Using the False Claims Act to Combat Environmental Fraud

Environmental FraudOn February 29, 2016, Lockheed Martin Corporation and subsidiaries Lockheed Martin Energy Systems and Lockheed Martin Utility Services agreed to pay the United States $5 million to resolve allegations that they violated the Resource Conservation and Recovery Act (RCRA) and, in misrepresenting their compliance with RCRA to the Department of Energy (DOE), knowingly submitted false claims for payment under their contracts with DOE to operate the Paducah Gaseous Diffusion Plant in Paducah, Kentucky.

“We depend on the private sector to provide services critical to the government’s energy needs and to provide those services by means that are environmentally sound,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “As the settlement announced today demonstrates, the department will vigorously pursue all appropriate remedies to ensure that those who provide these vital services do so honestly and safely and in accordance with the law.”

Allegations of Environmental Fraud

The government’s lawsuit alleged that Lockheed Martin violated RCRA, the statute that establishes how hazardous wastes must be managed, by failing to identify and report hazardous waste produced and stored at the facility, and failing to properly handle and dispose of the waste. The government further alleged that this conduct resulted in false claims for payment under Lockheed Martin’s contracts with the Department of Energy.

Of the $5 million settlement amount, Lockheed Martin will pay $4 million to resolve the government’s False Claims Act allegations and its subsidiaries will each pay $500,000 ($1 million total) in RCRA civil penalties.

“Government contractors are required to follow the same federal laws that apply to everyone else,” said U.S. Attorney John E. Kohn, for the Western District of Kentucky. “These companies do not get a pass on compliance, especially when their responsibilities include managing and disposing of hazardous waste. Today’s settlement should serve as a reminder that my office and the Department of Justice will pursue all credible allegations of false claims and environmental regulatory violations.”

“Managing hazardous waste is important, and this case makes clear EPA’s commitment to upholding laws that protect communities where waste is disposed,” said EPA Regional Administrator Heather McTeer Toney of EPA Region 4, the Southeast region.

Lockheed Martin operated the Paducah Gaseous Diffusion Plant under contracts with the Department of Energy and a government corporation, the U.S. Enrichment Corporation, from 1984 to 1999. During that time, Lockheed Martin was responsible for the facility’s uranium enrichment operations. Enriching uranium increases the proportion of uranium atoms that can be used to produce nuclear fuel for weapons and civilian energy production.

In addition to uranium enrichment, Lockheed Martin was responsible for environmental restoration, waste management, and custodial care at the site, which occupies 3,500 acres in McCracken County, Kentucky. Uranium enrichment operations ceased at the plant in 2013. The government is working with other contractors to remediate contamination at and near the site consistent with the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).

The settlement resolves two lawsuits filed under the qui tam provision of the False Claims Act. The lawsuits were filed by the National Resource Defense Counsel, Inc. and several former employees of Lockheed Martin who worked at the Paducah facility. The United States partially intervened in the lawsuits, which were then consolidated into one action. The whistleblowers will collectively receive $920,000 from the United States’ portion of the settlement.

Environmental Fraud Whistleblowers

The False Claims Act has been applied with growing frequency to the environmental regulation arena. Environmental contracts involve significant amounts of federal funds, but violations of environmental statutes and regulations are often difficult for the government to detect without the help of whistleblowers. Generally, False Claims Act liability can arise when a contractor falsely certifies compliance with required environmental laws and regulations related to a specific project, deliberately overcharges the government for services, gets paid for work that the contractor did not perform, or provides services that do not meet government specifications.

Contact us if you have any questions about using the False Claims Act to combat environmental fraud.

 

 

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