Opinions of the United
2002 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


6-4-2002

USA v. Chau
Precedential or Non-Precedential: Precedential

Docket No. 00-2720




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PRECEDENTIAL

       Filed June 4, 2002

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 00-2720

UNITED STATES OF AMERICA

v.

THOMAS CHAU
a/k/a TAM MINN CHAU
a/k/a TAM MIHN CHAU

Thomas Chau,
       Appellant

On Appeal from the United States District Court
for the Eastern District of Pennsylvania.
(D.C. Crim. No. 99-cr-00704-1)
District Judge: Hon. Eduardo C. Robreno

No. 00-2721

UNITED STATES OF AMERICA

v.

THOMAS CHAU,
       Appellant




On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Crim. No. 00-cr-00130-1)
District Judge: Hon. Eduardo C. Robreno

Argued November 2, 2001

Before: SLOVITER, NYGAARD and CUDAHY,*
Circuit Judges

(Filed: June 4, 2002)

Hope C. Lefeber, Esq. (ARGUED)
1420 Walnut Street
Suite 1000
Philadelphia, PA 19102

 Attorney for Appellant

Michael L. Levy, Esq.
 United States Attorney
Robert A. Zauzmer, Esq.
 Assistant United States Attorney
 Chief of Appeals
Linda Dale Hoffa, Esq. (ARGUED)
 Assistant United States Attorney
Alicia S. Resnicoff, Esq.
Office of United States Attorney
615 Chestnut Street
Suite 1250
Philadelphia, PA 19106-4476

 Attorneys for Appellee
_________________________________________________________________

* Hon. Richard D. Cudahy, United States Court of Appeals for the
Seventh Circuit, sitting by designation.

                                2


OPINION OF THE COURT

CUDAHY, Circuit Judge.

Thomas Chau ("Chau") appeals the sentence imposed by
the district court, contending that there was error in the
application of several enhancements. We vacate the
sentence and remand for a new sentencing.

I.

This case arises out of an ultimately unlawful attempt to
deal with a common problem facing many property owners
--asbestos. In 1986, Chau purchased the former Drexel
School (building) from the School District of Pennsylvania.
Chau had no idea that the building contained asbestos. The
building sat vacant for the next eleven or twelve years.
During that time, Chau unsuccessfully attempted to sell
the property. In the meantime, he apparently suffered
financial and physical setbacks that led him to declare
bankruptcy.

Things looked brighter when, in 1997, Chau received an
offer for the building from a social service organization that
wanted to renovate it into a nursing home for senior
citizens. As part of the deal, Chau needed to get a zoning
permit for the building to permit its use as a nursing home.
In late July 1997, in preparation for the zoning inspection,
Chau asked James Fantom, his handyman for fifteen years,
to help him clean up the building. Fantom referred Chau to
Vincent Turner, who agreed to help. Turner cleaned up the
building by removing insulation that had fallen to the floor
or was peeling off the walls, ceiling, and pipes throughout
the building. Turner placed the refuse in unmarked trash
bags. Chau would assist Turner in loading these trash bags
into Chau’s pick-up truck and then dumping these bags in
a vacant lot in Philadelphia.

On or about July 23, 1997, a city inspector for
Philadelphia’s Air Management Services (AMS) went to the
building to investigate a tip that Chau was illegally
removing asbestos from the building and that asbestos-
                                3


filled trash bags were on the curb. The inspector found
some opened trash bags in front of the building. He
observed certain air cell pipes in the bags that he suspected
might contain asbestos. The inspector collected samples of
the insulation around the air cell pipes (the pipe wrap) for
testing. Then, he covered the bags and marked them
"danger." Later that day, the inspector met with Chau at a
hearing before the Philadelphia Zoning Board and arranged
for an inspection to be held on July 30, 1997. The inspector
instructed Chau that the trash bags had to be removed
from the streets because they might contain asbestos. Chau
complied by placing the bags inside the building.

During the week of July 24 through July 27, 1997, Chau
continued to ready the building for the zoning inspection by
getting Turner to sweep and clean up the insulation.
Because the cleanup was taking too long, Chau asked
Fantom to help. Fantom agreed. During the evening, Chau,
Turner, and Fantom would load trash bags filled with
debris into Chau’s truck and dump them along a roadside
in Philadelphia.

On July 28, 1997, AMS received a tip that asbestos had
been illegally removed from the building over the weekend
and dumped somewhere in the city. A civil search warrant
for the building was obtained and executed by the city
inspector. During the search, asbestos contamination was
detected near the pipe risers on the first, second and third
floors. The inspector posted an asbestos warning on the
front door and had the locks changed.

Subsequently, on July 30, 1997, the previously
scheduled inspection took place. Additional asbestos was
found in the basement area. Chau’s wife was notified of the
asbestos violations and she was informed that only a
certified asbestos contractor could clean up and remove the
asbestos. Mrs. Chau was instructed to let no one enter the
building. The inspector also gave her the keys to the
building before he left. On August 4, 1997, Chau was
personally served with city notices of violations. He was
instructed to keep the building sealed.

On September 18, 1997, the City of Philadelphia filed a
civil complaint and a motion for preliminary injunction

                                4


against Chau seeking an immediate cleanup of any
asbestos in the building. On November 19, 1997, the
Environmental Protection Agency (EPA) executed a federal
search warrant for the property and found that the building
was contaminated with asbestos. In December 1997, the
EPA assigned an on-scene coordinator to the building to
begin an assessment of whether the property was eligible
for Superfund relief. That same month Chau accepted a
proposal from Pepper Environmental Services (Pepper) to
"stabilize" the building for $5,000. Pepper sealed the
basement area to prevent further asbestos exposure to any
persons inside or outside the building. Later, on January
12, 1998, Pepper offered to remove all of the asbestos in the
basement for $58,000. Since he was bankrupt at the time,
Chau did not accept Pepper’s proposal.

Between January 13, 1998, and March 11, 1998,
hearings were held on the City’s civil complaint against
Chau. After the hearings, the court ordered Chau to clean
up the building. On March 6, 1998, the EPA issued an
administrative compliance order outlining the steps that the
EPA was ordering Chau to undertake in cleaning up the
remaining asbestos.

After receiving these orders, Chau engaged in a desperate
and illegal act. He covered his upper and lower body with
black trash bags and tied some bags around his feet. Then,
he put on rubber boots, and donned a clear garbage bag
over his chest area, a paint respirator over his mouth and
nose, aviator goggles and a bandana over his head. Thus
equipped, he began stripping pipes and placing pipe wraps
in trash bags when the on-scene EPA investigator arrived.
Chau made some false statements to the investigator. He
was then promptly stopped from cleaning up the building,
and the property was locked up. Subsequently, the
government declared the property a Superfund site and had
it cleaned up for approximately $200,000. The City of
Philadelphia cleaned up the dump sites for approximately
$12,000.

In October 1999, Chau was indicted for violations of the
Clean Air Act with two other related charges. The
indictment charged him with polluting the air when he
initially cleaned up the building, with Fantom’s and

                                5


Turner’s help, in 1997, and when he attempted to clean up
the building by himself in 1998. Shortly before trial was to
begin on March 13, 2000, Chau attempted to get Fantom to
change his trial testimony. Chau was subsequently charged
by information with obstruction of justice. He pleaded
guilty to knowingly violating the Clean Air Act as well as to
the obstruction of justice charge. He was sentenced to 51
months in jail, the lowest possible sentence after certain
enhancements were applied. On appeal, Chau argues that
the district court erred in applying those enhancements to
his sentence.

II.

On review of a sentencing, the district court’s findings of
fact are accepted unless clearly erroneous, and the district
court’s application of the guidelines to the facts must be
given due deference. 18 U.S.C. S 3742(e). In Koon v. United
States, 

, 98 (1996), the Court noted that the
"deference that is due depends upon the nature of the
question presented."

A. Whether a six-level enhancement pursuant to U.S.S.G.
       S 2Q1.2(b)(1)(a) was warranted.

S 2Q1.2(b)(1) imposes a four-level enhancement for a
single discharge of a hazardous substance and a six-level
enhancement for a continuous or repetitive discharge of the
substance. Chau argues that the district court erred in
imposing this enhancement because the government failed
to prove actual contamination or any substantial amount of
discharge.

Application Note 5 for S 2Q1.2 states: "Subsection (b)(1)
assumes a discharge or emission into the environment
resulting in actual environmental contamination." The
circuits are split on the question whether the government
must prove that the discharge caused actual environmental
contamination. Compare United States v. Cunningham, 

, 1201-02 (11th Cir. 1999) (proof of actual
contamination not required), United States v. Liebman, 

, 550-51 (2d Cir. 1994) (same), and United States
v. Goldfaden, 

, 1331 (5th Cir. 1992) (same)
with United States v. Ferrin, 

, 663 (9th Cir.

                                6


1993) (showing of actual contamination required). However,
even under Ferrin, the record here supports a six-level
enhancement. In Ferrin, the court held that"proof of
environmental contamination does not necessarily require a
full-blown scientific study." 

. The
court continued: "We see no reason why in most cases
reasonable inferences from available evidence would not
suffice to support a conclusion that the illegal acts resulted
in contamination." Here, there is substantial evidence that
Chau disturbed the asbestos in the building. There is also
evidence that some asbestos became exposed to the air. For
example, the city inspector found that some opened
garbage bags containing asbestos were left outside the
building on the sidewalk. Further, the district court found
that there had been a continuous discharge and this
finding is entitled to deference. Thus, the district court
correctly applied this enhancement to Chau’s sentence.

B. Whether a four-level increase pursuant to U.S.S.G.
       S 2Q1.2(b)(3) was warranted.

S 2Q1.2(b)(3) provides that "[i]f the offense resulted in
disruption of public utilities or evacuation of a community,
or if cleanup required a substantial expenditure, increase
by 4 levels." Chau argues that this enhancement should
not apply to him because Superfund relief was initiated
prior to any criminal charges being brought against him
and, since the cleanup was paid out of Superfund monies,
there was no substantial expenditure. Alternatively, he
argues that the actual cost of the cleanup was $58,000 (the
amount proposed by Pepper to remove the asbestos), which
is not a substantial expenditure.
Here, Chau’s actions resulted in a cleanup that required
substantial expenditure. The fact that Superfund relief was
authorized prior to the institution of criminal charges is
irrelevant because it was Chau’s criminal acts that led in
part to the expenditure of Superfund monies. Chau’s
alternative argument is also unpersuasive. Although we
believe that $58,000 is a substantial expenditure, the
district court found that the cost of cleaning up Chau’s
contamination of the environment was $200,000. This is a
finding of fact that is not clearly erroneous. And we hold
that, for the purposes of S 2Q1.2(b)(3), $200,000 is a

                                7


substantial expenditure. Cf. United States v. Bogas, 

(6th Cir. 1990) (holding that $100,000 was a
substantial expenditure). Thus, the district court did not
err in applying the four-level enhancement.

C. Whether a four-level increase pursuant to U.S.S.G.
       S 2Q1.2(b)(4) was warranted.

S 2Q1.2(b)(4) states: "If the offense involved
transportation, treatment, storage, or disposal without a
permit or in violation of a permit, increase by 4 levels."
Chau argues that this enhancement was improperly applied
to his case because a permit violation was not part of the
charges against him. Whether S 2Q1.2(b)(4) should apply to
this case is an issue of law that is reviewed de novo.

The government charged Chau under 42 U.S.C.
S 7413(c)(1), the substantive violation provision of the Clean
Air Act, and not S 7431(c)(2), the recordkeeping violation
provision of the Act. As a guide to applying the various
sentencing enhancements, the background commentary to
S 2Q1.2(b) states that "[t]he first four specific offense
characteristics provide enhancements when the offense
involves a substantive violation." Thus, S 2Q1.2(b)(4), one of
the first four specific offense characteristics importing a
four-level increase, applies to Chau because he was
charged with a substantive violation. However, this
enhancement applies only if the substantive violation
involves a permit.

The government contends that there are two possible
permits involved in this case. One is a federal"permit"
under 42 U.S.C. S 7413(c)(2); the other is a permit required
by the City of Philadelphia before asbestos can be removed.
With respect to what the government argues is a federal
"permit" under S 7413(c)(2), we hold that this is not a
permit for the purposes of S 2Q1.2(b)(4). Section 7413(c)(2)
does not impose a "permit" requirement prior to asbestos
cleanup; it only requires notice of the cleanup to the
government. While the government argues that the notice
provision is effectively a permit, that is not the common
understanding of the word "permit," which is"a written
warrant or license granted by one having authority."
Merriam Webster’s Collegiate Dictionary 866 (10th Ed.
                                8


1997); see also Black’s Law Dictionary 1140 (6th ed. 1990)
("A license or grant of authority to do something."). A
requirement that someone provide written notice of an
intention to perform an act is not the same as the EPA’s
granting of a license, or other permission, to the person to
perform the act in question (even though the purpose of the
two procedures may be similar). Thus, S 7413(c)(2) does not
provide a basis for an enhancement under S 2Q1.2(b)(4). We
note that the EPA could have charged Chau with violating
the notification requirement of S 7413(c)(2), but declined to
do so.

The other possible permit involved here is the permit
required by the City of Philadelphia. The government
argues that this permit is a sufficient basis for a district
court to impose an enhancement under S 2Q1.2(b)(4). We
have never addressed in a published opinion whether a city
permit will satisfy the permit requirement of S 2Q1.2(b)(4) in
a violation of the Clean Air Act. We have, however, dealt
with this question before in two unpublished decisions that
offered contradictory conclusions. See United States v.
Banks, No. 96-1422 (3d Cir. January 7, 1997) (affirming
enhancement) and United States v. Burrell, No. 96-1419 (3d
Cir. October 23, 1996) (reversing enhancement). The
conflicting determinations apparently reflected a difference
in the facts and procedural posture of those cases.

The government argues that a city permit is a sufficient
basis to impose a four-level enhancement under
S 2Q1.2(b)(4) because that provision attaches consequences
to what it calls a "permit" without designation of an issuing
jurisdiction. The government also cites United States v.
Paccione, 

(S.D.N.Y. 1990), in support of
its view. However, Paccione is distinguishable. In that case,
defendants Paccione and Vulpis were convicted of mail
fraud, racketeering and racketeering conspiracy charges.

. The charges stemmed
from the illegal operation of a landfill, and because the
crimes resulted in substantial environmental damage, the
district court looked to the environmental offenses
guidelines to calculate the sentence. Since the city required
a permit to operate a landfill that accepted asbestos, it was
the lack of a proper permit that rendered the operation of

                                9


the landfill illegal. Because the defendants "did not have
permits to conduct the types of waste disposal operation in
which they engaged," the district court imposed the four-
level enhancement pursuant to S 2Q1.2(b)(4). 

. Thus, a permit was integral to the criminal
charges in Paccione, but a permit is not integral to the
charges against Chau because he was charged with
violations of the Clean Air Act, with respect to which there
was no permit requirement. See United States v. Weintraub,


. 135, 137 (D. Conn. 2000) ("It is undisputed
that there is no permit requirement of any sort for the
disposal of asbestos under the Clean Air Act. . . .
Furthermore, the Clean Air Act contains no delegation of
permitting authority or any incorporation of state
permitting requirements related to the handling of
regulated asbestos materials.").

The absence of a permit requirement in the Clean Air Act
also renders the government’s plain language argument
unpersuasive. In order to apply the enhancement,
S 2Q1.2(b)(4) requires that the offense must"involve" a
permit violation. "Involve" is defined variously as "to relate
to closely: [to] connect" and "to have within or as part of
itself: [to] include." Merriam Webster’s Collegiate Dictionary
617 (10th Ed. 1997). While the city permit in this case can
plausibly be described as being "connected" to the
violations of the Clean Air Act, the city permit was in no
sense integral to the violations. It is not the lack of the
permit that imparts illegality under the Clean Air Act. The
fact is that under the enforcement procedure of the Clean
Air Act, there are no penalties for violating a permit. This
enforcement procedure reflects the EPA’s belief that"[t]he
burden imposed by requiring permits for asbestos
demolition and renovation is unnecessary because it would
provide few additional environmental or enforcement
benefits." 57 Fed. Reg. 32250, 32263 (1992). Because the
Clean Air Act does not contemplate a permit violation as a
basis of enforcement, the S 2Q1.2(b)(4) enhancement is not
available. This reading of S 2Q1.2(b)(4) does not render it
superfluous, because other environmental statutes impose
a permit requirement where the enhancement would be
quite appropriate. See Weintraub, 

at 138

                                10


(collecting environmental statutes that contain permit
requirements or incorporate state permit requirements).

Our interpretation of S 2Q1.2(b)(4) is consistent with that
of the only reported federal authority on the matter. In
Weintraub, the defendant was convicted of conspiracy to
violate the Clean Air Act as well as of substantive violations
of the Act. 

at 136. The government argued
that the defendant should receive an enhancement under
S 2Q1.2(b)(4) "because the asbestos disposal was done
without obtaining prior written authorization from the
Connecticut Department of Environmental Protection as
required under state regulation." 

court held
that, "absent any federal requirement of any permit related
to asbestos handling under the Clean Air Act, expressly or
by delegation to the state regulatory schemes, Weintraub’s
offense of conviction is unrelated to his noncompliance with
the state prior authorization requirement and the Court
concludes that Section 2Q1.2(b)(4) is therefore inapplicable
to Weintraub’s offense." 

The government attempts to distinguish Weintraub by
arguing that, in the present case, the city permit was
incorporated into the Clean Air Act because the EPA
delegated to the City of Philadelphia the authority to
enforce the Clean Air Act. But the EPA’s delegation of
authority to enforce does not incorporate the City’s permit
requirement into the Clean Air Act. Rather, the EPA’s
delegation of authority provides that "[e]nforcement of the
NSPS and NESHAP regulations [dealing with Clean Air Act
work practice standards] are the primary responsibility of
the [City of Philadelphia Health] Department .. . . U.S.
E.P.A. retains authority to enforce any NSPS or NESHAP
standard whenever such enforcement is deemed by the U.S.
EPA to be necessary to carry out the purposes of the Clean
Air Act." 50 Fed. Reg. 34140, at 39 (August 23, 1985). This
delegation provides that the City may enforce the Clean Air
Act as written. It does not contemplate that the City may
create new requirements for compliance with the Clean Air
Act.

Of course, this does not mean that the City cannot adopt
mechanisms of its own--like a permit. Our system of
environmental protection envisions concurrent enforcement

                                11


activities by federal, state, and local authorities. But the
City’s permit requirement is its own, and operates
independently of, and outside the federal requirement.
Such a City obligation is not incorporated into federal law.
Cf. 

(noting that"while
Connecticut’s prior written authorization requirement is not
preempted by the Clean Air Act, it is also not incorporated
into federal law"). Since Chau was charged with violating
the federal requirements of the Clean Air Act, his apparent
violation of a city permit, quite independent of the Clean Air
Act, cannot be the basis for an enhancement of his
sentence for violating that statute. Thus, the district court
erred in applying the four-level enhancement.

D. Whether a two-level upward adjustment pursuant to
       U.S.S.G. S 3B1.1(c) was warranted.

S 3B1.1(c) provides a two-level enhancement for being an
organizer, leader, manager, or supervisor of criminal
activity involving two or more participants. Chau argues
that this enhancement is improper because he merely
directed his handyman, Fantom, to clean up the building
with brooms, sledges and hefty trash bags. However, this is
sufficient for a district court to impose this enhancement.
S 3B1.1(c) requires only that the defendant be"an
organizer, leader, manager, or supervisor in any criminal
activity." As several courts have noted, a manager or
supervisor is one who "exercise[s] some degree of control
over others involved in the offense." United States v. Fuller,

, 1220 (1st Cir. 1990). Here, Chau ordered
Turner to clean up the building. Later, he asked Fantom to
help. Then, Chau worked with Fantom and Turner to dump
the asbestos at various sites in the city. Chau’s
participation in the cleanup indicates that he was in a
position to exercise supervisory control over both Fantom
and Turner. The district court found that Chau did exercise
some degree of control over Fantom and Turner, and this
finding is not clearly erroneous. Thus, the district court did
not err in applying this enhancement.

                                12


III.

For the foregoing reasons, we VACATE the sentence of
the district court and REMAND to the district court for re-
sentencing.

A True Copy:
Teste:

       Clerk of the United States Court of Appeals
       for the Third Circuit

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