Knowing Enough to be Convicted

A paint manufacturer and a senior company officer can be convicted under the Resource Conservation and Recovery Act (RCRA) without proof that they knew whether the substances they handled were hazardous or whether a permit was required, according to a decision by a federal appeals court. [U.S. v. Kelley Technical Coatings Inc., Nos. 96-6282 and 96-6283, 6th Cir., Sept. 16, 1998.]

Kelley Technical Coatings Inc. ("Kelley") operates two paint manufacturing plants in Louisville, Ky. Arthur Sumner was a vice president in charge of manufacturing operations at both facilities, which included the storage and disposal of hazardous wastes. Among other duties, he was responsible for environmental compliance. In fact, Sumner filed the necessary paperwork with state environmental authorities to register Kelley as a hazardous waste generator.

Indeed, Kelley's manufacturing process generated enormous amounts of hazardous wastes, including solvents, paint residues and sludges, and other paint by-products that contained toxic heavy metals. Between 1986 and 1992, the company filled hundreds of drums with these wastes and stored them behind one of the plants. However, Kelley never applied for a permit for on-site storage or disposal of the wastes.

For a time, Sumner arranged for a licensed hazwaste disposal firm to haul away some of the drums, but from late 1989 to July 1992 no drums were shipped from the site. Instead, as a cost-saving measure, Kelley hired a waste disposal company to work at the site, draining the liquids from the drums. After most of the wastes were drained, Sumner directed plant employees to pour any accumulated rainwater in the drums onto the ground and to consolidate any residues into one drum.

When inspectors from the Kentucky Department of Envionmental Protection visited one of the plants in July 1992, they found at least 600 drums that had been stored on-site for many months and, in some cases, for years. Some of the drums had rusted and were leaking.

A federal district court jury convicted Kelley and Sumner of violating RCRA by knowingly storing and disposing of hazardous waste without a permit. The district judge levied a $225,000 fine on Kelley [which it did not appeal] and sentenced Sumner to a 21-months imprisonment and fined him $5,000.

On appeal, Kelley and Sumner challenged their convictions on the basis that the judge gave the jury wrong instructions regarding what defendants must know before they may be held criminally responsible. The trial court told the jurors that they could find the defendants guilty if the government proved beyond a reasonable doubt that:

1. the defendants knowingly stored material for longer than 90 days and knowingly disposed of material on the site;

2. the material was hazardous waste;

3. the defendants did not have a permit to store or dispose of hazardous waste; and

4. the defendants knew that the material was potentially hazardous to human health or to the environment.

The judge also instructed the jury that prosecutors did not have to prove that the defendants knew the material was listed or characterized by law as hazardous waste or knew a permit was required before storing or disposing of the material.

The U.S. Court of Appeals for the Sixth Circuit rejected the defendants' claims, upheld the convictions and affirmed the fine and jail sentence imposed on Sumner.

Citing prior decisions of the Sixth Circuit and "every other [appeals court] that has considered the issue," the three-judge panel reaffirmed that a conviction under RCRA for "knowingly" storing or disposing of hazardous waste without a permit requires the government to prove only that a defendant knew certain facts: storage and disposal of material was occurring; the material was waste; and the material posed potential to harm human health or the environment.

Federal appeals courts are virtually unanimous in finding that the "knowing" element of a criminal violation under RCRA focuses on whether a defendant consciously approved, aided or allowed storage or disposal activities - not whether a defendant was aware that the handled material was regulated hazardous waste. For good measure, the appeals court opinion referred to "overwhelming evidence" presented at trial that the defendants knew the hazardous nature of the drums' contents and knew the proper means of disposal.

"Defendants were knowledgeable about RCRA requirements," the court said. "They signed annual hazardous waste registration forms and arranged for the proper disposal of the contents of the drums by qualified hazardous waste haulers. [The defendants' knowledge] that the residue in the drums was hazardous waste as well is beyond doubt."