Opinion ID: 162640
Heading Depth: 2
Heading Rank: 2

Heading: Attaluri Challenges.

Text: 138
139 Attaluri was ordered to pay restitution in the amount of $1,265,078. The probation office calculated this amount as the cost to the Coast Guard of removing the storage tanks from the Peko property and cleaning up the area. 140 On appeal Attaluri argues that this award is erroneous for several reasons: (1) the award violates the Ex Post Facto Clause; (2) federal law prohibits restitution awards from exceeding the value of the property restored; (3) the Coast Guard costs were unrelated to his conviction, because the Coast Guard was engaged in only a routine cleanup operation in the area, Br. at 53; (4) the contamination of Peko was caused, at least in part, by persons other than Defendants; (5) Attaluri could not have reasonably foreseen Overholt's use of the Peko tank farm; (6) the cleanup was unnecessary; and (7) the restitution order failed to set a reasonable payment schedule. In district court Attaluri's sole objection to the restitution award was that he did not pollute the Peko property, Overholt did; he does not reassert that argument here. Thus Attaluri has abandoned the only argument he had preserved on this issue. We therefore will review only for plain error. See United States v. Johnson, 183 F.3d 1175, 1178-79 (10th Cir.1999). 141 Attaluri's arguments that the Peko cleanup was not related to his offense, that the damage came from other sources, that Overholt's use of the tank farm was not foreseeable, and that the Peko cleanup was unnecessary are all purely factual issues unraised in district court. The PSR sets forth sufficient information to support the determination that the cleanup cost was a foreseeable consequence of Attaluri's criminal conduct. Attaluri's failure to raise his factual challenges at sentencing prevented the probation office from reviewing any of these disputes and prevented the district court from resolving them. In such circumstances, we consider the issue waived and will not find plain error. See United States v. Saucedo, 950 F.2d 1508, 1518 (10th Cir.1991) (failure to assert factual challenge at sentencing waives the challenge), overruled on other grounds, Stinson v. United States, 508 U.S. 36, 113 S.Ct. 1913, 123 L.Ed.2d 598 (1993); see also United States v. Svacina, 137 F.3d 1179, 1187 (10th Cir.1998) (This court has held repeatedly that factual disputes not brought to the attention of the [trial] court do not rise to the level of plain error.). 142 Because the value of the Peko property is a fact issue, we might also be able to rely on the same ground to dispose of Attaluri's claim that the restitution award could not properly exceed the value of the Peko property. Regardless, we find no plain error because if there was error, it was not clear or obvious under current law. United States v. Hughes, 191 F.3d 1317, 1322 (10th Cir.1999) (internal quotation marks deleted) (stating test for plain error). Attaluri relies on a provision of the Mandatory Victim Restitution Act (MVRA) stating that when an offense results in damage to or loss or destruction of property of a victim of the offense and return of the property to the owner is impossible, impracticable, or inadequate, the defendant shall be ordered to: 143 pay an amount equal to — (i) the greater of — 144 (I) the value of the property on the date of the damage, loss, or destruction; or 145 (II) the value of the property on the date of sentencing, less 146 (ii) the value (as of the date the property is returned) of any part of the property that is returned; .... 147 18 U.S.C. § 3663A(b)(1)(B). (The identical language appears in the Victim and Witness Protection Act (VWPA), 18 U.S.C. § 3663, except that it makes restitution discretionary by saying that the defendant may, rather than shall, be ordered to pay the designated amount.) 148 Attaluri contends that the property damaged here is the Peko property, so that restitution is limited to the value of that property. But the Coast Guard's loss was not as an owner of the Peko property. Its loss was a purely financial one; the property it lost was money. Purely financial losses have been recognized as proper subjects of restitution under both 18 U.S.C. § 3663 and § 3663A. See United States v. Sapoznik, 161 F.3d 1117, 1121-22 (7th Cir.1998) (affirming order under the MVRA requiring a corrupt city police chief to repay the city one-fourth of his salary while on the take from the Mafia); United States v. Sanga, 967 F.2d 1332, 1335-36 (9th Cir.1992) (affirming order under the VWPA requiring an alien smuggler to pay a victim held in virtual slavery the difference between a fair wage and the pittance he had paid her); see also United States v. Lowell, 256 F.3d 463 (7th Cir.2001) (bankruptcy trustee compensated for time expended as a result of the defendant's efforts to cover up his crime). 149 Perhaps the above-quoted language in the restitution statutes could be read to say that when there is physical damage to property, the only permissible restitution is payment to the property owner of the amount calculated in accordance with that language, regardless of any financial loss to another victim who was not an owner of the property. But that perverse reading of the statute is certainly not clear or obvious under current law. If it were, we question whether the Third Circuit would have upheld an order of restitution under the VWPA requiring the defendants to pay the Coast Guard's cost of cleaning up their pollution of navigable waters. See United States v. West Indies Transp., Inc., 127 F.3d 299, 315 (3d Cir.1997). Accordingly, we find no plain error with respect to this contention. 150 Attaluri's remaining arguments are legal challenges. First is Attaluri's claim that the restitution award violates the Ex Post Facto Clause, because his crime predated the enactment of the MVRA. As Attaluri recognizes, however, we have previously rejected the argument that the Ex Post Facto Clause applies to restitution, because the purpose of restitution is not punishment. United States v. Nichols, 169 F.3d 1255, 1279-80 (10th Cir.1999). 151 Finally, Attaluri argues that the district court erred by failing to set a reasonable schedule for payment of the restitution award, as required by 18 U.S.C. § 3664(f)(2). The PSR provided an analysis of Attaluri's financial status. At the time of sentencing, the total value of his assets was $73,100. His net worth was negative because he had unsecured debt of $168,100, not including unpaid attorney fees in excess of $175,000. Although Attaluri held a graduate degree in chemistry, he had no monthly income. His wife had gross monthly income of $4,300, but their household expenses led to a monthly cash flow of negative $443. He was planning to file both personal and corporate bankruptcy. On the other hand, Attaluri hoped to obtain employment in the future and his parents had some wealth, a portion of which he expected to inherit sometime in the future. The PSR concluded: Any restitution applicable in this case is mandatory. Based on the defendant's financial profile, he does not have the ability to pay a fine. 152 The district court ordered that the [r]estitution shall be paid in full immediately. Any amount not paid immediately shall be paid while in custody through the Bureau of Prisons' Inmate Financial Responsibility Program. Upon release from custody, any unpaid balance shall be paid as a condition of supervised release.... The Government argues that remand for a payment schedule is unnecessary because the restitution order provides for an appropriate payment schedule to be set by the Bureau of Prisons while he is incarcerated and by the probation office during his subsequent supervised release. 153 The district court well knew that Attaluri could not immediately pay the full amount of the restitution award. Thus, it was essentially delegating the preparation of a payment schedule to the Bureau of Prisons and the probation office. Our sister circuits are split on whether such delegation is lawful, although a majority forbid it. Compare United States v. Porter, 41 F.3d 68, 71 (2d Cir.1994) (delegation not permitted); United States v. Coates, 178 F.3d 681, 685 (3d Cir.1999) (same); United States v. Johnson, 48 F.3d 806, 808 (4th Cir.1995) (same); United States v. Albro, 32 F.3d 173, 174 (5th Cir.1994) (same); United States v. Mohammad, 53 F.3d 1426, 1438-39 (7th Cir.1995) (same); United States v. McGlothlin, 249 F.3d 783, 785 (8th Cir.2001) (same); with Weinberger v. United States, 268 F.3d 346, 360 (6th Cir. 2001) (permitting delegation); United States v. Signori, 844 F.2d 635, 641 (9th Cir.1988) (same); United States v. Fuentes, 107 F.3d 1515, 1528 n. 25 (11th Cir.1997) (same, but criticizing binding circuit precedent). In our view, such delegation is improper and constitutes plain error. 154 The governing statute is 18 U.S.C. § 3664, entitled Procedure for issuance and enforcement of order of restitution. This statute, particularly as amended by the Anti-terrorism and Effective Death Penalty Act (AEDPA) in 1996, clearly contemplates judicial control of restitution payment schedules. Section 3664(f)(2) requires the district court to set a payment schedule based on the defendant's financial resources. It states: 155 Upon determination of the amount of restitution owed to each victim, the court shall, pursuant to section 3572, specify in the restitution order the manner in which, and the schedule according to which, the restitution is to be paid, in consideration of — 156 (A) the financial resources and other assets of the defendant, including whether any of these assets are jointly controlled; 157 (B) projected earnings and other income of the defendant; and 158 (C) any financial obligations of the defendant; including obligations to dependents. 159 The court is able to specify such a schedule because of the information provided in accordance with § 3664(d)(3), which states: 160 Each defendant shall prepare and file with the probation officer an affidavit fully describing the financial resources of the defendant, including a complete listing of all assets owned or controlled by the defendant as of the date on which the defendant was arrested, the financial needs and earning ability of the defendant and the defendant's dependents, and such other information that the court requires relating to such other factors as the court deems appropriate. 161 The court is granted considerable discretion in structuring a payment schedule. Section 3664(f)(3) provides: 162 (A) A restitution order may direct the defendant to make a single, lump-sum payment, partial payments at specified intervals, in-kind payments, or a combination of payments at specified intervals and in-kind payments. 163 (B) A restitution order may direct the defendant to make nominal periodic payments if the court finds from facts on the record that the economic circumstances of the defendant do not allow the payment of any amount of a restitution order, and do not allow for the payment of the full amount of a restitution order in the foreseeable future under any reasonable schedule of payments. 164 Of course, the defendant's economic circumstances may change significantly over time. Perhaps the most persuasive reason for delegating the preparation or modification of the payment schedule to the Bureau of Prisons or the probation office is to allow for adjustments when economic circumstances change. See Weinberger, 268 F.3d at 362-64 (Cohn, J., concurring). But § 3664 specifically addresses what is to happen in such a situation. The court is to be notified of the change in circumstances and then may adjust the schedule accordingly. Section 3664(k) states: 165 A restitution order shall provide that the defendant shall notify the court and the Attorney General of any material change in the defendant's economic circumstances that might affect the defendant's ability to pay restitution. The court may also accept notification of a material change in the defendant's economic circumstances from the United States or from the victim. The Attorney General shall certify to the court that the victim or victims owed restitution by the defendant have been notified of the change in circumstances. Upon receipt of the notification, the court may, on its own motion, or the motion of any party, including the victim, adjust the payment schedule, or require immediate payment in full, as the interests of justice require. 166 In light of this statutory scheme, we see no room for delegation by the district court with respect to payment schedules for restitution. We therefore reverse the restitution award and remand for the sole purpose of establishing a schedule for Attaluri's payment of the amount of restitution previously awarded. Although it may appear obtuse to hold that it is plain error to delegate the task of setting a payment schedule when there is contrary authority in other circuits, in each of those decisions either the opinion predated the AEDPA amendments to § 3664 or the present provisions of § 3664 were not brought to the attention of the court. 167
168 Attaluri's offense level was enhanced under U.S.S.G. § 2Q1.2(b)(1)(A), which provides: 169 If the offense resulted in an ongoing, continuous, or repetitive discharge, release, or emission of a hazardous or toxic substance or pesticide into the environment, increase by 6 levels.... 170 The district court applied the provision because of the unlawful injection of liquid wastes into Class II disposal wells. Attaluri contends that his sentence enhancement under this guideline is improper because (1) he did not discharge anything into the environment, and (2) the enhancement cannot apply unless the environment was actually contaminated. Although Attaluri argued in district court against the enhancement, he did so on the basis that he did not make a repetitive discharge. We therefore again review only for plain error. 171 In support of his first contention, Attaluri cites the CD-ROM dictionary, Encarta 1999, for the proposition that environment means the natural world in which people, animals and plants live. Because the waste was injected 4000 feet below the surface, where no people or animals or plants live, Attaluri concludes that he did not dump hazardous waste into the environment. 172 There are, however, broader definitions of the word environment than Encarta provides, such as surroundings, Webster's II New Riverside Dictionary 232 (rev. ed.1996), and that which environs; the objects or the region surrounding anything, Oxford English Dictionary (2d ed.1989) (electronic). The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) definition of environment includes any other surface water, ground water, drinking water supply, land surface or subsurface strata, or ambient air within the United States or under the jurisdiction of the United States. 42 U.S.C. § 9601(8) (emphasis added). Such broader definitions certainly allow the inclusion of the Earth's upper crust as a part of the environment. 173 The concern of § 2Q1.2(b)(1)(A) is harm to life from dangerous chemicals. We conclude that the environment encompasses at least those portions of the earth's crust whose contamination can impact human health. Although Attaluri contends that the waste injected into the disposal wells was trapped far below any water used for drinking, he misreads the record. The testimony at trial revealed that the principal function of the restrictions imposed by the Safe Drinking Water Act on injections into disposal wells is to prevent contamination of potential sources of drinking water. We therefore hold that injecting chemicals into such a well is a discharge into the environment for purposes of § 2Q1.2(b)(1)(A). 174 With respect to Attaluri's contention that § 2Q1.2(b)(1)(A) applies only when there is actual contamination of the environment, Attaluri claims to find support in United States v. Ferrin, 994 F.2d 658 (9th Cir.1993). In Ferrin the defendant deposited hazardous waste into a dumpster. The waste was retrieved before the dumpster was emptied. Id. at 660. The court held that simply putting the waste into the dumpster did not trigger § 2Q1.2(b)(1)(A). Id. at 664. It relied on Application Note 5 to the section, which states in part, that [s]ubsection (b)(1) assumes a discharge or emission into the environment resulting in actual environmental contamination. The court concluded that the section applies only when the environment is contaminated. Id. at 663. But see United States v. Liebman, 40 F.3d 544, 550-51 (2d Cir.1994) (proof of actual contamination of the environment is not necessary); United States v. Goldfaden, 959 F.2d 1324, 1331 (5th Cir.1992) (same); United States v. Bogas, 920 F.2d 363, 367-68 (6th Cir.1990) (same); United States v. Cunningham, 194 F.3d 1186, 1201-02 (11th Cir.1999) (same). 175 Yet even if we were to reject the majority view and follow Ferrin, Attaluri would not benefit. Ferrin stated that environmental contamination occurred whenever the hazardous waste came into contact with land or water or was released into the air. 994 F.2d at 664. The court remanded to the district court to determine whether any gaseous hazardous waste escaped into the atmosphere. Id. In short, the simple release of a toxic or harmful substance into the environment constitutes contamination. By dumping harmful substances into the disposal well, Defendants contaminated the environment. There was no plain error. 176
177 The district court increased Attaluri's offense level under U.S.S.G. § 2F1.1(b)(1)(H), because the loss to the victim — the United States — resulting from Attaluri's fraud exceeded $120,000. (Amendment 617 to the Sentencing Guidelines, effective November 1, 2001, repealed § 2F1.1 and moved its substance to § 2B1.1) At sentencing Attaluri contended that the loss was not more than $40,000. If his argument had been adopted, Attaluri's offense level would have been 23 instead of 24. 178 The loss to the United States was the amount paid by the United States to Allied for disposal of waste that was unlawfully injected into disposal wells. The presentence report calculated that loss at $132,325.91 by using the figure of $199,825.91 for the total amount paid to Allied and then giving an offset of $67,500 for an estimated 150,000 gallons of wastewater disposed of lawfully from one of the government sites. Attaluri did not contest the $199,825.91 figure for the total amount paid Allied. But he did challenge the PSR's conclusions regarding the amount of wastewater disposed of properly. 179 We review the sentencing court's factual findings for clear error. United States v. Vaziri, 164 F.3d 556, 568 (10th Cir. 1999). The application note to § 2F1.1 stated, For the purposes of subsection (b)(1), the loss need not be determined with precision. The court need only make a reasonable estimate of the loss, given the available information. U.S.S.G. § 2F1.1, comment (n.9). 180 On appeal Attaluri directs our attention to a trial exhibit which, he contends, shows that significantly more than 150,000 gallons of wastewater were disposed of properly. Yet he did not reference that exhibit in his objection to the PSR. The sole basis of his objection to the PSR was a document showing how many gallons of wastewater were delivered by Allied to Waste Water Treatment, Inc., during the second half of 1995. The document failed, however, to indicate the source of the wastewater — whether a government facility or otherwise. The PSR response to Attaluri's objection was: The defendant stated that the government's loss calculation was closer to $120,000 but did not detail how that number was calculated. The probation office is unaware of any other adjustments that would apply.... The sentencing court could properly agree. We refuse to reverse that determination on the basis of a trial exhibit not brought to the attention of the court at sentencing, so we need not determine whether the exhibit might have influenced the court if it had been properly presented. 181