U.S. v. Wilson

Page 251

133 F.3d 251

45 ERC 1801, 28 Envtl. L. Rep. 20,299,

48 Fed. R. Evid. Serv. 384

UNITED STATES of America, Plaintiff-Appellee, v. James J. WILSON, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee, v. INTERSTATE GENERAL COMPANY, L.P.; St. Charles Associates, L.P., Defendants-Appellants.

UNITED STATES of America, Plaintiff-Appellee, v. James J. WILSON, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee, v. James J. WILSON, Defendant-Appellant.

Nos. 96-4498, 96-4503, 96-4537 and 96-4774.

United States Court of Appeals Fourth Circuit.

Argued March 3, 1997.

Decided Dec. 23, 1997.

ARGUED: Steven Alan Steinbach, Williams & Connolly, Washington, DC, for Appellants. Jane F. Barrett, Assistant United States Attorney, Baltimore, MD, for Appellee. ON BRIEF: Paula M. Junghans, Martin, Junghans, Snyder & Bernstein, P.A., Baltimore, MD, for Appellant Wilson; Bruce A. Baird, Covington & Burling, Washington, DC, for Appellants Interstate General and St. Charles Associates. Lynne A. Battaglia, United States Attorney, James C. Howard, Assistant United States Attorney, Baltimore, MD, for Appellee.

Before NIEMEYER and LUTTIG, Circuit Judges, and PAYNE, United States District Judge for the Eastern District of Virginia, sitting by designation.

Reversed and remanded by published opinion. Judge NIEMEYER wrote the opinion for the court in parts I, II, V, and VI and Judge LUTTIG joined in parts I and V and Judge PAYNE joined in parts I, II, V, and VI. Judge LUTTIG wrote a separate opinion concurring in the judgment. Judge PAYNE wrote a separate opinion.

OPINION

NIEMEYER, Circuit Judge, writing for the court on parts I, II, V and VI:

The defendants in this case were convicted of felony violations of the Clean Water Act for knowingly discharging fill and excavated material into wetlands of the United States without a permit. On this appeal they challenge: (1) the validity of federal regulations purporting to regulate activities that "could affect" interstate commerce; (2) the district court's application of the Clean Water Act to wetlands that do not have a "direct or indirect surface connection to other waters of the United States"; (3) the district court's application of the Clean Water Act to a practice known as "sidecasting" (depositing excavated material from wetland drainage ditches next to the ditch); (4) the district court's interpretation of the mens rea required for a felony conviction under the Act; (5) evidentiary rulings of the district court; and (6) aspects of their sentences.

Because we conclude that 33 C.F.R. § 328.3(a)(3) (1993) (defining waters of the United States to include those waters whose degradation "could affect" interstate commerce) is unauthorized by the Clean Water Act as limited by the Commerce Clause and therefore is invalid, and that the district court erred in failing to require mens rea with respect to each element of an offense defined by the Act, we reverse and remand for a new trial.

I

In February 1996, after a seven-week trial, a jury convicted James J. Wilson, Interstate General Co., L.P., and St. Charles Associates, L.P., on four felony counts charging them with knowingly discharging fill material and excavated dirt into wetlands on four separate parcels without a permit, in violation of the Clean Water Act, 33 U.S.C. §§ 1319(c)(2)(A) & 1311(a). The district court sentenced Wilson to 21 months imprisonment and 1 year supervised release and fined him $1 million. It fined the other two defendants $3 million and placed them on 5 years probation. The court also ordered the defendants to implement a wetlands restoration and mitigation plan proposed by the government.

Wilson, a land developer with more than 30 years of experience, was the chief executive officer and chairman of the board of directors of Interstate General. He was personally responsible for various decisions relevant to the defendants' convictions in this case. Interstate General was a publicly traded land development company with 340 employees, 2,000 shareholders, and assets of over $100 million. It was the general partner of St. Charles Associates, a limited partnership that owned the land being developed within the planned community of St. Charles, which lies between the Potomac River and the Chesapeake Bay in Charles County, Maryland. The convictions involve discharges onto four parcels that are part of St. Charles.

St. Charles currently consists of approximately 4,000 developed acres and 10,000 housing units with 33,000 residents. At completion, it is expected to be a 9,100 acre planned community of some 80,000 residents. The community was created under the New Communities Act of 1968 and developed initially in partnership between Interstate General and the United States Department of Housing and Urban Development ("HUD"). The project agreement provides for the creation of schools, parks, and recreational areas and designates at least 20% of the community to be reserved as "open space." It also provides for the preservation of 75 acres of wetlands near Zekiah Swamp. In connection with the initial plan, HUD and Interstate General prepared an environmental impact statement, but that statement did not reflect any specific development plans for the four parcels involved in this case nor did it constitute a development permit under the Clean Water Act.

At trial, the government introduced evidence that during the period from 1988 to 1993, the defendants attempted to drain at least three of the four parcels of land involved in this case by digging ditches. The excavated dirt was deposited next to the ditches--a process known as "sidecasting." The government also introduced evidence that the defendants transported a substantial amount of fill dirt and gravel and deposited it on three of the parcels; only one parcel involved sidecasting without the addition of fill. The government presented evidence that all four of these parcels contained wetlands and that the defendants failed to obtain permits from the Army Corps of Engineers, the agency charged with issuing permits under the relevant section of the Act, 33 U.S.C. § 1344, prior to making efforts to drain and fill the parcels.

Although the parcels in question were not, because of neighboring development, located in pristine wilderness areas, the government presented substantial evidence about the physical characteristics which identified them as wetlands, including testimonial and photographic evidence of significant standing water, reports of vegetation typical to hydrologic soils, and infrared aerial photographs showing a pattern of stream courses visible under the vegetation. Evidence also showed that the properties were identified as containing wetlands on public documents including the National Wetlands Inventory Map and topographical maps of Charles County and the State of Maryland. The government demonstrated that water from these lands flowed in a drainage pattern through ditches, intermittent streams, and creeks, ultimately joining the Potomac River, a tributary of the Chesapeake Bay.

The government also produced evidence of the defendants' awareness of the physical conditions of their land. The very development work underlying the present prosecution involved efforts to improve the drainage of the areas to make building feasible. Substantial fill was later added in an attempt to raise the ground level of the parcels. Some construction work involved repeated reshoring efforts because of wetness-induced ground shifting and collapse. Evidence was introduced that bids for work at one of the parcels actually contained different price quotations for wet and dry work because of the level of moisture on parts of the property. And witnesses gave testimony that despite the attempts at drying the property through ditching and draining or through the pumping off of standing water, and even after hundreds of truck loads of stone, gravel and other fill had been added to three of the parcels, wetland-loving plants continued to sprout through the fill.

Witnesses also testified at trial that a private consulting firm retained by the defendants informed the defendants that its observations of conditions on the parcels led it to conclude that the parcels contained wetlands. The firm recommended seeking permits from the Army Corps of Engineers before beginning development. The defendants were also contacted by Charles County zoning authorities concerned about the possible presence of wetlands in the vicinity of the new construction projects. Finally, the government presented evidence that even as the defendants complied with an Army Corps of Engineers order to cease construction on one of the parcels and remove fill dirt that had already been added, they continued to develop the other parcels without notifying the Corps or making an effort to ascertain whether a permit was necessary.

The defendants introduced contradictory evidence suggesting that whether the four parcels were wetlands under the Clean Water Act was unclear. They offered evidence which they claim showed that the Army Corps of Engineers was inconsistent in asserting jurisdiction over the parcels in question, claiming that the Corps took action on only one parcel, even though it had been aware for years of the ongoing development. Defendants also introduced an internal Corps memorandum that stated that while the areas in the St. Charles community have the "necessary parameters ... to be considered wetlands when using the Corps Wetland Delineation Manual," "it is not clear to me that these areas can be interpreted as 'waters of the United States' within the meaning or purview of Section 404." That memo suggested obtaining guidance from higher authority as to what constitutes "waters of the United States." The defendants also introduced evidence indicating their belief that they had legally drained three parcels prior to introducing fill, and that no fill was discharged into...