Kenny Rogers sang a song years ago with the lines “Know when to hold ‘em, know when to fold ‘em.” While referring to a poker game and a life lesson, I was reminded of the song in a recent criminal investigation a client was facing. In these investigations, you always have to decide how much you will volunteer versus waiting on specific requests from environmental criminal investigators or attorneys.Making the decision on how much to volunteer is a true judgment call.
In some cases, like the one I just worked on, you have to decide if the facts demonstrate a clear lack of criminal intent or knowing violation in the case of most state and environmental statutes. Some are based on strict liability or negligence, but most are “knowing” violations. The line between civil and criminal enforcement is often largely a matter of enforcement discretion by environmental agencies or attorneys, prosecutors, agency attorneys, or district attorneys.
Evaluating the facts and circumstances, and how they may be perceived by the individuals involved is critical. Different people will see matters differently. One sees something as a mistake, others as an intentional, knowing act.
Sometimes this may mean federal and state agencies, sometimes two or three. Occasionally, a local city or county investigator may want to be involved. In addition to environmental agencies, in Texas EPA and the Texas Commission on Environmental Quality, you may face review by wildlife agencies such as the US Fish and Wildlife Service or the Texas Department of Parks and Wildlife.
In the right case, it can be productive to disclose the facts and make facilities available for tour by the investigators. It can be effective to avoid a criminal investigation to disclose all and push for a decision that the matter should be referred to civil enforcement representatives, rather than being investigated by the criminal side of the agency house.
Often a rather early meeting and provision of documents and information may gain great confidence from the criminal investigators that the parties under review acted in good faith, but for whatever reason violated the law, even causing environmental damage. Avoiding the criminal investigation can be more important for reputation of the entity and potentially even stock price. Criminal environmental investigations tend to gain focus by the media and reverberate through the Internet and social media. A turn from the criminal to the civil can avoid much of the damaging reputational impact. For some parties that work with the government, criminal investigations can result in debarment from federal, state, or local contracts—with even greater damage than any fine.
When an event occurs that leads to a criminal investigation, a rapid legal analysis and strategy development is crucial. Sometimes, it makes a significant difference if the alleged violator acts quickly and presents information and explanation before any subpoena or other request for information is received.
The pro-active disclosure strategy does not fit every case. Sometimes waiting for any requests for information or documents is the best strategy. Every instance must be considered based on its unique facts and actions by the entity’s or contractor’s employees.
You have to “know when to hold ‘em, know when to fold ‘em.” I have found that in the right case, the full disclosure approach can turn a potentially damaging criminal investigation into a civil settlement of a small penalty.