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United States v. Overholt

Citation: 33 ELR 20070
No. Nos. 00-5074, -5081, 307 F.3d 1231/(10th Cir., 10/10/2002)

The court overturns two individuals' conspiracy convictions for mail fraud, but upholds their conspiracy convictions for unlawfully injecting wastewater into disposal wells and attempting to cover up their crimes. The individuals were charged with entering into a conspiracy with five objects: (1) improperly disposing of petroleum-impacted wastewater in violation of the Safe Drinking Water Act (SDWA); (2) transporting hazardous wastes without a manifest in violation of the Resource Conservation and Recovery Act (RCRA); (3) using the mails in the commission of a fraud; (4) using interstate wire communications in the commission of a fraud; and (5) defrauding the United States by obstructing the lawful environmental protection functions of the U.S. Environmental Protection Agency (EPA) and the U.S. Department of Defense (DOD). In five special verdicts, a jury found that they conspired to commit each of the alleged objects of the conspiracy. One of the individuals was also convicted for the unlawful discharge of pollutants into U.S. waters in violation of the Clean Water Act (CWA) and for transporting hazardous waste to an unpermitted facility in violation of RCRA. Both individuals appealed. As for the SDWA conviction, one of the individuals argued that the injection of a nonpermitted liquid waste into a Class II disposal well was lawful under the governing regulations issued by the Oklahoma Corporation Commission.

The court holds, however, that the Oklahoma regulations are no more permissive than the federal law on which the jury was instructed. In addition, the court holds that the district court properly instructed the jury on the meaning of "willful" on the SDWA count. There is no reason to believe that the word "willful" requires proof of knowledge of the regulation allegedly violated. Additionally, the district court was not required to give a mistake-of-law/good-faith-defense instruction. The court also holds that the jury instruction was not erroneous as to the charge that the individual defrauded the United States by obstructing the lawful environmental protection functions of EPA and the DOD. In addition, there was sufficient evidence to convict one of the individuals for discharging pollutants into U.S. waters in violation of the CWA. Likewise, the court holds that he was properly convicted for knowingly causing the transportation of hazardous materials to a facility that was not permitted to accept them. The individual signed a manifest stating that the load contained no hazardous materials, he never asked the facility whether it carried a hazardous waste permit, and when asked about the event a month later, he responded with a series of lies. From this evidence, the jury could reasonably infer that he knew that the facility lacked a proper permit. The court, however, holds that both individuals should not have been convicted for mail fraud. Although there was sufficient evidence for the jury to find that bills of lading were false, that one of the individuals had an intent to fraud, and that the other individual was a knowing participant in the scheme to defraud, there is no evidence that they ever used the fraudulent bills of lading. Last, the court affirms the individuals' sentences. Despite setting aside the convictions for mail fraud, the sentences are not affected. Elimination of the mail fraud conviction would not change the ultimate offense level under the U.S. Sentencing Guidelines for either individual. Nevertheless, on remand the district court must set a repayment schedule for the amount of restitution to be paid by one of the individuals.

Counsel for Plaintiff
Todd S. Aagaard
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Counsel for Defendant
William D. Lunn
Law Offices of William D. Lunn
320 S. Boston Ave., Tulsa OK 74103
(918) 582-9977