Legal Watch: Volume 19

Prepared by William H. Bode
Bode & Grenier, LLP
1150 Connecticut Ave., NW
Washington, D.C. 20036
Telephone: 202-862-4300 | Email: wbode@bode.com

RCRA CLAIMS BY EPA AGAINST REFINER NOT DISCHARGED IN BANKRUPTCY

Case Summary: Clark Oil and Refining Corporation operates a refiner in Hartford, Illinois whose debts were discharged in a Chapter 11 Bankruptcy Proceeding on August 16, 1990. Apex Oil Company, its successor in interest, was thus surprised when the EPA sued under the Resource Conservation and Recovery Act (“RCRA”) – nearly fifteen years later – alleging that releases from the refiner pose an “imminent and substantial endangerment” to the environment. In litigation to enforce the EPA’s injunctive relief request, the EPA contended that the relief it sought was not discharged in Bankruptcy. Apex Oil, in response, argued that the injunctive relief sought by EPA was a “claim” that was discharged in the bankruptcy proceeding whether “known or unknown.” The Court analyzed this question on whether the government can convert an injunction issued under RCRA into a “right to payment.” Using wording from the Supreme Court case of Mehrig v. KFC Western Inc., the Federal Court for the Southern District of Illinois ruled that the operative provision did not provide for monetary awards and thus held for the EPA.

LESSON: The EPA may sue a party for injunctive relief requiring a party to remedy an oil spill even if that party received a discharge of its debt in Bankruptcy. Presumably, under this decision, a private party also could sue a party emerging from bankruptcy under RCRA for injunctive relief. United States of America v. Apex Oil Company, Inc.

Please address any comments or questions to Mr. Bode at 202-862-4300 or wbode@bode.com.

BACK TO ENERGY NEWS ARTICLES MAIN PAGE