A federal court in West Virginia has ruled that the U.S. government may proceed with a Clean Air Act (CAA) and Resource Conservation and Recovery Act (RCRA) enforcement action, even though defendant and its subsidiaries have filed for bankruptcy. United States v. RG Steel Wheeling, LLC, No. 12-19 (N.D. W. Va. 7/9/12). According to the court, the action was exempt from the automatic stay provision of the Bankruptcy Code under the police and regulatory powers exception in section 362(b)(4).

The court found that the government’s requests to enjoin the defendant from further violating the acts and to require it to maintain associated permits “are undoubtedly exempted from the automatic stay pursuant to § 362(b)(4).” While the court also found the government’s bid to assess civil penalties to be exempt, it left defendant with the option to seek an injunction under section 105(a) of the Bankruptcy Code, which authorizes bankruptcy courts to enjoin the continuation of ongoing judicial proceedings that are exempt from the automatic stay.

Defendant operated two steelmaking facilities in Ohio, both of which allegedly violated the CAA numerous times from July 2004 to August 2008. The company purportedly violated RCR A by failing to properly dispose of and transport hazardous waste at a facility in West Virginia.