White House Issues Executive Order Limiting Criminal Enforcement of Regulatory Offenses

Background

This Executive Order states it is intended to ease regulatory burdens on American citizens and ensure they are protected from unjust criminalization. The Order explains that many regulations carry potential criminal penalties for violations, including strict liability offenses that do not require proof of intent, meaning companies or citizens need not have a guilty mental state to be convicted of a crime. This status quo is, according to the Order, “absurd and unjust” and “can lend itself to abuse and weaponization by providing Government officials tools to target unwitting individuals.

Key Provisions of the Order

The key provisions in the Executive Order include the following:

• Criminal enforcement of regulatory offenses: The Order discourages criminal enforcement of regulatory offenses. However, it states that prosecution of criminal regulatory offenses is “most appropriate” for those who knowingly violate regulations and cause significant public harm.  
• Strict liability offenses: Strict liability offenses, which do not require proof of intent, are “generally disfavored.” Where enforcement is appropriate for strict liability offenses, agencies should consider civil or administrative enforcement rather than criminal enforcement.
• Public listing of criminally enforceable regulations: Within 1 year of the date of the Order, agency heads must provide to the Office of Management and Budget (OMB) a report listing all enforceable criminal regulatory offenses, the range of potential criminal penalties for a violation, and the applicable mens rea (mental state) required for liability. Agencies must post these reports publicly and update them annually. The Order strongly discourages criminal enforcement of any regulatory offense not on the public list. It also requires the Attorney General to consider the amount of public notice provided regarding an offense before pursuing investigations or charges.
• Guidance on criminal regulatory offenses: The Order instructs agencies to publish guidance describing the circumstances under which they would refer violators for prosecution. The Order indicates the guidance should factor in harm, defendant’s gain, and awareness of unlawfulness.
• Notification of criminal regulatory offenses: According to the Order, any future notice of proposed rulemaking and final rule published in the Federal Register that carries potential criminal penalties for a violation should include a statement that the rule or proposed rule is a criminal regulatory offense, the authorizing statute, and the required mens rea.  The Order also instructs agencies to adopt a default mens rea criminal regulatory offenses under the agency’s statutes when possible.  
• Strict liability as a significant regulatory action: The Order mandates that regulations imposing strict liability be treated as “significant regulatory actions” and subject to review by the Office of Information and Regulatory Affairs (OIRA) under Executive Order 12866 of September 30, 1993 (Regulatory Planning and Review).
• Exemptions: The Order does not apply to immigration law enforcement or national security functions.

Implications for Park Prosecutions 

By aiming to reduce criminal enforcement of regulatory offenses and discourage strict liability offenses, the Executive Order provides instructions to agencies that could affect the use of the Park Doctrine. Under the Park Doctrine, a corporate official can be held criminally liable for violations of the Federal Food, Drug, and Cosmetic Act (FFDCA) in areas of the company under the official’s control, even if the official did not intend for the violations to occur or was not aware of the violations. The Federal Meat Inspection Act (FMIA) and Poultry Products Inspection Act (PPIA) operate similarly. 

The Park Doctrine is named for the 1975 Supreme Court case United States v. Park, 421 U.S. 658 (1975), but originated decades earlier, with the 1943 decision in United States v. Dotterweich, 320 U.S. 277 (1943), in which the Court upheld the conviction of the president of a company that was repackaging misbranded drugs. In Park, the government prosecuted Acme Markets, a national food retailer, and Park, its CEO, for violating the FFDCA by allowing food to be stored in rodent-infested warehouses. Even though Park claimed he relied on a subordinate to remedy the problem, the Supreme Court explained that, as CEO, Park was ultimately responsible under the corporation’s by-laws for overseeing sanitation. Relying on Dotterweich, the Court held that strict criminal liability applied to corporate officials whose failure to exercise authority led to a violation of the FFDCA, meaning Park could be criminally liable for FFDCA violations because he had the final responsibility for ensuring compliance with the FFDCA and failed to do so.

Although FDA’s and DOJ’s pursuit of Park Doctrine cases has ebbed and flowed over the years, Park Doctrine prosecutions have been used regularly over the past decade to hold senior managers and corporate officials responsible for their companies’ operations. The Park Doctrine has been used in cases involving major foodborne illness outbreaks and fatalities.  

The recent Executive Order instructs agencies to limit the use of strict liability in regulatory enforcement, emphasizing that criminal penalties should generally require proof of intent. This shift could result in a modified approach to criminal investigations and prosecutions under the FFCDA, FMIA, or PPIA, although much depends on how FDA and the United States Department of Agriculture’s (USDA) Food Safety and Inspection Service (FSIS) analyze particular cases.  For instance, the Park Doctrine is still existing legal precedent that eliminates the need for the government to prove intent, and the Executive Order continues to permit the government to enforce the Park Doctrine where the government determines that “persons . . . know or can be presumed to know what is prohibited or required by the regulation and willingly choose not to comply.”  The FDA, for example, has generally sought to apply the Park Doctrine when it identifies aggravating factors, and the Executive Order does not appear to preclude the same approach moving forward.  It is also important to note that DOJ could pursue charges stemming from major food safety incidents using theories unrelated to the FFDCA (or FMIA or PPIA), such as wire or mail fraud theories or, when government contracts are involved, the False Claims Act.  Moreover, although the Executive Order is an instruction to agencies, it does not convey private rights, does not change the underlying statutory offenses, and appears to preserve DOJ’s discretion to make case-by-case decisions.

Moreover, it remains to be seen how this EO gets applied in the context of corporate criminal liability, in which a business is prosecuted or enters into a plea agreement as a corporate entity.  A number of high-profile criminal cases brought related to foodborne illness outbreaks have involved prosecutions of the corporate entity in addition to (or sometimes instead of) prosecution of individuals, and these prosecutions have resulted in corporate plea agreements involving ten-figure fines.   

Next Steps

We will continue to monitor the Trump Administration’s actions and developing policy agenda. Please contact us if you have any questions.

Authored by Brian Eyink, David Sharfstein, Elizabeth Fawell, Maile Gradison, and Rebecca Popkin.