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In re In re Commonwealth Oil Ref. Co.

Citation: 17 ELR 20407
No. Nos. 85-2827, -2828, 805 F.2d 1175/25 ERC 1748/(5th Cir., 11/25/1986)

The court holds that an Environmental Protection Agency's (EPA's) Resource Conservation and Recovery Act (RCRA) § 3008 action ordering compliance with federal and state environmental laws is exempt from the automatic stay provision of the Bankruptcy Reform Act and should not be stayed under § 105 of the Act. Initially, the court holds that RCRA § 3005, which provides that each land disposal facility operating under an interim status permit prior to November 8, 1984, must submit a RCRA Part B permit application and associated documents by November 8, 1985, does not moot the issue. Even if the facility's RCRA permit expired under this provision, EPA's ongoing enforcement action seeks compliance with closure and post-closure obligations which remain even after a permit is lost.

The court then rules that EPA's enforcement actions are not subject to the automatic stay provisions of the Bankruptcy Reform Act, 11 U.S.C. § 362(a)(1). The exceptions contained at § 362(b)(4) and (5), as well as their legislative history, are applicable because the EPA order is the exercise of regulatory authority and is not an attempt to enforce a money judgment. The exceptions from the automatic stay for regulatory enforcement proceedings and the applicable caselaw do not require there be a showing of imminent and identifiable harm or urgent public necessity for the EPA order to fit within the exceptions. The court distinguishes the Supreme Court's decision in Midlantic National Bank v. New Jersey Department of Environmental Protection, 16 ELR 20278, noting that the decision considered the scope of a trustee's abandonment power, not the automatic stay provision. The EPA action is not an action to enforce a money judgment since the action does not seek the entry of a money judgment or the adjudication of liability for a specific sum.

Finally, the court holds that it was not an abuse of discretion for the bankruptcy court to refuse to stay EPA proceedings under 11 U.S.C. § 105, the bankruptcy code provision permitting the court to issue any necessary or appropriate order. A balancing of the harms weighs in EPA's favor, since enforcement of environmental laws is in the public interest.

Counsel for Official Committee
John P. Campbell
Curtis, Mallet-Prevost, Colt & Mosle
101 Park Ave., New York NY 10178
(212) 696-6000

Counsel for Commonwealth Oil Refining Co.
Robert T. Brousseau, Sander L. Esserman
Stutzman & Bromberg
2200 Americas Tower, 2323 Bryan, Dallas TX 75201
(214) 969-4900

Counsel for U.S. EPA
J. Carol Williams, John Cermak
Land and Natural Resources Division
Department of Justice, Washington DC 20530
(202) 633-2757

Before GEE, RANDALL and DAVIS, Circuit Judges.