US v. Hubler, Civ. A. No. 88-2105.
| Citation | 117 BR 160 |
| Decision Date | 08 June 1990 |
| Docket Number | Civ. A. No. 88-2105. |
| Parties | UNITED STATES of America, Plaintiff, v. Harold R. HUBLER, individually, and Leon G. Taylor, individually, and Harold R. Hubler and Leon G. Taylor, d/b/a H & T Coal Company, a partnership, and H & T Coal Company, a partnership, Defendants. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
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Jan Bellhy, Kimberly Gilmore and Janet A. Goodwin, Sp. Asst. U.S. Attys., U.S. Dept. of the Interior, Office of the Sol., Pittsburgh, Pa., for plaintiff.
Harold Huber, Osceola Mills, Pa., John Carfley, Philipsburg, Pa., for defendants.
Presently before this Court are motions for summary judgment filed by both parties. In ruling on a motion for summary judgment, this Court must examine the facts in the light most favorable to the party opposing the motion. International Raw Materials, Inc. v. Stauffer Chemical Co., 898 F.2d 946, 949 (3d Cir. 1990). Summary judgment may be granted only if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits . . . show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R. Civ.P. 56(c).
The facts of this case, as seen in a light most favorable to the respective non-movant, are as follows. Defendants Harold R. Hubler and Leon G. Taylor were co-partners doing business under the name H & T Coal Company (H & T). H & T operated a surface coal mining operation in Clearfield County, Pennsylvania, which was permitted by the State of Pennsylvania. On December 11, 1980, the mine was inspected by representatives of the Secretary of the Interior (Secretary) who discovered that the mine site was in violation of 30 U.S.C. § 1272(e)(4) because mining operations were being conducted within 100 feet of a public road without approval of the state. The Secretary issued a Notice of Violation (NOV) which required H & T to either obtain state approval for mining in the unpermitted area or backfill and regrade the area to achieve its approximate original contour and then seed the area during the next planting season. The NOV set a time for compliance of February 17, 1981. The NOV was sent to H & T by certified mail, and was accepted by Theresa Hubler, wife of defendant Hubler. On February 17, 1981, the Secretary modified the NOV, setting a new compliance date of March 19, 1981. On March 23, 1981, a representative of the Secretary inspected the mine site and determined that H & T had not complied with the NOV. The Secretary thus issued a Cessation Order (CO) on March 30, 1981, which required H & T to either obtain a state permit for mining the area within 100 feet of the public road or backfill and regrade the area to achieve its approximate original contour and then seed the area during the next planting season. The CO was sent to H & T by certified mail, and was received by D.E. Colley, an authorized agent of H & T. Neither H & T nor the individual defendants sought administrative review of the NOV or CO. The wrongfully mined area has not been reclaimed by H & T or the individual defendants since issuance of the CO. Defendants' failure to reclaim their permitted mining site resulted in the forfeiture of approximately $40,000 in bonds to the Pennsylvania Department of Environmental Resources.
On February 18, 1981, defendants Hubler and Taylor, individually and doing business as H & T Coal Company, filed a Chapter 11 bankruptcy petition. Defendant Hubler then filed an individual Chapter 11 petition on March 27, 1981, and defendant Taylor filed an individual Chapter 11 petition on April 13, 1981. The defendants' Chapter 11 petitions were subsequently converted to Chapter 7 petitions. Defendants Hubler and Taylor were discharged in bankruptcy on February 21, 1985.
The United States filed the present action seeking, inter alia, an injunction compelling defendants to comply with their obligations under the CO. Both parties have filed motions for summary judgment which are presently before this Court. Plaintiff contends that no issues of material fact exist and it is entitled to judgment as a matter of law. Defendants contend that their obligations under the CO were discharged by their bankruptcies, so judgment should be entered in their favor.
This Court has jurisdiction to entertain the present dispute pursuant to 30 U.S.C. § 1271(c) and 28 U.S.C. §§ 1331, 1345. Personal jurisdiction is proper as all defendants are citizens of this district. Venue is proper because the surface mining site is located in this district. 30 U.S.C. § 1271(c).
Defendants state that plaintiff is not the proper party to bring the present action. Defendants claim that only the State of Pennsylvania is authorized to pursue a remedy for defendants' conduct. Defendants misconstrue the Surface Mining Control and Reclamation Act (SMCRA). Under the SMCRA, both the federal government and the State of Pennsylvania share enforcement responsibility. 30 U.S.C. § 1253(a). The federal government is expressly authorized to institute a civil action whenever a mine or mine operator violates or fails or refuses to comply with a cessation order. 30 U.S.C. § 1271(c).
Defendants argue that the clean-up obligations imposed on them by the CO have been discharged in bankruptcy. The plaintiff responds that the obligations imposed by the CO are not "claims" under the Bankruptcy Code, and consequently were not discharged by defendants' bankruptcies.
A discharge in bankruptcy discharges the debtor from all debts that arose before bankruptcy unless the debt meets one of the nine specific exceptions to discharge specified in 11 U.S.C. § 523(a). Plaintiff does not contend that defendants' obligations pursuant to the CO fall within one of the nine exceptions to discharge. A "debt" is defined under the Code as liability on a claim. 11 U.S.C. § 101(11). A "claim" is defined as a:
11 U.S.C. § 101(4). The issue contested by the parties in this case is whether the CO gives rise to a right to payment.
The issue of whether an equitable order requiring a party to engage in affirmative acts to clean up the environment gives rise to a right to payment, and is thus dischargeable, was considered by the Supreme Court in Ohio v. Kovacs, 469 U.S. 274, 105 S.Ct. 705, 83 L.Ed.2d 649 (1985). The Kovacs Court determined that where a state attempts to recover clean-up costs from a polluter, this type of debt is dischargeable in bankruptcy. However, the Court repeatedly emphasized that its holding is limited to situations where a clean-up order is "converted into an obligation to pay money." Id. at 283, 105 S.Ct. at 710. The Court strongly implied that equitable orders which demand performance and which cannot be satisfied merely by making a monetary payment to the governmental body which issued the order are not dischargeable in bankruptcy. In this regard, the Court expressly approved the Court of Appeals for the Third Circuit's decision in Penn Terra Ltd. v. Department of Environmental Resources, 733 F.2d 267 (3d Cir.1984).
In Penn Terra, the Court of Appeals held that an injunction which required the defendant to restore land which had been surface mined was not stayed by the bankruptcy automatic stay provision, 11 U.S.C. § 362. The injunction required the defendant to backfill and grade a surface mine, submit erosion plans, seal a deep mine, remove the top strata over a gas line, and complete top soil spreading, mulching, and seeding. The Court held that the injunction was not subject to the automatic stay because the injunction did not constitute a money judgment. The injunction was not a money judgment because:
It was not intended to provide compensation for past injuries. It was not reduceable to a sum certain. No monies were sought by the Commonwealth as a creditor or obligee. The Commonwealth was not seeking a traditional form of damages in tort or contract, and the mere payment of money, without more, even if it could be estimated, could not satisfy the Commonwealth Court\'s direction to complete the backfilling, to update erosion plans, to seal mine openings, to spread top soil, and to implement plans for erosion and sedimentation control. Rather, the Commonwealth Court\'s injunction was meant to prevent future harm to, and to restore, the environment.
The Supreme Court characterized the injunction in Penn Terra "as an effort to enforce the police power statutes of the state, not a suit to enforce a money judgment." Kovacs, 469 U.S. at 283 n. 11, 105 S.Ct. at 710 n. 11. The Court stated that "the automatic stay provision does not apply to suits to enforce the regulatory statutes of the state, but the enforcement of such a judgment by seeking money from the bankrupt . . . is another matter." Id.
Although Penn Terra involved the automatic stay provision of the Bankruptcy Code whereas the present case involves the question of discharge, Penn Terra demonstrates that a clean-up order does not constitute a right to a money payment merely because the enjoined party will be forced to expend money when fulfilling its clean-up obligations. The Supreme Court's approval of Penn Terra shows that the Court limited its holding in Kovacs to mean a clean-up obligation is discharged only in the situation where monetary payment is the relief sought from the...
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