307 F.3d 1231 (10th Cir. 2002), 00-5074, U.S. v. Overholt
|Citation:||307 F.3d 1231|
|Party Name:||U.S. v. Overholt|
|Case Date:||October 10, 2002|
|Court:||United States Courts of Appeals, Court of Appeals for the Tenth Circuit|
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William D. Lunn, Tulsa, OK, for Defendant-Appellant Attaluri.
Michael G. Katz, Federal Public Defender, and James P. Moran, Assistant Federal Public Defender, Denver, CO, on the brief for Defendant-Appellant Overholt.
Todd S. Aagaard, Attorney, United States Department of Justice, Environment & Natural Resources Division, Washington, D.C., for Plaintiff-Appellee in Case No. 00-5081 (John C. Cruden, Acting Assistant Attorney General, Washington, D.C., David E. O'Meilia, United States Attorney, Kevin Leitch, Assistant United States Attorney, Tulsa, OK, John A. Bryson and Andrew D. Goldsmith, Attorneys, United States Department of Justice, Environment & Natural Resources Division, Washington, D.C., with him on the brief in both cases).
Before EBEL, BALDOCK, and HARTZ, Circuit Judges.
HARTZ, Circuit Judge.
Defendant Koteswara Attaluri was president of Allied Environmental Services (Allied), which was hired to take petroleum-impacted wastewater from several Department of Defense installations and dispose of it properly. Allied employed Overholt Trucking, owned by Defendant DeWayne "Mac" Overholt, to perform hauling incident to the project. The gist of the charges against Defendants is that they unlawfully injected the wastewater into disposal wells and tried to cover up their crimes.
Allied, Attaluri, and Overholt were convicted under 18 U.S.C. § 371 on a charge that they entered into a conspiracy with five objects: (1) improperly disposing of petroleum-impacted wastewater, in violation of the Safe Drinking Water Act (SDWA), 42 U.S.C. §§ 300h, et seq.; (2) transporting hazardous wastes without a manifest, in violation of the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. § 6928(d)(1); (3) using the mails in the commission of a fraud, in violation of 18 U.S.C. § 1341; (4) using interstate wire communications in the commission of a
fraud, in violation of 18 U.S.C. § 1343; and (5) defrauding the United States by obstructing the lawful environmental protection functions of the Environmental Protection Agency (EPA) and the Department of Defense. In five special verdicts, the jury found that they conspired to commit each of the alleged objects of the conspiracy.
All three were also convicted of a substantive count of mail fraud. In addition, Overholt was convicted on two counts of discharging a pollutant into United States waters, in violation of the Clean Water Act (CWA), 33 U.S.C. §§ 1311(a), 1319(c)(2)(A); one count of illegally transporting hazardous waste, in violation of the RCRA; and one count of making false statements to the federal government in the course of an investigation, in violation of 18 U.S.C. § 1001. Although Allied and Attaluri were also charged on the two CWA counts, they were acquitted. Codefendant Gary Bicknell, an Allied employee, was acquitted of all charges against him. Attaluri was sentenced to a 55-month prison term; Overholt received an 87-month sentence. Each was ordered to pay restitution of $1,265,078.
Attaluri and Overholt raise numerous issues on appeal. (Allied did not appeal.) Attaluri claims that the jury instructions (1) did not accurately set forth the law regarding what wastes could be injected into the disposal wells used by Defendants, (2) misled the jury regarding what constitutes hazardous waste, and (3) improperly indicated that the offense of defrauding the United States did not require an intent to deceive. He also claims he was entitled to instructions that (4) the SDWA imposes criminal sanctions only on those who know the law they are violating and (5) the SDWA does not impose criminal penalties for violations committed in good faith ignorance of the law. In addition, Attaluri raises several challenges to the sufficiency of the evidence to support his conspiracy and mail fraud convictions; and Overholt challenges the sufficiency of the evidence to support any of his convictions except making false statements.
Both Defendants also claim various errors regarding their sentences. Attaluri contends on several grounds that the restitution award was improper and excessive, and complains that the district court did not set a payment schedule. He also contests two factors used to enhance his sentence under the United States Sentencing Guidelines, contending that the district court miscalculated the loss from fraud when applying U.S.S.G. § 2F1.1 and should not have applied U.S.S.G. § 2Q1.2(b)(1)(A), because the waste was not discharged into the environment and did not contaminate the environment. Overholt contends that the district court improperly enhanced his sentence under U.S.S.G. § 3B1.1(a) for his role as an "organizer or leader of a criminal activity" and improperly considered two misdemeanors when determining his criminal history category.
Attaluri and Overholt appealed separately. We heard oral argument on Attaluri's appeal but, at the request of both the Government and Overholt, no oral argument was held in his case. Nevertheless, we consolidate these cases because of the overlap of facts and issues. We have jurisdiction under 28 U.S.C. § 1291. We reverse the mail fraud convictions and affirm all other convictions. We also affirm the sentences, except that we remand to the district court to set a payment schedule for restitution by Attaluri.
We begin with the factual background. Additional evidence will be described as needed in the discussion of the specific issues on appeal.
The Defendants' Businesses and Disposal Wells.
In 1994 Allied successfully bid to become a subcontractor on four Department of Defense contracts for the removal of underground petroleum storage tanks (USTs) at various military sites throughout the Midwest. The primary contractor would unearth the UST and rinse out any remaining oil sludge or chemical residue. Allied was responsible for hauling the rinsewater to its treatment facility at Bonner Springs, Kansas, where it was to remove any refined petroleum product (which it could sell) and properly dispose of the treated wastewater.
Allied hired independent trucking companies to fulfill its hauling needs. Overholt Trucking was hired from November 1994 to May 1995. Although Allied made representations to the government contractors that it would haul wastewater from Bonner Springs to publicly owned wastewater treatment facilities, Overholt truckers were often instructed to inject untreated wastewater into disposal wells in Oklahoma, On some occasions Overholt truckers picked up the wastewater from tanks at Bonner Springs. At other times they would arrive at Bonner Springs and simply pick up loads directly from other trucks coming in from the government sites. And at still other times, they would go to the government sites themselves, pick up the rinsewater, and proceed directly to a disposal well, bypassing Bonner Springs altogether. Overholt acted to conceal his company's use of the disposal wells by instructing his drivers to falsify bills of lading to misrepresent the origin and characteristics of the loads and by telling drivers to use the disposal wells at night.
The well owners eventually refused admittance to Overholt's drivers because of Overholt's delinquencies in paying disposal fees and their suspicions that his drivers were dumping illegal wastes. As an alternative, Overholt used the Peko tank battery, a collection of a dozen above-ground oil storage tanks (OSTs) near Drumright, Oklahoma. Despite never receiving permission to use the tanks, Overholt began instructing his drivers to dump truckloads of wastewater there.
In addition to hauling, Overholt had a side-business trading in "burner fuel," a combustible product made from petroleum-based waste. Overholt would treat sludge built up in the bottom of OSTs with a chemical thinning agent, pump out the resulting "blended oil tank bottom" burner fuel, and sell it for use in industrial furnaces.
The Hillside Dump.
On December 31, 1994, one of Overholt's drivers, Bob Fleming, transported a truck-load of wastewater from a military site to Oklahoma for dumping in a disposal well. When he arrived at the well, Fleming was unable to empty the truck's contents because the cold weather had frozen its exit valve. Fleming drove the truck to Overholt's property and left it there, explaining the situation to Overholt. Overholt attempted to fix the valve by beating on it with a hammer. The frozen valve broke, and the truck's contents started spilling down the adjacent hillside. Overholt waited for the spill to abate and replaced the valve. He finished his work around 4:00 a.m. and went to bed.
Early the next morning a neighbor of Overholt's awoke to find that the adjacent creek contained a black, smelly substance that gave off a "real forceful, pungent odor," and stung his eyes and nose. The neighbor called the local deputy sheriff and the Army Corps of Engineers to investigate. The spill was traced to the hill abutting Overholt's property, where a wide trail of dead vegetation led up the hill to Overholt's tanker truck, still parked in his yard.
When Overholt arose that morning, he found the investigators on his property. While repeatedly disclaiming responsibility for the spill, he offered to clean it up and proceeded to vacuum the waste out of the creek. As soon as the investigators left, the neighbor observed Overholt...
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