Regulatory authorities

Regulatory authorities

Which authorities are responsible for the environment and what is the scope of each regulator’s authority?

The US Environmental Protection Agency (EPA) implements most national environmental statutes. The Department of the Interior and the US Forest Service implement a variety of laws addressing environmental review, wildlife and cultural and historic resources. The Clean Water Act (CWA) wetlands fill permits are issued by the US Army Corps of Engineers with EPA oversight. The US Department of Justice litigates cases arising under federal environmental and natural resources laws. State agencies issue most operations permits pursuant to authority delegated by EPA, and also share enforcement authority. States generally take the lead under the Clean Air Act, CWA, and the Resource Conservation and Recovery Act on inspections and enforcement, with EPA retaining significant ‘overfiling’ enforcement authority with regard to violations of these statutes at individual facilities. In other areas (eg, the Toxic Substances Control Act; the Federal Insecticide, Fungicide, and Rodenticide Act; and the Emergency Planning and Community Right-to-Know Act) EPA generally takes the lead on enforcement.

Investigation

What are the typical steps in an investigation?

Although state and federal environmental agencies routinely conduct inspections of regulated facilities, comprehensive governmental investigations are not usually initiated as a result of most regulatory compliance issues. Many compliance issues, whether self-disclosed or identified as a result of an agency inspection, are resolved informally. If agency inspectors identify non-compliance through review of a regulated facility’s records or an onsite inspection, under most circumstances agency personnel will initially discuss the alleged violations with facility personnel. If a regulatory agency initiates a comprehensive or even a limited investigation, it will typically make a site inspection, undertake testing, sampling or similar activities, conduct interviews of facility personnel and prepare a written report and notice of violation identifying the practices or events constituting alleged non-compliance. The facility is entitled to obtain split samples of materials removed by the agency for testing, to retain copies of records requested by the agency and to be represented by counsel throughout the investigation.

Environmental agencies also have the power to initiate criminal investigations, which are generally brought when ‘serious’ environmental violations (which pose actual environmental harm or substantial risks of harm) and are committed ‘knowingly’ or ‘intentionally’. These criminal charges can be brought against the company, culpable or responsible individuals, or both. If criminal charges are brought against individuals in the federal system, the risks of an active prison sentence are real. With regard to companies, apart from substantial fines, the biggest adverse impact can arise from suspension or debarment from public contracting, which can also spill over into contractual bars imposed by the compliance requirements of larger corporations, which prohibit them from using vendors with corporate criminal records.

Administrative decisions

What is the procedure for making administrative decisions?

Most administrative decision-making processes are open and allow for participation by interested parties and the general public. The procedural aspects of administrative decision-making vary based on a number of factors, including the agency involved (eg, federal or state), the type of decision (eg, individual permit or variance, enforcement) and the environmental statute under which the decision is made. Some administrative processes resemble a formal trial. More informal proceedings are decided on written submissions. Although procedures vary, the parties typically may use any type of evidence they deem relevant in administrative proceedings. There also are means to seal confidential information if applicable. Any subsequent court challenge to a final agency action is typically based on and limited to the same administrative record as before the agency.

Sanctions and remedies

What are the sanctions and remedies that may be imposed by the regulator for violations?

Federal and state agencies may pursue injunctive relief and require the abatement or cessation of permit violations or environmental harm. Remedial steps may include installing equipment to control emissions, ceasing certain activities or revoking a permit or shutting down a facility. Many environmental statutes also authorise civil and criminal penalties, often calculated on a per-day, per-violation basis. Agencies may – and sometimes must – issue warnings or notices of violations before taking more severe enforcement actions. An agency typically may pursue an administrative enforcement action or sue the violator in federal court.

Appeal of regulators’ decisions

To what extent may decisions of the regulators be appealed, and to whom?

Nearly all formal administrative decisions from environmental agencies can be appealed by the recipient. Appeals can be based on factual findings and legal conclusions and can also challenge the extent of the remedy imposed by the decision-maker. Administrative appeal procedures differ among agencies, including potential proceedings before an Administrative Law Judge or an agency appeals board. After exhaustion of administrative remedies, a final agency action may be appealed to federal district court, or in some instances directly to a US court of appeals. Judicial review follows the Federal Rules of Civil Procedure, the Federal Rules of Appellate Procedure, and individual courts’ local rules, and is deferential to agencies.

Judicial proceedings

Judicial proceedings

Are environmental law proceedings in court civil, criminal or both?

Most violations trigger administrative or civil enforcement. In addition, a party may be prosecuted in a criminal case if that party has committed a knowing violation of the law or a permit (or in some cases, even a negligent violation). Civil regulators and criminal prosecutors have substantial discretion about whether and which charges to bring in response to environmental violations, but typically seek remedies commensurate with the underlying offence. Since the consequences associated with criminal charges are more severe, US law imposes a higher burden of proof for crimes (eg, ‘beyond a reasonable doubt’) as opposed to civil violations (eg, ‘preponderance of the evidence’ or ‘more probable than not’). A party challenging a federal agency action on environmental grounds may bring a civil case in a proper federal district court or a specific (eg, appellate) court if the relevant statute so directs. 

Powers of courts

What are the powers of courts in relation to infringements of environmental law?

In civil cases brought by governmental entities or citizen plaintiffs to enforce environmental laws, courts are generally authorised to require violators of environmental legal requirements to pay penalties and to undertake injunctive relief to abate the violation or address the environmental impacts of the violation. In a criminal case, individual defendants who plead guilty or are convicted at trial can generally be ordered to pay a higher fine and serve time in prison. The primary factors that the US courts consider in imposing such a sentence include:

  • the level of harm or danger imposed;
  • the degree of the violations;
  • the duration of the violations; and
  • whether the violations required a substantial clean-up.

 

Under Federal Rule of Civil Procedural 65 and similar court rules and case law, courts may also grant a preliminary injunction or other interim relief to, for example, stay a challenged agency action or prevent a project from going forward during the litigation.

Civil claims

Are civil claims allowed regarding infringements of environmental law?

Certain environmental statutes (eg, the Clean Air Act (CAA), the Clean Water Act and the Resource Conservation and Recovery Act) contain ‘citizen suit’ provisions authorising non-governmental entities to sue third parties for injunctive relief for violations. A private party claiming injury from hazardous activities also may seek damages or injunctive relief in a tort action. No contractual relationship among the private parties is necessary, but contracts can create obligations for compliance with environmental laws. The Administrative Procedure Act also generally enables citizen plaintiffs to file civil lawsuits challenging final agency actions, or omissions in some circumstances, as arbitrary and capricious or otherwise for failure to comply with procedural or substantive requirements of other laws.

Defences and indemnities

What defences or indemnities are available?

In civil cases, potential defences frequently include:

  • statutes of limitations (up to five years is common);
  • ambiguity of statutory or regulatory language;
  • compliance with a valid permit;
  • factual defences; and
  • limited statutory defences.

 

In criminal cases, additional defences often may include:

  • lack of knowledge;
  • the government’s failure to meet its heightened burden of proof; and
  • other constitutional arguments unique to criminal cases (eg, lack of fair notice or void for vagueness).

 

A liable party could have indemnity rights against other parties or be a party to contracts with other parties under which the violator in turn may seek recovery, but such indemnities do not shield the violator from liability to the government. In Superfund litigation, in which multiple parties can be liable, courts have generally held that liability is strict and joint and several (subject to potential ‘divisibility’ defences).

Directors’ or officers’ defences

Are there specific defences in the case of directors’ or officers’ liability?

Routine environmental violations generally do not create officer and director liability. However, some federal environmental statutes, including the CAA, specifically state that an ‘operator’ or ‘responsible corporate officer’ can include ‘any person who is senior management personnel or a corporate officer.’ In addition, a number of reports submitted to the US Environmental Protection Agency and state agencies are required to include formal certifications (under oath) with regard to the accuracy of the information contained therein, which can provide the basis for claims against corporate officers.

More often, various theories under laws governing the internal governance of corporations and other business enterprises can support personal liability of corporate directors and officers under environmental and other public health laws – for example:

  • the corporate veil is pierced;
  • the director or officer personally participated in the improper activity; or
  • the director or officer personally exercised substantial control and supervision over the activity in question.

 

US law generally does not permit liability based only on the corporate position or job title of director or officer. However, federal prosecutors can rely on a range of surrogates to prove the executive’s knowledge. Therefore, criminal charges can be pursued when the directors or officers:

  • are personally aware of, or involved in, the commission of a crime;
  • aid and abet a crime;
  • fail to prevent the commission of a crime by others within the corporation by either turning ‘wilfully blind’ or negligently supervising the conduct of those subject to their control; or
  • fail to implement preventive measures to ensure that violations do not occur.

 

Directors’ and officers’ liability insurance and corporate indemnification can mitigate such liability.

Appeal process

What is the appeal process from trials?

In the federal courts, a judgment from a trial-level federal district court is directly appealable to one of 12 federal circuit courts of appeals. From a circuit court of appeals, a party may petition the US Supreme Court to hear an appeal, but the Supreme Court’s jurisdiction is discretionary and rarely exercised.

Each of the 50 states has its own court system, but generally there is a right of review from the trial level to an intermediate appellate court and then to the state’s highest court. In many states, the highest court’s jurisdiction is discretionary. State court systems vary as to the possible levels of appeal, but there are typically two or three levels of courts (although the jurisdiction of some courts of appeal may be discretionary).