State Enforcement of Environmental Laws Against Bankrupt Entities

June 1986
Citation:
16
ELR 10143
Issue
6
Author
James D. Morris

Editors' Summary: The rationalization of conflicts between environmental law and bankruptcy law continues. The recent emergence of a substantial body of state and federal law imposing financial liability on businesses for the cleanup of hazardous wastes has brought environmental lawyers into the realm of bankruptcy with increasing frequency. Attempts to mix the two bodies of law often produce conflict, because the laws serve distinct purposes. Two of the disputes have risen to the Supreme Court, but major issues remain. The author reviews the interaction of state environmental enforcement and the bankruptcy principles governing stays of actions to recover money from the bankrupt, the extent to which state enforcement claims may be discharged in bankruptcy, and abandonment by the trustee in bankruptcy of liability-ridden hazardous waste sites owned by the estate in bankruptcy. He concludes that bankruptcy law should not be an insuperable obstacle to force the cleanup of sites owned by bankrupt entities, especially in light of the Court's recent decision in Midlantic National Bank v. New Jersey Department of Environmental Regulation, which held that the trustee may not abandon such sites.

Mr. Morris is Assistant Counsel in the Pennsylvania Department of Environmental Resources' Eastern Region Office in Philadelphia.

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State Enforcement of Environmental Laws Against Bankrupt Entities

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