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United States v. San Diego Gas & Electric Co.

December 7, 2007

UNITED STATES OF AMERICA, PLAINTIFF,
v.
SAN DIEGO GAS & ELECTRIC COMPANY, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Hon. Dana M. Sabraw United States District Judge

ORDER GRANTING DEFENDANTS' MOTION FOR NEW TRIAL [Docs. 157, 158, 159, 161, 163, 184]

On August 22, 2007, Defendants San Diego Gas and Electric Company ("SDG&E"), Kyle Rheubottom, and David Joseph Williamson filed motions for acquittal and, in the alternative, for new trial under Rules 29 and 33 of the Federal Rules of Criminal Procedure. The motions were fully briefed by the parties, and argued on September 26, 2007. On October 4, 2007, the parties submitted supplemental briefing at the request of the Court regarding the admissibility of certain samples of asbestos containing materials and the test methodology employed to determine the asbestos content of those samples.

Defendants advanced numerous grounds in support of their motions. Two grounds merit relief. The admission of scientific test results regarding the asbestos content of certain samples of pipe wrap, combined with the manner in which such results were argued to the jury, warrants a new trial as to all Defendants on the asbestos NESHAP (National Emission Standards for Hazardous Air Pollutants) work practices counts. Additionally, the inconsistent verdicts on the false statement count warrant a new trial as to Defendant SDG&E on that count. The balance of Defendants' arguments are denied.

I. BACKGROUND

The facts are well known to the parties and thus, only facts relevant to the issues addressed in this Order are set forth below. Defendants SDG&E, Kyle Rheubottom, David Joseph Williamson, and Jacquelyn McHugh were among the first persons in the nation to be charged with criminal violations of asbestos NESHAP work practice standards promulgated by the Environmental Protection Agency ("EPA"). The Government alleged Defendants violated certain NESHAP work practice standards during the removal of over nine miles of asbestos-containing gas pipeline. The Government's case-in-chief included five counts: three work practices counts, one false statement count, and one conspiracy count. After the Government rested, the Court granted Defendants' Rule 29 motion and dismissed the conspiracy count as to all Defendants. The counts in the indictment were thereafter renumbered, and the jury was charged with deciding the remaining four counts.

Counts one through three charged Defendants with various violations of the asbestos NESHAP work practice standards, including failure to provide written notice of the removal of "regulated asbestos containing material" ("RACM") in advance of the start date of the renovation operation (count one), failure to adequately wet RACM (count two), and failure to contain RACM in leak tight containers (count three). The fourth count charged Defendants SDG&E and Williamson with making a false statement to federal authorities under 18 U.S.C. § 1001.

After a lengthy trial involving numerous novel issues of law, a jury found Defendant SDG&E guilty on all counts, and Defendants Rheubottom and Williamson guilty on count three (failure to contain RACM in leak tight containers). Defendants Rheubottom and Williamson were acquitted of the remaining work practices counts. The jury deadlocked as to Defendant Williamson on the false statement count, and Defendant McHugh was acquitted of the one work practice count with which she was charged: failure to provide written notice (count one).

The regulatory scheme promulgated by the EPA subjects the removal of certain "asbestos containing materials," or "ACM," to environmental oversight and regulation. Not all materials containing asbestos, and not all demolition projects, are regulated. To be "regulated," the material and project must exceed certain thresholds regarding project size and asbestos content. Pertinent to the present motion are the following requirements: (1) the quantity of asbestos content in the ACM must exceed 1% as determined by a designated test method (40 C.F.R. § 61.141); and (2) the ACM must be "friable," that is, the material may be crumbled by hand pressure creating dust, or if initially "nonfriable," the ACM must have a "high probability" of becoming friable due to acts of disturbance during the removal process. (Id.) If the ACM meets these and other standards not relevant here, it is deemed to be regulated asbestos containing material, or RACM, and subject to governmental oversight and regulation through the NESHAP work practices standards. Accordingly, as a threshold to criminal culpability, the Government must prove that the material under investigation is RACM, i.e., contains more than 1% asbestos and is friable or has a high probability of becoming friable. The cental issue here is whether the Government properly proved that the pipe wrap in question contained more than 1% asbestos.*fn1

To prove the pipe wrap contained more than 1% asbestos, the Government presented eighteen samples of pipe wrap to the jury. Each sample was analyzed by a laboratory, and each laboratory was represented by a witness who testified before the jury about the test procedure used by the lab to determine asbestos content. All but five of the samples were destroyed after testing. Defendants' labs tested the five existing samples ("SD-1, 2, 3, 4 & 5"), and Defendants presented their own evidence reporting the results of those tests.

Throughout the litigation, both the test procedures used to determine asbestos content and the nature of the samples tested were the subject of intense debate. These disputes, which were novel and highly technical, were the subject of several pre-trial orders issued by the Court. In its first order, the Court held that where discrete layers of ACM are identified, each layer must be analyzed for asbestos content, and the results must then be combined to determine "an estimate of asbestos content for the whole sample."*fn2 (Order, November 21, 2006, Doc. 178, Case No. 06-cr-0065, "RACM I Order"). This test method has been referred to by the Court throughout this litigation as the "averaging test."

The Government initially charged and indicted Defendants with work practices violations based upon a different test, one in which only a single layer was tested for asbestos content. Using the "single layer" test method, the Government determined asbestos content by testing only the layer of pipe wrap that contained asbestos (and ignoring other non-asbestos containing layers). The Court held the single layer test method was not subject to rulemaking procedures as mandated by the Administrative Procedures Act and thus, the test could not be used in place of the averaging test.*fn3 (RACM I Order at 12). Because the Government relied upon single layer testing to indict Defendants, in the RACM I Order, the Court dismissed the work practices counts. Thereafter, the Government reindicted Defendants in accordance with the RACM I Order.

Defendants moved to dismiss the second indictment on numerous grounds, all of which were denied by the Court. Significantly, however, the parties briefed whether a sample of ACM had to be "whole" (i.e., contain all layers of the pipe wrap) in order to be used as a sample from which asbestos content could be determined. On March 29, 2007, at a hearing on Defendant's motion to dismiss, the Court ruled from the bench and held that while the NESHAP regulations do not require an intact sample, they do require a whole sample-- that is, the sample must contain all layers of the material. (Order, March 29, 2007, RT 39:6-13; 44:25-45:3, "RACM 1.5 Order") Finally, on April 12, 2007, the Court determined that once layers are separated from a sample, the asbestos content of each layer is measured and averaged by volume rather than by weight -- a test method referred to in this litigation as "volumetric averaging." (Order, April 12, 2007, Doc. 20, Case No. 07-cr-0484, "RACM II Order"). The RACM II Order reiterated that volumetric averaging may be "properly performed by analyzing a complete, albeit non intact sample of the asbestos material." (Id. at 1). Again, however, the parties did not brief and the Court did not decide what test would apply if a sample did not contain discrete, identifiable layers.

During trial, Defendants moved to exclude most of the Government's scientific evidence on grounds that it conformed with neither the NESHAP regulations nor the Court's RACM Orders. The Government represented the tests were compliant with the pretrial orders.*fn4 The Court ultimately concluded that its pretrial orders were clear, and any non-compliance by the laboratories would go to the weight rather than the admissibility of the evidence in question. The Court was satisfied that any nonconformity would be revealed during cross examination and the evidence -- given its probative value -- was not sufficiently confusing or prejudicial to warrant exclusion. (RT 432:14-18). On these grounds, the Court allowed the Government to present the evidence. (RT 447:9-12).

II. LEGAL STANDARD

The Court may grant a new trial "if the interest of justice so requires." Fed. R. Crim. P. 33. In practice, a new trial is a remedy that courts grant sparingly. See, e.g., United States v. Narciso, 446 F. Supp. 252 (E.D. Mich. 1976); United States v. Snead, 447 F. Supp. 1321 (E.D. Pa. 1978). The Court may grant a new trial only if the error was not harmless under the same standard an appellate court would apply under Rule 52 of the Federal Rules of Criminal Procedure. See Fed. R. Crim. P. 52 advisory committee's note. However, unlike a motion for acquittal, the Court need not draw all inferences in favor of the Government. "If the court concludes that, despite the abstract sufficiency of the evidence to sustain the verdict, the evidence preponderates sufficiently heavily against the verdict that a serious miscarriage of justice may have occurred, it may set aside the verdict, grant a new trial, and submit the issues for determination by another jury." United States v. Kellington, 217 F.3d 1084, 1097 (9th Cir. 2000).

III. DISCUSSION

A. The NESHAP and the Court's Pretrial Orders

The NESHAP regulations describe the process for collecting and analyzing ACM to determine asbestos content. More specifically, the Court's RACM Orders describe the type of sample required for testing, and the test method for determining asbestos content where discrete ...


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