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United States of America v. Frank Scaccia and

June 8, 2012


The opinion of the court was delivered by: Judge Joan B. Gottschall


Frank Scaccia and Theresa Neubauer have each been charged with one count of knowingly and willfully engaging in a false-statement scheme, in violation of 18 U.S.C. §§ 1001(a)(1) and (2), and 22 counts of knowingly and willfully making false statements, in violation of 18 U.S.C. §§ 1001(a)(2) and (2). Before the court are three pre-trial motions: (1) the defendants' joint motion to dismiss the indictment for lack of federal jurisdiction; (2) Scaccia's motion to suppress statements made to agents of the United States Environmental Protection Agency ("U.S. EPA") and request for an evidentiary hearing; and (3) Neubauer's motion to suppress statements made to agents of the U.S. EPA and request for an evidentiary hearing.


The Safe Drinking Water Act of 1974 ("SDWA"), 42 U.S.C §§ 300f to 300j-26, is a federally mandated and state-administered regulatory scheme for the protection of public drinking water. Pursuant to 42 U.S.C. § 300g-2, the U.S. EPA has granted primary enforcement responsibility for public water systems in the State of Illinois to the Illinois Environmental Protection Agency ("Illinois EPA"). The state is required to adopt "drinking water regulations that are no less stringent than the national primary drinking water regulations." Id. § 300g-2(a). The U.S. EPA reviews and provides funding to the state regulatory program. See 40 C.F.R. § 142. When a public water system is out of compliance with federal requirements, the U.S. EPA provides "advice and technical assistance" to the state and has the authority to commence a civil action if the state fails to bring appropriate enforcement action within 30 days. § 300g-3(a)(1)(A), (B).

According to the indictment, between 1987 and 2008, Scaccia was the certified water operator for the Village of Crestwood, Illinois ("Crestwood"), and Neubauer was Crestwood's Water Department Clerk and Water Department Supervisor. Count 1 of the indictment alleges that "the defendants engaged in a multi-year scheme to conceal the fact that [Crestwood] was supplementing its primary drinking supply (Lake Michigan water) with water drawn from an underground well" ("Well #1").

In concealing the use of the well, Crestwood's community water system violated several U.S. and Illinois EPA regulations, two of which are relevant to the indictment. First, public water systems must to disclose to their customers in an annual Consumer Confidence Report ("CCR") the sources of water used for public drinking water supplies. Crestwood failed to disclose the use of Well #1. The defendants were responsible for preparing and filing the CCRs and issuing them to customers. Counts 2-4 of the indictment allege that the defendants falsely stated in the CCRs issued for 2005-2007 that Crestwood's drinking water came solely from Lake Michigan.

Crestwood officials were also required to submit to the Illinois EPA a Monthly Operation and Chemical Analysis Report ("MOR") that disclosed information about the operation of Well #1. Scaccia was responsible for obtaining the raw data used to complete the MORs, and Neubauer was responsible for preparing the MORs and submitting them to the Illinois EPA. Counts 5-23 of the indictment allege that the defendants falsely reported in MORs filed between 2006 and 2008 that Well #1 was in standby status and was not used as a source of drinking water.


A. Defendants' Joint Motion to Dismiss the Indictment

The defendants move this court, pursuant to Federal Rule of Criminal Procedure 12(b)(3)(B), to dismiss the indictment on the basis that the government cannot establish the jurisdictional element required under 18 U.S.C. § 1001(a), which applies to schemes to conceal material facts and to false statements made "in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States."

The defendants argue that the federal government lacks authority over the alleged false statements concerning Crestwood's drinking-water supply. The statements were submitted not to the U.S. EPA, but to the Illinois EPA, which was granted primary enforcement authority over public water systems in Illinois by the federal agency. Given this balance between state and federal authority, defendants argue, there is no basis for federal jurisdiction over the alleged violations. The government responds that the U.S. EPA retains substantial oversight over the state agency to ensure compliance with federal regulations. The strong federal presence in the state public drinking-water program indicates that false statements made to the Illinois EPA relate to the functions of the federal agency, and that the federal agency retains authority over those statements.

Jurisdiction over false statements under § 1001(a) extends wherever the federal government "has the power to exercise authority." United States v. Rodgers, 466 U.S. 475, 479 (1984). Jurisdiction is broadly construed. Bryson v. United States, 396 U.S. 64, 70 (1969). The false statements need not have been made to a federal agent. United States v. King, 660 F.3d 1071, 1081 (9th Cir. 2011). Rather, there must be "a 'direct relationship' between the authorized functions of [a federal] agency and the false statement." Id. at 1081 (quoting United States v. Facchini, 874 F.2d 638, 641 (9th Cir. 1989)).

Other circuits have held that the grant of primary authority by the U.S. EPA to a state agency to enforce public-water regulations does not strip the agency of federal jurisdiction under § 1001(a).*fn1 In United States v. Wright, a defendant submitted false water-quality reports to the Oklahoma State Department of Health. 988 F.2d 1036, 1036-37 (10th Cir. 1993). The Tenth Circuit held that the false statements fell within the jurisdiction of the EPA even though Oklahoma had been granted primary enforcement responsibility over drinking-water standards. That court explained, "A grant of primary authority is not a grant of exclusive authority." Id. at1038. The U.S. EPA retained the authority to enforce the regulations and was "actively involved in assuring state compliance" by auditing and reviewing the state program. Id. at 1039. Moreover, the state agency used federal funds, and the U.S. EPA retained the authority to see that those funds were properly spent. Id.

The Sixth Circuit took the same approach in United States v. White, 270 F.3d 356 (6th Cir. 2001), involving false statements made in reports submitted to the Kentucky Division of Water. Although Kentucky was granted primary enforcement authority over the state's drinking water, the U.S. EPA retained "a federal interest in what reasonably must be considered an official function of the EPA, ensuring safe drinking water." Id. at 364. The court noted that the Division received federal funding to administer its public-water ...

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