Enforcement of Environmental Protection Through Criminal Law

Written by: Andrea Jarolímková

1. Introduction

Protection of the environment is one of the topics frequently discussed but which is much more difficult to implement in practice. This particularly applies in relation to companies which are often involved in serious infringements of environmental law. Compliance with environmental law is inversely proportional to its enforceability. Inability of state authorities to effectively enforce environmental law, as well as creativity of the companies in circumventing the law, creates the right atmosphere for companies to feel that they are able to do and get away with anything. In this regard, traditional forms of enforcement of environmental law through civil or administrative sanctions are becoming insufficient, and some jurisdictions are searching for more effective remedies. An example of this is the European Union (“EU“) which has tried to regulate the rules on criminal liability for infringements of environmental law. What is the main idea behind this effort of the EU, and which new features will it bring to the individual Member States, especially to the Czech

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Republic? Is corporate criminal liability the right solution to be followed in order to prevent the wrongdoing of companies or at least to make their illegal activities more difficult? How does environmental protection work in a jurisdiction where corporate criminal liability is a part of the law? The aim of this article is to, at least partially, address these questions in relation to three different legal systems – the EU, the Czech Republic and federal United States (“US“) law.

2. What Does the New EU Legislation Bring?

On 24 October 2008, the EU adopted a new Directive on protection of the environment through criminal law (the “Directive“).[1] In fact, this is the first time the EU has attempted to regulate the national laws of the Member States of the EU in the area of criminal law. The reason for adoption of the Directive is simple – criminal sanctions seem to be the sole adequate deterrent with which to achieve a high level of environmental protection throughout the EU. Although the national laws of the Member States often contain criminal liability for infringement of environmental law, definitions of environmental crimes and the level of sanctions differ greatly from one Member State to another. The EU had already tried to coordinate criminal environmental liability before the adoption of the Directive, without success. According to the proposal for the Directive which is surprisingly, relatively concise, the Directive mainly aims at setting the “minimum standard” of environmental protection through criminal law. It requires the Member States to treat serious environmental offences as criminal acts if such offences are committed intentionally or with at least gross negligence.

Importantly, the Directive does not define any new environmentally harmful activities. It merely subjects environmentally harmful activities that are already regarded as illegal by existing EU laws and relevant national laws to criminal law measures. The Directive suggests that individuals and legal persons who commit a criminal offence under the Directive should be subject to “criminal penalties” and “penalties”, respectively.[2] The lack of reference to criminal penalties in relation  to legal persons is the result of certain Member States including the Czech Republic and Germany failing to recognize criminal liability of legal persons in their national laws. Thus, according to the Explanatory memorandum to the proposal for the Directive, these Member States of the EU are not obliged to change their national systems by introducing corporate criminal liability.[3] Nevertheless, somewhat confusingly, the Directive seems to suggest that although a legal person does not have to be a subject to criminal penalties, it commits a criminal offence. To a certain extent, it is possible to argue that the Directive thus introduces corporate criminal liability.

According to the Directive, the Member States of the EU have to ensure that legal persons can be held liable for the offences committed for their benefit by certain individuals acting on their behalf, or exercising control within the legal person, or in situations where a lack of supervision or control has made the commission of the offence possible. At the same time, the liability of legal persons does not exclude the criminal liability of individuals who committed the offence when acting for the company.[4] In this respect, inspiration has come from US laws. This principle – to have both legal persons and individuals criminally liable – could be seen as a crucial change for the countries that do not recognize corporate criminal liability.

Unlike in the US where statute does not define the individuals within the companies which could be held liable, the Directive defines these so called “responsible corporate officers” as persons who have a leading position within the legal person, based on (i) “a power of representation of the legal person”, (ii) “authority to take decisions on behalf of the legal per person”,
or (iii) “authority to exercise control within the legal person.” In the author’s view, defining responsible corporate officers in the Directive is useful. The reason is that, unlike the US courts, national courts in the EU do not generally get a high level of discretion to determine the meaning of general terms within statutes. In addition, national courts of different Member States of the EU would otherwise reach different interpretations of the term “responsible corporate officers” which could lead to forum shopping.

3. Is the Czech Republic Always the Last?

3.1 Current situation

As to the implementation of the Directive in the Czech Republic, there are no special measures planned to be taken. The reason is that the Czech Republic (as well as Germany and Finland) is already one of the most pro-active countries in terms of sanctioning environmental offences. In this regard, environmental offences stipulated in the Criminal Code correspond to those under the Directive and penalties under the Criminal Code are often more severe than those stipulated under the  Directive. Moreover, there is Act No. 167/2008 Coll., on Ecologic Harm, partially effective since 17 August 2008, which imposes sanctions for breaches of environmental law. This Act contains detailed obligations to prevent ecological harm and sanctions for causing ecological harm, although the sanctions are of an administrative rather than criminal nature.

Thus, the sole difference between the applicable Czech law and the Directive is the innovative approach relating to criminal liability of legal persons. Under Czech law, there are two major arguments generally offered for not having criminal corporate liability. The first is that a legal person cannot act in a criminal sense, i.e. it cannot act in an objectively visible manner (which is a so called “objective” requisite of a criminal act under Czech law). It means that the behavior of a legal person is always the behavior of a natural person[5] and cannot be imputed to a legal person when an “environmental crime” is committed. The second argument relates to the so called “subjective” requisite of a criminal act and means that a legal person can never act culpably, i.e. with a mental element relating to the circumstances constituting a crime. Only people can have an intention to commit or omit.[6] For these reasons, corporate criminal liability and criminal liability of both an acting individual and its company could also become an important change in Czech criminal law.

3.2 Draft Czech Criminal Code[7]

Neither the Criminal Code nor any other Czech statute currently contains criminal liability for legal persons. Legal persons can only be found liable through administrative law. Moreover, the new draft Criminal Code does not intend to introduce criminal corporate liability.[8] Although this issue was extensively discussed when the draft Criminal Code was prepared, corporate liability was only to be introduced at the level of administrative law by the new draft Administrative Punishment Act.

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However, regardless of the above, the new draft Criminal Code seems to suit environmental protection better, given that its penalties are better conceived. In this regard, it is often impossible to impose a fine for an infringement, the real focus is on stopping the wrongful activity. In addition, a court could prohibit certain activity or forfeit property. Finally, there can be longer sentences or higher fines imposed.

4. Environmental Criminal Liability in the US

The concept of environmental criminal liability in the US is relatively new, yet older than in the EU. Since the mid-1980s, US Congress and state legislatures have passed numerous environmental protection statutes and the criminal law has become a tool for environmental enforcement. The main reason for the increased use of criminal enforcement was the same as the reason currently in the EU – insufficiency of functioning of civil liability and administrative penalties and also the ever increasing number of companies that are not effectively deterred from committing environmental crimes. We can even observe a trend where environmental fines imposed for violation of environmental rules become only one of a company’s ordinary costs of doing business. That is why corporate criminal liability appears to be the sole effective method of deterring environmental violations.[9] It means not only to enforce the law through high fines, but also through effective criminal remedies such as prohibition of business, forfeiture of property, or publication of judgments.

Although environmental criminal liability is regulated on all levels in the US, i.e. federal, state and local, this article will only focus on the federal level. The most important federal statutes forming the basis of environmental criminal protection are the Comprehensive Environmental Response Compensation and Liability Act of 1980 (CERCLA), the Clean Water Act of 1972 (CWA), the Clean Air Act of 1970 (CAA), and the Resource Conservation and Recovery Act of 1976 (RCRA).[10] In these statutes we find all the important types of environmental criminal liability resulting from general rules of criminal law. Under US criminal law, a person has to commit a prohibited act (actus reus) with a guilty mind (mens rea) to trigger criminal liability. There are five categories of the state of one’s mind which could result in criminal liability. Four of these are similar to those under Czech criminal law and include intent, knowledge, recklessness or negligence. The fifth category is specific for the US criminal law – there are certain crimes which may be committed without a guilty mind.[11]

In the US, individuals, corporations, or in fact both at the same time can be subject to environmental criminal liability. Below, I briefly examine corporate criminal liability, its relation to the liability of corporate officers and the concept of strict liability.

4.1 Corporate Criminal Liability

Under US federal law, a corporation may be held criminally liable for the actions of its employees or agents that have violated environmental laws, if these acts were committed for the benefit of such company and were within the scope of the employee’s or agent’s authority. Such a company may be found to have knowingly engaged in criminal conduct based on proof that one employee knew facts relating to one element of a criminal offence and other employees had knowledge relating to other essential elements.[12] Put differently, even if no single employee or corporate officer had knowledge of all facts necessary to prove all of the elements of a criminal offence, the corporation can still be held criminally liable for violations of environmental law.[13]

The most famous court case confirming the existence of corporate criminal liability under the US federal law is New York Central & Hudson River Railroad v. United States.[14] The case is about New York Central, a railroad company which was found to have violated statute by paying shippers a rebate for using the railroad line. The statute made the corporation criminally liable for the criminal acts committed by corporate directors, officers, and other persons acting on behalf of the corporation. Even though no evidence was produced showing that the director authorized or approved the prohibited rebates, the corporation was found criminally liable. The Court based this accountability on the imputed benefit received by the corporate principal from the acts of its agent.[15]

4.2 Strict Liability

Strict liability means that liability is imposed “in the absence of fault, knowledge, intent, negligence, breach of contract, or any other direct or indirect wrongdoing by the person held responsible.”[16] Strict liability applies to individuals and corporations. An example of a statute which imposes strict liability is CERCLA. CERCLA foresees strict liability for a number of situations including owners or operators of a facility at the time of disposal or release of any hazardous substance, or any other person who arranged for disposal or treatment, who accepted the hazardous substances for transport to disposal or treatment, etc.[17] The rationale behind strict liability under CERCLA is to ensure that there will always be a person liable for clean-up costs. Strict liability is conceived as joint and several liability. This means that if a court can identify just one person out of many that polluted the environment, such a person can potentially be liable for all clean-up costs. The only remedy for such a person may be to claim contribution from any other potentially liable persons.

On the one hand, this concept is very severe and can be considered contrary to the principles of fairness and justice. On the other hand, it strengthens the protection of the environment. The purpose of strict liability is not to find scapegoats to pay for the costs of environmental damage. Rather. it works mostly in a preventive manner, although it can sometimes lead to reparation of environmental losses.

4.3 Responsible Corporate Officer Doctrine

Not only a company through its employees, but also individual employees or corporate officers may be held liable for environmental crimes. Under this doctrine, refers to these employees as responsible corporate officers (the “RCO”), “corporate officers are criminally liable on the basis of their “responsible relation” for the acts they personally commit, or the acts of agents or subordinates, for crimes that they aid or abet, and for crimes they fail to prevent despite their responsible positions.”[18]

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Given that the environmental statutes only define general categories of individuals considered to be responsible corporate officers, the government prosecutors have an immense discretion in determining which, and whether a corporate officer may be deemed a responsible corporate officer. Generally, a corporate officer is found “responsible” if the environmental violation is committed, the corporate officer had the authority to stop or prevent the violation, and the corporate officer failed to do so, or, if the corporate officer had the authority to exercise control over the corporation’s activity that caused the violation. Under this doctrine, there is no requirement that the officer in fact exercised such authority, or even that the corporation had expressly told the officer that he could exercise the authority.[19] The relevant government agency or Court need only prove that the defendant had the responsibility and had either the authority to prevent or the ability to remedy a violation. They do not need to show that the individual had the intent to violate the law or even had any knowledge of the violation.

The RCO doctrine was first introduced in United States v. Dotterweich which addressed the question of individual liability of a corporate officer under a public welfare statute.[20]Dotterweich, the president of a pharmaceutical company, was found guilty of shipping adulterated and misbranded goods in violation of the Food, Drug, and Cosmetic Act. He was responsible for the day-to-day supervision of his company. Although there was no evidence that he knew or participated in the illegal conduct, the Supreme Court stated that the offence could be committed “by all who have a responsible share in the furtherance of the transaction which the statute outlaws.” The Court weighed the potential risk of harm to the public against the hardship suffered by the corporate officer who, although not intending to violate the statute, was in a position of “responsible relation” to the danger such that he could be informed of the danger before loosing it on consumers.[21]

5. Conclusion

As we can see, the new proposed EU Directive is quite different from the US rules on corporate criminal liability in environmental matters. However, the proposed EU Directive contains several significant new features which in some ways resemble the US federal law. First, it de facto introduces criminal corporate liability, without naming it so, at the EU level. This will be new for certain Member States of the EU. Second, criminal corporate liability does not exclude liability of individuals if an environmental offence is committed. The possibility for individuals to commit a criminal offence (whether alone or together with the company) means that they cannot be exonerated from liability if the company is held liable. Thirdly, strict liability as in the US does not seem to be achievable in EU countries with a civil law system.

It is suggested that environmental protection through criminal law is the only effective method. Companies understand that prevention is generally cheaper than a fine or prohibition of an activity imposed in subsequent criminal proceedings. The adopted EU directive has a chance to influence this debate, even though its provisions could have been more courageous and better conceived.

Andrea Jarolímková is a graduate of the Charles University Law Faculty in Prague where she is currently completing her PhD. She is a junior associate with Bird & Bird in Prague where she focuses mainly on intellectual property law.

Footnotes

  1. Directive 2008/99/EC of the European Parliament and of the Council of 19 November 2008 on the protection of the environment through criminal law (OJ L 328, 6.12.2008, p. 28-37). See also proposal for the Directive under document COM(2007)51 final, dated 9 February 2007. Available at: http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2007:0051:FIN:EN:PDF
  2. Articles 5 and 7 of the Directive.
  3. COM(2007)51 final, dated 9 February 2007, page 8.
  4. Article 6(3) of the Directive.
  5. I.e. its statutory body, employee, or representative.
  6. See Janda, P. Trestní odpovědnost právnických osob [2006] Právní fórum 5, pg. 168; Novotný, O., Dolenský, A., Jelínek, J. and Vanduchová, M. Trestní právo hmotné – I. Obecná část. Praha: Aspi Publishing, 2003, p. 133 and 134.
  7. See Draft Criminal Act – Document No. 410/2008 of the Lower Chamber of the Czech Parliament (5th Voting Period). Available at http://www.psp.cz/sqw/sntisk.sqw
  8. See Explanatory Report to draft Criminal Act – Document No. 410/2008 of the Lower Chamber of the Czech Parliament (5th Voting Period). Available at http://www.psp.cz/sqw/sntisk.sqw
  9. Paddock, LeRoy C. Environmental enforcement at the turn of the century (August, 21 2008). Environmental Law, Vol. 21, p. 1509, 1991 GWU Legal Studies Research Paper No. 430; GWU Law School Public Law Research Paper No. 430. Available at SSRN: http://ssrn.com/abstract=1244249
  10. Miller, Andrew B. What makes companies behave? An analysis of criminal and civil penalties under environmental law (December 2005). Available at SSRN: http://ssrn.com/abstract=471841
  11. Cole, E. Joseph. Environmental criminal liability: what federal officials know can hurt them – or should know (2004). Available at: http://findarticles.com/p/articles/mi_m6007/is_54/ai_117325772. However, strict and absolute liability offences are not exclusive to US law and are relevant to a range of common law jurisdictions.
  12. Tomko, Edwin J. and Wahl, Peter K. Criminal Liability Concerns to the Environmental Professional – I Should Have Known Better (2001). Available at: http://www.akingump.com/docs/publication/391.pdf; O´Connell, George L. and Allison, Craig C. The Growing Web of Environmental Criminal Liability (1996). Available at: http://www.grac.org/summer96/growingweb.htm.
  13. Chamber of Shipping. Environmental Criminal Liability in the United States. A Handbook for the Marine Industry. Library of Congress Card Number 00-106049: September 2000. Available at: http://www.marisec.org/resources/EnvironmentalCriminalLiabilityInthe US.pdf.
  14. New York Central & Hudson River Railroad v. United States, 212 U.S. 481 (1909).
  15. Ibid.
  16. Smith, Bruce C.: Avoiding Environmental Liability (1992). http://www.mmmlaw.com/publications/article_detail.asp?serviceid=10articleid=88.
  17. CERCLA § 9607 – Liability, http://www4.law.cornell.edu/uscode/42/usc_sec_42_00009607.
  18. Chamber of Shipping, op.cit., note 13.
  19. Chamber of Shipping, op. cit., note 13.
  20. United States v. Dotterweich, 320 U.S. (1943), http://www.altlaw.org/v1/cases/385093.
  21. Ibid.

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