Seventh Circuit Court of Appeals Commentary : In Their Opinion : Lawyer & Attorney Michael E. Rigney : Kelley Drye & Warren Law Firm

ADKINS v. VIM RECYCLING, INC. (May 3, 2011)

VIM Recycling operates a waste dump in Elkhart, Indiana. It entered into an Agreed Order with the Indiana Department of Environmental Management in 2007 relating principally to the removal of certain waste it referred to as "C" grade waste. When VIM did not comply with the order by the September 2008 deadline, IDEM sued them in state court. A group of area residents attempted to intervene and expand the scope of the lawsuit beyond "C" waste. They also sought damages. When the state court judge limited their intervention to the original scope of the lawsuit, they withdrew their claims. Instead, in October, they brought a RCRA suit in federal court, after providing the required notice and waiting the required time period. Their federal suit included claims relating not only to "C" waste, but also to “A”, “B”, and “C&D” wastes. It sought relief both under RCRA’s "violation" provision, alleging that VIM violated several Indiana regulations, and under RCRA’s "endangerment" provision, alleging that the VIM waste site presented an imminent and substantial danger. About a month later, IDEM brought a second lawsuit in state court, this one relating to "B" waste. VIM moved to dismiss the RCRA "violation" action on the grounds that RCRA prohibited a private action when the state is diligently prosecuting an action. VIM also asked for abstention under both Burford and Colorado River. Chief Judge Simon (N.D. Ind.) agreed, dismissed the "violation" count, and abstained on the "endangerment" count. Plaintiffs appeal.

In their opinion, Circuit Judges Ripple (concurring in part and dissenting in part) and Hamilton and District Judge Murphy reversed and remanded. The Court first addressed the "violation" count and the statutory bar. The Court corrected the parties’ treatment of the issue as jurisdictional, noting the Supreme Court's recent reminders to distinguish between truly jurisdictional rules and other, claims-processing rules. The RCRA statutory bar is a claims-processing rule. On the merits, the statutory bar prohibits the commencement of an action if a state "has commenced and is diligently prosecuting" an action requiring compliance with the same standard or regulation. The Court concluded that neither IDEM action totally barred the private action. The second action was not "commenced" at the time of the federal action so it cannot bar the action. The first action was commenced before the federal action so it bars the federal action -- but only to the extent that the claims overlap. The RCRA plaintiffs’ "C" claims were properly dismissed but the plaintiffs' other claims with respect to other types of waste can be pursued. The Court turned to the two abstention doctrines at issue in the case. Although the Court noted that it was applying an abuse of discretion standard of review, it also noted that federal courts have a "virtually unflagging obligation" to exercise their jurisdiction and should not abstain from doing so except in exceptional circumstances. Colorado River abstention comes into play when there are parallel state and federal proceedings and judicial economy supports abstention. But there must be both parallel proceedings and exceptional circumstances. Here, the Court found neither. The parties are not the same, the claims are not the same, and the state court case would not dispose of the federal case. Furthermore, Congress, in enacting RCRA, expressly contemplated simultaneous federal and state court proceedings. The Court concluded that the district court did abuse its discretion in adopting Colorado River abstention. Burford abstention, on the other hand, comes into play when a federal proceeding could be disruptive to a coherent state policy on a matter of public concern. But the Court noted that Burford abstention requires a state forum with specialized expertise. Since the IDEM cases are proceeding before a court of general jurisdiction, Burford abstention simply does not apply.

Judge Ripple concurred with most of the majority's conclusions but dissented with respect to Colorado River abstention. He believed that the simultaneous proceedings were a "recipe for delay, confusion, and wasted judicial resources" and satisfied the requirements for Colorado River abstention.

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UNITED STATES v. APEX OIL CO. (August 25, 2009)

Years ago, a corporate predecessor of Apex Oil Co. owned a refinery near Hartford, Illinois. According to the EPA, the operation of the refinery contributed to the contamination of the groundwater in the area. The United States brought an action, pursuant to the Resource Conservation and Recovery Act (RCRA), for an injunction to require Apex to clean up the site. Apex argued that its earlier discharge in bankruptcy relieved it of any cleanup obligation. The district court issued the injunction. Apex appeals.

In their opinion, Judges Cudahy, Posner and Kanne affirmed. The Court identified the principal issue on appeal as whether the government's claim for the injunction was discharged in bankruptcy. Under the bankruptcy laws, the Court stated that a debtor is discharged from any "liability on a claim." A "claim" is further defined as a "right to payment" or a "right to an equitable remedy for breach of performance if such breach gives rise to a right to payment." The Court concluded that the natural reading of the bankruptcy provision is that an equitable claim is dischargeable if the holder can obtain a money judgment in lieu of the injunction under certain circumstances. Here, however, the statute under which the government sought the injunction (RCRA) does not authorize any form of money judgment -- the only remedy available to the government is a cleanup order. The fact that the cleanup order would require a significant payment by Apex did not convert the injunction into a money judgment. The Court distinguished the Supreme Court's opinion in Kovacs. In Kovacs, the plaintiffs were seeking money from the debtor. Apex also challenged the injunction itself on vagueness grounds. The Court actually agreed that the injunction was vague and that it has in the past insisted on compliance with the requirement that an injunction describe in some reasonable detail the acts required. However, the Court concluded that that policy applies when compliance with the rule is feasible. Here, the subject of the injunction is a complicated refinery remediation. In such cases, more leeway is necessary.

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SYCAMORE INDUSTRIAL PARK ASSOC. v. ERICSSON  (October 20, 2008)

Ericsson used to manufacture wiring and cable at its 28-acre, nine-building facility in Sycamore, Illinois. The buildings were heated by two large steam boilers and a network of piping. Most of the system is insulated. In January of 1983, Ericsson ceased its operations and decided to sell the property. Michael Kreiger, Ericsson’s property manager at the site, decided to buy the property and operate it as an industrial park. Between December of 1984 and the spring of 1985, Ericsson installed natural gas heaters throughout the property and discontinued the use of the steam boiler system. Meanwhile, Kreiger agreed to buy the building and formed Sycamore Industrial Park Associates (“Sycamore”) to hold title to the property after the purchase. The sale closed in May of 1985 and the property was immediately assigned to Sycamore. Sycamore discovered asbestos in the insulation of the boilers and associated piping. Sycamore brought an action against Ericsson based on CERCLA and RCRA to compel it to remove the asbestos. The court granted summary judgment for Ericsson, holding that the abandonment of the insulation in place was neither a CERCLA “disposal” nor a RCRA “handling, storage, treatment, transportation, or disposal.” Sycamore appeals.

In their opinion, Judges Flaum, Williams, and Sykes affirmed. The Court first addressed the CERCLA claim. To prevail, Sycamore had to show that Ericsson owned the facility at the time it “discharged, deposited, injected, dumped, spilled, or leaked” a solid or hazardous waste. The Court referred to its prior decision in G.J. Leasing for the proposition that asbestos abandoned in place in a structure does not create CERCLA liability, even when the structure is sold. CERCLA “disposal” requires a threat that the asbestos will be emitted or discharged into air or water. Here, all of the asbestos is enclosed and not a threat to enter the environment. The Court found no CERCLA liability and proceeded to address the RCRA count. To prevail on its RCRA count, the Court stated that Sycamore had to show that Ericsson “handled, stored, treated, transported, or disposed of” solid or hazardous waste. Because RCRA and CERCLA use the same definition of disposal, the Court adopted its analysis of the CERCLA claim to conclude that there was no RCRA disposal either. The district court properly entered judgment for Ericsson on the both counts. 

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