Legal Document

474 U.S. 494 106 S.Ct. 755 88 L.Ed.2d 859 MIDLANTIC NATIONAL BANK, Petitionerv.NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION. Thomas J. O'NEILL, Trustee in Bankruptcy of Quanta Resources Corporation, Debtor, Petitioner v. CITY NEW YORK et al. Nos. 84-801, 84-805. Argued Oct. 16, 1985. Decided Jan. 27, 1986. Rehearing Denied March 24, See 475 1090, 1482. Syllabus Corp. (Quanta) processed waste oil at facilities located New York and Jersey. The Jersey Department Environmental Protection (NJDEP) discovered that had violated a provision the operating permit for facility by accepting contaminated with toxic carcinogen. During negotiations NJDEP cleanup site, filed petition reorganization under Chapter 11 Code, after issued an order requiring cleanup, converted action to liquidation proceeding 7. An investigation then revealed also accepted similarly site. trustee notified creditors Court he intended abandon property § 554(a) which authorizes "abandon any estate is burdensome or inconsequential value estate." City State objected, contending abandonment would threaten public's health safety, violate state federal environmental law. approved abandonment, and, District affirmed, appeal was taken Appeals Third Circuit. Meanwhile, trustee's proposed over NJDEP's objection, took direct Appeals. In separate judgments, reversed, holding erred permitting abandonment. Held: A bankruptcy may not contravention statute regulation reasonably designed protect public safety from identified hazards. Congress did intend pre-empt all local laws. court does have power authorize without formulating conditions will adequately safety. Pp. 500-507. (a) Before 1978 revisions codified 554 judicially developed rule been limited doctrine legitimate interests. codifying presumably included corollary could exercise his violation certain 500-501. (b) Neither this Court's decisions nor has granted powers lend support right laws Where Code conferred other special upon where there no common-law limitation on such powers, expressly provided efforts marshal distribute estate's assets must yield governmental interests It cannot be assumed Congress, having placed limitations aspects trustees' operations, discard well-established judicial restriction power. Moreover, 28 U.S.C. 959(b), commands "manage operate possession . according requirements valid State," provides additional evidence 502-505. (c) Additional restricting found repeated congressional emphasis, statutes, goal protecting environment against pollution. 505-506. 739 F.2d 912 927, affirmed. POWELL, J., delivered opinion Court, BRENNAN, MARSHALL, BLACKMUN, STEVENS, JJ., joined. REHNQUIST, dissenting opinion, BURGER, C.J., WHITE O'CONNOR, joined, post, p. 507. 1 William F. McEnroe, Newark, N.J., petitioner No. 2 A. Dennis Terrell, Morristown, 84-801. 3 Robert Hermann, Albany, N.Y., respondents 4 Mary Carol Jacobson, Trenton, respondent 5 Justice POWELL Court. 6 These petitions certiorari, arising out same proceeding, present question whether 554(a),1 regulations are 7 * Corporation two facilities, one Long Island City, York, Edgewater, At Edgewater facility, handled pursuant temporary (NJDEP), June 1981, Midlantic National Bank, $600,000 loan secured Quanta's inventory, accounts receivable, equipment. month, specific prohibition its more than 400,000 gallons PCB, highly ordered cease operations began concerning But October 6, before conclusion negotiations, Code. next day, administrative clean up financial condition remained perilous, however, following it O'Neill, 84-805, appointed bankruptcy, subsequently oversaw both facilities. 8 After stored 70,000 toxic, PCB-contaminated deteriorating leaking containers. Since mortgages facility's real exceeded property's value, estimated cost disposing plainly rendered net burden estate. trying success sell benefit creditors, 554(a). No party disputed allegation site "burdensome" "inconsequential estate" within meaning 554. 9 (collectively York), nevertheless rested objection "public policy" considerations reflected applicable laws, requirement 959(b) operate" "according situated." asked used bring into compliance briefing argument, noting "[t]he better position every respect either debtor's do what needs done dangers posed facility." appealed 10 Upon removed 24-hour guard service shut down fire-suppression system. became necessary decontaminate exception polluted subsoil, about $2.5 million.2 On April 23, 1983, shortly gave notice intention personal consisting principally oil. May 20, sufficient funds hazardous waste.3 12 Because abandonments presented identical issues, parties litigation consented taking 405(c)(1)(B) Act 1978. 13 divided panel Circuit reversed. re Corp., (1984); 927 (1984). Although little guidance legislative history 554, concluded codify judge-made practice previous Act. Under law, law general equitable principles protected interests, those were overridden provisions regulation, but only grounded policies outweighed relevant Accordingly, held remanded cases further proceedings.4 14 We certiorari consolidated these determine properly construed 469 1207, 105 1168, 84 319 (1985). now affirm. II 15 This made clear few cases. Ottenheimer Whitaker, 198 289 (CA4 1952), trustee, liquidating barge company, several barges when obstructed navigable passage stated: 16 "The [abandonment] give way comes conflict enacted ensure navigation; we dealing imposed bankrupt contract, duty owner vessels interest." Id., 290. 17 Chicago Rapid Transit Co., 129 (CA7), cert. denied, sub nom. Junction R. Co. Sprague, 317 683, 63 205, 87 L.Ed. 547 (1942), debtor transit company operation branch railway line required continued operation. While forbid (i.e., reject unexpired lease), conditioned actions Similarly, Lewis Jones, Inc., BCD 277 (Bkrtcy Ct. ED Pa.1974), invoked "safeguard interest" utilities seal underground steam lines abandoning them. 18 Thus, well-recognized restrictions established normal statutory construction if intends legislation change interpretation created concept, makes intent specific. Edmonds Compagnie Generale Transatlantique, 443 256, 266-267, 99 2753, 2759-60, 61 521 (1979). followed particular care construing scope codifications. If wishes grant extraordinary exemption nonbankruptcy "the clearly expressed, left collected inferred disputable convenience administering bankrupt." Swarts Hammer, 194 441, 444, 24 695, 696, 48 1060 (1904); see Palmer Massachusetts, 308 79, 85, 60 34, 37, 93 (1939) ("If old familiar states [over railroad service] withdrawn district courts railroads, ought find language fitting so drastic change"). define us exact contours power, they make subject III 19 As last Term Ohio sought compensation cleaning corporation: 20 "Finally, anyone site—whether [the debtor] another event receivership liquidated abandons property, vendee receiver trustee—must comply Ohio. Plainly, person firm maintain nuisance, pollute waters State, refuse remove source conditions." Kovacs, 274, 285, 705, 711, 83 649 (1985) (emphasis added). 21 repeatedly expressed determination carte blanche ignore interest Infra, 503-504. One assume nearly years ago context Labor Relations Act, debtor-in-possession relieved obligations [Act] simply filing bankruptcy." NLRB Bildisco & Bildisco, 465 513, 534, 104 1188, 1201, 79 482 22 automatic stay 362(a),5 described as "one fundamental protections laws." S.Rep. 95-989, 54 (1978); H.R.Rep. 95-595, 340 (1977), U.S.Code Cong. Admin.News 1978, pp. 5787, 5840, 5963, 6296. Despite importance 362(a) preserving estate, categories exceptions allow Government commence continue legal proceedings. For example, 362(b)(5) permits enforce "nonmonetary" judgments purposes safety: "Thus, unit suing prevent stop fraud, protection, consumer similar police regulatory attempting fix damages stayed stay." supra, 343 added); 52 added), 5838, 6299. 23 Petitioners suggested existence express undermines inference power: restrict limiting provisions. fails acknowledge differences between predecessors §§ 362. noted, firmly established. enacting 362 significantly broadened stay, W. Norton, Law Practice 20.03, 5-6 (1981), expansion begun five earlier adoption Rules 1973, id., 20.02, 4-5. Between 1973 some stretched expanded foreclose States' their antipollution laws,6 wanted overrule interpretations revision. 174-175, 6134-6136. face greatly increased 362, limit new expressly. Title 959(b)7 Section State." contended actually business debtor, it. Even though directly apply Code—and therefore de-limit precise abandonment—the section supports our otherwise constrain powers. IV 25 reasons elaborated above suffice conclude abrogate emphasis "goal pollution." Chemical Manufacturers Assn., Inc. Natural Defense Council, 470 116, 143, 1102, 1117, 90 Resource Conservation Recovery 42 6901-6987, regulate treatment, storage, disposal wastes monitoring creation until permanent disposal. That United States seek restraint activities involving "may imminent substantial endangerment environment." 6973; 98-284, 58 (1983). tightened restraints 1984.8 Comprehensive Response, Compensation, Liability amended Pub.L. 98-80, 2(c)(2)(B), fund finance sites responsible reimburse who paid cleanup. empowers Federal secure relief avert "imminent welfare because actual threatened release substance." 9606. Congress' undisputed concern risks improper storage substances, unwilling presume enactment 554(a), implicitly overturned longstanding V 26 light restricted pre-1978 provisions, reaching imposing onerous interfere adjudication itself, hold hazards.9 affirm 27 ordered. whom THE CHIEF JUSTICE, WHITE, O'CONNOR join, dissenting. 29 today concludes "certain something surprise ending, limits class can authorized "reasonably hazards." reduces somewhat my disagreement result reached, renders ratio decidendi import quite unclear. More important, I remain unconvinced arguments supporting bar principal independent ground offered—that "well-recognized power"—is particularly unpersuasive. rests misreading three pre-Code cases, elevation "well-recognized" unsupported assertion meant (or like it). shortcomings analysis, addressed greater detail below, stem least part failure discuss even passing nature role bankruptcy. 30 Abandonment previously 39.01 (1984), citing Brown O'Keefe, 300 598, 602-603, 57 543, 546-47, 81 827 (1937). Prior specifically authorizing By analogy executory contracts, worthless expected price sufficiently excess encumbrances offset costs administration. L. King, Collier ¶ 554.01 (15th ed. 1985) (hereinafter Collier).1 served overriding purpose liquidation: expeditious reduction money, distribution Kothe R.C. Taylor Trust, 280 224, 227, 50 142, 74 382 (1930). 554.01. Forcing administer contradict purpose, slowing administration draining assets. 31 incorporates first time. bears repeating: 32 "(a) hearing, (amended 1984). 33 language, absolute terms, suggests mention factors balanced weighed easy concerned regulations.2 Indeed, notes, itself clearly, exempting injunctions 362(b)(4), (5) (1982 Supp. II). 34 Nor scant interpretation. Nowhere suggest authority might opposed charged 35 seeks turn seemingly unqualified absence helpful advantage. Adopting reasoning Appeals, argues elaborate, prior "abandonment" case "a laws," ante, 501. disagree. unwillingness read based unless demonstrates clarity indeed Congress. E.g., Garcia States, 70, 75, 479, 482-83, 472 think analysis "legislative history" relied here falls far short standard. 36 relies just claimed "established corollary" close reading reveals none announced today. obstructing traffic Baltimore Harbor "judge-made [of abandonment] way" "an thus depended need reconcile gloss statute. confirmed validity approach Terms 523-524, 1194-1195, Here, contrast, "conflict" uncertain declines identify.3 addition, heavily fact judge-made, raises Delphic inquiry decided 37 (Bkrtcy.Ct. decision concluding principle conflicting nonetheless free seeking spend manholes vents pipe network. admittedly closer Ottenheimer, too turns believe isolated single rises level law" fairly incorporate. Merrill Lynch, Pierce, Fenner Smith, Curran, 456 353, 379-382, 102 1825, 1839-41, 72 182 (1982). 38 denied sitting lease rail line, lessor appealed. imposition abandonment; propriety affirmed authorization So while dicta Appeals' certainly not. short, view contains implicit 39 assuming stand proposition ascribed them opinion's brief discussion 500-501, claim reflect Generally speaking, rather constitute sort settled absent expression so. Perhaps recognizing this, place reliance "well settled" statement (pre-Code) 14th edition Bankruptcy, accompanying citation Transit: "Recent illustrate, application nature." 4A Moore, 70.42[2], 502-504 (14th 1978); 912, 916 (1984) (quoting Collier). Respondents observe treatise addressing cited note early precursor 4-611 H.R.Doc. 93-137, Part II, 181, reprinted Resnick E. Wypyski, Reform 1978: Legislative History, Doc. resourceful, argument wholly 40 reference Code's " 'legislative history' meaningful sense term," Board Governors, FRS Dimension Financial 361, 372, 681, 688, 691 (1986). And qualified instead much less remarkable concept well recognized 70.42[3]." divine regulations, therefore, Senator Congressman merely look several-page history. 41 attenuated since superseded version writing incorporate ill-defined trustee. suggesting "if concept" should expressly, 501, concedes "do power," ibid. never identifies draws "exact contours" announces today; appear likely candidate. knew how draft covering "certain" to. II); 509. provision. 1170(a)(2) (abandonment permitted "consistent interest"). qualify indicates hearing difficult fathom. "provides evidence" self-evident "that 505, "does Code," indirect application, contend operates Assuming management during governed abandon, pending "manage[ment]" "opera[tion]" Not contrary strain cf. Adelphi Hospital 579 726, 729, n. (CA2 1978) (per curiam ) (in "is manager institution's operations"), create shred one. commentator among contain explicit exceptions." Note, 85 Colum.L.Rev. 870, 883 creating exception. 43 Citing SEC Realty Improvement 310 434, 455, 1044, 1053, 1293 (1940), argue reached below. equity, freewheeling consideration conceivable equity." U.S., 527, S.Ct., 762. not, sound policy expense protect. properties expend 44 fully appreciate "aggravat[e] already existing halting security measures preven[t] entry, vandalism, fire." Ante, 499, 3. almost notify authorities adequate opportunity step provide needed security. noted 84-805: App. Pet. Cert. 73a. appropriate perfectly consistent advances State's unlike propounded time allows orderly course, afforded take preventative remedial measures. 45 likewise exclude possibility narrower today, genuine emergency uniquely able against. amicus curiae suggests, dynamite furnace basement schoolhouse. know situations trustees circumstances, narrow reserve surely embrace situation. 46 What respondents' lies fisc. undertaking efforts, unsuccessfully lien extent expenditures court's denial lien, proceeded (except subsoil). presses reimbursement, maintaining allowed Protection, apparently undo force remaining thereby reducing ultimately borne State.4 47 "abandonment fettered calculated identifiable harm." 507, 9. identify deems calculated," speculate total assume, affirms below means adopt position. opinions require available sites.5 barring forcing effectively fisc ahead claims creditors. hearings establish priority retain considerable latitude status allotted claims, 285-286, 711 (O'CONNOR, concurring), errs impose contemplated. each reverse judgment reads: "After Technical amendments Amendments Judgeship 1984 added words "and benefit" "value" 98-353, Tit. III, 468(a), 98 Stat. 380. sole issue claiming reimbursement expense. question, ultimate disposition us. relatively minor steps reduce danger, fencing, drainage diking repairs, sealing tanks, removing explosive agents. aggravated prevented fire. Joint Appendix 83-5142 (CA3), 11-12 (affidavit Richard Docyk, Deputy Chief Inspector N.Y. Fire Department); (transcript proceedings De Vito, J.). 470,000 carcinogenic unguarded, containers "present explosion, fire, contamination water supplies, destruction natural resources, injury, genetic damage, death through contact." Brief Amicus Curiae 4, 23; Appendix, (70,000 site); 83-5730 A7 (400,000 A46 (deteriorating containers); tanks); (guard service); (risk fire); (contamination adjacent areas); (health effects exposure PCBs derivatives). Judge Gibbons dissented, arguing analogous stay. dissent majority's raised questions Takings Clause potentially destroying Security Industrial 459 103 407, 235 (1982), majority failed address important underlying reimbursement. provides: Except subsection section, 301, 302, 303 title, 5(a)(3) Securities Investor 1970 (15 78eee(a)(3)), entities, of— "(1) commencement continuation, including issuance employment process, judicial, administrative, commenced recover arose title; "(2) enforcement, obtained "(3) act obtain estate; "(4) create, perfect, "(5) secures "(6) collect, assess, "(7) setoff debt owing title debtor; "(8) continuation Tax debtor." See, e.g., Hillsdale Foundry 195 WD Mich.1974) (action Michigan Attorney General stay). House Report referred unreported Texas Maine closing plant polluting river protection 174-175 (1977). "Except 1166 11, cause possession, shall manage situated, manner possessor thereof bound thereof." eliminated small generator subjected many regulations. 98-616, 3221, 3248-3272 (codified 6921(d) ed., III)). Another automatically broadens Act's coverage assigning rating substances Agency classify set deadline. 3227-3231 6924(d), (e), (f)(3), (g)(6) Amended enforcement citizen suits, 3271-3272 6973 III)), orders suits compel "corrective action" leak occurred. 3257-3258 6928(h) vested encompass speculative indeterminate future harm. former divested revested debtor. 554.02[2]. longer takes control Ibid. specify abandoned, possessory property. 92 284-285, 12, 710-711, Last involved dischargeability briefly sites: Such (1978). debtor's] worth bringing undoubtedly buyer whatever obligation satisfied. owner, ability." 12. finds "additional support" recent statutes environment. operated here—something neither suggests—then different case. obvious storing makeweight. Midlantic's claim, complete command qualifies, "conditio[n] itself,"

Classification Label: 7