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In re In re Franklin Signal Corp.

Citation: 17 ELR 20369
No. No. 4-85-935, 65 Bankr. 268/25 ERC 1001/(Bankr. D. Minn., 09/29/1986)

The court holds that the trustee in a Chapter 7 bankruptcy may abandon, pursuant to 11 U.S.C. § 554(a), drums containing hazardous waste where the estate does not have sufficient assets to comply with state environmental laws. The court initially rules that the bankruptcy court cannot authorize the abandonment of property in contravention of state laws designed to protect the public health and safety unless conditions are formulated that will adequately protectthese concerns, concluding that this was the Supreme Court's intent in Midlantic National Bank v. New Jersey Department of Environmental Protection, 16 ELR 20278. Such an interpretation of Midlantic is consistent with dicta in the Court's earlier decision in Ohio v. Kovacs, 15 ELR 20121, and with the goal of preventing imminent danger to the public as a result of abandonment. The court next holds that the trustee may abandon 14 drums containing various wastes despite the possibility that this will violate Wisconsin laws concerning the appropriate storage and discharge of hazardous wastes, since the trustee has taken adequate steps to protect the public health and safety. The trustee undertook an investigation to determine the exact contents of the drums and to estimate the cost of cleanup, and informed the Wisconsin Department of Natural Resources of the results of the investigation. There is no evidence of any imminent danger resulting from storage of the drums until the party ultimately responsible for cleanup can be determined. The state has not taken any precautionary measures, indicating the low level of threat posed by the drums. Moreover, cost of cleanup is estimated to be approximately twice the amount of unencumbered cash left in the estate. The court notes that, upon abandonment, the drums become the property of the debtor corporation.

Counsel for U.S. Trustee
John A. Hedback
U.S. Trustees Office
550 U.S. Cthse., 110 S. 4th St., Minneapolis MN 55401
(612) 349-5300

Counsel for State of Wisconsin
Thomas L. Dosch, Ass't Attorney General
Department of Justice
114 E. State Capitol, P.O. Box 7857, Madison WI 53707
(608) 266-1221

Counsel for Debtor
David Gronbeck
Suite 380, 608 2nd Ave. S., Minneapolis MN 55402
(612) 339-1431