U.S. Fish and Wildlife Service Releases Rules Governing Whistleblower Rewards in the $150 Billion Illegal Fishing, Logging, and Wildlife Trafficking Industries
In response to a Freedom of Information Act request filed by the online newspaper Whistleblower Network News, the U.S. Fish and Wildlife Service (“FWS”) publicly released, for the first time, its procedures governing the payment of whistleblower rewards. These procedures have widespread application to illegal fishing, logging and wildlife trafficking prohibited under the Lacey and Endangered Species Acts.
Under the FWS rules, whistleblowers can report crimes and obtain rewards when their original information results in successful prosecutions in the multi-billion dollar wildlife trafficking industry. The laws covered under the FWS rules have broad application. For example, illegal, unreported, and unregulated (IUU) fishing is one of the greatest threats to the oceans and the continued health of numerous fish and marine species. Interpol estimates that illegal fishing constitutes an $11 billion to $30 billion USD per year industry. It is estimated that as much as 32% of wild-caught U.S. seafood imports are illegal. Illegal trafficking in fish is big business.
Likewise, illegal logging is a multi-billion dollar business. The scale of the illegal lumber trade and forest crime is immense, estimated by Interpol at between $30 to $100 billion annually. A Chatham House study cites that “if illegal logging were eliminated, the value of U.S. timber-sector products would increase by around $500-700 million annually.”
Trafficking in animals and their body parts is also big business. A 2020 UN Office on Drugs and Crime report calculated that annual illegal trade in ivory was $400 million per/year, and the trade in Rhino horn was estimated at $230 million per/year. Collectively, trafficking in animals and animal parts is estimated to be a $20 billion business.
The major whistleblower law covering illegal fishing, logging and wildlife trafficking was passed in 1981` as an amendment to the Lacey Act [16 U.S.C. 3375(d)]. The reward law permits the Secretary of Interior/Fish and Wildlife Service to pay rewards, with no upper limit, to qualified whistleblowers. Other wildlife trafficking laws were also amended to authorize payment to whistleblowers. In addition to the Lacey Act, the FWS regulations released under FOIA cover payments under the Endangered Species Act (16 U.S.C. 1540(d), the Fish and Wildlife Revenue Enhancement Act (16 U.S.C. 742/(k), and the Rhinoceros and Tiger Conservation Act (16 U.S.C. 5305a(f).
The FWS reward laws were enacted five years prior to the 1986 amendments to the False Claims Act and twenty-one years before the Dodd-Frank Act. Consequently, they do not contain many of the most important features in those laws. However, the FWS is authorized to pay rewards to whistleblowers. It is incumbent that all persons involved in combating wildlife trafficking, including NGOs and national and international law enforcement agencies, understand how the current whistleblower law works. They also need to know how rewards can be used to incentivize and protect whistleblowers who often risk their jobs and safety to protect the public interest.
The FWS Whistleblower Rules
According to their implementing rules, the FWS recognizes the importance of rewarding whistleblowers.The rules state that “rewards are an invaluable tool for law enforcement.” The regulations authorize the FWS Office of Law Enforcement (OLE) to pay rewards for its law enforcement operations. This can be done “at the end of an investigation to compensate an individual or entity for their service and assistance with an investigation.” OLE can also directly “offer” rewards for “information” that can result in a successful prosecution.
Dispositions that Qualify for Rewards
According to the FWS rules, rewards can be paid to individuals or “entities” whenever these persons provide information that results in any of the following:
A criminal conviction;
A payment of forfeiture of collateral,
Abandonment or forfeiture of property,
A court-negotiated settlement,
A civil penalty assessment,
An out-of-court settlement; or
Furnished information that contributed significantly to furthering the investigative portion of a case.
The Lacey and Endangered Species Act whistleblower laws provide an explicit carve-out regarding the application of the Victims Assistance laws.Under the Victim Assistance Act, all monies obtained from criminal prosecutions under these trafficking laws are placed into a separate fund to pay whistleblowers and/or for conservation purposes.Unlike other criminal penalties, fines obtained under the Lacey and Endangered Species Acts are not deposited into the general Victims Assistance Fund.Thus, rewards are paid for sanctions obtained as a result of a criminal, civil or administrative proceeding.
Paying for Information
Pursuant to the FWS rules, rewards can be paid for information alone, even before a successful prosecution. This is unlike other whistleblower reward laws that only pay rewards after a case is successfully resolved. The FWS whistleblower regulation describes these reward payments as follows: “If information furthers an investigation but has not yet led to an outcome,” the FWS can still pay a reward in order to obtain the initial information that can trigger or aid an ongoing investigation.
Paying an Award
Under the FWS rules, rewards are paid “at the end of an investigation.” The primary criteria for qualifying for a reward is for the “information” provided to lead to a successful criminal, civil, or administration prosecution or settlement. Rewards can also be paid whenever that information contributed significantly to an investigation.” Persons to whom the FWS paid a reward prior to a successful prosecution can also apply for an additional reward once a case is successfully prosecuted. The FWS treats the payment of rewards as a strictly discretionary function of the FWS. However, both the Lacey and Endangered Species Acts state that rewards “shall be paid” and direct that all sanctions obtained in wildlife trafficking cases be deposited into a special reward and conservation account.
Eligibility for Rewards
The Lacey and Endangered Species Acts do not include any broad exclusion barring various persons for obtaining a reward. The statutes state that any “person” can obtain a reward, and “person” is broadly defined under the wildlife laws to include natural persons and corporations. The only statutory exclusion covers government employees. However, the FWS has created additional exclusions that go beyond the narrow statutory disqualification. Other than the exclusion covering government employees, the other two exclusions identified in the regulations may be impermissible, depending on their application.
The regulations exclude the following persons from qualifying for an award:
“An official of a local, state, Federal, or foreign government who was acting in his/her official capacity;”
“A non-government organization (NGO), an individual member of an NGO, or any other individual or entity that acts or attempts to act in a law enforcement capacity when not authorized to do so by the Service;” or
“Any person or entity whose receipt of a reward would create a conflict of interest or appearance of impropriety.”
How the FWS Determines the Amount of an Award
Unlike other reward laws, Congress did not create any rules regarding how the FWS should pay rewards. The Lacey and Endangered Species Acts do not set a mandatory minimum or maximum percentage for the payment of rewards. In contrast, the False Claims Act requires that a qualified whistleblower obtain no less than 15% and no greater than 30% of the sanctions obtained by the government. Under the trafficking laws, the FWS can grant rewards in the range of a de minimus amount (such as 1%) up to 100% of the collected proceeds. Furthermore, the statute does not provide any guidance to the FWS regarding the criteria it should apply when determining a reward amount. The Lacey Act describes the obligation to pay rewards as follows:
[The FWS] shall pay, from sums received as penalties, fines, or forfeitures of property for any violation of [the Lacey Act] or any regulation issued hereunder a reward to any person who furnishes information which leads to an arrest, a criminal conviction, civil penalty assessment, or forfeiture of property for any violation of this chapter or any regulation issued hereunder.
The FWS regulations fill in the gap left by this very general mandate and set forth the criteria the FWS Office of Law Enforcement must apply when determining the amount of a reward. These criteria should instruct potential whistleblowers and their counsel regarding the types of behaviors and contributions whistleblowers can make to maximize a reward payment.
When requesting an award, a whistleblower should address these criteria, as the FWS agents that will file the internal requests for a reward payment are required to address the following issues:
First, there should be a summary of the investigation that includes a “description of the individual's contributions,” along with an identification of the number of subjects involved in the case.
Second, there needs to be a “summary of the criminal or civil charges filed, the settlement, the abandonment or forfeiture of the property, or payment of the forfeiture of the collateral” that resulted from the whistleblower’s contributions.
Third, the FWS case agent must discuss the “results of all legal proceedings,” including “legal proceedings” that are “not completed prior to the request.” If the FWS case agent recommends that a reward be paid prior to the conclusion of the case, that request must be justified, and a “statement confirming that the prosecuting attorney concurs” with the advance payment must be submitted. These criteria are very different from those applicable under laws such as the False Claims Act, as they permit rewards to be paid during an investigation, prior to any guilty pleas. In the context of policing wildlife trafficking, where many of the violations may be initiated outside the United States, applying for advance rewards may be critical to the success of a case.
Fourth, the FWS must evaluate a number of factors that focus specifically on the whistleblower’s contribution. These are:
“The probability the investigation would have been successfully concluded/prosecuted without the information/testimony;”
“The relationship, if any, between the success of prosecution and the information provided;”
“The safety risk, if any, to the individual.”;
Finally, the FWS looks toward the overall impact the whistleblower’s disclosures had on protecting the natural resources designed to be protected under law. The FWS must evaluate “the impact of the illicit activities to the resource.”
The FWS rules do not contain any provision concerning a whistleblower’s right to file a confidential or anonymous complaint. Whistleblowers can informally request confidentiality or request that the Justice Department (usually through the FBI) or the FWS grant the whistleblower official “confidential informant” status. But both the statute and regulations are silent as to these rights.
However, the FWS rules clearly envision that many whistleblowers will remain confidential. In response to Freedom of Information Act requests filed both by the National Whistleblower Center and Whistleblower Network News, the FWS protected the identity of all the whistleblowers who obtained rewards. It also deleted identifying information from their FOIA responses. Additionally, the FWS regulations have a special provision for paying whistleblowers awards that will protect confidentiality. These provisions are triggered when the whistleblower “wants to remain anonymous” and “receiving a Government-issued check may reveal his/her cooperation with the Government.”
In such circumstances, the FWS may issue a “covert check” from the Office of Law Enforcement’s “Special Funds Account.” The check is cashed by the FWS investigator and the whistleblower reward is “paid to the individual in cash.” The FWS has special procedures for accounting related to such payments.
Comparing the FWS Whistleblower Rules to Other Reward Laws
The Lacey Act and the FWS whistleblower rules do not include a number of provisions contained in other whistleblower laws. Some of these problems could be addressed by amending the current regulations. Others can only be resolved by a statutory correction. Given that the Lacey and Endangered Species Acts were passed years before the False Claims or Dodd-Frank Acts were passed, Congress did not have the benefit of modelling the wildlife and natural resources trafficking laws in light of the success of these other reward programs. Among the problems are:
No judicial review if a reward is denied or if FWS fails to follow its own criteria in setting a reward amount;
No guaranteed minimum reward that is necessary to ensure that whistleblowers obtain a minimum reward, and that those taking the risk of reporting crimes understand that if their evidence results in a reward, they will get some compensation. This defect in the statute can be corrected by a rules revision by the FWS
No statutory confidentiality provisions;
No provision to accept anonymous claims;
No “related action” provision entitling whistleblowers to rewards when their information results in trafficking related sanctions outside the narrow confines of the Endangered Species or Lacy Acts. This would include related penalties for obstruction of justice, customs violations, or money laundering, and other crimes that often are committed in conjunction with trafficking or natural resources crimes. The related action provisions also prevent the government from classifying sanctions under laws that have no provision to reward a whistleblower.
No protections against job related retaliation;
No central whistleblower office. The lack of a whistleblower office, which has proven to be instrumental in the successful operation of reward laws under the Dodd-Frank Act, could be corrected by amendments to the FWS whistleblower rules or other internal operating changes within the FWS.
Because of the weaknesses in the Lacey and Endangered Species Act reward laws, leading Members of the House of Representatives introduced bipartisan legislation in the 116th Congress to modernize these laws. Whistleblowers also can augment the protections under the FWS administered laws by carefully considering whether other reward laws may apply to the case. For example, suppose bribes are being paid to facilitate trafficking. In that case, the whistleblower provisions of the Foreign Corrupt Practices Act may be applicable. Similarly, if traffickers are violating U.S. customs laws. A whistleblower may be able to state a claim under the False Claims Act. Also, the Dodd-Frank Act, Commodity Exchange Act and IRS whistleblower laws may be applicable in cases where money laundering is being used by traffickers to move their profits through the international banking system.
The public release of the FWS rules governing their wildlife trafficking whistleblower reward program is a step forward for the protection of fish, forests, and animals. The FWS has previously classified these rules as “law enforcement sensitive” and blocked public access to these procedures. Whistleblowers, anti-trafficking and wildlife protection NGOs, and investigators in other national and international law enforcement agencies that work with whistleblowers need to be aware of these regulations. They need to ensure that all qualified whistleblowers know how to apply for a reward and the criteria that will be applied when they do. The online newspaper Whistleblower Network News did the public a service in obtaining these rules under the Freedom of Information Act. But an FOIA request should not have been needed. It is incumbent upon the FWS to widely publicize its reward program and exploit this law enforcement tool. That was Congress’ intent when they passed the reward law back in 1981.
Every NGO dedicated to protecting forests, fish, and animals should post these FWS rules on their office bulletin boards and websites. They should publicize the rules’ existence on social media and as a part of their trainings. There is no excuse for any individual with the courage and integrity to report illegal trafficking to not be made aware of their rights, and how they can qualify for a reward. Silence is not an option.
House Report 97-276 explained precisely why Congress amended the Lacey Act to enhance enforcement tools, including the requirement that whistleblowers be paid:
“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 public release of the FWS rules is a step in the right direction. But the Congressional and regulatory changes necessary to properly incentivize wildlife protection whistleblowers are well documented. The amendments necessary to correct the deficiencies in the current law and ensure that whistleblower disclosures can be fully exploited to help detect wildlife crimes and provide the evidence necessary for the successful prosecution of these crimes were introduced in 115th and 116th Congress. These reform bills have had strong bipartisan support and should be a high priority in Congress. Extinctions are forever. The framework necessary to protect and incentivize whistleblowers are now well understood given the tremendous success of the False Claims and Dodd-Frank Acts. Given ongoing deforestation, the need to enforce the new IUU fishing laws, and the slaughter of numerous species (including elephants and rhinoceros), there is no time to lose.
Between 1981-2017 the FWS did not publicize its reward program. The wildlife protection communities were not aware of the Lacey and Endangered Species Act reward laws. This public ignorance started to change when the Environmental Law Institute published the first article explaining how wildlife whistleblower laws should work.
Thereafter, the U.S. Agency for International Development awarded the National Whistleblower Center a “Grand Prize” in its Crime Tech Challenge program. This permitted the NWC to commence an informational program concerning wildlife whistleblower rewards. Thereafter, the Government Accounting Office reviewed the FWS whistleblower program and found numerous deficiencies. The FWS justified its failure to make potential informants aware of the reward laws, in part, due to their fear that they would be bombarded with informants. As part of this process, the NWC filed an FOIA lawsuit in U.S. District Court. This lawsuit forced the FWS to release its internal investigator reports on cases where rewards had been paid. Although the number of cases was small (as was the size of the rewards). The internal law enforcement documents produced by the FWS confirmed the invaluable role whistleblowers play in the enforcement of laws designed to stop illegal fishing, deforestation, and wildlife trafficking. Below are verbatim quotations from FWS law enforcement officials describing the contributions of whistleblowers. The FOIA Documents are available online, on the wildlife trafficking informational webpage, under section “Additional Materials.”
Whistleblowers Necessary to Detect Wildlife Crimes
“The case would not have been possible had [redacted] not first made law enforcement aware of the crime and second, worked with law enforcement.”
— FWS Case "Sheldrake Game Ranch Leopards," p. 0542
“Without [the whistleblower’s] candor in coming forward with this information, his willingness to aid Service agents by contacting former employees, and to provide testimony in federal court, this case would have never reached fruition.”— FWS Case "Lochridge Ranch," p. 0104
Whistleblowers “account for a large part of the success of an effective wildlife law enforcement program and we should take the opportunities we can as an agency to reward these people.”
— FWS Case "Prairie Harvest [Redacted]," p. 0050
The whistleblower “willingly met with investigators and provided them information critical to the investigation… If [redacted] had not come forward, the investigation would not have resulted in the successful prosecution of the three defendants because critical evidence had been destroyed or covered up.”
— FWS Prosecution [Redacted], p. 0131
The whistleblower’s “assistance was of such significance that it is highly unlikely this case would have been successful without [it].”
— FWS Prosecution [Redacted], p. 0423
“The area where [the crime occurred] was very remote and contained more than one thousand (1000) acres of land... Using the specific information [the whistleblower] provided, [agents] were able to investigate and recover one (1) wolf carcass which had recently been killed.”
— FWS Case "Horse Bait Wolf," p.0413
Whistleblowers Saved Government Time and Money and Delivered Big Cases
“The evidence, information, and personal contact with [the defendant] provided by [the whistleblower] in only seven months – might well have taken the service years, if ever, to obtain at the same level of quality.”— FWS Case "Iowa Army Ammo Plant, "p. 0021
“[W]ithout the assistance of [the whistleblower], it could have easily taken an additional two years to infiltrate the illegal industry, if we were able to do it at all. A conservative estimate of the cost that would have been incurred without the assistance of [the whistleblower] would be in excess of $90,000.” — FWS Case "Operation Board," p. 0345
The whistleblower “provided crucial information resulting in saving the U.S. Fish and Wildlife Service thousands of dollars and investigator hours.” — FWS Case "Asian Elephant Tusk and QT Aquarium," p. 0630
“Without [the whistleblower’s] assistance, the Service would have... requir[ed] additional agents, investigative hours and equipment at significant cost.” — FWS Case "Iowa Army Ammo Plant," p. 0021
Monetary Rewards Necessary to Incentivize Whistleblowers
“In order to complete the mission and purpose of the USFWS, Office of Law Enforcement, it is extremely important and critical to provide a monetary award to the individuals who come forward and provide information to investigators.”
— FWS Prosecution [Redacted], p. 0132
“Rewards expand the informant reporting network critical to law enforcement success.”
— FWS Prosecution [Redacted], p. 0199
The whistleblower “said he heard the radio announcement and the reward being offered... [and] decided to call the Idaho Department of Fish and Game [IDFG]... [he] decided the monetary reward was worth the risk.”
— FWS Prosecution [Redacted], p. 0064
Whistleblowers Face Tremendous Personal Risks
“The whistleblower “began receiving threats, harassment and property damage... One of the defendants blamed him for the entire investigation and indicated that the whistleblower ‘would pay.’”
— FWS Case "Operation Board," p. 0346
“In January 2005, the informant was physically assaulted as he entered his residence. The informant suffered minor lacerations and was bruised all over his head and body.”
— FWS Case "Operation Angelfish," p. 0203
“The risk included, but was not limited to, being banished by his peers... and also being known as a rat (informant) in the community.”
— FWS Prosecution [Redacted], p 0065
The whistleblower “voluntarily came forward and provided critical information regarding [redacted] smuggling activity at the expense of losing her job and financial hardship.”
— FWS Case "Oak Creek Elk Ranch," p. 0188