United States v. Wabash Environmental Technolog

In the
United States Court of Appeals
For the Seventh Circuit
Nos. 07-3874 & 07-3875
U NITED S TATES OF A MERICA,
Plaintiff-Appellee,
v.
D ERRIK H AGERMAN and W ABASH
E NVIRONMENTAL T ECHNOLOGIES, LLC,
Defendants-Appellants.
Appeals from the United States District Court
for the Southern District of Indiana, Indianapolis Division.
No. 1:06CR0139—David F. Hamilton, Chief Judge.
S UBMITTED N OVEMBER 13, 2008—D ECIDED D ECEMBER 5, 2008
O PINION JANUARY 15, 2009 1
Before P OSNER, R OVNER and E VANS, Circuit Judges.
P ER C URIAM. A jury convicted Wabash Environmental
Technologies (WET) and its president, Derrik Hagerman,
1
The court has decided to publish its order, in edited form, as
an opinion.
2 Nos. 07-3874 & 07-3875
on ten counts of making materially false statements in
reports that WET was required to file under the Clean
Water Act, 33 U.S.C. § 1319(c)(4). The judge sentenced
Hagerman to 60 months in prison (a guideline sentence,
well explained by the judge, United States v. Hagerman, 525
F. Supp. 2d 1058 (S.D. Ind. 2007)), and, along with WET,
was ordered to pay $237,680 in restitution to the EPA
for the expense of cleaning up pollution caused by them.
WET operated a facility in Terre Haute, Indiana, that
treated industrial liquid waste and discharged the treated
liquid into the Wabash River. The National Pollutant
Discharge Elimination System permit issued by the
Indiana Department of Environmental Management
limited the type and amount of pollutants that the waste
liquid could contain and required WET to make monthly
reports—Monthly Monitoring Reports (MMRs) and
Discharge Monitoring Reports (DMRs)—disclosing the
results of tests of the waste liquid. The permit required
that WET use testing procedures approved by the EPA
and made Hagerman responsible for completing the
reports and certifying that they were “true, accurate
and complete.”
Hagerman and WET argue that the district court erred
in admitting into evidence copies of certain electronic
spreadsheets that recorded test results that were not
charged in the indictment but were in conflict with what
WET had reported. The defendants argue that the test
results are evidence of prior bad acts that should have
been excluded under Federal Rule of Evidence 404(b). The
argument has no merit. When a defendant commits
two criminal acts simultaneously but is charged only with
Nos. 07-3874 & 07-3875 3
one, “the evidence of the ‘other’ crime [cannot] be disen-
tangled from the evidence of the charged crime,” and
therefore evidence material to prove the charged crime
“may unavoidably reveal” other criminal acts that are
not charged. United States v. Taylor, 522 F.3d 731, 734
(7th Cir. 2008). That is the situation here.
Hagerman and WET were charged with mis-
representing results of tests conducted between
January and October 2004. This was the same period
covered by the spreadsheets in question. It would have
been infeasible to separate out this evidence so as to
eliminate any hint that the defendants had also
falsified other test results. United States v. Bass, 794 F.2d
1305, 1312 (8th Cir. 1986). What Hagerman knew when
he completed the reports was the central question at
trial. He denied having received reports of test results in
any format other than post-it notes and scraps of paper and
testified that he had never seen the spreadsheets or re-
ceived any test results showing unacceptable levels of
pollution. But the EPA found spreadsheets in his office,
and the spreadsheets that the defendants argue should
have been excluded from evidence were crucial to estab-
lishing that those found in Hagerman’s office were in
fact printouts of the spreadsheets created and maintained
to record lab results. In showing that Hagerman possessed
these printouts, the prosecution undercut Hagerman’s
defense that he had never seen them.
The defendants argue frivolously that by admitting
evidence of misconduct not charged in the indictment, the
judge allowed the indictment to be “constructively
4 Nos. 07-3874 & 07-3875
amended.” That amounts to saying that admitting any
“other crimes” evidence permitted by Rule 404(b) would
result in a constructive amendment. Obviously not. United
States v. Rosario-Diaz, 202 F.3d 54, 70-71 (1st Cir. 2000);
United States v. Leichtnam, 948 F.2d 370, 379 (7th Cir. 1991).
The defendants argue that the district judge misstated
the law in one of its jury instructions. He instructed the
jury that WET’s permit required Hagerman to certify that
each report he submitted was “true, accurate, and com-
plete” and was prepared under his “direction or super-
vision in accordance with a system designed to assure that
qualified personnel properly gather and evaluate the
information submitted.” So far, so good, but he further
instructed the jury that “[t]he phrase ‘properly gather and
evaluate the information submitted’ means that the
information was gathered and evaluated in accordance
with the terms and conditions” of WET’s permit, including
“the requirement that the analytical and sampling
methods used conform to the applicable federal regula-
tions.” The court drew this language from WET’s dis-
charge permit. But the defendants argue that the pro-
vision of the Indiana Administrative Code setting out the
specific language that holders of discharge permits must
use in verifying their reports does not define the phrase
“properly gather and evaluate the information submit-
ted.” 327 IND. A DMIN. C ODE 5-2-22(d). They argue that the
judge should have left it up to the jury to determine
whether WET had a system in place to ensure that the
results were properly gathered and evaluated.
The permit stated that WET had to use either the test
methods approved in the EPA regulations, which are
Nos. 07-3874 & 07-3875 5
listed in the permit, or “different but equivalent methods”
that had been approved by the EPA and the Commissioner
of the Indiana Department of Environmental Manage-
ment. The judge’s instruction that the testing methods
must “conform to applicable federal regulations” was a
correct interpretation of the permit, and the meaning of the
permit presented an issue of law that the judge was
entitled to determine, rather than leave to the jury. United
States v. Weitzenhoff, 35 F.3d 1275, 1288 (9th Cir. 1993); Piney
Run Pres. Ass’n v. County Comm’rs of Carroll County, Md.,
268 F.3d 255, 269 (4th Cir. 2001). The permit states that
the testing methods “shall conform to the current version
of 40 CFR, Part 136,” and both the listed testing methods
and the procedure for obtaining approval to use alterna-
tive methods are described in the cited Part of the CFR.
See 40 C.F.R. §§ 136.3 (listing the approved testing proce-
dures), 136.4 (laying out the procedure for gaining ap-
proval of an equivalent testing method).
Finally, Hagerman argues that he should not have been
given a prison sentence. He says that the damage he
caused to the environment could not be quantified, that
in his life outside WET he made “considerable” contribu-
tions to his community, that his family relies on him
for support, and that imprisonment will make paying
restitution difficult. The judge considered but rejected
these arguments. There was no abuse of discretion.
A FFIRMED.
1-15-09