311 F.3d 589 (5th Cir. 2002), 01-20460, U.S. v. Ho

Docket Nº:01-20460.
Citation:311 F.3d 589
Party Name:UNITED STATES of America, Plaintiff-Appellee-Cross-Appellant, v. Eric Kung-Shou HO, Defendant-Appellant-Cross-Appellee.
Case Date:October 31, 2002
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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311 F.3d 589 (5th Cir. 2002)

UNITED STATES of America, Plaintiff-Appellee-Cross-Appellant,

v.

Eric Kung-Shou HO, Defendant-Appellant-Cross-Appellee.

No. 01-20460.

United States Court of Appeals, Fifth Circuit

October 31, 2002

Page 590

[Copyrighted Material Omitted]

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Robert Harris Oakley (argued), Greer S. Goldman, John Smeltzer, U.S. Dept. of Justice, Environment & Natural Resources Div., Washington, DC, James Lee Turner, Asst. U.S. Atty., Houston, TX, for U.S.

Michael E. Clark (argued), Lee Hamel, Hamel, Bowers & Clark, Houston, TX, Samuel J. Buffone, Ropes & Gray, Washington, DC, for Ho.

Appeals from the United States District Court for the Southern District of Texas.

Before DAVIS, JONES and SMITH, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

Eric Ho appeals his conviction under the Clean Air Act ("CAA"), 42 U.S.C. § 7401 et seq., and its regulations. The government cross-appeals the refusal to impose two sentencing enhancements. We affirm the conviction but vacate the sentence and remand for re-sentencing.

I.

Ho is a naturalized citizen who emigrated to Houston from the Republic of China in the 1970's. He owns and operates a produce supply company, Houston Fruitland, and a trucking company, Ho Ho Ho Express, Inc. He was convicted of failure to comply with asbestos work practice standards, 42 U.S.C. § 7413(c)(1), and failure to give notice of intent to remove asbestos, 42 U.S.C. § 7413(c)(2)(B).

A.

In October 1997, Ho entered negotiations to purchase the abandoned Alief General Hospital and Professional Building in Houston. During negotiations, the owner's agent told Ho's broker, who told Ho, that a 1994 environmental site assessment had revealed extensive asbestos in the hospital's fireproofing; that asbestos abatement could cost as much as $400,000; and that the owner was selling the property "as is." The owner and Ho ultimately agreed to a price of $700,000 instead of the initial asking price of $1.1 million. The contract included a Commercial Property Condition Statement to the effect that the property contained asbestos. Ho signed the statement, thereby acknowledging the presence of asbestos.

Ho soon contacted a project manager at Laughlin Environmental, a licensed asbestos abatement company, to obtain a bid for asbestos removal. The manager prepared a bid of $325,000 to remove and dispose of all asbestos in the two buildings. Ho quickly rejected the bid as too high, so the manager offered a second bid of cost plus ten percent; Ho never responded.

Instead, Ho initiated his own hospital renovation project in December 1997. He did not give advance notice to the Environmental Protection Agency ("EPA") or the Texas Department of Health ("TDH") of his intent to renovate a building that would involve the removal and disposal of asbestos; this failure violated 40 C.F.R. § 61.145(b). Ho hired Manuel Escobedo, his sometimes handyman, to supervise the work, though Ho often visited the hospital site himself. Ho also hired Corson Tate to begin renovations in the professional building.

Escobedo, in turn, hired at least ten Mexican nationals—apparently in the United States illegally—to perform the renovation and asbestos removal work. Escobedo paid the workers by submitting their time sheets to Ho's accountant, receiving and cashing a check, and paying the workers in cash.

After removing sheetrock partitions and ceiling tiles from the first floor of the

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hospital, the workers, who had no experience or training in asbestos removal, began in mid-January 1998 to remove the asbestos-containing fireproofing. Neither Ho nor Escobedo told them that the fire-proofing contained asbestos or that asbestos is a dangerous carcinogen, nor did they provide the workers with adequate safety equipment.

Against customary asbestos abatement practices, the workers used no water as they removed the fireproofing, but only scraped off the fireproofing, which produced large amounts of asbestos-containing dust inside the hospital. As the workers removed the fireproofing, they placed it in plastic bags. Although they generally left the bags open and inside the hospital, on one occasion a worker placed several bags in an outside dumpster, but Escobedo immediately instructed him to retrieve the bags and leave them inside the hospital. The hospital remained unsealed throughout, with several open doors and windows and a large hole in the second floor exterior wall. None of these practices complied with asbestos work practice standards. See 40 C.F.R. § 61.145.

On February 2, 1998, Tim Stewart, a building inspector for the City of Houston, visited the hospital to investigate a complaint of renovation work without a city permit. Stewart observed the workers as they removed the fireproofing with putty knives without water or adequate safety equipment. Stewart also noted that the hospital was unsealed. He therefore issued a stop-work order and placed a red tag on the main entrance to the hospital indicating that work could not proceed without a city building permit. The workers left shortly thereafter, and Tate delivered the stop-work order to Ho.

Ho then contacted an operations manager at Alamo Environmental, a licensed asbestos abatement company in San Antonio, for an estimate to remove the remaining asbestos-containing material. The manager met Ho at the hospital on February 10 and sent him an estimate of $159,876 on February 13. Ho decided not to hire Alamo Environmental but, instead, to renew his own renovation project.

To avoid the stop-work order and further inspections, Ho re-hired the Mexican workers and instructed them to work at night, asking one of the workers, Jaime Contreras, to supervise. (Escobedo had fallen ill shortly after the stop-work order was issued.) Ho also visited the hospital frequently and on a few occasions personally supervised the workers. The pace of the project soon dissatisfied Ho, however, so he began to offer the workers performance incentives to complete sections of the hospital. Ho also hired Tate to provide supplies to the workers and monitor their hours; Ho and Tate reduced this agreement to a written contract.

The workers completed the asbestos removal on March 10, 1998. Ho told Tate to wash down the inside of the hospital using a water line outside the hospital. Unfortunately, the "water line" was in fact a pressurized gas line.

After Tate removed the cap on the line, he started his nearby van. The spark from the ignition and the open gas line caused an explosion. The explosion burned Tate, three workers, and the van and blew a hole in the exterior wall of the hospital.

As a result of the explosion, TDH inspectors Tim Hendrix and Gary Williams inspected the site on March 13, 1998. They found the hospital unsealed, with open windows and doors and, now, two holes in the exterior walls. Fireproofing dust covered floors and shelves, and the building contained roughly 100 open bags of fireproofing and sheetrock residue.

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Subsequent laboratory analysis of the fire-proofing indicated two to twenty percent chrysolite asbestos; any material with more than one percent is subject to federal and state regulations. The inspectors noted several footprints leading from the hospital outdoors, though they could not determine conclusively whether the dust in the footprints was asbestos-containing fire-proofing or harmless sheetrock residue.

Over the next few months, Hendrix tried, with little success, to get Ho to seal the hospital and complete the asbestos abatement. Ho initially had one of the Mexican workers place plywood over the hospital's doors and windows, though this measure did not adequately seal the hospital. Ho also obtained multiple estimates for the remaining abatement project. He apparently did not want to pay the still-sizeable cost of abatement, though he finally relented after much importuning by Hendrix.

The Occupational Safety and Health Administration ("OSHA") ultimately initiated an administrative enforcement action against Ho and two of his companies, charging violations of the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq., and its regulations. An administrative law judge upheld the citations and assessed administrative penalties against Ho and his companies in excess of $1 million.1

B.

In October 2000, the grand jury issued a nine-count superseding indictment against Ho and Escobedo. Count 1 charged them with conspiracy to violate the CAA in violation of 18 U.S.C. § 371. Count 2 charged Ho with a failure to give notice of intent to renovate a facility involving the removal of asbestos material in violation of 42 U.S.C. § 7413(c)(2)(B). Count 3 charged Ho with failure to comply with asbestos work practice standards in violation of 42 U.S.C. § 7413(c)(1). Count 4 charged Ho with failure to notify the appropriate agency of a release of asbestos in a violation of 42 U.S.C. § 9603(b). Count 5 charged Ho with a knowing release of asbestos into the ambient air, which placed another person in imminent danger of death or serious bodily injury in violation of 42 U.S.C. § 7413(c)(5)(A). Count 6 charged Ho with making a false and material statement to OSHA and the Department of Labor in violation of 18 U.S.C. § 1001. The remaining three counts charged Escobedo with various crimes.

C.

The district court dismissed count 5 after a pre-trial hearing. At the conclusion of the government's case at trial, the court dismissed Count 4 with prejudice and directed a verdict of not guilty on Count 1. The jury convicted Ho on counts 2 and 3 and acquitted him on count 6.

D.

In his presentence report, the probation officer recommended an offense level of 18. First, he grouped, as two or more acts connected by a common criminal objective or part of a common scheme or plan, the convictions for failure to give notice of intent to remove asbestos and failure to comply with asbestos work practice...

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