On February 22, 2023, the U.S. Department of Justice (DOJ) announced the formalization of its voluntary self-disclosure policy for corporate criminal enforcement (VSD Policy) for all U.S. Attorney’s Offices (USAO). The VSD Policy details the circumstances under which a disclosure will qualify as a voluntary self-disclosure under the policy and, in turn, provides incentives to companies to make eligible self-disclosures. One such incentive — provided that the company makes an eligible self-disclosure, fully cooperates, and timely and appropriately remediates the criminal conduct — is that the USAO will not seek a guilty plea unless there are aggravating factors present. This is the first time DOJ has issued nationwide standards for voluntary self-disclosures for corporate criminal enforcement.
Companies that regularly operate under the purview of environmental statutes will note that the VSD Policy shares some similarities with environmental-specific self-disclosure policies adopted by the U.S. Environmental Protection Agency (EPA). For example, EPA’s Audit Policy — which has been in effect for over two decades — provides benefits to companies that voluntarily discover and disclose potential violations under federal environmental statutes, such as the Clean Air Act; the Clean Water Act; the Emergency Planning and Community Right to Know Act; the Comprehensive Environmental Response, Compensation, and Liability Act; and the Resource Conservation and Recovery Act. Under the Audit Policy, EPA may reduce gravity-based penalties up to 100% for eligible self-disclosure violations. Like the new VSD Policy, EPA’s Audit Policy provides incentives to companies that opt to take swift action to identify and resolve noncompliance.
Companies that have become aware of possible environmental-related criminal conduct should consider the new VSD Policy in light of the potential benefits offered. EPA has authority, or is sometimes mandated, to refer cases to DOJ for criminal prosecution under certain circumstances. Thus, companies engaged in business governed by federal environmental laws should familiarize themselves with DOJ’s VSD Policy and ensure it is adequately considered if potential criminal conduct is uncovered. For more information, please refer to this Sidley Update on the new VSD Policy.
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