Petition for Writ of Certiorari — West Indies Transport, Inc. v. United States

97 931 DE -5 1%

No. OFFICE OF THE CLERK

IN THE

Supreme Court of the United States

OCTOBER TERM, 1997

WEST INDIES TRANSPORT (CO.), INC., WIT

EQUIPMENT CO., INC., and W. JAMES OELSNER,

Petitioners,

VS.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

DANIEL RIESEL

Of Counsel: Counsel of Record

TRESTON E. MOORE SIVE, PAGET & RIESEL P.C.

MoorE & DODSON 460 Park Avenue

14A Norre Gade New York, New York 10022

P.O. Box 310 (212) 421-2150

St. Thomas, V.I. 00804-0310

(809) 777-5490 Counsel for Petitioners

DANIEL RIESEL

STEVEN RUSSO

On the Petition

~ —_ . a oe

: ee ni TN

Ret the eR aI a SS ee

i

QUESTIONS PRESENTED

l. Whether, in view of the plain language of the

Clean Water Act ("CWA"), its legislative history, and its

interpretation by the courts, the individual act of severing

portions of a vessel following a hurricane can constitute the

discharge of a pollutant from a “point source" within the

meaning of the CWA?

p Whether the discharge of airborne sand and

paint particles carried by wind over the water body in

connection with the sandblasting of a vessel constitutes a point

source discharge within the meaning of the CWA?

x Whether a barge temporarily moored to shore

that, if repaired, would be capable of being used as a means of

transportation, constitutes a "vessel" as defined by the CWA?

4. Whether the failure of the Jury to determine the

question of materiality of petitioners’ alleged false statements

requires reversal of the convictions for visa fraud when the

issue of materiality was contested at trial?

TABLE OF CONTENTS

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Cr eee SEE co ns hc Sew o kee eye wee wees

PEE, ie oe wa ee a da ea

STATUTORY PROVISIONS INVOLVED ..........

DAPRRURCe GAP ENE SAM 60s 8 Ga Sc aN ce ba ws

PE FOE bos a Sis KN a ede eee ees

Tat FO I oS os PE ea

REASONS FOR GRANTING THE WRIT ..........

i. THE PANEL’S INTERPRETATION

BELOW OF THE TERM "POINT SOURCE"

IS CONTRARY TO THE INTERPRETATION

BY THE SECOND CIRCUIT, FINDS NO

SUPPORT IN THE CWA OR ITS

LEGISLATIVE HISTORY, AND

CONCERNS A MATTER OF

SUBSTANTIAL IMPORTANCE. .........6:

a ali, eB aca ACN Sth EEE Nt RIA a I a A Re Mma FN Re RO A lk eA Mle Ab

Aa tte ET gi

ill

II. THE THIRD CIRCUIT’S REFUSAL

TO RECOGNIZE THE LONG-STANDING

DEFINITION OF A "VESSEL" UNDER

FEDERAL LAW AND ITS

INTERPRETATION BY THIS COURT

AND OTHERS HAS CREATED

PRECEDENT THAT LEAVES

FUTURE COURTS WITHOUT

ADEQUATE GUIDANCE ............-. eae

If. THE THIRD CIRCUIT FAILED TO

RECOGNIZE A CRITICAL DISTINCTION

BETWEEN THE FACTS OF THIS CASE

AND THOSE PRESENTED IN

UNITED STATES V. JOHNSON WHICH

HAS CREATED A HOLDING THAT IS

CONTRARY TO OTHER CIRCUITS ....... 19

wis cece eee V Rate Rae en 6 Om 22

APPENDIX

A. Opinion of the United States Court

of Appeals. for the Third Circuit,

dated October 15, 1997 ........0 2c eeeees A-|

B. Judgment of the United States Court

of Appeals for the Third Circuit,

dated October 15, 1997 .........---+-0-- A-39

i. Order of the United States Court

of Appeals for the Second Circuit

denying petition for rehearing

en banc, dated November 12, 1997 .......-- A-41

iV

TABLE OF AUTHORITIES

Page

CASES

Braxton v. United States,

ee Rs ee A ew ke ek oa ee a 12

Cope v. Vallette Dry Dock Co.,

ta 15

Eastern Transport Co. v.

ites eens. 272 US. OFS Ciel) oe ew awake’ 14

Hudson Harbor 79th Street Boat

Basin, Inc. v Sea Casa, 469 F. Supp.

Pe ee hd ve ee Sree 15

Johnson _v. United States US. __

SE a ee Ee ak oe Oo wee Rs Se passim

Kathriner v. Unisea, Inc..

Fie eae FG ER) 2 oo ok a ee ee eee ae 15

McCarthy v. The Bark Peking,

716 F.2d 130 (2d Cir. 1983),

cert. denied sub nom. South

Street Seaport Museum v.

BEL BY. Bo tik PUI A IPOE) nea cece awe basars 14

National Wildlife Federation v.

Coreuce. O73 P.20 100 (7, Clr, 1962) kw sas 11

Offshore Co. v. Robison,

OO Ce Fe Me a a ha RS ee 15

Sy ae —— el it ae ER niga OT TEASE tac nn at Mad

Vv

Producers Drilling Co. v. Gray,

361 F.2d 432 (Sth Cir. Yo ee 14

Salgado v. M.J. Rudolph Corp.,

514 F.2d 759 (2d Cir. ee ans co cnds arenes 14

Tucker _v. Alexandroff, 183 U.S.

HAE NEE nu co an eunds Cer cetanpee seer T 14

United States v. Baumgardner, 85 F.3d

1305 (Sth Cir. 1996) «..- seer eerereerseerre® 18,21

United States v. David, 83 F.3d 638

A Cae, FIO aw cape ent ee ETE Te 18,21

United States v. Gaudin,

SEE EE SOG CLUES cok g we vs 02 HOS EEK ENS BROT AE OD 18

United States v. Olano,

SOY 11S. TIS VGGS) ccc eee ce eee reser e ee: 18,19,20

United States _v. Plaza Laboratories, Inc.

3 F.3d 643 (2d Cir. 1993), cert. denied sub nom.

United States v. Villegas,

SVS 1S 1205 (IGN R) oss de tee eee ee passim

STATUTES

ee os ok oo ete TS EEE TE 13,14

ie Oe SPIRAL) c's Coens eee eh eee rE Ee |

Gk Ss | SMM era gat YL Basten amematay cain avs 13

vi

Clean Water Act, 33 U.S.C. § 1251 et_seg.

RR OTe es oe es as

SUSE: 6 THGENINAS Goo

SUAr 41M og os ak

OTR 6 VR oe es

REGULATION

aR a BORE: ies Waar e s bialerkckw iby alee we eral

OTHER AUTHORITY

Vol. 1, Benedict on Admiralty, Friedel,

RR Ie i Pg ea a

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF

APPEALS FOR THE THIRD CIRCUIT

Petitioners, W. James Oelsner, West Indies Transport,

Inc., and WIT Equipment Co., Inc. (collectively "Oelsner"),

request that a writ of certiorari issue to review the judgment

and opinion of the United States Court of Appeals for the

Third Circuit entered in this action on October 15, 1997, which

affirmed 2-1 the convictions and sentences of the United States

District Court of the Virgin Islands.

OPINIONS BELOW

The opinion of the Court of Appeals together with the

dissenting opinion of Judge Nygaard, is reported at me Se

1997 U.S. App. Lexis 78593 (3d Cir. 1997). It is also

reproduced in Appendix A at A-1-39.! The decision of the

District Court is unreported.

JURISDICTION

The judgment of the Court of Appeals was entered on

October 15, 1997. A timely petition for rehearing with a

petition for rehearing en banc was denied on November 12,

1997. (Appendix C.) On November 24, 1997, the Court of

Appeals issued a stay of the mandate until December 5, 1997.

This Court has subject miatter jurisdiction pursuant to 28 U.S.C.

§ 1254(1).

STATUTORY PROVISIONS INVOLVED

Section 1311(a) of the CWA provides:

| References to the decisions below are designated

parenthetically as "A" followed by the Appendix page

number(s) on which the referenced material appears.

2

the discharge of any pollutant by

any person shall be unlawful.

Section 1319(c)(2)(A) of the CWA provides:

Any person who-

(A) knowingly violates Section

1311, 1312, 1316, 1317, 1318,

1321(b)(3), 1328, or 1345 of this

title ... shall be punished by a

fine of not less than $5,000 nor

more than $50,000 per day of

violation or by imprisonment for

not more than 3 years, or by

both ....

Section 1322(a)(1\ of the CWA defines "new

vessel” to include:

every description of watercraft

or other artificial contrivance

used, or capable of being used,

as a means of transportation on

the navigable waters....

Section 1362(14) of the CWA defines

source as:

any discernible, confined and

discrete conveyance, including

but not limited to any pipe,

ditch, channel, tunnel, conduit,

well discrete fissure, container,

rolling stock, concentrated

animal feeding operation, or

vessel or other floating craft,

from which pollutants are or

"point

3

may be discharged.

STATEMENT OF THE CASE

nk

Relevant Facts

Petitioner W. James Oelsner was the president of the

now defunct West Indies Transport Co. ("WIT"). He is a 69

year old businessman with no prior involvement with the

criminal justice system. WIT acted as agent for foreign

principals who conducted drydocking and repair operations of

their own vessels in St. Thomas, United States Virgin Islands,

and operated a barge towing company.

In September of 1989, Hurricane Hugo devastated the

island of St. Thomas, impacting every aspect of the foreign

principals’ operations. (A-4.) The hurricane severely damaged

many of the WIT barges. (A-4.) The stern of one of the

vessels -- the W/TConcrete Il -- had broken free and sunk to

the bottom of Krum Bay, connected with the floating remainder

of that vessel only by several pieces of rebar. (A-5.)°

After the hurricane, Antilles Marine Services Co., Inc.,

through Oelsner, attempted to repair the WIT facility and to

salvage and rebuild the damaged WIT vessels. As part of that

effort, the floating portion of the WITConcrete II was severed

from the stern portion lying on the ocean floor and towed to St.

Croix. Subsequently, at the request of the Virgin Island Port

Authority, WIT secured United States Coast Guard and Virgin

Island Government authorization to return the vessel to the

WIT facility in Krum Bay, St. Thomas, and tugs were sent to

retrieve the WiTConcrete II. \n closing the hull and preparing

the vessel for safe towing -- as required by the Coast Guard --

2 “Rebar” are metal rods used to reinforce concrete. The

WITConcrete II was constructed of reinforced concrete.

4

additional rebar was cut from the stern portion in St. Croix’s

Krause Lagoon in June 1993. A portion of the rebar cut from

the vessel fell into Krause Lagoon. (A-5.)

The post-hurricane activities also included the

sandblasting and repair of another vessel. During the course of

refurbishing this vessel, small amounts of sand and residue

were blown into the air. (A-5.) In conducting scraping, sand-

blasting and repainting of the vessel’s exterior. tarps were

situated around the tug on drydock, and the residue was

regularly swept, bagged and removed to a nearby trash

receptacle. Nevertheless, some of the airborne paint chips and

sand were carried by wind over the adjacent waterway and

settled into the water.

Also as part of its salvage and repair operations,

workers engaged in salvage operations slept in container berths

provided within the damaged barge WITRollon. This vessel

also contained kitchen and toilet facilities. While workers were

housed on this vessel, sewage produced from the toilet on

board was discharged into Krum Bay, prior to the connection

of the toilet to a holding tank. (A-5.)

The workers -- who were non-U.S. citizens from the

Philippines -- came to the Virgin Islands pursuant to contracts

signed with one of WIT’s foreign principals, Administration De

Marinos, S.A. ("ADM"). These workers were qualified within

the international maritime community as seamen. They entered

the United States pursuant to special visas issued to them as

seamen in the Philippines. Once they eniered the United

States, they performed salvage and repair work on ADM

vessels. The workers were to ready the vessel and man it upon

its return to operations after repairs.

The Proceedings Below

Oelsner was charged, along with WIT and WIT

Equipment Co., in a twenty-one count indictment for visa

fraud, environmental crimes, conspiracy, and a charge under

the local RICO statute. (A-6.)

Count | alleged that the severing of the stern of the

WITConcrete II constituted a knowing discharge of a pollutant

from a point source in violation of the CWA. Count 2 alleged

that the cutting of rebar from the W/TConcrete II, some of

which inadvert-ntly landed into Krause Lagoon, also

constituted a knowing discharge of a pollutant in violation of

the CWA. Count 7 alleged that the airborne sand and paint

chips that landed into the adjacent waterway as a result of

petitioners’ sandblasting activity also constituted a knowing

discharge of a pollutant in violation of the CWA. Count 4

alleged that the discharge of untreated sewage from the

WITRollon also constituted a knowing violation of the CWA ,

Counts 13 through 19 alleged that petitioners engaged in "fraud

and misuse of visas, permits and other documents," in violation

of 18 U.S.C. § 1546(a), with regard to the visa applications by

the Filipino workers contracted to work for ADM.

Prior to verdict, the district court dismissed counts 5-6,

10-11, and 20 were dismissed. After a jury trial, petitioners

were convicted of the remaining counts. (A-6.) An appeal to

the Third Circuit followed, and the majority in a 2-1 decision

affirmed the convictions. Subsequently, Oelsner filed a petition

for rehearing en banc which was denied by the Third Circuit

on November 12, 1997. (Appendix C.)

3 The remaining counts, which are not the subject of this

Petition, alleged violations of the Rivers and Harbors Act, the

Ocean Dumping Act, and the Virgin Islands parallel to RICO.

6

Oelsner petitions this Court to grant certiorari to review

the panel majority’s decision regarding counts 1-2, 4, and 7

under the CWA, and counts 13-19 relating to the alleged visa

fraud which affirmed the District Court’s convictions and

sentencing as to such counts.

REASONS FOR GRANTING THE WRIT

This Court should grant Oelsner’s Petition for Writ of

Certiorari ("Petition") in order to resolve a direct conflict

among the circuits involving the interpretation of provisions in

the CWA. The Third Circuit Court of Appeals and the Second

Circuit Court of Appeals are in conflict over an important

question concerning criminal enforcement of the CWA. This

Petition would bring up for review an impermissible expansion

of the criminal provisions of one of the most pervasive

environmental statutes.

The Third Circuit has construed the definition of "point

source” in the CWA to include conduct never contemplated by

Congress, the United States Environmental Protection Agency

("EPA"), or any court interpreting this term. The overly broad

construction of specific provisions in the CWA -- especially in

the context of a criminal prosecution -- finds no support in the

Statutory language, legislative history, or case law. This

construction by the majority below seriously undermines the

credibility of criminal enforcement under federal environmental

laws. Furthermore, if the Supreme Court refuses to grant

Oelsner’s Petition, future courts will be left without guidance

in this area.

In addition, with regard to court 4, the Court of

Appeals’ interpretation of the definition of "vessel" in the

CWA focused unduly on the actual use of the W/TRollon,

effectively reading out of the definition the language "capable

of being used as a means of transportation." This interpretation

was contrary to the long-standing reading of this term to

LL

7

include the "residual capacity" of a vessel.

Finally, the Court of Appeals’ decision relating to he

conviction on the visa fraud counts misapplied this Court's

recent decision in Johnson_v. United States, ("Johnson"), __

us. , 175.0% 1544 (1997). This Court should grant

certiorari to provide important instruction to federal courts

concerning whether the failure to permit the jury to determine

the materiality of alleged false statements constitutes “plain

error" when, as here, the issue of materiality was contested at

trial.

In light of this circuit conflict, and the substantial

importance of these issues of statutory interpretation, the

Supreme Court should exercise its discretion and grant

Oelsner’s Petition.

THE PANEL’S INTERPRETATION BELOW OF THE

TERM "POINT SOURCE" IS CONTRARY TO THE

INTERPRETATION BY THE SECOND CIRCUIT, FINDS

NO SUPPORT IN THE CWA OR ITS LEGISLATIVE

HISTORY, AND CONCERNS A MATTER OF

SUBSTANTIAL IMPORTANCE

The Court of Appeals’ decision below stands in direct

conflict with another circuit’s decision. Contrary to the Second

Circuit’s interpretation of the term "point source" in United

States v. Plaza Health Laboratories. Inc. ("Plaza Health"), 3

F.3d 643 (2d Cir. 1993), cert. denied sub nom. United States

y. Villegas, 512 U.S. 1245 (1994), the panel has expanded the

scope of the CWA’s point source provisions beyond a level

ever intended by Congress. This split on a substantial question

is deserving of Supreme Court review.

8

In a 2-1 decision, the majority affirmed petitioners’

convictions on counts 1, 2, and 7, under the CWA, finding, in

part, that the severing of the stern of the W/TConcrete II, as

well as the severing of rebar and attached concrete from the

stern of the WiTConcrete II, constituted the discharge of a

"pollutant" from a "point source" pursuant to Section 131 1(a)

of the CWA. (A-14-15.) In an opinion written by Judge

Anthony J. Scirica, the majority rejected petitioners’ argument

that the government had failed to establish that a pollutant was

added to navigable waters from a "point source." (A-14-15.)

Central to the majority’s holding below was its analysis

of the CWA’s definition of "point source," which defines that

term in the following manner:

any discernible, confined and_ discrete

conveyance, including but not limited to any

pipe, ditch, channel, tunnel, conduit, well

discrete fissure, container, rolling stock,

concentrated animal feeding operation, or vessel

or other floating craft, from which pollutants are

or may be discharged.

33 U.S.C. § 1362(14). The majority found that because the

W1TConcrete II qualified as a "vessel" or "other floating craft,"

the severing of the stern and rebar qualified as point source

discharges. (A-17.)

Judge Nygaard’s dissent, however, properly recognized

that the severing of the W/TConcrete II's stern -- which was

lying on the floor of Krum Bay after that portion of the vessel

had been partially severed during Hurricane Hugo -- "was not

a discharge from a vessel, as required by 33 U.S.C. § 1362(14).

Rather, a part of the vessel itself was discharged." (A-36.)

The dissent went on to properly characterize defendant’s

activities, noting that defendant:

9

merely severed a wrecked, useless portion of

the Witconcrete II to extricate a serviceable

forward portion of it. This was a salvage

operation, not a discharge of concrete and rebar

through the instrumentality of the barge.

(A-36.)

Judge Nygaard’s dissent properly recognized that the

definition of point source has, as its central principle, the

concept of a physical structure designed to collect or discharge

pollutants in the course of waste-generating activity. (A-34

(citing Plaza Health, 3 F.3d at 646-47).) While a vessel or

floating craft are surely capable of being used as a mechanism

for discharging pollutants, the W/TConcrete II was not utilized

‘n such a manner. The barge did not convey pollutants into the

water, but rather part of the vessel itself remained in Krum Bay

after the stern was severed. Similarly, "the severed rebar was

not discharged through the ‘conveyance’ of the barge, see 33

U.S.C. § 1362(14), it was part of the barge itself." (A-37.)

In Plaza Health, -- a case that Judge Nygaard found to

fit the facts of the instant case "particularly well," (A-34) -- the

Court of Appeals for the Second Circuit also examined the

application of the definition of point source in the criminal

context. The Court held that the defendant could not be

prosecuted under the CWA because the individual dumping of

waste directly into a body of water was not a point source

within the meaning of the Act. 3 F.3d at 646. In that case, the

defendant loaded vials of contaminated blood into his car and

dumped them into the Hudson River. Id. Despite the

majority’s creative efforts to distinguish Plaza Health, that

decision is irreconcilable with the panel’s holding in the instant

case.

In reaching its decision, the Plaza Health court observed

that the CWA "was never designed to address the random

Neen nn a

10

individual polluter," and noted that:

the words used to define the term [point source]

and the examples given . . . evoke images of

physical structures and instrumentalities that

systematically act as a means of conveying

pollutants from an industrial source to navigable

waterways.

Id. at 645-46. The court also reasoned that an interpretation

which brings every act of "discharge involving humans" within

the ambit of the term point source would make the provision

redundant and hence contrary to established principles of

statutory construction. Id. at 647. The Court stated that it

could not "make the further leap of writing “human being’ into

the statutory language without doing violence to the language

and structure of the CWA." Id. at 649.

The Plaza Health court also examined the legislative

intent and found:

no suggestion either in the act itself or in the

history of its passage that Congress intended the

CWA to impose criminal liability on an

individual for the myriad, random acts of

human waste disposal...

Id. at 647. The court concluded that:

[ajdopting the government’s suggested

flexibility for the definition would effectively

read the ‘point source’ element of the crime out

of the statute, and not even the EPA has

extended the term ‘point source’ as far as is

urged here.

Id. at 649.

= ee

1]

Contrary to the ruling in Plaza Health, the Court of

Appeals For The Third Circuit has departed from this

understanding and interpretation of point source and has

affirmed Oelsner’s convictions for precisely the type of conduct

which the Second Circuit found to be outside the scope of the

CWA’s point source provisions. In the instant case it was not

the vessel that conveyed any "pollutant" into Krum Bay or

Krause Lagoon, but, at most, the individual human act of

severing the stern or severing the rebar that left the material in

the water. The barge in question did not convey pollutants into

the water, but rather part of the vessel itself remained in Krum

Bay after the stern was severed, nor was the severed rebar

discharged through the conveyance of the barge; it was part of

the barge itself.4 (A-37.)

Similarly, the human activity of sandblasting paint from

a ship near water -- the subject of Count 7 -- cannot constitute

a point source discharge. Nevertheless, the majority

disregarded the Second Circuit’s well-reasoned application of

the CWA’s point source provisions in a criminal context. The

4 The notion of a discharge suggests that it is illogical to

have something that existed in navigational water by its very

nature become the basis for a criminal enforcement action

when part of it is severed from the whole. This result is

contrary to an analogous line of cases which hoid that "addition

from a point source occurs only if the point source itself

physically introduces a pollutant into water from the outside

world." National Wildlife Federation _v. Gorsuch, 693 F.2d

156, 175 (D.C. Cir. 1982). Furthermore, EPA believes that

"the point or nonpoint character of pollution is established

when the pollutant first enters navigable water..." Id. This

———s

analysis of the “addition of a pollutant" appears to exclude the

activity alleged in the case at hand from the scope of the

CWA’s point source provisions.

renner eee ae

12

majority identified the barge, upon which the sandblasting

occurred, as the point source. (A-14-15.) Yet nowhere did the

majority ever explain how the barge served as the conduit for

conveying sand and paint debris into the water. This

unwarranted expansion of the term "point source" not only

departs from established principles of statutory construction,

eviscerating the language of the CWA, but highlights a stark

difference among the circuits over the proper scope of the

CWA’s point-source provisions.

A conflict among the circuits on an important matter

provides a compelling reason for this Court to grant certiorari.

Supreme Court Rule 10(a). Indeed, this Court has stated that

a principal purpose for which the Supreme Court uses its

certiorari jurisdiction is to resolve conflicts among Circuit

Courts of Appeals concerning the meaning of provisions of

federal law. Braxton _v. United States, 500 U.S. 344, 347

(1991). The panel’s decision in this case has produced a split

amongst the circuits regarding the application of certain CWA

provisions. Given the irreconcilable nature of these decisions

and the difficulty that future courts will face applying these

precedents, Oelsner requests that this Court exercise its judicial

discretion and grant certiorari.

I.

THE THIRD CIRCUIT’S REFUSAL TO

RECOGNIZE THE LONG-STANDING

DEFINITION OF A "VESSEL" UNDER

FEDERAL LAW AND ITS

INTERPRETATION BY THIS COURT AND

OTHERS HAS CREATED PRECEDENT

THAT LEAVES FUTURE COURTS

WITHOUT ADEQUATE GUIDANCE

This Petition also presents an important question of

federal law that has not, but should be, settled by this Court.

ee ee

13

The Court of Appeals has badly misinterpreted the term

"vessel." which will have far reaching impact in courts’

application of that term in the CWA, and other federal statutes

containing that definition.” In order to provide future courts

with necessary guidance on the interpretation of specific CWA

provisions, this Court should grant certiorari and reverse the

holding below of the panel’s majority.

Ignoring the plain language of the CWA, the panel

affirmed Oelsner’s conviction on count 4 for discharging

untreated sewage into Krum Bay from the WITRollon in

violation of 33 U.S.C. §§ 1311(a) and 1319(c)(2){A). (A-16-

17.) Although the panel properly recognized that "if

defendants’ barge falls within the statutory definition of

‘vessel,’ the conduct in question does not violate §§ 1311(a)

and 1319(c)(2)(A) and their convictions must be reversed," it

concluded that the W/TRollon was not a vessel because it "was

moored permanently to shore." (A-17.) This conclusion is

based on an erroneous interpretation of the term "vessel" in the

CWA, which is contrary to the long-standing interpretation of

that term by this Court and courts in several circuits. °

Accordingly, this error provides an additional basis for the

Supreme Court to grant certiorari and reverse the hol of

the panel.

5 Eg. 1 U.S.C. § 3 (containing identical definition of

"vessel" as in CWA); Compare 46 U.S.C. § 688 (Jones Act

allowing recovery by seamen for vessels in "navigation).

6 The Panel’s conclusion is directly contradicted by the

evidence at trial where the prosecution itself referred to the

WITRollon as a "vessel." Indeed, the dissent, in reference to

Count 3, noted that the barges were placed in their current

location by the hurricane, not by WIT. (A-37.)

Sa

14

The panel’s discussion of the term "vessel" ignored the

clear language of Section 1322(a) of the CWA. That

definition defines vessel to include:

every description of watercraft or other artificial

contrivance used, or capable of being used, as

a means of transportation on the navigable

waters...

33 U.S.C. § 1322(a)(1); 40 C.F.R. § 110.1 (emphasis added).

The panel’s interpretation places too much emphasis on

the actual use of the WITRollon, eradicating the language

“capable of being used as a means of transportation" from this

definition. It is the presence or absence of this "residual

capacity" to be used as a means of transportation upon which

many other courts have focussed in determining whether a craft

is a "vessel." McCarthy v. The Bark Peking, 716 F.2d 130,

134 (2d Cir. 1983), cert. denied sub nom. South Street Seaport

Museum _v. McCarthy, 465 U.S. 1078 (1984). See Eastern

Transport Co. v. United States, 272 U.S. 675, 692-93 (1927)

(sunken barge constitutes a vessel); Tucker v. Alexandroff, 183

U.S. 424, 438 (1902) ("A ship is born when she is launched

and lives so long as her identity is preserved").

The use of the WITRollon for housing and storage did

not affect its capacity as a vessel and was consistent with its

original function. Indeed, numerous courts have found barges

and other special purpose structures capable of transportation

to be vessels pursuant to the definition set forth in the general

provision of the United States Code, 1 U.S.C. § 3, which

contains the identical definition of vessel as the CWA, even

where the primary function of such structures is not

transportation. E.g., Salgado v. M.J. Rudolph Corp., 514 F.2d

750, 755-56 (2d Cir. 1975) (floating crane); Producers Drilling

Co. v. Gray, 361 F.2d 432, 437 (Sth Cir. 1966) (barge

submerged and in use as a drilling vessel deemed vessel);

15

Offshore Co. v. Robison, 266 F.2d 769, 779 (Sth Cir. 1959)

(drilling barge); Hudson Harbor 79th Street Boat Basin, Inc. v

Sea Casa, 469 F. Supp. 987 (S.D.N.Y. 1979) (floating

houseboat); Vol. I, Benedict on Admiralty, Friedel, §§ 164, 166

at note 2.

The two cases relied upon by the majority involved

instances where it was clearly established that the vessel was

permanently moored and permanently converted to another

non-transportation use. For example, Kathriner v. Unisea, Inc.,

975 F.2d 657 (9th Cir. 1992), involved a former ship whose

hull had been converted into a floating fish processing plant.

Id. at 659. The ship was hooked up to city sewers and water

mains, telephone lines and cable television. Id. The engine,

engine controls and all navigational equipment had been ripped

out. Similarly, Cope v. Vallette Dry Dock Co., 119 U.S. 625,

627 (1887), involved a former vessel that had been

permanently altered in a manner so that it was no longer

capable of being used as a means of transportation.

The majority cited to no cases, however, where a court

found that a barge like the WITRollon, whose hull was

damaged, but capable of repair, did not qualify as a vessel

under the relevant definition. There is no evidence in the

record that the W/TRollon was permanently moored, or that its

condition had been so altered to eliminate its capability for use

as a means of transportation. Rather, the Court focused on its

present use to house workers, and that the barge was "half

submerged" to justify its conclusion. (A-17.) Petitioners, on

the other hand, had submitted evidence demonstrating that,

with minor repairs to its hull, the W/TRollon was capable of

being used as a means of transportation.’

7 Indeed, a barge of that type, subdivided into several

compartments, may float with only some that are airtight or by

severing those compartments that are not.

16

If the Court’s interpretation of the term vessel is

permitted to stand, ships and other watercraft could shift

intermittently between being a "vessel" or "non-vessel" under

the CWA, depending on whether the watercraft is capable of

being used as a means of transportation at that precise moment

in time. Such a scheme would subject vessels to varying

regulatory standards at different times and would thus be

unduly burdensome and confusing for owners and operators of

vessels, as well as for the regulators who would have to write

permits for any vessel that was moored and undergoing some

type of repair. There is no support in the CWA, its legislative

history or applicable case law that Congress intended such a

shifting regulatory scheme based on _ the _ specific

"seaworthiness" of individual vessels.

This departure away from established interpretations of

the CWA and the impractical results of such a holding provide

another basis for the Supreme Court to grant certiorari.

Accordingly, Oelsner requests that this Court recognize the

important nature of this Petition and resolve this question

regarding the proper scope and application of one of our

nations most significant environmental laws.

17

IIl.

THE THIRD CIRCUIT FAILED TO

RECOGNIZE A CRITICAL DISTINCTION

BETWEEN THE FACTS OF THIS CASE

AND THOSE PRESENTED IN UNITED

STATES V. JOHNSON WHICH HAS

CREATED A HOLDING THAT IS

CONTRARY TO OTHER CIRCUITS

The Court of Appeals’ decision relating to the visa

fraud convictions (Counts 13 through 19) misinterprets recent

Supreme Court precedent. As set forth below, this decision is

contrary to the holdings of other courts on similar facts.

Accordingly, this Court should grant certiorari and reverse the

decision of the panel.

The Court of Appeals, purportedly basing its holding in

part on this Court’s decision in Johnson, supra, ignored a

critical distinction between the facts of that case and those

presented here. The Supreme Court’s holding in Johnson, was

premised on the Court’s recognition that the issue of

"(mJateriality was essentially uncontroverted at trial..." 117

S.Ct. at 1546. There, the petitioner failed to present any

plausible argument as to her statements’ materiality.

In this case, however, materiality was contested.

Petitioners argued and attempted to offer evidence that their

failure to provide further information as to foreign crew

activities would not have been "material" because the alleged

false statements made on the workers’ visa applications would

not have altered the determination to allow these workers to

enter United States territory. Indeed, the government called its

own witness to rebut that assertion.

This distinction is significant because, in cases similar

to this one, where materiality was contested at the trial below,

ee

18

several appellate courts have held that the failure of the jury to

determine the issue of materiality was sufficient to satisfy the

plain error test and thus warranted a reversal of conviction.

United States v. David ("David"), 83 F.3d 638, 648 (4th Cir.

1996) (Conviction vacated where defendant maintained at trial

and on appeal "that materiality was not ultimately proven...");

United States v. Baumgardner ("Baumgardner"), 85 F.3d 1305

(8th Cir. 1996) (Where both definition and sufficiency of

evidence to support materiality element were questioned at

trial, conviction for false statement vacated).

In the instant case, the panel properly determined that,

pursuant to the holding in United States v. Gaudin ("Gaudin"),

515 U.S. 506 (1995), the issue of the materiality of petitioners’

alleged false statements should have been decided by the jury,

rather than by the district court. The panel, however, found

that the petitioners could not satisfy the "substantial rights"

prong of the plain error test enunciated by this Court in United

States v. Olano ("Olano"), 507 U.S. 725 (1993).§ The panel

held that the petitioners failed to point to "any facts suggesting

that a jury might have reached a conclusion different from the

district court on materiality" and had "presented no evidence at

trial that their statements were not material." (A-9.)? The

5 Olano provides that before an appellate court may

correct an error not raised at trial pursuant to Rule 52 of the

Federal Rules of Criminal Procedure, "there must be (1) error,

(2) that is plain, and (3) that ’affect[s] substantial rights.’ If all

three conditions are met, an appellate court may then exercise

its discretion to notice a forfeited error, but only if (4) the error

seriously affect[s] the fairness, integrity or public reputation of

the judicial proceedings." Johnson, 117 S. Ct. at 1549 (citing

Olano, 507 U.S. at 732).

? The Court also noted that the government had

(continued...)

19

panel also found that, whether or not the substantial rights

prong was satisfied, petitioners in any event did not satisfy the

final prong of the Olano test -- that the error seriously affects

the fairness, integrity or public reputation of the judicial

proceedings. The panel’s determination, however, was based

on the erroneous finding that the issue of materiality had not

been disputed below.

The panel’s finding was primarily based upon the

holding of the United States Supreme Court in Johnson, supra.

The facts of Johnson, however, are far afield of this case. In

Johnson, the defendant had been prosecuted for perjury relating

to her testimony concerning the source of money utilized to

make certain improvements to her home. 117 S.Ct. at 1547.

The defendant in that case, Joyce Johnson, denied that the

money had come from her boyfriend, who had been accused of

drug trafficking and claimed that the money had been given to

her mother by one Gerald Talcott in 1985. Id. The

government, however, established that Talcott had died several

years prior to the time that Johnson claimed he had given her

mother the cash. Id.

After Johnson was convicted, but prior to her appeal,

the United States Supreme Court decided Gaudin, supra.

Applying Rule 52, as outlined in Olano, supra, the Court found

that the first two prongs of the test had been satisfied. With

regard to the third prong, whether the error impacted

"substantial rights," the Court declined to determine whether

the failure to have the jury determine the issue of materiality

constituted a "structural error," which is an error that cannot be

corrected under Rule 52 regardless of the impact on the

outcome of the trial. Id. at 1550.

9(...continued)

introduced substantial evidence proving the appellants’

representations were material. (A-9-10.)

20

Instead, the Court determined that:

even assuming that the failure to submit

materiality to the jury ‘affect[ted] substantial

rights,’ it does not meet the final requirement of

Olano .. . whether the forfeited error ‘seriously

affect[s]} the fairness, integrity or public

reputation of judicial proceedings.

Id. (quoting Olano, 507 U.S. at 736 [brackets in original].)

This ruling, however, was based upon petitioner’s failure to

present a:

plausible argument that the false statement

under oath for which she was convicted -- lying

about the source of the tens of thousands of

dollars she used to improve her home -- was

somehow not material to the grand jury

investigation.

Here, the Third Circuit found that, as in Johnson, supra,

the evidence of materiality was “overwhelming and

uncontroverted." (A-10.) That conclusion, however, ignored

appellants’ defense, presented at trial, that asserted that the

representations made on the visa applications were in

accordance with the Immigration and Naturalization Service

("INS") practice of permitting workers to enter United States

territory to perform work on vessels of their employers,

including drydocking activities. Thus, the appellants clearly

argued that their failure to provide further information as to

appellants’ activities would not have been "material" because

Such information would not have affected the government’s

decision to permit these foreign workers to enter United States

territory.

21

The district court, moreover, refused to allow the jury

to determine whether the additional information would have

impacted the INS’s determination. Instead, the district court,

not the jury, determined as a matter of law that appellants "did

not give to the INS, when such contacts were made, the full

elements, the full story of what was being done." (A-26-

27.)

As a result of the panel’s misapplication of Johnson,

very different holdings have resulted from similar factual

circumstances. David, supra; Baumgardner, supra. Given this

split in authority and the misapplication of Supreme Court

precedent, this Court should grant certiorari and reverse the

panel’s holding.

10 The court’s determination was framed as a rejection of

appellants’ “entrapment by estoppel" argument. (A-26-27,

n.14.) The district court’s ruling, however, had the effect of

denying appellants an opportunity to further contest the

materiality of any alleged misrepresentations, and thus

constituted "plain error."

oO

/

_—

CONCLUSION

For all the foregoing reasons, this Court should grant

Oelsner’s petition for writ of certiorari.

Dated: New York, New York

December 4, 1997

Respectfully submitted.

DANIEL RIESEL

Counsel of Record

Sive, Paget & Riesel, P.C.

460 Park Avenue

New York, N.Y. 10022

(212)-421-2150

Counsel for Petitioners

Of Counsel:

TRESTON E. MOORE

Moore & Dodson

14A Norre Gade

P.O. Box 310

Charlotte Amalie, St. Thomas

U.S. Virgin Islands 00804-0310

(809)-777-5490

Daniel Riesel

Steven Russo

Laurence Horvath, Admission Pending

On the Petition

APPENDIX

A-|l

APPENDIX A

Filed October 15, 1997

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

UNITED STATES OF AMERICA

V.

WEST INDIES TRANSPORT, INC.,

Appellant at No. 96-7063

| WIT EQUIPMENT CO., INC.,

: Appellant at No. 96-7064

a

a

“Sel

ag

4

a

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x

a

2

‘=

ms

i

+

a

q W. JAMES OELSNER, Appellant at No. 96-7065

: On Appeal from the District Court of the Virgin Islands

: Division of St. Croix.

| (D.C. Criminal Nos. 93-cr-00195-1,

93-cr-00195-2 and 93-cr-00195-3)

4 Argued December 9, 1996,

3 Before: SCIRICA, NYGAARD and McKEE, Circuit Judges

i] (Filed October 15, 1997)

4 TRESTON E. MOORE, ESQUIRE

id (ARGUED)

P.O. Box 310, E.G.S.

Charlotte Amalie, St. Thomas

U.S. Virgin Islands 00804

Attorney for Appellants

KATHERINE W. HAZARD, ESQUIRE

(ARGUED)

United States Department of Justice

P.O. Box 23795

L’Enfant Plaza Station

Washington, D.C. 20026

DAVID L. ATKINSON, ESQUIRE

Office of United States Attorney

1108 King Street, Suite 201

Christiansted, St. Croix

U.S. Virgin Islands 00820

Attorneys for Appellee.

OPINION OF THE COURT

SCIRICA, Circuit Judge.

Defendants West Indies Transport, Inc., WIT Equipment Co.,

and W. James Oelsner appeal their convictions and sentences

for visa fraud, environmental crimes, conspiracy, and

racketeering. The district court had jurisdiction under 48 U.S.C.

§ 1612' and 18 U.S.C. §§ 323] and 3241.2 We have

rae ose § 1612(a) provides, in part: "The District

Court of the Virgin Islands shall have the jurisdiction of a

District court of the United States ... ."

48 U.S.C. § 1612(c) provides, in part: "The District Court of

the Virgin Islands shall have concurrent jurisdiction with the

(continued...)

A-3

jurisdiction under 28 U.S.C. § 1291.° We will affirm.4

(continued)

courts of the Virgin Islands established by local law over those

offenses against the criminal laws of the Virgin Islands,

whether felonies or misdemeanors or both, which are of the

same or similar character or part of, or based on, the same act

or transaction or two or more acts or transactions connected

together or constituting part of a common scheme or plan, if

such act or transaction or acts or transactions also constitutes

or constitute an offense or offenses against one or more of the

Statutes over which the District Court of the Virgin Islands has

jurisdiction pursuant to subsections (a) and (b) of this section."

18 U.S.C. § 323] provides, in part: "The district courts

of the United States shall have original jurisdiction, exclusive

of the courts of the States, of all offenses against the laws of

the United States."

18 U.S.C. § 3241 provides: "The United States District Court

for the Canal Zone and the District Court of the Virgin Islands

shall have jurisdiction of offenses under the laws of the United

States, not locally applicable, committed within the territorial

jurisdiction of such courts, and jurisdiction, concurrently with

the district courts of the United States, of offenses against the

laws of the United States committed upon the high seas."

> 28 U.S.C. § 1291 provides, in part: "The courts of

appeals (other than the United States Court of Appeals for the

Federal Circuit) shall have jurisdiction of appeals from all final

decisions of the district courts of the United States, the United

States District Court for the District of the Canal Zone, the

District Court of Guam, and the District Court of the Virgin

Islands, except where a direct review may be had in the

Supreme Court."

I. Facts and Procedural History

West Indies Transport, Inc. and WIT Equipment Co

(collectively "West Indies Transport") operated several

businesses in Krum Bay, St. Thomas, including a dry dock,

ship repair facility, and barge towing company. West Indies

lransport’s chief operating officer was W. James Oelsner. In

1987, West Indies Transport obtained permits to use five

barges as fixed docks for its other vessels. In 1989, Hurricane

Hugo seriously damaged some of these barges, shifting them

from their permitted positions. West Indies Transport did not

attempt to repair, reposition, or salvage these barges after the

storm. Instead, it used these barges as docks, repair facilities,

and housing for employees in their new unauthorized locations.

In the process, West Indies Transport attached the barges

permanently to shore, constructed walkways and ramps

between the barges for use by vehicles and employees, and

wired them for electricity.

To staff its facilities, West Indies Transport hired an

overseas agent to recruit Filipino workers. The Filipino workers

were instructed to apply for D-1 visas intended for non-

immigrant foreign maritime crewmen, not the H-2 visas

required by law. The “West Indies Transport crewmen" never

put to sea. Instead, West Indies Transport housed them in a

converted shipping container on a barge and used them as dock

workers. The Filipino workers were paid approximately $400

per month for a 56-hour work week. By using underpaid

illegal foreign employees, West Indies Transport was able to

reduce significantly its expenses for wages and wage taxes.

4(._ continued)

In some instances, it is difficult for us to ascertain the

precise basis of the defendants’ claims for relief. We have

construed defendants’ brief in the most plausible fashion.

A-5

In the course of its repair operations, West Indies Transport

discharged several different pollutants into the navigable waters

of the United States. Witconcrete II, a ferro-concrete barge,

was heavily damaged in Hurricane Hugo. The stern was

partially severed from the remainder of the barge, attached only

by metal reinforcing bars, known as rebar. West Indies

Transport did not attempt to repair, break up, or salvage the

damaged stern. Instead, it cut the rebar by which the stern was

attached and dumped the stern into the bay. Later, when West

Indies Transport decided to move the barge, it cut additional

protruding pieces of rebar from the structure and dumped them

in the water. West Indies Transport also sand-blasted the hull

of a vessel moored in its facility, causing paint chips and sand

to fall into Krum Bay near the main water intake for the St.

Thomas desalinization plant. The toilet system on the

Witrollon, the barge on which illegal Filipino workers were

housed, discharged raw sewage directly into the bay. West

Indies Transport also collected steel scrap from its repair

operations and dumped it twelve miles out at sea under cover

of darkness. West Indies Transport never obtained a permit for

any of these pollution discharges.

Defendants were charged in a twenty-one count indictment

for visa fraud, environmental crimes, conspiracy, and

racketeering. Five counts were dismissed on motion of the

goverument. A jury found defendants guilty on the remaining

sixteen counts. Defendants moved for post-verdict judgment of

acquittal, which the district court denied. This appeal followed.

II. Visa Fraud

A,

Defendants were convicted of aiding and abetting visa fraud

A-6

in violation of /8 U.S.C. § 2 and 18 U.S.C. § 1546.° At trial,

the district court instructed the jury that defendants’

representations to U.S. immigration and State Department

officials verifying that Filipino workers hired by West Indies

Transport would be working as crewmen aboard foreign

flagged vessels were material as a matter of law. These

instructions were consistent with our decision in United States

v. Greber, 760 F.2d 68 (3d Cir.), cert. denied, 474 U.S. 988, 88

L. Ed. 2d 348, 106 S. Ct. 396 (1985), which held that when a

defendant is tried for perjury the issue of materiality is decided

by the court.

Between verdict and sentencing, the United States Supreme

Court held that on a perjury charge under /8 U.S.C. § 1001,

materiality must be submitted to the jury. United States v

Gaudin, 515 U.S. 506, 132 L. Ed. 2d 444, 115 S. Ct. 2310

(1995). “The Constitution gives a criminal defendant the right

to have a jury determine, beyond a reasonable doubt, his guilt

of every element of the crime with which he is charged. The

trial court’s refusal to allow the jury to pass on the materiality

<

18 U.S.C. § 1546 provides, in part: “Whoever

knowingly makes under oath, or . . . knowingly subscribes as

true, any false statement with respect to a material fact in any

application, affidavit, or other document required by the

immigration laws or regulations prescribed thereunder, or

knowingly presents any such application, affidavit, or other

document containing such statement -- Shall be fined under this

title or imprisoned not more than five years, or both."

18 U.S.C. § 2 provides: "(a) Whoever commits an offense

against the United States or aids, abets, counsels, commands,

induces or procures its commission, is punishable as a

principal. (b) Whoever willfully causes an act to be done which

if directly performed by him or another would be an offense

against the United States, is punishable as a principal."

A-7

of Gaudin’s false statements infringed that right." 7/5 S. Ct. at

2320.

The rule announced in Gaudin applies retroactively to this

direct appeal. Johnson v. United States, US. , 137 L. Ed.

2d 718, 117 S. Ct. 1544, 1549 (1997) (Gaudin applies

retroactively on direct review; citing Griffith v. Kentucky, 479

U.S. 314, 328, 93 L. Ed. 2d 649, 107 S. Ct. 708 (1987))

Defendants contend that Gaudin requires a new trial.

Defendants submitted to the district court proposed jury

instructions which took the issue of materiality away from the

jury, but now object to those same instructions. For this reason.

the government asks us to treat the district court’s instructions

as non-reviewable invited error, under United States v

Console, 13 F.3d 641 (3d Cir. 1993), cert. denied, 5/3 US

812 (1994) and Herman v. Hess Oil Virgin Islands Corp., 524

F.2d 767 (3d Cir. 1975). We decline to do so. Where a

defendant submits proposed jury instructions in reliance on

current law, and on direct appeal that law is declared

constitutionally infirm, we will not apply the invited error

doctrine. Instead, we will review for plain error under Fed. R.

Crim. P. 52. See Johnson, 117 S. Ct at 1548-49 (reviewing

Gaudin error under plain error standard where defendant.

relying on current law later declared unconstitutional, insisted

at trial that materiality was an issue for the court, not jury, to

decide). Under Rule 52, "before an appellate court can correct

an error not raised at trial, there must be (1) error, (2) that is

plain, and (3) that affects substantial rights. If all three

conditions are met, an appellate court may then exercise its

discretion to notice a forfeited error, but only if (4) the error

seriously affects the fairness, integrity or public reputation of

the judicial proceedings." Johnson, 117 S. Ct. at 1549 (internal

quotations and brackets omitted; citing United States v. Olano.

907 U.S. 725, 732, 123 L. Ed. 2d 508, 113 S. Ct. 1770 (1993)).

As the Supreme Court explained in Johnson, "in a case such as

this -- where the law at the time of trial was settled and clearly

\-8

contrary to the law at the time of appeal -- it is enough that an

error be ‘plain’ at the time of appellate consideration.” Id. See

also United States v. Retos, 25 F.3d 1220 (3d Cir. 1994)

(question is not whether error was plain at time of trial, but

whether it is plain based on current law at time of direct

appeal)

Failure to submit the issue of materiality to the jury was

error. Gaudin, 115 S. Ct. at 2320; Johnson, 117 S. Ct. at 1549

[hat Gaudin involved perjury under /8 U.S.C. $§ /00/ rather

than /8 U.S.C. § 1546, the relevant statute here, is not

significant given the identical character of the materiality

element in both perjury statutes. See Johnson, 137 L. Ed. 2d

718, 117 S. Ct. 1544 (1997) (applying Gaudin to case involving

perjury under /8 U.S.C. $ 1623); United States v. DiRico, 78

F.3d 732 (1st Cir. 1996) (applying Gaudin to perjury under 26

USC. §$ 7206(1))

\ "plain" error ts an error which its “clear” or “obvious.”

Johnson, 117 S. Ct. at 1549; Olano, 507 U.S. at 734. Failure

to send the issue of materiality to the jury is, in light of

Gaudin, obvious or clear and therefore "plain" error. Johnson

=

ll7 S. Ct. at 1549

lo satisfy the "substantial rights" prong of the plain error

test, defendants usually must show that the error was

“prejudicial” -- "It must have affected the outcome of the

district court proceedings.” Olano, 507 U.S. at 734; United

States v. Turcks, 41 F.3d 893 (3d Cir.) (same), cert. denied,

514 U.S. 1074, 131 L. Ed. 2d 575, 115 S. Ct. 1716 (1994).°

h . . .

In Olano, the Supreme Court suggested that there might

be a "special category” of structural errors that can be corrected

under Rule 52 regardless of their effect on the outcome of the

trial, 507 U.S. at 735, but did not state what types of cases

(continued...)

A-9

Defendants bear this burden of proof. Id. Defendants here have

not brought to our attention any facts Suggesting that a jury

might have reached a conclusion different from the district

court on materiality. Defendants presented no evidence at trial

that their statements were not material. More importantly, the

government introduced substantial evidence proving the

defendants’ representations were material. Indeed, had

immigration officials known the true facts behind the Filipino

workers’ applications for visas -- defendants’ intention to

employ as dock workers illegally underpaid foreign workers

housed permanently on derelict barges -- the visas never would

have been granted. For these reasons, defendants have not met

their burden of proving that the failure to submit the issue of

materiality to the jury affected the outcome of the trial. See

United States v. Kramer, 73 F.3d 1067 (\\th Cir.) (Gaudin

error not reversible plain error; defendant failed to show that

error affected outcome of trial), cert. denied, 136 L. Ed 2d

405, 117 S. Ct. 516 (1996); United States v. Ross, 77 F 3d

1525 (7th Cir. 1996) (Gaudin error not reversible plain error;

issue of materiality not seriously disputed at trial).

“When the first three parts of Olano are satisfied. an

appellate court must then determine whether the forfeited error

°(...continued)

might fall under this special category. In Johnson, 137 L. Ed

2d 718, 117 S. Ct. 1544 (1997), the Supreme Court declined to

address whether a Gaudin error falls within this category. Our

ruling in Retos, 25 F.3d 1220, assumed but did not decide that

this "special category," whatever its content, does not include

cases where the district court failed to instruct the jury on an

essential element of the offense. We agree with that

assumption. But see United States v. David, 83 F 3d 638 (4th

Cir. 1996) (failure to send issue of materiality to jury falls

within "special category" noted by Supreme Court in Olano:

reversal required regardless of effect on outcome).

A-10

seriously affects the fairness, integrity, or public reputation of

judicial proceedings before it may exercise its discretion to

correct the error." Johnson, 117 S. Ct. at 1550 (internal

quotations and brackets omitted). Whether or not their

substantial rights were affected, defendants have not satisfied

the fourth prong of the Olano test. In Johnson, a case involving

similar facts, the Supreme Court observed that the evidence of

materiality was "overwhelming," materiality was "essentially

uncontroverted at trial," and the defendant had presented "no

plausible argument" that her false statements were "somehow

not material." Id. The Supreme Court concluded: "On this

record there is no basis for concluding that the error seriously

affected the fairness, integrity or public reputation of the

judicial proceedings. Indeed, it would be the reversal of a

conviction such as this which would have that effect. .. . No

miscarriage of justice will result here if we do not notice the

error, and we decline to do so." Id. (internal quotations

omitted).

In the same manner, the evidence at trial that West Indies

[ransport’s representations were material was overwhelming

and uncontroverted. On appeal, defendants have not presented

a plausible argument that their statements were not material.

The failure to submit materiality to the jury did not seriously

affect the fairness, integrity, or public reputation of the judicial

proceedings. For these reasons, we will affirm the convictions

on visa fraud.

B.

Defendants contend their convictions for aiding and abetting

visa fraud must be reversed because the district court did not

instruct the jury that it must find "knowing subscription" or

"knowing presentation" of false material. Not only did

defendants fail to request such an instruction, their proposed

instruction was remarkably similar to that actually delivered by

A-11

the district court.’ "Thus, if there was any error at all, it was

‘invited error’ and cannot now be a basis for reversal.” United

States v. Console, 13 F.3d 641, 661 (3d Cir. 1993) (quoting

Herman v. Hess Oil Virgin Islands Corp., 524 F.2d 767, 772

(3d Cir. 1975)), cert. denied, 513 U.S. 812 (1994)

aa

Defendants contend as a matter of law they could not be

convicted of aiding and abetting visa fraud because the

government conceded that immigrant workers who presented

false information to the INS at West Indies Transport’ s

instigation lacked criminal intent. We review de novo where

the question is one of statutory interpretation. United States v

Schneider, 14 F.3d 876 (3d Cir. 1994).

The aiding and abetting statute provides, inter alia, that a

defendant is liable if he willfully causes an act to be done by

another which would be illegal if he did it himself. 18 USC

§ 2(b). For this reason, whether the immigrant workers lacked

criminal intent is irrelevant so long as West Indies Transport

intentionally caused them to submit false information. As the

Court of Appeals for the Eleventh Circuit explained, "it is well

established that § 2(b) was designed to impose criminal

liability on one who causes an intermediary to commit a

criminal act, even though the intermediary who performed the

act has no criminal intent and hence is innocent of the

substantive crime charged." United States v. Tobon-Builes, 706

F.2d 1092, 1099 (lith Cir.), reh’g denied, 7/6 F.2d 91/4

(1983). See also Springs y. First Nat. Bank of Cut Bank, 835

Compare defendants’ proposed instruction, requiring the

jury to find that "knowing false statement be made" to the

government, SA 1140, with actual instruction used. which

required the jury to find that false statements were "made" and

that the defendants "knew" that they were false, A 981.

A-12

F2d 1293 (9th Cir. 1988) ("A person who causes the

commission of an offense is punishable as a principal even

though the person who commits the wrongful act violates no

criminal statute because of lack of criminal intent or

capacity.").

In United States v. Catena, 500 F.2d 1319 (3d Cir.), cert.

denied, 419 U.S. 1047, 42 L. Ed. 2d 641, 95 S. Ct. 621 (1974),

a physician was convicted for presenting false Medicare claims

to the United States. On appeal, the physician argued that his

conviction must be overturned because he did not present the

claims to the United States in person. Rather, he submitted the

false claims to two insurance companies, which forwarded

them to the United States government. We affirmed his

conviction, observing that under " § 2(b) a person may be

convicted of causing a false claim to be presented to the United

States even though he uses an innocent intermediary (in this

case the insurance carriers) to actually pass on the claims to the

United States." Jd. at 1323.

The Court of Appeals for the Ninth Circuit reached the same

conclusion in United States v. Causey, 835 F.2d 1289 (9th Cir

1987). In Causey, a tax protester was convicted for aiding and

abetting tax evasion by helping persons file false tax returns.

On appeal, he argued the government failed to prove that the

persons actually submitting the false returns possessed criminal

intent. The court rejected this argument “because it Is

immaterial to Causey's conviction whether or not the taxpayers

were shown to have intended to file false tax returns." /d. at

129]. "Under section 2(b) . . . the government need not prove

that someone other than the defendant was guilty of the

substantive crime. A person who causes the commission of an

offense is punishable as a principal even though the person

who completes the wrongful act violates no criminal statute

because of lack of intent or capacity . . . . Whether the

taxpayers had guilty knowledge in submitting the claims

becomes irrelevant under section 2(b)." Jd. at 1291

A-13

West Indies Transport’s arguments are indistinguishable from

those rejected in Catena and Cause. When a defendant uses an

innocent intermediary to present false claims or make false

Statements to the government, the criminal intent of the

intermediary is not an element of the offense. /8 U.S.C $ 2(b).

For this reason, the district court’s charge was not erroneous.

Ill. Environmental Crimes

A.

Defendants were convicted of violating the Clean Water Act.

33 U.S.C. § 1251 et seq., by (1) severing a 250-ton concrete

and rebar block from the stern of Witconcrete II, a ferrous

concrete barge, and dumping it into Krum Bay, St. Thomas: (2)

severing approximately one hundred pieces of rebar and

attached concrete from the stern of Witconcrete II and dropping

it into Krause Lagoon; and (3) conducting sandblasting

operations on a floating barge that projected sand and paint

chip residue into Krum Bay. The Clean Water Act generally

prohibits discharging pollutants into the navigable waters of the

United States without a permit. But it only regulates

“discharges” of pollutants from a "point source." See 33 U.S.C

§§ 1311(a) and 1362(12).8 Defendants contend as a matter of

2 ust. § 1311 (a) provides: “Except as in

compliance with this section and sections 1312, 1316, 1317.

1328, 1342, and 1344 of this title, the discharge of any

pollutant by any person shall be unlawful.”

33 U.S.C. § 1362(12) provides: "The term ‘discharge of a

pollutant’ and the term ‘discharge of pollutants’ means (A) any

addition of any pollutant to navigable waters from any point

source, (B) any addition of any pollutant to the waters of the

(continued...)

A-14

law their conduct did not constitute discharge of a pollutant

from a point source. We review questions of statutory

interpretation de novo. United States v. Schneider, 14 F.3d 876

(3d Cir. 1994).

Barges are “floating craft," expressly included within the

definition of "point source." 33 USC. 1362(14).’

"Discharges" include "any addition of any pollutant to

navigable waters from any point source." Defendants concede

that Krum Bay and Krause Lagoon are navigable waters of the

United States. Rebar, concrete, sand and paint chips fall within

the Clean Water Act’s broad definition of "pollutant." 33

U.S.C. § 1362(6).'° Therefore, cutting off pieces of a ferro-

concrete barge and dumping them in Krum Bay and Krause

Lagoon, or conducting sandblasting on a floating craft and

8’. .continued)

contiguous zone or the ocean from any point source other than

a vessel or other floating craft."

9 33 U.S.C. § 1362(14) provides: "The term point

source’ means any discernible, confined and _ discrete

conveyance, including but not limited to any pipe, ditch,

channel, tunnel, conduit, well, discrete fissure, container,

rolling stock, concentrated animal feeding operation, or vessel

or other floating craft, from which pollutants are or may be

discharged. The term does not include agricultural stormwater

discharges and return flows from irrigated agriculture."

10 33 U.S.C. § 1362(6) provides, in part: "The term

‘pollutant’ means dredged spoil, solid waste, incinerator

residue, sewage, garbage, sewage sludge, munitions, chemical

wastes, biological materials, radioactive materials, heat,

wrecked or discarded equipment, rock, sand, cellar dirt and

industrial, municipal, and agricultural waste discharged into

water."

A-15

allowing the residue to fall into Krum Bay, constitutes making

an addition of a pollutant to navigable waters of the United

States from a point source. Defendants’ conduct fell within the

applicable statutory definitions.

Appellants’ reliance on United States v. Plaza Health Labs.,

Inc., 3 F.3d 643 (2d Cir. 1993), cert. denied, 51/2 U.S. 1245

(1994), does not alter our conclusion. There, defendant

removed containers loaded with blood vials from his office,

transported them in his car, and carried them to the Hudson

River, where he deposited them during low tide in a bulkhead

separating his home from the river. The United States Court of

Appeals for the Second Circuit refused to consider defendant

a "point source." But Plaza offers no guidance here because it

focused almost exclusively on the application of the Clean

Water Act to human beings:

As the parties have presented the issue to us in their briefs and

at oral argument, the question is ‘whether a human being can

be a point source.’

*x* * *

Human beings are not among the enumerated items that

may be a ‘point source’ ... . if every discharge involving

humans were to be considered a ‘discharge from a_ point

source.’ the statute’s lengthy definition of ‘point source’ would

have been unnecessary.

*x* * *

The Clean Water Act generally targets industrial and

municipal sources of pollutants, as is evident from a perusal of

its many sections .... The legislative history of the CWA ..

. confirms the act’s focus on industrial polluters.

** *

We find no suggestion either in the act itself or in the

history of its passage that congress intended the CWA to

impose criminal liability on an individual for the myriad,

random acts of human waste disposal, for example, a passerby

who flings a candy wrapper into the Hudson River, or a

A-16

urinating swimmer. Discussions during the passage of the 1972

amendments indicate that congress had bigger fish to fry.

Id. at 647 (citations omitted). Congress intended a broad

definition of "point source:" "the concept of a point source was

designed to further this [regulatory] scheme by embracing the

broadest possible definition of any identifiable conveyance

from which pollutants might enter the waters of the United

States." United States v. Earth Sciences, Inc., 599 F.2d 368,

373 (10th Cir. 1979). Plaza properly circumscribed the breadth

of the "point source" definition that the rebar was actually part

of the Witconcrete II and does not alter the analysis. Before

and after the severance of the rebar, the Witconcrete II

qualified as a "vessel or other floating craft" within the

parameters of 33 U.S.C. $ 1362(14). The deliberate amputation

of a portion of the vessel did not destroy the Witconcrete II’s

suitability as a "point source." Cf. Hudson Riverkeeper Fund,

Inc. v. Harbor at Hastings Assocs., 917 F. Supp. 251, 257

(S.D.N.Y. 1996) ("it would seem unlikely that Building 15

would fit into this interpretation of point source as any

discharge of material would not be deliberate or systematic").

We see no error here.

B.

Defendants were also convicted for discharging untreated

sewage into Krum Bay from a barge used to house their

workers, in violation of 33 USC. $§ J31l(a) and

1319(c)(2)(A).!! Defendants correctly argue and_ the

IT 33 U.S.C. § 1311(a) provides: "Except as in compliance

with this section and sections 1312, 1316, 1317, 1328, 1342

and 1344 of this title, the discharge of any pollutant by any

person shall be unlawful." Section 1319(c)(2)(A) provides for

criminal sanctions for "any person" who "knowingly" violates

§ 1311.

A-17

government concedes that "sewage from vessels" is regulated

under 33 U.S.C. § 1322, not §§ 1311 and 1319. Thus, if

defendants’ barge falls within the statutory definition of

"vessel," the conduct in question does not violate § 131 1(a) and

§ 1319(c)(2)(A) and their convictions must be reversed.

Defendants maintain their barge on which they housed Filipino

workers is a vessel. We disagree.

33 U.S.C. § 1322(a)(1) defines "new vessel" and "existing

vessel" to include "every description of watercraft or other

artificial contrivance used, or capable of being used, as a

means of transportation on water." This definition contrasts

vessels with "other floating craft," a term which the Clean

Water Act does not define, but which suggests by its terms and

in the context. of the statute an artificial water-borne

contrivance that, in contrast to a vessel, is not used or capable

of being used for transportation purposes. See 33 U.S.C. )

1362(12). At all relevant times, the barge in question was

moored permanently to shore. It was used to house foreign

workers, not as a means of transport. Nor could the barge have

been used for transport. According to testimony at trial,

defendants’ barge was half submerged in the water of Krum

Bay, with part of the hull resting on the bottom and with water

visible below decks. The barge could not be moved from its

mooring. There was sufficient evidence therefore for the trier

of fact to conclude that the barge was not a vessel within the

meaning of the Clean Water Act.

Though we are not aware of any authority interpreting the

meaning of "vessel" under § 1322, our view is in accord with

long-standing interpretation of the term "vessel" in other

contexts. See Cope v. Vailette Dry-Dock Co., 119 U.S. 625, 30

L. Ed. 501, 7 S. Ct. 336 (1887) (dry dock attached to shore by

large chains, with no means of propulsion, and incapable of

being used for navigation, not a vessel; "The fact that it floats

on the water does not make it a ship or vessel."); Kathriner v.

UNISEA, Inc., 975 F.2d 657 (9th Cir. 1992) ("Floating

A-18

structures are not classified as vessels in navigation if they are

incapable of independent movement over water, are

permanently moored to land, have no transportation function of

any kind, and have no ability to navigate.").

c.

33 U.S.C. § 1319(c)(2)(A) establishes criminal penalties for

anyone who "knowingly" violates 33 USC. § 13/1.

Defendants contend the district court erred when it failed to

instruct jurors on the definition of "knowingly," arguing that

jurors might have been unaware that an accidental discharge of

pollutants was insufficient to convict. Defendants did not raise

this objection at trial, so we review for plain error.

Despite defendants’ contention, the court instructed jurors-on

the meaning of the term "knowingly." It stated: "An act is done

knowingly if done voluntarily and intentionally, and not

because of mistake or accident or other innocent reason. The

purpose of adding the word ‘knowingly’ is to insure that no

one will be convicted for an act done because of mistake,

accident, or other innocent reason." There was no error here.

D.

Defendants were convicted for violating the Rivers and

Harbors Act, 33 U.S.C. § 403, which provides, in part:

it shall not be lawful to build or commence the building of

any wharf, pier, dolphin, boom, weir, breakwater, bulkhead,

jetty, or other structures in... any water of the United States,

outside established harbor lines, or where no harbor lines have

been established, except on plans recommended by the Chief

of Engineers and authorized by the Secretary of the Army.

Defendants contend the district court should have dismissed

this count because the government "did not prove that the

NOSE RE I RM

CA on conme ceearcl, Mane Laauas naka aos Ae ts a tie taRiettinnare

A-19

Defendants had knowingly built a pier, wharf. or any other

structure."

Under longstanding precedent, the prohibition on "building

or commencing the building of any wharf. pier .. . or other

structures" contained in § 403 contemplates "the purposeful

creation of something formulated or designed, construction

work in the conventional sense." United States v. Bigan, 274

F.2d 729, 732 (3d Cir 1960). Thus, we have held that

negligent creation of an obstruction to navigation does not

violate § 403. See id. (negligently caused land slide resulting

in blocked river channel not a violation of § 403).

At trial, the government presented evidence that defendants

intentionally strung together numerous derelict barges to form

a permanent dock for loading activities, repairs, and the

housing of employees. West Indies Transport permanently

attached these barges together and to land with rope and wire

cable. The barges and shore were connected by walkways

defendants constructed out of metal and wood. The resulting

wharfs were wired for electricity and were substantial enough

to support significant loading and repair operations, including

the use of forklifts. This evidence provided sufficient basis that

defendants purposefully built an unauthorized structure. This

was not a case where an act of nature or negligence resulted in

an obstruction to navigation. It was clear that defendants here

intentionally built ¢ large dock to conduct their business

activities. '

'2 Consistent with the United States Supreme Court’s

directive to interpret 33 U.S.C. § 403 broadly, courts have

considered structures analogous to the barges at issue in the

instant case "obstructions." See United States v. Republic Steel

Corp., 362 U.S. 482, 487, 4 L. Ed 2d 903, 80 S. Ct. 884

(1960) ("the Court... gave the concept ‘obstruction’ ._ . a

(continued...)

OO es a

LL ae ee LE a a ae

A-20

E.

Defendants raise a second objection to their convictions

under 33 U.S.C. § 403, the Rivers and Harbors Act. 33 U.S.C.

§ 403 sanctions the construction of structures in water of the

United States only when those structures are built "outside

established harbor lines, or where no harbor lines have been

established." 33 U.S.C. § 403. The district court did not instruct

the jury that it must find defendants built a structure outside

harbor lines, or where no lines have been established. Although

12’ continued)

broad sweep"), reh’g denied, 363 U.S. 858, 4 L. Ed. 2d 1739,

80 S. Ct. 1605 (1960); Norfolk & W. Co. v. United States, 641

F.2d 1201, 1210 (6th Cir. 1980) (" ‘obstruction’ within the

meaning .. . of the Act is to be liberally construed"). Examples

of like structures which constitute "obstructions" include docks,

piers, boat ramps, and sunken vessels. See Great Am. Ins. Co.

v. Tugs "Cissi Reinauer” et al., 933 F. Supp. 1205, 1219

(S.D.N.Y. 1996) (finding a houseboat, that served as a

residence and was not moved for more than seven months,

constituted a “permanently moored vessel” and = an

"unauthorized riparian ‘obstruction’ " for purposes of § 403)

(citations omitted); United States v. Lambert, 915 F. Supp. 797,

804 (S.D.W. Va. 1996) ("the dock and its extension are

‘structures’ that obstruct the navigable capacity of the River.

The River’s normal flow and circulation patterns have been

disrupted also"); Fox Bay Partners v. United States Corps of

Engineers, 831 F. Supp. 605, 608 (N.D. Ill. 1993) ("the

construction of docks, piers, and boat ramps _ creates

obstructions in the navigable waters of the United States");

United States v. Ohio Barge Lines, Inc., 432 F. Supp. 1023,

1027 (E.D. Pa. 1977) ("{a] barge, whether negligently or

intentionally sunk in a navigable river of the United States, to

further the purpose of the Act and not narrow it... [is

included] as an obstruction").

A-21

defendants now contend on appeal the jury instruction was

fatally deficient, their proposed jury instruction made no

mention of the "harbor lines" element. "Thus, if there was any

error at all, it was ’invited error’ and cannot now be a basis for

reversal." United States v. Console, 13 F.3d 641. 661 (3d Cir

1993) (quoting Herman v. Hess Oil Virgin Islands Corp., 524

F.2d 767, 772 (3d Cir. 1975)).

If not invited error, we would review for plain error because

defendants did not object at trial. A plain error must be

"prejudicial" -- "It must have affected the outcome of the

district court proceedings." Olano, 507 U.S. at 734: United

States v. Turcks, 41 F.3d 893 (3d Cir. 1994) (same).

Defendants bear this burden of proof. Id.

Defendants have not brought to our attention any evidence

Suggesting that the district court’s instruction affected the

outcome of the trial. West Indies Transport has not argued, at

trial or on appeal, that its docks were in fact constructed within

established harbor lines, or where no lines have been

established. On the contrary, defendants appear to concede this

issue. Nor do defendants contend that a reasonable jury might

have acquitted them on this charge had it been instructed on

the harbor lines requirement. We see no indication that the

district court’s jury instruction had any impact on the outcome

of the trial. For these reasons and because the district court

followed the defendants’ proposed instruction, the court’s

instruction did not seriously affect the fairness. integrity, or

public reputation of the judicial proceedings. Therefore we see

no plain error.

IV. Alieged Prejudicial Testimony

Randolph Allen, a local labor official, testified for the

government regarding the costs defendants would have incurred

had they employed workers through legal means. Defendants

A-22

objected to his testimony on the ground that it was unduly

prejudicial and irrelevant. The district court allowed Allen’s

testimony as probative of defendants’ motive and intent to

commit visa fraud.

After the conclusion of Allen’s testimony defendants asked

for a mistrial, citing possible prejudice among union workers

on the jury against someone who employed alien labor.

Defendants also asked the court to question the jury for

possible prejudice. Denying the motion for mistrial, the court

noted that defendants failed to raise this question with potential

jurors during pre-trial voir dire. Nevertheless, the district court

halted the trial and asked the jurors whether any of them had

"such strong feelings for or against alien workers" that they

would not be able "to decide this case fairly and impartially.”

No juror responded affirmatively.

We review denial of mistrial for abuse of discretion. United

States v. Wright-Barker, 784 F.2d 161, 175 (3d Cir. 1986)

Allen’s testimony was relevant to and probative on the intent

element of the charged visa fraud counts because it tended to

establish the defendants’ motive. We see no sign of undue

prejudice. Though the defendants did not raise this issue during

voir dire, the district court carefully questioned the jury to

ensure there was no prejudice that might affect the jury's

~——mpartiality. We see no abuse of discretion here.

VY. Entrapment by Estoppel

Defendants contend they were denied a fair trial when the

district court prevented them from presenting evidence relevant

to, and failed to instruct the jury on, two "entrapment by

estoppel” defenses.

The affirmative defense of entrapment by estoppel has its

hc aca

A-23

roots in two Supreme Court decisions, Raley v. State of Ohio,

360 U.S. 423, 3 L. Ed. 2d 1344, 79S. Ct. 1257 (1959) and Cox

v. State of Louisiana, 379 U.S. 559, 13 L. Ed. 2d 48 7, 85 S. Ct.

476 (1965), reh’g denied, 380 U.S. 926, 13 L. Ed 2d 814, 85

S. Ct. 879 (1965), finding violations of due process. In Raley,

defendants refused to answer questions of the Ohio Un-

American Activities Commission after a state official

erroneously informed them that they were protected under the

State constitution’s privilege against self-incrimination. The

defendants were subsequently held in contempt. The Supreme

Court reversed, holding that the state may not "convict{ ] a

citizen for exercising a privilege which the state clearly had

told him was available to him,” for to do so "would be to

sanction the most indefensible sort of entrapment.” 360 U.S. at

438. The Court applied the doctrine again in Cox, where it

reversed state law convictions for picketing because a state

official had granted defendants permission to picket.

We have applied the entrapment by estoppel defense in only

’€ prior decision, United States v. Pennsylvania Industrial

Chemical Corp., 461 F.2d 468 (3d Cir. 1972), modified and

remanded, 4// U.S. 655 (1973). In Pennsylvania Industrial, the

defendant was charged with discharging pollution into the

Monongahela River, in violation of the Rivers and Harbors

Act, 33 U.S.C. § 407. At trial, the defendant sought to present

evidence that its allegedly criminal acts had been authorized by

Army regulations and the federal government's long-term

interpretation of the statute. The district court prohibited the

defendant from introducing the evidence and refused to instruct

a jury that the defendant should be acquitted if his actions

resulted from affirmative government representations that its

acts were lawful.

Citing due process grounds, we reversed on appeal. "The

concept of fair play is implicit in our basic notions of what is

meant by due process of law. In this regard, an individual or

corporation should not be held criminally responsible for

aiaiditac iain ii ee |

TT LO Ee eT ET LL ELE ELT TT ENE TE, So SAMI

A-24

activities which could not reasonably have been anticipated to

be illegal based on 70 years of consistent government

interpretation and subsequent behavior." /d. at 479. Because the

defendant had not been allowed to present the evidence nor had

the jury been instructed on the entrapment by estoppel defense,

we granted a new trial. Id.

The Supreme Court agreed with our statement of the law,

holding "it was error for the District Court to refuse to permit

PICCO to present evidence in support of its claim that it had

been affirmatively misled into believing that the discharges in

question were not a violation of the statute." United States v.

Pennsylvania Indus. Chem. Corp., 411 U.S. 655, 675, 36 L. Ed.

2d 567, 93 S. Ct. 1804 (1973). The Court also held that the

defense applied only where there is reliance in fact and that

reliance was reasonable under the circumstances. Id.

Since Pennsylvania Chemical was decided, other courts of

appeals, citing the due process clause, have applied the

entrapment by estoppel defense, although employing slightly

different tests. See, e.g., United States v. Rector, 111 F.3d 503,

506-07 (7th Cir. 1997) (entrapment by estoppel defense applies

where "the one misleading the defendant be an official of the

State; that he actively mislead the defendant; and that the

defendant’s reliance be actual and reasonable in light of the

identity of the agent, the point of law represented, and the

substance of the misrepresentation"; additionally, defendant’s

reliance must be in good faith); United States v. Aquino-

Chacon, 109 F.3d 936, 938 (4th Cir. 1997) ("A criminal

defendant may assert an entrapment-by-estoppel defense when

the government affirmatively assures him that certain conduct

is lawful, the defendant thereafter engages in the conduct in

reasonable reliance on those assurances, and a criminal

prosecution based upon the conduct ensues."); United States v.

Trevino-Martinez, 86 F.3d 65, 69 (Sth Cir. 1996) ("criminal

defendant may be entitled to raise a defense of entrapment by

estoppel only when a government official or agent actively

A-25

assures a defendant that certain conduct is legal and the

defendant reasonably relies on that advice and continues or

initiates the conduct") (internal quotations omitted), cert.

denied, 1/7 S. Ct. 1109 (1997): United States v. Brebner, 95]

F.2d 1017, 1024 (9th Cir. 1991) ("The entrapment by estoppel

defense applies when an authorized government official tells

the defendant that certain conduct is legal and the defendant

believes the official."); United States vy. Smith, 940 F.2d 710,

714 (1st Cir. 1991) ("Entrapment by estoppel has been held to

apply when an official assures a defendant that certain conduct

is legal, and the defendant reasonably relies on that advice and

continues or initiates the conduct."). These courts agree that

reasonable reliance means a defendant must establish that "a

person truly desirous of obeying the law would have accepted

the information as true, and would not have been put on notice

to make further inquiries." Trevino-Martinez, 86 F 3d at 69;

Brebner, 951 F.2d at 1024.

We hold the entrapment by estoppel defense applies where

the defendant establishes by a preponderance of the evidence

that (1) a government official (2) told the defendant that certain

criminal conduct was legal, (3) the defendant actually relied on

the government official’s statements, (4) and the defendant’s

reliance was in good faith and reasonable in light of the

identity of the government official. the point of law

represented, and the substance of the official’s statement. !2

B.

At trial, defendants sought to raise two entrapment by

estoppel defenses. First, they wished to present testimony from

‘3 The defendant’s reliance is reasonable and in good faith

only where a person truly desirous of obeying the law would

have accepted the information as true, and would not have been

put on notice to make further inquiries.

A-26

certain West Indies Transport employees and INS agents.

Defendants claimed the testimony would show that they had

fully informed INS that they wanted to employ foreign

nationals admitted to the United States on D-1 crewman visas

as dockworkers at their facility, and that INS had approved of

the scheme.

The district court held that "to establish entitlement to the

defense of entrapment by estoppel . . . defendants must show

(1) that after fully informing government officials with actual

Or apparent authority of the underlying facts, they were advised

that the alleged conduct was legal; (2) that they relied on that

advice; and (3) that reliance was reasonable, and given that

reliance, prosecution would be unfair." After holding an in

camera hearing to review the proffered evidence, the district

court concluded defendants’ evidence demonstrated only that

INS extended the Filipino workers’ visas based on

representations by West Indies Transport that the workers

would soon be employed as crewmen on ocean-going vessels.

The evidence also showed that defendants never informed any

United States officials at any time that the workers would be

living on United States soil and that they would work as dock

workers on derelict barges and on land. For these reasons, the

district court held that defendants had offered no evidence

tending to prove that the INS was informed of and approved

defendants’ scheme to employ alien workers admitted to the

United States on D-1 foreign crewman visas as permanent

dockhands.'*

'+ The district court said: "The proffered testimony has led

me to conclude that no comments by a government agency can

be construed as indicating to defendants that their conduct was

legal, when no government official was ever informed as to the

specifics of the given situation. Because defendants failed to

inform any government authority of the facts which are

(continued...)

A-27

As the district court correctly observed, defendants pointed

to no evidence tending to prove that the INS was informed of

and approved defendants’ scheme to employ alien workers

admitted to the United States on D-1 foreign crewman visas as

permanent dockhands. Defendants have failed to establish a

necessary element of the defense -- that government officials

told them that their conduct was lawful. For that reason, the

district court correctly excluded the proffered evidence.

.

The second entrapment by estoppel claim arises out of

defendants’ convictions under the Ocean Dumping Act, 33

U.S.C. §§ 1411(a) and 1415(b)(1). Defendants were convicted

for dumping large quantities of scrap metal and other debris

into the ocean under cover of darkness. without a permit. Coast

juard regulations implementing the Act to Prevent Pollution

from Ships, 33 U.S.C $ 1901-11, require all vessels 26 feet

and longer to carry placards that warn vessel! owners and crews

that certain discharges of ship-generated garbage and sewage

are prohibited at various distances from shore. At trial,

defendants “argued that the placards led them to believe that

they could legally dump scrap metal into the ocean so long as

the dump site was at least twelve miles offshore. The district

court allowed them to present their evidence, but did not

instruct the jury on the entrapment by estoppel defense. !°

14. continued)

relevant to obtaining the visas, they could not have obtained or

relied upon any advice indicating that their conduct with regard

to the information provided on the visa applications was legal.

Thus the entrapment by estoppel defense is not available to the

defendants in this case."

I We cannot ascertain from the defendants’ brief or

appendix whether the defendants requested such an instruction.

A-28

Defendants contend their reasonable reliance on these signs

absolved them of criminal responsibility under the doctrine of

entrapment by estoppel. In the alternative, they contend the

failure to instruct on the entrapment by estoppel defense

violated their due process rights.

Defendants have included in the appellate record examples

of placards similar to those on which they claimed they relied

when they believed their dumping operations were legal. One

example, apparently produced by the Coast Guard, states that

certain types of "nonplastic trash" may be discharged at sea if

the vessel is at least twelve nautical miles from shore. The

placard makes no representations about scrap metal. It also

states, in clear type: "The information contained on this device

is provided as a guidance to many, but not all, of the discharge

restrictions which apply under United States law. There are a

number of discharge restrictions which are not set out in this

device."

Defendants were not entitled to an entrapment by estoppel

instruction on the strength of this placard. The placard makes

no representations about the legality of defendants’ conduct --

dumping scrap metal off-shore. The placard expressly states

that other discharge restrictions may apply, putting defendants

on notice to make further inquiries to determine whether their

conduct was legal. Nor would it have been reasonable for

defendants to rely on this placard as an authorization to dump

scrap metal off-shore. Large quantities of scrap metal generated

by a ship repair facility do not fall within the plain meaning of

"non-plastic trash." Moreover, there is substantial evidence that

the defendants’ claimed reliance was neither actual nor in good

faith. Had West Indies Transport truly believed that its ocean

dumping was legal, it would not have consistently dumped

scrap metal under cover of darkness.

The second example placard submitted by the defendants

was manufactured by "Seachoice Products,” apparently a

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private ship chandler. The entrapment by estoppel defense

applies only to representations made by government officials,

not to asserted reliance on legal advice or representations from

non-governmental actors. Representations made by Seachoice

Products or any other private entity as to the legality of ocean

dumping cannot remotely establish a valid entrapment by

estoppel defense. Even if the placard contained representations

by the government, it would not warrant the defense, for the

placard contains no statements regarding the legality of

dumping scrap metal at sea.

No government official ever told West Indies Transport its

dumping operations were legal. Nor does it appear from the

record that West Indies Transport ever asked the government

for advice on this matter. Defendants were experienced

operators in the maritime industry. It was clearly unreasonable

for defendants to rely on a placard that appears on all types of

vessels, including recreational boats. as legal justification for

industrial ocean dumping.

VI. Racketeering and Conspiracy

Defendants assert if we reverse their convictions on the

immigration and environmental crimes counts, we must reverse

their convictions for conspiracy and racketeering. Because we

affirm defendants’ convictions for visa fraud and environmental!

violations, we will affirm these convictions as well.

Defendants also contend their racketeering convictions must

be overturned because none of the predicate acts was a local

Virgin Islands offense. The Virgin Islands RICO Statute, 14

V.L.C. § 604, requires only that at least one predicate act

charged as a federal offense also "constitute" a felony under

Virgin Islands law. 14 V.LC. § 604(4j)(2)(C). But, the one

requisite local predicate act need not be charged as a local

felony, but merely "constitute" one. Here. defendants were

charged with and convicted for conspiracy under federal law.

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Conspiracy also constitutes a felony under the Virgin Islands

Code. See 14 V.1.C. § 551. We see no error here.

VII. Sentencing

Defendants raise several sentencing objections.

A.

First, defendants contend that the $500,000 fine imposed by

the district court under the Corrupt Organizations Act, 14

V.1.C. § 605, was excessive. We review the district court's

determination of the amount of a fine for clear error. United

States v. Seale, 20 F.3d 1279, 1284 (3d Cir. 1994). The

defendants concede the fine falls within the range permitted by

law. Nor have defendants pointed to any legal or factual error

underlying the assessment of a fine in this amount. We see no

error here.

B.

Defendants also contend the six level enhancement for

ongoing, continuous, or repetitive discharge of a pollutant

assessed by the district court under U.S.S.G. § 2Q1.3(b)(1)(A)

should be reduced because the raw human sewage defendants

dumped into navigable waters was "fully biodegradable." Our

review is plenary. United States v. James, 78 F.3d 851 (3d

Cir.), cert. denied, 136 L. Ed. 2d 77, 117 S. Ct. 128 (1996).

Defendants cite no authority for the proposition that

untreated human sewage or fully biodegradable pollution

warrants different treatment under the guidelines than other

pollutants, nor any reasons why we should adopt such a rule.

Because untreated human sewage falls within the clear meaning

of “pollutant” under § 2Q1.3(b)(1)(A), we will affirm the

enhancement.

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C.

The district court ordered defendants to pay restitution to

offset the costs of cleaning up their environmental damage.

Restitution is authorized only for violations of Title 18 and

some Title 49 provisions. See /8 USC $ 3663. Defendants

contend the trial court erred by ordering restitution for title 33

offenses. Our review is plenary. United States v. Maurello, 76

F.3d 1304 (3d Cir. 1996).

Defendants’ argument is meritless. Each Title 33 offense also

charged a violation of /8 U.S.C. § 2. Restitution is authorized

for violation of /8 U.S.C. § 2.

D.

Defendants also imply, though they do not clearly argue, that

the amount of restitution was excessive given the amount of

environmental damage caused by their criminal conduct. We

review the appropriateness of a particular restitution award for

abuse of discretion. United States y. Maurello, 76 F.3d 1304

(3d Cir. 1996). The district court calculated restitution based on

Coast Guard estimates of the costs required to clean

defendants’ environmental damage. The district court also

ordered that if the ultimate cost of the Clean-up is lower than

the Coast Guard estimate. any amount over the actual costs

shail be returned to the defendants. This sensible approach

appears appropriate and does not constitute an abuse of

discretion.

VIII.

For these reasons, the judgments of conviction and sentence

will be affirmed.

NYGAARD, Circuit Judge, concurring and dissenting.

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I agree with most of the government’s argument. Regarding

the Clean Water Act charges, | cannot. It is true, of course, that

"wrecked or discarded equipment" is a listed "pollutant" under

33 U.S.C. § 1362(6). Webster's, however, defines "equipment"

as "the set of articles or physical resources serving to equip a

person or thing . . . ." Webster's Ninth New Collegiate

Dictionary 421 (1988). I do not think these parts of the

Witconcrete Il--which in better times were an integral part of

its hull--can properly be thought of as part of the ship’s

equipment. They were not mere appurtenances, like a loading

crane or radar antenna dumped over the side. I believe they

were a part of the ship itself.

That aside, however, there still was no "point source" within

the meaning of the Act. The Clean Water Act prohibits

discharging pollutants into the navigable waters of the United

States without a permit; however, it regulates discharges only

from "point sources." See 33 U.S.C. $$ 1311](a), 1362(12).

Appellants argue that they cannot be criminally culpable

because as a matter of law the discharges above did not

emanate from point sources. Under 33 U.S.C. § 1362(14),

"point source” is defined as follows:

"any discernable, confined and discrete conveyance, including

but not limited to any pipe, ditch, channel, tunnel, conduit,

well, discrete fissure, container, rolling stock, concentrated

animal feeding operation, or vessel or other floating craft, from

which pollutants are or may be discharged.”

Appellants rely on United States v. Plaza Health

Laboratories, Inc., 3 F.3d 643 (2d Cir. 1993). There, the

defendant owned a medical testing laboratory. He loaded vials

of blood into his car and dumped them into the Hudson River.

He was indicted under the Clean Water Act. The Court of

Appeals, however, ruled that defendant, as an_ individual

dumping waste directly into a body of water, was not a "point

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source" within the meaning of the Act and reversed his

conviction.

After first observing that "this statute was never designed to

address the random, individual polluter," id. at 646, the Plaza

Health Court looked to the language and structure of the Act

and concluded that the listed items in the statute "evoked

images of physical structures and instrumentalities that

systematically act as a means of conveying pollutants from an

industrial source to navigable waterways." Id. It then reasoned

that an interpretation of the statutory text that brought every act

of "discharge involving humans" within the ambit of the term

“point source" would make that text redundant, id. at 646-47

and thus contrary to long-established principles of statutory

construction.

The Court next turned to the legislative history of the Act

and found no congressional intent "to impose criminal liability

on an individual for the myriad, random acts of human waste

disposal, for example, a passerby who flings a candy wrapper

into the Hudson River, or a urinating swimmer." Jd. at 647

Moreover, it found no such expansive interpretation of the Act

in the criminal case law, although it noted that courts dealing

with this issue in the context of civil penalties have construed

the statute more broadly. Jd. at 648. Finally, the Plaza Health

Court found no evidence of any administrative interpretation by

the EPA that would bring the defendant’s conduct within the

statute. Jd. at 649.

Based on these observations, the Court then concluded "that

the term "point source’ as applied to a human being is at best

ambiguous." Id. Applying the rule of lenity, it held that the

prosecution must be dismissed. Id.

The government relies, however, on United States v. MC.C.

Inc., 772 F.2d 1501 (11th Cir. 1985), in which a contractor

building a bridge in the Florida Keys departed from the

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approved plan and brought construction assemblies in by barge.

Unfortunately, the tug’s screws stirred up sand from the bottom

of a shallow body of water and redeposited it on nearby grass

beds, damaging them. The M.C.C. court held that material

already in the water, when redeposited, could constitute a

discharge under the Clean Water Act. /d. at 1506. Without

dwelling on the issue, the court concluded that because "vessel"

was included in the statutory list of possible point sources, the

tug’s screws were a point source under the facts of that case.

Id. at 1505-06.

It is evident to me that when Congress used the term "point

source," it had in mind something other than the propulsion

system of every ship that happens to operate in navigable

waters. | would thus conclude that a point source is the

conduit, conveyance or vector by which pollutants are

discharged, and not the screws of a vessel stirring up old

pollutants without discharging anything at all.

| would not follow M.C.C. for another reason: there, the

government sought only civil penalties. Here, we are reviewing

a felony conviction, and must apply different maxims of

Statutory construction. Remedial statutes are typically construed

broadly to effectuate the legislative purpose behind them.

Criminal statutes are construed more narrowly to give

defendants fair warning of the conduct the legislature intended

to penalize. | conclude that Plaza Health fits our case

particularly well, and would adopt its holding.

I would also conclude that the error here was plain. In

United States v. Olano, 507 U.S. 725, 113 S. Ct. 1770, 123 L.

Ed. 2d 508 (1993), the Supreme Court clarified the standard

that courts of appeals must employ when deciding whether a

forfeited error warrants reversal under Fed. R. Crim. P. 52(b).

First, of course, there must be an error that has not been

knowingly and intentionally waived. Jd. at 732-33, 113 S. Ct.

at 1777. Second, the error must be plain; that is, clear or

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obvious under current law. Jd. at 734, 113 S. Ct. 1777. Third.

the plain error must have affected substantial rights, generally

by affecting the outcome of the district court proceedings. Jd.

at 734, 113 S. Ct. at 1777-78. Finally, once this threshold has

been crossed, the reviewing court must exercise its discretion.

correcting the error if it "seriously affected the fairness.

integrity or public reputation of judicial proceedings," /d. at

736, 113 S. Ct. at 1779 (quoting United States v. Atkinson, 297

U.S. 157, 160, 56 S. Ct. 391, 392, 80 L. Ed. 555 (1936)). as

when the error caused the conviction of an "actually innocent

defendant." Id. at 736, 113 S. Ct. at 1779.

Turning to this case, the Clean Water Act proscribes only

"the discharge of any pollutant," 33 U.S.C. § 131 1(a), which in

turn is defined as "any addition of any pollutant . . . from any

point source ... ." 33 U.S.C. § 1362(12). It is evident that the

requirement that the discharge emanate from a point source is

an essential element of the crime.

We have held recently that "the omission of an essential

element of an offense from the jury instructions usually will be

obvious error, and therefore ordinarily satisfies the first and

second requirements of Olano." United States v. Stansfield, 101

F.3d 909, 920 (3d Cir. 1996) (citation omitted); accord United

States v. Zolicoffer, 869 F.2d 771, 774 (3d Cir. 1989) ("the

failure to prove one of the essential elements of a crime is the

type of fundamental error which may be noticed by an

appellate court notwithstanding the defendant’s failure to raise

it in the district court"). Thus, I conclude that to the extent

appellants’ Clean Water Act convictions rested on the

erroneous conclusion that the discharges came from point

sources, the error was "plain."'

My conclusion is not altered by the fact that Plaza

Health, a Second Circuit case, was not binding in this circuit

(continued...)

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| likewise have no difficulty concluding that the error

involved appellants’ substantial rights and __ seriously

undermined the fairness, integrity and reputation of the judicial

proceedings. If the discharges did not emanate from a point

source, an issue to which I shall turn shortly, then appellants

could not, as a matter of law, have been convicted of Clean

Water Act violations, and are “actually innocent" of the

offense. Such a conviction would be a classic miscarriage of

justice. Accordingly, to the extent there was error, we have the

power to correct it and | would exercise our discretion to do

SO

| believe that neither the discharge of the Witconcrete II's

stern nor its protruding rebar qualifies as a point source within

the meaning of the Clean Water Act. The severing of the stern

was not a discharge from a vessel, as required by 33 U.S.C

/362(14). Rather, a part of the vessel itself was discharged

Appellants merely severed a wrecked, useless portion of the

Witconcrete II to extricate a serviceable forward portion of it.

[his was a salvage operation, not a discharge of concrete and

rebar through the instrumentality of the barge.

Likewise, the severed rebar was not discharged through the

“conveyance” of the barge, see 33 U.S.C. § 1362(14), it was

part of the barge itself. Put another way, | think these two

'(...continued)

at the time of appellants’ trial. In United States v. Retos, 25

F.3d 1220, 1230 (3d Cir. 1996), we held that the defendant was

entitled, on plain error review, to the benefit of a Supreme

Court decision handed down after his trial but before his appeal

became final. Here, the law was clear at the time of trial;

although not binding in a formal sense, the holding of Plaza

Health has not been questioned by any other court facing

analogous facts.

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discharges are closer to the intermittent, manual blood dumping

of Plaza Health than they are to the industrial paradigm of the

sewage treatment plant, oil refinery or steel mill that animates

most Clean Water Act cases.2_ I would accordingly reverse

appellants’ convictions at counts one and two.

| also disagree with the government’s argument concerning

the Rivers and Harbors Act. I rely again on the language of the

statute, 33 U.S.C. § 403, under which it is prohibited "to build

or commence the building of any wharf, pier . . . or other

structures.” In sum, these barges were placed in their current

locations by the hurricane, not by WIT. At most, WIT wired

them to the local utilities and built some walkways to connect

them. That may be the “use” of an existing structure, but it is

not the “building” of a new one.

In more detail, appellants had a permit to moor four vessels

in Krum Bay as docks. When Hurricane Hugo hit the Virgin

Islands in 1989, it ran some of these vessels aground and

otherwise shifted their positions from those specified in the

permits. After the storm, appellants did not move these vessels

back to their original positions, but used them where they sat.

By November 1992, the permits had expired. In count three of

the superseding indictment, the government charged appellants

with misdemeanor violations of the Rivers and Harbors Act, 33

U.S.C. $ 403, which proscribes creating piers and wharves

without a permit. Appellants did not challenge the sufficiency

of the evidence to support their convictions in the district court,

so again the plain error standard applies.

The government also argues that the stern and rebar

became “wrecked and discarded equipment," a listed pollutant

under § 1362(6), but that begs the question of whether there

was a point source, which | conclude there was not.

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Under longstanding precedent, prohibiting “building or

commencing the building of any wharf, pier ... or other

structures" contained in section 403 contemplates "the

purposeful creation of something formulated or designed,

construction work in the conventional sense." United States v.

Bigan, 274 F.2d 729, 732 (3d Cir. 1960) (emphasis added).

There, we held that a negligently caused earth slide resulting

in an obstruction to a river channel was not a violation of

section 403. Likewise, we have held that negligently sinking a

vessel in a river channel did not violate the Act. See United

States v. Ohio Barge Lines, Inc., 607 F.2d 624, 629 (3d Cir

1979); accord United States v. Wilson, 235 F.2d 251, 253 (2d

Cir. 1956) (a sunken barge may be an “obstruction,” but is not

a "structure" in violation of § 403).

Here, appellants had every right to moor vessels in Krum

Bay, but the hurricane shifted them out of position. Appellants,

however, never purposely put the vessels in their current

positions and hence never built any structure in violation of the

Act. Because, as I have discussed supra, the government utterly

failed to adduce evidence supporting an essential element of

the crime, | would deem the error plain and exercise our

discretion to correct it under Fed. R. Crim. P 52(b).

Accordingly, | would reverse the convictions at count three.

A True Copy:

Teste:

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APPENDIX B

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Nos. 96-7063, 96-7064

and 96-7065

UNITED STATES OF AMERICA

WEST INDIES TRANSPORT, INC.,

Appellant at No. 96-7063

WIT EQUIPMENT CO., INC..,

Appellant at No. 96-7064

W. JAMES OELSNER

Appellant at No. 96-7065

On appeal from the District Court of the Virgin Islands

Division of St. Croix

(D.C. Criminal Nos. 93-cr-00195-1,

93-cr-00195-2 and 93-cr-001 95-3)

Present: SCIRICA, NYGAARD, and McKEE., Circuit Judges

JUDGMENT

This cause came on to be heard on the record from the

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District Court of the Virgin Islands and was argued by counsel

December 9, 1996.

On consideration whereof, it is now here ordered and

adjudged by this Court that the judgments of conviction and

sentence of the said District Court entered January 8, 1996, be,

and the same are hereby affirmed. All of the above in

accordance with the opinion of this Court.

ATTEST

5)

Clerk

Dated: October 15, 1997

A-4]

APPENDIX C

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Nos. 96-7063, 96-7064

and 96-7065

UNITED STATES OF AMERICA

V.

WEST INDIES TRANSPORT, INC.,

Appellant at No. 96-7063

WIT EQUIPMENT CO., INC.,

Appellant at No. 96-7064

W. JAMES OELSNER

Appellant at No. 96-7065

(D.C. Crim. Nos. 93-cr-00195-1,

93-cr-00195-2 and 93-cr-00195-3)

SUR PETITION FOR REHEARING

Present: SLOVITER, Chief Judge,

BECKER, STAPLETON, MANSMANN, GREENBERG,

SCIRICA, COWEN, NYGAARD, ALITO, ROTH,

LEWIS and McKEE, Circuit Judges.

The petition for rehearing filed by appellants in the

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above-entitled cases having been submitted to the judges who

participated in the decision of this Court and to all the other

available circuit judges of the circuit in regular active service,

and no judge who concurred in the decision having asked for

rehearing, and a majority of the circuit judges of the circuit in

regular service not having voted for rehearing, the petition for

rehearing by the panel and the Court in banc, is denied.

BY THE COURT,

le

/S/

Circuit Judge

Dated: NOV 12 1997

ce: T.M.

D.A.

K.H.