United States v. Knott

• Decision Date: 06 June 2001
• Docket Number: CROSS-APPELLANTS,CROSS-APPELLEE,No. 00-2238,N,00-2238
• Citation: 256 F.3d 20
• Parties: (1st Cir. 2001) UNITED STATES OF AMERICA, APPELLANT AND, v. JAMES M. KNOTT, SR.; RIVERDALE MILLS CORP., DEFENDANTS, APPELLEES ANDo. 00-2239 Heard
• Court: U.S. Court of Appeals — First Circuit

Page 20

256 F.3d 20 (1st Cir. 2001)

UNITED STATES OF AMERICA, APPELLANT AND CROSS-APPELLEE, v. JAMES M. KNOTT, SR.; RIVERDALE MILLS CORP., DEFENDANTS, APPELLEES AND CROSS-APPELLANTS.

No. 00-2238, No. 00-2239

United States Court of Appeals For the First Circuit

Heard June 6, 2001

Decided July 12, 2001

APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. Nathaniel M. Gorton, U.S. District Judge] [Copyrighted Material Omitted] John L. Smeltzer, Trial Attorney, Environment & Natural Resources Division, United States Department of Justice, with whom John C. Cruden, Acting Assistant Attorney General, Patty Merkamp Stemler, Trial Attorney, Criminal Division, and David M. Uhlmann and Jared Goldstein, Trial Attorneys, Environment & Natural Resources Division, were on brief, for appellant and cross-appellee.

Warren G. Miller, with whom Henry T. Dunker and Jamy B. Buchanan were on brief, for appellees and cross-appellants.

Before Torruella, Circuit Judge, Cyr, Senior Circuit Judge, and Lynch, Circuit Judge.

Lynch, Circuit Judge

This is a case of first impression for this court as to the standards for awarding attorneys' fees against the United States for its initiation of criminal proceedings, as provided for under the Hyde Amendment, Pub.L. No. 105-119, 111 Stat. 2440, 2519 (1997), reprinted in 18 U.S.C. §§ 3006A (statutory note). The district court awarded $68,726.00 in fees to Riverdale Mills, which had been one defendant in a criminal prosecution for violation of the Clean Water Act, and denied fees to James Knott, the other defendant. The government voluntarily dismissed the action after the district court suppressed some of the prosecution's evidence. The district court awarded fees on the grounds that the government's prosecution was "vexatious." We reverse the award of fees to Riverdale Mills and affirm the denial of fees to Knott.

I.

Riverdale Mills Corporation and its principal owner, James Knott, operate a plant in Northbridge, Massachusetts, that manufactures plastic-coated steel wire mesh. The production involves two processes, one producing rather acidic wastewater, and the other producing quite caustic (i.e., alkaline) wastewater. Riverdale Mills ultimately discharges this industrial waste into the public sewer owned by the Town of Northbridge.

The Clean Water Act prohibits the indirect discharge of pollutants into the waters of the United States through publicly owned treatment works. 33 U.S.C. §§ 1317(b)(1). The implementing regulations for the Act prohibit the discharge of wastewater with a pH below 5.0 standard units ("s.u.") ¹ into publicly owned sewer systems. 40 C.F.R. §§ 403.5(b)(2). Any person who "knowingly" violates these standards is subject to felony prosecution. 33 U.S.C. §§ 1319(c)(2)(A).

Riverdale Mills's state permit for discharging its waste into the public sewer states that Riverdale Mills will ensure that the wastewater falls within acceptable limits by combining the two streams inside the plant so that the caustic water neutralizes the acidic water, and then further neutralizing the waste by adding a caustic soda. Following this pretreatment, on the design in the permit, the now- combined wastewaters would flow intermittently through an effluent pipe to a manhole outside the building on Riverdale Street (Manhole #1), where it joins a sewer pipe. The discharge then would flow through that sewer pipe approximately 100 yards to a second manhole (Manhole #2), where the pipe joins the public sewer line.

Acting on an anonymous tip that this pretreatment system was not in operation, two EPA civil inspectors went to Riverdale Mills for an unannounced inspection on October 21, 1997. The district court determined that Knott consented to the inspection, but determined on disputed facts that his consent was qualified by the express condition that the EPA inspectors be accompanied by Riverdale Mills representatives during the entire course of their inspection. Knott then accompanied the inspectors to Manhole #1, where they took two initial samples (neither below pH 5.0 s.u.) and observed only an intermittent discharge. Because of the intermittent nature of the discharge flow, the inspectors then allegedly informed Knott that they would have to conduct periodic sampling throughout the day. The group then embarked on a tour of the facility, during which the EPA inspectors discovered that, contrary to Knott's alleged statement that morning, the wastewater treatment facility at Riverdale Mills was not in operation. Apparently, the two wastewater streams were not being mixed in the treatment facility as intended because a valve was turned to the wrong position, and also the tank where caustic soda was to be added to the wastewater was being bypassed.

In the early afternoon, the inspectors returned to Manhole #1, on the street in front of the plant and in the plain view of Riverdale Mills employees. There they took a series of samples, and those additional samples yielded pH readings ranging from 2.19 to 7.48 s.u., with thirteen of the fourteen samples showing extremely low pH readings (between 2.19 and 2.59 s.u.). ² The district court determined that the EPA inspectors were not accompanied by a Riverdale Mills representative for this sampling. The inspectors then returned to the plant and a Riverdale Mills employee completed their tour of the facilities. The EPA inspectors also gave a split sample from one of their afternoon samples to the employee, who signed the chain of custody form for it. At the EPA's closing conference with Knott, they discussed the low pH discharges, and Knott informed the EPA inspectors that he owned Riverdale Street and he claimed ownership of the sewer line under the street.

After leaving the plant, the EPA inspectors went to Manhole #2. This is where the "private" sewer line joined the municipal line, according to Knott's statement at the meeting. There the inspectors noted a second residential sewer line also joined at the manhole, seven feet below the Riverdale Mills line. Accordingly, they took three different samples at this site. One was from the discharge of the residential line, which the EPA says yielded a pH of approximately 7 s.u. One was from water standing in a trough at the manhole, which the EPA says yielded a pH around 7 s.u. The last one was from the discharge flowing from the Riverdale Mills line, which the EPA says yielded a pH of around 4 s.u. In their field log, the number "4" for this final measurement appears to be written over a "7." (The district court later concluded that the recorded entry for that sample had been altered from its actual reading of 7 s.u.)

Based on this information, the EPA criminal division obtained a federal search warrant and conducted a second inspection on November 7, 1997. A large number of samples were taken at Manhole #1. Most had a pH below 5.0 s.u. and the samples worsened -- that is, became even more acidic -- as the day progressed. EPA agents also took seven samples in the morning at Manhole #2, and all had pH readings around 5.0 or 6.0 s.u. Again, the agents observed that the required pretreatment system at the Riverdale Mills plant was largely not operational; although on that day the two wastewater streams were mixing in the plant, the process adding caustic soda was still being bypassed. Plant employees told the EPA that the pretreatment system had not been in operation since sometime in the spring of 1997, and that Knott was aware that wastewater was being discharged without pretreatment.

In July 1998, the EPA executed a second search warrant to measure the effects of groundwater infiltration between Manhole #1 and Manhole #2. This was done in response to Knott's claim that he owned the intervening sewer line and that by the time the wastewater reached the public sewer at Manhole #2, groundwater infiltration inevitably brought it within the legal limit. The EPA's expert concluded that even making assumptions favorable to Knott, any wastewater with a pH below 3.0 s.u. at the first manhole would reach the sewer line at the second manhole with a pH below 5.0 s.u.

On August 12, 1998, a federal grand jury indicted Knott and Riverdale Mills on two counts of violating the Clean Water Act by knowingly discharging industrial wastewater with a pH below 5.0 s.u. into a publicly owned treatment works on October 21 and November 7, 1997. Following the indictment, both the U.S. Attorney's office and the regional EPA issued standard press releases announcing the indictment and its allegations.

On October 14, 1998, Knott and Riverdale Mills moved to suppress evidence from the afternoon sampling on October 21, 1997 as the result of an unlawful search, and also to suppress the sampling obtained through the November 7 search warrant, as the fruit of the October 21 sampling. On February 16, 1999, the district court suppressed the sampling results from the afternoon of October 21, 1997, finding that the EPA inspectors exceeded the scope of Knott's consent when they sampled the wastewater stream without a Riverdale Mills representative present. However, the district court declined to suppress the evidence obtained on November 7, reasoning that even though the basis of the warrant was in part the October 21 afternoon sampling, the agents acted in good faith executing the warrant.

The government sought leave of court to dismiss the indictment without prejudice on April 23, 1999, because in the course of preparing for trial, it determined that the suppression had substantially weakened its case and raised a question as to whether it could make a sufficiently compelling case to the jury to meet its burden of proof on the remaining evidence. Leave of the court to dismiss the indictment without prejudice was granted by the district court on May 6, 1999.

Following the dismissal of the indictment, Knott and Riverdale Mills filed a motion to recover reasonable attorneys' fees under the...