United States v. CITGO Petroleum Corp.

Decision Date04 September 2015
Docket NumberNo. 14–40128.,14–40128.
Citation801 F.3d 477
PartiesUNITED STATES of America, Plaintiff–Appellee v. CITGO PETROLEUM CORPORATION; CITGO Refining and Chemicals Company, L.P., Defendants–Appellants.
CourtU.S. Court of Appeals — Fifth Circuit

Nicholas Andrew DiMascio, Trial Attorney, U.S. Department of Justice, Denver, CO, Renata Ann Gowie, Assistant U.S. Attorney, U.S. Attorney's Office, Houston, TX, Howard P. Stewart, U.S. Department of Justice, Washington, DC, for PlaintiffAppellee.

Nathan P. Eimer, Esq., Daniel D. Birk, Eimer Stahl, L.L.P., Chicago, IL, Dick W. DeGuerin, Attorney, DeGuerin & Dickson, Houston, TX, for DefendantAppellant.

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

Before DAVIS, JONES, and CLEMENT, Circuit Judges.

Opinion

EDITH H. JONES, Circuit Judge:

CITGO Petroleum Corporation and CITGO Refining and Chemicals Company, L.P. (collectively CITGO) were convicted of multiple violations of the Clean Air Act, 42 U.S.C. § 7413 and 40 C.F.R. § 60.690 et seq. (“Subpart QQQ”), and the Migratory Bird Treaty Act of 1918 (“MBTA”), 16 U.S.C. § 703. CITGO urges this court to reverse the Clean Air Act convictions because the district court erroneously instructed the jury about the scope of a regulation concerning “oil-water separators.” CITGO also contends that the MBTA convictions are infirm because the district court misinterpreted the century-old statute as covering unintentional bird kills. We essentially agree with both contentions and REVERSE.

BACKGROUND

In the 1980s, the Environmental Protection Agency (“EPA”) exercised its authority under Section 111 of the Clean Air Act, 42 U.S.C. § 7411, to regulate oil refinery wastewater treatment systems.1 These systems, the EPA explained, emit dangerous levels of volatile organic compounds (“VOCs”), such as xylene, toluene, and benzene. Standards of Performance for New Stationary Sources; VOC Emissions From Petroleum Wastewater Systems [hereinafter “Proposed Standards”], 52 Fed.Reg. 16,334 –01, 16,337 (May 4, 1987) (to be codified at 40 C.F.R. pt. 60). When VOCs enter the atmosphere they cause photochemical reactions that produce ozone. Id. Ozone, a principal ingredient of urban smog, can trigger a variety of respiratory problems. To mitigate the alleged health risks, the EPA sought to reduce the VOCs entering the wastewater system, reduce the surface area of wastewater exposed to the atmosphere, and control the venting of VOCs to the extent practicable. Id. at 16,337.

Understanding the ensuing regulations, however, requires a brief overview of the wastewater treatment process. Wastewater—containing a mixture of solids, sludges, and oil—is an inevitable byproduct of the refining process. U.S. Envtl. Prot. Agency, VOC Emissions from Petroleum Refinery Wastewater Systems—Background Information for Proposed Standards S [hereinafter “Background for Proposed Standards”], EPA–450/3–85–001a, at 3–3 (1985). A series of drains located in different parts of the refinery collects the wastewater as it is generated. Id. From there, the water travels through lateral sewers into the first piece of oil separation equipment, aptly called an oil-water separator. Id. When wastewater enters the separator, oils and solids with specific gravities less than that of water float to the top, while heavy sludges and solids sink to the bottom. Id. Skimmers then remove the top layer of floating oil for recycling. Id. Although these separators are the primary oil removal equipment, they are not designed to remove all the oil from wastewater; according to the EPA, oil-water separators can remove between fifty and ninety-nine percent of separable oil. Id. at 3–56. When the EPA promulgated the regulation at issue in 1987, there were three types of oil-water separators: the American Petroleum Institute (“API”), Corrugated Plate Interceptor (“CPI”), and Parallel Plate Interceptor (“PPI”). Id. at 3–28. The EPA considered CPIs, the type of separators used at CITGO's facility, “enhanced oil-water separators” because they are more efficient than the then-prevalent API separators.Id.

After wastewater passes through the oil-water separator it pools in large vessels called equalization tanks. By providing a way point between the oil-water separators and subsequent treatments, the tanks ensure that a constant and manageable amount of wastewater flows to secondary treatment systems. Background for Proposed Standards, supra, at 3–54. In other words, the equalization tanks increase the efficiency of downstream treatment processes by preventing large unpredictable discharges (which are common in refineries) from overwhelming those systems. Id. When oil accumulates in the tanks, skimmers and vacuum trucks extract the excess oil for recycling.

Next, wastewater undergoes air flotation. Gas and air are pumped into the wastewater. Background for Proposed Standards, supra, at 3–41. The gases then form bubbles that attach to suspended oil. Id. The combined oil-gas bubbles, with densities less than water, float to the top. Id. The resulting layer of oil can then be skimmed off and recycled. Id. From there, the wastewater undergoes biological treatment in an aerobic basin, then passes through a clarifier before finally being released. Id. at 3–53.

CITGO's Corpus Christi refinery fits this general description. Drains collect wastewater and transport it to two CPI oil-water separators. On average, the CPIs removed about 70 percent of separable oil. The water flowed from the separators into two large equalization tanks, referred to as Tanks 116 and 117, each measuring thirty-feet tall and 240 feet in diameter. When unpredictable discharges occurred, oil pooled in the equalization tanks, and CITGO used vacuum trucks and skimmers to remove the excess oil. Although the CPI oil-water separators had roofs, at the time of the alleged violations, Tanks 116 and 117 did not.

After a surprise inspection in March 2002 revealed 130,000 barrels of oil floating atop the uncovered equalization tanks, Texas environmental inspectors cited CITGO for violating the Clean Air Act.2 Under Subpart QQQ, which resulted from the EPA's push to limit VOC emissions from oil refineries, all oil-water separators must have roofs. Because the equalization tanks contained such a large amount of oil, Texas authorities concluded CITGO was using Tanks 116 and 117 as oil-water separators. And because those tanks were uncovered, authorities concluded that CITGO was violating Subpart QQQ.

In 2007, a grand jury returned a ten-count indictment. As relevant here, the indictment accused CITGO in two counts of knowingly operating Tanks 116 and 117 as oil-water separators without emission control devices in violation of 42 U.S.C. § 7413(c)(1), and 40 C.F.R. § 60.692–4.3 Id. Because the government suspected birds had died in the uncovered tanks, the indictment also accused CITGO of “taking” migratory birds in violation of the MBTA, 16 U.S.C. § 703.4 Id. The trial occurred in two parts. In the first, a jury exonerated the defendants on three CAA counts but found CITGO guilty on the two above-noted counts. CITGO moved to set aside the verdict, arguing, inter alia, that the district court's jury instruction misinterpreted Subpart QQQ. The district court denied the motion. See United States v. CITGO Petroleum Corp. (Clean Air Act Opinion ), No. C–06–563, 2011 WL 1155684, at *1 (S.D.Tex. March 28, 2011). In the nonjury phase of the trial, the district court found CITGO guilty of three (out of five) counts for “taking” migratory birds. The district court denied CITGO's motion to vacate these convictions. United States v. CITGO Petroleum Corp. (MBTA Opinion ), 893 F.Supp.2d 841 (S.D.Tex.2012). The court sentenced CITGO to a $2 million fine for the Clean Air Act counts and $15,000 for each MBTA violation. CITGO now appeals.

DISCUSSION

CITGO presents three challenges to its convictions, only two of which need discussion. First, CITGO challenges the jury instruction that an oil-water separator is any equipment used to separate oil from water. Second, CITGO argues that the MBTA only criminalizes acts related to hunting or poaching, not omissions that unintentionally kill birds.5

I.

CITGO's challenge to the jury instructions rests on one question: under Subpart QQQ, can an equalization tank be an oil-water separator? The district court thought it could. The jury instructions quoted Subpart QQQ's definition of an oil-water separator and then added: [t]he definition of oil-water separator does not require that [it] have any or all of the ancillary equipment mentioned such as forebays, weirs, grit chambers, and sludge hoppers.... An oil-water separator is defined by how it is used.” Clean Air Act Opinion, 2011 WL 1155684, at *3. This purely functional explanation is not what Subpart QQQ says, however: it defines an oil-water separator by how it is used and by its constituent parts. Nor does the district court's interpretation comport with other regulations governing wastewater treatment systems or Subpart QQQ's promulgation history. Although the jury was also provided the exact text of Subpart QQQ, the court's instruction told them what it means and thus undoubtedly affected the verdict. For this harmful error, the Clean Air Act convictions must be reversed.

The district court has “substantial latitude ... in describing the law to the jury.” United States v. Williams, 610 F.3d 271, 285 (5th Cir.2010). This court only evaluates “whether the charge, as a whole, was a correct statement of the law and whether it clearly instructed the jurors as to the principles of the law applicable to the factual issues confronting them.” United States v. Orji–Nwosu, 549 F.3d 1005, 1008 (5th Cir.2008). In other words, this court reviews jury instructions for abuse of discretion. United States v. Santos, 589 F.3d 759, 764 (5th Cir.2009). The legal conclusions underlying jury instructions, however, are reviewed de novo. See Williams, 610 F.3d at 285.

A.

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