United States v. Chemetco Inc ( 2001 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 00-3940
United States of America,
Plaintiff-Appellee,
v.
Chemetco, Incorporated,
Defendant-Appellant.
Appeal from the United States District Court
for the Southern District of Illinois.
No. 99 CR 30048--William D. Stiehl, Judge.
Argued April 20, 2001--Decided December 17, 2001
Before Easterbrook, Manion, and Kanne,
Circuit Judges.
Kanne, Circuit Judge. Defendant
Chemetco, Inc. pleaded guilty to
violating the Clean Water Act, 33 U.S.C.
sec. 1311(a). Accordingly, the district
court sentenced Chemetco to pay a fine
that was based on the number of days that
it violated the Clean Water Act. Chemetco
now appeals its sentence, arguing that
the district court misinterpreted the
Clean Water Act and that the district
court’s findings violated the rule set
forth in Apprendi v. New Jersey, 530 U.S.
466, 120 S. Ct. 2348, 147 L. Ed. 2d 435
(2000).
I. History
Section 301 of the Clean Water Act
("CWA") provides that it is unlawful for
any person to discharge a pollutant
unless in compliance with the CWA. See 33
U.S.C. sec. 1311(a). A person achieves
such compliance by obtaining a National
Pollutant Discharge Elimination System
("NPDES") permit from the United States
Environmental Protection Agency ("U.S.
EPA") or from a qualified state agency.
See id. at sec. 1342.
Chemetco smelts scrap metal at a foundry
located near Hartford, Illinois in order
to recover copper and other valuable
products. On September 12, 1986, the
Illinois Environmental Protection Agency
("Illinois EPA") issued Chemetco a permit
allowing construction and operation of a
storm- water runoff control system. Later
that month, contract laborers hired by
Chemetco installed this system, and
pursuant to Chemetco’s instructions, also
installed a secret pipe on Chemetco’s
property running to an unnamed ditch
tributary. The contract laborers then
covered exposed sections of this secret
pipe with straw. This secret pipe did not
appear in any blueprint or drawing kept
by Chemetco, and Chemetco did not have a
permit allowing it to discharge
pollutants via this pipe. Chemetco used
this secret pipe to discharge water
containing toxic metals such as lead and
cadmium until September 18, 1996, when
U.S. and Illinois EPA agents witnessed
the secret pipe discharging polluted
water.
Chemetco and six of its managers were
indicted in the United States District
Court for the Southern District of
Illinois on April 21, 1999. Count I of
the indictment charged Chemetco and
various managers with conspiring to
violate the CWA. Count II charged
Chemetco and various managers with
knowingly violating Section 301 of the
CWA "[f]rom on or about September 1986 to
on or about September 18, 1996." Finally,
Counts III and IV of the indictment
charged Chemetco and various managers
with making false statements to
government officials.
On January 11, 2000, Chemetco pleaded
guilty to Counts I and II and nolo
contendere to Counts III and IV. Chemetco
also stipulated to the facts underlying
the plea and waived its right to a jury
trial. In the plea agreement,
Chemetcoacknowledged discharging
pollutants via the secret pipe during at
least some of the time period alleged in
the indictment. Chemetco also
acknowledged that the government would
recommend the imposition of a fine for
Count II based on the number of days that
the violation occurred. Section 309(c)(2)
establishes criminal penalties for
knowing violations of Section 301 of the
CWA: "Any person who . . . knowingly
violates [Section 301] . . . shall be
punished by a fine of not less than
$5,000 nor more than $50,000 per day of
violation, or by imprisonment for not
more than 3 years, or by both." 33 U.S.C.
sec. 1319(c)(2)(B)./1 The district court
then referred the matter to the probation
office for pre-sentence investigation and
asked counsel to prepare sentencing
memoranda.
Chemetco filed its sentencing memorandum
on February 15, 2000, in which it averred
that both parties agreed that under
Section 309 of the CWA, Chemetco was
liable for a fine of $2,500 to $25,000
per day of violation before February 4,
1987, and for a fine of $5,000 to $50,000
per day of violation thereafter. Chemetco
then noted that the only disputed issue
was the number of days that the violation
occurred, and that the district court
would resolve this issue at a hearing on
March 13, 2000. Chemetco claimed that at
this hearing, the government would have
to prove the number of days that the
violation occurred by "clear and
convincing evidence." Chemetco attached
tables showing rainfall statistics and
explained that the amount of rainfall
would affect the number of days on which
the secret pipe discharged polluted
water. These tables also calculated
possible fine ranges based on the
rainfall statistics. The tables indicated
that there had been 948 days of rain
between September, 1986 and September,
1996. However, Chemetco stated that "[i]t
may . . . be impossible to determine [on]
how many days an actual discharge
occurred."
The government also filed its sentencing
memorandum on February 15, 2000. The
government recommended fining Chemetco
for 949 days of violation--948 days when
it rained plus one day, September 18,
1996, when although it did not rain, U.S.
and Illinois EPA agents witnessed the se
cret pipe discharging polluted water.
On March 13 and 14, 2000, the district
court held a hearing to determine the
violation days. The government maintained
that the secret pipe discharged polluted
water on the 949 days indicated in its
sentencing memorandum. Chemetco countered
that there were fewer days of violation
because the secret pipe did not discharge
polluted water on every day that it
rained. In support of this contention,
Chemetco’s expert witness, Kim Fock,
presented two alternative methodologies
for calculating the number of days that
the secret pipe discharged polluted
water. Further, Chemetco employees
testified that the secret pipe could not
have discharged polluted water on every
day that it rained because on certain
occasions during the ten-year period
charged in the indictment, the valve to
the secret pipe was closed.
With the district court’s leave,
Chemetco filed a supplemental sentencing
memorandum on March 22, 2000, in which it
argued that there were seventy-one days
of violation, yielding a fine range of
$342,500 to $3,425,000. On May 18, 2000,
the probation office issued its pre-
sentence report ("PSR"), in which it
discounted Chemetco’s calculation and
concluded that there were 826 days of
violation, yielding a fine range of
$4,077,500 to $40,775,000. Chemetco filed
its first objection to the PSR on June 9,
2000, disputing the methodology that the
probation office used to calculate the
number of days of violation. The
probation office responded by filing an
addendum to the PSR on June 28, 2000, in
which it concluded that there were 711
days of violation, yielding a fine range
of $3,502,500 to $35,025,000.
On August 3, 2000, Chemetco filed a
second objection to the PSR. Citing the
Supreme Court’s recent decision in
Apprendi, 530 U.S. at 477, Chemetco
claimed that it had to "be charged [in
the indictment] with each day of
violation" and that the number of days of
violation had to "be proven [by the
government] beyond a reasonable doubt."
In an order dated October 26, 2000, the
district court rejected Chemetco’s
Apprendi objection. The district court
found that the indictment, which charged
Chemetco with violating the CWA "[f]rom
on or about September 1986 to on or about
September 18, 1996," was sufficient given
that it informed Chemetco of the charges
and put Chemetco on notice of the
potential maximum penalty--the penalty
that the CWA would allow if Chemetco
discharged pollutants every day during
the period that the indictment
identified. Further, the district court
found that Apprendi did not apply to this
case and, therefore, the number of days
of violation under the CWA was a
sentencing factor that the court could
find by a preponderance of the evidence.
The district court held a sentencing
hearing on October 30, 2000. At that
hearing, the district court found, by a
preponderance of the evidence, that there
were 676 days of violation, resulting in
a fine range of $3,327,500 to
$33,275,000. The district court sentenced
Chemetco to a fine of $3,327,500 on Count
II, and Chemetco now appeals this
sentence.
II. Analysis
The issue in this case is whether the
number of days that Chemetco violated the
CWA is an element of a CWA offense or a
sentencing factor. Due process requires
that the government prove each element of
an offense beyond a reasonable doubt. See
Apprendi, 530 U.S. at 477. After the gov
ernment has met this burden and an
offender is found guilty of a crime,
however, courts can apply sentencing fac
tors based on a preponderance of the
evidence in order to increase the
offender’s punishment. See Almendarez-
Torres v. United States, 523 U.S. 224,
228, 118 S. Ct. 1219, 140 L. Ed. 2d 350
(1998). Thus, whether the number of days
that Chemetco violated the CWA is an
element of a crime or a sentencing factor
is important because if the number of
violation days belongs in the former
category, then it was reversible error
for the district court to calculate it
based on a preponderance of the evidence.
See Apprendi, 530 U.S. at 490.
The Supreme Court has ruled that, within
certain constitutional limits, Congress
can identify which factors are elements
of a crime and which are sentencing
factors. See id. at 485-90. Therefore,
our first inquiry is statutory--whether
in drafting the CWA, Congress intended
the number of days of violation to be an
element of a CWA offense or a sentencing
factor. See Almendarez-Torres, 523 U.S.
at 228. If we answer that question in the
affirmative, our next inquiry is whether
treating the number of violation days as
a sentencing factor comports with the
constitutional limits elucidated in
Apprendi.
A. Standard of Review
We agree with both parties that we
should assess Chemetco’s constitutional
argument--the application of Apprendi to
this case--de novo. See, e.g., United
States v. Bhutani, 266 F.3d 661, 668 (7th
Cir. 2001) (questions of law reviewed de
novo). However, the parties dispute which
standard of review should apply to
Chemetco’s statutory argument. Chemetco
urges us to apply de novo review because
it timely objected to the PSR, stating
that the district court’s procedures ran
afoul of Apprendi. Nevertheless, the gov
ernment argues that because Chemetco only
objected to the PSR on constitutional
grounds and not on statutory grounds, we
should review Chemetco’s statutory
argument under the plain error standard.
See, e.g., United States v. Nance, 236
F.3d 820, 824 (7th Cir. 2000). Chemetco
responds that its Apprendi objection
preserved its statutory argument because
inherent in every Apprendi objection is a
claim of improper statutory construction.
Because the result would be the same
under the stricter de novo standard of
review, we need not address whether an
Apprendi objection preserves a claim of
improper statutory construction.
B. Clean Water Act
In order to determine whether Congress
intended the number of violation days to
be a sentencing factor or an element of a
crime, we first look at the language of
the statute. See United States v.
Hayward, 6 F.3d 1241, 1245 (7th Cir.
1993). When the language of a statute is
clear and unambiguous, we must give
effect to its plain meaning unless doing
so would "thwart the purpose of the
overall statutory scheme." See id.
Section 301 prohibits discharging a
pollutant without an applicable permit.
See 33 U.S.C. at sec. 1311(a). Those who
"knowingly" commit this violation "shall
be punished" under the terms set forth in
Section 309(c)(2). Id. at sec.
1319(c)(2). Section 309(c)(2) of the CWA
provides that: "Any person who . . .
knowingly violates [Section 301] . . .
shall be punished by a fine of not less
than $5,000 nor more than $50,000 per day
of violation, or by imprisonment for not
more than 3 years, or by both." Id. at
sec. 1319(c)(2) (emphasis added). Section
309(c)(2)’s "shall be punished by" clause
indicates that the language following it
sets forth the terms of punishment for a
CWA violation. See United States v. Colt,
126 F.3d 981, 982 (7th Cir. 1997). The
terms of punishment for a CWA violation
include a fine that depends on the number
of days of violation.
The "per day of violation" language
qualifies this term of punishment. This
language indicates that there is a
"violation" that is defined elsewhere in
the CWA, and that the punishment one
receives for this violation depends on
the number of days that the violation
occurred. Thus, the number of days that
the violation occurred is a factor to be
determined after a "violation" has been
established. Therefore, the plain meaning
of Section 309(c)(2)’s language expresses
Congress’s unambiguous intent.
Because the language of Section
309(c)(2) is unambiguous, we must give
effect to it if doing so is consistent
with the overall statutory scheme of the
CWA. See Hayward, 6 F.3d at 1245. CWA’s
statutory scheme is clear: Section 301
and other sections define what
constitutes a violation/2 and Section
309 establishes penalties for these
violations. See Kelly v. United States
E.P.A., 203 F.3d 519, 521-22 (7th Cir.
2000). Indeed, Section 309 is entitled
"Enforcement" and sub-section 309(c) is
entitled "Criminal penalties." 33 U.S.C.
at sec. 1319. While it is true that
statutory titles are not definitive
guides to statutory meaning, they are
relevant. See Almendarez-Torres, 523 U.S.
at 234. Because the clear and unambiguous
language of Section 309(c)(2) comports
with the overall statutory scheme of the
CWA, we hold that Congress intended the
number of violation days to be a
sentencing factor and not an element of a
CWA offense.
Chemetco argues that Congress intended
to make the number of violation days an
element of a CWA offense or
alternatively, that Congress intended
that each day of violation be charged as
a separate CWA offense. Chemetco’s
reliance on the Supreme Court’s decision
in Castillo v. United States, 530 U.S.
120, 120 S. Ct. 2090, 147 L. Ed. 2d 94
(2000) for the proposition that the
number of violation days is an element of
a CWA offense is misguided. The Supreme
Court held that although the language of
18 U.S.C. sec. 924(c)(1) was ambiguous,
the structure of the statute clarified
Congress’s intent to create a new element
of a separate offense. See id. at 124-25.
The facts in the present case are
distinguishable because unlike the
language and structure of 18 U.S.C. sec.
924, the CWA’s language is unambiguous
and Section 309(c)(2) is an integral part
of the CWA’s penalty structure.
Chemetco’s reliance on a district court
case from Pennsylvania, United States v.
Oxford Royal Mushroom Prods., Inc., 487
F. Supp. 852, 856 (E.D. Pa. 1980), for
the proposition that each day of
violation is a separate offense is also
misguided. The court in Oxford considered
a motion to dismiss an indictment under
the multiplicity doctrine, which prevents
the government from charging a single
offense in several counts, because the
government charged individual days of
violation under the CWA rather than a
single crime. See id. The district court
denied the motion because it realized
that whether the indictment charged the
defendants with the days of violation
separately or with a single course of
conduct made no real difference because
the CWA directs punishment for each day
of violation. See id. Therefore, all
Oxford shows is that the indictment here
could have charged Chemetco for each
individual day of violation without being
defective, not that it had to charge
individual days separately. See id.
Moreover, the plain language of the CWA
contradicts the argument that each day of
violation is a separate offense. Section
309(c)(2) allows district courts to
impose fines "per day of violation,"
thereby implying that violations may span
more than one day. 33 U.S.C. sec.
1319(c)(2). Given that generally "a court
should not construe a statute in a way
that makes words or phrases meaningless .
. . or superfluous," United States v.
Franz, 886 F.2d 973, 978 (7th Cir. 1989),
Chemetco’s argument is unavailing.
Furthermore, Chemetco’s interpretation of
the CWA would subject it to a prison term
of 2,028 years--three years for each of
its 676 CWA violations--and we cannot
accept that Congress intended this
interpretation of the CWA.
C. Apprendi
Even though Congress intended the number
of violation days to be a sentencing
factor, Chemetco argues that its sentence
violated the rule announced by the
Supreme Court in Apprendi. In that case,
the Court held: "Other than the fact of a
prior conviction, any fact that increases
the penalty for a crime beyond the
prescribed statutory maximum must be . .
. proved beyond a reasonable doubt."
Apprendi, 530 U.S. at 490 (emphasis
added).
Despite Chemetco’s assertions, Apprendi
is inapplicable because the CWA does not
have a prescribed statutory maximum
penalty. See United States v. Behrman,
235 F.3d 1049, 1054 (7th Cir. 2000). In
Behrman, 235 F.3d at 1052, the defendant,
charged with bank fraud, entered into a
plea in which he agreed to pay $611,000
in restitution to the victim banks as
part of his sentence, as authorized by 18
U.S.C. sec. 3663A. The defendant claimed
that because the district court did not
determine the victim banks’ losses beyond
a reasonable doubt, his sentence violated
Apprendi. See id. at 1053. We held that
because 18 U.S.C. sec. 3663A required
full restitution and did not set an
absolute maximum amount, there was no
statutory maximum penalty that could be
increased by a certain finding, and
therefore, Apprendi did not apply./3
See id. at 1054; see also United States
v. Smith, 223 F.3d 554, 564-66 (7th Cir.
2000) (holding that Apprendi did not
apply to statute providing for a maximum
sentence of life imprisonment).
Section 309(c)(2) of the CWA, which
allows for "a fine of not less than
$5,000 nor more than $50,000 per day of
violation," also lacks a statutory
maximum penalty. 33 U.S.C. sec.
1319(c)(2). Thus, even though the
sentence imposed under Section 309(c)(2)
of the CWA depends on a factual finding--
the number of violation days--this
finding cannot increase the amount of the
fine over a prescribed statutory limit.
See Behrman, 235 F.3d at 1054. Therefore,
Apprendi does not apply and it was proper
for the district court to find the number
of violation days by a preponderance of
the evidence.
Chemetco claims that the CWA does have
a statutory maximum penalty: $50,000 per
day of violation. Even if Chemetco’s
argument were true, it would not mandate
a reversal in this case because an
Apprendi violation only occurs when the
imposed sentence exceeds the prescribed
statutory maximum. See Apprendi, 530 U.S.
at 490. In its supplemental sentencing
memorandum, Chemetco urged the court to
find seventy-one days of violation, which
would yield a fine range of $342,500 to
$3,425,000./4 The $3,327,500 fine that
the district court actually imposed on
Chemetco was less than what Chemetco
contends was appropriate. Therefore, even
if the CWA had a statutory maximum
penalty of $50,000 per day of violation,
this limit was not exceeded in this case.
III. Conclusion
Because of the foregoing, we AFFIRM
Chemetco’s sentence.
FOOTNOTES
/1 This provision became effective on February 4,
1987. See Water Quality Act of 1987, Pub. L. No.
100-4, sec. 312, 101 Stat. 7. Before then, the
range of available fines was $2,500 to $25,000
per day of violation. See 33 U.S.C. sec.
1319(c)(1) (1982).
/2 See United States v. TGR Corp., 171 F.3d 762, 763
n.2 (2d Cir. 1999); United States v. Wilson, 133
F.3d 251, 260 (4th Cir. 1997); United States v.
Ahmad, 101 F.3d 386, 389 (5th Cir. 1996).
/3 We also held that Apprendi did not apply because
restitution was not a "penalty for a crime." Id.
In the present case, we need not determine wheth-
er a fine is a "penalty for a crime" for Apprendi
purposes.
/4 Chemetco admitted to five days of violation
before February 4, 1987 and sixty-six days there-
after. Therefore, the fine range for 71 days of
violation is calculated as follows: (5 x $2,500
+ 66 x $5,000 = $342,500) to (5 x $25,000 + 66 x
$50,000 = $3,425,000).