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In re In re Wall Tube & Metal Prods. Co.

Citation: 17 ELR 20284
No. No. Civ-2-86-99, 24 ERC 2010/(E.D. Tenn., 08/12/1986) Aff'd

The court holds that hazardous waste cleanup response costs incurred by Tennessee that would be recoverable from the debtor under the Comprehensive Environmental Response, Compensation, and Liability Act are not entitled to administrative expense priority in voluntary bankruptcy proceedings under the Bankruptcy Code. The court agrees with the bankruptcy court, 16 ELR 20547, that the state's inspection and identification expenses were not the actual and necessary costs and expenses of preserving the estate as required by 11 U.S.C. § 503(b)(1)(A) for treatment as administrative expenses. The court disagrees with In re T.P. Long Chemical, Inc., 15 ELR 20635, which held that response costs incurred by the Environmental Protection Agency were entitled to priority, concluding that the bankruptcy court in that case inadequately addressed the language and purpose of § 503. The Supreme Court's decision in Midlantic National Bank v. New Jersey Department of Environmental Protection, 16 ELR 20278, also does not compel a decision in favor of the state. Although Midlantic involved related issues, the Court specifically excluded the question of whether the state's hazardous waste response expenditures should be accorded priority as administrative expenses. The court rejects the state's argument that Midlantic dictates that 28 U.S.C. § 959(b) be construed to mean that a liquidating trustee must assume the same duties and responsibilities under state environmental laws as any property owner. Although § 959(b) requires that the trustee manage the property in accordance with state law, § 959(a) indicates that the provision is addressed to trustees carrying on business connected with the property. Moreover, language in the Midlantic decision suggests that the Supreme Court did not find § 959 applicable at all to the liquidating trustee, but cited it in support of its interpretation of congressional intent concerning abandonment under the Bankruptcy Code.

Counsel for State of Tennessee
W. J. Michael Cody, Attorney General; Michael D. Pearigen, Ass't Attorney General
450 James Robertson Pkwy., Nashville TN 37219
(615) 741-6474

Counsel for Trustee
Ferdinand Powell Jr.
115 E. Unaka Ave., Johnson City TN 37605
(615) 926-0716

Counsel for Debtor
Robert M. Child
Child, O'Connor & Petty
15th Fl., Third Nat'l Bk. Bldg., Knoxville TN 37901
(615) 525-7115