Supreme Court Hears Oral Arguments in Yates v. United States
On November 5, the United States Supreme Court heard oral arguments in Yates v. United States, a case in which Florida fisherman John Yates is appealing his conviction under the Sarbanes-Oxley Act for destruction of evidence as a result of his allegedly ordering his crew to throw undersized fish overboard to avoid fines. The key question before the court is whether a fish may be considered a “tangible object” under the “anti-shredding provision” of the Sarbanes-Oxley Act, which was intended to address corporate fraud, and whether such a construction renders the statute unconstitutionally vague and overbroad. In Mr. Yates’ own words, “It’s obvious that a fish is not a document. You don’t have to be that smart to figure that out.”
The facts leading to Yates’ conviction are as follows: On August 23, 2007, a field officer with the Florida Fish and Wildlife Conservation Commission who was authorized to enforce federal fisheries laws inspected Yates’ fishing vessel, the Miss Katie, to ensure compliance with laws relating to gear, fishery, and boating safety. The officer noticed grouper that appeared to be smaller than the legal size of 20 inches, measured the fish, and determined that 72 grouper were undersized. He placed these grouper in wooden crates in the Miss Katie’s fish box. On the way back to port, Yates ordered his crew to throw the undersized fish in the crates overboard and replace the fish in the crates with larger fish. He also instructed his crew to tell the officials at port that the fish in the crate were the same ones designated as undersized by the officer. The crew complied. Upon further inspection at port, 69 of the fish still measured undersized. After noticing the discrepancy, officials interviewed the crew and learned that the original fish were thrown overboard.
Despite Yates’ arguments regarding the proper method for measuring the fish, which focused on whether the fish should have been measured with mouths closed or open, following trial he was convicted of (1) knowingly disposing of undersized fish in order to prevent the government from taking lawful custody and control of them, in violations of 18 U.S.C. § 2232(a); and (2) destroying or concealing a “tangible object with intent to impede, obstruct, or influence” the government’s investigation into harvesting undersized grouper, in violations of 18 U.S.C. § 1519. The trial court sentenced Yates to 30 days in prison following by 3 years supervised release.
On appeal, the 11th Circuit Court of Appeals affirmed Yates’ convictions under both statutes. Regarding Section 1519, the court held that the term “tangible object” as used in the statute “unambiguously applies to fish” and thereby rejected Yates’ argument that the term should apply only to records, documents, or tangible items that related to recordkeeping. Yates submitted a petition for writ of certiorari to the U.S. Supreme Court, which was granted.
Before the Supreme Court, Yates argued that Section 1519, which is known as the “anti-shredding provision” of the Sarbanes-Oxley Act of 2002 should not be construed so broadly as to reach the destruction of anything meeting the dictionary definition of “tangible objects” as held by the 11th Circuit. Rather, Yates argued that the statute should be limited to the destruction of tangible objects related to record-keeping given the fact that the Sarbanes-Oxley Act was passed in the wake of criminal charges filed against Enron’s corporate officers and was aimed at corporate fraud and executive malfeasance. Yates argued that the 11th Circuit’s broad construction of “tangible object” renders Section 1519 so vague and ambiguous that it fails to give individuals constitutionally required fair notice of what conduct is prohibited and renders the statute “overbroad, indeed limitless in its reach.”
At oral argument, the justices initially focused on the wording of Section 1519 and Congressional intent in passing the statute and asked pointed questions of Yates’ lawyer, assistant federal public defender John L. Badalamenti, regarding his proposed construction of the statute. (Yates argued that the statute should be read narrowly to apply only to destruction of devices or modes of storing business information.)
However, the justices questions to Yates’ lawyer seemed mild in comparison to those directed at U.S. Solicitor General, Roman Martinez, who argued on behalf of the government that the statute was, indeed, broad enough to reach the intentional destruction of “all types of physical evidence.” Justice Scalia questioned the wisdom of bringing this type of prosecution, which could carry a potential 20-year prison sentence, for a fisherman whose actions constituted merely a civil infraction. Justice Scalia inquired, “What kind of sensible prosecutor does that? Who do you have who exercises prosecutorial discretion?” He later inquired, “what kind of mad prosecutor” would prosecute under this law for destroying fish? The justices’ questions indicated concern regarding the potentially sweeping discretion allowed prosecutors to apply the statute to trivial matters.
An opinion from the Court is expected by the end of June 2015.
Additional Items of Interest
On November 10, EPA announced a settlement with Cannon Place, LLC, a Georgia developer, to resolve Clean Water Act NPDES permit violations resulting from unauthorized stormwater runoff from construction sites in Cumming, Georgia. Cannon Place agreed to implement best management practices to come into compliance with its permit and paid a civil penalty of $110,253.
On October 23, the indictment of owners of Out of Africa Adventurous Safaris – Dawie Groenewald and Janneman Groenewald, both South African nationals – was announced by Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division, the U.S. Attorney for the Middle District of Alabama, and Director of the U.S. Fish & Wildlife Service. Janneman Groenewald resided in Autauga County, Alabama during the period covered by the indictment. The indictment alleges that the brothers sold outfitting services and accommodations to American hunters for South African rhino hunts by lying to hunters about the details of the hunts, failing to obtain proper permits, cutting the horns from the rhinos with chainsaws and knives, and then selling the rhino horn on the black market. The indictment includes 18 counts of conspiracy, Lacey Act violations, mail fraud, money laundering and structuring bank deposits to avoid reporting requirements.
On October 29, a settlement was announced between Superior Crude Gathering Inc. and EPA and the U.S. Department of Justice to resolve Clean Water Act violations stemming from the discharge of 2,200 barrels of crude oil into waters and wetlands near the Intracoastal Waterway and Redfish Bay in Texas. The company agreed to pay a $1.61 million civil penalty. The company was also required to clean up the spill and has ceased operations at the site.
On November 3, EPA and the U.S. Department of Justice announced settlement with Kia and Hyundai representing the largest ever Clean Air Act civil penalty. According to EPA, the automakers violated the Clean Air Act by selling approximately 1.2 million vehicles that will emit approximately 4.75 metric tons of greenhouse gases above the amount certified to EPA. Kia and Hyundai will pay a $100 million civil penalty, spend approximately $50 million on preventative measures, and forfeit 4.75 million greenhouse gas emission credits at an estimated value of over $200 million.
On November 4, Leading Edge Aviation Services, Inc., a California company, was sentenced by U.S. District Judge Glen Davidson in Aberdeen, Mississippi to pay a criminal fine of $700,000 for treating, storing, or disposing of hazardous waste without a permit at its Greenville, Mississippi commercial aircraft painting facility. The government alleged that the company stored large volumes of hazardous wastes generated by stripping paint from aircraft prior to painting them in open pits without a permit. In addition to the criminal fine, the company will pay a $275,000 civil penalty and make a $25,000 community service payment. Leading Edge must also serve a 12-month probation, clean up the facility, and make organizational changes.
On November 6, EPA and the U.S. Department of Justice announced a settlement with PCS Nitrogen Fertilizer, AA Sulfuric Inc., and White Springs Agricultural Chemicals Inc., three subsidiaries of Potash Corporation of Sasketchewan, the world’s largest fertilizer producer to address violations of the Clean Air Act at sulfuric acid plants in Louisiana, Florida, and North Carolina. As part of the settlement, the companies will install state-of-the-art pollution reduction measures at a cost of approximately $50 million. They have also agreed to pay a $1.3 million civil penalty and perform a supplemental environmental project at an estimated cost of up to $4 million. The violations resulted from changes in the facilities that EPA alleged released excess sulfur dioxide into the environment.
On October 21, the United States Court of Appeals for the District of Columbia Circuit held that the American Petroleum Institute (API) and the Engine Products Group (EPG) failed to show the requisite injury-in-fact to demonstrate standing to challenge EPA’s rule requiring warning labels on gas pumps containing 15% ethanol. API argued that it had standing because its members were the object of the regulation, but the court held that the group lacked standing because it failed to show that any of its members actually sells or plans to sell E15 gasoline. Similarly, EPG argued that E15 would damage the products sold by its members and result in warranty claims, products liability lawsuits, and reputational injury. The court held that EPA failed to connect sales of E15 under the regulation to the claimed injuries. The plaintiffs’ petition for review of the EPA rule was, therefore, denied for lack of standing. See Alliance of Automobile Manufacturers v. EPA, No. 11-1334 (D.C. Cir. Oct. 21, 2014).
On October 31, EPA released Sustainability Plan and Climate Change Adaptation Plans. The release coincided with the 5th anniversary of President Obama’s 2009 Executive Order on Environmental, Energy and Economic Performance. The Climate Change Adaptation Plan includes EPA’s commitment to incorporate climate adaptation criteria into the Brownfields grants process, consider climate change considerations as part of Clean Water State Revolving Funds process, and provide communities with tools to increase their resilience. The Sustainability Plan outlines EPA’s commitment to meeting water, energy, and waste targets and describes how EPA has reduced the agency’s greenhouse gas emissions by 57.4%. To view the plans, go to http://epa.gov/climatechange/impacts-adaptation/fed-programs/Final-EPA-Adaptation-plans.