Protect our water and our livelihood: Pan Am convicted and fined for failing to protect environment

June 02, 2009

Pan Am convicted and fined for failing to protect environment

The excerpts below are from a memorandum on sentencing written March 30, 2009 by Attorney General Martha Coakley for Pan Am Railroad after it spilled between 800 and 1700 gallons in Ayer, reported it late and as only 9 gallons. The company was fined $400,000.

Just days after their sentencing, Pan Am broke ground a few miles away to build an 800-space parking lot over the Spectacle Pond aquifer, which supplies 60 percent of Ayer's water and provides Pepsi/Aquafina, VeryFine, Nasoya and Cains food with potable water. UPS will provide logistics to the operation to unload Ford Motor Vehicles.

Read the highlights of the decision and then contact our representatives and ask them to intervene to prevent Pan Am and Norfolk Southern from operating above a crucial aquifer. See bottom of the blog for contact info. TIME IS OF THE ESSENCE. Our aquifer is being bulldozed.

COMMONWEALTH OF MASSACHUSETTS
v.
SPRINGFIELD TERMINAL RAILWAY COMPANY
MAINE CENTRAL RAILROAD COMPANY
BOSTON and MAINE CORPORATION
PAN AM RAILWAYS INCORPORATED
COMMONWEALTH’S MEMORANDUM ON SENTENCING

Each of the four defendants in this case has been convicted of two counts of Failing to
Notify the Massachusetts Department of Environmental Protection of a Release of Oil or
Hazardous Materials, pursuant to G.L. c. 21E, §7. The Commonwealth recommends that the
Court sentence each defendant on one count to pay the maximum penalty of $100,000 (a
combined total of $400,000), and that the Court impose the maximum penalty on each defendant on the second count, but suspend that penalty for a period of three years during which each defendant would be on probation. Because of the specialized nature of environmental violations, the Commonwealth requests that the defendants be required to pay for the cost of an independent environmental monitor who will be responsible for overseeing their probation during the three years.

The Commonwealth submits this Sentencing Memorandum in order to set out the reasons
why it is appropriate for the Court to impose the maximum monetary penalty on these
defendants, based upon their repeated prior environmental violations and one prior criminal
matter.

I. The Defendants’ Prior Violations of the Law.

The defendants have a long track record of violating the environmental laws, including a
particularly long record of unreported releases of oil and other hazardous materials to the
environment, and have utterly failed to develop reliable or consistent environmental management systems despite having been ordered to do so repeatedly.

Perhaps the most relevant history is the defendants’ history of unreported oil spills in the
State of Maine, which goes back over 20 years. As more fully set forth in the attachments to
this Memorandum, the Maine Department of Environmental Protection ordered the defendants in 1986 to promptly report any “discharges of petroleum” (Ex. A), but they have consistently and repeatedly failed to do so.

The defendants’ compliance history with both the Commonwealth and the State of Maine
is remarkable not only for the defendants’ repeated failures to report spills of oil and hazardous
materials, but also for their failure to adopt or implement required spill response plans or an
overall environmental management system sufficient to prevent future spills.

The State of Maine ordered the defendant Maine Central Railroad to adopt a spill response plan in 1990 (Ex. B) and again in 1995 (Ex. C), and yet the company still did not have one in place in February 1998 when several hundred gallons of oil leaked from a locomotive in the Waterville Rail Yard into the nearby Kennebec River. The United States Environmental Protection Agency fined Maine Central $47,300 for failing to have a spill response plan in place.

As the EPA regional administrator stated at the time, “Maine Central Railroad made two
big mistakes here. First, it had no plan to prevent or deal with oil spills; second, it discharged
hundreds of gallons of oil into the Kennebec. It’s unfortunate a spill had to occur for the
company to follow the law . . . .” (Ex. T).

THERE's MORE. See previous post for the whole text of the document or email stoppanamlot@gmail.com for a PDF of the court document.

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What's next?

Pan Am and Norfolk Southern have responded by providing more information about construction of the parking lot over the Spectacle Pond Aquifer because people have spoken out, contacted elected and appointed officials, protested, attended meetings and rallies and written letters.

Because Pan Am Railways is on probation for an unreported spill in 2006, the company is more acquiescent to requests that the site be monitored.

Pan Am Southern expects to start unloading cars in January 2010 over the water supply for 15,000 people. The challenge now is to monitor the operation to insure our water supply is protected for the next seven generations.

Keep up hope

The Chinese symbol for political order is based on the symbol for water because those who control water control people.

Water and air, the two essential fluids on which all life depends, have become global garbage cans.
--Jacques Cousteau

Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it's the only thing that ever has.
--Margaret Mead

Tell me: what is it you plan to do with your one wild and precious life?
-- Mary Oliver

I looked around for somebody to do something about what was going on, and I found me.
-- Anonymous

"Twenty years from now you will be more disappointed by the things that you didn't do than by the ones you did do."
- Mark Twain

Soiling our own nest will lead to our demise

Of course, God is likely to have a longer-term view and while lamenting the current folly of humans will probably recall that planet earth undergoes continuous change and from time to time, cataclysmic events alter the entire planet.

At lest 90 % of all the creatures that have lived on the planet are gone. Perhaps our folly is seen as just another natural phenomenon.

What if 500 years from now, God enters a note into her journal, "Humans on Planet Earth had the chance to get it right but they didn't quite make it. Humans turned out to be self-destructive, short term planners and tragically selfish. They soiled their own nest and now they are gone."

From: http://www.nutramed.com/environment/index.htm

Martha Coakley's Environmental Crime Strike Force -- Memorandum on Sentencing Pan Am Railways 2000

COMMONWEALTH OF MASSACHUSETTSMIDDLESEX, ss SUPERIOR COURTCRIMINAL NOS.2008-395, 2008-396, 2008-397, 2008-398COMMONWEALTH OF MASSACHUSETTS v. [ALL Pan Am Subsidiaries]SPRINGFIELD TERMINAL RAILWAY COMPANYMAINE CENTRAL RAILROAD COMPANYBOSTON and MAINE CORPORATIONPAN AM RAILWAYS INCORPORATEDCOMMONWEALTH’S MEMORANDUM ON SENTENCING
Each of the four defendants in this case has been convicted of two counts of Failing toNotify the Massachusetts Department of Environmental Protection of a Release of Oil orHazardous Materials, pursuant to G.L. c. 21E, §7. The Commonwealth recommends that the Court sentence each defendant on one count to pay the maximum penalty of $100,000 (a combined total of $400,000) [LATER RAISED to $500,000], and that the Court impose the maximum penalty on each defendant on the second count, but suspend that penalty for a period of three years during which each defendant would be on probation. Because of the specialized nature of environmental violations, the Commonwealth requests that the defendants be required to pay for the cost of an independent environmental monitor who will be responsible for overseeing their probation during the three years.
The Commonwealth submits this Sentencing Memorandum in order to set out the reasons why it is appropriate for the Court to impose the maximum monetary penalty on these defendants, based upon their repeated prior environmental violations and one prior criminal matter. This history is discussed in the first section of the memorandum.

The second section lays out for the Court the history of penalties that have been imposed on other defendants for violations of G.L. c. 21E, §7, to show that the penalties sought here are not out of proportion to the penalties imposed in the past, even on the civil side of the docket. The third section discusses the law that supports the requirement that the defendants pay for the cost of an environmental monitor during a period of probation.
I. The Defendants’ Prior Violations of the Law.The defendants have a long track record of violating the environmental laws, including aparticularly long record of unreported releases of oil and other hazardous materials to the environment, and have utterly failed to develop reliable or consistent environmental management systems despite having been ordered to do so repeatedly.Perhaps the most relevant history is the defendants’ history of unreported oil spills in the State of Maine, which goes back over 20 years. As more fully set forth in the attachments to this Memorandum, the Maine Department of Environmental Protection ordered the defendants in 1986 to promptly report any “discharges of petroleum” (Ex. A), but they have consistently and repeatedly failed to do so:
• In 1990, the defendant Maine Central Railroad was fined $25,000 for “fail[ing] topromptly report and remove” numerous oil discharges at its maintenance yard inWaterville, including fuel leaking from locomotives without drip pans, fuel leakinginto a turn table pit that drained directly into the Kennebec River, and fuelcontaminating soil near the loading dock. The defendant was also fined for failing todevelop and maintain a hazardous waste contingency plan, for failing to train theiremployees in hazardous materials response, and for failing to properly store or timelydispose of hazardous waste. (Ex. B)
• In 1995, Maine Central was again fined $10,500 for failing to properly store, labeland inspect hazardous materials at its Waterville yard, and for again “failing todevelop and maintain a contingency plan for hazardous waste management.” (Ex. C)
• Between 1978 and 2003, Maine DEP staff “documented approximately 22 prohibitedoil discharge incidents” at the Rigby Rail Yard in South Portland, Maine operated bydefendant Pan Am Railways, Inc. and owned by its subsidiary Portland TerminalCompany, resulting in the discharge of “approximately 11,760 gallons of oil” at theproperty. The Maine DEP issued a Notice of Violation on August 15, 2007 after itsstaff found evidence of multiple prohibited discharges of oil, posing a threat to“coastal waters, groundwater, Long Creek, Calvary Pond, Barberry Creek and theFore River” and that the discharges had never been reported. (Ex. D)
• The Maine DEP issued two additional notices of violation on September 11, 2007 andOctober 18, 2007 when it discovered that discharges of hundreds of gallons of wasteoil from the Rigby Yard had contaminated the nearby Calvary Pond on August 6,September 12 and October 12, 2007, and that Pan Am had failed to report all threedischarges and failed to undertake actions to remediate them. (Ex. E and F) Becauseof Pan Am’s lack of responsiveness, the State of Maine had to spend $287,385 toinvestigate and clean up the Calvary Pond. (Ex. G)
• In January 2006, a resident of Anson, Maine reported to the Maine DEP that thedefendants Pan Am Railways, Inc. and Maine Central Railroad had improperlydischarged oil onto the railroad tracks in that town and onto the property at 46 RiverRoad in Anson. The Maine DEP determined that the defendants had failed to reportthe discharges and failed to undertake to clean up the discharges, and required thedefendants to reimburse it for the cost of a clean-up. (Ex. G and H)
• In March 2006, Maine Central was again fined $19,000 after a concerned citizenreported that the company’s railroad ties and bridge structures were consistentlydripping hazardous material into the Royal River in Grey, Maine, and the companywas again required to reimburse the Maine Department of Environmental Protectionfor costs it occurred in responding to the incident. (Ex. H)
• In August 2007, the Maine DEP inspected Maine Central’s Waterville Yard anddiscovered evidence of multiple prohibited discharge of oil at the property, includingdischarges to soil and storm drains posing a threat to groundwater and to the nearbyKennebec River. The Department’s staff documented “34 prohibited oil dischargeincidents” at the property between 1985 and 2001. The Department determined that“MEC failed to report the discovery of the prohibited discharges of oil describedabove [and] failed to immediately undertake to remove those discharges”. (Ex. I)
• In November 2007, the Maine DEP received an anonymous report of a prohibiteddischarge of oil along the railroad tracks in Orono, Maine that stretched forapproximately 8 miles, and the Department issued a Notice of Violation to defendantsPan Am Railways, Inc. and Maine Central Railroad for failing to report the spill.(Ex. G)
• In April 2008, staff of the Madison Paper Company in Madison, Maine discoveredprohibited discharges of oil on the railroad tracks adjacent to the company’s mill.The Maine DEP sent the defendants Pan Am Railways, Inc. and Maine CentralRailroad a Notice of Violation for failing to report or to clean up the discharges.(Ex. G)
• In May 2008, the Maine DEP again discovered evidence of multiple prohibiteddischarges of oil at the Rigby Yard operated by Pan Am Railways, Inc. that had neverbeen reported, including “at least thirteen (13) storm drain catch basins and man waysat the Site that contained oil”, six of which “drain directly to the South Portlandmunicipal storm water system”. (Ex. J)
The defendants’ history of environmental compliance in Massachusetts is nobetter:
• In April 2002, the defendant Boston and Maine Corporation was fined $30,000 forfailing to close a dump in Northfield, Massachusetts that was leaching hazardousmaterials into the environment. Additional penalties were suspended, based upon thedefendant’s agreement to develop an Environmental Management System (EMS) togovern all of its environmental compliance activities. (Ex. K) In May 2007—fiveyears later -- $15,000 of the suspended penalties were imposed because the defendantstill had not developed an adequate Environmental Management System, a decisionon which the defendant then proceeded to seek administrative review. (Ex. L)
• In March 2005, the defendant Boston and Maine Corporation was fined $43,400 forthree different violations—failing submit required inspection and monitoring reportsfor the closure of the Northfield, Massachusetts dump that had first been required in1999; failing to submit inspection and monitoring reports for a spill of oil that hadoccurred at the defendant’s fuel depot in Williamstown, Massachusetts in 1989; andfailing to submit a remedy plan for multiple releases of oil that had occurred at thedefendant’s Rail Yard in East Deerfield, Massachusetts in 1998. $8,400 of thispenalty was suspended. (Ex. M)
• In April 2005, the defendant Boston and Maine Corporation was also fined $9,250 for failing to properly dispose of oil and hazardous materials from its Rail Yard in EastDeerfield, Massachusetts. (Ex. N)
• In December 2005, a portion of the penalty that had been suspended in March 2005was imposed on the defendant Boston and Maine Corporation because the companystill had not developed remedial alternatives for the recovery of free phase oil at theWilliamstown depot facility (a remedial process that remains ongoing to this day for arelease that occurred in 1989). (Ex. O)
• In August 2006, the Massachusetts DEP issued to the defendant Boston and MaineCorporation a Notice of Noncompliance for failing to timely complete remediationactivities with respect to releases of oil at the company’s Rail Yard in East Deerfield,Massachusetts. (Ex. P)
• In May 2007, the defendants Boston and Maine Corporation and Pan Am Railways,Inc. were fined $59,747 for failing to properly dispose of railroad ties that wereleaching hazardous materials into the environment in Deerfield, Charlmont, and nearthe Wachusetts Reservoir. (Ex. Q) The defendants then appealed the fine.
• In December 2007, the Massachusetts DEP issued a Notice of Noncompliance to thedefendant Boston and Maine Corporation for failing to timely perform an ImmediateResponse Action for a spill of oil that had been discovered at the defendant’s EastDeerfield Rail Yard. The spill, from abandoned tanks and drums, had been reportedto the DEP by a passer-by (not by the defendant) in August 2007. (Ex. R) TheDepartment also issued a Notice of Noncompliance to defendant Pan Am Railways,Inc. in December 2007 for accumulating excess quantities of waste oil at the EastDeerfield Rail Yard and failing to properly store the oil. (Ex. S)

The defendants’ compliance history with both the Commonwealth and the State of Maine is remarkable not only for the defendants’ repeated failures to report spills of oil and hazardous materials, but also for their failure to adopt or implement required spill response plans or an overall environmental management system sufficient to prevent future spills. The State of Maine ordered the defendant Maine Central Railroad to adopt a spill response plan in 1990 (Ex. B) and again in 1995 (Ex. C), and yet the company still did not have one in place in February 1998 when several hundred gallons of oil leaked from a locomotive in the Waterville Rail Yard into the nearby Kennebec River. The United States Environmental Protection Agency fined Maine Central $47,300 for failing to have a spill response plan in place.As the EPA regional administrator stated at the time, “Maine Central Railroad made twobig mistakes here. First, it had no plan to prevent or deal with oil spills; second, it discharged hundreds of gallons of oil into the Kennebec. It’s unfortunate a spill had to occur for the company to follow the law . . . .” (Ex. T).1Similarly, the defendant Boston and Maine Corporation agreed in 2002, but then failed,to develop a comprehensive Environmental Management System. As of May 4, 2007 – five years later – the company still had not developed an acceptable EMS. When, thereafter, it submitted an EMS in February 2008, DEP still found it wanting. For example, the EMS contained a long list of Standard Operating Procedures, pollution prevention plans, and guidance documents for many environmentally related compliance activities. However, of the 50 listed documents, 35 (or 70%) had projected completion dates in the future. The documents that still had not been drafted included many critical environmental compliance programs such as policies for the accumulation of hazardous wastes, management of used solvents and used oil, solid waste disposal, corporate compliance tracking, environmental training, and response to noncompliance.As noted below, the Commonwealth believes that the only way the defendants are going to develop a real environmental compliance program is if an independent, outside monitor is there to ensure they do so.

The defendants’ long history of failure to report releases of oil and hazardous substancesand failure to adopt responsible environmental compliance practices strongly supports the imposition of the sentence recommended by the Commonwealth.

Finally, the Commonwealth believes it appropriate to bring to the Court’s attention onecriminal matter involving Boston and Maine Airways (BMAC), an affiliate of defendant Pan Am.1 In July 2007, the defendant Springfield Terminal Railway was also fined by EPA forfailing to fully implement a spill control plan for its facility in Springfield, MassachusettsRailways, Inc. that is owned and controlled by the same individuals as Pan Am Railways, Inc.

In the case of United States v. John Nadolny, Docket No. 07-CR-26 (D.N.H.), John Nadolny, then the Secretary and General Counsel of Boston and Maine Airways, pled guilty to making false statements in financial statements submitted to the Department of Transportation in support of the company’s application for an air carrier certificate. In sentencing Nadolny, Judge Barbadoro of the United States District Court in New Hampshire observed that Nadolny’s actions “were undertaken on behalf of BMAC. He was an officer of the company. His actions would be chargeable or taken – undertaken ostensibly to benefit the company, and it would seem that the company is criminally culpable here.” (Ex. U, at 4) Indeed, when Mr. Nadolny’s misstatements were brought to the attention of the Department of Transportation, the Department revoked BMAC’s air carrier certificate:Specifically, we find that BMAC’s authority to operate large aircraft was based on falsefinancial information submitted to the department, without which the air carrier wouldnot have been found fit to hold such authority, when it first sought to expand . . . . Wefind further that BMAC’s management knew, or should have known, about the falsefinancial information and it therefore . . . lacks the competence necessary to oversee theair transportation authorized in the air carrier’s certificate.Application of Boston-Maine Airways Corp., Docket OST-00-7668, Order of Department of Transportation, Feb. 1, 2008, at 15. (Ex. V).

II. The History of Penalties Under G.L. c. 21E, §7.Unlike all other violations of chapter 21E, which are punishable by a fine of no more than $50,000 and a house of correction sentence, violations of the reporting requirement of section 7 are punishable by a fine of up to $100,000 and imprisonment in state prison. There is a reason why the Legislature adopted this enhanced punishment for failures to notify DEP. As Nicholas Child testified at the trial in this case, notification is the linchpin of DEP’s ability to respond to environmental emergencies. Notification is what enables DEP’s Emergency Response Unit to coordinate with local authorities, such as police, fire and water authorities. Notification enables the Emergency Response Unit to determine whether a threat is posed to human health or the environment, and enables the Emergency Response Unit to determine whether it needs to go to the site and take proactive steps for protection.Because notification is so critical to the DEP process, the Commonwealth has repeatedlysought substantial fines for failure to report. The size of the fines that the Commonwealth is requesting in this case is consistent with numerous civil penalties that have been imposed for failure to report:• In the 2002 case of Signature Flight Support Group, the company paid a penalty of$250,000 and agreed to perform a Supplemental Environmental Project valued at$200,000 for failure to report a jet fuel spill at Logan Airport.• In the 1997 case of Zeneca Plastics Company, the company paid a civil penalty of$400,000 for failure to report a release of toxic vapors to the air of a Wilmingtonneighborhood.• In the 1991 case of Monsanto Corporation, the company paid a penalty of $1 millionfor releasing of sulfuric acid into the Mystic River and failing to report the spill in atimely and complete manner.• In the 2001 case of MRP Site Development Inc. aka MRP Testa, the company paid a$1 million criminal fine and was placed on probation for four years for violating thestate’s 21E §7 notification requirement and using PAH contaminated recycleddemolition debris for use as a road base product.• In the 2007 case of Boot Hydropower, the company paid a fine of $125,000for failing to report a spill of hydraulic oil into the Merrimac River.• In the 2008 case of Mantrose-Haeuser Co. and Zinsser Co., the defendants paid a civil penalty of $2 million and agreed to perform a Supplemental Environmental Projectvalued at $300,000 for a series of violations, two of which entailed the failure to report spills of sulfuric acid into the Ten Mile River.

The present case is a criminal case in which the Commonwealth introduced evidence that the defendants did not merely fail to report the release of diesel fuel, but took steps to deliberately cover up the spill. For example, the Commonwealth introduced evidence that, on the night of the spill, the defendants ordered workers to dig holes that would enable pooled oil to sink below the ground surface. The next day, the defendants directed their workers to remove the most heavily stained soil and ballast on the surface, and put in fresh ballast, even though stained and fuel-soaked soil remained below (and there continued to be an overwhelming smell of diesel fuel). Moreover, as soon as the defendants learned that government authorities had been alerted to the spill, the first thing they did was to try to remove from the scene the locomotive that had spilled the fuel at a time when the locomotive still showed evidence of the size of the spill.
When the Court considers the purposes of the notification requirement, the size of priorfines for failure to notify, and the defendants’ deliberate effort to cover up, the fines sought by the Commonwealth are amply justified.

III. Authority for Imposition of an Environmental Monitor
The superior court has the inherent power to suspend a sentence and impose a term ofprobation with conditions. E.g., Commonwealth v. Pinnick, 52 Mass. App. Ct. 1104 (2001) (defendant sentenced to a term of 8 – 10 years in State prison, suspended for 5 years, with probation.); Commonwealth v. Delise, 440 Mass 137 (2003) (defendant sentenced for violatingan abuse prevention order and assault and battery; to12 to 15 years in state prison, suspended fora four year period of probation to commence on release from house of corrections);Commonwealth v. Speight, 59 Mass. App.Ct. 28 (2003) (defendant sentenced by Superior Court 10 to 2 ½ years in a house of correction, committed, followed by a suspended 8 – 10 year sentence.)

In this case, the Commonwealth asks the Court to impose a maximum monetary fine of$100,000 on each defendant on the first count on which it has been convicted and asks that another $100,000 fine be suspended on the second count and that each defendant be placed on probation for a period of three years with conditions. When sentencing a defendant, all of the goals of punishment are to be considered: deterrence, rehabilitation, moral reinforcement, punishment. Commonwealth v. Williams, 60 Mass.App.Ct. 331 (2004); Cepulonis v.Commonwealth, 384 Mass. 495 (1981); Commonwealth v. Goodwin, 414 Mass. 88 (1993). A monetary fine will serve as a punishment to the defendants, but something more is needed here. The defendants in this case are profitable multi-million dollar corporations.

The defendants have an extensive history of environmental violations and a history of paying fines, and therefore payment of a fine alone will not serve to fulfill the multifaceted goals of sentencing and may not fully deter the defendants from future violations. There needs to be a component of the sentence that addresses the rehabilitation and moral reinforcement necessary in order for the corporate entities as a whole to come into compliance with the environmental laws of the Commonwealth.

A judge has wide latitude to consider a variety of factors when imposing a sentence.Commonwealth v. Ferguson, 30 Mass.App.Ct. 580 (1991). A condition of probation isenforceable, even if infringes on a constitutionally protected or preferred right, as long as the condition is reasonably related to the goals of probation. Commonwealth v. Power, 420 Mass. It should also be noted that G.L. 21E, §11, the provision that sets forth the punishments that may be imposed under the Oil & Hazardous Material Release Prevention Act, specifically states that “The superior court department of the trial court shall have jurisdiction to …grant such additional relief as it deems necessary or appropriate to secure compliance with, the provisions of this chapter, or any order or regulation issued or adopted there under upon the petition of the attorney general or the commissioner. G.L. 21E §11. 410 (1995); Commonwealth v. Lapointe, 435 Mass. 455 (2001). The propriety of a probation condition depends upon the facts of the case. Commonwealth v. Lapointe, 435 Mass. 455 (2001).

In this case, the Commonwealth asks the Court to order the Defendants to retain an independent environmental compliance monitor for the duration of the three year probationary period. The imposition of a monitor is directly relevant to the non-compliance with environmental laws at issue in this case. Moreover, the defendants’ enforcement history shows that the defendants cannot be relied upon to address environmental matters in an adequate manner on their own. There must be an independent monitor to ensure compliance by the defendants and to directly report incidents of non-compliance should it become necessary.There is an established history in the federal courts of ordering independent monitorsto be put in place when conditions of probations are imposed on corporate defendants.Among other cases, monitors were ordered in:
• U.S. v. Lucas Aerospace Communications & Electronics, Inc., (94 Cr 493, E.D. N.Y.)(in cases of false claims violations, was to recommend to company additional disciplinary actions, personnel/policy/procedural changes, or other remedial actions to ensure against similar misconduct).
• U.S. v. International Longshoremen’s Association, 518 F.Supp.2d 422 (2007): (monitor put in to oversee labor union, in case involving violations of RICO, pattern ofracketeering)
• Claudio v. U.S. Department of Labor, 137 F.Supp. 2d 405 (2001)(again, monitor installed to oversee operations of a union)
• U.S. v. Mahwah Homes, Inc. (S.D.N.Y.)(monitor installed in case involving falsifyingtax returns)
• U.S. v. BP Products North America (S.D.Tex 2009) 2009 WL 677653 (monitor installed to guard against future OSHA safety violations)See W. Swenson, Compliance Programs and Corporate Sentencing Guidelines §4:18 (2008). A relevant precedent in the environmental context is the case of United States v.Consolidated Edison Co. of New York, Docket No. 93-CR-1063 (S.D.N.Y.), in which the court ordered the imposition of an environmental monitor on Consolidated Edison Co. of New York, over the company’s objection, after the company failed to give notice of the dispersal of asbestos from a manhole explosion.

Prosecutors in the case argued that a fine alone would mean little to a company with substantial revenues, and the court agreed that a monitor was needed in order to change a corporate culture in employees felt intimidated not to speak out against illegal practices. (Ex. W and X). The Judge appointed a monitor from a pool of applicants submitted by each side and costs of the monitor were paid by the defendant. As in the Con Edison case, there is evidence in this case that the corporate culture of these defendants does not place an emphasis on environmental compliance. During the trial of this case, evidence was presentedthat showed that managerial level individuals knew there was a significant spill of diesel fuel in the rail yard, but instead of notifying the DEP, the defendants had their employees undertake steps to cover up the incident.Although obviously not binding in this case, the Federal Sentencing Guidelines in §8D1.1 provide factors for courts to consider when imposing conditions of probation on a corporate entity “(3) if, at the time of sentencing, (A) the organization (i) has 50 or more employees, or (ii) was otherwise required under law to have an effective compliance and ethics program; and (B) the organization does not have such a program; (4) if the organization within five years prior to sentencing engaged in similar misconduct, as determined by a prior criminal adjudication, and any part of the misconduct underlying the instant offense occurred after that adjudication; (5) ifan individual within high-level personnel of the organization or the unit of the organization within which the instant offense was committed participated in the misconduct underlying the instant offense and that individual within five years prior to sentencing engaged in similar misconduct, as determined by a prior criminal adjudication, and any part of the misconduct underlying the instant offense occurred after that adjudication; (6) if such sentence is necessary to ensure that changes are made within the organization to reduce the likelihood of future criminal conduct.” See United States Sentencing Guidelines §8D1.1 (setting forth eight situations in which organizational probation is appropriate.) Virtually all of these factors arepresent in this case.Moreover, it is in the interest of the Court to order an independent environmentalcompliance monitor to oversee the Defendants’ probationary period because corporateenvironmental compliance is a specialized area of the law that is not ordinarily handled by the Court’s probation department. It would be critical to the oversight of probation here to have a specialized individual involved.As proposed by the Commonwealth, the monitor would be selected by DEP and paid bythe defendants. The monitor would report to the DEP Environmental Strike Force Director on a regular basis regarding the environmental activities of the defendants. The initial task of the monitor will be to assist the defendants in finalizing an Environmental Management System (EMS) that is acceptable to the DEP and applicable to each of the defendants. DEP ordered the Boston & Maine Corporation to create such an EMS in 2002 but that project, 7 years later, remains uncompleted. (See Ex. L) Additional responsibilities of the monitor would include:a. The monitor would assist the defendants in developing internal environmentalcompliance controls and procedures to prevent future violations of the law and monitorthe effectiveness of the procedures implemented;b. The monitor would submit quarterly reports to DEP, with copies to the defendants,regarding the defendants’ compliance and cooperation regarding environmental matters;c. The monitor would immediately communicate any compliance issues to DEP so that DEP can provide appropriate guidance or take any necessary corrective action;d. The monitor and the defendants would review and inventory all of oil and hazardousmaterial in the defendants’ control including both their use and their transport, andoversee deadlines for remediation of hazardous waste sites already in the complianceprocess;e. The monitor would ensure that the defendants have trained all personnel in the area of spill reporting and response procedures, including ensuring that new employees gettrained and how annual refreshers are handled;f. The monitor would establish an independent data collection point where all releases of oil and hazardous material by the defendants is called in and logged at this independent entity to show that they are reporting as required.ConclusionFor all these reasons, the Commonwealth respectfully requests that this Honorable Court sentence each defendant on one count to pay the maximum penalty of $100,000 (a combined total of $400,000), and that the Court impose the maximum penalty on each defendant on the second count, but suspend that penalty for a period of three years during which each defendant would be on probation with the condition that the defendants be required to pay for the cost of an independent environmental monitor who will be responsible for overseeing their probation during the three years.
Respectfully Submitted,MARTHA COAKLEY ATTORNEY GENERAL
By: Andrew Rainer, Chief (BBO # 542067)Wendoly Ortiz Langlois, AAG (BBO # 654442)Environmental Crimes Strike ForceOffice of the Attorney GeneralOne Ashburton Place, 19th FloorBoston, MA 02108(617) 727-2200Date: March 30, 2009

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June 02, 2009

Pan Am convicted and fined for failing to protect environment

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