French environmental law, deferred prosecution agreements (CJIP), and the imperative for compliance programs

What impact will the Environmental CJIP have on French companies' compliance programs?

This article was first published in French in Le Journal du Management juridique et réglementaire d’entreprises.

In 2017, the Sapin II law¹ introduced in the French legal system the possibility to resort to a settlement called the “Convention judiciaire d’intérêt public” (“CJIP”), for companies charged with fraud and/or corruption-related offences. In December 2020² the French legislator extended this settlement option to the environmental offences included within the French Environmental Code³.

Prior to the CJIP, it was already possible for individuals and companies to settle when charged with environmental offences. However, (i) that option was limited to offences for which the offender faced a maximum imprisonment sentence of two years: and (ii) the settlement fine was capped to a third of the potential legal fine. Additionally, while the objectives of the settlement obligations were clear (i.e. stop the wrongdoing, avoid its renewal, repair the damage etc.), the means to achieve these targets remained undefined.
However, by introducing the possibility for companies to settle via a CJIP for environmental offences, the French legislator:

(i) Significantly increased the threshold of the settlement fine which is now proportionate to the gains derived from the company’s wrongdoing and can amount to up to 30% of the company’s
turnover⁴ ;

(ii) Provided more details on how the company should stop the wrongdoing or avoid its resumption i.e. by implementing a compliance program within three years of the settlement;

(iii) Introduced a monitoring system and controls over the implementation of the compliance program by the Ministry of Environment; and

(iv) Introduced the obligation to remedy the environmental damage and compensate the victims for any damages suffered.

As in the case of anti-bribery and corruption, the company’s post-settlement compliance program will have to address all environmental risks faced by the company, and specifically those that allowed the wrongdoing to occur. The company will have to map these environmental risks and mitigate them efficiently via the implementation of targeted policies and procedures, trainings and internal controls.

Given the current pace of French and international environmental law-making, the implementation of an environmental compliance program is all the more important for companies exposed to environmental risks.

The French Environmental Code already includes offences related to the emission of pollutants by motor vehicles. For example, the French legislation imposes criminal penalties on anyone who “makes modifications or has modifications made, that may interfere with the pollution control device of a motor vehicle”⁵. The violation of the equivalent US regulation on “defeat devices”⁶ led to the ‘Dieselgate’ scandal and Plea Agreement between the US Department of Justice and Volkswagen, who committed to update their compliance program to prevent similar future wrongdoings⁷.

Three years after Volkswagen’s Plea Agreement, the French legislators is strengthening the legal arsenal to facilitate the enforcement of environmental legislation. Companies facing environmental risks and environmental regulations will certainly have their compliance programs examined by the French authorities. The level of scrutiny is likely to match that of anti-corruption compliance programs and companies will need to respond.

Read the full publication here.

This article was written by Yasmine Ben Achour, manager in the FRA Paris office.

¹ Enacted on December 9, 2016, the Sapin II law entered into force in June 2017.
² Loi du 24 décembre 2020 « relative au Parquet européen, à la justice environnementale et à la justice pénale spécialisée »
³ Only applicable to “délits”, i.e. criminal offences for which the offender faces a maximum imprisonment sentence of 10 years.
⁴ Based on the previous three years.
⁵ The French Environmental Code refers to Article L318-1 of the French Highway Code sanctioned by Article L318-3 of the same code.
⁶ Auxiliary emission control device that reduces the effectiveness of the emission control system under conditions which may reasonably be expected to be encountered in normal
vehicle operation and use.
⁷ https://www.justice.gov/opa/press-release/file/924436/download

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