United States v. Ilco, Inc., CV85-H-823-S
| Decision Date | 10 May 1985 |
| Docket Number | No. CV85-H-823-S,Bankruptcy No. BK-82-04836-S.,CV85-H-823-S |
| Citation | 48 BR 1016 |
| Court | U.S. District Court — Northern District of Alabama |
| Parties | UNITED STATES of America, Plaintiff, State of Alabama, ex rel. Charles A. Graddick, Attorney General, and the Alabama Department of Environmental Management, Intervening Plaintiffs, v. ILCO, INC., a/k/a Interstate Lead Company, Inc.; Leeds Excavating & Paving Co., Inc.; Diego Maffei; William Fleming and Annie Bell Fleming; Defendants. In re ILCO, INC., Debtor. |
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Frank W. Donaldson, U.S. Atty., George C. Batcheler, Asst. U.S. Atty., Birmingham, Ala., F. Henry Habicht II, Asst. Atty. Gen., Scott C. Fulton, Environmental Enforcement Section, Land and Natural Resources Div., U.S. Dept. of Justice, Douglas Greenhaus, U.S.E.P.A., Washington, D.C., Keith Casto, Region IV, U.S.E.P.A., Atlanta, Ga., for plaintiff.
Donald B. Sweeney, Jr., Rives & Peterson, Birmingham, Ala., for Leeds Excavating & Paving Co.
James E. Hill, Jr., Leeds, Ala., for William & Annie Bell Fleming.
Jack E. Held/Charles R. Driggars, Sirote Permutt Friend Friedman Held Apolinsk, Birmingham, Ala., for ILCO, Inc., and Maffei.
Charles A. Graddick, Atty. Gen., David A. Ludder, Asst. Atty. Gen., Ala. Dept. of Environmental Management Office of Gen. Counsel, Montgomery, Ala., for Non-parties, State of Ala. and the Ala. Dept. of Environmental Management, Proposed plaintiff intevenors.
On March 18, 1985, plaintiff United States of America (U.S.) filed a complaint against: (1) ILCO, Inc., a/k/a Interstate Lead Company, Inc. (ILCO)—the owner and operator of a secondary lead smelting and lead battery recycling facility in Leeds, Alabama, and also is the debtor in an ongoing Chapter 11 bankruptcy proceeding styled In Re ILCO, Inc., BK-82-04836-S, which proceeding was commenced in the bankruptcy court for this court on August 20, 1982; (2) Diego Maffei (Maffei)—the president and chief operating officer of ILCO; (3) William and Annie Bell Fleming (Flemings)—the owners of the property referred to as the Fleming's Patio site, which serves as one of ILCO's off-site disposal grounds; and (4) Leeds Excavating and Paving Company, Inc., (Leeds)—the transporter of ILCO's "hazardous" wastes to two off-site disposal grounds, the Fleming's Patio site and a site referred to as the Church of God site.
The first three claims of the complaint seek prohibitory injunctive relief against ILCO and Maffei relating to regulatory violations of the Clean Water Act (CWA) and the Resource Conservation and Recovery Act (RCRA). In summary, the First Claim alleges that defendants ILCO and Maffei have violated the CWA by discharging lead-contaminated wastewater (a) since March, 1984, without a valid National Pollutant Discharge Elimination System (NPDES) permit, (b) at locations not approved of in an earlier issued but now expired permit, (c) with contamination levels above the expired permit's approved levels, and (d) in violation of the expired federal permit's reporting requirements. Under 33 U.S.C. § 1319(a)(3), the U.S. seeks to enjoin Maffei and ILCO from continuing to discharge pollutants into the water unless and until these defendants obtain a valid NPDES permit. The Second Claim and Third Claim allege that defendants ILCO and Maffei have violated provisions of the RCRA by: (a) failing to identify certain waste activities and units in ILCO's November 19, 1980 application seeking qualification as an "interim status" hazardous waste facility, and by maintaining and operating those unidentified units without a permit; (b) violating both state and federal interim status regulations regarding activities which were conducted pursuant to a permit;1 and (c) releasing hazardous wastes into the environment at the ILCO site. The U.S. apparently discovered most of these RCRA violations as a result of several site inspections conducted at various times in 1983, 1984 and 1985. The U.S. explains that it did not inspect the ILCO facility at earlier dates because ILCO notified state authorities that it had shut down operations at the ILCO plant in February of 1981, and never notified the state that it had resumed operations. Pursuant to 42 U.S.C. § 6928(a) (Second Claim) and § 6928(h) (Third Claim), the U.S. seeks to enjoin Maffei and ILCO from continuing to commit the three RCRA violations listed above.
The Fourth Claim and Fifth Claim of the complaint seek mandatory injunctive relief pursuant to provisions of the RCRA and Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). These claims focus on the EPA's determination that the Fleming's Patio site and the ILCO site may present an imminent and substantial endangerment to public health and the environment. Under 42 U.S.C. § 6973 (Fourth Claim) and § 9606 (Fifth Claim), the U.S. seeks an order requiring (a) Maffei and ILCO to remedy the dangerous conditions at both sites pursuant to RCRA (Fourth Claim) and CERCLA (Fifth Claim), (b) defendants Flemings and Leeds to remedy the dangerous conditions at the Fleming's Patio site pursuant to RCRA (Fourth Claim), and (c) the Flemings to remedy the dangerous conditions at the Fleming's Patio site pursuant to CERCLA (Fifth Claim).
Proceeding under 42 U.S.C. § 9607(a), the Sixth Claim seeks money damages from Maffei pursuant to CERCLA, for costs incurred by the U.S. in cleaning up the Church of God site.
Along with the complaint, the U.S. filed a motion for a preliminary injunction and a "Motion for Referral to a United States District Judge." On that same day, March 18, 1985, the State of Alabama and the Alabama Department of Environmental Management filed both a motion to intervene as plaintiffs and a proposed intervenor's complaint, in which the proposed intervenors accuse Maffei and ILCO of maintaining a continuing public nuisance and of violating the Federal Water Pollution Control Act (FWPCA), the Alabama Water Pollution Control Act (AWPCA), the RCRA, and the State's Hazardous Wastes Management Act of 1978 (HWMA). The proposed intervenor's complaint seeks injunctive relief and seeks assessment of civil penalties.
Prior to ruling on the State's motion and setting this case for a preliminary injunction hearing, this court issued an order dated March 22, 1985, notifying the parties and proposed intervenors that it would treat the U.S.'s "Motion for Referral to a United States District Judge" as a motion under 28 U.S.C. § 157(d) for withdrawal of a reference to bankruptcy court and directing the parties to submit briefs addressing the following issues:
(1) What aspect, if any, of the March 18, 1985 complaint is presently referred to the bankruptcy court as a result of the General Order of Reference entered in this court July 16, 1984, (2) what aspect, if any, of the March 18, 1985 complaint which arguably is referred to the bankruptcy court should this court withdraw under § 157(d), and (3) the effect, if any, of the § 362 stay on the respective parties and issues embodied in the complaint?
On April 30, 1985, the State was granted leave to file a brief addressing the bankruptcy issues identified in the March 22, 1985 order. All briefs have been received and the matters raised by the pending motions and by the March 22, 1985 order are ripe for resolution.
Under the 1984 Bankruptcy Amendments the federal district court has original but not exclusive jurisdiction of "all civil proceedings arising under title 11, or arising in or related to cases under title 11." 28 U.S.C. § 1334. Pursuant to 28 U.S.C. § 157(a), a federal district court judge has discretion to refer to the bankruptcy judge "any or all cases under title 11 and any or all proceedings arising under title 11 or arising in or related to a case under title 11." On July 16, 1984, The United States District Court for the Northern District of Alabama issued a general order of reference automatically referring to the bankruptcy judges for the district "all cases under title 11 and all proceedings arising under title 11 or arising in or related to a case under title 11." (emphasis added).
The Bankruptcy Code does not define "related to" nor does it provide any guidance as to what types of actions are considered "related to" a case under title 11. The U.S. and ILCO now agree that this case is a related proceeding subject to the general reference solely because ILCO, a named defendant in the instant litigation, is a debtor in an ongoing Chapter 11 reorganization. The State, however, contends that a case is not subject to the automatic reference unless the outcome of that case directly affects the bankruptcy proceeding. Under the State's rationale, the relief sought by it and the U.S. will not directly affect ILCO's bankruptcy case—only an attempt to enforce a judgment would affect the bankruptcy case.
The Chapter 11 reorganization of debtor ILCO could, and most likely will be greatly affected by a grant or denial of the injunctive relief sought by the U.S. in this case. As a result, this case certainly relates to that title 11 case. Broad construction of the phrase "related to" is consistent with Congressional intent because of the withdrawal provision. Any inequities in a broad construction can be corrected by the permissive withdrawal provisions of 28 U.S.C. § 157(d). Consequently, this court concludes that this entire case, at the time of its filing, was subject to automatic reference and was in fact referred by the July 16, 1984 order to the bankruptcy judges, thereby becoming an adversary proceeding in the title 11 case.
28 U.S.C. § 157(d) provides:
The district court may withdraw, in whole or in part, any case or proceeding referred under this section, on its own motion or on timely motion of any party, for cause shown. The district court shall, on timely motion of a party, so withdraw a proceeding if the court determines that...
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