ELR Citation: ELR 21411
No(s). s. 88-1079, -1110 (3d Cir. Sep 16, 1988)

The court holds that a suit by the United States to recover response costs incurred under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) falls within the police power exception to the Bankruptcy Code's automatic stay provision. The court first holds that it has appellate jurisdiction under 28 U.S.C. §1291 to review the district court's order lifting the automatic stay. The court holds that its jurisdiction under 28 U.S.C. §1291 is identical to its jurisdiction under 28 U.S.C. §158(d), which authorizes circuit court review of district court decisions reviewing orders of bankruptcy judges, since this case is inextricably intertwined with a pending bankruptcy proceeding. The court holds that the district court's decision is a final order under §158(d). Interpretation of finality is more flexible in bankruptcy proceedings, a ruling lifting an automatic stay subjects the debtor to litigation harassment that cannot be remedied on appeal at the end of the bankruptcy proceedings, the issue raised is purely legal, and the district court has completed its work on this phase of the case.

The court next holds that the federal government's suit to recover past CERCLA response costs falls within the police and regulatory exception to the automatic stay provision and thus may proceed to trial. Although the language of the Bankruptcy Code is ambiguous, the legislative history reveals that the automatic stay provision does not apply to government actions for entry of a money judgment in environmental enforcement cases. An action to collect a money judgment is subject to the automatic stay, but the government maintains that it will not execute on the judgment if it prevails at trial.

[The district court decision is published at 18 ELR 20845. Other decisions in this litigation appear at 17 ELR 21085, 21088, and 21091.]

Counsel for Appellant
Douglas J. Smillie
Clark, Ladner, Fortenbaugh & Young
32nd Fl., 1818 Market St., Philadelphia PA 19103
(215) 241-1800

Counsel for Appellee
Kathleen P. Dewey, Jacques B. Gelin, David Street
Land and Natural Resources Division
Department of Justice, Washington DC 20530
(202) 633-2000

Virginia Gibson-Mason, Ass't U.S. Attorney
3310 U.S. Courthouse, 601 Market St., Philadelphia PA 19106
(215) 597-1716

Before Sloviter and Scirica, JJ.