Oral argument: Mar. 19, 2012
Appealed from: United States Court of Appeals for the First Circuit (Dec. 22, 2010)
CRIMINAL FINES, FIFTH AMENDMENT, SIXTH AMENDMENT, ENVIRONMENT, CRIMINAL LAW
In 2004, local youths broke into a Southern Union storage center that was improperly storing mercury; the incident resulted in a spill and cleanup effort. Southern Union was charged with storing hazardous waste without a permit under the Resource Conservation and Recovery Act. After a jury found Southern Union guilty, the district court judge determined that the violation had continued for 762 days and imposed a fine of $38 million. On appeal, Southern Union argued that the Supreme Court’s decision in Apprendi required that the jury determine the period of the violation, not the judge. Southern Union contends that if the determination of the period of violation is left to the judge, the court could impose a fine in excess of the actual violation, violating Southern Union’s Fifth and Sixth Amendment rights. In contrast, the United States asserts that Apprendi is not applicable because it dealt with deprivations of life and liberty interests, not the criminal fines that are at issue here. The decision in this case has implications for consistent treatment of defendants and the efficiency of courts.
Whether the Fifth and Sixth Amendment principles that this Court established in Apprendi v. New Jersey, 530 U.S. 466 (2000), and its progeny, apply to the imposition of criminal fines.
When the court imposes a criminal fine, do the principles of Apprendi v. New Jersey, 530 U.S. 466 (2000) apply, requiring that the jury find all issues of fact necessary to determine the amount of the fine?
Southern Union Company (“Southern Union”), a distributor of natural gas, acquired an old gas manufacturing plant in Rhode Island (“the Tidewater property”) as part of its new operations in Massachusetts and Rhode Island in 2000. See United States v. Southern Union Co., 630 F.3d 17, 22 (2010). Although this property was not maintained or secured, Southern Union began storing loose mercury and outdated mercury-sealed gas regulators (“MSRs”) on the Tidewater property in June 2001. See id. Southern Union stopped recycling MSRs in November 2001, and employees left loose mercury in whatever container it arrived in, including a milk jug, a paint can, glass jars, and plastic containers. See id. By June 2004, the Tidewater property held 165 MSRs and more than 140 pounds of loose mercury. See id. at 23.
Aware of the accumulating mercury, Southern Union’s Environmental Services Manager for New England drafted Requests for Proposals (“RFPs”) in 2002, 2003, and 2004 to find someone to dispose of the mercury, but Southern Union’s corporate headquarters did not distribute the RFPs and took no action to dispose of the mercury. See id. Although the issue was raised again at safety committee meetings in May, June, and September of 2004, Southern Union took no action. See id.
In late September 2004, several local youths broke into the Tidewater property, spilling the stored mercury around the Tidewater property, and bringing some back to their apartment complex where residents tracked it into other apartments. See id.
Southern Union discovered the break-in on October 19, about three weeks later. See id. Southern Union immediately called a contractor to clean up the spills and notified the state Department of Environmental Management. See id. However, Southern Union did not contact the Pawtucket fire department or the state Fire Marshal, the official contacts for mercury spills over one pound. See id. It cost Southern Union $6 million to clean the spill sites, and all residents of the five contaminated apartment buildings were tested for elevated mercury levels, but none met the standards for hazardous exposure. See id. at 24.
In 2007, a federal grand jury returned an indictment against Southern Union for three counts: two counts of storing hazardous waste without a permit in violation of the Resource Conservation and Recovery Act (“RCRA”) (Count One covered the loose mercury, and Count Three covered the MSRs) and one count of failing to report a mercury release in violation of the Emergency Planning and Community Right-to-Know Act. See id. However, the jury convicted Southern Union only on Count One. See id. After the jury verdict, Southern Union renewed a previously filed motion, arguing that the EPA’s 2002 Immediate Final Rule, which authorized Rhode Island’s RCRA regulations, was improper because the Rhode Island regulations were beyond the scope of the federal RCRA program. See id.
The District Court for the District of Rhode Island denied the motion because no judicial review of the EPA’s authorization of state hazardous waste programs is available in “criminal proceedings for enforcement.” See id. The district court sentenced Southern Union to a $50,000 fine per day for 762 days’ worth of violations of the RCRA. See Brief for Petitioner Southern Union Company at 8.
Southern Union appealed the sentence, claiming that under the Supreme Court’s holding in Apprendi v. New Jersey, a jury must find all the facts necessary to calculate a criminal fine, not the court. See id. at 8–9. The United States Court of Appeals for the First Circuit upheld the sentence maintaining that Apprendi does not apply to the imposition of statutorily prescribed fines. See id. at 9. The Supreme Court granted certiorari on November 28, 2011.
Avoiding Government Abuse of Criminal Fines
Petitioner Southern Union Company (“Southern Union”) argues that courts should not be the body that finds facts that are necessary to calculate a criminal fine because the court could abuse the power and extract payments as punishment. See Brief for Petitioner, Southern Union Company at 46–47. As Southern Union argues, fines are a unique sanction — while other forms of punishment cost the state money, fines are a source of revenue, so the court may have an incentive to charge excessive fines if it has fact-finding discretion. See id. at 47.
Respondent, the United States, maintains that a sentencing system that allows for fines that increase per day of violation is in place to promote sentences that reflect the proportional harm of the offense. See Brief for Respondent, the United States at 48. The United States notes that statutes that base the fine on the length of time of exposure to hazardous substances, or the gain and loss resulting from the offense limit judicial discretion by conditioning the amount of the fine on facts that quantify the harm. See id. at 47–48.
Consistent Treatment of Criminal Defendants
Southern Union asserts that if courts have discretion over criminal fines, criminal defendants subject to imprisonment will be treated differently than criminal defendants subject to fines. See Brief for Petitioner at 48. Southern Union maintains that when juries decide imprisonment issues, they use the beyond a reasonable doubt standard; if a court decides the proper criminal fine, courts use the lower preponderance of the evidence standard. See id. at 51. Southern Union asserts that this structure would disproportionately affect corporations, who can never be subject to imprisonment and therefore, would always be subject to this lower standard of proof in criminal cases. See id. at 48. The Chamber of Commerce and the National Association of Criminal Defense Lawyers argue that defendants subject to fines, and corporations in particular, will be under pressure to accept a deal with the prosecutor to plead guilty rather than rolling the dice at trial. See Brief for Amici Curiae Chamber of Commerce et al. in Support of Petitioner at 5–6.
The United States responds that defendants facing a mere loss of property have always been given different protections than defendants facing a loss of liberty. See Brief for Respondent at 19–20. The United States argues that because fines involve a lesser type of deprivation than incarceration or the death penalty, the Supreme Court has recognized only limited Sixth Amendment rights when a fine is the only penalty. See id. at 21–23.
Additionally, the United States notes that prior to the implementation of this sentencing system, corporations were faced with only modest penalties for serious crimes. See id. at 48–49. The United States argues that this more discretionary fine system is necessary to ensure that corporations do not profit from their wrongdoings. See id. at 49. The United States contends that if juries must determine the proper fine for a corporation, they would need to be presented with the extent of environmental harm and the money that the corporation saved by violating safety regulations, information that might prejudice a jury against a corporate defendant. See id. at 50–51.
Efficiency of the Criminal Justice System
The United States argues that applying Apprendi v. New Jersey to criminal fines will interfere with the criminal justice system. See Brief for Respondent at 50. The United States argues that the facts needed to set the fine might not be known at the time of indictment, which would make sentencing difficult for a jury. See id. Additionally, the United States expresses concern that requiring jurors to find the gain or loss to a company, as required by some sentencing systems, might cause substantial juror confusion, as the calculations can be complex and require expert testimony outside of matters related to guilt or innocence. See id. at 51.
The Chamber of Commerce argues that subjecting criminal fines to the rule of Apprendi would not prevent prosecutors from effectively enforcing the law. See Brief for Amici Curiae Chamber of Commerce et al. at 7. As an example, the Chamber of Commerce discusses the Antitrust Division’s success in extracting criminal fines of between three and four times the Sherman Antitrust Act maximum while adhering to Apprendi. See id. The Chamber of Commerce also points to the United States Court of Appeals for the Second Circuit, which recently held that Apprendi applied to criminal fines, and in which prosecutors frequently prepare to prove gain and loss information beyond a reasonable doubt when requesting the imposition of high fines. See id. at 10.
In Apprendi v. New Jersey, the Supreme Court decided that in order for a judge to impose a sentence above the maximum prescribed by statute, the facts forming the basis of that sentence must have been found by the jury. See Apprendi v. New Jersey, 530 U.S. 466, 490 (2000). At issue in this case is whether that principle applies to criminal fines, not just offenses carrying a possibility of incarceration. Petitioner Southern Union Company (“Southern Union”) argues that Apprendi applies, because both the historical analysis and plain language of the Apprendi case reference fines as well as prison sentences. See Brief for Petitioner, Southern Union Co. at 21–23. Southern Union argues its Fifth and Sixth Amendment rights have been violated because the district court judge, rather than the jury, determined the dates of the permit violation and then based the fine on that time period. See id. at 29–30. Respondent, the United States, contends that the Supreme Court has repeatedly distinguished between fines and incarceration, because only the latter implicates the serious loss of liberty that the Fifth and Sixth Amendments were meant to guard against. See Brief for Respondent, the United States at 19–21.
Do criminal fines fall within Apprendi v. New Jersey?
According to Southern Union, the historical common law basis underpinning the Apprendi decision means that the principles of that case extend to criminal fines in addition to incarceration and other punishments. See Brief for Petitioner at 20–21. Southern Union emphasizes that because Apprendi focused heavily on criminal sentencing practices that existed at the time of the founding, and because fines were a primary form of punishment at that time, all of Apprendi’s principles must also apply to criminal fines. See id. at 19–20. Southern Union contends that there is no jurisprudential distinction between incarceration and fines for the purposes of applying the protections of the Fifth and Sixth Amendments. See id. at 21.
Southern Union underscores Justice Thomas’s concurrence in Apprendi, in which he noted that a jury would have to determine the worth of property in an arson case for a fine to be based on the property’s value. See Brief for Petitioner at 20. By analogy, Southern Union asserts that the jury in this case would have to find the dates of the permit violation in order to calculate the amount of the fine. See id. Southern Union alleges that since the jury did not explicitly determine the duration of the violation, the trial court violated Southern Union’s constitutional rights by basing the fine on facts not found by the jury. See id. at 22–23.
In addition to these historical underpinnings, Southern Union also highlights that Apprendi’s express language applies to fines, not just incarceration. See Brief for Petitioner at 23–24. Because the decision refers to the word “penalty” in general terms, Southern Union claims that Apprendi applies broadly to criminal fines, incarceration, and other forms of punishment. See id. at 24–25. Further, Southern Union points to a number of other decisions in federal courts of appeals which had vacated fines that were based on facts beyond those found by the jury, in violation of Apprendi. See id. at 27–28.
In response, the United States contends that the central focus in Apprendi was that sentencing beyond a statutorily prescribed maximum imposed a stigma and loss of liberty that implicates serious Sixth Amendment concerns. See Brief for Respondent at 19. For the United States, it is the seriousness of the imposed punishment that requires a jury to find facts leading to a sentence above the statutory maximum. See id. at 19–20. The United States asserts that fines are inherently different from incarceration and do not deal with the same loss of liberty as a prison sentence. See id. at 20. The United States contends that judges historically exercised wide discretion when imposing fines for common law and statutory crimes, while juries were not involved in determining the amount of the fines. See id. at 31–34.
The United States highlights the fact that the Supreme Court has repeatedly differentiated Sixth Amendment requirements based on the seriousness of the punishment that a defendant faced. See Brief for Respondent at 20. For example, the United States notes that while a jury trial is required for serious offenses, the same does not hold true for petty crimes. See id. Dealing with fines in particular, the United States points to a case in which the Court found that there was no right to a jury trial for a labor union facing a maximum penalty of $10,000. See id. at 21.
Finally, the United States asserts that the primary concern behind the jury trial right is to prevent arbitrary or wrongful infringement on a defendant’s life and property interests. See Brief for Respondent at 24. According to the United States, wrongful deprivation cannot occur in a case like this one because the jury already found beyond a reasonable doubt that there was a permit violation as specified in the indictment. See id. Here, the United States contends that the district court judge did not find any facts that either increased or decreased the crime charged or its punishment. See id. at 26. The United States adds that judges often determine the extent of harm in statutes where a fact found by a judge increases the maximum possible fine. See id.
What is the impact of the Oregon v. Ice decision?
Southern Union asserts that the lower court misinterpreted the Supreme Court’s decision in Oregon v. Ice, and therefore incorrectly decided that Ice had limited the Apprendi rule such that it did not apply to criminal fines. See Brief for Petitioner at 32–33; Oregon v. Ice, 550 U.S. 160 (2009). Southern Union argues that the holding in Ice was narrow in scope, and did not reach the issue of criminal fines. See Brief for Petitioner at 33. According to Southern Union, the Court in Ice declined to extend Apprendi to criminal sentencing for multiple offenses because judges have historically decided whether a convict should serve sentences concurrently or consecutively. See id. at 33–34. Southern Union further argues that even if Ice did address criminal fines, it did not authorize a judge to find facts that support a fine above the statutory maximum. See id. at 35.
The United States argues that Ice in fact strongly cautions against extending the rule in Apprendi to situations beyond incarceration. See Brief for Respondent at 15. The United States points to the fact that the Ice Court emphasized that, to fall under Apprendi, a defendant must allege the violation of essential Sixth Amendment rights that are based in common law history. See id. at 16. Because juries have not ordinarily played a role in determining whether sentences should be served concurrently or consecutively, Ice holds that there is no right to have a jury make that determination. See Ice, 550 U.S. at 168–70. The United States contends that the reasoning in Ice applies with equal force to criminal fines because judges have historically had great discretion in imposing fines, often engaging in fact-finding about the defendant’s character or the offense committed when doing so. See Brief for Respondent at 17.
This case will determine whether the Supreme Court’s holding in Apprendi v. New Jersey applies to criminal fines. Petitioner Southern Union argues that, by its own language, Apprendi applies and therefore requires a jury to determine the time period of the permit violation on which the fine is based. Respondent, the United States, asserts that the holding in Apprendi applies to deprivations of life and liberty, not deprivations of property like criminal fines. The decision in this case will affect the rights of criminal defendants, with special implications for corporations, and the efficient administration of the criminal justice system.
Edited by: Natanya DeWeese
Robert C. Cook, Bloomberg BNA, U.S. Supreme Court Agrees to Review High Criminal Fine in Mercury-Spill Case (November 29, 2011).
Richard Frank, Legal Planet: Supreme Court Grants Review in Criminal Environmental Enforcement Case (November 28, 2011).
Jeff Lorenzo, Indiana Environmental Law Report: Southern Union v. US: Supreme Court to Review Criminal Fines (December 2, 2011).