United States v. Thomas E. Iverson, Sr.
50 Fed. R. Serv. 1065, 162 F.3d 1015, 98 Cal. Daily Op. Serv. 9028 (1998)
Rule of Law:
Under the Clean Water Act, a corporate officer may be held criminally liable as a "responsible corporate officer" if they possess the authority and capacity to prevent illegal discharges, regardless of whether they personally exercised that authority or participated in the acts.
Facts:
- The defendant founded CH20, Inc., a chemical blending company, and served as its President and Chairman of the Board.
- CH20's operations involved cleaning chemical drums, which generated wastewater containing heavy metals and chemical residue.
- The local sewer authority repeatedly refused to accept CH20's wastewater because it did not meet safety parameters for industrial waste.
- Despite the refusal, the defendant personally discharged wastewater and ordered employees to discharge it at the plant, his apartment complex, and his home.
- Later, CH20 moved operations to a warehouse with sewer access and discharged industrial wastewater directly into the sewer system without a permit.
- Although the defendant announced an "official" retirement, he continued to receive payments, give orders to employees, and visit the facility where he could observe and smell the waste.
- The defendant assured employees that the operations were legal or that consequences would be minimal, despite knowing the discharges were unpermitted.
Procedural Posture:
- A grand jury filed a superseding indictment charging the defendant with conspiracy and violations of the Clean Water Act, Washington Administrative Code, and Olympia Municipal Code.
- The defendant was tried before a jury in the United States District Court.
- The jury convicted the defendant on all counts.
- The District Court sentenced the defendant to one year in custody, supervised release, and a fine.
- The defendant appealed the conviction to the United States Court of Appeals for the Ninth Circuit.
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Issue:
To be criminally liable as a "responsible corporate officer" under the Clean Water Act, must a corporate officer actually exercise control over the illegal activity, or is possessing the authority to prevent the violation sufficient?
Opinions:
Majority - Judge Graber
No, actual exercise of control is not required; possessing the authority to prevent the violation is sufficient. The court grounded its reasoning in the statutory definition of "person" under the Clean Water Act (CWA), which includes "any responsible corporate officer." Interpreting this undefined term, the court relied on the Supreme Court's "responsible corporate officer" doctrine established in United States v. Dotterweich and United States v. Park. These cases hold that liability attaches to those who have a responsible share in the furtherance of the transaction or the authority to prevent the violation. The court concluded that a person is a responsible corporate officer under the CWA if they have the authority to exercise control over the activity causing the discharges. The government need not prove the officer actually exercised such authority or that the corporation expressly vested a duty in them to oversee it.
Analysis:
This case significantly clarifies the scope of individual liability for environmental crimes within the Ninth Circuit. By adopting the "responsible corporate officer" doctrine from the Food, Drug, and Cosmetic Act context into the Clean Water Act, the court established that corporate executives cannot insulate themselves from criminal liability merely by delegating day-to-day operations or claiming a lack of active participation. The ruling emphasizes that the power to prevent a violation creates a legal duty to do so. This standard prevents officers who benefit from illegal cost-cutting measures from avoiding responsibility, potentially leading to greater diligence in corporate environmental compliance.
