charges in a case involving straightforward technical violations, which are better addressed using civil enforcement tools, including injunctive relief, to improve compliance programs.
The Chemical Safety Board is Conducting Its Own Independent Investigation
On Jan. 11, 2014, two days after the West Virginia spill was discovered, the CSB announced that it would investigate the spill. While to be expected, this type of concurrent on-the-ground investigation is a major complication for companies and their counsel.
Recently, in the Northern District of California, the U.S. Attorney’s Office sought to compel the CSB and its investigators to testify before a federal grand jury investigating an incident at a refinery. The CSB resisted, but its reports may ultimately be fair game for prosecutors to use in any subsequent criminal case. A CSB investigation is usually in the midst of or immediately following the event, involves interviews of employees, managers, regulators and other percipient and expert witnesses, and often includes gathering physical, documentary and photographic evidence. All of this is undoubtedly necessary to finding out what happened, but it nonetheless causes huge headaches — particularly for criminal counsel.
One particular complication is that Fifth Amendment issues are triggered once a criminal investigation has been opened or even contemplated because statements made during the incident investigation may be used later in a criminal prosecution. Criminal counsel must balance the interests of full disclosure and cooperation with the CSB (or other investigative agency) and the company officials’ and employees’ rights against self incrimination.
In developing a legal strategy, counsel should assume that the CSB interviews and evidence will later be used by a prosecutor.
To address these often competing interests, companies are wise to have “pool counsel” available as soon as investigators arrive, make sure that employees know their rights before interviews take place, and have separate counsel for the individuals present during all interviews. Under the stress of the event — with feelings of remorse or guilt — traumatized employees have been known to take full responsibility for events that were completely beyond their control. Having counsel present can facilitate the search for the truth, not impede it, and should be described in this way to government investigators.
Another thorny question raised by these situations is whether — and when — to cooperate with prosecutors. Obviously this decision is case specific. But once a company and counsel decide to cooperate, that cooperation should be full and complete. Prosecutors report that counsel often try to have it both ways — they say that they are cooperating, but omit or minimize information. Understandably, prosecutors and defense counsel may view the term “cooperation” differently, but defense counsel must ensure that they and their clients know exactly what is expected when they agree to cooperate.
The Best Defense: Prevention
Companies and counsel that have faced environmental accidents and resulting criminal investigations know well the hard truth of the “ounce of prevention” adage. Far too often, hindsight leads to a series of “if onlys.” Perhaps the most important role that lawyers can play is helping companies to envision and plan for worst-case scenarios. Here too, a thorough audit or internal investigation — with technical experts — is an invaluable starting place.
Identify potential sources of environmental accidents. Address technical vulnerabilities. Keep regulators informed. Develop and update response plans — from those addressing accident-readiness to those outlining a clear chain-of-command and guidance for communication. Document everything.
Of course, companies must focus on bottom-line resource allocation. But even a casual glance at the recent headlines of the West Virginia spill and other environmental accidents may help business officials — with the proper nudge from their counsel — to contemplate the risks and costs of inaction: worker deaths and serious injury; economic devastation to the community; bankruptcy; a parade of civil lawsuits; criminal investigations; and perhaps federal prison time for company officials.
Accidents happen. But rigorous internal investigations, thoughtful compliance and readiness programs and active dialogue with regulators can minimize the chances of them happening — and maximize the chances of avoiding criminal prosecution.
There is a great deal about the Elk River spill that we don’t yet know. But as a defense lawyer — and someone who grew up in West Virginia — I wonder if there may have been relatively modest and cost-effective actions that could have dramatically changed the outcomes.
Defense counsel on this case have their work cut out for them. And defense counsel generally, in partnership with their clients, can use the West Virginia example as motivation to take all feasible steps to avoid having their names in similar headlines.
Originally published on Law360, February 5, 2014, Posted with permission.