By Juan-Carlos Rodriguez

Law360 (April 15, 2020, 4:49 PM EDT) -- The U.S. Department of Justice has quietly frozen its collection of civil penalty payments until at least May 31 in an effort to blunt the coronavirus pandemic's economic impact.

U.S. attorneys' offices were directed to stop affirmative civil debt collection in a March 31 letter from acting Director of the Executive Office for U.S. Attorneys Corey Ellis. The policy does not apply to criminal penalties, the letter said.

In a follow-up letter on Monday sent to address questions that had arisen after the policy was announced, Ellis said the suspension of required payments shouldn't be interpreted to mean there is a broader relaxation of enforcement efforts.

"The temporary suspension does not impact a [U.S. attorneys' office]'s ability to investigate, file complaints, litigate to judgment or settle any [affirmative civil enforcement] matter," the April letter said. "The temporary suspension does not apply to ongoing litigation, appeals or cases that are not subject to a final, nonappealable judgment."

If a settlement agreement is breached in some respect, DOJ attorneys may still pursue "any of the remedies made available to the United States by the terms of the parties' settlement agreement, including, but not limited to, seeking a default judgment," Ellis said. Default judgments can't be enforced while the freeze is in place, but interest can accrue and enforcement officials can take steps to protect their ability to collect down the line, such as putting liens on assets and acting to prevent fraudulent transfers of assets, the letter said.

Under the DOJ policy, affected parties may voluntarily continue paying their full penalties or just make interest-only payments. The temporary suspension could be extended by legislation or other administrative action, Ellis said in the initial letter.

The policy drew condemnation from the Center for Biological Diversity.

"It's beyond absurd the Trump administration is using the COVID-19 pandemic to temporarily excuse companies from paying fines for polluting," Hannah Connor, an attorney at the center, said Tuesday. "It's telling that at the same time Team Trump is barreling ahead with plans to gut environmental regulations, it's dialing back enforcement of laws that are supposed to protect our air and water."

Connor was referring to a separate policy that was recently adopted by the U.S. Environmental Protection Agency that allows for the potential suspension of enforcement of environmental regulations if a regulated entity is adversely affected by the coronavirus. 

The EPA's policy generally divides compliance obligations into tiers and treats potential violations differently. Significant leeway will be given to businesses that show they can't meet routine compliance monitoring and reporting requirements, while those at risk of allowing discharges or emissions that could damage human health and the environment will be scrutinized more closely. Once the coronavirus crisis has passed, the EPA said, the policy will be rescinded.

Margaret Anne Hill, a partner at Blank Rome, said the EPA's and the DOJ's moves are important to assist regulated entities during this time.

"While DOJ's civil debt collection has a limited six-week timeframe, the agency acknowledges, as does EPA, that its temporary exercise of enforcement discretion may be subject to an extension," Hill said. "These agency actions are a 'first' in the enforcement arena, and show that the federal government recognizes that easing the regulatory burdens on business is one way of trying to get the economy back on track."

--Editing by Stephen Berg.

Update: This article has been updated to add additional comment.

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