Case Review: Supreme Court Refuses to Review Criminal Negligence Standard

Stephen Richmond
Bowditch & Dewey
Boston, MA

The U.S. Supreme Court recently refused to review a criminal conviction in an opinion that has chilling repercussions for those involved in any activities that may have environmental impacts. An understanding of the case is critical to all in-house and outside counsel who advise companies and their employees for activities with environmental impacts, particularly those subject to the broad reach of the Clean Water Act.

The case, known as U.S. v. Hanousek, 120 S.Ct. 860, 145 L.Ed. 2d 710 (2000) [176 F.2d 1116 (9^th Cir. 1999)], involved the criminal prosecution of a manager, Hanousek, who was responsible for track maintenance and construction projects for a railroad company in Alaska. One of the many projects under Hanousek’s supervision included a curve realignment project high above the famed Skagway River. The project required the removal of rock from the curve, which included both the railroad and a high pressure oil pipeline. Hanousek, the manager, became responsible for the project one month after project construction began. Four months later, a backhoe operator working for a construction contractor hit the oil pipeline with his backhoe bucket, causing a release of 1,000 – 5,000 gallons of oil down the cliff into the Skagway River.

The resulting investigation found that a protective platform was used to shield the pipeline before Hanousek became the overseer. But, the platform was not used after he assumed management. There was no evidence that Hanousek had any direct involvement with the accident that caused the spill.

The U.S. Attorney brought criminal charges against Hanousek, and he was convicted by a federal jury, for violating the Clean Water Act by negligently discharging oil into a navigable water. The conviction was based upon his supervisory role and the jury’s conclusion that he was criminally negligent in preventing the accident. Hanousek was sentenced to six months in a federal jail, six months in a half-way house and six months of supervised release.

Hanousek appealed the conviction to the U.S. Court of Appeals for the Ninth Circuit. The Circuit denied the appeal, finding that:

The Clean Water Act provides criminal sanctions for negligent conduct. A jury only needs to find that a defendant failed to use such care as a reasonably prudent and careful person would have used under similar circumstances. The Circuit specifically refused to read a "gross negligence" standard into the Clean Water Act’s penalty provisions.

The criminal provisions of the Clean Water Act constitute public welfare legislation. The government does not have to prove in a criminal prosecution that a defendant knew his or her conduct violated the law. As long as a defendant knows he or she is dealing with dangerous substances, a federal court can presume the defendant knows the "probability of strict regulation."

The imposition of criminal penalties for ordinary negligent conduct does not violate due process protections provided in the U.S. Constitution.

Hanousek petitioned the Supreme Court for review of the Ninth Circuit’s decision. He argued that his Constitutionally guaranteed right to due process is violated when a statute imposes criminal liability for simple negligence, rather than only for gross negligence or willful conduct. However, the high court denied certiorari in January 2000, and in a published opinion declined to review the conviction. As a result, the ordinary negligence standard imposed by the Ninth Circuit remains the controlling precedent across the U.S. for federal Clean Water Act criminal prosecutions.

This case (and earlier decisions from the Ninth Circuit) has serious ramifications for anyone engaged in the very broad scope of activities regulated under the Clean Water Act. The statutory provision at issue in Hanousek, Section 309(c), 30 U.S.C. §1319(c), imposes criminal penalties on anyone who negligently violates any of the following:

Section 1311 (ban on discharges without a permit);

Section 1312 (water quality effluent limitations);

Section 1316 (national standards of performance);

Section 1317 (toxic and pretreatment effluent standards);

Section 1318 (recordkeeping, reporting and inspections);

Section 1321(b)(3) (ban on discharges into navigable waters);

Section 1345 (disposal of sewage sludge);

Any violation of a permit condition or limitation;

Any violation of a pretreatment requirement; or

Any unpermitted discharge of a pollutant to a publicly owned treatment work or sewer when the discharger should have known that the discharge could cause injury or property damage.

Environmental prosecutors will likely interpret the Hanousek decision to authorize the use of the ordinary negligence standard in the prosecution of Clean Water Act cases. All attorneys who advise companies on compliance with the Clean Water Act should take care to explain these stringent standards to employees, managers, and officers. These individuals should understand that their work for their company must be conducted with such care as a reasonably prudent and careful person would use under similar circumstances.

Corporate counsel’s advice will be most effective where clients invest more heavily in three areas: (1) compliance education, (2) compliance management systems and (3) environmental performance benchmarking. The adoption of compliance education and compliance management systems will help to place clients in a better position to reduce the likelihood of incidents that a jury would view as preventable by the reasonably prudent person. Environmental performance benchmarking will alert companies to changes in "best management practices" in their industries. If management practices are continually updated, a company (and its employees, managers and officers) will have a much stronger defense when accidents occur, resulting in a greater likelihood that a felony prosecution will not occur.

[Ed. The Ninth Circuit includes the States of Alaska, Arizona, California, Hawaii, Idaho, Nevada, Oregon, and Washington, as well as Guam. The Hanousek decision illustrates how careless violations of the Clean Water Act can make a manager a felon. The Ninth Circuit started the ball rolling with its 1993 decision in U.S. v. Weitzenhoff, 35 F.3d 1275, where it ruled that "[t]he criminal provisions of the CWA constitute public welfare legislation. …" Owners, operators, and "persons in charge" can be convicted as felons if they should have known that pollution would occur. The prosecutor said it succinctly last year in the CWA prosecution reported as U.S. v. Iverson, 162 F.3d 1015 (9^th Cir. 1998): "You can’t turn a blind eye to it. That’s why you are in a position of authority."]

Mr. Richmond is a member of the Corporate Counsel Committee and a partner with the law firm of Bowditch & Dewey, LLP in Massachusetts. He maintains a national practice specializing in environmental law. Before joining his firm, Mr. Richmond was in-house environmental counsel for nine years with two large corporations.