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13 Preventive L. Rep. 29 (1994)
Hazardous Wastes of Time When the Crime is Environmental

handle is hein.journals/prevlr13 and id is 125 raw text is: SELF-REPOR77NG ENVIRONMENTAL CRIMES
Hazardous Wastes of Time
When the Crime Is Environmental
By GARY S. LINCENBERG, Of Counsel; Bird, Marella, Boxer, Wolpert and Matz; Los Angeles, California

Editor's Note: Reprinted in part with permissionfrom Criminal
Justice, V.9:1, Spring 1994.
When Sam, the company president, is told thatJoe, the
foreman, emptied barrels of hazardous waste down
the sewer, the last people he wants to let in on the
news are his local EPA investigators. For Sam, the decision
seems clear: I'm barely making a profit as it is. Why alert
someone to consider bringing a criminal lawsuit against me?
Sam, think twice before you act. The first step you take may
be the most important one. You not only may commit a crime
by failing to report the incident but also may blow your
company's chance to escape indictment. And if the company is
indicted, you may lose an opportunity to reduce significantly the
legal costs and fine.
What a corporation does in the first few hours, days, and
months after learning of a potential environmental crime can
dramatically affect whether charges will be brought and, if
brought, what the punishment will be. Department of Justice
(DOJ) policy states that timing is a critical factor in deciding
whether voluntary disclosure and self-correction of criminal
conduct should result in a decision not to indict, to seek reduced
charges, or to recommend a reduced sentence. (DOJ Policy
Statement, Factors in Decisions on Crminal Prosecutions for
Entronmental Violations in the Context of Significant Volun-
tary Compliance or Disclosure Efforts by the Violator (July 1,
In many cases, it will be the prudent business decision-and
the prudent legal decision--not to self-report. But it would be
unwise to fail to report at this early stage without a legal
explanation of the benefits, or in some cases the requirements,
of making a disclosure. The regulatory emphasis placed on
timeliness and the potential benefits to be derived from early
reporting and self-correction dictate that a company consider
GARY LINCENBERG specializes in white-collar criminal de-
fense work and has handled a number ofentronmental crimes
cases on both the prosecution and defense sides.

very early on the risks and costs attendant to its various legal and
business options.
Weighing the Risks
A company can conduct a risk/cost analysis of its options in
five basic steps:
1. Detect potential criminal conduct.
2. Assess the risk of a criminal investigation.
3. Assess the risk of conviction if there is an investiga-
4. Estimate the costs of defending itself.
5. Explore ways to reduce defense costs.
The key benefit of conducting a risk/cost analysis at the
earliest possible time is the preservation of a full range of options
for the company. If an investigation and criminal charges appear
very likely, the company ultimately will pursue either voluntary
disclosure, cooperation, negotiated disposition, or litigation.
The strength of each option depends in part on how quickly
the company contacts prosecutors; how counsel structures
audits, intemal investigations, and joint defense agreements;
how supportive the company wants to be of the employee(s)
responsible for the wrongful conduct; and which approach is
likely to give the company the most bargaining leverage.
Has a Crime Been Committed?
An environmental compliance program can alert manage-
ment to potential crimes through self-audits and by offering
incentives for employees to report suspect incidents. If a
manager thinks that conduct has occurred that a criminal
investigator possibly could view as criminal, he or she should
seek a second opinion and consider calling an attorney for
independent review.
Will There Be an Investigation?
It is not possible to know whether the government will detect
a wrongdoing, but assessing the risk of detection is the first step
in any risk analysis. Consider the following hypothetical ex-
Oil Company operates an offshore drilling platform. Its penmit
provides that it may discharge no more than 150 parts per million
of oil and grease in wastewater into the ocean. It is required by
permit to submit monthly discharge-monitoring reports (DMRs)

Fall 1994                                                                    PREVENTIVE LAW REPORTER       29

Fall l994


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