Top Ten Environmental Fraud Recoveries of 2021
This year’s environmental fraud Top Ten list includes enforcement actions against automakers, oil and pipeline companies, metal producers and recyclers, energy companies, and serial offender Monsanto. We didn’t see as many blockbuster settlements in 2021 as we did in 2020, despite the Biden administration signaling its focus on environmental fraud as an enforcement priority. Nonetheless, the 2021 enforcement actions address significant environmental harms, including oil spills, pesticide exposure, and water and air pollution.
Let’s take a look at the Top Ten Environmental Fraud Recoveries of 2021:
- Toyota – This marks the third year in a row that an automaker tops the environmental fraud recoveries list. In 2019 it was Fiat Chrysler, in 2020 it was Daimler, and in 2021 Toyota took the crown for its $180 million settlement of Clean Air Act violations. Toyota admitted it did not submit required reports regarding defects and recalls relating to emissions control systems in a timely manner. It also admitted that it didn’t even implement systems to determine whether the reports were required, despite the objections of Toyota employees.
- U.S. Magnesium – The magnesium metal producer takes the number 2 spot this year for settling alleged violations of the Resource Conservation and Recovery Act. U.S. Magnesium agreed to make modifications to a Utah facility to the tune of $37 million. These modifications included the creation of a massive barrier wall around the facility to prevent hazardous materials from leaking into the Great Salt Lake and building a wastewater filtration plant. The company also agreed to pay a $250,000 civil penalty.
- Summit and Meadowlark pipeline companies – The Summit Midstream, Meadowlark Midstream, and Summit Operating Services pipeline companies take the bronze for settling charges relating to a five-month leak of hydraulic fracturing waste in North Dakota. Summit paid $35 million in the settlement and admitted it did not have a reliable leak detection system, and that it misled federal and state authorities about the spill through its reports.
- Monsanto – Monsanto makes our top ten list once again this year, this time for pleading guilty to charges that it put workers at risk of exposure to glufosinate ammonium-based pesticide by allowing them to enter Hawaiian cornfields within six days of when the pesticide was applied. The government alleged these actions violated a deferred prosecution agreement regarding the company’s illegal use of another banned pesticide. Monsanto paid $12 million to resolve the charges and agreed to undertake certain environmental compliance programs.
- ExxonMobil – The oil company comes in at #5 for agreeing to resolve claims that it violated the Clean Air Act and a 2005 Consent Decree relating to its facility in Joliet, Illinois. ExxonMobil committed to paying $1.5 million in penalties and by making physical and operational changes to its Joliet petroleum refinery for a total of $10 million.
- West Shore and Buckeye pipeline companies – These pipeline companies make the list for settling federal claims arising out of their 2010 pipeline breach that leaked 1,800 barrels of oil into a protected wetland near Lockport, Illinois. According to the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration, there were 586 reported oil spills in 2010, which spilled over 100,000 barrels of oil and cost more than $1.6 billion. West Shore and Buckeye agreed to pay $8.4 million in penalties and damages for its 2010 pipeline breach.
- American Zinc Recycling – American Zinc Recycling makes the list for committing to shell out $7.6 million to resolve claims that it violated the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, the Emergency Preparedness and Community Right-to-Know Act, and also its operating permit and a 1995 Consent Decree because of lead dust exposure allegedly caused by its facility in Palmerton. The company agreed to pay $3.3 million in penalties and make $4.3 million worth of physical and operational changes to its Palmerton recycling facility.
- Devon Energy – Next is Devon Energy, which resolved False Claims Act claims for $6.15 million in 2021. The FCA case alleged the energy company underpaid federal natural gas lease royalties in Wyoming and New Mexico. DOJ Acting Assistant AG Brian M. Boyton explained the significance of underpayments like these, stating “The United States allows companies to remove gas from federal lands, which belong to all of us, in exchange for the payment of appropriate royalties. This settlement demonstrates that the government will hold accountable those who take improper advantage of public resources.”
- Schnitzer Steel – Schnitzer Steel takes the penultimate spot for settling alleged environmental law violations at its metal shredding and recycling facility in Oakland, California for $4.1 million. The state of California alleged the facility released toxic air contaminants and hazardous particulates into the local West Oakland community and other areas nearby.
- Yarlagadda and Alpha Bioenergy LLC – Rounding out the top ten is Chandra Yarlagadda for alleged tax fraud relating to his biodiesel supply company, Alpha Bioenergy LLC. The scheme involved Renewable Identification Numbers (RINs), which are credits used in the EPA’s Renewable Fuel Standard program. Renewable fuel tax scams have made our top ten list in four of the last five years: 2016, 2018, 2019, and 2020. Yarlagadda allegedly overstated Alpha Bioenergy’s RIN expenses by over $14 million in his personal tax return. Yarlagadda pled guilty to income tax evasion and was ordered to pay $3.3 million in restitution.
Annual Whistleblower Insider Top Ten Lists
Every January, Whistleblower Insider looks back at the significant government enforcement actions of the past year. Our Top Ten lists highlight the biggest recoveries and significant enforcement efforts by different government actors in cases of interest to whistleblowers.
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