S. 610 Chemical Weapons Convention Implementation Act of 1997

S. 610 Chemical Weapons Convention Implementation Act of 1997

To implement the obligations of the United States under the Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on Their Destruction, known as `the Chemical Weapons Convention' and opened for signature and signed by the United States on January 13, 1993. MEMORANDUM
In Further Response to Prof. Bruce Markell Re: Section 603 of Chemical Weapons Convention Implementation Act
Editor's Note: Other Commentary on Section 603 of S. 610:

Professor Markell has now responded to my comments on his article about the proposed revisions to the automatic stay that are contained in S. 610, the implementing legislation for the Chemical Weapons Bill. He attacks the process by which the language was included and disputes whether the bill says what it means. What he conspicuously fails to do is engage the real issue here: namely, what should be the proper scope of the police and regulatory exception. If there is agreement on that point, then it matters little whether Congress arrived at that conclusion on its own or whether it recognized and built on the work of the Commission. (In this regard, I would reiterate the point I made previously — while NAAG is obviously in agreement with this proposal, it did not contact the Senate or request that this issue be dealt with in this bill. To the contrary, the government has raised these issues with the Commission from day one and proposals have been presented to and debated extensively before the Government Working Group and the Commission as a whole. Indeed, the Commissions's current working proposal endorses much, albeit not all, of this proposal. That is all that the government did.) It does little to advance the debate to engage in ad hominem references to "lobbyist-supported and lobbyist-drafted language" to describe actions that are no different from those of every other participant in the process before the Commission (including, of course, the good Professor himself.)

I also find offensive Professor Markell's statement, that the government's position that the proposal excludes payment of monetary judgments is bad drafting, at best, and "dissembling," at worst. The government has stated explicitly and unequivocally in every discussion there has been of these issues that it does not seek to change the current system by which it may liquidate, but not collect, monetary judgments obtained in police and regulatory actions. Professor Markell can hardly deny that the proposed language, by incorporating the limitation that is presently contained in §362(a)(5), at least evinces an effort to retain that distinction — and Commissioner Edith Jones of the 5th Circuit has indicated that she reads the proposal in the same way that the government does. While ambiguity in drafting is an ever-present hazard, accusing a proposal's proponents of undertaking the effort in bad faith is unlikely to advance the dialogue. In any event, fighting over the current language, I suggest, misses the point. If the debate would, instead, focus on reaching agreement on what the scope of the exception should be, it should certainly then be possible for persons of good will to ensure that the proposal does correctly state that understanding.

Turning to the merits of this debate, then, the government believes that there is a great need to clarify the existing language in §362. Congress has already made clear that it wishes to allow the normal police and regulatory processes to go on, even in situations where enforcement of the regulatory decision would, inevitably, affect estate property. Having made the policy judgment to allow the process to proceed to that point, it will only be in rare situations that the bankruptcy court will have any power to bar the government from implementing the order. This is not because government actions are unique; rather, it is simply an inescapable result of the Full Faith and Credit Clause — like every other court, a bankruptcy court is not authorized to relitigate the merits of determinations made by other courts with jurisdiction to hear the case. If one accepts that simple principle of jurisprudence, then it follows logically that a bankruptcy court can refuse to allow the enforcement of those governmental orders only if it decides that it can disregard the finding that the debtor is violating the law and authorize that lawbreaking if this is what is necessary to assist the debtor's reorganization. I challenged Professor Markell in my initial response to find authority in the Bankruptcy Code for placing such startling and far-ranging authority in the bankruptcy courts and I renew that challenge now.

I submit that there is no such general authority. (Congress clearly knows how to make the Code govern, "notwithstanding applicable non-bankruptcy law" in treating matters such as executory contracts — but there is no such statement with respect to police and regulatory actions.) Yet, despite the fact that the court will have virtually no discretion, at that stage of the proceedings, to deny the government's request to enforce its order, the current language in §§362(a)(3) and (6) can be read to hold that the implementation of such orders is barred until the court carries out the ministerial act of lifting the stay. The proposed language was meant to eliminate the need for the government to take that additional step, because it is an unnecessary source of cost and delay and encourages debtors to seek to relitigate matters which have been finally adjudicated.

  • That is not to say that the bankruptcy court will never have the power to enjoin police and regulatory actions. Clearly, it may act on a motion by the debtor that challenges the government's assertion that is exercising police and regulatory authority. In addition, even if the action is ostensibly covered by the governmental exception to the stay, the court may still enjoin use of applicable non-bankruptcy principles, such as bad faith or equitable estoppel, to enjoin the government. Excepting an action from the automatic stay does not immunize the government from such motions; at most, it merely presumes the regularity of the government's actions and requires the debtor to affirmatively raise the issue if it believes the government is not acting properly. Thus, while I may debate Professor Markell's view that check prosecutions are "bad faith" actions, the fact is that motions to enjoin the government on that basis are routinely filed (and usually denied) in criminal cases, even though such cases are exempt from all aspects of the stay. Ipso facto, the debtor is entitled to raise the issues in civil proceedings. Allowing challenges on these limited bases, though, is a far cry from an assertion that the court has a general authority to enjoin the government so as to allow the debtor to continue to break the law.

    Moreover, even though I agree that these challenges may be made, if they are raised at the appropriate time, I strongly disagree with the assumption that the debtor should be able to use §362(a)(3) as the basis for seeking a plenary, de novo review of these issues after the regulatory process is complete and the government is prepared to implement its order. Waiting to conduct such a review until that point, I suggest, comes far too late in the process. In all but the most unusual cases, these issues will be apparent and ripe for decision as soon as the government begins its regulatory actions. When the government continues an enforcement action after a bankruptcy filing, it does so, perforce, based on the assertion (whether explicit or implicit) that its actions are justified by the police and regulatory exception and are not being taken in bad faith. If the debtor disagrees with that position, it can and I suggest must timely assert them, either before the bankruptcy court by means of a requested injunction, or in the nonbankruptcy proceedings as an affirmative defense, long before the final judgment is reached. It makes neither legal nor logical sense to suggest that a debtor may allow the litigation process to run its course in state court and only then raise these issue before the bankruptcy court if the results prove unfavorable. The non-bankruptcy court may have explicitly ruled on these issues — and, if so, its judgment is entitled to full faith and credit. But, even if it did not, the principles of res judicata dictate that these defenses must be raise at an appropriate time or they will be waived. It is one thing to say that the government must be prepared to defend its actions if the debtor challenges them in a timely fashion; it is quite another to say that the reason for retaining §§362(a)(3) and/or (6) is to ensure that debtors may have this very belated bite at that apple.

    Some may view these arguments as overly technical or legalistic. Why not, after all, let the bankruptcy court, the "authority" on the automatic stay, decide those issues once they are really "crucial?" Or why not let the bankruptcy court "balance" the important goals of the Code against the regulatory requirements of the other statute? Why not indeed. While these arguments may seem tempting, they are based on the notion that bankruptcy is an area in which normal rules of jurisprudence simply don't apply — and that is a very dangerous slope to begin to venture down. Moreover, while there may seem to be little harm in allowing judges to exempt a debtor "just this once" from just this little "technicality," the legal and practical drawbacks to granting such unbounded authority to judicial actors are insurmountable. What standard would they use to "balance" a goal against a law? What evidence would be admissible to prove the "need" for the law? What presumption of validity would be accorded to the conclusions of the statute's drafters on those issues? Perhaps most importantly, how would the interests of third parties like neighbors and competitors be recognized in this process? Professor Markell does not like legislatures passing laws without notice and comment — surely he does not suggest that a court should be allowed to override a duly-enacted law without according those same rights to everyone affected by the change?

    All of this suggests why we believe the present proposal is necessary. Professor Markell disagrees and argues that there is no reason why the current legislation should go beyond language dealing with chemical weapons inspectors. His proposal is flawed for several reasons:

    • First, if a change is made only with respect to chemical weapons, this would strongly suggest, by negative implication, that §§362(a)(3) and (6) do apply to bar all other governmental police and regulatory actions that may affect estate property. The courts are currently split on these issues, but adopting Professor Markell's proposal would strongly suggest to them that the argument should be resolved against the government. Thus, his change would not be neutral, but would leave regulators in a weaker position than they are now — which directly contradicts the recommendation from the Working Group of the Bankruptcy Review Commission that the government's ability to act should be strengthened.

    • Second, while chemical weapons are undoubtedly dangerous, in reality, the number of filings involving such parties are likely to be minuscule, at best. If it's important to ensure that the government can act in those highly unlikely cases, why is it any less important to ensure that it may act in the more mundane, but far more likely, situations that occur? Shutting down an unsanitary restaurant without delay, for instance, does not have the glamour of seizing chemical weapons — but is far more likely to actually prevent illness and death. Granted, most courts will probably overlook the "technical" violation that occurs when the health inspectors padlock the doors without obtaining relief from the stay, but should a government be forced to operate this way — protecting the public good only at its peril and under the constant threat of contempt sanctions? I suggest that is no way to run a railroad —or a government.

    • Finally, Professor Markell's suggested language does not deal with §362(a)(6) and he continues to profess a lack of understanding as to why the proposal in S.610 deals with that section. The reason is simple. By its terms, that section prohibits any act to collect or recover on a pre-petition claim — words which, applied literally, cover far more than just attempts to receive actual payment of one's claim. Debtors have frequently argued that the section should be applied according to its literal terms, so as to bar even regulatory actions that are explicitly covered by the section 362(b)(4) and (5) exceptions. In their view, every act that the government takes, from the first filing of a complaint to the last appeal, is simply a step along the way to collecting on the claim and, as such, is barred. Again, to be sure, most courts view that interpretation of the section as "absurd," and rewrite its language so that it does not apply to actions that are otherwise excepted from the stay. But, so long as the words are as broad as they are, they will invite unnecessary litigation. If the section were rewritten to narrow it to its intended scope; i.e., nonjudicial acts of harassment or coercion, then there might be no need to have a governmental exception to it. Until then, though, it is important to clarify that it does not apply to normal police and regulatory litigation and that is what the language in S.610 attempts to do, by allowing enforcement of regulatory judgments, while excepting the enforcement of money judgments.

    Finally, Professor Markell returns to Seminole as a reason for retaining the automatic stay. Much of the debate on this topic seems to proceed on the notion that state laws allow government officials to seize money and assets of the estate in blithe disregard of the Due Process Clause. Obviously that is not the case. Indeed, the vast majority of police and regulatory seizures will only take place after prolonged bureaucratic wrangling so the debtor will have ample opportunity to name the appropriate state official (rather than the state directly) and request an injunction against the actions being threatened by that official. Moreover, even where tangible assets or a bank account are seized or frozen without a preliminary hearing, it may still be possible to obtain injunctive relief against the state official to obtain the return of the items, so long as the debtor retains an ownership interest in the property. Finally, as to the small number of cases that may remain, I am confident that there be some forum where monetary claims against a state may be heard in virtually all instances. State politicians must answer to their constituents, after all, and those persons are unlikely to allow the government to trample on them without an opportunity for redress for long. Those state forums, in turn, are required to enforce federal laws equally with state laws.

    Failing to do so is unconstitutional and would be subject to appeal to the state Supreme Court and to the United States Supreme Court. While in an occasional case, the need for such review may result in greater cost and delay than would occur if the states were fully amenable to suit in bankruptcy court, this is part of the price we pay for our federal system. (Indeed, the frequent efforts by debtors to use bankruptcy as a means of shifting pending state court litigation to bankruptcy court has its costs as well, but that too is part of the system.) In any event, the Supreme Court has spoken and Seminole is the law of the land. In my view, the cases where Seminole will raise substantial issues will be far fewer than those where it is important to clarify the government's ability to act to protect its citizens during a bankruptcy case. That is what this amendment is about, and I continue to believe it is necessary and appropriate.