The U.S. Environmental Protection Agency (EPA) is responsible for enforcing the federal laws, regulations, and Executive Orders focused on protecting the environment for the benefit of the American people, threatened and endangered species, and the world at large. It has a variety of enforcement tools at its disposal, and companies (and individuals) can find themselves facing environmental litigation with the EPA for a variety of different reasons. This litigation can present substantial risks; and, as a result, an informed and strategic defense is critical.

What are the risks of facing EPA litigation? The answer to this question depends on the circumstances involved. While loss of EPA registration, revocation of National Pollutant Discharge Elimination System (NPDES) permits, and other administrative sanctions could be on the table, so could steep fines and even criminal penalties.

“While the EPA isn’t often viewed as a law enforcement agency, it has become increasingly active in enforcing companies’ environmental responsibilities in recent years. Companies targeted by the EPA can face steep—and costly—penalties, so those facing scrutiny must be prepared to defend themselves in litigation with the agency.” – Dr. Nick Oberheiden, Founding Attorney of Oberheiden P.C.

With this in mind, for companies facing EPA litigation in 2024, taking a wait-and-see approach is not an option. If left unchecked, EPA enforcement actions will lead to penalties. But, with an informed and strategic approach, potentially responsible parties can mitigate their risk; and, depending on the circumstances, they may be able to avoid penalties entirely.

7 Strategic Considerations for EPA Litigation Defense

So, how can (and should) companies respond when facing EPA litigation? Here are seven strategic considerations for EPA litigation defense:

1. Make Sure You Know the Specific Allegations At Issue

When facing any type of enforcement litigation, it is critical to ensure that you know the specific alleged violations at issue. While discerning the allegations in a civil or commercial lawsuit is generally fairly straightforward, in federal enforcement matters determining exactly what a company needs to defend against can be significantly more challenging.

In most cases, companies will learn that the EPA is considering enforcement action long before it files suit or engages the U.S. Department of Justice (DOJ) to seek an indictment. However, knowing that the EPA is looking into your company’s operations and knowing why the EPA is looking into your company’s operations are two very different prospects. With the multitude of issues that can trigger EPA scrutiny, companies need to ensure that they are focused on the right issues so that they can prepare the right defense. Violations of the Comprehensive Environmental Response Liability Act, National Environmental Policy Act, Clean Air Act, Endangered Species Act, and Toxic Substances Control Act all require different defense strategies. You want your defense team focused on the specific environmental law violations that apply to your case.

How can you determine what the EPA is investigating? When our firm represents clients in EPA enforcement cases, one of our first steps is always to intervene and open a dialogue with the EPA personnel involved. This allows us to gain a clear understanding of both the focus and scope of the inquiry, and then we can use these insights to advise our clients effectively.

2. Focus on Securing a Pre-Litigation Resolution if Possible

While EPA enforcement actions can (and frequently do) lead to enforcement actions, companies can also avoid litigation in many cases. Doing so requires a proactive approach focused on either: (i) presenting sufficient evidence raising sufficient questions to demonstrate to the EPA that litigation is unwarranted; or, (ii) working with the EPA to negotiate a mutually agreeable resolution that sufficiently serves both parties’ interests.

Obviously, these are two very different approaches focused on two very different outcomes. Deciding which of these approaches to take requires a clear understanding of not only the allegations at issue but also the facts at hand. This brings us to our third strategic consideration . . . .

3. Independently Assess the Environmental Allegations at Issue

Regardless of the allegations at issue, successfully defending against (or avoiding) EPA litigation requires a clear understanding of the facts at hand. Under no circumstances should companies assume that any allegations against them are true, nor should they assume that they have violated the law simply because the EPA has launched an investigation. Many aspects of EPA compliance are extraordinarily complex, and an EPA investigation is just that—an effort focused on analyzing the facts to determine whether enforcement action is warranted. The fact that the EPA is seeking to gather information does not necessarily mean that the EPA will bring charges.

But, it could.

To assess their risk when facing EPA scrutiny, companies need to independently assess the allegations (or potential allegations) at issue. This involves conducting an internal compliance audit, which should be done with the oversight of outside EPA counsel to establish the attorney-client privilege. Once companies (and their counsel) have independently analyzed the environmental compliance concerns at issue, then they can begin making informed decisions about how best to proceed.

4. Locate, Review, and Preserve All Relevant Documentation

As part of the process of analyzing the facts at hand, companies (and their counsel) should prioritize locating, reviewing, and preserving all relevant documentation. All three of these are equally important. Locating all relevant documents is essential, because overlooking any relevant documents could lead to unanticipated exposure. Reviewing the relevant documents is essential for conducting the necessary risk assessment. Preserving the relevant documents is critical as well—not only is this required, but failing to preserve relevant documents (either intentionally or inadvertently) will only serve to raise more red flags at the EPA.

5. Determine the Best Approach Based on the Circumstances at Hand

After reviewing the relevant documents and taking all other necessary investigative measures, companies (and their counsel) should be able to make an informed decision about the best approach to managing the circumstances at hand. This could involve targeting a pre-litigation resolution as discussed above; or, if a pre-litigation resolution is not viable or not in the company’s best interests, it could involve challenging the EPA’s investigative measures in court or preparing for trial.

In any case, it is critical to balance proactiveness with flexibility. When facing the prospect of going to trial with the EPA or DOJ, companies need to have a specific target result in mind, but they also need to be prepared to adapt as the circumstances evolve. As companies (and their counsel) gather more information and as the EPA’s enforcement efforts progress, companies (and their counsel) need to be prepared to progress in their strategic execution as well.

6. Leverage the Discovery Process

Company owners and executives tend to think of federal enforcement actions as a one-way street in terms of information gathering. While this is true to an extent at the investigative stage, once the litigation stage begins, companies have significant opportunities to turn the tables through the discovery process.

Leveraging the discovery process is essential in all types of litigation—litigation with the EPA included. By finding out exactly what the EPA knows (and, crucially, what it doesn’t), companies can further hone their defense strategies and make a fully informed decision about whether some form of settlement may be warranted.

7. Consider the EPA’s Enforcement Priorities and Use Them to Make Strategic Decisions

Finally, companies (and their counsel) should consider the EPA’s enforcement priorities and use them to make strategic decisions regarding their approach to litigation. If an enforcement case involves one of the EPA’s top enforcement priorities—like reducing air pollution or eliminating PFAS from the drinking water supply—this may signal that the EPA is more likely to be prepared to litigate and less likely to consider leniency in settlement negotiations. Conversely, if the EPA’s resources could be better used elsewhere, putting this fact on the table could help facilitate favorable negotiations, if negotiating is warranted.

What Should Companies Not Do When Facing EPA Litigation?

While there are several steps companies need to take when facing EPA litigation (the list above only scratches the surface), there are just as many mistakes they need to avoid. With this in mind, here are some examples of what not to do when facing EPA litigation:

• Do not ignore the EPA. Ignoring the EPA is one of the biggest mistakes companies can make when facing litigation with the agency. Once it initiates an investigation or enforcement action, the EPA isn’t simply going to go away.
• Do not ignore the risks. EPA litigation can present substantial risks—including the risk of criminal penalties for both companies and their leaders. Understanding what is at stake is essential for making informed decisions.
• Do not make assumptions. Under no circumstances should companies make assumptions about what the EPA is investigating or what it can or cannot prove. Targeted companies can—and should—gather all of the information they need to defend themselves strategically.
• Do not let the EPA take the lead. Companies facing EPA litigation need to work with experienced legal counsel to level the playing field. This is one of the first steps toward establishing a position of strength from which companies can target a favorable result.
• Do not accept unnecessary consequences. While settling with the EPA will be the best approach in some cases, in others it will lead to unnecessary consequences. For company owners and executives, this should not be an option that is on the table.