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Assistant Attorney General John C. Cruden Delivers Keynote Address During the Interactive Session on “Environmental Compliance and Enforcement: International, Regional and National Perspectives” at the 2016 World Environmental Law Congress
RJ
Brazil
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Friday, April 29, 2016

Remarks as prepared for delivery

I am extremely honored to have been invited by the International Union for Conservation of Nature, the United Nations Environment Programme and the other sponsors of this historic first World Environmental Law Congress.  I want to thank the Congress organizers for including me as your keynote speaker on this extremely important panel – Environmental Compliance and Enforcement.  As the global environment continues to become more intertwined, ensuring the rule of environmental law is of vital importance to everyone.  Bringing to together this impressive group of international representatives of academia, prosecutors and non-governmental organizations to not only discuss their approaches to compliance and enforcement, but to also learn from each other will be invaluable.  

And I am pleased to address a subject to which I have dedicated my career, compliance and enforcement to address environmental issues.  While I have been in the environmental field much of my adult life, I want to talk to you today from a particular perspective:  my role as the leader of the Environment and Natural Resources Division at the Department of Justice.  Our role is representing the United States in federal courts, and sometimes state courts, in each of the 94 judicial districts of the United States.  We have significant international responsibilities with respect to protection of the environment and natural resources, such as wildlife trafficking, illegal timber and vessel pollution.  My plan today is to first tell you something about the Environment and Natural Resources Division and then take a specific example of our work to illustrate the application of the rule of law to our litigation.

I believe there are some universal principles that govern our adherence to rule of law principles that are fundamentally embedded within the environmental and natural resources laws of the United States.  They are that everyone, governments included, must be accountable under the law, that the laws must be clear, transparent and applied fairly, that the process by which laws are enacted, administered and enforced must also be done fairly, with due process to all and in a timely fashion and that judges must be independent, representative and have adequate resources.

In all of the Department of Justice’s enforcement actions, we want to make sure the civil or criminal sanctions send a strong message of deterrence, the sanctions reflect the seriousness of the violation and the damage caused by the violation to individuals and the environment is compensated or repaired when the law allows.

First, let me give you a brief description of the Environment and Natural Resources Division and the work that we do.

The Environment and Natural Resources Division, or ENRD, is the United States’ “largest environmental law firm.”  We have nearly 650 employees, including 450 attorneys.  ENRD represents the U.S. government in all cases in United States federal courts relating to protection of the environment and natural resources, as well as cases relating to the rights of Native Americans.

Our docket of active cases includes over 6,500 cases and we have represented virtually every federal agency in connection with cases arising in all 50 states and the U.S. territories.  Our responsibilities also involve international work.  About half of our work is offensive, where we are the plaintiff and about half defensive.  For instance, our offensive work includes the criminal prosecution and civil litigation against BP and other corporate entities for the Deepwater Horizon oil spill catastrophe which I will discuss next.  Our defensive work includes representing the U.S. Environmental Protection Agency’s (EPA) Clean Power Plan and their historic regulation of greenhouse gases from existing power plants, which is now before the D.C. Circuit.

I have identified certain priorities for my tenure as Assistant Attorney General.  They are to:  enforce the nation’s bedrock environmental laws that protect air, land and water for all Americans; vigorously represent the United States in federal trial and appellate courts, including by defending key agency rulemaking authority; protect the public fisc and defending the interests of the United States; advance environmental justice through all of the division’s work and promote and defend tribal sovereignty, treaty obligations and the rights of Native Americans; and provide effective stewardship of the nation’s public lands, natural resources and animals, including fighting for the survival of the world’s most protected and iconic terrestrial and marine species.

Deepwater Horizon Oil Spill

I would argue that at the heart of the rule of law is enforcement.  A nation can have the best of laws, but unless they are adequately enforced they have no meaning.  And, adequate enforcement means that all entities are subject to the law.  There simply cannot be a situation where the illegal conduct is too large to address, or the company too big to enforce against.  This brings me to the focus of my remarks.

We are probably most well-known for our work litigating against BP and other entities for the massive oil spill into the Gulf of Mexico in April 2010.  After three different trials, multiple trips to the 5th Circuit Court of Appeals and the Supreme Court and countless hours of discovery and terabytes of document management, we were able to settle that case in a historic series of settlements, which the Attorney General announced last October as the largest settlement against a single defendant in the history of the Department of Justice.  It is hard to imagine a better example of our dedication to the rule of law than that litigation and the outcome.  As is true in so many cases, there were real victims with real injuries that deserved compensation.  And, the ecosystem itself was a victim in need of our help.

It is my intent to discuss the trial, judge’s decisions and our final settlement in this historic oil spill case, as the pathway to ecosystem restoration illustrates many of the key points about effective enforcement that I wish to pass on today.

I will divide my remarks on the Deepwater Horizon oil spill into two areas—the criminal prosecution and the civil litigation.  While there were several corporate entities and individuals subject to criminal or civil enforcement regarding the Deepwater Horizon disaster, I’m going to focus my discussion on the primary violator and defendant in the enforcement actions – BP. 

Let me begin by setting the stage of what happened in April 2010 leading to five years of multiple investigations and litigation.  In April, less than 50 miles or approximately 80 kilometers off the coast of Louisiana, the Macondo well suffered a catastrophic blowout.  The explosion and fire destroyed the DHW drilling rig and killed 11 men aboard the rig.  In addition to the tragic loss of human life, more than three million barrels of oil were spilled into the Gulf of Mexico over a period of 87 days.  The spill extended over more than 43,000 square miles or over 111,000 square kilometers, damaged and temporarily closed fisheries vital to the gulf economy, oiled hundreds of miles of beaches, coastal wetlands and marshes and killed thousands of birds and other marine wildlife among other economic and natural resources injuries.  Oil was washed up onto more than 400 square miles or 1,035 square kilometers of the sea floor and washed up onto more than 1,300 miles or 2,092 kilometers of shoreline from Texas to Florida.  Five states were directly affected by the oil spill: Texas, Louisiana, Mississippi, Alabama and Florida.

BP Criminal Prosecution

The criminal investigation and ultimate prosecution was led by the Deepwater Horizon Task Force.  Task forces are commonly used in the United States to investigate cases when there are multiple federal agencies with overlapping jurisdiction as well as large or complex matters that require a large commitment of resources.  The task force was led by the Criminal Division of the Department of Justice and included a multi-agency group including ENRD, several U.S. Attorneys’ Offices, several federal investigatory agencies such as the FBI and EPA and a state agency.

In November 2012, the department announced the largest criminal resolution in U.S. history - $4 billion dollars.  BP pleaded guilty to felony manslaughter charges for the workers killed in the explosion and fire, a felony charge for obstruction of Congress, and charges under the Clean Water Act and Migratory Bird Treaty Act. 

While the criminal sanction included a significant fine to punish the crimes, it more importantly included measures to repair the harm and change the BP’s corporate behavior.  First, the criminal resolution was specifically structured so that more than half of the monies would directly benefit the Gulf of Mexico region.  Approximately $2.4 billion dollars was dedicated to acquiring, restoring, preserving and conserving the marine and coastal environment, ecosystems and bird and wildlife habitat in the Gulf of Mexico and bordering states.  Money would also be directed to barrier island restoration and river diversion off the Louisiana coast to further improve the coastal wetlands affected by the spill.  Second, the plea agreement required that BP hire certain subject matter experts to address BP’s conduct of behavior.  BP had to agree to retain a process safety and risk management monitor and an independent auditor to oversee BP’s process safety, risk management and drill equipment maintenance for its Gulf of Mexico operations.  Additionally, BP had to retain an ethics monitor to improve BP’s code of conduct to ensure BP’s future candor with the U.S. government. 

These conditions in the plea agreement became a part of BP’s conditions of probation and are under the supervision of the court.  This is very significant to have this as a part of the criminal sanctions as there are consequences for not complying.   

BP Civil Litigation

Next, I will turn to the civil litigation which resulted in the largest civil fine against a single defendant litigated by the Department of Justice.  Similar to the criminal investigation, there was a joint civil team that included ENRD, the department’s Civil Division, one U.S. Attorneys’ Office and the same investigatory agencies except for the FBI which only has criminal jurisdiction.  A complaint was filed by the United States in December 2010 against BP and eight other corporate defendants.  The complaint alleged numerous regulatory violation, such as the failure to monitor the well and failure to maintain the equipment.  The compliant sought penalties under the Clean Water Act and to declare eight of the defendants, including BP, liable without limitation under the Oil Pollution Act for all removal costs and damages caused by the oil spill, including damages to natural resources.  In addition to the complaint filed by the United States, there were also numerous civil complaints filed by the states and private individuals in various federal courts.

To understand the civil litigation, I need to explain three processes from a big picture perspective.  These processes are natural resource damage assessments (NRDA) under the Oil Pollution Act, Clean Water Act penalties and claims and litigation.

First, the NRDA process is a remedial process under the Oil Pollution Act with the goal of restoring natural resources to the condition they would have been in had the oil spill not occurred.  This is a legal process that is overseen by federal, state, and tribal natural resource trustees that is paid for by the party or parties responsible for the damage.  For the Deepwater Horizon oil spill, the trustees were the EPA, U.S. Department of Agriculture, U.S. Department of the Interior, National Oceanic and Atmospheric Administration and the five Gulf coast states.  Under this process the types of damages that can be addressed can include replacing or restoring natural resources and the services they provide, as well the loss of use and reasonable costs for the assessment. 

The second process is the Clean Water Act penalties.  The purpose of the Clean Water Act penalties is to punish those who have illegally discharged pollutants into waters of the United States.  The penalties for oil pollution can be calculated in two basic ways: either by a statutorily set dollar amount per day or by a statutorily set dollar amount per barrel.  The statute also includes more severe monetary penalties if gross negligence or willful misconduct caused the oil spill.

Unlike other oil spill cases, a law was specifically passed to ensure the civil penalties collected for the Deepwater Horizon oil spill did not solely go to the Oil Spill Liability Trust Fund, which is a fund available to support government responses to oil spills like Deepwater Horizon.  The Restore Act required that 80 percent of all civil and administrative penalties be placed in the Gulf Coast Restoration Trust Fund, established for environmental restoration, economic recovery projects, and tourism and seafood promotion in the five Gulf States directly affected by the spill.  This was a proactive step taken by Congress to ensure any monies collected would go to whether they were most needed, to restore the Gulf region and would not be a burden on taxpayers.

The majority of the Deepwater Horizon lawsuits filed in the various federal courts were consolidated into one judicial district in Louisiana in what is called multi-district litigation.  Multi-district litigation is a mechanism in the U.S. federal court system when multiple complaints have been filed in multiple federal courts that involve similar questions of fact and they are consolidated into one lawsuit when it is determined to be more efficient and fair.  In the Deepwater Horizon multi-district litigation, there were essentially two categories of plaintiffs.  The government group included the United States federal government, five Gulf coast states, and several local governments.  The other plaintiff group included private litigants such as individuals and businesses, which had a Plaintiff’s Steering Committee to represent all of the private litigants at trial.  Please keep in mind, the government and private plaintiffs had to work together to present a unified case to the trial judge.  There were some theories of the case presented where not all plaintiffs were in agreement.  For those issues, the aligned parties would present those theories. 

The Deepwater Horizon trial is an example of true judicial economy in litigating this potentially unwieldy lawsuit consisting of terabytes of data, massive discovery, numerous witnesses and very complex and technical issues.  Unlike most trials, the Deepwater Horizon civil litigation was a bench trial.  The Deepwater Horizon trial consisted of three phases to address each of the central issues in sequential steps.  For each phase of the trial, plaintiffs and defendants had an opportunity to submit briefs to the court prior to and after the trial. 

The Phase I Trial in 2013 lasted 29 trial days and focused on the question of whether the nine corporate defendants were liable for the oil spill and whether gross negligence and willful conduct was involved.  The trial judge issued a 153 page decision in 2014 finding BP liable and guilty of gross negligence and willful misconduct, meaning BP was subject to the higher penalties under the Clean Water Act as I mentioned earlier.  The court found two other corporate defendants, Transocean and Halliburton, liable but that their actions only rose to the level of ordinary negligence.  BP was apportioned 67 percent of the blame for the oil spill.  Transocean was apportioned 30 percent of the blame and Haliburton was apportioned the remaining three percent of the blame.  The gross negligence finding against BP was a tremendous victory for the plaintiffs as the court recognized the seriousness of the violation because of BP’s lack of due care and made it certain that the penalty would be in the billions of dollars.    

The Phase II Trial in 2015 lasted a total of 12 trial days with the primary issue being quantifying the amount of the oil discharged into the Gulf of Mexico over those 87 days.  As you can anticipate, the plaintiffs and BP disagreed on the amount of oil discharged into the Gulf of Mexico.  The United States estimated that 4.19 million barrels of oil was discharged and BP argued the actual amount was 2.45 million barrels of oil.  The trial judge determined the amount of oil discharged into the Gulf of Mexico was 3.19 million barrels of oil.

This brings us to the Phase III Trial in January 2015 to determine the penalties.  After the trial, but prior to the trial judge reaching a decision on the penalties, we were able to negotiate a settlement with BP that was announced last October.  Under the settlement, we obtained a $5.5 billion civil penalty with 80 percent of that amount going to restoration efforts, $8.1 billion in natural resource damages and $600 million for other claims.  Prior to the settlement being accepted by the court, the public had 60 days to comment on both the consent decree and the draft damage assessment and restoration plan which were made publicly available.  As part of environmental civil settlements, our laws require that the public be given an opportunity to comment and the government is required to address those comments and inform the court of how we did or did not address those comments.  I am pleased to announce that the consent decree was entered by the federal court just this month on April 4, resolving the civil claims against BP.  

Moving Forward

I hope that you take from my remarks the bigger picture and six principles I believe that this case represents.  First, there is no such thing as a corporate entity that is too big or powerful to prosecute when the law has been broken and there is harm to the environment and at the end of the day people.  Second, effective enforcement requires cooperation between agencies.  These investigations, criminal prosecutions and civil litigation took the collective effort of several federal agencies and multiple components within the Department of Justice.  Third, cooperative federalism has an important role in environmental enforcement.  This effort required the federal government and the states to work together to successfully investigate and litigate the actual cases, including the settlement.  Fourth, it also is a lesson in working cooperatively with and working separately in a cooperative matter with private litigants who have similar but some different interests in the litigation.  Fifth, the civil litigation is also a prime example that reaching final settlements and making decisions on environmental restoration is a transparent process where the public has an opportunity to have a voice.  Lastly, it is an example of how your legislative and executive bodies can be nimble enough to pass legislation to ensure that an environmental disaster is addressed by directing penalties to where they are most needed.

I recognize the legal systems in your countries may have some similarities to our system which has a strong central government, but there are legal systems that are more decentralized.  However, I believe the concepts I just mentioned from the civil and criminal enforcement actions against BP should be universal when governments address environmental compliance and enforcement issues.

Rule of law considerations have, at their base, a need to deter future illegal activity and ensure a level playing field for those who do comply with the law.  Although I am quite proud of our enforcement record, I fully realize that our efforts are only part of the whole of rule of law considerations.  To be effective, there must also be a trained and independent judiciary, experienced prosecutors and well understood and applied laws.  The Environment and Natural Resources Division is committed to building the capacity of our enforcement counterparts and judges in other countries. 

I thank you for listening to me today.  I am excited to listen to the rest of the panel discussion on this topic and discuss how the United States can continue to be an active global partner to ensure the environmental rule of law.

Updated April 29, 2016