In re Professional Sales Corp.
| Citation | 56 BR 753 |
| Decision Date | 16 December 1985 |
| Docket Number | No. 85 C 5791.,85 C 5791. |
| Court | U.S. District Court — Northern District of Illinois |
| Parties | In re PROFESSIONAL SALES CORP., Debtor. UNITED STATES of America, Appellant, v. PROFESSIONAL SALES CORP., Appellee. |
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John Redfield, Chicago, Ill., for plaintiff-appellee Professional Sales.
Elizabeth Stein, Asst. U.S. Atty., Chicago, Ill., John F. Cermak, EPA, Washington, D.C., for defendant-appellant U.S.
on appeal from 84 A 549.
In this matter, appellant and adversary defendant Environmental Protection Agency ("EPA") appeals a decision of the bankruptcy court enjoining the EPA from terminating the "interim status" of a hazardous waste management facility owned by debtor-in-possession and appellee Professional Sales Corporation ("PSC"). Jurisdiction is founded on 28 U.S.C. § 1334(b) and 28 U.S.C. § 158(a). Also pending before the court is the EPA's motion under 28 U.S.C. § 157(d) for this court to withdraw the reference of the adversary matter to the bankruptcy court. For the reasons set forth herein, the bankruptcy court's order is vacated, and the matter is remanded to the bankruptcy court with instructions to dismiss PSC's complaint. The motion to withdraw the reference is therefore denied as moot.
Section 3005 of the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. § 6925, requires all facilities which treat, store or dispose of hazardous wastes to obtain a permit from the EPA or, in applicable cases, from an authorized state agency. 42 U.S.C. § 6926(b). Such permits are issued only upon a determination that the facility is in compliance with the section 3005 hazardous waste management standards and hazardous waste permit requirements. These standards and regulations are promulgated in 40 C.F.R. part 264, and 40 C.F.R. part 270, respectively. See generally In re Commonwealth Oil Refining Co., Inc., 22 Env't. Rep. Cases 1069, 1070 (Bankr.W.D.Tex.1985), aff'd, Slip Op. No. SA-85-CA-2045 (W.D.Tex. Nov. 5, 1985).
Because the EPA could not issue permits to all hazardous waste facilities before the effective date of the RCRA, Congress provided that certain facilities could be treated as having been issued a permit pending final administrative disposition of their permit applications. Section 3005(e), 42 U.S.C. § 6925(e). In order to qualify for this treatment, known as "interim status," a hazardous waste facility must meet three requirements: 1) the facility must have been in existence on November 19, 1980 or on the effective date of any statutory or regulatory change rendering the facility subject to the permit requirement; 2) the facility must be in compliance with all section 3010(a) requirements, 42 U.S.C. § 6930(a); and 3) the facility must have filed an application for a permit under the statute. See 42 U.S.C. § 6925(e)(1)(A-C). Any facility which does not meet these requirements lacks interim status, and, if operated without a permit, is in violation of the RCRA.
Under regulations promulgated by the EPA, certain requirements for permit applications must be followed to obtain interim status. See 40 C.F.R. §§ 270.2, 270.10, 270.70-270.73. The regulations require that an existing facility submit minimal descriptive information such as the location of the facility and the processes used in the treatment, storage and disposal of the waste. The filing of this information, known as part A of the permit application, operates as a pending application under § 6925(e)(1)(C) so as to trigger the availability of interim status. 40 C.F.R. §§ 270.1, 270.10(e), 270.13.
After the above information has been filed, the true application process does not begin until the EPA requests further technical information, known as Part B of the permit application. 40 C.F.R. § 270.1, 270.14. The EPA may call for this information at any time, and the facility owner or operator has six months to respond. Id., § 270.1(b). Failure to furnish the requested information on time, or to furnish the information in full, is grounds for termination of the interim status. 40 C.F.R. § 270.10(e)(5). When the EPA announces termination, the facility no longer has authorization to operate, and a closure plan must be submitted to the Regional Administrator within 15 days. Id., § 265.112(c).
Under 42 U.S.C. § 6976(b), review of the EPA's action in withdrawing interim authorization may be had in the court of appeals for the federal judicial district in which the interested person resides or transacts business. Application for such review shall be made within 90 days of the agency's action, and is to be conducted under the standards of the Administrative Procedure Act, 5 U.S.C. §§ 701-706. That latter Act authorizes review of final agency action in the district court only to the extent that other statutory procedures for review are inadequate. F.C.C. v. ITT World Communications, Inc., 466 U.S. 463, 104 S.Ct. 1936, 1940, 80 L.Ed.2d 480 (1984). PSC has never alleged that the § 6976(b) review procedures are inadequate in this case.
PSC is in the business of constructing and maintaining industrial and commercial buildings. On January 18, 1983, pursuant to a mechanic's lien foreclosure suit, Professional Construction Co. v. Harris Trust & Savings, 77 CH. 8852, PSC acquired title to certain real estate located at 2200 East 119th Street, also known as the American Incineration facility.
At the time PSC acquired title, the property was being operated as a hazardous waste facility by Cal Harbor Development Corp. and Alburn, Inc. pursuant to an "interim status" authorization under 42 U.S.C. § 6925(e). However, the facility had a history of violating EPA standards,1 and Cal Harbor never completed Part B of its application for permanent authorization. PSC inherited both of these problems. See Professional Sales Corp. v. United States, 48 B.R. 651, 654-55 (Bankr.N.D.Ill.1985).
On January 21, 1983, PSC requested the EPA to extend the submittal date for the Part B application for the American facility from January 24, 1983 to March 31, 1983. EPA granted this request. On February 17, 1983, PSC submitted a revised Part A of its permit application to record the change in ownership. On March 14, 1983, PSC requested that the time for submitting its Part B permit application be further extended to February 29, 1984. The EPA agreed to take the request under consideration if PSC would submit an approvable closure plan, financial assurance for closure, and proof of liability coverage. The Agency further required that PSC submit a "clean-up plan" before any such extension would be ruled on.
On May 18, 1983, PSC filed for reorganization under Chapter 11 of the Bankruptcy Code. In re Professional Sales Corp., No. 83 B 06226. On July 5, 1983, by which date PSC still had not filed a proposed cleanup plan, two drums exploded at the American facility. In view of this explosion, the earlier violations at the site, and PSC's apparent financial inability to rectify the situation, EPA conducted an immediate removal of hazardous wastes at the site under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), also known as "Superfund." 42 U.S.C. § 9604 (1982). Over the next 3½ months, the EPA removed approximately 7500 drummed and 37,500 gallons of bulked hazardous waste from the site. Contaminated soils and groundwaters still remain on the property. (Affidavit of William Simes, ¶¶ 3-4).
On July 21, 1983, EPA denied PSC's still pending request for an extension of time to file a Part B application. On September 12, 1983, PSC was advised of the EPA's tentative decision to terminate the interim status of the facility. The letter to PSC cites four bases for the EPA's decision: (1) failure to submit a timely Part B application, 2) endangerment to public health and the environment resulting from operation of the facility, 3) past and present violations of the interim status standards, and 4) PSC's financial inability to correct the violations. Public notice of the tentative decision was issued on September 23, 1983, and a public hearing was held on January 4, 1984.
On April 12, 1984, the EPA notified PSC that the interim status would be terminated effective May 12, 1984 and advised PSC of its right to appeal that decision under 40 C.F.R. § 124.19. On May 10, 1984, PSC filed Adversary Complaint No. 84 A 549 to enjoin the termination of the status. According to the allegations of the complaint, PSC never operated a liquid waste treatment facility on the premises, the facility was not presently dangerous due to the CERCLA cleanup performed in 1983, and termination of the temporary permit would greatly reduce the value of the real estate. The complaint contains no allegations that the EPA acted arbitrarily or capriciously, or in violation of law, other than to claim that EPA's consideration of financial inability was contrary to the intent and spirit of the Bankruptcy Code.
The Bankruptcy Court, Judge Frederick Hertz presiding, granted a TRO against EPA on the date the complaint was filed. The TRO was then extended by orders dated May 21, 1984, May 29, 1984, June 7, 1984, and June 18, 1984. The EPA appealed the last three of these extensions, and this court vacated the orders for failure to comply with Rule 65(b) of the Fed.R.Civ.P. Under that rule, a judge is without power to extend a temporary restraining order after it has been once extended for ten days. United States v. Professional Sales Corp., Slip Op. Nos. 84 C 6079, 84 C 6551 (N.D.Ill. Nov. 2, 1984). I cautioned at that time that any attempt to seek further injunctive relief from the bankruptcy court would have to take the form of a motion for preliminary injunction, to be entered after an evidentiary hearing only, and that the bankruptcy court should not enter such relief without first ascertaining its subject matter...
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