Summary of Recent Environmental Criminal and Envorcement Actions

Raymond C. Marshall and Tini Duong

I. Overview
Aggressive prosecution of environmental crimes has remained a centerpiece of the government’s enforcement strategy. According to data released in March, the Environmental Protection Agency (EPA) referred 241 criminal cases to the Department of Justice for prosecution, compared with 266 in 1998. Those prosecutions resulted in a record-setting 208 years of prison time. See U.S. Envtl. Protection Agency, EPA Sets Enforcement Records in 1999 (visited Mar. 21, 2000) http://yosemite.epa.gov/opa/admpress.nsf ; Susan Bruninga, Increases Seen in Civil Penalties, Jail, EPA Says, 31 BNA Env’t Rep. 113, 113 (2000). The focus of the government’s prosecution efforts has continued to shift toward individual defendants. (In 1998, 26 percent of the government’s targets were companies and 74 percent were individuals. The proportion of individual to organizational targets was almost completely reversed in 1990. See Joyce E. Cutler, Large Number of Companies Noncompliant with Environmental Laws, EPA Official Says, 29 BNA Env’t Rep. 2233, 2233 (1999).) Among responsible individuals, prosecutors are seeking to identify more high-level employees with criminal knowledge. See id.

The relationship between EPA and the states is improving, according to a spokesman for the Environmental Council for the States. A perennial source of tension between federal and state enforcement agencies has been overfiling, EPA’s practice of initiating a duplicative federal enforcement action after commencement of a state action. Relationships Between States, EPA Improving, ECOS Official Reports, 29 BNA Env’t Rep. 2376, 2376 (1999). On September 16, a federal appeals court curbed the practice by holding that the Resource Conservation and Recovery Act (RCRA) grants states primary enforcement power once EPA has authorized it to act. A panel of the Eighth Circuit declared in Harmon Industries, Inc. v. Browner that states that have received federal authorization may supplant the EPA’s regulatory apparatus with their own programs. 1999 U.S. App. LEXIS 22405 (8th Cir. Sept. 16, 1999). EPA may pursue a separate enforcement action if it considers the state action inadequate, but it must first give the state a chance to correct its deficiency and withdraw the state’s federal authorization. Id. at *18.

II. Significant Prosecutions
Federal, state, and local environmental agencies have worked together in 1999 to compile an impressive record of criminal prosecutions. The following cases are particularly noteworthy due to their size, novelty, or precedential value.

A. Clean Water Act
1. Ordinary Negligence Sufficient for Criminal Liability Under CWA Provision

A provision of the Clean Water Act (CWA) prohibiting the actual discharge of harmful quantities of oil into U.S. waters, 33 U.S.C. § 1321 (b)(3), authorizes the imposition of criminal penalties on individuals who act with ordinary negligence, a divided panel of the Ninth Circuit declared. See United States v. Hanousek, 176 F.3d 1116 (9th Cir. 1999). There, the court upheld the conviction of Edward Hanousek, a roadmaster at White Pass & Yukon Railroad. The defendant supervised a railroad employee who had ruptured an unprotected pipeline, releasing heating oil into the nearby Skagway River. Hanousek urged adoption of a criminal negligence standard, which would penalize only gross deviations from the degree of care a reasonable person would exercise. Pointing to other CWA provisions that include a heightened negligence standard, the Ninth Circuit reasoned that the absence of similar language in 33 U.S.C. § 1321(b)(3) showed that Congress intended to approve criminal liability for ordinary negligence.

The court further dismissed Hanousek’s due process challenge, holding that under a public welfare statute such as the CWA, the government need not prove that a defendant knew his conduct was illegal. That is because a defendant who handles dangerous substances is presumed to have knowledge of the regulations governing those substances. Even though Hanousek was not a CWA permittee, he was aware that a potentially dangerous high-pressure petroleum pipeline was located in the vicinity. The court reasoned therefore that application of § 1321(b)(3) in this case did not offend due process.

The Supreme Court denied certiorari on January 10, 2000. See Hanousek v. United States, 2000 U.S. LEXIS 494 (Jan. 10, 2000). Dissenting from the Court’s denial of certiorari, Justice Thomas warned against "expos[ing] countless numbers of construction workers and contractors to heightened criminal liability for using ordinary devices to engage in normal industrial operations." Id. at *4-5.

2. Royal Caribbean Cruise Line Agrees to Pay Record $18 Million Fine

Royal Caribbean Cruise Line (RCCL) agreed to pay $18 million criminal fine and pleaded guilty to 21 felony counts of dumping waste oil and hazardous chemicals and making false statements to the Coast Guard. See Cruise Line Pleads Guilty to 21 Counts of Dumping Waste Oil, Hazardous Chemicals, 30 BNA Env’t Rep. 611, 611 (1999). The fine is the largest ever assessed against a cruise line for polluting U.S. waters. In addition, the Liberian-owned company submitted to a five-year court-supervised environmental compliance plan. The agreement was filed in six federal courts in the cities where the violations were committed: Anchorage, Miami, New York, Los Angeles, St. Thomas, and San Juan. The company admitted to using secret pipes to discharge waste directly into the water. The agreement commits RCCL to assisting the government in prosecuting employees responsible for the violations. (The government has since shifted focus from the company to individual employees. Oystein Larsen, chief engineer of RCCL’s Voyager of the Seas, was indicted in November on charges of conspiracy and giving false statements to the U.S. Coast Guard. See Cruise Ship Officer Faces Charges in Dumping Case, N.Y. Times, Nov. 17, 1999, at A16.)

The investigation commenced in October 1994 when a Coast Guard plane observed a company ship dumping oil-contaminated bilge waste off the coast of Puerto Rico. Investigators discovered a fleetwide practice of illegal discharges and concealment via falsified records. RCCL continued to dump oily bilge and falsify logs after the government investigation began.

RCCL had earlier agreed to pay $9 million in fines and restitution for similar violations in Miami and San Juan. On January 14, 2000, the company settled a civil lawsuit based on the same conduct filed by the State of Alaska for $3.5 million. See Royal Carribean to Pay $3.5 Million in Settling Lawsuit Over Water Pollution, 31 BNA Env’t Rep. 110, 110-111 (2000).

3. Defendants Sentenced in Northern California Oil Spill Case

Anax International Agencies and ship captain Dimitrios Georgantas were sentenced on December 13, 2000 on charges related to a September 27, 1998 oil spill from the oil tanker Comman. The defendants were responsible for an illegal discharge that cost $1.2 million to clean up and killed more than 170 sea birds, among them the endangered brown pelican. At sentencing, the defendants paid a $2.46 million criminal fine that will be applied to the National Oil Pollution Cleanup Fund, gave $5.5 million to government efforts to rehabilitate the affected area, and reimbursed the Coast Guard for clean up expenses. See U.S. Envtl. Protection Agency, Tanker Owner and Captain Sentenced for Ocean Spill (visited Mar. 21, 2000) http://yosemite.epa.gov/opa/admpress.nsf.

4. Hog Producer Pleads Guilty to Dumping Waste in Creek

On June 25, an Iowa hog farm plead guilty to discharging untreated manure into a local creek in violation of the CWA, which prohibits concentrated animal feeding operations from negligently releasing a pollutant into U.S. waterways. See Pamela Najor, Iowa Hog Farm Pleads Guilty to Discharge in First Criminal Manure Discharge Case, 30 BNA Env’t Rep. 431,431 (1999) (citing United States v. Trace, N.D. Iowa No. 99-2014MJM). The illegal discharge ultimately killed more than 109,000 fish, including hundreds of American brook lamprey, a threatened species in Iowa. Id. at 131-32. Trace, Inc., a Minnesota company that operates 17 facilities in Iowa and the upper Midwest, was ordered to pay a $10,000 fine and $30,000 restitution to the state. Id. at 132. The Trace prosecution is believed to be the first ever criminal manure discharge case in the nation. Id. at 131.

Such prosecutions demonstrate the government’s resolution to hold hog producers accountable. In March, the EPA announced the Unified Animal Feeding Operations Strategy, which calls on all covered facilities to implement nutrient management plans by 2009 and subjects the largest operations to CWA requirements. The EPA is currently in the process of creating a permitting guidance manual to help implement the Strategy. Id. at 132.

5. San Diego Sludge Hauler’s 51-Month Sentence for Illegal Dumping Affirmed

The Ninth Circuit affirmed a sludge hauler’s 51-month sentence for violating San Diego’s national pollution discharge elimination system permit by dumping sewage sludge directly onto agricultural land, despite federal regulations permitting the application of high-grade sewage sludge to land as a fertilizer. United States v. Cooper, 173 F.3d 1192 (9th Cir. 1999). Because the CWA preserves local control over sewage sludge disposal, the federal land application regulations did not relieve defendant Gordon Cooper of his duty to comply with the city’s permit. The court rejected Cooper’s argument that, as a non-permittee, he could not be subject to criminal penalties, stating that "[a]ny person who knowingly violates" a permit condition may be criminally liable under the CWA. 33 U.S.C. § 1319(c)(2).

The court approved an increased sentence on the basis of evidence that Cooper stood to profit from the violations, was familiar with the business’s day-to-day activities, and found a farmer to accept the sludge. Prior cases have held that a defendant "need only exercise [supervisory] authority over at least one other participant to merit [a sentence enhancement]." U.S.S.G. § 3B1.1. Cooper sought to avoid triggering an additional enhancement for "ongoing, continuous or repetitive" discharge of a pollutant by arguing that the sludge did not qualify as a "pollutant" under the sentencing guidelines. U.S.S.G. § 2Q1.3(b)(1)(a). He did not persuade the court, which stated that the statutory definition of "pollutant" controls for purposes of sentencing and encompasses nonhazardous substances.

6. Louisiana Companies and Employees Admit to Conspiracy

On January 13, 2000, seven related Louisiana companies pled guilty before the U.S District Court in New Orleans of conspiring to violate the Clean Water Act from 1991 to 1998. The companies admitted that they improperly operated and maintained six wastewater treatment facilities and concealed their misconduct by submitting false information to state and federal authorities. The institutional defendants agreed to pay a $4.36 million criminal fine and $165,000 in restitution to affected homeowners. See Louisiana Sewage Treatment Firm to Pay $4.36 Million to Settle Conspiracy Charges, 31 BNA Env’t Rep. 110, 110 (2000). In February 2000, three Lousiana Properties employees pled guilty to charges arising from the same violations. Johnson Properties’ General Manager agreed to a three-year prison sentence and $750,000 in fines and restitution. See U.S. Envtl. Protection Agency, Louisiana Properties Company President, Two Employees Plead Guilty in Water Case (visited Mar. 21, 2000) <http://yosemite.epa.gov/opa/admpress.nsf>.

7. Septic Tank Effluent Considered "Sewage Sludge" for Direct Enforcement Purposes

In United States v. Hagberg, 2000 Daily Journal D.A.R. 3083 (Mar. 23, 2000), a panel of the Ninth Circuit Court of Appeals reinstated charges against a defendant who allegedly pumped material from the septic tank of a Lavina, Montana bar into his truck and illegally dumped it on the side of the road. The government charged the defendant, Jamie John Hagberg, with violating 33 U.S.C. 1345(e), which proscribes the disposal "of sludge from a publicly owned treatment works or any other treatment works for which regulations have been established pursuant to [section 1345(d)]." Id. at 3083. The lower court dismissed the indictment, concluding that the substance released was not "sewage sludge" within the meaning of the statute. The Ninth Circuit reversed, sweeping aside legislative history supporting the lower court’s decision and relying instead on the plain language of regulations promulgated under 33 U.S.C.§ 1345(d). The circuit court admittedly "piece[d] together a meaning" by reading several [40 C.F.R. § 503.9] subsections together and held that material from septic tanks fell within the regulatory definition of "sewage sludge." Id. at 3085. This creates an inconsistency between EPA’s permit regulations, which do not apply to septic tanks, and its direct enforcement regulations, which do, according to the court. See id.

B. Resource Conservation and Recovery Act
1. $32,000 Not Deemed "Substantial" Cleanup Expenditure Justifying Higher Sentence

A panel of the Ninth Circuit Court of Appeals vacated the sentence of Jorge Merino, a man convicted of unlawfully transporting and storing hazardous waste. See United States v. Merino, 1999 Daily Journal D.A.R. 9549 (9th Cir. 1999). The only issue on appeal was the lower court’s application of U.S. sentencing guidelines, which permit enhancement of the penalty if "the offense resulted in disruption of public utilities or evacuation of a community, or if cleanup required substantial expenditure." U.S.S.G. § 2Q1.2(b)(3). The district court judge determined that an upward adjustment was appropriate because a reasonable person would consider $32,000 "substantial" expense. Merino, 1999 Daily Journal D.A.R. at 9549. The appeals court disagreed, reasoning that in the context of the guidelines, the purpose of the term "substantial" is to distinguish serious offenses from "run-of-the-mill" contamination according to the degree of resulting harm. Id. at 9550. Thus, activities requiring substantial cleanup expenditures are those which have an impact on the community equivalent to contamination that causes utility disruptions and evacuations. In light of evidence that environmental cleanup typically involves six-figure sums, the court held that Merino’s conduct did not merit an adjustment. Id.

2. Prosecutors Need Not Prove Defendant Knew He Was Transporting Hazardous Waste

On February 12, 1999, the Seventh Circuit rebuffed Leo G. Kelly’s challenge to his conviction for RCRA violations. United States v. Kelly, 167 F.3d 1176 (7th Cir. 1999); Man’s Conviction for Knowing Transport, Disposal Under RCRA is Upheld on Appeal, 29 BNA Env’t Rep. 2076, 2076 (1999). Kelly owned and operated a business specializing in underground storage tank removal. He was convicted of ordering the delivery of 27 barrels of hazardous waste to a site he knew was not certified to accept them. Kelly, 167 F.3d at 1178. Kelly argued on appeal that he did not know he was transporting "waste"; he thought the substance was gasoline. The court held that Kelly’s liability did not hinge on whether he knew that the substance he transported was both "hazardous" and "waste" because the term "hazardous waste" is defined at 42 U.S.C. § 6903(5). Id. at 1180. A finding that Kelly knowingly transported and disposed of a substance that fell within the statutory definition of "hazardous waste" was sufficient to support a conviction. Id.

3. American Airlines Pleads Guilty to Hazardous Waste Violation

On December 16, 1999, American Airlines pled guilty to charges that it illegally stored hazardous waste in violation of RCRA. American employees stored a drum of the potentially explosive substance Dioxital at the Miami airport for three years instead of properly disposing of it. The plea agreement calls for American, the nations’ second largest airline, to pay an $8 million fine and create a hazardous materials safety program at every airport where it ships cargo. One quarter of the fine will be used to fund the Miami-Dade Fire Department’s hazardous materials division. See U.S. Envtl. Protection Agency, American Airlines to Pay $8 million for Hazardous Waste Violation (visited Mar. 21, 2000) http://yosemite.epa.gov/opa/admpress .

C. Clean Air Act: Three Plead Guilty to CFC Smuggling Conspiracy
Three men pleaded guilty to conspiring to smuggle freon (CFC-12), a refrigerant used in automobile air conditioning systems, into the country through the San Ysidro port in Southern California in violation of the Clean Air Act. Cowas Gustad Patel, owner of K&P imports in San Dimas, was sentenced to six months community confinement and three years supervised release. Moussa Khalil Toubbeh, owner of Jobber’s Warehouse in Westminster, received two years probation and 200 hours of community service. See U.S. Envtl. Protection Agency, Texas Man Arrested for Smuggling Freon Into the U.S. (visited Sept. 13, 1999) http://epainotes1.rtpnc.epa.gov:7777 . George Shahin, who owns Geo Auto Supply in Alhambra, also pled guilty to participating in the conspiracy and faces a maximum prison term of five years and a maximum fine of $250,000. See Three to Be Sentenced in CFC Smuggling Case, 29 BNA Env’t Rep. 1937, 1938 (1999).

Strict regulations limit importation of CFC-12 into the United States because it depletes the earth’s ozone layer when released into the atmosphere. The prosecutions were part of a nationwide enforcement initiative launched in 1995 by the EPA, Department of Justice, Customs Service, Federal Bureau of Investigation, and Internal Revenue Service that has resulted in 88 convictions for a total of 48 years incarceration and $68 million in fines and restitution. See U.S. Envtl. Protection Agency, Texas Man Arrested for Smuggling Freon Into the U.S. (visited Sept. 13, 1999) http://epainotes1.rtpnc.epa.gov:7777.

D. One-Call Notification System: Judge Dismisses First Case Brought Under One-Call Notification System Law
A federal district court judge in Minnesota dismissed charges that Plummer Excavating, Inc. and Randy Lee Konickson of Minneapolis violated the One-Call Notification System Law, 49 U.S.C. § 60123(d), which requires a person who engages in excavation to use the system to determine the location of underground pipelines in the area before beginning work. United States v. Plummer Excavating, Inc., 1999 WL 701365 (D.Minn. 1999). According to the indictment, Konickson directed a Plummer Excavating employee to undertake activities which caused the pipeline to rupture, spilling nearly 218,000 gallons of crude oil and ultimately contaminating Clearwater River and forcing evacuation of the city of Plummer. This was the first case prosecuted under the One-Call Notification System statute, which subjects to criminal penalties any person who knowingly and willfully (1) engages in excavation without first checking the system and (2) subsequently damages a pipeline facility. The court interpreted the law to preclude liability where a person’s negligent conduct damages underground facilities, holding that the scienter requirement applies to both subparts of the statute. Because government attorneys failed to allege that defendants intentionally damaged the pipeline, the court dismissed those counts of the indictment brought under the One-Call Notification System Law.