Opposition Brief — Torwico Electronics, Inc. v. New Jersey Department of Environmental Protection & Energy

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No. 93-1187 OFFICE

UL Ink GLERE

In the

Supreme Court of the United States

October Term, 1994

Torwico Electronics, Inc.,

Petitioner,

v.

State of New Jersey, Department of

Environmental Protection and Energy,

Respondent.

On Petition For a Writ of Certiorari

To The United States Court of Appeals

For The Third Circuit

BRIEF IN OPPOSITION

DEBORAH T. PORITZ

Attorney General of New Jersey

Attorney for State Respondent

R.J. Hughes Justice Complex

CN 093

Trenton, New Jersey 08625

(609) 984-4805

JOSEPH L. YANNOTTI

Assistant Attorney General

Of Counsel

RACHEL JEANNE LEHR

Deputy Attorney General

Counsel of Record and

On the Brief

i

QUESTION PRESENTED

Whether the obligation of petitioner to comply with state

and federal regulatory requirements associated with the

generation and use of hazardous substances constitutes a

dischargeable “claim” under 11 U.S.C. 101(5) and Qhio v,

Kovacs, 469 U.S. 274 (1985), where, as in this case, the

State is merely seeking performance by the debtor which does

not give rise to a "right to payment."

QUESTION PRESENTED

COUNTERSTATEMENT OF THE CASE

1. Statutory Background

2. History of These Proceedings

ii

TABLE OF CONTENTS

REASONS FOR DENYING THE PETITION

I.

The Opinion Below Does Not Conflict With This

Court’s Opinion in Ohio v. Kovacs.

A.

Ohio Had Barred Kovacs From

Access To His Property, Appointed

A Receiver To Perform The Cleanup

And Then Consistently Sought The

Payment GF BENET we cceceeees

In Chateaugay, The Second Circuit

Also Held That Kovacs Does Not

Support The Position That Petitioner

SS REI. 5 sk ae es

The Court Has Rejected The View

That A Claim Arises Merely Because

A Debtor Must Expend Money

To Meet Its Ongoing Regulatory

CD 5k 3 0 54-6 Oe ee es

13

iii

Il. The Third Circuit’s Decision Does Not Conflict

With The Decisions Of Other Circuits........ 17

A. The Second Circuit’s Decision In

Chateaugay Is Entirely In Accord

With The Third Circuit’s Decision

I 17

B. The Decision Of The Seventh Circuit

In CMC Heartland Is In Accord

With The Decision In This Matter...... 19

aa The Sixth Circuit’s Decision In

Whizco Goes Beyond Kovacs And Is

Based On Its Own Facts Which Are

Distinguishable From Torwico. ....... 20

D. Other Court Of Appeals Decisions

Are Not In Conflict With Third

Circuit’s Opinion In This Case........ 22

Ill. Although This Court Has Repeatedly Held That The

Definition Of "Claim" Should Be _ Broadly

Construed To Include All Legal Obligations Of The

Debtor It Has Never Construed A "Claim" As

Including Obligations That Do Not Involve A

eG ee ee 23

IV. Petitioner Is Asking This Court To Rule On A

Hypothetical Situation In Its Discussion Of Chapter

11 Reorganization Because Torwicc Is Not

Reorganizing, But Liquidating. ........... 24

<5. rte ee ee eee eee 28

a al WT al

iV

CASE CITED

Board of Governors of the Federal Reserve

System of the United States v. MCORP

Financial, __ U.S. _, 112 S.Ct. 459

BRR =e a a re 16

122 N.J. 228, 584 A.2d 797 (1991) .......... 2

128 N.J. 442 (1992), 608 A2d 288 «www... 2

In re Chateaugay Corp.,

944 F.2d 997 (2d Cir. 1991) ........... 9, 14,

15, 18-20, 22, 27

In re Daniels,

130 B.R. 239 (E.D. Ky. 1991) ............ 22

In re Dant & Russell, Inc.,

853 F. 2d 700 (9th Cir. 1988) .......... 23, 24

ee FF ee SS ee 8

pe f Fl. 0 rr 12

In re Quanta Resources Corp.,

739 F.2d 912, (3d Cir. 1984),

aff'd sub nom. Midlantic National

Bank v, N.J. Dept. of Environmental

Protection,

oo ee a

In re Rosemarie Brown,

gS fF 2. os | nen 13

In re Sanderfoot, 899 F.2d 598 (7th Cir. 1990)

(Posner, J. dissenting) rev’d

“U.S. __, 111 S.Ct. 1825 (1992) ........ 28

~_ U.S. __, 111 S. Ct. 2150 (1991) ........ 25

Matter of CMC Heartland Partners,

966 F.2d 1143 (7th Cir. 1992) ...... 9, 18, 20, 21

805 F.2d 1175 (Sth Cir. 1986), cert

denied, 483 U.S. 1005 (1987) ............. 3

Matter of Kimber Petroleum Corp.,

110 N.J. 69 (1988), 539 A.2d 1181, 1190 ...... 2

New Haven Inclusion Cases, 399 U.S. 392

(1970), quoting Penn-Central Merger

me OG ar 27

Qhio v. Kovacs,

469 U.S. 274 (1985) ......... 1, 8-15, 17, 21-24

tvania L + Publi

Welfare v. Davenport,

RO ee a ae ee a ee 15

Phipps v. Kentucky,

aa ae 22

Vv ‘

, $e Big. '. 23

: ‘or Air Prod C NJ

Industries, Inc., 216 N.J. Super. 46,

vi

522 A.2d 1025, 1041 (App. Div. 1987),

certif. den., 126 N.J. 308, 598 A.2d

SR hi care ce 4

—

New Jersey, Department of Environmental

Protection and Energy,

8 F.3d 146 (3d Cir. 1993)

Pee See CCK CHORE ROC Ow HOR 8, 9, 11-13,

18, 19, 21-23, 25, 26

United States v, Hubier,

117 B.R. 160 (W.D.Pa. 1990) (affirmed without

opinion, 928 F.2d 1131 (3d Cir. 1991) ....... 22

841 F.2d 147 (6th Cir. 1988) ........... 21, 22

STATUTES CITED

ea SP es) Oe 4

NJ. Gi. Aam. IIR-Gee ae nce oc ceees 2

8 ee 2

i § % - Serrrrerrrrerererre. 3

N.J. Stat. Ann. 58:10-23.1l et seg. ........... 19

a ee 1, 12

11 U.S.C. Se er ee rere 1, 6-8, 11, 12

Ue, ¢6e0 vec ev euses sxe ne es 13

Li VBA Ger re Sh.) ccc cc eeseews 20

Vii

11 U.S.C. §362(b)(4) and (5)... 0... e eee ee eee 6

16 GR ID «gon c kee cbse eens 5

I oo sok 55 te kv bean 9, 26

42 U.S.C. $9601 ef seq. ww ee ee eee 14

GURL GUTOR gc ccc ccvcevcues: 27

42 U.S.C. $96901-G991 wc eee 2

REGULATIONS CITED

N.J. Admin. Code. 7:26-1 et seq .. 1... 2s eevee 4

N.J. Admin. Code 7:26B-1.12(b)(2) ........... 12

OTHER AUTHORITIES CITED

J. Schmidt, New Jersey’s Experience

Implementing the Environmental Cleanup

Responsibility Act, 38 Rutgers L. Rev.

Fare, Sees Heeee Ce eee wee eeoewes 2

K. Heidt, The Automatic Stay in

Environmental Bankruptcies,

67 American Bankr, L. Journal 70,87 ........ 28

W. Mugdan and B. Adler, 1984 RCRA Amendments:

Congress as Regulatory Agency,

10 Columbia ]. of Env. L. 215... ww ee ee eee 5

————

——

COUNTERSTATEMENT OF THE CASE

Petitioner seeks a writ of certiorari to challenge a

determination of the United States Court of Appeals for the

Third Circuit holding that the enforcement of state statutes

imposing regulatory requirements on the generation, use and

disposal of hazardous substances and waste that require

performance and not payment do not constitute "claims"

subject to discharge and are therefore enforceable against

debtors in bankruptcy. The court below correctly found that

in this matter the State was seeking compliance by petitioner

with its obligations under the New Jersey Environmental

Cleanup Responsibility Act ("ECRA"), N.J. Stat. Ann.

13:1K-6 et seq., and the Resource Conservation and

Recovery Act ("RCRA"), 42 U.S.C. §§6901-6991, and that

the State’s enforcement of the law does not constitute the act

of a creditor trying to achieve a preference over other

creditors. Thus, the State was not asserting a "claim" as

that term is defined in the Bankruptcy Code and should not

have been enjoined by the Bankruptcy Court from enforcing

its laws against petitioner.

1. Statutory Background

ECRA, now the Industrial Site Recovery Act ("ISRA"),

1993 N.J. Laws 139, was enacted in 1983 for the purpose

of protecting the public from having to bear the expense of

cleaning up abandoned plant sites contaminated with

hazardous wastes. See generally, J. Schmidt, New Jersey’s

Experience Implementing the Environmental Cleanup

Responsibility Act, 38 Rutgers L. Rev. 729 (1986). To

achieve this goal, ECRA provides that, upon the closure,

sale or transfer of an industrial establishment, the owner or

operator of the industrial establishment must either submit

a cleanup plan to the Department detailing the measures

necessary to detoxify the property, or obtain a “negative

declaration” from the Department that there has been no

discharge of hazardous substances or wastes or that any such

discharge has been cleaned up and there remain no

hazardous substances or wastes on the property. N.J. Stat.

2

Ann. 13:1K-8(g).' “Industrial establishments” are those (1)

at which hazardous substances or wastes are present and (2)

which also have a designated reference number as

determined by the Standard Industrial Classification ("SIC")

manual published by the Federal Office of Management and

Budget. N.J. Stat. Ann. 13:1K-8f.

In enacting ECRA, the New Jersey Legislature

recognized that the generation, handling, storage and

disposal of hazardous substances and wastes pose an inherent

risk of harm, and the closing of operations and the transfer

of real property where hazardous substances were used must

be conducted in a rational and orderly way so as to mitigate

potential risk. N.J. Stat. Ann. 13:1K-7. The magnitude of

New Jersey’s hazardous waste problem is beyond dispute.

Matter of Kimber Petroleum Corp., 110 N.J. 69, 88 (1988),

539 A.2d 1181, 1190 (Wilentz, C.J. dissenting). Decades

of industrial activity have left the State with a legacy of

hazardous waste. That legacy now threatens the State’s

public health and ecology.

7:26B, 128 N.J. 442, 446 (1992), 608 A2d 288, 289.

Public money does not even “begin to meet New Jersey’s

cleanup needs." Kimber, 110 N.J. at 89; 539 A2d 1101,

1191. The Legislature decided that the obligation to clean

up the contaminated sites rests with the polluters themselves.

Id. at 90.

Although ECRA does not impose an independent

duty to clean up the property during a period of operation,

the owner cannot walk away after deciding to cease

operations without developing and implementing a cleanup

plan. Dixon Venture v, Dixon Crucible Company, 122 N.J.

228, 584 A.2d 797 (1991). Furthermore, ECRA was

' The State, therefore, does not “choose to proceed under ECRA” as

petitioner maintains (Pet. Brief at 17, n. 19). ECRA is triggered

automatically, imposes a self-executing duty to comply on the owner or

operator, and does not provide the State with a “right to payment” at all.

3

intended to impose upon both the owner and the operator of

an industrial establishment a “self-executing duty to

remediate” upon closure, sale or transfer of certain

potentially polluted properties.” See Superior Air Products

Co, v. N.L, Industries, Inc., 216 N.J. Super. 46, 62, 522

A.2d 1025, 1041 (App. Div. 1987), certif. den., 126 N.J.

308, 598 A.2d 872 (1991).’ By the express terms of the

statute, compliance with ECRA “constitute[s] [a] continuing

regulatory obligation ... imposed by the State." N.J. Stat.

Ann. 13:1K-12.

As a generator of hazardous waste, petitioner is

also required to comply with obligations emanating from the

Resource Conservation and Recovery Act, which was

enacted by Congress to regulate the treatment, storage, and

disposal of hazardous wastes. See Matter of Commonwealth -

i , 805 F.2d 1175 (Sth Cir. 1986), cert.

denied, 483 U.S. 1005 (1987) (the objective of RCRA is "to

promote the protection of health and the environment” and

"[aJn injunction which does not compel some expenditure or

loss of monies may often be an effective nullity"). The

Environmental Protection Agency ("EPA") delegated the

enforcement of RCRA to the State of New Jersey in 1983,

and the State thereafter promulgated implementing

regulations under the Solid Waste Management Act

("SWMA"), N.J. Stat. Ann. 13:1E-1 et seq. See N.J.

2 Torwico’s lease agreement with George Allen Associates, however,

clearly identified Torwico as the party responsible for complying with

ECRA. ECRA allows such an agreement to transfer joint and several

liability to one party in this way. See 1993 N.J. Laws 139, section 20.

> Petitioner’s comments are misleading when citing Superior Air

Products. "New Jersey courts have concluded that ECRA and the Spill Act

apply “in pari materia.” (Pet. Brief at 16, n. 5). Petitioner’s implication

to the con notwithstanding, the court concluded that such an

application of CRA and the Spill Act illustrated that the State cannot be

sued under the Environmental Rights Act to enforce the Spill Act against

a responsible party when : RA has been triggered. This is exactly the

opposite of what petitioner is advocating.

4

Admin. Code. 7:26-1 et seq (setting forth, inter alia,

requirements for disposal of hazardous wastes). See

generally, W. Mugdan and B. Adler, 1984 RCRA Amend-

ments: Congress as Regulatory Agency, 10 Columbia J. of

Env, L. 215.

2. History of These Proceedings

Petitioner, Torwico Electronics, Inc. ("petitioner” or

"Torwico"), a manufacturer of electronic transformers, is an

"industrial establishment" as that term is defined in ECRA

and a "generator" of hazardous waste as defined by RCRA.

Up until 1985, petitioner conducted its business at a site

located in Lakewood, New Jersey. In 1985, it relocated to

a new site in Lakewood, where it continued to manufacture

transformers until it sold its business in 1993, a fact that is

of significance to the dischargeablity of a "claim" but which

petitioner failed to disclose in its brief. * Petitioner became

responsible for ECRA compliance in 1985 when it ceased

operating at its original Lakewood site and transferred its

operations to another location. See N.J. Stat. Ann. 13:1K-

9. Petitioner moved without complying with ECRA.

On August 4, 1989, Torwico filed a petition for

reorganization under Chapter 11 of the Bankruptcy Code.

Several months later, on November 13, 1989, the

Department performed an inspection of Torwico’s former

site and discovered a hidden, illegal seepage pit (not a septic

system, as petitioner alleges) (Pet. Brief at 5) containing

* Thus, petitioner is now liquidating, rather than reorganizing, under

Chapter 11 of the Bankruptcy Code. As a corporate debtor, petitioner will

not be discharged of any obligations whether or not they constitute

"claims." See 11 U.S.C. §1141 (d)(3) (confirmation of a plan does not

discharge a corporate debtor if the plan provides for the liquidation of all

or substantially all of the property of the estate and if the debtor does not

engage in business after the consummation of a plan).

5

hazardous wastes (Ja219-Ja231)°. The contamination in the

pit was found to be migrating off-site, into local waters and

to be approaching a potable water supply (Ja230).

On April 9, 1990, the Department issued an

Administrative Order and Notice of Civil Administrative

Penalty Assessment to petitioner (Pa61)°. Among other

things, the Order required petitioner to apply for a permit

for its seepage pit, obtain an identification number from the

EPA, and develop a closure plan for the pit (Pa63). In

response to the Administrative Order, petitioner filed a Sum-

mons and Complaint for Declaratory Judgment and

Injunctive Relief against the Department, asking the

Bankruptcy Court to enjoin the Department from enforcing

any applicable environmental laws against petitioner (Ja6).

Petitioner sought a declaratory judgment that any

environmental obligations that petitioner may have were

“claims” under 11 U.S.C. 101(5) and that the State’s failure

to file a timely proof of claim precluded the State from

requiring petitioner to comply with New Jersey’s

environmental laws and regulations (Ja8). In August 1990,

the Department issued a Notice of Violation of ECRA to

both petitioner and George Allen Associates, Torwico’s

landlord and the owner of the Lakewood site. On

November 26, 1990, petitioner moved for summary

judgment on its Complaint (Jal4).

On December 6, 1990, the State filed a Notice of

Cross-Motion for Summary Judgment arguing that Torwico’s

obligation to comply with New Jersey’s laws does not

constitute a “claim” that can be discharged in bankruptcy,

but that such obligations are ongoing regulatory

responsibilities imposed pursuant to the state’s police

* "Ja" cites are to the Joint Appendix filed with the United States

Court of Appeals for the Third Circuit.

* "Pa" cites are to Petitioner's Appendix.

6

powers, intended to protect the public health, safety,

welfare, and environment (Jal1).

On September 6, 1991, the Bankruptcy Court issued its

opinion, now published at 131 B.R. 561 (Pa22), finding that

an action to compel compliance with environmental statutes

constitutes an “unsecured claim" under 11 U.S.C. §101(5).

131 B.R. 561, 565 (Pa31-32). Because the State did not file

a timely proof of claim, the State was barred from ever

enforcing ECRA against Torwico. To reach this holding,

the Bankruptcy Court first found that any action by the State

under the State’s police and regulatory powers to compel

compliance with environmental laws constituted no more

than the enforcement of a “money judgment” within the

meaning of the automatic stay provisions of 11 U.S.C.

§362(a), rather than "regulatory" obligations, and therefore

is not exempt from the automatic stay provisions under 11

U.S.C. §362(b)(4) and (5). An order embodying the court’s

decision enjoining the State from enforcing certain

environmental laws against petitioner and declaring certain

portions of the ECRA statute and regulations void was

entered on September 20, 1991 (Ja350).

On September 30, 1991, the State appealed to the

United States District Court. On December 14, 1993, the

Hon. Anne E. Thompson, United States District Judge,

entered a Memorandum Opinion and Order vacating the

Bankruptcy Court’s injunction. The district court held that

Torwico’s obligation to comply with ECRA is not

dischargeable in bankruptcy, and rejected the remainder of

the Bankruptcy Court’s decision (Pa21). Judge Thompson

found that the State has no alternate payment remedy under

ECRA and is attempting to remedy both past and ongoing

7

pollution. The district judge concluded that the State had no

obligation to file a claim in the proceeding.’

On January 8, 1993, petitioner appealed the order of the

district court to the United States Court of Appeals for the

Third Circuit. On October 25, 1993, the Court of Appeals

affirmed the decision of the district court finding that

petitioner’s obligation to comply with state and federal

environmental laws was not a dischargeable "claim" and

that petitioner’s obligation to clean up "ran with the waste.”

Department of Environmental Protection and Energy, 8 F.3d

146, 151 (3d Cir. 1993). In coming to this conclusion, the

Third Circuit relied on many of the same decisions of this

Court and the Second and Seventh Circuits that petitioner

mistakenly claims conflict with the opinion below.

REASONS FOR DENYING THE PETITION

This petition for a writ of certiorari should be denied

because the decision of the Court of Appeals finding that

petitioner’s obligation to comply with state and federal

regulatory requirements associated with the generation and

use of hazardous substances does not constitute a

dischargeable "claim" because it does not give rise to a

’ The Bankruptcy Court had held that certain sections of ECRA

conflict with the Bankruptcy Code, and were therefore invalid under the

Supremacy Clause. 131 B.R. at 573 (Pa49-Pa56). In addition, the

Bankruptcy Court had held certain provisions of ECRA not in dispute in

this case to be unconstitutional under the Supremacy Clause. Notably, the

Bankruptcy Court did not limit its constitutional review of ECRA to the

ision relevant to “claims”; rather, it reached out, sua sponte, to

invalidate several other sections of ECRA that were not challenged by

Torwico, and that were not in di in this case. See Ja6 (Torwico’s

complaint); compare 131 B.R. at 576 (Ja340-Ja341). This is part of the

decision that was vacated by the District Court. Petitioner did not raise

any issue as to the incorrectness of that aspect of the District Court’s

determination and appealed only the finding that since ECRA has no

alternate payment remedy, an obligation to comply with ECRA does not

constitute a “claim.”

8

"right to payment", is in accord with the opinion of this

Court in Ohio v. Kovacs, upon which the Court of Appeals

relied in part, see, Torwico, 8 F.3d at 150, and does not

conflict with the decisions of the other circuits. Contrary to

the assertions of petitioner, the decision at issue, rather than

conflicting with, was in accord with In re Chateaugay

Corp., 944 F.2d 997 (2d Cir. 1991), and Matter of CMC

Heartland Partners, 966 F.2d 1143 (7th Cir. 1992). See,

Torwico, 8 F.3d at 149.

Petitioner’s argument that this decision created a conflict

among the circuits and with this Court’s decision in Qhio v,

Kovacs is entirely erroneous. Furthermore, much of the

petition poses what is no more than a hypothetical situation.

As misguided as petitioner’s hypothesis is as to the

deleterious effect on reorganization of compelling a debtor

to comply with the law (See, 28 U.S.C. 959(b)) (requiring

a debtor-in-possession or trustee to comply with state law

throughout the bankruptcy), petitioner is also asking this

Court to rule on facts that are not involved in this case.

This debtor is not reorganizing. This corporate debtor has

sold its business, has ceased operating and is liquidating,

which means that there will be no discharge available to

petitioner in any event. Thus, the precise issue upon which

petitioner seeks certiorari does not arise on the facts of this

case.

The notion that petitioner does not have to comply with

New Jersey’s laws because the Department did not file a

proof of claim is legally incorrect. The State is a regulator

in this case, not a creditor. The State’s enforcement of its

environmental regulations seeks compliance by the debtor

with the law; it does not constitute the act of a creditor

trying to devise a preference over other creditors. See In re

, 504 F.2d 499, 503 (3d Cir.

1974) ("The mere fact that the debtor’s property may be

affected by state law does not constitute a ’claim’ against

that ’property’"). See, also, In re Quanta Resources Corp.,

739 F.2d 912, 921-922 (3d Cir. 1984), aff'd sub nom.

me RS Rt a RR A a Oe ew « a

9

Midlantic National Ban} NID ¢ Envi

Protection, 474 U.S. 494 (1986) ("It cannot be said that the

bankruptcy laws were intended to work such a radical

change in the nature of local public health and safety

regulation -- the substitution of governmental action for

citizen compliance -- without an indication that Congress so

intended.").

I. The Opinion Below Does Not Conflict With This

Court’s Opinion in Ohio v. Kovacs.

A. Ohio Had Barred Kovacs From

Access To His Property, Appointed

A Receiver To Perform The

Cleanup And Then Consistently

Sought The Payment Of Money.

Petitioner claims that the decision of the Court of

Appeals is at odds with the opinion in Ohio v, Kovacs and

that the State, in ordering petitioner to meet its statutorily-

imposed environmental regulatory obligations, was seeking

what is, in essence, the payment of a "money judgment."

Petitioner fails to recognize that the narrow ruling of

Kovacs is confined to a very specific set of facts that are

widely divergent from the facts of this case.

In Kovacs, the State of Ohio sought to enforce an

injunction it had obtained against an individual (Kovacs) for

various environmental violations. The injunction required

Kovacs to remove specified hazardous wastes from his

property and to pay the State $75,000. Kovacs failed to

comply with his obligations under the injunction. The State

then obtained the appointment of a receiver to take

possession of Kovacs’ property and assets, and to

implement the injunction by cleaning up the site. Ohio

thereafter endeavored to recover its costs by maintaining

10

that the costs were not dischargeable “claims."* The Court

held that Ohio was seeking to enforce a "right to payment."

Therefore, it had a claim within the meaning of the

definition of that term as used in 11 U.S.C. §101(5).

Contrary to the contentions of petitioner, the Court of

Appeals considered Kovacs and correctly pointed out the

key distinction in that opinion:

[aJs Kovacs noted, a debtor cannot

maintain an ongoing nuisance in

direct violation of _ state

environmental laws. The state can

exercise its regulatory powers and

force compliance with its laws, even

if the debtor must expend money to

comply. Under Kovacs, what the

state cannot do is force the debtor to

pay money to the state; at that point,

the state is no longer acting in its

role as regulator, it is acting as a

creditor.” [Torwico, 8 F.3d at 150].

Under the statutes involved in this case, New Jersey does

not have the authority to accept money in place of

performance from petitioner and then perform petitioner’s

obligations under ECRA and RCRA itself. In Kovacs, Ohio

had already performed the cleanup and was merely trying to

recover its costs. Ohio was a creditor of Kovacs’. In this

matter, New Jersey is a regulator of all “industrial

establishments” subject to ECRA and RCRA.

* Petitioner points out that Ohio, like New Jersey, “also argued that

it was seeking the performance of some action and not the payment of

money.” Pet. Brief at 15. However, here New Jersey is actually seeking

performance, whereas Ohio was only seeking money.

ee en

11

The definition of a “claim” at 11 U.S.C. 101(5) is as

crucial to the opinion in Kovacs as the particular

circumstances of that case. Notably, the phrase “right to

payment” is included in both paragraphs of the definition.

See, 11 U.S. C. 101(5).’ It is this “right to payment” that

is missing from petitioner’s obligations under ECRA and

RCRA. Consequently, Torwico’s regulatory requirements

under those laws are not dischargeable “claims” under the

Bankruptcy Code.

It was this "right to payment” which Ohio both had and

endeavored to enforce that allowed the Court to determine

that Ohio’s injunction was no more than a money judgment.

The Court stated, "At oral argument in this Court, the

State’s counsel conceded that after the receiver was

appointed, the only performance sought from Kovacs was

the payment of money.” 469 U.S. at 283.

In Kovacs, the debtor’s lack of possession of the

property in question was physical, legal and irreversible

because, following the appointment of a receiver, Ohio

undertook to perform the needed cleanup work itself. Since

the debtor’s lack of possession of the property constituted a

real (and insurmountable) reason why the debtor could not

perform the required cleanup work itself, the lack of

possession tended to highlight the fact (conceded by the

* (A) right to payment, whether or not such right is reduced to

judgment, liquidated, unliquidated, fixed, contingent,

matured, unmatured, disputed, undisputed, legal, equitable,

secured, or unsecured; or

(B) right to an equitable remedy for breach of performance if

such breach gives rise to a nght to payment, whether or not

such right to an equitable remedy is reduced to judgment,

fixed, contingent, matured, unmatured, disputed,

undisputed, secured or unsecured. [11 U.S.C. §101 (5)

12

State of Ohio at oral argument) that Ohio was seeking only

to enforce a monetary obligation.

In this case, by contrast, petitioner is not only

physically able to gain access to the site to perform the

needed cleanup work, petitioner is | under a state court

ion to do so (Ja353-Ja354)." Furthermore, the

landlord, George Allen Associates, has a legal obligation to

grant petitioner access to the site to comply with ECRA,

even if he had not obtained that court order or did not wish

petitioner to return. The regulations found at N.J. Admin.

Code 7:26B-1.12(b)(2), require a landlord or property

owner to grant such access and remedies are provided by

the ECRA amendments at 1993 N.J. Law, 139, section 40,

if such access is not readily granted.

Despite the expressly narrow holding of Kovacs,

petitioner construes that decision to apply to any action

brought by a state agency to enforce an environmental

obligation where a debtor cannot comply with the obligation

without paying money. The Court of Appeals correctly

rejected this reading of Kovacs, which has the dangerous

potential of making bankruptcy law a haven for polluters.

As this Court has held before, “[c]ongress has repeatedly

expressed its legislative determination that the trustee is not

to have carte blanche to ignore nonbankruptcy

law....Congress has expressly provided that the efforts of

the trustee to marshal and distribute the assets of the estate

must yield to governmental interest in public health and

safety." Midlantic, 474 U.S. at 502.

© It should be noted that the Bankruptcy Court is required to give

preclusive effect to that state court judgment.

951 F.2d 563 (3d Cir. 1991). At a minimum, therefore, Torwico must

be considered to be in constructive possession of the site in question. See

also, In re Morristown and Erie R. Co., 885 F.2d 98 (3d 1989) (11

U.S.C. §105 may be used by the Bankruptcy Court to pa Haan provisions

in debtor’s lease or contract of sale).

ee ee tac Rl ANNE AN he Bae A OT TS es oe I IE. Bae RE TR OR ON ret a RNa é:

13

B. In Chateaugay, The Second Circuit

Also Held That Kovacs Does Not

Support The Position That

Petitioner Is Advocating.

In Chateaugay, the EPA had issued an order under

§106 of the Comprehensive Environmental Response,

Compensation, and Liability Act (“CERCLA" or "Super-

fund"), 42 U.S.C. §9601 et seq., requiring a debtor to take

certain cleanup actions. In addition, the EPA had filed a

proof of claim for $32 million for expenses it had itself

incurred under §107 of CERCLA in cleaning up contamina-

tion caused by the debtor. EPA contended that the debtor’s

obligation to comply with the cleanup order and to repay

EPA’s incurred expenses were not one to discharge in

bankruptcy.

The district court found the $32 million in response

costs incurred by EPA to be a dischargeable claim. 944

F.2d at 1000. The district court further found that even

claims for injunctive relief would be dischargeable if the

injunctive remedy was an option EPA was electing to

pursue, instead of incurring cleanup costs itself and

thereafter seeking reimbursement. On the other hand -- and

of direct importance here -- the district court concluded,

"where there is no right to such payment for cleanup or

other remedial costs, claims for injunctive relief do not fall

within the Bankruptcy Code and are not dischargeable.” Id.

(emphasis added).

The Second Circuit, on appeal, gave close consideration

to the Court’s decision in Ohio v, Kovacs, and found that,

to the extent that an order is obtained

under CERCLA or any other

environmental statute that seeks to

end or ameliorate pollution, we are

satisfied ihat nothing in Kovacs

14

permits a discharge of such

obligation [Chateaugay, 944 F.2d at

1009].

The court in Chateaugay concluded that Kovacs turned on

the fact that a receiver had been appointed in that case,

thereby precluding Kovacs from taking any steps to comply

with the injunction in question, and restricting the State’s

legal options to obtaining monetary relief. Chateaugay, 944

F.2d at 1008-09. This reading of Kovacs gives full effect

to the plain text of the opinion, in which the Court

emphasized the narrowness of its holding. As the Second

Circuit itself noted, its reading of Kovacs is also entirely

consistent with Midlantic’s holding that the Bankruptcy

Code does not entitle a debtor to abandon property in

violation of an environmental regulation “that is reasonably

designed to protect the public health or safety from

identified hazards.” Chateaugay, 944 F.2d at 1009.

As the Second Circuit stated, "“[i]t is difficult to

understand how any injunction directing a property owner to

remedy ongoing pollution could be a dischargeable ’claim’

if, as Kovacs instructs, the owner ’may not maintain a

nuisance, pollute the waters of the State, or refuse to

remove the source of such conditions.’” Id. (citations

omitted). Petitioner rejects this straightforward and legally

sound reading of Kovacs, and instead interprets that opinion

to create a gaping exception to generally applicable

environmental laws. This interpretation of Kovacs cannot

withstand scrutiny.

15

¢. The Court Has Rejected The View That

A Claim Arises Merely Because A Debtor

Must Expend Money To Meet Its Ongoing

Regulatory Obligations.

Petitioner’s contention that when a debtor in bankruptcy

cannot clean up environmental contamination himself or

itself without paying money, the obligation to clean up

pursuant to an injunction is a debt which is dischargeable in

bankruptcy, renders the government’s police power

exemption for enforcement actions meaningless. This Court

has rejected this assertion by expressly declining to

disapprove of or overrule

7 "), 733 F.2d 267 (3d Cir.

1984), which held that, simply because an injunctive action

will require the debtor to expend funds, the action is not

one to enforce a money judgment. The Third Circuit had

aptly stated, "in contemporary times, almost everything

costs something." 733 F.2d at 277. In Kovacs, this Court

Stated:

(In Penn Terra] the Court of Appeals

for the Third Circuit held that the

automatic stay provision of 11

U.S.C. §362 did not apply to the

State’s seeking an injunction against

a bankrupt to require compliance

with the environmental laws. This

was held to be an effort to enforce

the police power statutes of the

State, not a suit to enforce a money

judgment. But in that case, there

has been no appointment of a

receiver who had the duty to comply

with the state law and who was

seeking money from the bankrupt.

The automatic stay provision does

not apply to suits to enforce the

16

regulatory statutes of the State, but

the enforcement of such a judgment

by seeking money from the bankrupt

- what the Court of Appeals for the

Sixth Circuit concluded was involved

in this case - is another matter. [469

U.S. at 283, n.11.]

This Court’s deliberate preservation of the Penn Terra

holding makes clear that the Court of Appeals’ decision in

this matter was entirely in accord with Kovacs.

Furthermore, this Court effectively reaffirmed the Third

Circuit’s holding in Penn Terra recently in Board of

Governors of the Federal Reserve System of the United

States v. MCORP Financial, __ U.S. _, 112 S.Ct. 459

(1991), in which the Court found that although enforcement

proceedings might ultimately affect the Bankruptcy Court’s

control over the property of the estate, “that possibility

cannot be sufficient to justify the operation of the stay

against an enforcement proceeding that is expressly

exempted by subsection (b)(4). To adopt such a character-

ization of enforcement proceedings would be to render 11

U.S.C. 362 (b)(4)’s exception almost meaningless."

This holding is identical to that in Penn Terra: just

because compliance will require the debtor to expend

money, an enforcement action is not subject to the

automatic stay. Thus, it is clear that "Congress did not

intend for the Bankruptcy Code to preempt all state laws,”

Midlantic, 474 U.S. at 505, which is what petitioner is

advocating when it contends that if compliance with a law

will require the debtor to spend money, then that law is

unenforceable in bankruptcy. Were petitioner correct in

asserting that any order which requires the expenditure of

money is a dischargeable claim, “then the exception to

section 362 for government police action, which should be

17

construed broadly, would instead be narrowed into virtual

nonexistence.” Penn Terra, supra, 733 F.2d at 277-78.

Il. The Third Circuit’s Decision Does Not Conflict

With The Decisions Of Other Circuits.

The opinion below does not conflict with the Second

Circuit’s opinion in Chateaugay or with the Seventh

Circuit’s opinion in Matter of CMC Heartland as petitioner

alleges. Ironically, the Third Circuit relied in part on both

of these decisions to form its own conclusions: "We find

CMC and Chateaugay to be both persuasive and consistent.

Applying the precepts outlined in those cases to the situation

here present leads us to conclude that Torwico’s obligations

under the administrative order do not constitute a claim."

Torwico, 8 F.3d at 150..

A. The Second Circuit’s Decision In

Chateaugay Is Entirely In Accord

With The Third Circuit’s Decision

In Torwico.

As noted above, in Chateaugay, the EPA had issued an

order under §106 of CERCLA, requiring the debtor to take

certain cleanup actions as well as an order for $32 million

in expenses that the EPA had itself incurred under §107 of

CERCLA in cleaning up contamination caused by the

debtor. The district court found the $32 million in response

costs incurred by EPA to be a dischargeable claim, 944

F.2d at 1000, but concluded, "where there is no right to

such payment for cleanup or other remedial costs, claims

for injunctive relief do not fall within the Bankruptcy Code

and are not dischargeable.” Id. The district court

expressly rejected [the debtor’s]

contention that an _ injunction

provision should be dischargeable

"merely because the debtor would be

18

required to expend money in order

to comply with the injunction,” ...

and observed, "To accept that

argument would render dischargeable

any claims for injunctive relief other

than those merely seeking the

cessation of some unlawful activity.

Such a reading would render the

right to payment language set forth

in the statute superfluous and would

thus hardly be consistent with

congressional intent.” [944 F.2d at

1000}.

On appeal the Second Circuit affirmed. Judge

Newman, writing for the court, held that a cleanup order

issued under §106 of CERCLA “no matter how phrased,

[that] requires [a debtor] to take any action that ends or

ameliorates current pollution ... is not a ’claim’." 944 F.2d

at 1008. "Since there is no option to accept payment in lieu

of continued pollution, any order that to any extent ends or

ameliorates continued pollution is not an order for breach of

an obligation that gives rise to a right of payment and is for

that reason not a ’claim.’" 944 F.2d at 1008.

The reasoning and result of Chateaugay apply with

direct force here and demonstrate the correctness of the

decision of the court below. ECRA, like §106 of

CERCLA, has no “alternate payment remedy,” by which

the State can perform a cleanup and later seek

reimbursement from the polluter.’ Torwico’s obligation, as

" On the other hand, the Spill Compensation and Control Act("Spill

Act"), N.J. Stat. Ann. 58:10-23.11 et seq., like §107 of CERCLA, does

Hy

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Circuit referred is the Spill Act, which the state did

authority for its administrative order but which does provide the State with

19

the operator of an industrial establishment, to ameliorate the

pollution at its former site of operations and thereby halt the

migration of the plume of contaminated water that is

approaching a potable water supply, does not differ in any

legally material way from the type of cleanup order that the

Court found to be nondischargeable.

B. The Decision Of The Seventh

Circuit In CMC Heartland Is In

Accord With The Decision In This

Matter.

Similarly, the decision in

Partners, is not in conflict with the decision in this case.

In Heartland, the Seventh Circuit discharged CMC of all

obligations as an operator under §106 as well as §107 of

CERCLA because this case was filed under the prior

bankruptcy law, the Bankruptcy Act of 1898.

There was no "right to payment” language in the

definition of a "claim" under the 1898 Act and the United

States had failed to file a proof of Claim, so even CMC’s

obligations as an operator under $106 where there is no

"right to payment," were discharged.” However, the

Seventh Circuit ruled that the newly organized corporation

that emerged from bankruptcy was now responsible for the

cleanup as the new owner of the site because CERCLA

claims run with the land. Matter of CMC, 966 F.2d at

1147. Here, too, the Seventh Circuit found that Kovacs

Spill Act, but to RCRA when talking abut disposing of hazardous

substances. Torwico, 8 F.3d at 151. The State has no authority to issue

administrative orders to comply with RCRA under the Spill Act, which is

why the State did not invoke the Spill Act.

? The entire definition of a “claim” under the 1898 Act was “[t]he

term ‘claims’ includes debts, whether liquidated or unliquidated, securities

(other than stock and option warrants to subscribe to stock), liens, or other

interests of whatever character." 11 U.S.C. §$205(6)(1978 ed.).

| al

20

required such an outcome, asserting as it did that only when

“environmental loss" has been “monetized” by the

conclusion of the bankruptcy case does it constitute a claim

that may be discharged. Id.

Cc. The Sixth Circuit’s Decision In

Whizco Goes Beyond Kovacs And

Is Based On Its Own Facts Which

Are Distinguishable From Torwico.

In United States v. Whizco, Inc., 841 F.2d 147 (6th

Cir. 1988), the United States had sought to compel a coal

company and the coal company’s operator to satisfy their

statutory obligations to reclaim an abandoned coal mine

under the Surface Mining Control and Reclamation Act,

("SMCRA"), 33 U.S.C. §§ 201 et seq. The Sixth Circuit

granted an injunction with respect to the corporate debtor,

but not with respect to the individual operator in his

Chapter 7 personal bankruptcy”. The court found that to

the extent thai the individual operator would have to spend

money or be granted access to the site (from which he was

barred) in order to comply with the injunction, it was

discharged. To the extent that the individual could comply

with the injunction himself it was not discharged. This

SS a ee : ri if he did ; he ris!

i ite. 844 F.2d at 149. Cf.

Torwico, 8 F.3d at 151.

In contrast to the individual debtor in Whizco who was

discharged from his legal obligations under federal law, the

petitioner here is a corporate debtor, liquidating under

Chapter 11 of the bankruptcy code -who, just like the

corporate debtor in Whizco, is not entitled to any discharge,

% It should be noted that the debtors in both Kovacs and Whizco

were individuals entitled to discharge under Chapter 7 of the Bankruptcy

Code.

21

whether of an “obligation” or a "claim". See, 11 U.S.C.

1141(d)(3); see, also, p.6, at note 1, supra. The Sixth

Circuit in Whizco, in discussing Kovacs, agreed that the

State of Ohio had converted its equitable remedy into a

"right to payment” and only wanted money from Kovacs.

844 F.2d at 149-50. The court cited In_re Aslan, 65 B.R.

826, 830-31 (Bankr. C.D. Cal.1986)("If the only remedy

allowed by law is nonmonetary, the equitable remedy is not

transformed into a claim."). Id. The court then

acknowledged the limited character of the Kovacs holding

and admitted that it was extending Kovacs. Although the

facts in Whizco are easily distinguishable from those of

Torwico, this case would not present a conflict warranting

this Court’s intervention in any event because this opinion

has had no impact, and has been widely criticized by other

circuits.

* It that only one case has followed Whizco, while both the

Second Third Circuits have expressly criticized this decision. "

112 B.R. at 523; , 117 B.R. 160,

F.2d 730(table only; text found at

(unpublished) (mining reclamation obligations of individual debtor owed

to state were i

22

D. Other Courts Of Appeals Decisions

Are Not In Conflict With The

Third Circuit’s Opinion In This

Case.

Nor is there any conflict with the Ninth Circuit’s

decision in_re Dant & Russell, Inc., 853 F. 2d 700 (9th

Cir. 1988). Dant & Russell did not involve a state

attempting to enforce its laws within its police powers for

the protection of the public health and safety. It involved a

landlord suing a tenant for the full costs of cleaning up

property contaminated by the debtor during the course of an

expired lease. Again, like Ohio in Kovacs, this landlord

only wanted money. It was not a government unit

enforcing a law that required performance, for which money

could not substitute -- or an obligation which does not give

rise to a right to payment.

In fact, the Third Circuit in Southern Ry, Co, v.

Johnson Bronze Co,, 758 F.2d 137 (3d Cir. 1985) where a

private party who cleaned up sewage sludge from the

property of another private party and then, like the State of

Ohio in Kovacs, sought to recover its costs -- or in other

words, a money judgment -- is noticeably in accord with

the Ninth Circuit. Southern Railway, too, is plainly

distinguishable from the situation in Torwico and the Third

Circuit was in accord with the Ninth Circuit when it ruled

that the creditor in that case was clearly seeking payment of

a general unsecured claim.

Nor is there any conflict between Torwico and In Re

Jensen, 995 F.2d 925 (9th Cir. 1993). Jensen involves two

individuals in a Chapter 7 bankruptcy who were discharged

from all prepetition obligations and their case closed in

1985. The Jensens were responsible for ten percent of

$900,000 spent by the California Department of Health

Services ("DHS") to clean up a multi-generator site. The

DHS argued that its claim arose post-petition, when the

23

DHS performed the clean up and obtained a "right to

payment". If this theory had prevailed the DHS "claim"

against the Jensens for $90,000 would not have been

discharged. The Ninth Circuit, however, ruled that the

claim arose prepetition - at the time of the release of the

hazardous substances - and that therefore the claim was

discharged. Jensen, 995 F.2d at 930-931. It is indisputable

that Dant & Russel, Southern Railway, Jensen, and Kovacs

all involved a clear cut “right to payment” of nothing more

or less than money owed to a "creditor" for one reason or

another -- even though sometimes the creditor was a

government unit. In this case, it is just as clear that the

government unit is a regulator without a right to payment

and that therefore petitioner’s environmental obligations are

not dischargeable claims.

Ill. Although This Court Has Repeatedly Held That The

Definition Of "Claim" Should Be Broadly Construed

To Include All Legal Obligations Of The Debtor It

Has Never Construed A "Claim" As Including

Obligations That Do Not Involve A "Right To

Payment."

The cases cited by petitioner, Pennsylvania Department

i » 495 U.S. 552, 588 (1990)

and cue Welle ang BO BD C2,

2150 (1991), neither conflict with the decision below nor

justify the Court’s granting this petition. Petitioner cites

Davenport for the proposition that the term "claim" should

be construed broadly. (Pet. Brief at 11). But that case

involved criminal restitution payments of money, and does

not indicate, as petitioner Suggests, that a “claim” can exist

without a "right to payment." No matter how broadly the

term is interpreted, no one would argue that it need not

include a right to payment. Neither the State, nor the Court

of Appeals in Torwico, has Suggested that a “claim” need

not be construed broadly. Nor is the State characterizing

petitioner’s obligations to the State as outside the definition

24

of a “claim” due to any unique characteristics of those

obligations as Pennsylvania did in Davenport. The State is

maintaining that the obligation to comply with ECRA and

RCRA is not a claim because these obligations do not give

rise to a right to payment, as the definition of a "claim"

requires and as every obligation in every case that petitioner

alleges a conflict requires as well.

Nor does Johnson dispute this interpretation - in fact,

the entire opinion relies on the “right to payment” provided

by a mortgage to find that the bank had a “claim” against

the debtor’s property: "Even after the debtor’s personal

obligations have been extinguished, the creditor still retains

a “right to payment” in the form of its right to the proceeds

from the sale of the debtors property.” 111 S. Ct. at 2151.

The opinion of the Court of Appeals does not conflict in

any way with these decisions of this Court and, therefore,

does not require this Court to grant this petition.

IV. Petitioner Is Asking This Court To Rule On A

Hypothetical Situation In Its Discussion Of

Chapter 11 Reorganization Because Torwico Is

Not Reorganizing, But Liquidating.

Perhaps most important of all, petitioner is engaging in

speculation and is asking this Court to grant certiorari to

rule on its hypothetical situations. Petitioner, throughout its

brief, repeatedly refers to Chapter 11 reorganizations and

what might be the result of nondischargeable environmental

obligations to a reorganized” and operating debtor -- when

is

Regardless of petitioner’s doom and gloom

predictions as to the effect on reorganization if a debtor

must “spend money” to comply with the law, 28 U.S.C.

959(b) requires the debtor to operate in compliance with

state law and does not mandate that this requirement is null

and void if it costs the estate money.

25

this matter involves a debtor who has sold its business and

is therefore not operating, but liquidating.

The Court of Appeals correctly rejected the view

espoused by petitioner that would replace the compliance of

private citizens with local public health and safety regulation

- with government action. The petitioner erroneously

asserts that the opinion below undermines the basic policies

of the Bankruptcy Code, the debtor’s ’fresh start’ and equal

treatment for all creditors. (Pet. Brief at 24-25). "The

funds a debtor is forced to expend to comply with an

environmental agency’s order--for example, to remediate a

landfill to which the debtor shipped waste years prior to the

bankruptcy --will be unavailable to pay the claims of

lenders, suppliers, contractors, workers, retirees, tort

victims, and other legitimate claimants. ""* Id. at 25. These

contentions are without merit.

The petitioner had a legal obligation to operate its

potentially hazardous business in accord with applicable

police power regulations enacted to protect the public.

These legal responsibilities and the concomitant financial

obligations associated with compliance _ significantly

increased the risk of petitioner’s insolvency and of the

erosion or destruction of the collateral to which a lender’s

16

This, of course, is absurd on its face because the

regulatory obligations required here have nothing to do with

remediating landfills, nor is this site a multi-generator site

as petitioner erroneously suggests or even a site where

anyone except the petitioner has ever ted. Petitioner

Suggests that the State could order the c eanup of a landfill,

citing CERCLA §107 (a)(3), 42 U.S.C. §9607 (a)(3). This

Statute has nothing to do with this case. Moreover, as

indicated in Chateaugay, §107 of CERCLA does have an

alternate payment remedy. Whether resort to an alternate

payment remedy under CERCLA is a dischargeable claim in

_bankruptcy is not an issue in this case.

26

security interest might attach. Had petitioner complied with

the environmental laws to the fullest of its ability prior to

the filing of its bankruptcy petition, the estate funds that

petitioner wishes to protect may very well have been

exhausted and never become part of the estate anyway. No

creditor can be insulated against all business risks as

petitioner suggests. As this Court has previously

recognized, "it is a fundamental aspect of our free enterprise

economy that private persons assume the risk attached to

their investments," New Haven Inclusion Cases, 399 U.S.

392, 492 (1970), quoting Penn-Central Merger Cases, 389

U.S. 486, 510 (1968).

Petitioner talks about not thwarting a debtor’s

reorganization, but in this matter, the debtor is not

reorganizing -- it has sold its business and is liquidating --

and therefore nothing is dischargeable. In fact all of

petitioner’s arguments about the dangers of

nondischargeability rarely will apply to a corporate debtor,

who is only granted a discharge if reorganizing. 11 U.S.C.

1141 (d)(3). On the other hand, by not requiring a

reorganizing debtor to comply with regulations that apply to

nondebtors, petitioner is espousing a system that will afford

a commercial advantage to a debtor in a Chapter 11

reorganization at great cost to the public. Requiring a

debtor to comply with environmental obligations is not "an

act" directed at possession or control of the property of the

estate. To permit the debtor to walk away from its legacy

of pollution as petitioner suggests, because it requires

expenditures of estate assets, would permit the debtor to

operate in violation of the law and would give the

reorganizing debtor a competitive advantage over others --

something Congress clearly did not intend. See, K. Heidt,

The Automatic Stay in Environmental Bankruptcies, 67

American Bankr, L. Journal 70, 87.

By maintaining that the state should use public funds

under other statutes to perform any necessary cleanup on

27

petitioner’s site, petitioner is advocating a practice whereby

the debtor "seeks a fresh start with someone else’s

property." See, In re Sanderfoot, 899 F.2d 598, 608 (7th

Cir. 1990)(Posner, J. dissenting) rev’d ___U. S. aes

S.Ct. 1825 (1992). Only in the present case “someone

else’s property” is the public’s money or the public health

and welfare. The Third Circuit correctly refused to

countenance that result in this case.

28

CONCLUSION

For all of the foregoing reasons, the State of New

Jersey, Department of Environmental Protection and

Energy, requests that this Court deny the petition for a writ

of certiorari.

Respectfully submitted,

Deborah T. Poritz

Attorney General of New Jersey

Attorney for Respondents

Joseph L. Yannotti

Assistant Attorney General

Rachel Jeanne Lehr

Deputy Attorney General

Counsel of Record and On the Brief

R.J. Hughes Justice Complex

CN 093

Trenton, New Jersey 08625

(609) 984-4805

Dated: March 24, 1994