## Facts

- An oil refinery operated by a corporate predecessor of Apex caused releases of petroleum products at a site in Hartford, Illinois.
- The releases formed a large underground hydrocarbon plume that contaminated groundwater and emitted vapors that entered nearby homes.
- The conditions were found to create hazards to health and the environment.
- The United States, acting through the EPA, sued under RCRA § 7003 to compel abatement of the endangerment.
- After a 17-day bench trial, the district court found Apex legally responsible for the nuisance and entered an injunction requiring cleanup.
- Apex argued it lacked in-house cleanup capability and would need to hire contractors, estimating compliance costs of about $150 million, potentially offset by contribution claims against others.

## Issues

1. Whether an injunction compelling cleanup under RCRA § 7003 is a dischargeable “claim” or “debt” under the Bankruptcy Code when the defendant previously received a Chapter 11 discharge.
2. Whether an equitable remedy constitutes a dischargeable “claim” only if the underlying breach “gives rise to a right to payment” within 11 U.S.C. § 101(5)(B).

## Decision

- The Seventh Circuit affirmed the district court’s injunction.
- The court held that the government’s demand for cleanup was not a dischargeable bankruptcy “claim” because it sought performance rather than payment.
- The court rejected Apex’s challenge to the district court’s factual findings and responsibility determination as meritless.
- The court concluded that Apex’s need to spend money to comply did not convert the injunction into a monetary claim.

## Legal Principles

- A Chapter 11 discharge eliminates pre-confirmation “debts,” defined as liabilities on “claims,” but only as those terms are defined in the Bankruptcy Code.
- An equitable remedy is a dischargeable “claim” under 11 U.S.C. § 101(5)(B) only when the breach gives the claimant an alternative “right to payment” (i.e., the equitable obligation can be satisfied by a money judgment in lieu of performance).
- Injunctive relief requiring abatement of ongoing environmental endangerment under RCRA § 7003 is not a dischargeable claim when the government lacks a statutory option to demand payment instead of compliance.
- The fact that compliance requires the defendant to hire contractors and incur substantial expense does not, by itself, create a governmental “right to payment” for bankruptcy-discharge purposes.

## Conclusion

The court held that a RCRA § 7003 cleanup injunction imposes an ongoing regulatory obligation that survives Chapter 11 discharge because it compels remediation rather than providing the government an enforceable substitute right to collect money in place of performance.


United States v. Apex Oil Co., 579 F.3d 734 (7th Cir. 2009)