Amicus Curiae Brief — O'Neill v. City of New York, 105 S. Ct. 2110 (1985) (No. 84-805)

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4) fo) Supreme Court, U.S.

Uy \\ J wate eS.

Nos. 84-801 and 84-805 JUN 7 1985

Iu the Supreme Court of the

OCTOBER TERM, 1984

nite Staten EVAS |

MIDLANTIC NATIONAL BANK, PETITIONER

Vv.

NEW JERSEY DEPARTMENT OF

ENVIRONMENTAL PROTECTION

THOMAS J. O’NEILL, TRUSTEE IN BANKRUPTCY OF

QUANTA RESOURCES CORPORATION, DEBTOR, PETITIONER

Vv.

CiTy OF NEW YORK, ET AL.

ON WRITS OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE THIRD CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS

CURIAE SUPPORTING RESPONDENTS

| CHARLES FRIED

‘> Acting Solicitor General

Ss F. HENRY HABICHT II

Assistant Attorney General

Loulis F.. CLAIBORNE

Deputy Solicitor General

KATHRYN A. OBERLY

Assistant to the Solicitor General

NANCY B. FIRESTONE

DIRK D. SNEL

JEFFREY P. MINEAR

Attorneys

Department of Justice

Washington, D.C. 20530

(202) 633-2217

gE I, I a a ED aw \

cme

QUESTION PRESENTED

Whether a bankruptcy trustee’s power to abandon prop-

erty that is a financial burden to the bankruptcy estate

is subject to generally applicable law safeguarding public

health and safety.

(I)

TABLE OF CONTENTS

Interest of the United States ....................-------------sseeee

I, s_sesssttabihbbaecsinecannanenninentineesteTeanenieten

Summary of argument ..................-.------------seeeeseeeeeeeeeeteneeeey

Argument:

A bankruptcy trustee’s abandonment of hazardous

wastes and related property is subject to generally

applicable law safeguarding public health and

A bankruptcy trustee must administer the bank-

ruptcy estate in compliance with federal and

state non-bankruptcy law unless the Bankruptcy

Code, by its express terms or necessary implica-

tion, displaces or preempts the otherwise appli-

OI a erlcctennenninserrenmesenennetinasnnsentions

Section 554 of the Bankruptcy Code, which au-

thorizes the trustee to abandon financially bur-

densome property, does not preempt generally

applicable laws safeguarding public health and

TTI ..:icesiiunieniabuionttametediactimessansneitininmnmaamnetanpeaintsees

New Jersey and New York public nuisance law

limits the trustee’s authority to abandon haz-

ardous waste and related property ........................

State law limitations on the trustee’s abandon-

ment power do not threaten a taking of creditors’

ID GID ccccccceceresenmmocesseveenuneesecsvopncoesseenseeesters

EE FE a i aa ea

Cases:

TABLE OF AUTHORITIES

Adelphi Hospital Corp., In re, 579 F.2d 726.............

American File Co. v. Garrett, 110 U.S. 288 -..........

American Surety Co. v. Sampsell, 327 U.S. 269 ......

(mI)

ao WwW

Cases—Continued : Page

Austrian v. Williams, 216 F.2d 278, cert. denied,

BR is I vcsicsscicsicslannncnccnnisssecunsiinbbidepeieidianbibieainihiaaacanines 10

Beauchamp v. New York City Housing Authority,

gS 6 Pe Aree oe rere 23, 26

Black v. Cutter Laboratories, 351 U.S. 292 ............ 22

Brown Vv. O’Keefe, 300 U.S. 598 ....................------------ 24

CFTC v. Weintraub, No. 84-261 (Apr. 29, 1985).... 8, 11

Cady v. Dombrowski, 413 U.S. 433 -...............22..-.---- 23

Chicago, R.I. & P. R.R., In re, 756 F.2d 517 .......... 21, 24

Chicago Rapid Transit Co., In re, 129 F.2d 1, cert.

I Se SN vi licrinceiniasensintniiiinnenninnitl 13, 16, 17, 18

City of Milwaukee v. Illinois, 451 U.S. 304 _............ 18

Commonwealth vy. Barnes & Tucker Co., 472 Pa.

115, 371 A.2d 461, appeal dismissed, 434 U.S.

PERSE SCR ren oe) Smee AY Be cos BIE EN YR nr a CET 23

Crawford Vv. Duluth St. Ry., 60 F.2d 212 .......00........ 13

Davis v. Gray, 83 U.S. (16 Wall.) 203 —.................. 11

Decker v. Jones, 194 Kan. 146, 398 P.2d 325 _........ 23

Dushane v. Beall, 161 U.S. 518 ............................2-.-- 19

Edmonds v. Compagnie Generale Transatlantique,

SRA EE Sas Ey Paper one nen nee e 15

Erie R.R. v. Tompkins, 304 U.S. 64 .............-2.2-2....2--- 21

First National Bank v. Lasater, 196 U.S. 115 ~....... 19

Gite V. Cabiformit, BBB UB. GB ..........0ccccecesecesescseeess 14

Glenny v. Langdon, 98 U.S. 20 ..................-.-0----0--0-22- 19

Hawaii Housing Authority v. Midkiff, No. 83-141

i iecenaliuninnel 8

Lawton V. Steele, 162 U.S. 188........................00020000000- 8, 22

Lewis Jones, Inc., In re, 1 Bankr. Ct. Dec. (CRR)

a a 17, 21

Lorillard ¥. Pons, 484 U.S. 876 ................................ 16

Massachusetts Society for the Prevention of

Cruelty to Animals v. Commissioner of Public

Health, 339 Mass. 216, 158 N.E.2d 487 -............... 23

McHenry v. La Scciete Francaise D’Epargnes, 95

ON 19

Merrill Lynch, Pierce, Fenner & Smith, Inc. Vv.

I Ti ich radii ciidteestiaiiiicedsieintnnes 16

Missouri v. United States Bankruptcy Court, 647

F.2d 768, cert. denied, 454 U.S. 1162 -................ 13-14

Cases—Continued : Page

Mugler v. Kansas, 123 U.S. 628 ............--------------+---- 8

Murphy v. United States, 272 U.S. 630 -..................- 22

NLRB Vv. Bildisco & Bildisco, No. 82-818 (Feb. 22,

STITT sonia cleanin bebtlininbanasaimipeonarcmniental 9, 18, 27

National Farmers Union Ins. Cos. v. Crow Tribe

of Indians, No. 84-320 (June 3, 1983) -.......... ..... 21

New York Trap Rock Corp. v. Town of Clarkstown,

fh & & ft f | 5 EE 22

Ohio v. Kovacs, No. 83-1020 (Jan. 9, 1985)........ 1, 9, 20, 24

Otte v. United States, 419 U.S. 48 ........................---. 9

Ottenheimer v. Whitaker, 198 F.2d 289, aff’g in

re Eastern Transp. Co., 102 F. Supp. 913 ......... 16, 17, 18

Ozone Holding Corp. v. City of New York, 79

Misc.2d 744, 361 N.Y.S.2d 558 .....................---...---- 23

Palmer v. Massachusetts, 308 U.S. 79 -................. 9, 13, 20

Paterson v. Farao Realty Inc., 174 N.J. Super.

Os A I SI i cniaceriaieamnebeneeesneaanenisas 25

Penn Terra, Ltd. v. Dep’t of Environmental Re-

Tae 9-10

Perez v. Campbell, 402 U.S. 687 ....................---.------- 10

Price v. City of Junction, 711 F.2d 582 .................... 23

Reading Co. v. Brown, 391 U.S. 471 .......................-. 24, 26

Reiter v. Sonotone Corp., 442 U.S. 330 _.................. 10

Skinner v. Coy, 13 Cal.2d 407, 90 P.2d 296 _............. 23

Smith v. Gordon, 22 Fed. Cas. 554 (No. 13,052) ..... 19

Southern Ry. v. Johnson Bronze Co., 758 F.2d 137.. 28

Sparhawk v. Yerkes, 142 USS. 1 ..............----.-2--0+++-++ 11

State v. Monarch Chemicals, Inc., 90 A.D.2d 907,

P 8 | EREEESOPERE SESS ce ee oe eT ON 22

State v. Schenectady Chemicals, Inc., 117 Misc.2d

960, 459 N.Y.S.2d 971, aff'd, 103 A.D.2d 33, 479

ds euiiieimmsnaianeibaae 25

State v. Ventron Corp., 94 N.J. 473, 468 A.2d 150... 22

State v. Waterloo Stock Car Raceway, Inc., 96

Misc.2d 350, 409 N.Y.S.2d 40 ................................ 26

State ex rel. Board of Health v. Sommers Render-

ing Co., 66 N.J. Super. 334, 169 A.2d 165 _.......... 22

Swarts v. Hammer, 194 U.S. 441 .....................--.------ 9, 20

T. P. Long Chemical, Inc., In re, 45 Bankr. 278..... 28

Touro Synagogue Vv. Goodwill Industries, Inc., 233

FS & } 3 Fane 23

Cases—Continued : Page

United States v. Security Industrial Bank, 459 U.S.

es icmnieeiabaiaiadiniiasanmianinnaias 28

United States v. Waste industries, Inc., 734 F.2d

ESE rere speee ec NO Ne Te om 26 .

Vermont Real Estate Investment Trust, In re, 25

ee To cceesineeseunnenibaeneiniiontan 24, 25

Village of Euclid vy. Ambier Realty Co., 272 U.S.

i o siacsinauessunnenassaaiainiadie 8

Constitution, statutes and rule:

i, I go icecntittntinteniidaiwwininiimmnnisinneninns 28, 29

Act of Mar. 3, 1887, ch. 373, § 2, 24 Stat. 554 _...... 11, 12

Act of Mar. 3, 1911, ch. 231, § 65, 36 Stat. 1104... 12

Bankruptcy Act of 1867, ch. 176, 14 Stat. 517 et

seq. (repealed by Act of June 7, 1878, ch. 160,

FN OE ED ccccccnecinsvirnerenicetutiennssenionetossnssenes

Clean Air Act, 42 U.S.C. 7401 et seq. ............--.---------

Clean Water Act of 1977, 33 U.S.C. 3251 et seq. -...

Comprehensive Environmental Res vnse, Compen-

sation, and Liability Act of 1980, 42 U.S.C. 9601

I y eeeee eis ceercensiettnncineinniinieenainiatanahimana eC

48 US.C. 9601 (2B) .q.....--..-----...-22-..-0ccce-eedincs-eseee-

| eee

I ssicestsnamessnmtomineisnnntiansen

PE CR | | een

£6) ee 7

8) ee

RE | eee

TB te oo

PB et | eee

BB UBC. GEBI ..-.--02---22200-coccccnsccccessnccesennsncenvscsese

Judiciary Act of 1948, ch. 646, § 959(b), 62 Stat.

DOT a casncncsnnasesnennnacoenensnssnsncesnerseenscesesesstnsncosssnsnsnsosones 12

Resource Conservation and Recovery Act of 1976,

Se ee I (TI, os scsnsresemmnneieasoentpnnensinseninens 2, 25

I 2

Pet) ee 2

2) 0 | 2

nm Ww WY

worm wh awn wo i)

PR ee

GB TTB. GUO eeectteccerencevesscnvesnsastsssonnssesennsasesene

Vil

Constitution, statutes and rule—Continued : Page

Toxic Substances Control Act, 15 U.S.C. 2601 et

WT... <.cocssnnemanchitsansaiissainnmasietianniniamiiaieinesminene seems 2

Pub. L. No. 91-354, 84 Stat. 468-469 0... 15

Pub. L. No. 98-353, 98 Stat. 333 et seq. -................... 5

ee GD oo cissesesnenneseentoninesnnnnniies 11

5 U.S.C. App. 202 (f) (3) (C) (i) ~..-----.----------ee eens 11

I cic cenliidbamnsonseenniamnonniemnients 19

a sehen NnGnENDD 13, 28

a epesianatenbaneeeianel 27

Be PD ccccrecesccesesncesensnes AERA ARN PANS 28, 29

I __._.seenniaiiinianesenpetiemabnneiesbenianiitl passim

I... cnicapicesnniocnsenenineunieneninnunénieininmnttes 5

11 U.S.C. 554 note ..».............................-- oe tee ace 5

| TITAN ae ne Tn a aE 24

i eeicmbiuiaianaine 5

Sac cdemnliatenleiidebiiiniet 28

| EAE ae nan ene ee an 28

OIL, ssccerineeetniaieiiianiominedbinets 2

I o_o sseennissnalgnnetaniaiiausnansennetils 12, 17

I III... cncenmneannbeanedines a laen acai 10

ft | eens 6, 10, 11, 12, 18, 14, 17, 18

I cli alellamia 11

oc scisscenrecncnsenenennpoanecssnens 11

I a asliannlincctinieit 11

N.J. Stat. Ann. (West 1982) :

IIIT x sinsscsitenighiasinsenpnienilbcninuinsedeenpienetitndetmentstinns 22

IIIT scr ninceeesensinaneempeencieninonanesion 22

N.Y. Penal Law § 240.45 (McKinney 1982) _........ 22

Bankruptcy Rule 608 advisory committee note 11

a ANI IIE seca ceoantsnpaepeneiedenineosiatbinatinesane 15

Miscellaneous: Page

A Bankrupt’s Onerous Property, 53 The Justice

of the Peace 339 (London, June 1, 1889) ............. 19

3 R. Clark, The Law and Practice of Receivers

I i ss ec eatihbellainbschithininetasianneenit 11, 12

Collier on Bankruptcy:

PERRET rene neers 12

, CT enna 15

LL 16, 19

VIII

Miscellaneous—Continued :

18 Cong. Rec. 2542-2543 (1887) -............--------------

G. Glenn, The Law Governing Liquidation (1935)...

H.R. Misc. Doc. 45, 49th Cong., 1st Sess. (1886)......

H.R. Rep. 308, 80th Cong., 1st Sess. (1947) .........---

H.R. Rep. 95-595, 95tn Cong., 1st Sess. (1977) .......

Hennigan, Accommodating Regulatory Enforce-

ment and Bankruptcy Protection, 59 Am. Bankr.

ee), $e ecaen

7 Moore’s Federal Practice, Pt. 2 (2d ed. 1985)......

Note, Abandonment of Assets by a Trustee in

Bankruptcy, 53 Colum. L. Rev. 415 (1953) ........

Prosser & Keeton on Torts (W. Keeton 5th ed.

| ee ne

2 H. Remington, A Treatise on the Bankruptcy

Law of the United States (1956) -..............-..-.----.

Report of the Commission on the Bankruptcy Laws

of the United States, H.R. Doc. 93-137, 93d Cong.,

1st Sess., Pt. 2 (1978) .......... Sree OTL Ne OE eR

Restatement (Second) of Torts (1979) -.................

Restatement (Second) of Trusts (1959)..................

Ringwood, The Disclaimer of Onerous Property in

Bankruptcy, 82 The Law Times 142 (London,

| ee

S. Misc. Doc. 19, 49th Cong., 2d Sess. (1886) ......

S. Misc. Doc. 7, 50th Cong., Ist Sess. (1887) -........

S. Misc. Doc. 44, 50th Cong., Ist Sess. (1888) .......

S. Rep. 98-284, 98th Cong., Ist Sess. (1984) .... ......

Securities and Exchange Commission Report on the

Study and Investigation, Personnel and Funce-

tions of Protective and Reorganization Commit-

tees: Strategy and Techniques of Protective and

Reorganization Committees, Pt. 1 (May 10,

1937) (reprinted in part in H.R. Rep. 95-595,

fe ae Rb ) ee

19, 20

22, 26

Iu the Supreme Court of the United States

OCTOBER, TERM, 1984

No. 84-801

MIDLANTIC NATIONAL BANK, PETITIONER

NEW JERSEY DEPARTMENT OF

ENVIRON MENTAL PROTECTION

No. 84-805

THOMAS J. O’NEILL, TRUSTEE IN BANKRUPTCY OF

QUANTA RESOURCES CORPORATION, DEBTOR, PETITIONER

Vv.

CITY OF NEW YORK, ET AL.

ON WRITS OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE THIRD CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS

CURIAE SUPPORTING RESPONDENTS

INTEREST OF THE UNITED STATES

The reach of the Bankruptcy Code is once again tested

by the financial distress of a debtor that handled hazard-

ous wastes. Compare Ohio v. Kovacs, No. 83-1020 (Jan.

9, 1985). The question presented in this case, whether

(1)

the trustee of a bankrupt company may abandon finan-

cially burdensome hazardous wastes and related property

free from state law constraints, implicates multi-faceted

federal concerns. As an initial matter, the United States

administers the Bankruptcy Code’s pilot program for

United States Trustees. See 11 U.S.C. 1501 et seg. The

United States thus recognizes the trustee’s central and,

indeed, essential role under the Code and has a funda-

mental interest in this Court’s interpretation of the trus-

tee’s abandonment power. But the United States also en-

forces a broad range of public health and welfare stat-

utes! and is therefore attentive to the states’ legitimate

rights to protect the health and safety of their citizenry.

Federal environmental statutes, although not at issue in

this case, typically complement state laws and frequently

are implemented through a federal-state partnership,’

embrace basic principles of federalism and rely heavily

on the states’ exercise of traditional police powers.

The United States has a particularly acute interest in

this case on account of its activities at the debtor’s waste

site in Edgewater, New Jersey. The United States En-

vironmental Protection Agency, recognizing that the Edge-

water site poses a serious risk to public health and safety,

has initiated an emergency removal action under Section

104 of the Comprehensive Environmental Response, Com-

pensation, and Liability Act of 1980 (CERCLA), 42

U.S.C. 9604, to alleviate immediate public health risks at

1E.g., Clean Water Act of 1977, 33 U.S.C. 1251 et seq.; Clean

Air Act, 42 U.S.C. 7401 et seg.; Toxic Substances Control Act, 15

U.S.C. 2601 et seg.; Resource Conservation and Recovery Act of

1976, 42 U.S.C. 6901 et seq.; and Comprehensive Environmental

Response, Compensation, and Liability Act of 1980, 42 U.S.C. 9601

et seq.

2 See, e.g., Resource Conservation and Recovery Act of 1976, 42

U.S.C. 6921, 6926, 6929, 6931; Comprehensive Environmental Re-

sponse, Compensation, and I dability Act of 1980, 42 U.S.C. 9604(c)

and (d), 9605, 9611 (f), 9614.

the site.* EPA also is contemplating actions for reim-

bursement of its cleanup costs from potentially respon-

sible parties.

STATEMENT

Quanta Resources Corporation, a Delaware corporation

formed in March 1980, operated three waste oil recovery

facilities located, respectively, in Edgewater, New Jersey;

Long Island City, New York; and Syracuse, New York.

Environmental conditions at the Edgewater and Long

Island City facilities are at the center of the present

dispute.

Quanta acquired the Edgewater facility in July 1980

through the purchase of the assets of Edgewater Termi-

nals, Inc. By that purchase, Quanta received a lease of

the underlying real property, outright ownership of the

facility and its inventory, and an assignment of the tem-

porary permit issued by the New Jersey Department of

Environmental Protection (NJDEP). On June 3, 1981,

petitioner Midlantic National Bank (Midlantic) provided

Quanta with a $600,000 working capital loan secured by

Quanta’s inventory, accounts receivable, and certain

equipment.

Quanta acquired the Long Island City facility through

the purchase of the assets of Hudson Oil Refining Cor-

poration. By that purchase, Quanta acquired an owner-

3 EPA became involved at the site following an April 18, 1984,

request from the New Jersey Department of Environmental Pro-

tection for application of “Superfund” monies, see 42 U.S.C. 9631,

available under CERCLA, see 42 U.S.C. 9604, 9611, to institute an

immediate removal of hazardous materials from the site. EPA,

acting on an investigation by its Regional Office and a review by

the Centers for Disease Control, concluded that the site posed an

immediate risk of harm to public health and welfare and authorized

the expenditure of $4,460,000 to commence removal actions. See

42 U.S.C. 9601(23). Copies of New Jersey’s April 18, 1984, funding

request, the EPA Regional Office’s January 25, 1985, action memo-

randum, the Centers for Disease Control’s March 24671985, hazard

determination, and EPA’s approval memorandum have been lodged

with the Court.

ship interest in the real property (subject to two mort-

gages totalling $454,464), the facility, and its inventory.

Quanta also became subject to a consent order with the

New York Department of Environmental Conservation

requiring Quanta to bring the facility into compliance

with state environmental law.

In June 1981, some time after Quanta received the

Midlantic loan, an NJDEP inspection at the Edgewater

facility uncovered unlawful concentrations of polychlori-

nated biphenyls (PCBs), which are extremely toxic car-

cinogens, in Quanta’s waste oil inventory. The presence

of PCBs violated Quanta’s operating permit; accordingly,

in July 1981, Quanta ceased its Edgewater operations at

NJDEP’s request. Quanta and NJDEP engaged in ne-

gotiations concerning cleanup of the property. However,

on October 6, 1981, Quanta filed a petition for reorgani-

zation under Chapter 11 of the Bankruptcy Code. On

October 7, 1981, NJDEP ordered Quanta to clean up the

hazardous wastes at the Edgewater site. On November

11, 1981, Quanta filed for conversion of the Chapter 11

proceeding to a Chapter 7 liquidation and, on November

18, 1981, petitioner Thomas J. O’Neill was appointed

liquidation trustee (the Trustee). PCB contamination at

the Long Island site was apparently discovered some

time after Quanta filed for bankruptcy.

At the time of the bankruptcy filing, the Edgewater

facility’s inventory included approximately 2.5 to 5.0

million gallons of waste oil, of which approximately

400,000 gallons were contaminated with PCBs. The Long

Island City facility’s inventory included approximately

500,000 gallons of waste oil, of which approximately

70,000 gallons were contaminated with PCBs. It appears

that the PCB contamination extended to the soil and sub-

soil portions of both sites.

The Trustee attempted without success to sell the Long

Island City site for the benefit of Quanta’s creditors. On

May 25, 1982, the Trustee notified the creditors that he

intended to abandon the site pursuant to Section 554 of

the Bankruptcy Code.‘ The City and State of New York

(New York) objected, contending that abandonment

would threaten public health and safety. The bankruptcy

court nonetheless approved the abandonment (Pet. App.

73a-74a).

New York appealed the bankruptcy court’s order to the

district court and, meanwhile, in response to the public

health threat, initiated cleanup of the site. The district

court, although noting that “the question is a close one,”

later affirmed the bankruptcy court’s abandonment order

(Pet. App. 56a). Shortly thereafter, on May 20, 1983,

the bankruptcy court authorized the Trustee to abandon

the PCB-contaminated waste contained in storage tanks

at the Edgewater facility, despite NJDEP’s objections

(id. at 64a-65a).

New York and NJDEP petitioned the court of appeals

for review, respectively, of the district court’s judgment

and the bankruptcy court’s May 20, 1983, abandonment

order. On July 20, 1984, a divided pane! of the court of

appeals reversed both decisions (Pet. App. la-35a). The

court concluded that the Trustee’s abandonment powers

under Section 554 of the Bankruptcy Code are subject to

state health and safety laws and remanded the case for

further proceedings. The dissent agreed with the lower

courts that Section 554 gives the Trustee absolute power

to abandon property that, from the creditors’ perspective,

is financially burdensome.

* Section 554(a), 11 U.S.C. 554(a), as then in force, provided in

part:

After notice and a hearing, the trustee may abandon any

property of the estate that is burdensome to the estate or that

is of inconsequential value to the estate.

This language was changed slightly by the 1984 Bankruptcy Amend-

ments, but the amendments did not affect the substance of the pro-

vision. See Pub. L. No. 98-353, 98 Stat. 333 et seq. Abandonment

under Section 554 transfers title to the property from the bank-

ruptcy estate to any party with a possessory interest (typically, the

debtor). See 11 U.S.C. 554 note. See also 11 U.S.C. 722.

SUMMARY OF ARGUMENT

The present conflict has been presented largely as a

choice between extremes: the Trustee has demanded un-

fettered discretion to abandon hazardous wastes and re-

lated property, while respondents, at least in the initial

proceedings, have demanded that the Trustee assume to-

tal responsibility for the dangerous conditions. Such

absolutism is neither necessary nor desirable. The court

of appeals’ judgments, holding that the Trustee’s abandon-

ment power is limited by state police powers, reasonably

accommodates both the Bankruptcy Code and public

health interests and finds full support in the principles of

equity and fairness that underlie the federal bankruptcy

laws.

It has been long established, in a variety of contexts,

that a bankruptcy trustee must administer a bankruptcy

estate in compliance with federal and state law unless

the Bankruptcy Code, by its express terms or necessary

implication, displaces or overrides the otherwise appli-

cable law. Indeed, the reach of the Bankruptcy Code is

governed by traditional principles of preemption, which

require that federal law accommodate state law to the

extent that it is possible and consistent with the full

purposes of Congress. Moreover, 28 U.S.C. 959(b) spe-

cifically requires the trustee to “manage and operate”

property within his possession in accordance with state

law. The requirement applies not only to actions taken

by the trustee in the course of reorganizing an ongoing

business, but also to his actions taken in the course of

liquidation.

Thus, the issue before this Court is whether Section

554 of the Bankruptcy Code, 11 U.S.C. 554, which au-

thorizes a trustee to abandon financially burdensome

property, creates an exception to established law by pre-

empting generally applicable state law safeguarding the

public’s health and safety. The answer lies in the history

and purpose of the abandonment provision. Congress en-

acted Section 554 as a codification of a judge-made rule

recognizing a trustee’s power to abandon burdensome

property. It thereby incorporated within Section 554 the

judicially-recognized limitations on that power. The

courts, prior to enactment of Section 554, had unequivo-

cally recognized that the trustee’s abandonment authority

was subject to general police powers. Accordingly, a

trustee acting pursuant to Section 554 is subject to the

same limitation. This result is completely consistent with

the purposes under!ying the abandonment power. It pre-

serves the trustee’s ability to avoid wasteful and unneces-

sary transaction costs, while recognizing that his admin-

istration of the estate must be conducted in accordance

with generally applicable law.

Petitioners’ contention that a trustee’s abandonment

authority is absolute must therefore fail. The court of

appeals correctly concluded that a trustee’s abandonment

authority is subject to traditional state police power limi-

tations. Although specific state environmental statutes

such as those suggested by the court of appeals may im-

pose relevant limitations in certain cases, we believe that

state public nuisance law provides the clearest and most

flexible limitation on a trustee’s abandonment authority

in a case such as this one. The relevant nuisance prin-

ciples do not absolutely proscribe abandonment. Instead,

they require that the trustee, prior to abandonment, take

steps that are reasonable, in light of conditions at the

hazardous waste site and the resources of the bankruptcy

estate, to ensure that discharge of the property from his

custodial care will not create or aggravate a threat to

public health and safety. The application of traditional

nuisance principles to the facts at hand finds solid sup-

port in state law. Additionally, it is consistent with the

bankruptcy courts’ traditional practice of accommodat-

ing competing interests. In all events, petitioners’ claim

that the application of state law threatens an uncon-

stitutional taking of creditors’ property rights is merit-

less. Thus, the United States urges affirmance of the

court of appeals’ judgments but suggests a somewhat

different interpretation of the applicable state law.

ARGUMENT

A BANKRUPTCY TRUSTEE’S ABANDONMENT OF

HAZARDOUS WASTES AND RELATED PROPERTY

IS SUBJECT TO GENERALLY APPLICABLE STATE

LAW SAFEGUARDING PUBLIC HEALTH AND

SAFETY

The Bankruptcy Code charges the bankruptcy trustee

with specific enumerated duties and concomitant powers

in liquidation proceedings, giving him extensive control

over the management of the estate. See CFTC v. Wein-

traub, No. 84-261 (Apr. 29, 1985), slip op. 8. The states,

meanwhile, have extensive and long-recognized powers to

protect the public health and welfare.® The trustee and

the states thus exercise firmly established authority

within their respective spheres and, together, they have

enjoyed a relatively peaceful co-existence. However, the

special problems presented by the instant dispute—the

potentially enormous costs of hazardous waste cleanup

and the frightening threats to public health and safety—

have brought these powers into ostensibly sharp confron-

tation. Nonetheless, the clash seems largely the result of

the rather extreme positions advanced below: the Trustee

has demanded unfettered discretion to abandon the haz-

ardous wastes and related property without regard to

resulting public health and safety consequences; mean-

while, respondents, at least in the initial proceedings, de-

manded that the Trustee assume total responsibility for

the hazardous conditions. These polar positions are in-

consistent with the general policies of bankruptcy and

have created a confrontation where none should exist.°

5 E.g., Hawaii Housing Authority v. Midkiff, No. 83-141 (May 30,

1984), slip op. 9-10; Village of Euclid vy. Ambler Realty Co., 272

U.S. 365, 387-388 (1926); Lawton v. Steele, 152 U.S. 133, 136

(1894) ; Mugler v. Kansas, 123 U.S. 623, 668-669 (1887).

6 As the House Report on the 1978 Bankruptcy Reform Act noted,

“lbjankruptcy law cuts across many other areas of the law. In

the interaction between bankruptcy law and other laws, each bends

Instead, the present clash can be comfortably resolved

through a careful reading of the particular requirements

of federal and state law.

A. A Bankruptcy Trustee Must Administer The Bank-

ruptcy Estate In Compliance With Federal And State

Non-Bankruptcy Law Unless The Bankruptcy Code,

By Its Express Terms Or Necessary Implication, Dis-

places Or Preempts The Otherwise Applicable Law

The Bankruptcy Code does not grant the trustee any

general power to avoid compliance with non-bankruptcy

law. Thus, like any other entity, he must generally com-

ply with such law in discharging his duties.’ Indeed, this

Court has long recognized that if Congress wished to

grant the trustee any extraordinary exemption from non-

bankruptcy law, “the intention would be clearly ex-

pressed, not left to be collected or inferi:ed from disput-

able considerations of convenience in administering the

estate of the bankrupt.” Swarts v. Hammer, 194 U.S.

441, 444 (1904).°

somewhat to accommodate the policies of the other.” H.R. Rep.

95-595, 95th Cong., Ist Sess. 228 (1977). See, e.g., NLRB v. Bildisco

& Bildisco, No. 82-818 (Feb. 22, 1984), slip op. 10-12.

™See Ohio v. Kovacs, No. 83-1020 (Jan. 9, 1985), slip op. 10

(trustee “in possession” of a hazardous waste site must comply

with state environmental laws); Otte v. United States, 419 U.S.

43, 52 (1974) (trustee must comply with IRS recordkeeping re-

quirements) ; Swarts v. Hammer, 194 U.S. 441, 444 (1904) (trustee

must pay state and local property taxes, because “there is nothing

in [his trust responsibilities] to withdraw [the property] from the

necessity of protection by the State and municipality, or which

should exempt it from its obligations to either’).

8 See also NLRB v. Bildisco & Bildisco, No. 82-818 (Feb. 22,

1984), slip op. 19 (“[T]he debtor-in-possession is not relieved of

all obligations under the | National Labor Relations Act] simply by

filing a petition for bankruptcy.”); Palmer v. Massachusetts, 308

U.S. 79, 85 (1939) (“If this old and familiar power of the states

{over local railroad service] was withdrawn when Congress gave

district courts bankruptcy powers over railroads, we ought to find

language fitting for so drastic a change.”); Penn Terra, Ltd. v.

The Bankruptcy Code does specify principles for estate

administration that can override conflicting non-bank-

ruptecy law (see Perez v. Campbell, 402 U.S. 637 (1971) ),

and a conflict, if truly present, must be resolved through

a traditional preemption analysis (id. at 649-652). But

not every intersection of federal bankruptcy law and state

law creates a conflict. Indeed, Section 959(b) of the

Judicial Code has largely eliminated the possibilities for

conflict between the bankruptcy trustee’s exercise of his

statutory authority and otherwise applicable state law.

That section expressly subjects the trustee to state police

power (28 U.S.C. 959(b) ):

[A] trustee * * * shall manage and operate the

property in his possession as such trus Shap ina

according to the requirements of the valid laws of

the State in which such property is situated, in the

same manner that the owner or possessor thereof

would be bound to do if in possession thereof.

Petitioners contend that Section 959(b) is relevant only

when the trustee is actually operating the business of the

debtor, and not when he is liquidating it (84-801 Br. 23-

24; 84-805 Br. 22-23). But this contention is inconsistent

with the ianguage, legislative history, and purposes of

Section 959(b).

Section 959(b) addresses both management and opera-

tion of property. Courts “are obliged to give effect, if

possible, to every word Congress used,” Reiter v. Sono-

tone Corp., 442 U.S. 330, 339 (1979), and Section 959 (b),

on its face, encompasses something more than “opera-

tion.” * As the court of appeals noted (Pet. App. 17a),

Dep't of Environmental Resources, 733 F.2d 267, 273 (8d Cir.

1984).

® Indeed, if Congress had wanted to restrict Section 959(b) to

the operation of a business, it would have used the phrase “carry-

ing on business,” as it did in Section 959(a). It has been held that

that phrase is limited te actions taken in the operation of a busi-

ness. Austrian Vv. Williams, 216 F.2d 278, 285 (2d Cir. 1954), cert.

denied, 348 U.S. 953 (1955).

there is no reason why the phrase “‘manage[ment]’ of

the ‘property,’” could not, in the abstract, describe a

trustee’s custodial care and disposition of property in a

bankruptcy liquidation. Indeed, Congress typically uses

the term “manage” in conjunction with the term

“trustee” to describe a trustee’s general activities in

admin.stering the trust corpus.’® Thus, Section 959(b)’s

use of the term “manage,” evaluated on its face, includes

the bankruptcy trustee’s general administration of prop-

erty in his possession, including actions taken in liquida-

tion of the estate.

The legislative history of Section 959(b) supports this

conclusion. Section 959(b) originated in state objections

raised in the late 19th century against perceived abuses

of federal railroad receiverships.'"' Congress, responding

to these concerns, adopted a provision expressly subjecting

receivers to state law. Act of Mar. 3, 1887, ch. 373, § 2,

24 Stat. 554. See 18 Cong. Rec. 2542-2543 (1887). This

provision eventually evolved into the present requirements

10 See, e.g., 2 U.S.C. 702(e) (3) (C) (i) (blind trusts for public

officials); 5 U.S.C. App. 202(f)(3)(C)(i) (same); 29 U.S.C.

1103(a), 1105(b)(2)(B) and (c)(3) (employee benefit plan

trusts). This Court follows that practice as well. See CFTC v.

Weintraub, slip op. 8 (emphasis added) (stating, after surveying

the trustee’s various powers, that “the Bankruptcy Code gives the

trustee wide-ranging management authority over the debtor’).

11 The railroad receivership was an invention of federal equity

courts designed initially to prevent piecemeal foreclosure of finan-

cially embarrassed interstate railroads. See generally 3 R. Clark,

The Law and Practice of Receivers §§ 847-884 (3d ed. 1959). Re

ceivers were expected “to operate such roads, until the diffi-

culties are removed, or such arrangements are made that the

roads can be sold with the least sacrifice of the interests of those

concerned.” Davis v. Gray, 83 U.S. (16 Wall.) 203, 220 (1872).

However, the states charged that the receivers, operating under the

aegis of the federal courts, frequently evaded or ignored legitimate

state powers, rights, and interests. See S. Misc. Doc. 44, 50th Cong.,

1st Sess. (1888); S. Misc. Doc. 7, 50th Cong., Ist Sess. (1887);

S. Misc. Doc. 19, 49th Cong., 2d Sess. (1886); H.R. Mise. Doc. 45,

49th Cong., Ist Sess. (1886).

of Section 959(b).% The origins of the section demon-

strate that it was enacted to prevent federal receivers,

and later trustees, from encroaching on general state pre-

rogatives, not only in the operation of a business, but also

in pursuing a liquidation. Notably, the equity receiver-

ship was a debt management scheine that frequently con-

templated either partial or complete liquidation of assets.”*

Indeed, at the time that the original provision was en-

acted, federal law did not expressly provide for debtor

reorganization, and partial or complete foreclosure was

the likely prospect.'* And in all events, particular conduct

12 The provision has been reenacted on several occasions, but its

basic substance has remained unchanged. For present purposes, we

need note only two of the amendments. The provision was first

codified at 28 U.S.C. 124 (see Section 65 of the Act of Mar. 3, 1911,

ch. 231, 36 Stat. 1104). In 1948, it was amended to apply to trustees

and debtors-in-possession and recodified at 28 U.S.C. 959(b). See

Judiciary Act of 1948, ch. 646, 62 Stat. 927; H.R. Rep. 308, 80th

Cong., Ist Sess. Al02 (1947).

13 See generally G. Glenn, The Law Governing Liquidation §§ 149-

172 (1935); 7 Moore’s Federal Practice, Pt. 2, { 66.09[1] (2d ed.

1985).

14 The Bankruptcy Act of 1867, ch. 176, 14 Stat. 517 (repealed by

Act of June 7, 1878, ch. 160, 20 Stat. 99 et seq.), did not provide

viable mechanisms for forcing creditors to accept consolidation or

composition of debts, and the United States had no general bank-

ruptcy code from 1878 to 1898. See 1 Collier on Bankruptcy § 0.05

(14th ed. 1978). Thus, receiverships were originally instituted with

full knowledge that a partial or complete foreclosure was a likely

prospect. See 3 R. Clark, The Law and Practice of Receivers §§ 855-

857 (3d ed. 1959). However, the railroads eventually became skilled

at using the equity receivership for reorganization purposes, often

to the detriment of creditors and the public. See Securities and

Exchange Commission Report on the Study and Investigation, Per-

sonnel and Functions of Protective and Reorganization Committees:

Strategy and Techniques of Protective and Reorganization Commit-

tees, Pt. 1 (May 10, 1937) (reprinted in part in H.R. Rep. 95-

595, 95th Cong., 1st Sess. 242-244 (1977)). The resulting abuses

eventually led to the adoption of provisions in the 1930’s for re-

organization in bankruptcy. See H.R. Rep. 95-595, supra, at 242,

244.

that the provision without question was intended to

reach, such as the abandonment of state-regulated rail

service,’ was likely to occur in liquidation. Thus, Section

959(b)’s legislative origins fully support its application

to actions taken by a trustee in liquidating a bankruptcy

estate.

Setting aside lexicon and legislative history, the under-

lying purposes of Section 959(b) require its application

to liquidation as well as to the operation of ongoing busi-

nesses. The section is intended to advance federalism in-

terests by limiting the power of federal court appointees

to avoid state law. There are no sound reasons for re-

quiring federal trustees to comply with state laws when

operating a business, but permitting them to disregard

those same laws when liquidating the enterprise. If a

trustee seeks, for example, to sell adulterated food, con-

trolled substances, or dangerous products to the general

public, pursuant to his powers under 11 U.S.C. 363, it

should make little difference whether he is operating the

debtor’s business or liquidating its assets. The effective

result of freeing the trustee from state law is the same

in either case—intrusion on state legislative and execu-

tive mechanisms by a federal court appointee who is un-

accountable to the public and perhaps insensitive to state

and local concerns.’

15 See, e.g., Palmer Vv. Massachusetts, 308 U.S. 79 (1939); In re

Chicago Rapid Transit Co., 129 F.2d 1, 6 (7th Cir.), cert. denied,

317 U.S. 683 (1942); Crawford v. Duluth St. Ry., 60 F.2d 212,

215 (7th Cir. 1932).

16 Petitioner Midlantic suggests (84-801 Br. 24) that the dictum

in Missouri v. United States Bankruptcy Court, 647 F.2d 768, 778

n.18 (8th Cir. 1981), cert. denied, 454 U.S. 1162 (1982), expressing

some “doubt” that a bankruptcy trustee must obtain a state license

to sell grain when liquidating the assets cf a grain warehouse,

demonstrates that Section 959(b) is inapplicable to liquidation pro-

ceedings. The court’s tentative dictum is hardly persuasive. Even

if correct (which we doubt), it speaks only to the procedural aspects

of sale, which would seem to be more susceptible to federal pre-

Section 959(b) is limited, of course, to “valid” state

law. It presumably would not operate where the Bank-

ruptey Code unequivocally preempts the state law or

where the state takes action that specifically discrimi-

nates against the trustee.’ But these are narrow excep-

tions. As a general matter, Section 959(b) demonstrates

that a bankruptcy trustee is subject to state police powers

in administering the estate, except where the Bankruptcy

Code expressly or by necessary implication provides other-

wise.

B. Section 554 Of The Bankruptcy Code, Which Authorizes

The Trustee To Abandon Financially Burdensome

Property, Does Not Preempt Generally Applicable

Laws Safeguarding Public Health And Safety

As the preceding section explains, a bankruptcy trustee

must generally exercise his powers in accordance with

state law. This propogtion holds true when the trustee

exercises his specific power of abandonment under Section

554 of the Bankruptcy Code, 11 U.S.C. 554. Section 554

codifies a judge-made rule of abandonment and thereby

adopts the longstanding judicial corollary that a trustee’s

abandonment power is subject to general police power

regulations. The legislative history of the 1978 Bank-

ruptcy Reform Act confirms that Section 554, far from

preempting state law, actually embraces its application.

The 1978 Bankruptcy Reform Act originated in the

recommendations presented to Congress by the Commis-

emption. Indeed, it appears that the Eighth Circuit would agree

that the trustee could not sell the grain if state law absolutely

forbade its sale on public health grounds rather than simply regu-

lated who sold it. See 647 F.2d at 776 (noting the Bankruptcy

Code’s deference to state health and safety laws).

17 For example, the Bankruptcy Code, rather than state law,

governs distribution of the estate. American Surety Co. v. Sampsell,

327 U.S. 269, 272 (1946). The mere fact that state law requires

financial expenditures does not, of course, alter distribution prior-

ities. See Gillis v. California, 293 U.S. 62, 66 (1934).

sion on the Bankruptcy Laws of the United States. See

Pub. L. No. 91-354, 84 Stat. 468-469. The Commission’s

final report included a proposed bill that served as a blue-

print for many portions of the 1978 Act. Section 4-611 of

that bill expressly recognized the trustee’s power to aban-

don property of the estate “if it is burdensome or has no

net realizable value.” Report of the Commission on the

Bankruptcy Laws of the United States, H.R. Doc. 93-137

93d Cong., ist Sess., Pt. 2, at 181 (1973). Ci ‘ng 4A

Collier on Bankruptcy { 70.42[3] (1967), t’:2 aecompany-

ing Commission Note stated that “(t]he concept of aban-

donment is well recognized in the case law,” H.R. Doc.

93-137, supra, Pt. 2, at 181. Although the 1898 Bank-

ruptey Act contained no abandonment provision, the Com-

mission Note indicated that its proposal was adopted from

Bankruptcy Rule 608, promulgated under that Act. H.R.

Doc. 93-137, supra, Pt. 2, at 181. Rule 608, in turn,

contained similar language, and its accompanying Ad-

visory Note expressly stated that the Rule “codifie[d] the

preferred practice developed under case law.” Bank-

ruptcy Rule 608 advisory committee note,11 U.S.C. App.,

at 227.

Congress, apparently relying on the Commission’s rec-

ommendations, fashioned Section 554 in close conformity

to the Commission’s proposal. Additionally, Congress

provided no further elaboration on the section’s scope.

Thus, Congress, like the Commission and the Bankruptcy

Rules Advisory Committee, must have intended to codify

the traditiona’ judge-made abandonment rules. Notably,

Congress offered no definition of the term “abandon,” a

bankruptcy term of art that could only be understood by

reference to past bankruptcy practices. It follows that

the “plain meaning” of Section 554 is, by necessity, the

meaning generated by those practices. Indeed, Congress’s

failure to elaborate on the reach of Section 554 “is most

eloquent, for such reticence while contemplating an im-

portant and controversial change in existing law is un-

likely.” Edmonds v. Compagnie Generale Transatlantique,

443 U.S. 256, 266-267 (1979) (footnote omitted).

Congress is, of course, presumed to have codified the

judge-made law existing at the time of its consideration

and enactment of Section 554. See Merrill Lynch, Pierce,

Fenner & Smith, Inc. v. Curran, 456 U.S. 353, 379-382

(1982); Lorillard v. Pons, 434 U.S. 575, 580-581 (1978).

At the time that Congress considered and enacted Section

554, the trustee’s responsibility to exercise his abandon-

ment powers consistent with federal and state police

powers was well established. As a leading bankruptcy

treatise noted (4A Collier on Bankruptcy { 70.42{2]

(14th ed. 1978) (emphasis added; footnotes omitted) ):

The trustee (and in a proper case, the receiver be-

fore him) may abandon any property which is either

worthless, or overburdened, or for any other reason

certain not to yield any benefit to the general estate.

Recent cases illustrate, however, that the trustee in

the exercise of the power to abandon is subject to

the application of general regulations of a police

nature.

Accord, 2 H. Remington, A Treatise on the Bankruptcy

Law of the United States § 1142, at 623 (1956).

The Collier treatise specifically cited two cases, Oiten-

heimer Vv. Whitaker, 198 F.2d 289 (4th Cir.), aff’g In re

Eastern Transp. Co., 102 F. Supp. 913 (D. Md. 1952),

and In re Chicago Rapid Transit Co., 129 F.2d 1 (7th

Cir.), cert. denied, 317 U.S. 683 (1942). In Ottenheimer,

the court of appeals concluded that a bankruptcy trustee,

in liquidating the estate of a barge company, could not

abandon several dilapidated barges moored in Baltimore

Harbor, because the abandonment would have resulted in

a navigational obstruction in violation of federal law.

The court stated (198 F.2d at 290):

The judge-made [abandonment] rule must give way

when it comes into conflict with a statute enacted in

order to ensure the safety of navigation; for we are

not dealing with a burden imposed upon the bankrupt

or his property by contract, but a duty and a burden

imposed upon an owner of vessels by an Act of Con-

gress in the pubiic interest.

The court in /n re Chicapo Rapid Transit reached a

similar result. In that case, a reorganization trustee

sought to abandon the debtor transit company’s lease of a

branch railway line, notwithstanding local law that re-

quired continued operation. The court recognized that a

bankruptcy court could “not order the utility to abandon

a public service, without consent of the state” (129 F.2d

at 5), but that it could “cancel a burdensome lease”

(ibid.). The court, noting that the lessor and lessee

both were obligated under a local ordinance to operate

the branch line (129 F.2d at 7-8), reconciled the two com-

peting considerations by permitting the trustee to aban-

don the unexpired lease, but requiring him to continue

operations for the account of the lessor. Jd. at 5-6. Thus,

while the court did not forbid the trustee’s abandonment

of property (or perhaps, more accurately, his rejection of

an unexpired lease), it conditioned the trustee’s actions to

ensure compliance with state law. Notably, the court

relied, in part, on the predecessor of 28 U.S.C. 959 (b)—

28 U.S.C. 124—in concluding that the trustee was bound.

by state law. 129 F.2d at 6.

Ottenheimer and Chicago Rapid Transit demonstrate

that a trustee’s abandonment power, prior to the 978

Bankruptcy Reform Act, was limited by federal and state

police powers.'* These mutually consistent cases were well-

established and, indeed, recounted in the leading bank-

18 A third case, Jn re Lewis Jones, Inc., 1 Bankr. Ct. Dec. (CRR)

277 (Bankr. E.D. Pa. 1974), offers still further support for this

proposition. Lewis Jones involved the bankruptcy liquidation of

three public utilities that supplied steam heat to city residents.

The trustees sought to abandon underground steam lines; however,

several governmental entities objected to the trustees’ plan because

it did not provide for sealing the abandoned lines. The govern-

mental bodies cited various health and safety hazards that would

result. The bankruptcy court noted that Ottenheimer required com-

pliance with local laws but found none applicable. It nevertheless

required the trustees to seal the steam lines, citing the court’s

equitable power to “safeguard the public interest.” 1 Bankr. Ct.

Dec. at 280.

ruptcy treatises when Congress codified the trustee’s aban-

donment power. They therefore reflect congressional un-

derstanding of the traditional reach of abandonment in

bankruptcy and control the interpretation of Section

554.”

Petitioners nonetheless contend (e.g., 84-801 Br. 16-26)

that Section 554 creates an absolute right to abandon

property, regardless of contrary federal or state law. This

contention is fatally undermined by the general rule that

the trustee must comply with non-bankruptcy law, by the

express limitation contained in 28 U.S.C. 959(b), and by

the legislative history of Section 554, which clearly indi-

cates that Congress adopted the recognized judicial limita-

tions on the trustee’s abandonment power.”° Indeed, peti-

19 The only authority that is even arguably contrary to Otten-

heimer and Chicago Rapid Transit is In re Adelphi Hospital Corp.,

579 F.2d 726 (2d Cir. 1978) (per curiam). Adelphi Hospital in-

~—volved the bankruptcy liquidation of a privately-owned hospital.

The trustee sought to abandon patient records. The state objected,

interposing state regulations that required the “governing au-

thority” of a discontinued hospital to retain hospital records for

six years. The court of appeals concluded that the trustee was not

a “governing authority” and therefore was not bound by the regula-

tions. 579 F.2d at 728. The court also suggested that the trustee’s

abandonment power was relatively broad, citing, ironically, Jn re

Chicago Rapid Transit Co. Adelphi Hospital, 579 F.2d at 729.

~~~ Although this per curiam dicta might be read to depart from

Ottenheimer, it does not create an irreconcilable conflict that be-

clouds congressional intent. Compare NLRB vy. Bildisco & Bildisco,

No. 82-818 (Feb. 22, 1984), slip op. 10. In all events, the case was

decided just a few months before enactment of Section 554 and

therefore cannot reasonably be considered within congressional con-

templation. See City of Milwaukee v. Illinois, 451 U.S. 304, 327

n.19 (1981).

20 The Trustee casually dismisses Ottenheimer in a footnote (84-

805 Br. 24 n.7) and does not even acknowledge Chicago Rapid

Transit. Petitioner Midlantic, meanwhile, suggests that Otten-

heimer would have been decided differently if Section 554 had then

been in existence (84-801 Br. 20). Thus, petitioners fail to come

to grips with the central weakness of their argument: Congress, in

enacting Section 554, did not write upon a tabula rasa; instead, it

tioners actually urge a radical and unwarranted expansion

of the trustee’s traditional abandonment power.

Historically, the trustee’s abandonment power has been

directed solely to property suffering from contractual,

rather than regulatory, encumbrances.”* Thus, abandon-

ment principles were originally developed to protect the

trustee from personal liability for the contractual com-

mitments of the debtor.2? Under present bankruptcy law,

however, the trustee is merely a representative of the

estate (11 U.S.C. 323(a)), and he is not subject to per-

sonal liability for the estate’s obligations. In the modern

context, therefore, abandonment is simply a method for

codified the judicially-developed rule of abandonment, including the

established corollary that the trustee must exercise his abandon-

ment power in conformity with federal and state law.

21 F.g., McHenry v. La Societe Francaise D’Epargnes, 95 U.S.

58, 60 (1877). Although the early American cases adopting

abandonment principles spoke broadly of a trustee’s power to

decline “property of an onerous or unprofitable character,” e.g.,

First National Bank v. Lasater, 196 U.S. 115, 118 (1905), the cases

all seemingly contemplated property burdened by liens, mortgages,

or contractual commitments. See Dushane vy. Beall, 161 U.S. 513

(1896); Sparhawk v. Yerkes, 142 U.S. 1 (1891); American File

Co. v. Garrett, 110 U.S. 288 (1884) ; Glenny v. Langdon, 98 U.S. 20

(1878); Smith v. Gordon, 22 Fed. Cas. 554 (D. Me. 1843) (No.

13,052). See also Note, Abandonment of Assets by a Trustee in

Bankruptcy, 53 Colum. L. Rev. 415, 416-417 (1953).

22 American courts adopted their judge-made rule of abandon-

ment from early English bankruptcy statutes. See 4A Collier on

Bankruptcy { 70.42[1], at 501 (14th ed. 1978). Under English law,

the trustee needed a means of avoiding any contractual liability that

might accompany the vesting of title. As a contemporary com-

mentator explained :

[I]nasmuch as the leasehold estates of the bankrupt vested in

his trustee, the Legislature was obliged to provide a means for

the trustee to get rid of his liability in respect to those lease-

hold estates. Sect. 23 was passed for this purpose * * *.

Ringwood, The Disclaimer of Onerous Property in Bankruptcy, 82

The Law Times 142 (London, Dec. 25, 1886). See also A Bankrupt’s

Onerous Property, 53 The Justice of the Peace 339 (London, June 1,

1889).

avoiding transaction costs when administering the estate.

It permits the trustee to exclude from the estate “prop-

erty not expected to sell for a price sufficiently in excess

of the mortgage or judgment liens to offset the interest

and costs of administration.” Note, Abandonment of

Assets by a Trustee in Bankruptcy, 53 Colum. L. Rev.

415, 416 (1953). But there is no support for the notion

that Section 554, enacted simply to permit efficient

administration of the bankruptcy estate, was ever in-

tended to override traditional governmental authority to

protect public health and safety. Clearly, no such intent

should be attributed to Congress absent affirmative evi-

dence that it desired such a radical result. See Swarts v.

Hammer, 194 U.S. 441, 444 (1904); Palmer v. Massa-

chusetts, 308 U.S. 79, 89 (1939).

This Court’s recent decision in Ohio v. Kovacs, No.

83-1020 (Jan. 9, 1985), does not compel a different con-

clusion. In dictum, the Court observed that a trustee, as

a general matter, can abandon a hazardous waste site

just as he might abandon any other property. Kovacs,

slip op. 10 n.12. We might agree that there is nothing

unique about a waste site that, in the abstract, dis- |

tinguishes it from other types of property and excepts

it from the trustee’s abandonment power. But the same

can be said of dilapidated barges or, for that matter,

a case of dynamite. A far different question is implicated

when the dilapidated barges are moored at the mouth of

Baltimore Harbor or, more hypothetically, the case of dy-

namite sits on a furnace in the basement of a school-

house. The question in this case, which was not ad-

dressed in Kovacs, is whether the trustee may abandon

property within his custodial care “when the act of

abandonment itself would create or contribute to a public

health and safety threat. Nothing in Kovacs suggests

that the federal and state governments, in the exercise

of their respective police powers, are powerless to prevent

the trustee from abandoning property when, under the

circumstances, abandonment itself significantly increases

the risk of public harm.

et he

C. New Jersey And New York Public Nuisance Law

Limits The Trustee’s Authority To Abandon Hazardous

Wastes And Related Property

Given that the Trustee’s authority to abandon bur-

densome property is subject to state police powers, the

only remaining question is whether New York or New

Jersey law actually limits the Trustee’s authority in

the circumstances presented by this case. The court of

appeals observed that state environmental statutes could

impose relevant limitations (Pet. App. 4a, 6a, 38a).

However, the application of these laws is far from clear,

and we leave it to respondents to clarify the applicability

of their own laws. For our part, we believe that state

public nuisance law provides the most reasonable and

workable restraint on the Trustee’s abandonment power

in this case (see note 35, infra).** In either event, the

court of appeals’ judgments must be affirmed.”

23 State public nuisance law, developed largely through the com-

mon law process, is entitled to no less respect than state statutory

law. See, e.g., Erie R.R. v. Tompkins, 304 U.S. 64, 78 (1938)

(“(W ]hether the law of the State shall be declared by its Legisla-

ture in a statute or by its highest court in a decision is not a matter

of federal concern.” ) ; cf. National Farmers Union Ins. Cos. v. Crow

Tribe of Indians, No. 84-320 (June 3, 1985), slip op. 4-5. Indeed,

the flexibility inherent in nuisance law, reflecting its equitable

origins, make its application particularly appropriate in bankruptcy

proceedings. See notes 33-35, infra. See also Jn re Chicago, RJ. &

P. R.R., 756 F.2d 517 (7th Cir. 1985) (considering nuisance princi-

ples in bankruptcy); Jn re Lewis Jones, Inc., 1 Bankr. Ct. Dec.

(CRR) 277, 280 (Bankr. E.D. Pa. 1974) (discussed at note 18,

supra).

24 We note that the sole issue decided by the court of appeals

and now before this Court is whether Section 554 gives the Trustee

an absolute right to abandon the property at issue, regardless of

otherwise applicable law (see Pet. App. 3a, 36a-37a). Both the

district court and the bankruptcy court concluded that the Trustee’s

power was absolute (see id. at 57a, 72a-73a), and both New York

and NJDEP challenged that specific conclusion on appeal. The

court of appeals reversed, holding that Congress did not intend

“that the trustee’s abandonment power be unrestricted by public

Each state, as a core element of its sovereignty, has

indisputably broad authority to prohibit and abate, as

a public nuisance, conduct and activity inimical to the

public at large. E.g., Lawton v. Steele, 152 US. 133,

136 (1894); see generally Prosser & Keeton on Torts,

649-652 (W. Keeton 5th ed. 1984); Restatement

(Second) of Torts § 821B ‘1979).% The creation and

maintenance of hazardous wastes in a manner that

threatens public health and safety unquestionably presents

a public nuisance that is subject to abatement.** The

Trustee’s abandonment of hazardous wastes and related

property, at least when the abandonment itself creates

or aggravates a public health and safety threat, is like-

wise subject to reasonable restraints.

State law recognizes that abandonment of even the

most innocuous property, without prudent precautions,

can threaten public health or welfare and create an

health and safety regulations” (id. at 9a; see also id. at 39a), and

remanded for further proceedings. In the course of its decision,

the court did need to ascertain that some source of state law would

impose potential limitations on the Trustee’s powers and that this

case therefore presented a justiciable controversy. However, the

court of appeals’ holding does not depend on its view of the applica-

ble state law; the judgments can be affirmed regardless of the

source of state law that limits the Trustee’s abandonment powers.

See Black v. Cutter Laboratories, 351 U.S. 292, 297 (1956) (“This

Court * * * reviews judgments, not statements in opinions.’’).

25 See also, e.g., State ex rel. Board of Health v. Sommers Render-

ing Co., 66 N.J. Super. 334, 338, 169 A.2d 165, 167 (1961) (render-

ing plant odors); New York Trap Rock Corp. v. Town of Clarks-

town, 299 N.Y. 77, 80, 85 N.E.2d 873, 875 (1949) (quarry opera-

tions). See also N.J. Stat. Ann. §§ 2C:17-2, 2C :33-12 (West 1982) ;

N.Y. Penal Law § 240.45 (McKinney 1982) (criminal provisions for

knowingly creating or maintaining a public nuisance). But see

Murphy v. United States, 272 U.S. 630, 632 (1926) (government

“may provide for the abatement of a nuisance whether or not the

owners of it have been guilty of a crime”).

26 F.g., State v. Ventron Corp., 94 N.J. 473, 468 A.2d 150, 160

(1983) ; State v. Monarch Chemicals, Inc., 90 A.D.2d 907, 908, 456

N.Y.S.2d 867, 869 (1982).

enjoinable nuisance.” The irresponsible abandonment

of inherently hazardous wastes poses particularly alarm-

ing health and safety concerns. Hazardous wastes, by

their very nature, present risks of explosion, fire, con-

tamination of water supplies, destruction of natural re-

sources, and injury, genetic damage, or death through

personal contact. When they are abandoned without

basic custodial precautions, such as containment meas-

ures and provisions for site security, these risks become

imminent and their realization inevitable. A state is en-

titled to invoke its police powers in response.

Contrary to petitioners’ suggestions, a bankruptcy trus-

tee cannot claim a special immunity from state demands

for pre-abandonment protective measures. A _ trustee

does have fiduciary obligations to creditors (84-805 Br.

26), but he cannot blindly pursue creditors’ interests,

oblivious to public health and safety threats left in his

wake. See, e.g., Restatement (Second) of Trusts §§ 62,

166 (1959) (a trustee is under no obligation to undertake

acts that are against public policy or illegal). Al-

though it is true that abandonment in bankruptcy vests

title to the property in the debtor corporation rather

than the puviic at large (84-801 Br. 17; 84-805 Br. 36-

27 The issue arises frequently with respect to abandoned build-

ings. E.g., Beauchamp v. New York City Housing Authority, 12

N.Y.2d 400, 406-407 (1963); Ozone Holding Corp. v. City of New

York, 79 Misc.2d 744, 748, 361 N.Y.S.2d 558, 563 (1974). However,

the abandonment of virtually any property that threatens public

harm can result in a nuisance. See, e.g., Cady v. Dombrowski, 413

U.S. 433, 447 (1973) (abandoned vehicle) (dicta); Price v. City

of Junction, 711 F.2d 582, 585-587 & n.2 (5th Cir. 1983) (aban-

doned vehicle); Skinner v. Coy, 13 Cal.2d 407, 417-418, 90 P.2d

296, 300-301 (1939) (abandoned diseased plants) ; Decker v. Jones,

194 Kan. 146, 147, 398 P.2d 325, 326 (1965) (abandoned oil and gas

drilling equipment) ; Touro Synagogue Vv. Goodwill Industries, Inc.,

233 La. 26, 3u, 34, 96 So.2d 29, 30, 32 (1957) (abandoned ceme-

tery); Massachusetts Society for the Prevention of Cruelty to

Animals v. Commissioner of Public Health, 339 Mass. 216, 225-

226, 158 N.E.2d 487, 493-494 (1959) (abandoned animals); Com-

monwealth v. Barnes & Tucker Co., 472 Pa. 115, 126, 371 A.2d 461,

466-467, appeal dismissed, 434 U.S. 807 (1977) (abandoned mine).

37), that consequence does not give rise to a meaning-

ful distinction. The filing of the bankruptcy petition di-

vested the debtor of its assets and placed them within

the trustee’s exclusive control. The debtor is destined to

exist indefinitely as an empty husk and eventually dis-

solve, leaving no one accountable for the property. See

Ohio Vv. Kovacs, No. 83-1020 (Jan. 9, 1985) (O’Connor,

J., concurring), slip op. 2. Thus, abandonment to the

assetless and evanescent corporate debtor has the very

same effect as abandonment to the public at large.”

Furthermore, the fact that the trustee does not own the

property (84-801 Br. 17) cannot permit him to ignore

the dangers created by his decision to abandon it. The

trustee is the custodian of the property and is charged

with its care. 11 U.S.C. 704(2). He is not entitled to

endanger the public simply because he acts on behalf of

the estate.*® Likewise, the preexisting dangerous propen-

sities of the property do not give him license to increase or

28 Petitioner Midlantic’s argument (84-801 Br. 17) that Brown Vv.

O’ Keefe, 300 U.S. 598 (1937), absolves the trustee of all responsi-

bility for abandonment is an attempt to elevate the trustee, by his

bootstraps, to a position above the law. Brown’s holding that

abandonment under the 1898 Bankruptcy Act relates back to the

filing of the bankruptcy petition is simply not relevant to whether

abandonment is proper in the first instance.

29 Reading Co. Vv. Brown, 391 U.S. 471 (1968), amply demon-

strates this point. The trustee’s post-petition negligence in admin-

istering an estate led to a fire that damaged adjoining buildings.

This Court recognized the trustee’s duty to prevent the occurrence

(id. at 477), and concluded that the resulting tort claim was an

administrative expense of the estate (id. at 482). Just as a trustee

owes a duty, on behalf of the estate, of reasonable care to adjoining

landowners, he owes a duty to the general public to avoid creating

or aggravating a threat of public harm. See also, e.g., Jn re Chicago,

RI. & P. R.R., 756 F.2d 517, 521-522 (7th Cir. 1985) (suggesting

that a trustee may not abandon railroad crossings if the abandon-

ment would create imminent danger); Jn re Vermont Real Estate

Investment Trust, 25 Bankr. 804, 806 (Bankr. D. Vt. 1982) (recog-

nizing that a debtor-in-possession or a trustee owed a duty to the

public to raze a dangerous building).

aggravate the public threat through abandonment.” He

has no right to worsen an already dangerous situation.

Accord, Hennigan, Accommodating Regulatory Enforce-

ment and Bankruptcy Protection, 59 Am. Bankr. L.J. 1,

54 n. 257 (1985) .**

In sum, the trustee is not immune from a state’s exer-

cise of its traditional powers, under public nuisance law,

to protect its citizen’s health and safety.“ Nonetheless,

30 See, e.g., State v. Schenectady Chemicals, Ine., 117 Misc.2d

960, 966, 459 N.Y.S.2d 971, 976-977 (1983), aff’d, 108 A.D.2d

33, 479 N.Y.S.2d 1010 (1984). The Trustee claims that abandon-

ment did not cause any threat to the public (84-805 Br. 33).

However, the realities of the Trustee’s actions belie that asser-

tion. By abandoning the property, the Trustee severed the hazard-

ous wastes from his custodial care and from what financial resources

were available to protect the public from imminent harm. For

example, upon abandonment, the Trustee’s security measures—

which prevented public entry, vandalism, and arson—were term-

inated and all maintenance and remedial measures, initiated by

Quanta, came to a halt. Thus, abandonment seriously aggravated

the dangers first created by Quanta.

31 Likewise, it is no answer to suggest that the public assume

all responsibility for the consequences of abandonment (84-801

Br. 25-26; 84-805 Br. 37-38). The principles of public nuisance

law are expressly intended to assure, to the extent possible, that

responsible parties prevent threats to the public. A bankruptcy

trustee has no greater right than any other party to foist burdens

on the public at large. Compare In re Vermont Real Estate Trust,

25 Bankr. 804 (Bankr. D. Vt. 1982), with Paterson v. Fargo Realty

Inc., 174 N.J. Super. 178, 415 A.2d 1210 (1980).

32 The application of federal hazardous waste statutes is not at

issue in this case. We note, however, that those laws, apart from

providing other conceivably relevant restrictions, impose limitation$

analogous to state nuisance law on activities involving hazardous

wastes. The Resource Conservation and Recovery Act of 1976

(RCRA), 42 U.S.C. 6901 et seq., in addition to providing a compre-

hensive regulatory scheme, empowers the United States to seek judi-

cial or administrative restraint of activities involving hazardous

wastes that “may present an imminent and substantial endanger-

ment to health or the environment.” 42 U.S.C. 6973. The United

States may act against “any person contributing to [the] handling,

nuisance law, which relies on principles of reasonable-

ness,** does not absolutely proscribe abandonment. In-

stead, it requires that the trustee, prior to abandonment,

take steps that are reasonable in light of the circum-

stances to protect the public from harm. In determining

what steps are reasonable, the magnitude of the public

threat is, of course, highly relevant. But of like relevance

are the resources of the estate. A trustee cannot be asked

to do more than available funds permit; the pre-conditions

for abandonment cannot be so costly that they exceed the

value of the estate.** A court, in determining whether,

storage, treatment, transportation or disposal” of hazardous wastes.

Ibid. See also S. Rep. 98-284, 98th Cong., Ist Sess. 58 (1983) (1984

RCRA Amendments). The United States possesses similar author-

ity under CERCLA to secure such relief as may be necessary to

avert an “imminent and substantial endangerment to the public

health or welfare or the environment because of an actual or threat-

ened release of a hazardous substance.” 42 U.S.C. 9606. These par-

ticular provisions of RCRA and CERCLA represent a legislative

application of public nuisance concepts to protect the public from the

dangers of hazardous wastes. See United States v. Waste Indus-

tries, Inc., 734 F.2d 159, 167 (4th Cir. 1984). The United States

may invoke these provisions in a bankruptcy proceeding to prevent

a trustee from abandoning hazardous wastes and related property

if abandonment would contribute to an imminent and substantial

endangerment to health and the environment.

33 F.g., Beauchamp ¥. New York City Housing Authority, 12

N.Y.2d 400, 407 (1963); State v. Waterloo Stock Car Raceway,

Inc., 96 Mise.2d 350, 409 N.Y.S.2d 40, 45 (Sup. Ct. 1978). See

generally Restatement (Second) of Torts § 821B comment e (1979).

34 Expenses resulting from the pre-abandonment abatement of

imminent dangers must generally be paid from estate funds. See,

e.g., Reading Co. v. Brown, 391 U.S. 471, 477 n.7 (1968). Thus,

a court cannot reasonably require a trustee to undertake abatement

actions that cost more than the estate can pay. The degree of abate-

ment must therefore depend on both the dangers nvresented by

abandonment and the available resources of the estate. We note,

in this regard, that there is no merit to petitioners’ claims that

they will suffer ruinous liability absent an absolute right of aban-

donment (84-805 Br. 18-19; 84-801 Br. 11-12). Absent highly un-

usual circumstances, such as a trustee’s operation of the hazardous

and under what conditions, abandonment is permissible,

must balance competing bankruptcy and nonbankruptcy

considerations. There is, of course, nothing novel in this

process; bankruptcy law frequently reyuires the exercise

of such essentially equitable judgments. Indeed, this

Court, in other contexts, has recognized that “the policies

of flexibility and equity” are inherent in the Bank-

ruptecy Code. E.g., NLRB v. Bildisco & Bildisco, No. 82-

818 (Feb. 22, 1984), slip op. 10.*°

In our submission, the present cases must be remanded

for a precise application of state law. What is clear is

that the district and bankruptcy courts erred in per-

mitting abandonment of hazardous wastes and related

property without considering any precautions to protect

the public health and safety. On remand, the lower

courts can determine what actions the Trustee should

have taken and how those who acted in his stead should

be recompensed.*®

waste site or the intentional misconduct of a trustee, the estate

alone is responsible for the abatement costs. Likewise, secured

claims will be compromised only to the extent that the abatement

costs are administrative expenses necessary to preserve or dispose

of the security. See 11 U.S.C. 506; see also pages 28-29, infra.

35In this respect, we believe that grounding the trustee’s re-

sponsibilities in the specific and somewhat less flexible requirements

of state environmental statutes could conceivably thwart the ad-

ministration of the bankruptcy estate and therefore raise bona fide,

albeit case-specific, preemption concerns. By contrast, the inherent

flexibility of nuisance principles, applied in the bankruptcy proceed-

ing to the specific facts at hand, avoids this potential problem. Of

course, state statutes may be highly relevant, as an indication of

the public’s interest, in the nuisance analysis.

36 ‘The question of appropriate pre-abandonment measures cannot

be determined on the present record. However, EPA’s “immediate

removal” activities at the Edgewater site (see note 3, supra) are

likely examples of reasonable pre-abandonment requirements. These

activities include security fencing, drainage and diking repairs, and

removal of explosive agents and hazardous materials from struc-

turally infirm tanks. See EPA Region II Action Memorandum

(Jan. 25, 1985) (lodged with the Court).

D. State Law Limitations On The Trustee’s Abandonment

Power Do Not Threaten A Taking Of Creditors’ Prop-

erty Rights

Citing United States v. Security Industrial Bank, 459

U.S. 70 (1982), petitioners argue that Section 554 must

be read to permit unfettered abandonment so as to avoid

any possible Fifth Amendment taking of creditors’ in-

terests. This argument is plainly meritless; the present

ease does not raise any constitutional threats to creditors’

property rights.

The court of appeals addressed only one issue—whether

the Trustee has an unconditional right to abandon bur-

densome property. It determined that he did not, and

remanded to the lower courts to determine what action

he should take and how the associated expenses should

be funded. The court of appeals left fully intact the

Bankruptcy Code’s liquidation distribution provisions.

Holders of secured claims, such as petitioner Midlantic,

remain entitled to their security, 11 U.S.C. 725, or pro-

ceeds from its sale, 11 U.S.C. 363, less applicable admin-

istrative expenses, 11 U.S.C. 506(c). Holders of unse-

cured claims remain subordinated to priority claims,

which again include administrative expenses, 11 U.S.C.

726. The court did not alter the status of creditors’

claims; thus, it is difficult to discern any constitutional

threat to creditors’ interests.

As the court of appeals recognized (but did not de-

cide), cleanup expenditures might constitute an adminis-

trative expense. Indeed, we believe that lawful pre-

abandonment expenditures should be so treated. See,

e.g., In re T. P. Long Chemical, Inc., 45 Bankr. 278

(Bankr. N.D. Ohio 1985).*7 But any argument that ad-

37 Compare Southern Ry. v. Johnson Bronze Co., 758 F.2d 137 (3d

Cir. 1985). In that case, a debtor, prior to bankruptcy, left hazard-

ous wastes on the property of an adjacent landowner and on prop-

erty that the debtor leased. The adjacent landowner and the post-

petition assignee of the lease claimed that they were entitled to an

administrative priority for their cleanup costs arising from the

ministrative expense treatment of cleanup claims would

work an unconstitutional taking is unpersuasive. The

potential administrative expense claims do not threaten

secured creditors, save those who hold an interest in the

hazardous waste site or the wastes themselves and who,

as a result, might be subject to a Section 506/c) assess-

ment for costs incurred in preserving their security. See

11 U.S.C. 506(c). In all events, the Quanta waste site

and the wastes, prior to cleanup, had negative value and,

hence, there was nothing to be taken. Likewise, a post-

cleanup Section 506(c) claim presumably would be lim-

ited to the value added tc the property by the cleanup—

hardly a taking in any sense of the word. If petitioners

are suggesting that general unsecured creditors face a

taking because the administrative expenses subordinate

unsecured claims, a traditional takings analysis, as set

forth in the court of appeals’ opinion (Pet. App. 23a

n.11), provides the appropriate response. Even if an

unsecured claim in bankruptcy constituted “property”

within the meaning of the Fifth Amendment, it would

remain subject to federal and state police power. See

cases cited at note 5, supra. If the federal and state

governments can legitimately impose cleanup costs on the

corporation prior to bankruptcy, there is no reason why

any unsecured creditor who undertook the risk of non-

payment can complain about the resulting diminishment

of the debtor’s estate.

debtor’s pre-petition activities. The court concluded that the land-

owner had an unsecured claim and that the assignee, assuming

the lease with notice of the wastes, had no claim at all. These claims

are quite different from those that are available in the Quanta bank-

ruptcy. New York and NJDEP, as governmental entities, have

legitimate administrative expense claims for post-petition activities

that state nuisance law obligated the Trustee to undertake prior to

abandoning hazardous wastes and related property.

CONCLUSION

The judgments of the court of appeals should be

affirmed.

Respectfully submitted.

CHARLES FRIED

Acting Solicitor General

F. HENRY HABICHT II

Assistant Attorney General

LouIs F. CLAIBORNE

Deputy Solicitor General

KATHRYN A. OBERLY

Assistant to the Solicitor General

NANCY B. FIRESTONE

DirK D. SNEL

JEFFREY P. MINEAR

Attorneys

JUNE 1985

ov. &. GOVERNMENT PRINTING OFFice; 1985 461531 10238

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