John D. Finerty, Jr.
A number of federal statutes, including the Clean Water Act, impose individual criminal liability on management level employees for violating federal law. Individuals may also face criminal punishment for lying to a federal officer investigating possible crimes. Ronald Snook, the former Environmental Manager at Clark Refining, was accused of both types of infractions and now faces nearly two years imprisonment, two years of supervised release and fines. United States v. Snook, Case No. 02-2304 (7th Cir. Apr. 23, 2004).
His case illustrates how an important developing standard is being applied as prosecutors seek to hold individuals accountable for violations of federal laws usually applied to corporations.
Ronald Snook was responsible for environmental compliance at Clark Refining & Marketing Inc., a petroleum refinery in Blue Island, Illinois. The refinery discharged, on average, about a million gallons of processed waste water into the greater Chicago sewerage system each day. The U.S. Environmental Protection Agency and the Greater Chicago Water Reclamation District set the standards that discharged wastewater had to meet before it could be released into the system. Clark Refining was required to monitor the level of contaminants in its discharges, provide periodic reports to the sewerage district and self-report any violations of the regulations.
After an investigation by the EPA, Snook was indicted for conspiring with an assistant manager at Clark and its wastewater testing service, Environmental Monitoring and Technologies, Inc., to selectively report testing data and conceal violations of the Clean Water Act. Snook was also charged separately for lying to the EPA inspector when he reported that the complying data was the only data Clark had collected.
A jury found him guilty and he was later sentenced to 21 months imprisonment. The district court that sentenced Snook, imposed a two-level increase in his punishment under the United States Sentencing Guidelines because Snook occupied a position of trust and abused that trust to significantly facilitate a crime. See U.S.S.G. § 3B1.3. The court reasoned that, based on Snooks responsibilities as Environmental Manager, his conduct threatened public health and safety.
The U.S. Sentencing Guidelines set important standards for conduct of management employees on topics that range from environmental law compliance, securities fraud and corporate accounting disclosures to trade secrets. One particular section of the sentencing guidelines applies to individuals who occupy a position of trust under the federal statutes.
Section 3B1.3 of the guidelines provides, in part, as follows: If the defendant abused a position of public or private trust, or used a special skill, in a manner that significantly facilitated the commission or commencement of the offense, increase by two levels. This adjustment may not be employed if the abuse of trust or skill is included in the base offense level or specific offense characteristic.
In Snooks case, the district court applied Section 3B1.3 because of the responsibility and discretion Clark gave to Snook in his position as Environmental Manager in complying with the Districts and EPAs regulations. Snook, therefore, violated a position of public or private trust by failing to comply with environmental regulations and self-report violations.
An important issue Snooks case raises is whether an individual, simply by virtue of his employment and the position given to him by the employer, can be criminally liable because his conduct had a potential public impact. That is, Snook was viewed to have jeopardized public health by allowing waste water discharges that exceeded contamination allowances approved by the EPA.
Snook, however, was an Environmental Manager; he was not appointed by a public agency nor did the public or any government agency entrust Snook specifically with any compliance obligations. The court, nevertheless, found the Clean Water Act is public-welfare legislation and violations of the Act harms the public; Snook could, therefore, be held criminally liable because environmental law compliance was his job.
A Dissent on the Public Trust Requirement
A dissenting judge pointed out that the sentencing guideline enhancements apply when an individual abuses a position of trust that he occupies in relation to the victim of the crime. That is, the discretion afforded to the individual within his or her position must have been entrusted to the defendant by the victim. See §3B1.3; see also United States v. Broderson, 67 F.3d 452, 456 (2nd Cir. 1995). Because the victim in Snooks case was the public, the sentencing guidelines required some appointment by the public in order to trigger the public trust enhancements under the sentencing guidelines, according to the dissent. Snook was appointed Environmental Manager by a private corporation that was not the victim in the case. Snook, therefore, should not have been given a penalty enhancement.
According to the dissent, with the exception of the first circuits opinion in United States v. Gonzalez-Alvarez, 277 F.3d 73 (1st Cir. 2002), no other circuit has extended the public trust penalty enhancement to private individuals merely by virtue the fact that they work in industries regulated to protect public health. The Fourth, Ninth and Tenth Circuits have all held the public trust doctrine does not apply unless there is a relationship akin to that of a fiduciary or personal trust relationship such as an attorney/client or patient/physician. See U.S.S.G. § 3B1.3, n. 1; see United States v. Caplinger, 339 F.3d 226 (4th Cir. 2003); see also United States v. Technic Servs., Inc., 314 F.3d 1031 (9th Cir. 2002); see also United States v. Koehn, 74 F.3d 199 (10th Cir. 1996).
For more information on this case or for assistance in drafting employment policies to address t
hese issues, contact John D. Finerty, Jr. at Michael Best & Friedrich at (414) 225-8269 or on the Internet at JDFinerty@mbf-law.com.