Real estate developer Melvin Weintraub negotiated with the City of New Haven, Connecticut, to purchase an abandoned office building with the intention of restoring the building and converting it into apartments. Before the developer expressed interest in the property, the City received an environmental analysis of the building and evaluations from outside consultants on renovation and demolition of the building.

The environmental analysis showed that the building contained a considerable amount of asbestos in floor tiles throughout the building and in basement insulation. After accounting for the poor condition of the building and the presence of asbestos, an appraiser hired by the City estimated the building's value to be $40,000.

Despite being supplied with the appraisal, consultant's report and environmental report, Weintraub arranged for Liberty Realty Associates, LLC (a company in which Weintraub was the principal shareholder) to purchase the building for $40,000.

To demolish the building's interior, Weintraub hired a contractor who did not have a state asbestos abatement license. The contractor did not comply with asbestos abatement rules during demolition, and a state health inspector began investigating reports that asbestos was being thrown from the windows of the building. The investigation revealed that the contractor's employees had scraped up asbestos-containing floor tiles and removed asbestos-containing insulation. They placed the material in plastic garbage bags and taped the bags closed. Some of these bags were illegally dumped at unauthorized sites, including a local park and on Amtrak property.

The inspector issued a warning letter to Weintraub advising him to hire a licensed asbestos abatement contractor. With Weintraub's knowledge, the overseer of the renovation procured forged documents showing that abatement had been completed. The documents were provided to the inspector and Weintraub's lender, which released loan funds in reliance on the documents.

Based on these activities, a federal grand jury indicted Weintraub, several other persons involved in the project and their companies on eight counts. They included conspiracy to violate the Clean Air Act (42 USC §7401 et seq) by unlawful removal and disposal of asbestos and violations of asbestos work practice standards promulgated by the Environmental Protection Agency under the Clean Air Act, including improper handling and removal of asbestos-containing material and failure to give required notices.

Weintraub was convicted. The U.S. District Court sentenced him to 12 months and 1 day in prison, fined him $250,000 and placed him on three years of supervised release.

Weintraub appealed. The Clean Air Act provides that any person who "knowingly violates" the Act or regulations promulgated under the Act will be held criminally liable. Weintraub argued that the prosecution was required to prove that he had knowledge of facts that triggered the asbestos work-practice standards: the friability of the asbestos-containing materials and the presence of threshold quantities of asbestos. (Once triggered, the work standards impose handling, disposal and notice requirements on demolition and renovation operations.)

The U.S. Court of Appeals for the Second Circuit rejected Weintraub's argument, holding that such detailed knowledge was not required. U.S. v. Weintraub, 273 F.3d 139 (2d Cir. 2001).

The court began its analysis by noting that the meaning of "knowingly violates" was at the heart of Weintraub's appeal. The court first held that the phrase does not require proof that the defendant knew he was violating the law. To impose such a requirement would abrogate the "bedrock common law principle that ignorance of the law is not a defense."

Rather, the court held that "knowingly violates" requires knowledge of facts and circumstances that comprise a violation of the statute. The defendant need only know of enough facts to distinguish conduct that is likely culpable from conduct that is entirely innocent. This, the court held, meant that the defendant need only know of facts that would cause a reasonable person to expect his conduct was subject to strict regulation.

But for the presence of asbestos, the court wrote, building demolition is innocuous and largely unregulated. The presence of asbestos makes a crucial difference. Because of the "torrent" of tort litigation over asbestos in the last three decades, the presence of asbestos "is easily sufficient" to trigger an expectation of prohibition or heavy regulation in a reasonable person and to distinguish innocent from wrongful conduct. The court held that no reasonable person - and especially a sophisticated real estate developer like Weintraub - could be unaware that asbestos is closely regulated and that its handling is fraught with legal risk.

Accordingly, the court held that the prosecution had to prove only that Weintraub knew asbestos was involved in the demolition. The prosecution did not need to prove Weintraub knew the project involved the kind and quantity of asbestos sufficient to trigger work practice standards.

Thus, the court held, one who, in good faith, did not know a building he demolished contained asbestos could not be convicted of knowingly violating a work practice standard even if he in fact did violate it. But, knowledge that the renovation or demolition involved asbestos could trigger criminal liability because no one can claim to be reasonably surprised that asbestos is regulated and that liability is possible for violating asbestos regulations.

The 2nd Circuit affirmed Weintraub's conviction. The court found that Weintraub knew of the asbestos both before and during demolition, noting: He received the city's environmental report describing the presence of asbestos; he signed a demolition permit application stating the asbestos abatement would be required; he had numerous conversations with city personnel and his own employees regarding asbestos in the building; he monitored expenditures for asbestos disposal; he was told of the need to hire a licensed asbestos abatement contractor; he made statements and took actions evidencing a knowledge of asbestos laws.

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©2005 Thelen Reid Brown Raysman & Steiner LLP