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Southern Union Argues to Supreme Court That $6 Million Fine Should Be Reversed

Tuesday, March 20, 2012

By Robert C. Cook

Southern Union Co. argued before the U.S. Supreme Court on March 19 that a $6 million criminal fine for a hazardous waste conviction should be overturned and the case remanded for resentencing by a federal court jury (Southern Union Co. v. United States, U.S., No. 11-94, oral argument 3/19/12).

Basing its argument on a 2000 U.S. Supreme Court case, Apprendi v. New Jersey, 530 U.S. 466 (2000), the company argued that it should have faced a criminal fine of $50,000 for a single incident of illegally storing mercury at a Rhode Island site, not the $6 million imposed by a federal judge.

The Supreme Court, which appeared divided on the case, was asked either to protect the Sixth Amendment right to a jury trial or to recognize that criminal fines are a primary way environmental laws are enforced.

The case involves the conviction of Southern Union, a Texas-based natural gas company, for illegal storage of mercury in violation of the Resource Conservation and Recovery Act between Sept. 19, 2002, and Oct. 19, 2004.

Sentence Imposed by Judge

The conviction was handed down by a jury in the U.S. District Court for the District of Rhode Island. After the potential fine was determined in the pre-sentence report to be about $38 million—at a maximum penalty of $50,000 per day—Judge William E. Smith in October 2009 imposed $18 million in penalties, which included the $6 million criminal fine and $12 million in payments for community projects (190 DEN A-10, 10/5/09).

In arguing for the company before the Supreme Court, Carter G. Phillips, of Sidley Austin LLP, relied upon Apprendi, which stated that “any fact” other than a prior conviction “that increases the penalty for a crime beyond the prescribed statutory maximum must be submitted to a jury and proved beyond a reasonable doubt.” The company argued the statutory maximum criminal fine was $50,000.

Justices Ruth Bader Ginsburg and Stephen G. Breyer expressed surprise that there were no jury trial objections in the case that would bring the Apprendi issue to the attention of the trial judge. Breyer suggested that broad judicial discretion was necessary for judges in complex cases.

Chief Justice John G. Roberts said the judge in this case operated “in a reasonable way. But we give juries the discretion to be unreasonable.”

According to Roberts, the judge “is constrained by reason in—in a way that the jury is not; and that's sort of—that's part of the protection the Sixth Amendment provided.”

DOJ Argues Judges Have Discretion

Arguing for the Department of Justice, Michael R. Dreeben, deputy solicitor general, said decisions in many complex issues such as valuation in damages or sentencing were historically left to the judge.

After Smith ruled on the Southern Union penalty, the U.S. Court of Appeals for the First Circuit in 2010 upheld the conviction, fines, and penalties for the company's illegal storage of mercury at the site (United States v. Southern Union Co., 630 F.3d 17, 72 ERC 1262 (1st Cir. 2010)).

Dreeben argued that the First Circuit reached the correct conclusion based on the reasoning of Oregon v. Ice, 555 U.S. 160 (2009).

In a brief filed in the case, the government noted that “Oregon v. Ice makes clear that any expansion of Apprendi requires careful consideration of the doctrine's purposes, historical practice, and impact on the administration of justice.”

The government also argued that criminal fines lie outside the jury's traditional domain and that extending Apprendi would interfere with legislative prerogatives and the administration of justice.

Phillip asserted that Ice should be factually distinguished. Oregon v. Ice states, “Members of this Court have warned against wooden, unyielding insistence on expanding the Apprendi doctrine far beyond its necessary boundaries.”

In answer to a question from Roberts, Dreeben acknowledged that the broad statement in the Ice case was only general guidance, but Dreeben asserted that the statement was part of the rationale of the case.

Background of Other Cases

The Apprendi case, which was decided in 2000, involved a New Jersey hate crime statute. The defendant had fired shots into the home of an African American family. The New Jersey Supreme Court judgment was reversed by the U.S. Supreme Court when it was found the jury should have made the determination on increased penalties due to the hate crime designation.

Oregon v. Ice was a 5-4 opinion written by Bader Ginsburg and joined by John Paul Stevens, Anthony M. Kennedy, Samuel A. Alito, and Breyer. The four dissenters were Roberts, Antonin Scalia, Clarence Thomas, and David Souter.

The case involved consecutive sentences for burglary and sexual assault based on facts found by the judge rather than the jury. The defendant argued that the issue of consecutive sentences could only be determined by the jury. The Supreme Court of Oregon vacated the defendant's sentence and the state of Oregon appealed. The U.S. Supreme Court reversed and remanded the case to the Oregon Supreme Court for further proceedings.

The U.S. Chamber of Commerce and the National Association of Criminal Defense Lawyers filed amicus briefs in support of Southern Union on Aug. 19, 2011, and Jan. 19, 2012.

“Subjecting criminal fines to Apprendi will not cause law enforcement to grind to a halt,” they wrote in both briefs.

Additionally, a group of criminal procedure scholars filed an amicus brief in support of Southern Union on Jan. 19.

The scholars concluded that the First Circuit had misunderstood the history of criminal fines and the Sixth Amendment.