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In re In re L.F. Jennings Oil Co.

ELR Citation: 24 ELR 20167
Nos. No. 93-2001, 4 F.3d 887/38 ERC 1189/(10th Cir., 09/08/1993)

The court holds that a bankruptcy court's order allowing a trustee to abandon a contaminated site that was part of the bankrupt estate did not violate the U.S. Supreme Court's ruling in Midlantic National Bank v. New Jersey Department of Environmental Protection, 16 ELR 20278 (1986), on the abandonment of bankrupt estate property in violation of state and local public health and safety laws. The court first holds that this appeal of the bankruptcy court's order by the state agency is moot as to two of three properties that once belonged to the debtor from which the contaminating tanks were removed and that had since been abandoned and deeded to third-party purchasers. There is no live controversy regarding the two properties because they have been cleaned up to the satisfaction of the state, so that a determination as to whether the bankruptcy court abandoned these properties in error, and any relief that might be granted, would have no proactive significance. Also, the state appears to be seeking future guidance in the form of an advisory opinion. The court holds that this action does not fall into the "capable of repetition yet evading review" exception to mootness. Although the circumstances are likely to repeat themselves, the issue will not inherently escape review, because the state will have ample opportunity to contest this issue in each case when it arises, as long as the state properly enters an appearance and files a request for notice pursuant to the bankruptcy rules. Finally, the court holds that the bankruptcy court did not violate Supreme Court precedent by allowing abandonment of the third property, because the property did not represent an immediate and identifiable harm to public health or safety. This "public health" exception to a trustee's abandonment powers, which the Supreme Court set forth in Midlantic, is narrow, the third property is not included in the state's list of contaminated sites, there is insufficient data that the property is a present threat, and the trustee's only violation of state law at the time of abandonment was a failure to file reports.

Counsel for Appellant
Felicia L. Orth, Ass't Attorney General
Attorney General's Office
Bataan Bldg., P.O. Box 1508, Santa Fe NM 87501
(505) 827-6000

Counsel for Appellee
James R. Jurgens
411 Paseo De Peralta, Santa Fe NM 87501
(505) 984-2020

Before Brorby and Brimmer*