By Emily Becker, Harvard Law School, Sept. 2014
Whistleblowers could facilitate the regulation of the environmental sector at little to no cost to the taxpayer. Often, potential whistleblowers have timely access to information that would enable them to avert or minimize environmental damage and to protect our communities. However, existing federal and state regulations fail to adequately protect environmental whistleblowers and to incentivize potential environmental whistleblowers. These failures unjustly penalize whistleblowers and discourage potential whistleblowers. This article uses research findings and a case study to illuminate these failings and to argue for reforms that would better protect and incentivize whistleblowers.
C. Importance of Whistleblowers
Employees and media personnel that blow the whistle help identify wrongdoing that might never be detected by auditors or regulators.41 Even in cases where the wrongdoing would eventually become known, whistleblowers often help identify the misconduct early. 42 By doing so, they reduce the cost of subsequent investigations and ensure that the fraud has a smaller impact than it would have had otherwise.43 Moreover, the very presence of potential whistleblowers in a workplace likely deters misconduct from ever occurring.44 Whistleblower’s contributions are not only descriptively good; they are also quantifiably valuable. As of 2007, “60 percent of the Department of Justice’s cases of fraud against the federal government were initiated by whistleblowers, resulting in recovery of over $20 billion for the taxpayers.”45 Whistleblower claims against the pharmaceutical industry recovered $12 billion from 2001 to 2011.46
Because of the challenges of enforcing environmental regulations, government-regulated monitoring efforts are expensive.69 In an effort to reduce the cost of enforcement, some regulatory approaches, such as subsidies, deposit-refunded systems, and information disclosure, shift the burden of proof onto the regulated industry.70 Though less costly, these approaches make regulators dependent on industry self-reporting and create the potential for an industry to misreport its pollutant levels.71 The potential that self-reported data will be misreported or that industries will subvert official monitoring by engaging in illegal practices, such as tampering with monitoring equipment or dumping illegally, poses a serious threat because industries often profit from noncompliance.72 Under the theory of efficient breach, companies may be willing to break environmental laws where noncompliance is less costly than compliance because regulations go under-enforced.73
Not only are environmental harms hard to monitor, costly to regulate, and susceptible to “efficient breach,” environmental harms are also time-sensitive.74 Indeed, environmental harms jeopardize public health, and the longer harms continue, the greater health risk these harms pose.75 Moreover, it is usually far easier to prevent an environmental harm than to clean up after one; some environmental harms are effectively irreversible.76 Thus, regulators often need to act quickly to be effective.
2. Whistleblowers Can Facilitate Regulation of the Environmental Sector
Whistleblowers can help regulators overcome the aforementioned challenges. First, whistleblowers that work as employees of regulated industries have the technical skills and knowledge that make them effective internal monitors.77 Moreover, whistleblowers increase compliance with little or no additional cost to the taxpayer because they are private citizens rather than official monitors.78 By increasing “the likelihood that polluters will be penalized,” 79 whistleblowers can quell the danger of efficient breach by helping to ensure that noncompliance is more costly than compliance.80 Finally, internal whistleblowers often learn of violations as they are happening and can act quickly to contain or even prevent a time-sensitive environmental harm.81 Likewise, whistleblowers in the media can write a quick article that alerts community members of potential threats before regulators have time to act.82 In these ways, environmental whistleblowers have the potential to increase compliance with environmental laws.
3. Challenges Faced by Environmental Whistleblowers
Despite the need for whistleblowers in the environmental sector and the financial savings they can provide, several features of the environmental sector make being an whistleblower especially challenging.83 One problem is that most definitions of who is considered a “whistleblower” cover only individuals who report on traditional types of misconduct, such as waste, fraud, abuse of authority, and actions that pose an imminent threat to public health and safety.84 However, potential environmental whistleblowers often encounter wrongdoing not covered by protective statutes, such as the suppression of results of emissions analyses and the use of skewed methodologies or inferior data.85 Relatedly, because scientific findings can be uncertain and contentious, potential environmental whistleblowers may be unclear as to whether they can or should publish controversial work in journals or newspapers.86 Second, the environmental sector has what is known as a “revolving door” problem, a phrase that describes how individuals often work both as regulators and as employees of regulated industries during their career.87 Though there is a benefit to having experience in both sectors, often “revolving-door officials develop or direct policies that benefit a former or prospective employer.”88 Even those that do not actively attempt to benefit an employer may be unduly cautious in what they are willing to say or do because they are concerned about their job prospects.89 Third, while whistleblowers in other industries may be able to stop wrongdoing by reporting internally, it is much more difficult for environmental whistleblowers to rely on internal reporting alone. This is because unlike other types of wrongdoing, environmental wrongdoing often has adverse effects on third parties and often creates lingering harms. 90 Thus, environmental whistleblowers that report internally may inadvertently enable their employers to avoid compensating third-party victims or to avoid paying the costs of environmental cleanup.91 To ensure that the situation is fully remedied, environmental whistleblowers therefore often need to report externally or otherwise publicize the wrongdoing.92 Finally, because so many people encounter chemicals and pollutants at different stages, environmental whistleblowers come from many different backgrounds.93 They can be employees involved with cleanup of environmental hazards, individuals responsible for storing and disposing of solvents, factory workers, concerned scientists, regulators who feel their work is being silenced, media personnel who learn about contamination from a variety of sources, and others.94 In fact, whistleblower protections from environmental laws have been applied to: “a painter who cooperated with an investigation into toxic dumping, a teacher who complained about asbestos in a school house, an engineer who filed reports regarding a shipyard’s noncompliance with hazardous waste regulations, and an employee who told a newspaper reporter about the discharge of sludge into the Cedar Rapids.”95 With environmental whistleblowers found in many different sectors, it is difficult to ensure that potential whistleblowers know about applicable laws, including the protections available, the procedure for reporting, and the timeline for the relevant statute of limitations.96
III. Fardin Oliaei: A Case Study in Environmental Whistleblower Laws
In 2000, Fardin Oliaei was working as a Senior Research Scientist and Coordinator of the Emerging Contaminants Program at the Minnesota Pollution Control Agency (MPCA).97 Her job was to investigate the dangers posed by emerging contaminants (a term for any artificial or naturally-occurring chemical that is not typically monitored but has the potential to enter the environment and pose a danger to the environment or human health).98 Oliaei was one of the first scientists in the state to express concern about the environmental and health risks posed by perfluorinated chemicals (PFCs), “a family of synthetic compounds that 3M manufactured for use in waterproofing agents, non-stick cookware, fire-fighting foam, and food packaging.”99 She found that PFC contamination had spread throughout the state, with the chemicals turning up everywhere from fish in Voyageur’s National park to drinking water in communities near 3M waste disposal sites.100 Human exposure to PFCs has been linked with cancer, thyroid problems, and liver damage, but the link is not necessarily causal.101 Though the long-term effects of exposure to PFCs on human health are uncertain, scientists worry because PFCs “accumulate in living tissue and take a long time to break down.”102 A former 3M chemist described one common form of PFC, perfluorooctane sulfonate or PFOS, as one of the “most insidious pollutants” of recent times in part because it does not degrade, is highly toxic to wildlife, and its environmental sink appears to be biota rather than soil or sediment.103 Because of the extent of the contamination, the length of time it takes PFCs to break down, and the scientific uncertainty regarding their health effects, Oliaei considered PCFs to be a top priority for research.104 Despite the scientific basis for concern, Oliaei alleges that MPCA management deliberately deterred her from continuing to research the chemicals.105 In her words, “since Ms. [Sheryl] Corrigan left 3M to become MPCA Commissioner . . . MPCA top management . . . intentionally minimized the environmental monitoring of PFCs in Minnesota.”106 When Oliaei publicized her findings on Minnesota Public Radio, top management disciplined her and threatened to fire her if she continued to speak out about the issue.107 She explains that the pressure to be silent was so great that “PFC was a forbidden word. During my last three years at the agency, the managers told me, ‘Fardin, don’t mention PFC or you will lose your job.’”108 Ultimately, Oliaei resigned from MPCA and pursued a lawsuit citing violations of the First Amendment, federal civil rights statutes, and the Minnesota Human Rights and Whistleblower Acts.109
After her resignation, Oliaei received a settlement of $325,000 (or three years of her salary), but that money quickly dwindled.110 As of 2012, she has been unable to find employment in her field, with several interviewers informing her that they had been pressured into not hiring her.111 Though Oliaei has been “constantly applying for jobs,” she now believes she was “naively optimistic” and that she has “been blacklisted from any possible job. 112 She reports that one potential employer explained that they could not hire her because, “3M is a powerful company. They drew lines and you crossed them. Now you can never step back inside.”113 This employer encouraged Oliaei to leave the state to increase her chances of finding a job.114 Eventually, she was forced to sell her prized possession—her home.115 “I hate to say it, but this is the reality: I’m homeless,” said Oliaei, who now lives with a friend out of state.116 “I lost everything. I left the agency with my 49 boxes of PFC research. When I sold the house, I let everything go at an estate sale for almost nothing—except for those boxes. I took those with me.”117 Since her resignation, politicians, regulators, and scientists have become more aware of the dangers posed by PFCs and efforts have been made to clean up the contamination.118 Many insiders attribute these changes to Oliaei’s work. State Senator John Marty, DFL-Roseville, said Oliaei’s efforts “made a big difference . . . [because] ‘I don’t think anyone was paying attention to PFCs before her.’”119 State Rep. Karen Clark, DFLMinneapolis, furthered, “[e]verything Fardin said when she testified to the Senate has proven to be true. It just took a couple of years to come out . . . I do think Fardin did us all a tremendous public service and she paid dearly.”120 Though Oliaei was not recognized for her work while at MPCA, her contributions have since been recognized.121 Rather than being disciplined, her supervisors, Paul Hoff and Marvin Hora, received recognition for Oliaei’s comprehensive research on PFC and were promoted.122
Oliaei’s experiences echo some of the obstacles facing environmental whistleblowers as discussed in Part II(E). Specifically, (1) the misconduct Oliaei made public constituted a violation of scientific integrity, involving the suppression of her research and an attempt to silence her; (2) part of the conflict between Oliaei and MPCA management involved a disagreement over her rights to publicize her research; (3) her supervisor, Commissioner Corrigan, previously worked for 3M (a producer of PFCs) and as such exemplifies the “revolving door” problem; and (4) the pollution involved impacts third parties and takes a long time to breakdown, meaning that simply preventing further contamination would not completely resolve the problem. Her experiences also highlight some of the challenges whistleblowers face after going public, including losing their jobs, losing their homes, having difficulty finding other work in the industry, and seeing those who suppressed their research go unpunished…
B. Deficiencies in Existing Approaches and Suggested Reforms
This section identifies deficiencies in existing laws regarding environmental whistleblowers, and it suggests ways that these laws could be reformed. Because many deficiencies exist in both federal and state approaches, the deficiencies are divided by subject matter rather than by legal framework with an indication whether a given deficiency applies to both or only to one of the two statutory schemes.154
1. Failure to Use an Incentives-Based Approach (Federal and State)
Though all six federal statutes and the majority of state statutes rely on the anti-retaliation model, this approach does not provide incentives to encourage potential whistleblowers to go public.155 Research suggests that anti-retaliation statutes are far less successful at encouraging whistleblowers to go public than statutes that promise a financial reward.156 As mentioned above, whistleblowers in the healthcare sector (which employs an incentives based approach) report a greater percentage of fraud cases than in other sectors. 157 Moreover, adding an incentives component to existing approaches has been shown to increase the size and number of reports filed.158 For example, in 2006, the IRS issued a bounty program, Section 7623(b), which provided that whistleblowers would receive a 15–30% bounty of collected revenues if the IRS successfully recovered revenues based upon information brought to light by the whistleblower. 159 In just three years, reporting increased by over 100%—jumping from 2,751 cases in 2007 to 5,678 cases in 2009.160 Moreover, while there were no IRS collections over $2 million between 2003 and 2006, there were fifteen collections over $2 million between 2007 and 2009.161 These figures suggest that offering a financial reward to environmental whistleblowers could dramatically increase the amount of wrongdoing detected.162 The existing approach to environmental whistleblowers should be reformed by providing environmental whistleblowers whose reporting results in recovery of civil penalties or fines with a portion of the proceeds.
The framework for providing funding for such an incentives program already exists.163 In 2010, the “EPA reported that it secured over $150 million in civil penalties and criminal fines and restitution.”164 Lawmakers could modify this system by offering a portion of the proceeds to whistleblowers that report a violation that results in such penalties or fines.165 Statistics from other sectors suggest that doing so would increase the net recovery made by the EPA as well as the number of claims filed.166 Critics of the incentives-based model point out that financial incentives are not always possible in circumstances where the employer is small or the type of infraction committed does not net a substantial fine or civil penalty.167 Moreover, financial awards are not always appropriate or feasible in circumstances where whistleblowers identify violations of scientific integrity like the suppression of research or the use of inferior data.168 Thus, the incentives-based model would provide a supplement to but not a replacement for the anti-retaliatory model.169 A two-pronged approach would ensure that whistleblowers in all circumstances are protected by the antiretaliatory model, but would provide incentives that would likely increase the number of whistleblowers who report on a certain class of infractions.
ADDITIONAL LEGAL STUDIES