EPA’s FY 2020 Criminal Prosecution and Civil Enforcement Results
Despite the challenges brought by the COVID-19 pandemic, the EPA’s Office of Enforcement and Compliance Assurance (“OECA”) ramped up its criminal investigations activity, opening 247 new criminal cases.1 This number represents a significant increase over recent years, amounting to 77 more cases than FY 2019, and the most since FY 2014.2 Despite the jump in new EPA investigations, criminal prosecutions (which are handled by DOJ after being referred from the EPA) reached an historic low, with the government only charging 91 defendants with criminal environmental violations.3 However, the government was fairly successful in prosecuting the cases that it did bring — of the cases that the government charged, 89% involved an individual defendant, and 94% of those cases resulted in a conviction.4
Civil enforcement matters are first investigated by the EPA, then can be handled internally by the EPA through administrative penalties or referred to DOJ’s Environment and Natural Resource Division (“ENRD”). Penalties in 2020 from civil resolutions were $160 million, down from $360 million in FY 2019.5 Although FY 2020 was not a blockbuster year for civil environmental enforcement from a penalty perspective, the EPA resolved 31 enforcement actions involving tampering and aftermarket defeat devices, representing the most resolutions of this type within a single year in the EPA’s history.6 Further, the EPA announced commitments of more than $2.5 billion to return facilities to environmental compliance.7
Comparing FY 2020 to Recent Years
The data reflects a continued year-over-year increase since 2017 in the number of new criminal cases opened by the EPA.8 The number of new cases appearing on the EPA’s criminal docket had been declining each year from FY 2011 to FY 2016, which can primarily be attributed to the historically low number of criminal investigators at the EPA and related budget constraints. Over the last three fiscal years, however, the EPA’s criminal caseload has rebounded substantially.
Despite the jump in new criminal cases at the EPA, the number of defendants charged with criminal environmental violations dropped to the lowest point in the past decade, representing a 69% drop from FY 2010, the decade high for the period FY 2010 to FY 2020.9 It seems likely that part of the decline is attributable to the COVID-19 pandemic, as courts (including investigative grand juries) were closed or limited in many parts of the country. But assuming that DOJ and the courts are able to handle the increased case load, the number of prosecutions is likely to jump in FY 2021 due to the surge in new criminal cases opened by the EPA in FY 2020.
On the civil side, the $160 million that the EPA secured in administrative and civil penalties is just below the average over the past decade if one excludes outlier years that included anomalous “one-time” cases.10 Although the penalties obtained last year are less than the $360 million obtained in FY 2019, the EPA’s FY 2020 results are in line with an inflation-adjusted long-term average. And though they are not properly included in the FY 2020 results (which count only cases through September 30, 2020), the EPA recently secured civil penalties of $744 million in the Daimler defeat device case11 and $180 million in the Toyota defect reporting case.12 These results show that the agency remains committed to substantial civil enforcement.
Predictions for the Biden EPA
Most environmental laws contain both criminal and civil violation provisions, and President Biden’s environmental platform during the 2020 election signals that the new administration will press for the investigation and prosecution of criminal and civil environmental offenses.13 Based on President Biden’s campaign promises, we can expect to see civil enforcement initiatives targeting the energy sector and violations of greenhouse gas emissions regulations.14 It is also likely that environmental criminal prosecutions will rise, given that the number of new criminal investigations opened by the EPA recently reached levels not seen for a number of years.
One way in which the Biden EPA could quickly grow its enforcement statistics to show that it is active would be to commence as many cases as possible. However, a prioritization of quantity over quality would mean that the increased number of cases could include more weak or simplistic cases that may not have been opened by the EPA or which would have been left for the states to pursue during other administrations. From the perspective of the regulated community, this desire to increase statistics could also mean that the EPA will take a more aggressive approach, referring cases to DOJ that it might have previously handled administratively. Because DOJ is empowered to bring cases in court seeking civil penalties (which are higher than administrative penalties), such referrals can lead to a company paying more to resolve a matter, or spending additional time in negotiations or litigation.
The EPA could also take over enforcement of matters that, at present, are typically enforced by the state environmental enforcement agencies. Most of these cases would involve relatively small enforcement actions, but taking over such cases from state agencies would boost the EPA’s enforcement numbers.
There is likely to be a surge in civil enforcement activity by the EPA and DOJ generally. President Biden’s campaign promised to direct the EPA and DOJ to pursue environmental enforcement cases to the fullest extent of the law.15 Further to this effort, President Biden has proposed creating a new enforcement division within DOJ called the Environmental and Climate Justice Division to “complement” ENRD’s enforcement work and pursue climate change litigation against energy companies.16 It remains to be seen whether this proposed division will come to fruition, but the proposal indicates the emphasis that the new administration is placing on such cases, and on environmental justice considerations.
The EPA may also focus on new areas of enforcement, likely including the active enforcement of greenhouse gas emissions regulations, Clean Water Act requirements related to coal ash impoundments, mobile source enforcement against equipment manufacturers and those in the transportation industry, and water standards involving multiple substances. Future enforcement efforts are likely to include cases involving substances like PFAS/PFOA, depending on what additional regulatory action the EPA takes with regard to them. The EPA would also be expected to increase its enforcement activity in the energy sector and may aim to boost its civil penalty and injunctive remedy metrics by pushing for more aggressive penalties and injunctive remedies.
Companies should review their environmental compliance practices and prepare for increased EPA and DOJ activity in both civil enforcement and criminal prosecutions. Companies should also expect the EPA and DOJ to be aggressive in their pursuit of violations once they are discovered, and businesses should make sure their legal and business teams are engaged early in the process after an EPA inspection.
1 See EPA Enforcement Annual Results FY 2020, Envtl. Prot. Agency (Jan. 13, 2021) [hereinafter FY 2020 Results], https://epa.maps.arcgis.com/apps/Cascade/index.html?appid=9dfe57199392498f872bac6bf2e4867c.
3 See Envtl. Prot. Agency, EPA-190-R-21-001, Fiscal Year 2020 Annual Performance Report, at 37 (Jan. 2021) [hereinafter FY 2020 Performance Report], https://www.epa.gov/sites/production/files/2021-01/documents/epa-fy-2020-annual-performance-report.pdf.
4 FY 2020 Results, supra note 1.
8 See Fiscal Year 2019 EPA Enforcement and Compliance Annual Results, Envtl. Prot. Agency at 10 (Feb. 13, 2020) [FY 2019 Results], http://web.archive.org/web/20200214154759/https://www.epa.gov/sites/production/files/2020-02/documents/fy19-enforcement-annual-results-data-graphs.pdf (demonstrating an overall downward trend in environmental crimes cases from fiscal year 2009 through fiscal year 2019, with 2018 being the lowest point during that period).
9 Compare Fiscal Year 2010 EPA Enforcement and Compliance Annual Results, Envtl. Prot. Agency at 2 (Dec. 2, 2010), https://archive.epa.gov/enforcement/annual-results/web/pdf/eoy2010.pdf (reporting 289 defendants charged in FY 2010), with FY 2020 Performance Report, supra note 3 (reporting 91 defendants charged in FY 2020).
10 Compare FY 2020 Results, supra note 1 (Reporting $160 million in civil and administrative penalties), with FY 2019 Results at 4, supra note 8 (reporting civil and administrative penalties from FY 2009 through FY 2019. If the three blockbuster years in FYs 2013, 2016, and 2017 are excluded, the average civil and administrative penalties handed out in the remaining years is roughly $171 million). The civil enforcement results over that period have swung erratically from a high of $6.25 billion in penalties in FY 2016 to a low of $70.1 million in FY 2018. See FY 2019 Results at 4, supra note 8. These big differences are primarily attributable to the resolution of several particularly large cases, including the Volkswagen and Deepwater Horizon cases. See generally Press Release, Envtl. Prot. Agency, Volkswagen Agrees to Plead Guilty, Pay $4.3 Billion in Criminal and Civil Penalties (Jan. 11, 2017), https://archive.epa.gov/epa/newsreleases/volkswagen-agrees-plead-guilty-pay-43-billion-criminal-and-civil-penalties.html; Press Release, Dep’t of Justice, U.S. and Five Gulf States Reach Historic Settlement with BP to Resolve Civil Lawsuit Over Deepwater Horizon Oil Spill (Oct. 5, 2015), https://www.justice.gov/opa/pr/us-and-five-gulf-states-reach-historic-settlement-bp-resolve-civil-lawsuit-over-deepwater (announcing a $5.5 billion Clean Water Act penalty in addition to other damages).
11 See generally Daimler AG and Mercedes-Benz USA, LLC Clean Air Act Civil Settlement, Envtl. Prot. Agency, https://www.epa.gov/enforcement/daimler-ag-and-mercedes-benz-usa-llc-clean-air-act-civil-settlement#penalty (noting that EPA and the California Air Resources Board would share certain amounts of a total $875,000,000 civil penalty).
12 See generally Toyota Clean Air Act Emissions Defect Reporting Settlement Information Sheet, Envtl. Prot. Agency, https://www.epa.gov/enforcement/toyota-clean-air-act-emissions-defect-reporting-settlement-information-sheet#civil.
13 The Biden Plan for a Clean Energy Revolution and Environmental Justice, Biden For President, https://joebiden.com/climate-plan/#.
14 Navigating the Transition: Key Environmental Enforcement Issues to Watch in the Biden Administration, Vinson & Elkins (Jan. 22, 2021), https://www.velaw.com/insights/navigating-the-transition-key-environmental-enforcement-issues-to-watch-in-the-biden-administration/.
15 See supra note 13.