Court Says CITGO Probation Terms May Not Include Penalties Higher Than Statutory Fine

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Community service requirements for a convicted defendant cannot include monetary contributions to charity if the amount of those contributions exceeds the maximum fine for the offenses, a federal district court in Texas ruled Sept. 18 in an air pollution case (United States v. Citgo Petroleum Corp., S.D. Tex., No. 2:06-cr-00563, 9/18/12).

Judge John D. Rainey, of the U.S. District Court for the Southern District of Texas, granted a motion by Citgo Petroleum Corp. and Citgo Refining and Chemicals Co. to block the government from seeking a penalty in excess of the statutory maximum.

Proposed Settlement

A proposed $44 million contribution to seven community service projects set as a condition of probation for the companies was ruled impermissible because it exceeds the statutory maximum fine of $2.09 million, the court held.

The Citgo companies were each convicted of two felony counts of violating the Clean Air Act. The charges stemmed from the operation of an oil-water separator without proper emission control devices at Citgo's East Plant Refinery in Corpus Christi, Texas. The companies were also convicted of three misdemeanor counts of violating the Migratory Bird Treaty Act.

The total fine that can be imposed for the Clean Air Act violations is $2 million, and the total for the Migratory Bird Treaty Act violations is $90,000. The government had recommended the maximum penalty.

In addition, the government requested a maximum probation term of five years, including a condition that the companies contribute $44 million to the community service projects.

Simply a Different Payee

While the court has the authority to require defendants to work in community service, the government is seeking payment of money, the court said.

Quoting from a 1984 decision by the U.S. Court of Appeals for the Third Circuit, the court said, “ 'The only difference between this condition and a fine is that here the payee on the corporate checks would be a charitable organization rather than the United States Treasury.’ ” SeeUnited States v. John Scher Presents Inc., 746 F2d 959 (3d Cir. 1984).

The court rejected the argument that the adoption of the Sentencing Reform Act of 1984 invalidated that ruling. The district court said there is “no authority holding that these 'indirect monetary sanctions'--when coupled with any other fine imposed by the court--can exceed the maximum statutory fine.”

A requirement to pay a penalty in excess of the maximum fine is illegal, the court concluded.

According to court records, Citgo was represented by Dick DeGuerin and Catherine Louise Baen, both of DeGuerin & Dickson, Houston; Matt Hennessy, Houston; Robert Brager, of Beveridge & Diamond PC, Baltimore; Ralph F. Meyer, of Royston Rayzor, Corpus Christi; James B. Blackburn Jr., of Blackburn & Carter PC, Houston; and Nathan P. Eimer and Daniel D. Birk, both of Eimer Stahl LLP, Chicago.

The government was represented by James L. Turner, of the U.S. Attorney's Office, Houston; Kenneth A. Cusick, of the U.S. Attorney's Office, Corpus Christi; and Howard P. Stewart, James B. Nelson, and Lary Cook Larson, all of the Justice Department, Washington, D.C.

By Nancy J. Moore  

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