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Louisiana Dep't of Envtl. Quality v. Crystal Oil Co.

ELR Citation: 29 ELR 20185
Nos. 97-30423, 158 F.3d 291/(5th Cir., 10/20/1998)

The court holds that bankruptcy discharges a state environmental agency's environmental liability claims against an oil company believed to be the successor to the owner of an abandoned oil site where hazardous substances had been released. The court first holds that the state agency's environmental liability claim against the company arose pre-petition for bankruptcy purposes. The agency became aware of the hazardous release in question before the close of the company's bankruptcy case. The agency's knowledge that the hazardous substance constituted an environmental violation was enough to put it on notice of the claim against the company under bankruptcy law's broad definition of a regulatory claim. Moreover, the bankruptcy court did not commit clear error when it found that the agency could have determined that the company was the successor to the abandoned site. The court next holds that the agency was not a reasonably ascertainable creditor for bankruptcy purposes, and the company's notice of bankruptcy by publication was, therefore, sufficient to subject the agency's claim to discharge in bankruptcy. The record supports the bankruptcy court's finding that the information in the possession of the company did not suggest that there was a hazardous waste claim for which the company would be liable to the agency. The court then holds that the agency should not be allowed to file a late claim on the basis of excusable neglect. The bankruptcy court correctly determined that the prejudice to the company would be high, the length of delay was quite long, and the reason for filing a late claim was unconvincing.

Counsel for Appellants
Caroline C. Donlon
Louisiana Department of Environmental Quality
Legal Division
7290 Blue Bonnett Rd., Rm. 4322, Baton Rouge LA 70810
(225) 766-0378

Counsel for Appellee
Osborne J. Dykes
Fulbright & Jaworski
1301 McKinney St., Ste. 5100, Houston TX 77010
(713) 651-5151

Before Politz and Reavley, JJ.