The New Whistleblower's Handbook

by Stephen Kohn

  A challenge to the Coast Guard’s authorities under APPS was rejected by the Court of Appeals for the D.C. Circuit in Watervale Marine Co. v. U.S. Dept. of Homeland Security, where the Court upheld the legality of holding a ship indefinitely while civil or criminal proceedings were commenced or, alternatively, requiring the shipowners to pay for housing and meals and continue to pay the crew’s wages as a condition to release the ship from port. These conditions were “reasonable” in order to ensure that the civil or criminal proceedings could be successfully completed, even if the ship was foreign owned and staffed.

  Courts also carefully scrutinize the conduct of counsel for the seamen. The seamen are often indigent foreign nationals who do not speak fluent English and are unfamiliar with the U.S. legal system. Under maritime law, seamen are given “special status” and are considered a “ward of the Admiralty,” and contracts they enter (including a fee agreement) are subject to “rigid scrutiny.” Attorneys representing the seamen are sometimes paid for by the shipowners or are court-appointed criminal attorneys unfamiliar with whistleblower law or more concerned with defending potential criminal charges. Some contingency fee agreements have been struck down as “excessive.” Lawyers who undertake representation of seamen must be able to document their work and the reasonableness of their fees.

  Enforcement of APPS is having impact. The Carnival Corporation was prosecuted under APPS for illegal discharges from one of its cruise ships and paid an $18 million fine. Thereafter, Carnival made a public presentation to the American Association of Port Authorities, noting that other cruise lines were also prosecuted under APPS for illegal discharges, including Royal Caribbean ($27 million in fines based on two violations), Holland America ($2 million in fines), and Princess and the Norwegian Cruise Lines ($1 million fine). Based on these prosecutions, Carnival’s recommendation for the cruise line industry was very clear:

  What gets reported? Everything—when in doubt report even the slightest pollution.

  Don’t shoot the messenger.

  PRACTICE TIPS

  • The Act to Prevent Pollution from Ships whistleblower reward provision is codified at 33 U.S.C. § 1908(a).

  • A detailed listing of APPS cases for which rewards were paid is posted at www.kkc.com/resources/APPS.

  • The Marine Defenders handbook designed to help seamen involved in government investigations is available at www.marinedefenders.com/commercial/rewards.php.

  • A major case explaining the reward provision is U.S. v. Efploia Shipping Co. S.A., Case 1:11-cr-00652-MJG, Bench Decision Re: Whistleblower Award (ECF Doc. 80) (D. Maryland) (April 25, 2016).

  RULE 12Get a Reward! End Wildlife Trafficking

  Thirty-five years ago, with no fanfare or publicity, the U.S. Congress enacted whistleblower reward laws in the form of amendments to two of the most important wildlife protection laws in the United States: the Lacey Act and the Endangered Species Act. The problem the laws targeted was of exceptional public importance: Prevent the extinction of iconic and endangered species and protect their habitat (worldwide). The strategy to be used was simple: Incentivize informants to report violations of the laws protecting endangered species and prohibiting illegal wildlife trafficking by paying monetary rewards to whistleblowers.

  Wildlife whistleblower reward laws remained dormant for more than thirty-five years. Between 1981 and 2016 there is nothing in the public record to indicate that a whistleblower ever applied for a reward. The laws were unknown to wildlife protection non-government organizations (NGOs), and none of the responsible federal agencies posted notice of these laws on any public websites. Although money was required to be set aside to pay whistle-blowers, three of the four agencies empowered to pay rewards have never paid one penny to a whistleblower. It is not an exaggeration to state that the laws had been forgotten. But they remain on the books, and the agencies entrusted to reward whistleblowers have a legal duty to pay rewards.

  “Powerful tools are needed to combat and control the massive illegal trade in wildlife which threatens the survival of numerous species, threatens the welfare of our agricultural and pet industries, and imposes untold costs upon the American taxpayers.”

  The House Report No. 97-276

  Illegal trafficking in plants, fish, and animals did not disappear after 1981. Extinctions continue, and the illegal trade has grown exponentially. A 2014 report issued by the international police organization INTERPOL and the United Nations Environment Program estimated that total losses worldwide due to illegal trafficking in plants, fish, and animals and illegal logging ranges from $48 to $153 billion annually. The growing threat of extinctions caused President Barack Obama, on July 5, 2013, to issue Executive Order 13648, calling for systemic federal action to prevent extinctions:

  The poaching of protected species and the illegal trade in wildlife and their derivative parts and products (together known as “wildlife trafficking”) represent an international crisis that continues to escalate. . . . The survival of protected wildlife species such as elephants, rhinos, great apes, tigers, sharks, tuna, and turtles has beneficial economic, social, and environmental impacts that are important to all nations.

  Illegal wildlife trafficking also promotes organized crime and undermines the rule of law in numerous countries. On April 22, 2015, John Cruden, the Assistant Attorney General responsible for the Environment and Natural Resources Division of the DOJ, described the problem in testimony before Congress: “Wildlife trafficking . . . has become one of the most profitable types of transnational organized crime. Illegal trade at this scale has devastating impacts: It threatens security, hinders sustainable economic development, and undermines the rule of law. The illicit trade in wildlife is decimating many species worldwide.”

  WHISTLEBLOWER REWARDS UNDER THE LACEY AND ENDANGERED SPECIES ACTS

  The principal law enforcement mechanism for stopping wildlife trafficking is the Lacey Act. Originally passed in 1900, it has been amended over time to become the premier antitrafficking law. Under the Act, it is “unlawful for any person to import, export, transport, sell, receive, acquire, or purchase in interstate or foreign commerce” any fish, wildlife, or plant “taken, possessed, transported, or sold in violation of any law or regulation of any State or in violation of any foreign law.” The Lacey Act’s scope includes trafficking in violation of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), the international convention designed to protect endangered species and forests.

  In 1981 Congress amended the Lacey Act to include whistleblower rewards. Its intent was clear—increase the ability of the U.S. government to detect and prosecute wildlife crimes: “Powerful tools are needed to combat and control the massive illegal trade in wildlife which threatens the survival of numerous species, threatens the welfare of our agriculture and pet industries, and imposes untold costs upon the American taxpayers.”

  Whistleblowers were one of the “powerful tools” Congress envisioned enlisting in the war against traffickers. The powerful tool would be effectuated by paying rewards to informants whose testimony resulted in successful prosecutions: “[The whistleblower reward provision] directs the Secretary to pay rewards to persons who furnish information leading to an arrest, conviction, assessment or forfeiture from sums received as penalties, fines or forfeitures.”

  Under the Act, the “Secretary” is defined as the Secretaries of Commerce, Interior, and Treasury. They are given joint authority to pay rewards. The Department of Agriculture is also given authority to pay awards under the “plants” provision of the Act, which includes illegal logging. These agencies have broad discretion to reward whistleblowers and, unlike most other whistleblower reward laws, there is no cap on the amount of award or percentage of collected proceeds that may be given to a whistleblower. By contrast, under the whistleblower provisions of the Commodity Exchange Act, False Claims Act, Foreign Corrupt Practices Act, Internal Revenue Act, and Securities Exchange Act, rewards are capped at a maximum o
f 30 percent of collected proceeds. The Act to Prevent Pollution from Ships caps rewards at 50 percent. By declining to cap whistleblower awards in the 1981 Lacey Act amendments, Congress provided agencies with tremendous power to aggressively use the reward law and to ensure that in cases where a monetary sanction may be small, the whistle-blower reward can still be significant.

  The 1981 Lacey Act amendments also contained a “miscellaneous” section that included an identical reward provision for whistleblowers who report violations of the Endangered Species Act. Over the next few years, Congress included whistleblower reward provisions identical to the Lacey Act in four other wildlife protection laws: the Rhinoceros and Tiger Conservation Act, the Antarctic Conservation Act, the Fish and Wildlife Improvement Act, and the Wild Bird Conservation Act.

  On December 31, 1982, Congress went even further in strengthening the authority of the government to pay awards for whistleblowers who report wild-life crimes. A little-noticed appropriations act for conservation programs on military reservations contained a provision “for other purposes,” amending the Fish and Wildlife Improvement Act. One of these “other purposes” was the grant of sweeping authority to the Departments of Interior and Commerce to pay whistleblower rewards from “appropriations.” Unlike other whistleblower reward laws, payments would not have to be based on the amount of funds recovered in a specific enforcement action. Instead, these Departments can use appropriated funds to compensate whistleblowers who report violations. Rewards can be paid even if no “collected proceeds” are ever obtained. The goal of the Fish and Wildlife Improvement Act’s whistleblower provision was to incentivize the reporting of violations, regardless of whether or not the United States could ever successful prosecute the case.

  The 1982 amendment also broadened the scope of laws for which rewards could be paid. Under the amended Fish and Wildlife Improvement Act, all wildlife laws administered by the Fish and Wildlife Service or the National Marine Fisheries Service (the Department of Commerce’s National Oceanic and Atmospheric Administration [NOAA] division) were covered. The law explicitly ensures that rewards can be paid to whistleblowers who report violations of “any laws administered by the United States Fish and Wildlife Service or the National Marine Fisheries Service relating to fish, wildlife, or plants.” The amendment now covers more than forty major wildlife laws, effectively closing any loopholes in coverage.

  During the House floor debate on the amendment, Congress understood the importance of paying rewards in order to detect crimes. Then-congressman John Breaux (D-LA) explained that “undercover activities,” which implicitly included almost all whistleblower cases, were always “difficult and dangerous but highly successful.” Additionally, the amendment was designed to draw out insiders who could help “apprehend large-scale commercial violators of wild-life laws.”

  For thirty-five years the federal agencies entrusted to protect endangered species and stop illegal wildlife trafficking never implemented these most powerful laws. There are no published rules, no application procedures, and no publicly available guidelines on how to use the laws. Unlike with the SEC or the IRS, there is no “whistleblower office” or web portal where informants can safely provide information about violations of law and register for a potential reward should their information result in a successful prosecution.

  The public’s renewed attention to these forgotten endangered species and wildlife trafficking laws was sparked by “Monetary Rewards for Wildlife Whistleblowers: A Game-Changer in Wildlife Trafficking Detection and Deterrence,” published in the January 2016 edition of the Environmental Law Reporter. In September 2016 the U.S. Agency for International Development, in partnership with the Smithsonian Institution, the National Geographic Society, and TRAFFIC (the wildlife trade monitoring network), awarded the nonprofit National Whistleblower Center a “Grand Prize” for an international program to educate whistleblowers and antitrafficking organizations worldwide about the wildlife whistleblower laws. That program is being administered at www.whistleblowers.org/wildlife.

  Although the laws have not been fully implemented, whistleblowers who provide information to the federal government should protect their right to a reward. First, they must carefully document the information they provide to U.S. (or other) law enforcement officials that is used to trigger an investigation or contribute to a successful prosecution. Second, whistleblowers must monitor any civil or criminal prosecution that is triggered by their information, or for which their information is used. Finally, whistleblowers must be prepared to file a formal application, similar to the reward applications filed under other laws, to justify a maximum reward. Until rules are published, these applications should be directed to the four cabinet officials with responsibility to pay rewards: Treasury, Commerce, Interior, and, in the case of illegal logging or importation of protected plants, Agriculture.

  Typically, when a judgment or plea agreement is entered in a Lacey Act or Endangered Species Act prosecution, monies obtained in fines and penalties will be carefully explained in the judgment. These monies are often allocated to a special fund administered by the Fish and Wildlife Service known as the Lacey Act Reward Fund. Monies obtained from various wildlife prosecutions are required to be deposited into this account and should be used to reward whistleblowers. If possible, whistleblowers should follow any prosecutions triggered by their disclosures and be aware whenever a court is planning to enter a plea agreement or make restitution payments in order to request a reward. Also if money has been deposited into the Lacey Act Reward Fund, the whistleblower should request a reward.

  In addition to permitting traditional whistleblowers to qualify for a monetary reward, the Lacey Act specifically permits any “person” defined under the Act to obtain a reward. “Person” under the Lacey Act “includes any individual, partnership, association, corporation, [or] trust. . . .” Because corporations are persons under the Act, non-government and nonprofit wildlife advocacy groups (often referred to as NGOs), which often play a critical role in obtaining information from local sources concerning illegal hunting, fishing, or lumbering, can also file a reward application under the law. The ability of NGOs to work with local whistleblowers (who may reside in very dangerous areas) and qualify for a reward has the potential to expand the use and effectiveness of these laws.

  When fully implemented, the wildlife whistleblower laws will have significant worldwide impact.

  PRACTICE TIPS

  • The three main wildlife whistleblower reward laws are: Lacey Act, 16 U.S.C. § 3375(d); Endangered Species Act, 16 U.S.C. §1540(d); and Fish and Wildlife Improvement Act, 16 U.S.C. §7421(c)(3).

  • The Congressional history behind the original 1981 amendments to the Lacey Act and the 1982 Fish and Wildlife Improvement Act are located in House Report No. 97-276 (Oct. 19, 1981) (Lacey); 128 CONG. REC. H10207 and H31972 (Dec. 17, 1982) (Improvement).

  • The wildlife whistleblower laws and program are fully explained in Kohn, Monetary Rewards for Wildlife Whistleblowers: A Game-Changer in Wildlife Trafficking Detection and Deterrence, 46 Environmental Law Reporter 10054 (January 2016), available at www.whistleblowers.org/wildlife.

  RULE 13If Working for the Government, Use the First Amendment

  For government workers the major breakthrough in whistleblower protection occurred in 1968, when the Supreme Court decided whether the First Amendment guarantee of “freedom of speech” applied to public employees who blew the whistle on “matters of public concern.”

  The case started after Marvin Pickering, a high school teacher from Will County, Illinois, wrote a letter to the local newspaper. He strongly criticized his school system for practicing “totalitarianism” and accused the school’s administration of taking the “taxpayers” to the “cleaners” by mismanaging the high school. Pickering alleged that the school board was misleading voters in a hotly contested bond issue referendum and identified serious shortcomings at the school, including classrooms that lacked doors, the failure to have running
water in the first aid treatment room, and overcharging children in the cafeteria.

  The board’s reaction was typical. Pickering was accused of making “false statements,” impugning the “motives, honesty, integrity, truthfulness, responsibility and competence” of the board and of damaging the “professional reputations” of the school’s administrators. His letter was labeled as “disruptive of faculty discipline.” The board fired Pickering with the claim that the “publication of [his] letter was detrimental to the best interests of the school,” and because it would foment “controversy, conflict and dissension” within the school system.

  In Pickering v. Board of Education the Supreme Court decided the case. Writing for the Court, Justice Thurgood Marshall held that the First Amendment prohibited government officials from using the power of the paycheck to cover up their own wrongdoing. Government workers who blew the whistle on matters of “public concern” were therefore protected from discrimination and wrongful discharge under the First Amendment’s guarantee of freedom of speech.

  The Pickering decision spelled out precisely why whistleblowers needed legal protections. Millions of government workers—from schoolteachers to police—could not afford to be fired from their jobs or lose their pensions simply for engaging in constitutionally protected speech. Without protecting the job, the underlying right to blow the whistle would be meaningless. Justice Marshall recognized that the “threat of dismissal” from a job constitutes a “potent means of inhibiting speech.”