COAST GUARD AND EPA AGREE TO ENFORCE AIR POLUTION REQUIREMENTS IN U.S. WATERS

June 27, 2011

The following is an excerpt from an e-mail sent out by the EPA:
"WASHINGTON — The U.S. Environmental Protection Agency (EPA) and the U.S. Coast Guard (USCG) today announced an agreement to jointly enforce U.S. and international air pollution requirements for vessels operating in U.S. waters. The requirements establish limits on nitrogen oxides (NO_x) emissions and require the use of fuel with lower sulfur content, protecting people’s health and the environment by reducing ozone-producing pollution, which can cause smog and aggravate asthma. The most stringent requirements apply to ships operating within 200 nautical miles of the coast of North America.
“Today’s agreement forges a strong partnership between EPA and the U.S. Coast Guard, advancing our shared commitment to enforce air emissions standards for ships operating in U.S. waters,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “Reducing harmful air pollution is a priority for EPA and by working with the Coast Guard we will ensure that the ships moving through our waters meet their environmental obligations, protecting our nation’s air quality and the health of our coastal communities.”
"This agreement demonstrates the Coast Guard's long-standing commitment to protecting our nation's marine environment," said Rear Adm. Kevin Cook, director of Prevention Policy for the U.S. Coast Guard. "Aligning our capabilities with EPA enhances our commitment to the marine environment while minimizing the impact on shipping."

The large marine diesel engines that provide propulsion and auxiliary power on many ocean-going vessels emit significant amounts of pollution. Without further action, EPA estimates that by 2030, NO_x emissions from ships will more than double, growing to 2.1 million tons per year. The memorandum of understanding (MOU) signed by EPA and the USCG outlines the agencies’ commitment to jointly enforce federal and international laws that EPA projects could prevent 12,000-31,000 premature deaths annually by 2030. Under the MOU, both the USCG and EPA will perform inspections and investigations, and will take appropriate enforcement actions if a violation is detected.
A letter to industry was also signed today by USCG and EPA to provide the regulated community with notice that USCG and EPA will be taking measures to promote compliance with federal and international air pollution requirements and will be actively pursuing violations.
The International Maritime Organization (IMO) is a United Nations agency which deals with maritime safety, security and the prevention of marine pollution from ships across the globe. The International Convention for the Prevention of Pollution from Ships (MARPOL), developed through the IMO, is the main international convention covering prevention of pollution of the marine environment by ships. MARPOL Annex VI addresses air pollution from ships through the use of both engine-based and fuel-based standards. Additionally, MARPOL Annex VI requires ships operated in designated geographical areas, known as emission control areas or ECAs, to meet the most advanced standards for NOx emissions and fuel sulfur limits. The United States became a party to MARPOL Annex VI in 2008 and the treaty is implemented in the United States through the Act to Prevent Pollution from Ships (APPS). "

REFUSE CART REPAIR EXECUTIVE GETS PRISON TIME FOR CONSPIRACY

The following is an excerpt from the department of justice website:
WEDNESDAY, JUNE 15, 2011


WASHINGTON — A former vice president of an Illinois refuse disposal container repair company was sentenced today to serve 16 months in prison and to pay a $40,000 criminal fine for his role in a conspiracy to commit mail and wire fraud in connection with bids on a contract with the city of Chicago, the Department of Justice announced.
Steven Fenzl, a California resident, was also sentenced by U.S. District Court Judge Ruben Castillo to pay $35,302 in restitution for his participation in a conspiracy to defraud the city of Chicago on a contract for the repair of refuse carts from as early as November 2004 to as late as September 2008. Fenzl, along with his business partner Douglas E. Ritter, was charged in an indictment filed on April 21, 2009, in U.S. District Court in Chicago. Fenzl was found guilty by a jury on Sept. 28, 2010, of one count of conspiracy to commit mail and wire fraud, two counts of mail fraud and one count of wire fraud. Ritter, an Illinois resident, pleaded guilty to the conspiracy on June 3, 2010, and was sentenced on May 10, 2011, to serve 16 months in prison and to pay $35,303 in restitution.
According to the indictment, Fenzl, Ritter and their co-conspirator conspired to deceive city of Chicago officials about the number of legitimate, competitive bids submitted for the contract. Specifically, Fenzl and his co-conspirators fraudulently induced other companies to submit bids for the contract at prices determined by Fenzl and his co-conspirators and greater than the price for which Fenzl’s company had submitted a bid. The department said that included in these bids were fraudulent documents indicating that, if awarded the contract, the bidder would enter into subcontracts to purchase goods or services for a specified percentage of the contract from a minority-owned business and a women-owned business, as required by the city of Chicago. According to the indictment, Fenzl and his co-conspirators also fraudulently certified to the city on Fenzl’s company’s bid that it had not entered an agreement with any other bidder relating to the price named in any other bid submitted to the city for the contract.
Today’s sentencing resulted from an investigation of the refuse cart repair industry being conducted by the Antitrust Division’s Chicago Field Office and the city of Chicago’s Office of Inspector General. “

The following is an excerpt from the SEC web site:

Remarks at Open Meeting — Whistleblower ProgrambyRobert S. Khuzami, Director, Division of EnforcementU.S. Securities and Exchange CommissionWashington, D.C.
May 25, 2011Thank you, Chairman Schapiro, and good morning Commissioners. I am very pleased to present for your approval today final rules that would establish the Commission’s new whistleblower program. This program is part of a broader initiative undertaken by the Division in the last two years to further strengthen our enforcement program by expanding our arsenal of investigative tools designed to detect and combat fraud and other violations of the securities laws. As with our Cooperation Initiative that we announced last year, the whistleblower program is designed to incentivize insiders and others who possess useful information regarding unlawful conduct to come forward early and assist the SEC with identifying and bringing enforcement actions against companies and individuals that have violated the securities laws.
The rules proposed by the Commission last November attempted to strike a balance between various policy considerations around implementation of a whistleblower program. To name just a few examples, among these policy considerations included —
To what extent should the program award individuals who provide information about matters already under investigation by the SEC?
Should the program exclude certain types of information; for example, information obtained through communications subject to the attorney-client privilege? and
Should the rules require employees to first report possible violations through their employer’s internal compliance procedures before coming to the SEC? Our proposal provoked strongly held and diverse views on these and a number of other significant topics. We received hundreds of comment letters expressing a range of views and ideas from various interested constituencies, including individual investors, whistleblower advocacy groups, public companies, corporate compliance personnel, academics, professional associations and audit firms. Perhaps the most vigorously-debated issue was the effect of the whistleblower program on internal corporate compliance processes. Many commenters recommended that the Commission require that whistleblowers report through their employers’ internal compliance systems before or at the same time they report to the SEC, in order to qualify for an award. The concerns expressed were that without mandatory internal reporting, the program would, among other things:
Encourage whistleblowers to bypass internal compliance programs;
Undermine the ability of an entity to detect, investigate and remediate securities violations, particularly as to those complaints over which the Commission has no jurisdiction or that are too small for the Commission to investigate;
Create adverse incentives for whistleblowers to see their companies sanctioned or to delay reporting potential violations; and
Reduce the incentive for corporations to establish and maintain effective internal compliance programs. After much study, and even more discussion, we concluded that an absolute requirement that whistleblowers report internally to qualify for an award would be detrimental to the enforcement program, and seemingly inconsistent with the statute’s goal of motivating individuals to come to the Commission with evidence of securities law violations.
Four primary reasons supported our conclusion. First, we were not presented with, nor are we aware of, any empirical data supporting the view that the absence of mandatory internal reporting would undermine internal compliance programs. Second, companies that take their fiduciary obligations and corporate citizenship responsibilities seriously will design and implement effective compliance programs regardless of whether a whistleblower is required to internally report wrongdoers to qualify for an award — and, companies with effective compliance programs and cultures of compliance are actually more likely to attract whistleblower information as a result of the incentives in today’s rules, which I will outline shortly. Third, Congress intended the statute to incentivize insiders to provide the SEC with high-quality tips that reveal fraud and other wrongdoing, and to protect them from retaliation in the process. As such, it is, first and foremost, a tool designed to increase the effectiveness of the enforcement program.
The information from whistleblowers will allow us to build stronger cases and move more quickly, thus increasing the chance of stopping frauds early, of locating and returning more money to victim-investors, and of preventing small frauds from growing into bigger frauds with even more victims, more losses and more ruined lives. Fourth, there is nothing in the statute requiring internal reporting as a condition of eligibility, and an internal reporting requirement — particularly in situations where the compliance function is not effective or is controlled by managers that are the subject of the whistleblower’s claims — could easily undercut the purpose of the statute.
Consider boiler room operations where the principals are all running a “pump and dump” scheme. Requiring internal reporting in these situations, where the entity is entirely or largely corrupt, where the wrongdoers control the operation, would serve no beneficial purpose, and certainly would not undermine any legitimate corporate compliance programs. The same is true for Ponzi schemes, offering frauds and similar scams that we confront all too often. Some of the same considerations apply where the violation is carried out by principals that are largely law-abiding, working within an entity that takes compliance seriously. Requiring under all circumstances — and that is the key here, requiring — that the whistleblower first reveal the incriminating information to the same persons that the whistleblower is suggesting acted unlawfully, would create, in our view, an imbalance between the statutory mandate to incentivize whistleblowers to report wrongdoing to the SEC, and the desire not to undermine the efforts of internal compliance programs.
Mandating internal reporting as a condition of eligibility would, in our view, place an undue and additional burden on a whistleblower prior to presenting evidence of unlawful conduct to the SEC, and likely would deter others from coming forward to do the same. That is why our rules leave the decision as to whether or not to report internally in the hands of the person best equipped to make that decision — the whistleblower, considering the circumstances of his or her individual situation. But, because we recognize the extremely significant value that effective corporate compliance programs deliver in identifying, remediating, and deterring wrongdoers, we have refined and revised the proposed rules so that the whistleblower is incentivized — not mandated, but incentivized — to utilize their companies’ internal compliance and reporting systems, when appropriate.
First, as Chairman Schapiro noted, the rules contain a provision under which a whistleblower can receive an award for reporting original information to an entity’s internal compliance and reporting systems, if the entity then reports information to the Commission that leads to a successful enforcement action. Under this new provision, all the information provided by the entity to the Commission will be attributed to the whistleblower, which means that the whistleblower will get credit — and potentially a greater award — for any additional information generated by the entity in its investigation. In fact, because the whistleblower gets credited under this provision with the information generated by the entity, reporting internally to an effective compliance program may permit an individual to qualify for an award where they otherwise would not. We also hope that this powerful new incentive for employees to report internally will have the added benefit of incentivizing companies to implement robust compliance programs, as a whistleblower likely will only report internally where he or she believes the company will act promptly and responsibly.
Second, with respect to the criteria for determining the amount of an award, the final rules expressly provide that (1) a whistleblower’s voluntary participation in an entity’s internal compliance and reporting systems is a factor that can increase the amount of an award; and (2) a whistleblower’s interference with internal compliance and reporting is a factor that can decrease the amount of an award.
Third, the final rules extend from 90 to 120 days the time for a whistleblower to report to the Commission after first reporting internally and still be treated as if he or she had reported to the Commission at the earlier reporting date. The release makes clear, however, that the 120-day grace period applies only to whistleblowers, and that the final rules do not change the fact-based analysis that each entity should conduct when considering whether and when to report potential securities violations to the Commission. We will continue to expect companies to self-report on a timely and responsible basis.
We believe that these incentives sufficiently address the concerns raised in comments regarding the value of internal corporate compliance receiving information about possible violations of the law, but without discouraging the flow of insider tips that we believe will increase our agency’s ability to identify more frauds, and to move earlier and more quickly to stop them when we do.
The final rules also clarify the scope of the limitations on awards set forth in the proposed rules relating to persons with legal, compliance, audit, supervisory or governance responsibilities for an entity that receive information about a potential violation of the securities laws. This was another area that generated vigorous comments. The final rules retain the exclusion for certain individuals and certain categories of information from eligibility for whistleblower consideration. Information obtained through communications subject to the attorney-client privilege generally cannot be used, in order not to weaken the benefits that consultation with counsel often contributes to an effective compliance program and the development of corporate best practices. Nor can information be used to support a claim if it was obtained in the course of engagements required of independent public accountants under the securities laws and relating to the engagement client.
Lastly, certain categories of company officials also cannot qualify for whistleblower status, such as officers, directors, trustees or partners of an entity, if they are informed by another person of allegations of misconduct, or who learn the information in connection with the entity’s processes for identifying, reporting and addressing possible violations of law. This exclusion is necessary to ensure that persons most responsible for compliance are not incentivized to promote their own self-interest at the expense of an entity’s ability to detect, address and self-report wrongdoing.
Our proposal to allow awards to culpable whistleblowers is another area that elicited a substantial number of sharply-divided comments. Many commenters argued that the rules should not place any limits or restrictions on eligibility or award amounts for culpable whistleblowers beyond what is already contained in the statute for individuals who are criminally convicted. Many other commenters argued that culpable whistleblowers should be excluded completely from eligibility for awards. In our view, the rules as proposed represent the appropriate balance on this issue. The final rules therefore leave the proposed rules unchanged. The final rules substantially limit awards based on the conduct attributable to the culpable whistleblower — both the whistleblower’s own conduct as well as an entity’s conduct that the whistleblower directed, planned, or initiated. The final rules also provide that culpability of a whistleblower is a factor that can decrease the amount of an award.
At the same time, the final rules allow certain less-culpable whistleblowers to receive awards, assuming they otherwise satisfy the requirements set forth in the rule. This simply recognizes the established reality in law enforcement that often only those who are part of the fraud can provide evidence of unlawful conduct, and equally importantly can make the case against the biggest threats to investors — the organizers and leaders of a scheme who, if not pursued, will resurface in the future to commit new frauds.
Of course, the rulemaking, though a significant undertaking, is but one aspect of the creation of our whistleblower program. Since the enactment of Dodd-Frank, the Division has been hard at work creating the agency’s Office of the Whistleblower. In February, we welcomed back to the Commission Sean McKessy to oversee our whistleblower program. In a moment, you will hear from Sean, who will brief you on the status of the office and his vision for the program.
Before turning it over to Sean and to Steve Cohen, who will present additional details about our recommendation, I would like to thank Chairman Schapiro, Commissioner Casey, Commissioner Walter, Commissioner Aguilar and Commissioner Paredes for their valuable insights and input on these and other issues. I would also like to thank Commissioner’s Counsel Christian Broadbent, Anil Abraham, Scott Kimpel, and James Cappoli for their cooperation and assistance.
In addition, I want to echo the Chairman’s remarks and thank the Division staff, in particular the work of Steve Cohen, Sarit Klein, Sean McKessy, Jordan Thomas, and Sam Waldon. Their efforts have been in the finest tradition of the Agency — diligence, dedication and uncompromising professionalism. It is an honor to have them as colleagues.
I would also like to thank the staff from the Office of General Counsel who partnered with us, particularly Rich Levine, Brian Ochs and Brooks Shirey, on this very important initiative, for their tireless work on this recommendation.
I would also like to thank the staff from the Office of Risk, Strategy and Financial Innovation for their contribution and assistance, as well as staff from the Division of Corporation Finance; Office of Compliance, Inspections and Examinations; Division of Investment Management; Division of Trading and Markets; Office of the Chief Accountant; Office of International Affairs; and the Office of Legislative and Intergovernmental Affairs for their input and assistance."

DOJ ALLEGES DISCRIMINATION AGAINST LEGAL IMMIGRANTS

The following excerpt comes from the Department of Justice website:

"Department of Justice

Office of Public Affairs

FOR IMMEDIATE RELEASE

Monday, June 27, 2011

Justice Department Files Lawsuit Alleging Immigration-Related Employment Discrimination by Farmland Foods Inc. in Missouri

WASHINGTON - The Justice Department today filed a lawsuit against Farmland Foods Inc., a major producer of pork products in the United States, alleging that it engaged in a pattern or practice of discrimination by imposing unnecessary documentary requirements on non-U.S. citizens when establishing their authority to work in the United States. Farmland Foods, a subsidiary of Smithfield Foods Inc., is headquartered in Kansas City, Mo.

The department’s investigation revealed that Farmland required all newly hired non-U.S. citizens and some foreign-born U.S. citizens at its Monmouth plant in Illinois to present specific and, in some cases, extra work authorization documents beyond those required by federal law.  The Immigration and Nationality Act (INA) requires employers to treat all authorized workers in the same manner during the hiring process, regardless of their citizenship status.  Farmland imposed different and greater requirements on non-U.S. citizens and foreign-born U.S. citizens as compared to applicants who were native-born U.S. citizens.

            

“Employers may not treat authorized workers differently during the hiring process based on their citizenship status,” said Thomas E. Perez, the Assistant Attorney General in charge of the Civil Rights Division.  “Federal law prohibits discrimination in the employment eligibility verification process, and the Justice Department is committed to enforcing the law.”

The lawsuit charging Farmland with discriminatory practices has been filed before the Office of the Chief Administrative Hearing Officer (OCAHO) within the Executive Office for Immigration Review, another component of the Department of Justice."

MERCURY AND AIR TOXIC STANDARDS COMMENT PERIOD EXTENDED

The following is an excerpt from the EPA: 
June 21, 2011
 

WASHINGTON -- In response to requests from members of Congress and to encourage additional public comment, EPA today extended the timeline for public input by 30 days on the proposed mercury and air toxics standards, an extension that will not alter the timeline for issuing the final standards in November 2011.

 

“EPA will put these long-overdue standards in effect in November, as planned. In our effort to be responsive to Congress and to build on the robust public comment process, we will extend the timeline for public input by 30 days, which will not impact the timeline for issuing the final standards," said Administrator Jackson.  "These standards are critically important to the health of the American people and will leverage technology already in use at over half of the nation’s coal power plants to slash emissions of mercury and other hazardous pollutants.  When these new standards are finalized, they will assist in preventing 11,000 heart attacks, 17,000 premature deaths, 120,000 cases of childhood asthma symptoms and approximately 11,000 fewer cases of acute bronchitis among children each year. Hospital visits will be reduced and nearly 850,000 fewer days of work will be missed due to illness.”

 

EPA proposed the first ever national mercury and air toxics standards in March.  The standards will be phased in over three years, and states have the ability to give facilities a fourth year to comply. Currently, more than half of all coal-fired power plants already deploy widely available pollution control technologies that are called for to meet these important standards. Once they are final in November, these standards will ensure the remaining coal-fired plants, roughly 44 percent, take similar steps to decrease dangerous pollutants. "