Supreme Court Uses RCRA Case to Extend Jury Trial Rights to Calculation of Criminal Fines
The U.S. Supreme Court extended Apprendi to criminal fines when it reversed a several million dollar fine imposed on Southern Union Co., a natural gas distributor, for unlawfully storing liquid mercury at a facility in Rhode Island in violation of the Resource Conservation and Recovery Act of 1976 (“RCRA”). RCRA, among other things, requires (with certain exceptions) that owners and operators of facilities that treat, store, or dispose of hazardous waste obtain permits. Criminal liability may be imposed under RCRA for knowing violations of the statute. 42 U.S.C.§ 6928(d). The statute authorizes criminal penalties of up to $50,000 “for each day of violation.” Id. The Supreme Court found that the judge-imposed fine violated the company's right to a jury trial because a jury did not make the factual findings required to impose a fine in excess of the statutory minimum. After the Southern Union ruling, facts that increase a statutory fine must be proven to a jury beyond a reasonable doubt.
In 2007, Southern Union was indicted for violating RCRA. The indictment alleged that the unlawful conduct occurred “on or about September 19, 2002 until on or about October 19, 2004,” a range that spans 762 days. Neither the verdict form nor the trial court’s instructions “asked [the jury] to determine the precise duration of the violation.” Instead, they “permitted conviction if the jury found even a 1-day violation.”
In connection with the sentencing hearing, the probation office determined that the maximum fine allowable under RCRA was $38.1 million, based on a $50,000 fine for each of the 762 days included in the indictment. Southern Union objected to the probation office’s fine calculation. Southern Union relied on Apprendi v. New Jersey, 530 U.S. 446 (2000), which held that the Sixth Amendment’s guarantee of a jury trial requires that any fact (other than the fact of a prior conviction) that increases the maximum punishment authorized for a crime be proved to a jury beyond a reasonable doubt. Based on the instructions the district court provided to the jury and the verdict form, Southern Union argued that imposing any fine greater than the 1-day penalty of $50,000 would be unconstitutional under Apprendi because the only violation the jury necessarily found was for one day, not for 762 days.
The district court agreed with the defense that Apprendi applied to criminal fines, but concluded from the “content and context of the verdict all together” that the jury found a violation that lasted for 762 days. Therefore, the district court accepted $38.1 million as the maximum allowable amount of the criminal fine, and ultimately imposed a $6 million fine. On appeal, the First Circuit rejected the district court’s finding that the jury necessarily found a 762-day violation, but affirmed the sentence on other grounds, holding that the Apprendi rule does not apply to criminal fines as opposed to imprisonment. The Supreme Court granted certiorari to resolve a circuit split regarding the applicability of Apprendi to the imposition of criminal fines.
Supreme Court’s Opinion
In contrast to most factors that affect a defendant’s sentence, which can be determined by a judge’s finding based on a preponderance of the evidence, the Apprendi rule requires facts that increase the statutory penalty for a crime beyond the prescribed statutory maximum to be submitted to a jury and proved beyond a reasonable doubt. In ruling that a jury must find facts beyond a reasonable doubt that increase the statutory maximum penalty, the Supreme Court observed that Apprendi’s “core concern” was to reserve the determination of certain facts that warrant punishment for a specific statutory offense, and there was “no principled basis under Apprendi for treating criminal fines differently” than sentences involving imprisonment. Rather, “the relevant question is the significance of the fine from the perspective of the Sixth Amendment’s jury trial guarantee. Where a fine is substantial enough to trigger that right, Apprendi applies in full.”
Although the Court did not state how large a fine must be in order to trigger the Sixth Amendment’s guarantee of a trial by jury, its opinion makes clear that the Apprendi rule does not apply to determining the amount of a fine for a petty offense. On the facts before the Court in Southern Union, there was no question that the size of the potential fine ($38.1 million) implicated the Sixth Amendment. Therefore, to impose a fine greater than $50,000 against the company, the jury needed to make a finding regarding the number of days that Southern Union violated the RCRA. Because the jury made no such finding, the fine was reversed, and the case was remanded.
Southern Union is the second decision from this Supreme Court term that could make it more difficult for Environmental Protection Agency to enforce environmental laws. Previously this term, the Court unanimously held that Clean Water Act compliance orders can be subject to judicial review prior to enforcement. See Sackett v. United States Environmental Protection Agency, 566 U.S. --- (2012), 132 S. Ct. 1367 (2012). Please click here for an analysis of the implications of the Sackett decision.
While the Southern Union decision clearly answered the question of whether the Apprendi rule applies to the imposition of criminal fines, it remains to be seen how courts and prosecutors will address the following issues:
- At what point does a fine become sufficiently substantial to render the underlying offense “non-petty,” thereby triggering the Apprendi rule?
- What is the reach of Apprendi? Language in Southern Union suggests that the Apprendi rule applies to any “penalties inflicted by the sovereign for the commission of offenses.”
- How will the prosecution present juries with the facts needed to make the required findings to support the imposition of fines? Defendants can expect the use of special verdict forms and/or separate, detailed counts in indictments.
- How will courts allow the parties to present evidence relevant to sentencing issues (as opposed to guilt or innocence issues) at trial? Will there be new pattern instructions to ensure that issues related to sentencing do not bleed over into the determination of guilt or innocence? Will there be an increase in bifurcated trials, where guilt or innocence will be determined separately from facts related to sentencing, similar to how courts frequently bifurcate forfeiture issues?
Moreover, Southern Union has the potential to become a significant authority for any defendant facing government enforcement actions. Although Southern Union arose in the context of a criminal prosecution for violation of RCRA, its holding will apply to all criminal actions arising in a variety of contexts with heavy governmental regulation, including other environmental statutes, antitrust, healthcare, food and drug, labor, securities, and other white collar offenses. Additionally, in civil cases, the government often seeks significant civil penalties. In the future, a court may consider certain civil penalties to be analogous to criminal punishment and sufficiently significant to trigger the Apprendi rule in context of the Seventh Amendment’s right to a jury trial in civil cases. In fact, this very issue has been raised in a recent civil SEC enforcement action before the Ninth Circuit. See SEC v. Jasper, --- F.3d ---, No. 10-17064 (9th Cir. May 15, 2012). In the context of Section 304 of the Sarbanes-Oxley Act, the Ninth Circuit determined that the statutory reimbursement provisions were equitable disgorgement remedies rather than legal penalties, and therefore, the Seventh Amendment’s right to a jury trial for civil cases was not implicated. Of course, the Ninth Circuit decided Jasper without having the benefit of the Supreme Court’s recent Southern Union opinion, so it remains to be seen whether Southern Union will affect the ways courts determine civil penalties for regulatory violations.
© 2012 Perkins Coie LLP