Government Contracts Monitor
A Recent Court Decision Opens Door for “Crime Victims” of Statutory Violations
February 8, 2013
A decision by the District Court in the Southern District of Texas gives all companies another good reason (as if any were needed) to avoid criminal violations of statutes governing their conduct. In United States v. CITGO Petroleum Corp., No. C-06-563 (S.D. Tex. Sept. 14, 2012), the District Court reversed its prior decision and held that citizens harmed by a company’s criminal violation of the Clean Air Act (“CAA”) qualify as “crime victims” under the Crime Victims’ Rights Act (“CVRA”). The District Court further held that, as crime victims, the affected citizens could provide victim impact statements at sentencing and could claim reasonable financial restitution for the harms that resulted from CITGO’s criminal actions. The citizens now seek almost $30 million in restitution.
In 2007, CITGO was convicted of two counts of violating the CAA for failing to install roofs (or other emission control devices) on two massive oil-water separator tanks, which thereby allowed toxic air emissions to escape from the tanks into the atmosphere and harm the surrounding neighborhoods in Corpus Christi, Texas. The District Court originally denied the Government’s Motion to have 300 citizens of the Corpus Christi community designated as crime victims under the CVRA because the Government could not demonstrate a causal connection between the citizens’ alleged medical ailments and the offenses of CITGO’s conviction. Over a year later, with the help of pro bono counsel, the citizens filed their own Motion seeking crime victim status containing “two new arguments, never advanced by the Government:” (1) that the CVRA does not require a showing of medically documented physical injuries or illnesses resulting from the actions for which CITGO was convicted and (2) that other forms of harm qualify them as victims, including emotional distress over breathing potentially toxic gases, property damage and risk of future injury. Without addressing the merits of these new arguments, the District Court denied the motion as untimely because it was filed only a few weeks before sentencing and nearly 5 years after the conviction. On Petition for a Writ of Mandamus, the United States Court of Appeals for the Fifth Circuit held, “The CVRA does not contain a time limit within which putative crime victims must seek relief in district court.” Thus, the Court of Appeals directed the District Court to hear the new victim status arguments raised by the citizens.
After reviewing the new arguments, the District Court reversed itself. The CVRA defines a “crime victim” as “a person directly and proximately harmed as a result of the commission of a Federal offense. . . .” 18 U.S.C. § 3771(e). Looking at the Fifth Circuit’s definition of proximate cause, the District Court found that the test is whether the alleged harms would have occurred had the defendant behaved correctly. Without a statutory definition of “harm,” the District Court construed the term broadly as covering any physical or mental damage or injury. Thus, the Court held, “The Court is now persuaded that it applied the incorrect legal standard when it determined that the Community Members must provide documentary medical evidence confirming injury or illness due to chemical exposure in order to qualify as victims under the CVRA. Instead, the Court finds that testimony by the Community Members and other witnesses that they suffered symptoms such as burning eyes, bad taste in the mouth, nose burning, sore throat, skin rashes, shortness of breath, vomiting, dizziness, nausea, fatigue, and headaches is sufficient to constitute ‘harm’ under the CVRA.” The Court then found that as crime victims, the citizens are entitled to make oral impact statements at the sentencing hearing and to seek restitution.
The citizens filed a sentencing memorandum seeking nearly $30 million in restitution. This includes medical monitoring costs and trust funds for future medical costs and relocation costs. The Court has not ruled on the citizens’ restitution claims and CITGO has yet to be assessed a fine on the CAA conviction. Regardless of how this particular matter ultimately turns out for CITGO, the Court’s decision further underscores the need for robust, proactive compliance efforts with respect to all statutes under which criminal liability might be imposed. For contractors, a lack of an effective compliance program can lead to not only potential jail time, criminal penalties and debarment, but also significant monetary liabilities to individual “crime victims.”
Bill Powell is the attorney responsible for the content of this article.