U.S. v. Southern Union Company

Dec 22: In the U.S. Court of Appeals, First Circuit, Case No. 09-2403. Appealed from the District Court of Rhode Island, Providence. According to the Appeals Court, this appeal by Southern Union, a natural gas company convicted by a jury of storing hazardous waste without a permit, raises two issues of initial impression. First, the case tests whether Federal criminal enforcement may be used under the Resource Conservation and Recovery Act (RCRA), where certain Federally approved state regulations as to hazardous waste storage have been violated. Second, the case also raises the important question of whether a criminal fine must be vacated under Apprendi v. New Jersey, 530 U.S. 466 (2000), where a judge, and not a jury, determined the facts as to the number of days of violation under a schedule of fines.

   

    The hazardous waste at issue is mercury, which the Appeals Court says "can poison and kill those exposed to it" In this case 140 pounds of mercury became the "play toy of young vandals who spread it about, including at their homes in a local apartment complex, after they spilled it around Southern Union's largely abandoned and ill-guarded Tidewater site in Pawtucket, Rhode Island."

 

    The Appeals Court affirmed the district court's rulings on Southern Union's conviction, as set forth in United States v. Southern Union. The Appeals Court concluded that: "(1) Southern Union is precluded by 42 U.S.C. § 6976(b) from challenging the EPA's 2002 Immediate Final Rule authorizing Rhode Island's RCRA regulations. Having failed to use the statutory procedure for judicial review, Southern Union may not raise the issue by collateral attack; (2) the 2002 Rule, in any event, is valid and was within the EPA's authority to adopt; and (3) the conviction does not violate Southern Union's right to fair notice under the Due Process Clause.

 

    The Appeals Court also affirmed the fine imposed saying, "The Apprendi issue is close but the Supreme Court's recent decision in Oregon v. Ice, 129 S. Ct. 711 (2009), leads us to hold that the Apprendi rule does not apply to the imposition of statutorily prescribed fines. If, however, we were wrong in our assessment of the Apprendi issue, we would find that any error under Apprendi was not harmless and that the issue of the fine would need to be remanded. Finally, we also hold that the financial penalties imposed did not constitute an abuse of the district court's discretion."

 

    Southern Union claimed the $18 million penalty was substantively unreasonable, arguing that it was grossly excessive in comparison to the penalties of $75,000-$250,000 imposed in what it describes "as cases of more egregious RCRA violations." However, on the penalty issue the Appeals Court said, ". . .the district court made 'an individualized assessment based on the facts presented,' and 'adequately explain[ed] the chosen sentence.' [Citing Gall, 552 U.S. at 50]. The district court explained why the statutory factors justified the penalties, noting that Congress measured the seriousness of long-term RCRA violations by imposing a high, per day statutory maximum fine; that Southern Union's willingness to put a densely-populated residential community, local public safety employees, and its own employees at risk by storing hazardous waste under deplorable conditions in their midst indicated great culpability; and that there was a need for a penalty substantial enough to attract the attention of large corporations, thereby achieving not only specific, but also general, deterrence. . ."

 

    Access the complete opinion (click here).