Home » Case Summaries » 1998 » United States v. Iverson


United States v. Iverson


Appellant Iverson appealed a conviction of four counts of violating the Clean Water Act (CWA),[1] the Washington Administrative Code (WAC), and the City of Olympia’s Municipal Code (Olympia code). He also appealed the conviction of one count of conspiring to violate the WAC or the CWA. He argued that 1) the district court misinterpreted the CWA, the WAC, and the Olympia code, 2) the cited provisions were unconstitutionally vague, 3) the district court erred in formulating its “responsible corporate officer” jury instruction, and 4) the district court erred by admitting evidence of defendant’s prior discharges of industrial waste. The Ninth Circuit held that the district court had did not abused its discretion and affirmed the convictions.

The appellant was the founder, president, and chairman of the board of CH2O, a company that blends chemicals to create products such as acid cleaners. The company shipped the blended chemicals to its customers in drums and asked that the drums be returned for reuse. The drums often contained chemical residue that CH2O removed by using a cleaning procedure that produced wastewater. In the early to mid-1980s, the appellant made several attempts to convince the local sewer authority to accept the wastewater, but it refused. Beginning in 1985, the appellant personally discharged and also ordered employees to discharge the wastewater through a sewer drain at an apartment complex that the appellant owned and through a sewer drain at the appellant’s home. This continued until 1988.

In 1988 and at the direction of a new employee, CH2O began to pay a waste disposal company to dispose of the wastewater. In 1991, CH2O began shipping the drums to a professional outside contractor for cleaning. After CH2O fired the employee, the company reinitiated its drum-cleaning operation and disposed of its wastewater through a sewer in a newly acquired warehouse. The drum-cleaning operation continued until 1995, when CH2O learned that it was under investigation for the discharge of pollutants into the sewer.

A few months before CH2O reinitiated its drum-cleaning operation, the appellant announced his retirement from the company. He continued to receive money from CH20, conduct business at the company’s facilities, give orders to employees, and was occasionally present when the drums were cleaned. Sometimes he told employees that he had a permit for the operation and other times he told them that the consequences for getting caught were small.

A jury convicted Iverson of violating the CWA, the WAC, and the Olympia code. Although the WAC and the Olympia code violations are not federal offenses, the CWA allows states to administer water pretreatment programs. If the Environmental Protection Agency (EPA) approves a state’s regulations, as it did for Washington, violations of those regulations are treated as federal criminal offenses.[2] The regulations implementing the CWA also require publicly owned treatment works (POTWs) to create their own regulatory programs.[3] These local regulations are considered pretreatment standards under the CWA.[4] Because EPA had approved the city of Olympia’s regulations, violations of these regulations are also violations of the federal CWA.[5]

The appellant argued that the district court had misinterpreted the CWA, the WAC, and the Olympia code. The Olympia code defines a pollutant based on the effect of the discharge, and provides that if state standards are more stringent than federal standards, then state law applies.[6] The WAC states that “[a] permit is required for any source subject to pretreatment standards promulgated under . . . [the CWA].”[7] Clean Water Act regulations prohibit the discharge of “[a]ny trucked or hauled pollutants, except at discharge points designated by the POTW.”[8]

The court held that because the Olympia code and the WAC both incorporate the federal standard by reference, they also prohibit the discharge of “any trucked or hauled industrial waste except at discharge points designated by the POTW.”[9] Because the appellant discharged hauled or trucked industrial waste at a point not designated by the POTW, he violated the CWA, the WAC, and the Olympia code regardless of any effect the discharges had on the water. Therefore, the Ninth Circuit held that the district court did not err in its interpretation of the CWA, the WAC, and the Olympia code.

Appellant also argued that the CWA, the WAC, and the Olympia code are unconstitutionally vague. A criminal statute is not vague if it gives adequate notice of the conduct the statute prohibits in terms that a “reasonable person of ordinary intelligence” would understand.[10] Additionally, when a criminal statute regulates economic activity, it is usually “subject to a less strict vagueness test . . . because businesses can be expected to consult relevant legislation in advance of action.”[11] The WAC and the Olympia code incorporated by reference the federal prohibition on the discharge of trucked or hauled industrial waste. The Ninth Circuit found that a reasonable person of ordinary intelligence would have consulted the incorporated provisions. Therefore, the appellate court held that the CWA, the WAC, and the Olympia code were not unconstitutionally vague.

Appellant next argued that the district court erred in formulating its “responsible corporate officer” jury instruction. The district court instructed the jury that it could find Iverson liable under the CWA as a responsible corporate officer if it found, beyond a reasonable doubt, that 1) defendant had knowledge of the fact that pollutants were being discharged to the sewer system by CH2O employees, 2) defendant had the authority and capacity to prevent the discharge of pollutants to the sewer system, and 3) Iverson failed to prevent the ongoing discharge of pollutants to the sewer system. The appellant argued that a corporate officer is “responsible” only when he or she in fact exercises control over the activity causing the discharge or has an express corporate duty to oversee the activity.

The Ninth Circuit disagreed. First, it looked to the statutory language of the CWA, which holds criminally liable “any person who . . . knowingly violates” its provisions.[12] “Person” includes “responsible corporate officer,” but the CWA does not further define that term.[13] The Ninth Circuit therefore looked to the plain meaning of the term “responsible” and held that it meant “answerable” or “accountable.” Consequently, any corporate officer who is “answerable” or “accountable” for the unlawful discharge is liable under the CWA.

Second, the appellate court looked to the history of responsible corporate officer liability law and held that it agreed with the district court’s construction of the CWA. Notably, in the CWA Congress used a similar definition of the term “person” formulated by the United States Supreme Court in a case that left the question of responsibility to the jury.[14] A later Supreme Court case (United States v. Park) refined the question for the jury to whether the corporate officer had the “responsibility and authority either to prevent in the first instance or promptly to correct, the violation complained of, and [whether] he failed to do so.”[15]

Third, the court stated that Congress replaced the criminal provisions of the CWA after the Park decision and made no changes to its responsible corporate officer provision. The court therefore held that Congress intended Park’s refinement of the doctrine to apply. Finally, the court stated that it had interpreted the term “person” in other statutes consistently with the Supreme Court’s decision in Park. As a result, it was consistent for the court to do so in this instance. On the issue of corporate criminal liability under the CWA, the court concluded that a person is a responsible corporate officer if he has authority to exercise control over the corporation’s activity that is causing the unlawful discharges. The CWA does not require that the officer in fact exercise that authority, or that the corporation expressly grant the officer the duty to oversee the activity.

The appellant next argued that the district court’s jury instruction did not accurately reflect the “responsible corporate officer” doctrine. The jury instruction required the government to prove that the appellant had the authority and capacity to prevent the discharge of pollutants to the sewer system. This ensured that the jury could convict the appellant only if he had actual authority to exercise control over the drum-cleaning operation. According to Iverson, the “responsible corporate officer” instruction allowed the jury to convict him without finding a violation of the CWA, because the initial instruction on liability under the CWA required a showing that defendant knowingly caused a pollutant to be discharged to a POTW. The court rejected this contention, noting that this instruction, read together with the responsible corporate officer instruction, relieved the government only of having to prove that the appellant personally discharged or caused the discharge of a pollutant. The government still had to prove that the discharges violated the law and that the appellant knew that the discharges were pollutants. Consequently, the court held that the instructions were not erroneous.

Finally, the appellant objected to the district court’s admittance of evidence of the appellant’s prior discharges of industrial waste 1) on the plant property, 2) into the sewer at an apartment complex owned by the appellant, 3) into the sewer at the appellant’s house, and 4) caused by a chemical spill at the plant. However, the court held that evidence of a prior bad act may be admissible for a purpose other than to prove that the appellant acted in conformity with those prior acts.[16] The court explained that admission of these prior acts was relevant to prove the material issue of knowledge–that the prior acts were not too remote to be admitted. Although some of the prior acts had occurred more than seven years ago, the court explained that because of the similarity between the prior and charged acts, and because the appellant’s knowledge of CH2O’s industrial waste did not change over the seven years, they were admissible.

[1] Federal Water Pollution Control Act, 33 U.S.C. §§ 1251-1387 (1994 & Supp. III 1997).

[2] Id. § 1319(c)(2) (1994).

[3] 40 C.F.R. § 403.5(c) (1998).

[4] Id. § 403.5(d).

[5] 33 U.S.C. § 1319(c)(2) (1994).

[6]Olympia, Wa., Municipal Code § 13.20.490 (1997).

[7]Wash. Admin. Code § 173-216-060(2)(A) (1997).

[8] 40 C.F.R. § 403.5(b)(8) (1998).

[9] United States v. Iverson, 162 F.3d 1015, 1020 (9th Cir. 1998).

[10] See Easyriders Freedom F.I.G.H.T. v. Hannigan, 92 F.3d 1486, 1493-94 (9th Cir. 1996).

[11] United States v. Doremus, 888 F.2d 630, 634 (9th Cir. 1989).

[12] 33 U.S.C. § 1319(c)(2) (1994).

[13] Id. § 1319(c)(6).

[14] United States v. Dotterweich, 320 U.S. 277 (1943).

[15] United States v. Park, 421 U.S. 658, 668 (1975).

[16] 162 F.3d at 1027 (citing Fed. R. Evid. 404(b)).

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