## Facts

- Penn Terra Limited operated coal surface mines in Armstrong County, Pennsylvania.
- Pennsylvania’s Department of Environmental Resources (DER) found Penn Terra in violation of state surface mining, reclamation, and anti-pollution requirements.
- Penn Terra entered a consent order obligating it to perform specific remedial and reclamation work (including backfilling and erosion/sedimentation controls) but failed to complete it.
- Penn Terra filed for Chapter 7 bankruptcy.
- After the bankruptcy filing, DER pursued an injunction in Pennsylvania Commonwealth Court to compel compliance with the consent order; the court issued an injunction requiring performance of physical remedial work, not payment of a sum certain to the state.
- Penn Terra sought relief in bankruptcy court, asserting DER’s enforcement violated the automatic stay under 11 U.S.C. § 362(a); the bankruptcy court enjoined DER, treating the action as enforcement of a money judgment outside the police-power exception.
- The district court affirmed, reasoning that because compliance required expenditures, the injunction effectively enforced a money judgment.
- DER appealed.

## Issues

1. Whether DER’s post-petition action to compel environmental reclamation is an exercise of police or regulatory power exempt from the automatic stay under 11 U.S.C. § 362(b)(4)–(5).
2. Whether an injunction requiring performance of environmental remediation constitutes enforcement of a “money judgment” subject to the automatic stay because compliance will cost the debtor money.

## Decision

- The Third Circuit reversed the district court and vacated the bankruptcy court’s injunction against DER.
- DER’s action to enforce surface mining and reclamation obligations was an exercise of the Commonwealth’s police and regulatory power within § 362(b)(4)–(5).
- The state-court injunction was not enforcement of a money judgment because it required remedial performance rather than payment of a sum certain to the state.

## Legal Principles

- The § 362(b)(4)–(5) exception allows governmental units to pursue actions enforcing police or regulatory power notwithstanding the automatic stay; § 362(b)(5) limits only the enforcement of money judgments.
- “Enforcement of a money judgment” ordinarily involves collection of a sum certain owed to particular parties; an order that incidentally requires the debtor to spend money is not necessarily a money judgment.
- Courts should distinguish remedies aimed at preventing ongoing or future harm (equitable/regulatory relief) from remedies aimed at compensating for past harms (money-judgment-like relief).
- Absent clear congressional intent, bankruptcy law should not be read to broadly preempt state regulatory enforcement, particularly where the state seeks compliance with environmental laws rather than debt collection.

## Conclusion

The Third Circuit held that a state injunction compelling a bankrupt mining operator to perform environmental reclamation is exempt from the automatic stay as police-power enforcement and is not barred merely because compliance requires expenditures, so long as the state is not enforcing a sum-certain money judgment.


Penn Terra Ltd. v. Dep’t of Env’t Res., 733 F.2d 267 (3d Cir. 1984)