November 12, 2014

New York Law Journal / Written by: Harvey M. Stone, Peter R. Schlam

This column reports on several significant, representative decisions handed down recently in the U.S. District Court for the Eastern District of New York. The first involves the Resource Conservation and Recovery Act of 1976.

In Aiello v. Town of Brookhaven, 94 CV 2622 (EDNY, March 15, 2001), Judge Frederic Block, following a trial on liability, held that the Town of Brookhaven (town) was responsible under the Resource Conservation and Recovery Act of 1976 (RCRA) for contaminating a creek and pond in the vicinity of the former Holtsville Landfill, but not liable under the Federal Water Pollution Control Act of 1972 (Clean Water Act).

Judge's Findings of Fact

Judge Block made the following findings of fact: Prior to 1937 the landfill was owned by the State of New York and used as a general dump. In 1937, it became the town dump, and in 1968, the New York State Environmental Facilities Corporation converted it to a sanitary landfill with seepage lagoons. In 1974, that agency closed the landfill by covering it with sand and then 18 to 24 inches of loam as a final cover. It was then transformed into the town recreational facility.

In the 1970s, the creek and pond south of the landfill were pristine with abundant wildlife, including fish, birds, rabbits and snakes. In the 1980s the creek and pond turned grey and then orange. By 1996 they were a "toxic soup," colored reddish orange and devoid of life.

The New York State Department of Environmental Conservation (DEC) issued a Phase I environmental report in June 1987 prepared by a private consultant, which gave the pond a Hazardous Ruling System (HRS) rating of 42.24. Any rating above 28.4 qualifies for listing as a hazardous waste site. The report found a release of the contaminants iron and manganese from the landfill to the ground water and recommended a remedial investigation/feasibility study (RI/FS) because it would be more thorough than a Phase II investigation report.

For cost reasons and because it would have to agree to a potential hazardous waste site designation to obtain state funding for the RI/FS, the town opted for a Phase II investigation and got permission to award the investigation to a consultant with which it had an ongoing relationship. The resulting report, which was not issued until five years later in 1992, recalculated the HRS rating to be 27.3, just under the minimum score for a hazardous waste site listing.

Dissatisfied with the testimony of the town's witness, a town engineer, that the plume of water from the landfill had nothing to do with the contamination of the pond in spite of the chemical similarity between the plume and the pond contaminants, Judge Block appointed an expert who issued a report in February 1999. That expert, Dr. Raymond A. Ferrara, president and founder of Omni Environmental Corp. of Princeton, N.J., concluded that the data overwhelmingly pointed to the landfill as the source of contamination. He found concentrations in the pond of ammonia-N (harmful to aquatic life), iron (responsible for the reddish-orange color), manganese and other chemicals which greatly exceeded acceptable DEC groundwater standards. Dr. Ferrara reported that the leachate plume containing contaminants traveled on a direct path to the pond and was the source of the surface water contamination.

Based upon the above, Judge Block concluded that the town had violated the RCRA. The intent of the RCRA, the court observed, is to reduce hazardous waste and ensure the proper treatment, storage and disposal of that waste to minimize present and future threats to human health and the environment. The RCRA provides for a private right of action to redress situations where there is an "imminent and substantial endangerment to health or the environment." Slip op. 33. The RCRA includes notice requirements to afford the government or the violator the opportunity to remedy the situation, then a delay of 60 to 90 days before a private party can commence a suit, except in cases concerning hazardous waste management. As Judge Block noted, plaintiffs had complied with the notice, but not the delay, requirement of the statute. The court concluded, however, that

Congress's intent in balancing the dangers of delay to health and the environment against encouraging nonjudicial and nonadversarial resolution of environmental conflicts is best manifested by permitting the immediate initiation of (a)(1)(B) imminent hazard suits whenever subchapter III hazardous chemicals can fairly be alleged to be a component of the endangerment. Slip op. 49.

The court determined that plaintiffs had standing here because harm to an aesthetic interest is a valid basis for injury in fact. The materials in the dump, moreover, were solid waste within the meaning of the RCRA that could have "contributed to an imminent and substantial endangerment because the evidence clearly established that the iron, ammonia and manganese which contaminated the leachate plume resulted from the unrestricted nature of the discarded solid waste" and encompassed a full range of post-consumer waste. Slip op. 50. Judge Block defined "contributed to" for arranger liability as requiring some nexus between the potentially responsible party (the town) and the disposal of the contaminants. The court rejected the town's attempt to escape liability by claiming that it had done none of the dumping and only owned the landfill in the past. The town subjected itself to liability by establishing an open dump on its own property for the use of the general public. Slip op. 54.

'Imminent Endangerment'

As to the town's factual assertion that plaintiffs had offered no evidence that any surface water had been exposed to the contaminants, Judge Block pointed to Dr. Ferrara's findings to the contrary. Next, the court considered whether the contamination " 'may present' an ongoing imminent and substantial endangerment to the environment," slip op. 57, even though the contamination did not present any harm to human health. Ammonia-N, the court noted, is toxic to aquatic life, and all plants, fish and other life forms have disappeared from the pond. The court found this harm "a substantial endangerment to the environment." Judge Block also cited the aesthetic injury in the deep orange coloring resulting from the contamination. Thus, the town, which had failed from the start to collect the necessary environmental information or, indeed, to make any effort to clean up the site, was required to fix the visual blight. Slip op. 61-62.

Judge Block dismissed plaintiffs' Clean Water Act claims. While the culvert coming from the landfill was a point source and the pond and creek were navigable waters, there was no continuing violation. Migration of residual contamination from previous releases of contaminates, the court held, was not "ongoing discharge" as required for a Clean Water Act claim. Slip op. 68.

Proffer Agreements

In United States v. Duffy, 99 CR 589 (EDNY, March 13, 2001), Judge Nina Gershon struck from the "standard" proffer agreement, where subsequent plea negotiations had failed and the case was heading for trial, the provision in paragraph 2(C) allowing the government to use defendant's proffered statements to rebut any evidence or factual assertions made by the defense.

In July 1999, defendant and his attorney met with the prosecutor in hopes of negotiating a cooperation agreement. Defendant signed the standard proffer agreement before beginning the proffer session. Paragraph 1 provides that in any prosecution brought against defendants (except a prosecution for perjury or obstruction of justice for acts or statements at or after the meeting), the government will not offer in evidence any statements made by defendant in its case-in-chief or at sentencing. Paragraph 2 contains several exceptions, allowing use of the statements to gather leads to other evidence (2(A)), as substantive evidence to cross-examine defendant if he testifies (2(B)), and

As substantive evidence to rebut any evidence offered or elicited, or factual assertions made, by or on behalf of defendant at any stage of a criminal prosecution. . . . (2(C)).

Paragraph 3 states that the exclusionary provisions of Fed. R. Crim. P. 11(e)(6) and Fed. R. Evid. 410 "do not apply to any statements made by defendant at the meeting." These rules both make inadmissible, against a defendant who participated in plea discussions with the prosecutor, any statement made in the course of those discussions which do not result in a guilty plea.

After signing the agreement, defendant gave a detailed proffer describing a securities fraud and his participation in it. Defense counsel then sought a cooperation agreement with permission to plead to a misdemeanor. When the government insisted on a felony plea, defendant chose to go to trial.

The heart of defendant's argument to strike paragraph 2(C) is that it operates effectively as a waiver of trail, and that he did not knowingly and intelligently waive his right to make a defense.

In the government's counterview, defendant could indeed mount a defense. For example, the defense could claim a failure by the government to meet its burden of proof, "generally" attack the credibility of government witnesses and "generally" assert innocence. Defendant's statements, the government explained, would become admissible only if defense counsel, on opening or summation, were to make a factual assertion directly contradicting the proffer, or if counsel were to ask a question of a witness that was designed to, and did, elicit a statement contradicting the proffer.

The 'Mezzanatto' Case

As Judge Gershon observed, the Supreme Court has upheld a waiver in which a defendant agreed that his proffer could be used to impeach his own testimony, United States v. Mezzanatto, 513 U.S. 196 (1995); and two courts of appeals the Seventh and D.C. Circuits have found enforceable a waiver permitting broader use of proffer statements. But it is "doubtful," Judge Gershon concluded, whether the Supreme Court and Second Circuit would enforce so broad a waiver as presented in this case.

Here, Judge Gershon noted, the waiver was not contained in a plea agreement and executed as a result of successful plea negotiations. Rather, it was executed as a condition for such negotiations. And, unlike the waiver in Mezzanatto, paragraph 2(C) is not merely the waiver of an evidentiary rule. "To the contrary," the court stated, "paragraph 2(C) implicates [defendant's] Sixth Amendment rights to make a defense and to have the effective assistance of counsel in making that defense. ... [A]ny argument that there was no conspiracy or that [defendant] had no part in it, would permit the government to offer [the] proffer." Slip op. 5. Judge Gershon also pointed to the impracticality, and crippling of the defense, that would result if the court had to preview in advance each question by defense counsel to avoid "opening the door."

The right at issue here, moreover, "implicates institutional and societal values that transcend the individual's interests." Slip op. 6 (quoting United States v. Ready, 82 F.3d 551, 556 (2d Cir. 1996)). The public interests at stake involve the fairness of both the plea bargaining process and federal criminal trials. Slip op. 9.

Although defendant "could have waived his right to trial by entering a plea," the court added, "the government's standard proffer agreement effectively accomplished the same end without affording [him] the benefit of a plea agreement and the protection of a Rule 11 allocution." Slip op 7.

In addition, paragraph 2(C) exploits the government's "awesome" advantage in bargaining power, accentuated by the pressures of the Sentencing Guidelines. If no deal is reached, "the defendant bears all the risks." Slip op. 8.

Judge Gershon rejected the argument that enforcing paragraph 2(C) prevents a fraud on the court:

That the Court is aware of facts which will be unknown to the jury is not significantly different from the suppression on constitutional grounds of a defendant's statements or other evidence. Indeed, Rules 11(e)(6) and 410, referred to in Mezzanatto as creating a privilege of the defendant, specifically contemplate that statements made by a defendant during plea discussions will be excluded at trial. Slip op. 9.

Bail: Extradition Hearing

In Borodin v. Ashcroft, 01 CV 1433 (EDNY, March 21, 2001), Judge Eugene H. Nickerson denied a habeas corpus petition for release from detention pending a hearing on a Swiss request for extradition. Petitioner is State Secretary of the Union of Russia and Belarus, a financial and trade union organized in January 2000. Before that, he was Chief of the Administrator's Directorate of the Russian Federation, overseeing construction of government buildings.

Pursuant to an arrest warrant and Article 13 of the Extradition Treaty between the United States and Switzerland, petitioner was arrested at Kennedy Airport en route to President Bush's inauguration. He has since been detained at the Metropolitan Detention Center in Brooklyn. Magistrate Judge Viktor V. Pohorelsky denied bail.

Switzerland seeks petitioner's extradition to face charges of money laundering and participation in a criminal organization. The extradition request alleges, with references to supporting documentation, that petitioner exacted some $30 million from Swiss companies for awarding them construction contracts, including work on the Grand Palace of the Kremlin and the Accounting Chamber in Moscow. In so doing, he allegedly abused his position as head of the administrative directorate of the office of Presidential Affairs. Attached to the Extradition Request is a flow chart tracking the alleged laundering of the money from the contracts.

'Special Circumstances'

Petitioner claimed "special circumstances" justifying his release and presented a "bail package" of restrictions, including 24-hour house arrest, to alleviate concerns about the risk of flight.

As a special circumstance, he cited his position as Secretary of the Union and his qualifications rendering him "irreplaceable." While incarcerated, he argued, he could not supervise preparation for an upcoming Union meeting to approve the budget. Petitioner submitted supporting statements from high-ranking officials of the Russian-Belarus Union, such as the President of Belarus and the Prime Minister of the Russian Federation. Petitioner also provided a letter from Yuri Ushakov, Russian Ambassador to the United States. The letter states that petitioner's detention has "most seriously hampered the activities of the supreme bodies of the Union."

As Judge Nickerson observed, "the importance of the business of the Union argues against the contention that a leader in absentia attempting to oversee that business from a foreign hotel room will be sufficiently more effective than one doing so from a foreign prison cell." Slip op. 15. The court added: "While there are undoubtedly large differences between prison and house arrest in terms of comfort and convenience to petitioner and his associates, these are not enough to constitute 'special circumstances.' " Slip op. 16. With respect to petitioner's "unique qualifications" for his position, the court concluded that such a status "does not constitute a special circumstance which overcomes a presumption against bail in extradition cases." Ibid. Conducting Union business from prison is "undeniably difficult." Ibid. But Judge Nickerson was "not persuaded that other administrative remedies could not be employed to continue this work of the Union in [petitioner's] absence, as indeed it has been doing since he left Russia prior to his arrest on Jan. 17, 2001." Slip op. 17-18.

Judge Nickerson also found insufficient comfort in petitioner's offer to pay for 24-hour surveillance and confinement to a selected location. Finding a significant risk of flight, the court commented (inter alia) on the "relative ease with which [petitioner] could enter Russian diplomatic property" if he could evade his detainers, his lack of ties to the United States, his motive and opportunity to flee, and the policy mitigating against private detention arrangements. Slip op. 26.

Peter R. Schlam and Harvey M. Stone are partners at Schlam Stone & Dolan. Bennette D. Kramer, a partner of the firm, assisted in the preparation of the article.

[Reproduced with permission from New York Law Journal Volume 225, Friday, April 13, 2001.  Copyright 2001 ALM Properties, Inc.  All rights reserved.]