In re Southeast Arkansas Landfill, Inc.
| Decision Date | 24 January 1992 |
| Docket Number | Bankruptcy No. 90-50402. |
| Citation | 137 BR 735 |
| Parties | In re SOUTHEAST ARKANSAS LANDFILL, INC. SOUTHEAST ARKANSAS LANDFILL, INC., Plaintiff, v. STATE OF ARKANSAS by the ARKANSAS DEPARTMENT OF POLLUTION CONTROL AND ECOLOGY, Defendant. |
| Court | U.S. District Court — Eastern District of Arkansas |
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Geoffrey Treece, Little Rock, for plaintiff.
Steve Weaver, Little Rock, for defendant.
Charles Gibson, Dermott, U.S. Trustee.
Before the Court for consideration is the "Memorandum Findings of Fact, Conclusions of Law and Order Certifying to the U.S. District Court for Disposition Pursuant to 28 U.S.C. § 157(c)(1)" from the Bankruptcy Court1 in this matter. Having reviewed the Memorandum Findings of Fact, Conclusions of Law and Order of the bankruptcy judge, the objections and the transcript of proceedings carefully, and considered the matter de novo as this court is required to do under Rule 9033(d) of the Bankruptcy Rules, the Court concludes that the Findings and Conclusions should be adopted and judgement should be entered in favor of defendant State of Arkansas.
This Court would note that there are situations where, under the guise of land use regulation, an actual taking occurs for which a land owner is entitled to compensation as in an eminent domain proceeding. Indeed, that issue may be defined more clearly by the Supreme Court during this term.2 However, this Court is convinced, given the purpose of the statute, its enforcement and the amount of burden on the landowner in this case, that such a taking did not occur here.
It is so ORDERED.
MEMORANDUM FINDINGS OF FACT, CONCLUSIONS OF LAW AND ORDER CERTIFYING TO THE U.S. DISTRICT COURT FOR DISPOSITION PURSUANT TO 28 U.S.C. § 157(c)(1)
Southeast Arkansas Landfill, Inc. ("SEAL") filed a voluntary petition under Chapter 11 of the Bankruptcy Code on October 18, 1990. SEAL is a solid waste disposal facility, better known as a privately owned landfill for non-hazardous municipal garbage. At the time of the filing, the corporation had debts totaling some $73,923.63 and assets of an undetermined amount, although greater than $22,000. The debtor remains in possession of the estate.
SEAL filed the instant adversary proceeding on October 19, 1990, i.e., the day after it filed for Chapter 11 protection. The complaint seeks declaratory and injunctive relief against the Arkansas State Department of Pollution Control and Ecology ("ADPC & E" or "the Department"). Specifically, SEAL asks the Court to enjoin the Department from revoking SEAL's permit to accept municipal solid waste and to enjoin enforcement of certain Arkansas State laws.
SEAL is the assignee of a contract to dispose of out-of-state municipal solid waste. The "Waste Disposal Agreement" or the "Davenport Contract" between Davenport Industries, Inc. ("Davenport") of New Bridge Centers, Kingston, Pennsylvania and SEAL as the assignees of Arkansas County Waste, Inc. of Dewitt, Arkansas, provides for the delivery of up to 5,000 tons of waste per day to SEAL. The contract was to begin on or about August 1, 1989 and to continue for three years.
The complaint alleges that two Arkansas laws, Act 870 of 1989 and Act 319 of 1991, prohibit the importation of out-of-state solid waste into the State of Arkansas for disposal in the SEAL facility. SEAL claims the Acts are unreasonable restraints on interstate commerce. SEAL also alleges that the Acts impermissibly impair its contract with Davenport. SEAL also claims that the Department's enforcement of the Acts constitutes an inverse taking of its property without just compensation. Finally, SEAL claims that the Department's implementation of the Acts is a violation of SEAL's right to due process and equal protection under the law.1 As a consequence, SEAL claims that it cannot profitably operate its landfill.
The parties tried the case to the Court on July 31 and August 1, 1991. Geoffrey Treece, Esq., and Charles S. Gibson, Esq., appeared for the debtor. Steve Weaver, Esq. appeared for the defendant. The parties filed post-trial briefs on September 9, 1991. The Court has had the case under advisement since that date.
This is an adversary proceeding within the jurisdiction of the bankruptcy court. This proceeding is related to a case under the bankruptcy code although it is not a core proceeding. 28 U.S.C. §§ 157(b) and (c). The Eighth Circuit set out the standard for determining whether a proceeding is "related to" a bankruptcy case in re: Dogpatch U.S.A., Inc., 810 F.2d 782 (8th Cir.1987). The Eighth Circuit there stated:
The test for determining whether a civil proceeding is related to bankruptcy is whether the outcome of that proceeding could conceivably have any effect on the estate being administered in bankruptcy. . . . An action is related to bankruptcy if the outcome could alter the debtor\'s rights, liabilities, options, or freedom of action . . . and which in any way impacts upon the handling and administration of the bankrupt estate.
Dogpatch, 810 F.2d at 786 (citations and internal quotations omitted); see also, National City Bank v. Coopers and Lybrand, 802 F.2d 990, 994 (8th Cir.1986).
The proceeding is properly before the Court because the outcome will have an effect on the estate. The debtor seeks injunctive and declaratory relief against the Arkansas Department of Pollution Control and Environment. The relief, if granted, would alter the debtor's rights, options, and freedom of action. An injunction would permit the debtor to go forward with certain waste disposal contracts and to continue, in effect, as a going concern pending the outcome of the Chapter 11 petition. Without relief, the applicable laws substantially impair the value of the debtor's estate.
The Bankruptcy Court confines itself to submitting proposed findings of fact and conclusions of law to the District Court. 28 U.S.C. § 157(c)(1). The parties have not consented expressly to the entry of final orders or judgment by the Bankruptcy Court. See, Fed.R.Bankr.P. 7008, 7012. Accordingly, the District Court has the power to enter a final order or judgment after a de novo review of those matters to which any party timely and specifically objects. 28 U.S.C. § 157(c)(1).
The Court further concludes that the debtor has standing to assert its claim in this Court. As discussed more fully below, the debtor's principal claim concerns a contract that may not have any value to the estate. However, the debtor also seeks prospective relief to permit it to accept solid waste from any source in order that it might reorganize under Chapter 11. The evidence in the case demonstrated that there is a lack of available landfill space in the State of Arkansas and that the SEAL facility is an available and potentially suitable site for the disposal of a large volume of solid waste. Therefore the Court concludes that the laws and regulations at issue cause substantial "injury in fact" to SEAL, which is sufficient for purposes of determining its standing. The Court makes this determination without considering whether or not a large contract for the disposal of waste in the landfill, discussed below, has any value to the estate.
The Court concludes that the defendant has not violated the Interstate Commerce Clause, U.S. Const. art. I, § 8, cl. 3. SEAL claims that Act 319 is a "per se" violation of the Commerce Clause because it constitutes "economic protection." SEAL also claims that the Act is invalid as applied because, even if the Act is valid on its face, the legislature could have used a less intrusive means to achieve the same ends. The department refutes both claims.
The State of Arkansas first created regional solid waste planning districts in 1989. Act 870 of 1989; Ark.Code Ann. § 8-6-701, et seq. ("Regional Solid Waste Planning Act of 1989" or "1989 Act"). The purpose of the 1989 Act was, inter alia, to "protect the public health and the State's environmental quality by requiring regional solid waste planning." Ark.Code Ann. § 8-6-701. The 1989 Act separated the State into eight regions and restricted the flow of solid waste into each region from any source outside of the region. The 1989 Act also mandated a study of solid waste disposal needs in the State, established planning boards, and imposed a moratorium on the expansion of any landfill service area for two years.
The Court limits its discussion of the 1989 Act because its application to the instant case is moot. Plaintiff's original complaint claimed that the moratorium and import-into-district limitations of the 1989 Act were the causes of its financial problems. Since plaintiff filed the complaint, the 1989 Act moratorium expired by its own terms. Act 319 of 1991 supplements and updates the 1989 Act. As discussed more fully below, Act 319 imposes its own limitations on the importation of solid waste into any of the solid-waste management districts. Plaintiff subsequently amended its complaint to include Act 319.
The purpose of Act 319 is stated in the Act itself. The Court sets out the purpose in full because it is critical to understanding the issues in this case:
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