IN RE COMBUSTION EQUIPMENT ASSOCIATES, INC.

• Decision Date: 27 April 1987
• Docket Number: Adv. No. 86-5433A.,No. 86 Civ. 5816(LBS),Bankruptcy No. 80 B 11757(BRL),86 Civ. 5816(LBS)
• Citation: 73 BR 85
• Parties: In re COMBUSTION EQUIPMENT ASSOCIATES, INC., Debtor. CARTER DAY INDUSTRIES, INC., f/k/a Combustion Equipment Associates, Inc., Plaintiff, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY and New Jersey Department of Environmental Protection, Defendants.
• Court: U.S. District Court — Southern District of New York

73 B.R. 85 (1987)

In re COMBUSTION EQUIPMENT ASSOCIATES, INC., Debtor CARTER DAY INDUSTRIES, INC., f/k/a Combustion Equipment Associates, Inc., Plaintiff, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY and New Jersey Department of Environmental Protection, Defendants.

Bankruptcy No. 80 B 11757(BRL), No. 86 Civ. 5816(LBS), Adv. No. 86-5433A.

United States District Court, S.D. New York.

April 27, 1987.

Anderson Russell Kill & Olick, P.C., New York City, for plaintiff; Roy Babitt, Arthur S. Olick, Warren R. Graham, of counsel.

Rudolph W. Giuliani, U.S. Atty. for S.D. New York City, for defendants; Mary Ellen Kris, Alan Nisselson, Asst. U.S. Attys., Elizabeth Yu (Environmental Enforcement Section), Washington, D.C., of counsel.

OPINION

SAND, District Judge.

The United States Environmental Protection Agency ("EPA") moves for summary judgment dismissing plaintiff Carter Day's declaratory judgment action upon the ground that the issue raised therein is not ripe for judicial determination. In the underlying action, Carter Day seeks declaratory and injunctive relief. Plaintiff contends that its discharge in bankruptcy pursuant to 11 U.S.C. §§ 524 and 1141 (1979 & West Supp.1987) has also discharged any potential liability that Carter Day may have under section 107(a) of the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C.A. § 9607(a) (West Supp.1987), in connection with two landfill sites. For the reasons stated in this Opinion, EPA's motion is granted.

We set forth the facts underlying this litigation in our Opinion dated November 24, 1986, 67 B.R. 709 (S.D.N.Y.), in which we withdrew the reference made earlier to the Bankruptcy Court. We need not repeat them here save to highlight those facts relevant to the instant motion: Combe Fill Corporation, a wholly owned subsidiary of Carter Day, operated two landfill sites in Morris County, New Jersey, until their closure in 1981. EPA had listed these sites on its National Priority List of hazardous waste sites after finding groundwater in the vicinity contaminated with a variety of hazardous substances. In 1983, EPA advised Carter Day as well as at least 190 others that they were potentially responsible parties ("PRPs") under CERCLA for the costs of remedial action which might be incurred by EPA in connection with the hazardous sites. EPA has since funded a Remedial Investigation and Feasibility Study ("RI/FS") at each site in order to identify appropriate remedial strategies.

Carter Day's voluntary petition for Chapter 11 bankruptcy was confirmed in December 1983. After that date, EPA incurred the majority of costs associated with the RI/FS. EPA has made no other expenditures for cleaning up the Morris County sites and has not made a decision to take enforcement action against Carter Day, or for that matter, against any particular PRP. The crux of plaintiff Carter Day's contention in this litigation is that any potential liability that Carter Day may have for cleanup at the sites arose before its Chapter 11 confirmation and therefore is barred by virtue of Carter Day's debtor status: the confirmation of a Chapter 11 plan discharges the corporate debtor from debts that arose before, but not after the date of confirmation. 11 U.S.C. § 1141(d)(1)(A). EPA contends, however, that the Court cannot reach the merits of plaintiff's claim.

EPA persuasively argues that this Court lacks subject matter jurisdiction over Carter Day's action since it is not a case or controversy ripe for judicial resolution. See, e.g., Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 512, 85 L.Ed. 826 (1941). The ripeness doctrine in the administrative context — to which we will confine ourselves — serves in part "to protect the agencies from judicial interference until an administrative decision has been formalized and its effects felt in a concrete way by the challenging parties." Abbott Laboratories v. Gardner, 387 U.S. 136, 148-49, 87 S.Ct. 1507, 1515, 18 L.Ed.2d 681 (1967). In determining whether an issue is ripe, courts evaluate both the fitness of the issue for review and the hardship to the parties of withholding court consideration. Id. at 149, 87 S.Ct. at 1515-16. Specifically, this Court must determine whether there has been final and definitive agency action by EPA having a direct and immediate impact upon Carter Day. Id. at 149-52, 87 S.Ct. at 1515-17; FTC v. Standard Oil Co. of California, 449 U.S. 232, 239, 101 S.Ct. 488, 493, 66 L.Ed.2d 416 (1980).

We first address whether EPA has taken "final" agency action. See, e.g., Abbott Laboratories, 387 U.S. at 149-51, 87 S.Ct. at 1515-17; 5 U.S.C. § 704 (1982). The Supreme Court in FTC v. Standard Oil Co. of California, 449 U.S. at 240-43, 101 S.Ct. at 493-95, set forth a three part test to determine finality: (1) the agency action should be a definitive ruling or regulation; (2) the agency action should have legal force or practical effect upon the party seeking judicial review; and (3) judicial review should serve either efficiency or enforcement of the regulatory scheme. We find that the agency action in this case meets none of these criteria.

First, far from being a "definitive" ruling by EPA that Carter Day was liable for cleanup costs, the letter sent to Carter Day as a PRP — the only action taken by EPA with respect to plaintiff — was purely a notice of potential responsibility and request for information that was sent to 190 other PRPs in addition to Carter Day. In this vein, the only "legal" requirement imposed by the letter was to require Carter Day to supply information to the agency; the notice in no way imposed liability or mandated Carter Day under either administrative or judicial order to undertake any remedial action or incur any cleanup costs. Accord Lake Carriers' Ass'n. v. MacMullan, 406 U.S. 498, 92 S.Ct. 1749, 32 L.Ed.2d 257 (1972) (declaratory judgment action by regulated party was ripe where state official sought compliance with state clean water statute and enforcement action merely threatened).

Furthermore, "regulatory efficiency" — the last requirement for finding final agency action — would not be promoted by allowing suit by Carter Day at this time. Before EPA would take enforcement action against Carter Day or any other PRP, the agency necessarily would perform steps that could make litigation involving Carter Day unnecessary. Specifically, EPA likely would...