United States v. MacDonald & Watson Waste Oil Co.

CAMPBELL, J.

This appeal concerns the criminal liability of individuals and corporations under hazardous waste disposal laws.

Following a jury trial in the district court, appellants were convicted ... of having violated criminal provisions of the Resource Conservation and Recovery Act ("RCRA"), ... and the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA")....

Appellants were convicted ... as follows:

MacDonald & Watson Waste Oil Co. ("MacDonald & Watson") ... and Eugene K. D'Allesandro were convicted, on two counts each, of knowingly transporting and causing the transportation of hazardous waste, namely toluene and soil contaminated with toluene, to a facility which did not have a permit, in violation of RCRA, section 3008(d)(1)....

...MacDonald & Watson, a company with offices in Johnstown, Rhode Island, was in the business of transporting and disposing of waste oils and contaminated soil. MacDonald & Watson operated a disposal facility on land in Providence, Rhode Island, known as the "Poe Street Lot," leased from ... NIC. MacDonald & Watson operated the Poe Street Lot under NIC's Rhode Island RCRA permit, which authorized the disposal at the lot of liquid hazardous wastes and soils contaminated with non-hazardous wastes such as petroleum products...

[Macdonald & Watson won a bid to remove soil contaminated by toluene from the property of the Master Chemical Company. Neither NIC nor MacDonald & Watson held a RCRA permit authorizing them to dispose of solid hazardous wastes such as toluene-contaminated soil at the Poe Street Lot. An employee of Macdonald & Watson signed an agreement calling for the removal of "contaminated soil and toluene." Another employee supervised the shipment of the contaminated soil to the Poe Street Lot. Finally, employees of MacDonald & Watson accepted the contaminated soil shipment at the Poe Street lot.]

D'Allesandro, the President and owner of MacDonald & Watson, contends that his conviction under RCRA, section 3008(d)(1) ... must be vacated because the district court incorrectly charged the jury regarding the element of knowledge in the case of a corporate officer. Section 3008(d)(1) penalizes "Any person who ... (1) knowingly transports or causes to be transported any hazardous waste identified or listed under this subchapter ... to a facility which does not have a permit...". In his closing, the prosecutor conceded that the government had "no direct evidence that Eugene D'Allesandro actually knew that the Master Chemical shipments were coming in," that is, [that they] were being transported to the Poe Street Lot under contract with his company. The prosecution did present evidence, however, that D'Allesandro was not only the President and owner of MacDonald & Watson but was a "hands-on" manager of that relatively small firm. There was also proof that that firm leased the Poe Street Lot from NIC, and managed it, and that D'Allesandro's subordinates had contracted for and transported the Master Chemical waste for disposal at that site. The government argued that D'Allesandro was guilty of violating section 3008(d)(1) because, as the responsible corporate officer, he was in a position to ensure compliance with RCRA and had failed to do so even after being warned by a consultant on two earlier occasions that other shipments of toluene-contaminated soil had been received from other customers, and that such material violated NIC's permit. In the government's view, any failure to prove D'Allesandro's actual knowledge of the Master Chemical contract and shipments was irrelevant to his criminal responsibility under section 3008(d)(1) for those shipments.

The court apparently accepted the government's theory. It instructed the jury as follows:

"When an individual Defendant is also a corporate officer, the Government may prove that individual's knowledge in either of two ways. The first way is to demonstrate that the Defendant had actual knowledge of the act in question. The second way is to establish that the defendant was what is called a responsible officer of the corporation committing the act. In order to prove that a person is a responsible corporate officer three things must be shown.

First, it must be shown that the person is an officer of the corporation, not merely an employee.

Second, it must be shown that the officer had direct responsibility for the activities that are alleged to be illegal. Simply being an officer or even the president of a corporation is not enough. The Government must prove that the person had a responsibility to supervise the activities in question.

And the third requirement is that the officer must have known or believed that the illegal activity of the type alleged occurred."

The court's phrasing of the third element at first glance seems ambiguous: it could be read to require actual knowledge of the Master Chemical shipments themselves. We are satisfied, however, that the court meant only what it literally said: D'Allesandro must have known or believed that illegal shipments of the type alleged had previously occurred. This tied into evidence that D'Allesandro had been advised of two earlier shipments of toluene-contaminated waste, and was told that such waste could not legally be received. For the court to require a finding that D'Allesandro knew of the alleged shipments themselves (that is, the Master Chemical shipments), would have duplicated the court's earlier instruction on actual knowledge, and was not in accord with the government's theory.

D'Allesandro challenges this instruction, contending that the use of the "responsible corporate officer" doctrine is improper under section 3008(d)(1) which expressly calls for proof of knowledge.... The government responds that the district court properly adapted the responsible corporate officer doctrine traditionally applied to strict liability offenses to this case, instructing the jury to find knowledge "that the illegal activity of the type alleged occurred," -- a finding that, together with the first two, made it reasonable to infer knowledge of the particular violation. We agree with D'Allesandro that the jury instructions improperly allowed the jury to find him guilty without finding he had actual knowledge of the alleged transportation of hazardous waste on July 30 and 31, 1986, from Master Chemical Company, Boston, Massachusetts, to NIC's site, knowledge being an element the statute requires. We must, therefore, reverse his conviction.

The seminal cases regarding the responsible corporate officer doctrine are United States v. Dotterweich ... and United States v. Park.... These cases concerned misdemeanor charges under the Federal Food, Drug, and Cosmetic Act, ... relating to the handling or shipping of adulterated or misbranded drugs or food. The offenses alleged in the informations failed to state a knowledge element, and the Court found that they, in fact, dispensed with a scienter requirement, placing "the burden of acting at hazard upon a person otherwise innocent but standing in responsible relation to a public danger." Dotterweich.... The Court in Park clarified that corporate officer liability in that situation requires only a finding that the officer had "authority with respect to the conditions that formed the basis of the alleged violations." But while Dotterweich and Park thus reflect what is now clear and well-established law in respect to public welfare statutes and regulations lacking an express knowledge or other scienter requirement, we know of no precedent for failing to give effect to a knowledge requirement that Congress has expressly included in a criminal statute. Park.... Especially is that so where, as here, the crime is a felony carrying possible imprisonment of five years and, for a second offense, ten.

The district court, nonetheless, applied here a form of the responsible corporate officer doctrine established in Dotterweich and Park for strict liability misdemeanors, as a substitute means for proving the explicit knowledge element of this RCRA felony.... As an alternative to finding actual knowledge, the district court permitted the prosecution to constructively establish defendant's knowledge if the jury found the following: (1) that the defendant was a corporate officer; (2) with responsibility to supervise the allegedly illegal activities; and (3) knew or believed "that the illegal activity of the type alleged occurred." ...

Contrary to the government's assertions, this instruction did more than simply permit the jury, if it wished, to infer knowledge of the Master Chemical shipments from relevant circumstantial evidence including D'Allesandro's responsibilities and activities as a corporate executive. With respect to circumstantial evidence, the district court properly instructed elsewhere that knowledge did not have to be proven by direct evidence but could be inferred from the defendant's conduct and other facts and circumstances. The court also instructed that the element of knowledge could be satisfied by proof of willful blindness. These instructions allowed the jury to consider whether relevant circumstantial evidence established that D'Allesandro actually knew of the charged Master Chemical shipments. These would have sufficed had it merely been the court's purpose to point out that knowledge could be established by circumstantial evidence, although the court could, had it wished, have elaborated on the extent to which D'Allesandro's responsibilities and duties might lead to a reasonable inference that he knew of the Master Chemical transaction.

Instead, the district court charged, in effect, that proof that D'Allesandro was a responsible corporate officer would conclusively prove the element of his knowledge of the Master Chemical shipments. The jury was told that knowledge could be proven "in either of two ways." Besides demonstrating actual knowledge, the government could simply establish the defendant was a responsible corporate officer -- the latter by showing three things, none of which, individually or collectively, necessarily established his actual knowledge of the illegal transportation charged. Under the district court's instruction, the jury's belief that the responsible corporate officer lacked actual knowledge of, and had not willfully blinded himself to, the criminal transportation alleged would be insufficient for acquittal so long as the officer knew or even erroneously believed that illegal activity of the same type had occurred on another occasion.

We have found no case, and the government cites none, where a jury was instructed that the defendant could be convicted of a federal crime expressly requiring knowledge as an element, solely by reason of a conclusive, or "mandatory" presumption of knowledge of the facts constituting the offense....

We agree ... that knowledge may be inferred from circumstantial evidence, including position and responsibility of defendants such as corporate officers, as well as information provided to those defendants on prior occasions. Further, willful blindness to the facts constituting the offense may be sufficient to establish knowledge. However, the district court erred by instructing the jury that proof that a defendant was a responsible corporate officer, as described, would suffice to conclusively establish the element of knowledge expressly required under section 3008(d)(1). Simply because a responsible corporate officer believed that on a prior occasion illegal transportation occurred, he did not necessarily possess knowledge of the violation charged. In a crime having knowledge as an express element, a mere showing of official responsibility under Dotterweich and Park is not an adequate substitute for direct or circumstantial proof of knowledge.

We vacate the convictions of Eugene D'Allesandro and of NIC and remand for a new trial or such other action as may be consistent herewith.

So ordered.