ELR Citation: ELR 20121
No(s). 83-1020 (U.S. Jan 9, 1985)

The Court holds that a waste site operator's obligation under an injunction to clean up its site is subject to discharge in bankruptcy. The Court first holds that although the United States has substantially cleaned up the site, the case is not moot, since Ohio alleges that ground contamination at the site still threatens public waters. The Court next rules that the obligation to clean up the site is a debt or liability n a claim under §101 of the Bankruptcy Reform Act. Section 101(4)(B), which includes certain rights of performance as "claims," is not limited to rights of performance arising from contracts and may include rights arising under statutes. Further, under the circumstance of the case, the statutory breach meets the §101(4)(B) requirement that it "[give] rise to a right of payment." Before the site owner had declared bankruptcy, Ohio had the site and all of the owner's non-exempt assets placed in receivership to effect compliance with the injunction. The site owner thus had no control over the site and no way of furthering compliance with the injunction except to give the receiver money. The court of appeals correctly concluded that the cleanup order had been converted into a dischargeable obligation to pay money. Finally, the Court notes that (1) the owner may still be subject to prosecution for violation of the state's environmental laws or for contempt of the injunction, (2) bankruptcy would not discharge a fine or penalty, (3) the case does not decide what would have happened had the state not sought pre-bankruptcy receivership, (4) prohibitory aspects of the injunction have not been discharged, and (5) the possessor of the site must comply with state environmental laws.

Justice O'Connor, concurring, notes the Court's ruling will not necessarily impede state enforcement of environmental laws.

[The appellate opinion affirmed here appears at 14 ELR 20253.]

Counsel for Petitioner
Anthony J. Celebrezze Jr., Attorney General., E. Dennis Muchnicki, Ass't Attorney General
State Office Tower, 30 E. Broad St., Columbus OH 43215
(614) 466-2766

Counsel for Respondent
David A. Caldwell
900 Tri-State Bldg., Cincinnati OH 45202
(513) 852-6031

Counsel for Amicus Curiae
Peter R. Steenland Jr., Dirk D. Snell, Wendy B. Jacobs
Land and Natural Resources Division
Department of Justice, Washington DC 20530
(202) 633-2217