Today’s Topics

1. Today’s Topics Environmental Protection Exporting “Dirty” Industries Bizarre interactions in American Law

2. The Lawrence Sumers Memo • Group Work • Group Reports and Analysis

3. Bizarre Interactions in American Law • Bankruptcy Protection vs. Environmental Protection • My research interests

4. Bankruptcy Protection • Bankruptcy is an Article One power of Congress • Bankruptcy serves important social and economic goals • Risk allocation and management • Clean slate, fresh start • Most debts are discharged

5. Environmental Obligations • C.E.R.C.L.A, Superfund, R.C.R.A. etc impose financial liability for environmental damage • Whoever makes the mess pays to clean it up

6. There is a conflict between the goals of a clean slate and a clean site

7. However, • Bankruptcy law sometimes allows a polluting debtor to discharge the financial obligations for the cleanup. • Bankruptcy law thus undercuts environmental protection • “Dump on it then dump it” as a business strategy

8. 4 Specific Problem Areas • When does a claim arise? • Are injunctions dischargeable? • Who has to look for a possible claim and when? • Can contaminated property be abandoned?

9. Abandonment • The Bankruptcy Code allows the trustee to abandon some property • § 554(a)-- After notice and hearing, the trustee may abandon any property of the estate that is burdensome to the estate or that is of inconsequential value and benefit to the estate

10. Can a trustee abandon a hazardous waste site?

11. The Supreme Court Speaks • Midlantic National Bank v. New Jersey Dept. of Environmental Protection 474 U.S. 494 (1986)

12. Facts— • Quanta resources sought to abandon property contaminated with waste oil (470,000 gallons at 2 sites) • Bankruptcy Court and Federal District Court allow abandonment • Court of Appeals (3rd Circuit) disallows abandonment • Supreme Court disallows abandonment in 5-4 decision • Rehnquist’s dissent

13. Rationale in Midlantic • No abandonment contravening state health laws • i. § 554 codifies pre-Code law on abandonment • ii. Other Code sections are subordinate to state health laws • iii. Bankruptcy estate must be operated in compliance with state and federal la • iv. Congress recognizes the importance of environmental protection

14. A troublesome footnote: • The abandonment power is not to be fettered by laws or regulations not reasonably calculated to protect the public health or safety from imminent and identifiable harm.

15. Rehnquist’s Dissent • The language of § 554 is absolute • No textual basis for applying pre-Code law • No basis for importing restrictions used elsewhere • A tortured reading of the requirement to comply with state and federal laws • Ignores economic and property rights of secured creditors

16. Majority Powell Blackmum Marchall Brennan Stevens Dissent Rehnquist Burger White O’Connor Voting Pattern in Midlantic

17. Majority Powell (Kennedy) Blackmum (Breyer) Marchall (Thomas) Brennan (Souter) Stevens Dissent Rehnquist (Scalia) Burger (Rehnquist) White (Ginzburg) O’Connor Changes since Midlantic

18. Recent Lower Court Decisions Interpreting Midlantic • Abandonment allowed absent a showing of immanent harm • Abandonment allowed despite apparent immanent harm • Bankruptcy court gets to decide whether there is immanent harm • Weak state laws, or lax enforcement, justify finding of no immanent harm

19. Cases disallowing abandonment absent a showing of immanent harm • Why these lower court decisions matter

20. Trends in the Supreme Court • The doctrine of legislative supremacy • i. Legal positivism and legislative supremacy • ii. Article I § 8 clause 4 of the ConstitutionCongress shall have the power to . . . establish an uniform rule of naturalization, and uniform laws on the subject of bankruptcies throughout the United States. iii. Article VI, Supremacy Clause issues

21. The ‘plain meaning’ approach to Code interpretation • The re-emergence of Takings Clause jurisprudence • i. The new importance of property rights • ii. The Lucas decision • Personnel changes and voting patterns