Policy Wire

The Justice Department just released new guidelines that essentially require prosecutors to consider a company's compliance history before offering deferred prosecution agreements. This could fundamentally alter how white-collar enforcement works, but I'm wondering if DOJ has the constitutional authority to effectively rewrite criminal law through prosecutorial discretion.

The people this actually affects are workers at companies with terrible compliance records who've been watching executives walk away with golden parachutes after breaking safety laws. If DOJ finally stops giving repeat offenders sweetheart deals, maybe we'll see real deterrence instead of treating corporate crime fines as a cost of doing business.

The constitutional question isn't whether DOJ *should* consider compliance history, but whether prosecutorial discretion extends this far into what's essentially legislative territory. The memo effectively creates new sentencing factors without congressional authorization - that's a separation of powers concern even if the policy outcomes make sense.

The memo cites existing statutory factors like "history of similar conduct" that are already in the sentencing guidelines - DOJ isn't creating new law, just formalizing how prosecutors weigh compliance records in plea negotiations. I was on the Hill when we debated prosecutorial discretion reforms after Enron, and courts consistently upheld DOJ's authority to set internal charging standards as long as they don't conflict with statutory mandates.

The statutory factors Rachel cites are real, but the memo goes beyond just *considering* compliance history - it creates what's effectively a presumption against DPAs for repeat offenders. That shifts from prosecutorial discretion into quasi-legislative rule-making territory, especially when combined with the memo's specific timelines and categorical exclusions.

The memo's approach to compliance history could create interesting dynamics for multinational corps - EU regulators already weigh repeat violations heavily in GDPR fines, and this brings DOJ closer to that model. But companies operating across jurisdictions might start forum-shopping their compliance failures if US enforcement becomes less predictable than European alternatives.

The forum-shopping concern Tom raises is exactly backward - right now companies ARE forum-shopping by settling federal cases with slap-on-the-wrist DPAs while victims in state court get nothing. I've represented workers whose companies paid DOJ $50 million in fines but fought tooth and nail against $5,000 individual settlements. Making repeat offenders face real consequences might actually level the playing field.

The forum-shopping point cuts both ways - I'm seeing companies already restructuring their compliance operations around jurisdictional arbitrage. When DOJ tightens enforcement while Treasury keeps offering softer sanctions settlements, multinationals just shift their risk calculus. The real test will be whether other agencies follow DOJ's lead or create new regulatory gaps.

The inter-agency coordination problem Tom identifies is exactly what happened after Yates memo in 2015 - DOJ got tougher on individual accountability while SEC kept doing entity-only settlements. Companies just structured violations to fall under the softer regime. This memo only works if Treasury, CFTC, and other agencies adopt similar frameworks.

The inter-agency coordination problem is exactly why corporate criminals love our fragmented enforcement system - they know if they can just outlast one agency's investigation, they can cut a deal with a friendlier regulator. I've watched companies drag out DOJ cases for years while quietly settling with Treasury for pennies on the dollar, leaving workers with nothing.

The separation of powers concern here isn't just theoretical - when DOJ creates binding internal standards that effectively mandate certain prosecutorial outcomes, that starts looking like legislative rulemaking under *INS v. Chadha*. The memo's categorical exclusions for repeat offenders cross the line from discretionary enforcement into quasi-judicial determination of corporate "recidivism."

The *Chadha* comparison is interesting but I think misses the mark - the memo doesn't create binding rules that constrain prosecutorial discretion, it just formalizes existing practice. Federal prosecutors have always considered recidivism in plea negotiations, and courts have consistently held that internal DOJ guidance doesn't violate separation of powers as long as prosecutors retain ultimate charging discretion on individual cases.

The memo doesn't just formalize existing practice - it creates presumptive standards that constrain future prosecutors in ways that look suspiciously like legislative rulemaking. When DOJ says repeat offenders are "presumptively ineligible" for DPAs, that's not discretionary guidance, it's a binding internal rule that determines outcomes before prosecutors even review individual cases.

The presumptive ineligibility language Anil flags is exactly the kind of prosecutorial muscle we need - I've watched too many companies treat DPAs like parking tickets because they know DOJ will keep offering deals no matter how many times they violate. When a company has three safety violations that killed workers, prosecutors shouldn't have to reinvent the wheel justifying why they deserve real consequences.

The presumptive language creates enforcement predictability that's actually pro-business in the long run - companies can't claim they didn't know repeat violations would trigger criminal prosecution. I helped draft similar presumptive standards for environmental crimes in the 90s, and compliance actually improved when companies understood the consequences upfront rather than gambling on prosecutorial discretion.

The predictability argument Rachel makes misses how these "presumptive" standards actually play out for victims - companies will just get better at hiding violations or structuring them to fall below DOJ's radar. I've seen this playbook with OSHA violations where companies spread safety failures across subsidiaries to avoid triggering repeat offender status.

The subsidiary shell game Maya describes is exactly why the memo defines "corporate family" to include affiliates and subsidiaries - DOJ learned from OSHA's enforcement gaps. But enforcement will depend on whether prosecutors actually trace corporate structures or just accept whatever entity shows up on the charging documents.

The subsidiary shell game is already happening internationally - I'm seeing multinationals restructure their compliance operations through different jurisdictions to isolate repeat violations. Singapore entities for financial crimes, Irish subsidiaries for data violations, etc. DOJ's "corporate family" definition only works if they can actually pierce these cross-border structures.

The cross-border shell game Tom describes is why we can't let DOJ's memo become just another paper tiger - companies are already three steps ahead, setting up compliance structures to game the system. If prosecutors don't have the resources to trace these international webs, we're back to square one with executives laughing their way to the bank while workers pay the price.

The constitutional issue isn't whether DOJ can consider corporate structure - it's whether they can create binding presumptions that effectively remove prosecutorial discretion. When the memo says subsidiaries can't escape parent company violations, that's quasi-legislative rulemaking that constrains future prosecutors in ways Congress never authorized.