The US DOJ’s Environmental Crimes Section (ECS) Voluntary Self-Disclosure Policy update, issued March 2, 2023, provides relief from criminal penalties to companies making voluntarily self-disclosures (VSDs) regarding violations of environmental criminal statutes.
DOJ prosecutors will not seek a guilty plea if:
A company submits a VSD that meets the following six criteria:
- Voluntary: Information is made available by the company and not subject to independent reporting obligations
- Timing of disclosure: Information must be made available prior to an imminent threat of disclosure, prior to the misconduct being publicly disclosed, and promptly after discovery of the misconduct
- Disclosure made to DOJ: VSD must be made directly to ECS or the US Attorney’s Office in the district in which conduct occurred
- Method of discovery: Significant benefit will occur when a violation is discovered and disclosed through a company’s ethics or compliance program
- Substance of disclosure and accompanying actions: Disclosure must provide all available information concerning misconduct and individuals, company must preserve information, and company must provide timely updates as investigation progresses
- Acquisitions: A new owner may receive VSD benefits
A company fully cooperates, including against responsible individuals
A company timely and appropriately remediates criminal conduct
A company presents none of the following six aggravating factors:
- Conduct posed a serious threat to environment or public health and safety
- Involved the knowing endangerment, serious injury, or death of any individual
- Was deeply pervasive throughout the company
- Involved concealment or obstruction of justice by senior management
- Was followed by lack of full cooperation, or
- Was followed by lack of timely and appropriate remediation
Further, the DOJ will not impose an independent compliance monitor if a company follows a VSD with full cooperation and demonstrates that it has implemented and tested an effective internal compliance program, in addition to the items above
Even where an aggravating factor is present, a VSD can serve to reduce the number or type of
charges or criminal fine
Note: The DOJ has stated that a company’s failure to appropriately leverage the VSD may later be deemed as an “aggravating factor.”
EPA audit policy
The EPA policy on Incentives for Self-Policing: Discovery, Disclosure, Correction, and Prevention of Violations offers relief from civil penalties. This policy was designed to encourage regulated entities to report and avoid environmental violations.
There are nine criteria for penalty mitigation that may result in the total waiver of the gravity-based penalty. If a disclosure meets items 2 through 9, criminal prosecution will generally not be recommended, and the EPA may waive up to 75% of the gravity-based penalty.
These criteria are:
1. Systematic discovery of the violation through an environmental audit or implementation of a compliance management system
2. Voluntary discovery of the violation
3. Prompt disclosure within 21 days of discovery
4. Independent discovery and disclosure
5. Correction and remediation within 60 days, usually from the date of discovery
6. Prevention of recurrence
7. Repeat violations are ineligible if the same violations have occurred at the same facility in the past three years
8. Certain types of violations are ineligible
9. Cooperation by the disclosing entity
- Companies making VSDs may be protected from criminal penalties
- The ECS will not seek guilty pleas if a company makes an effective VSD
- This policy follows the DOJ’s trend to enhance corporate disclosure incentives
- This will operate in tandem with an EPA policy incentivizing disclosure for civil noncompliance
To stay compliant with this update, companies should consider: reviewing ethics and environmental compliance programs, conducting an internal audit, instituting training programs, creating new standard operating procedures, and/or evaluating risks associated with internal compliance initiatives.
We invite you to reach out to any member of our Forensic Services Practice to continue the conversation if you seek independent assistance in preserving evidence, conducting a preliminary investigation, preparing a ECS VSD submission, and/or designing, developing, and implementing enhancements to your compliance program.