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In re In re Peerless Plating Co.

Citation: 17 ELR 20826
No. No. HG 83 0251, 70 Bankr. 943/26 ERC 1067/(Bankr. W.D. Mich., 03/12/1987)

The court holds that a trustee in bankruptcy of a hazardous waste site may not abandon the site with less than full compliance with the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and that the costs incurred by the Environmental Protection Agency (EPA) under CERCLA § 107 in cleaning up cyanide gas at the site are recoverable against the estate. The court first holds that postpetition cleanup costs are a core matter under the Bankruptcy Code, the disposition of which may be determined by a bankruptcy court. The court holds that the site may not be abandoned under § 554(a) of the Code as burdensome, even though the cleanup costs exceed all the assets of the estate, since the site poses an imminent and identifiable threat to public safety. The court holds that CERCLA imposes an implicit duty on the part of the trustee to expend the estate's unencumbered assets in cleaning up the site. The court holds that the trustee is the site owner under CERCLA, and holds inapplicable the theory that the estate is not liable for cleanup costs on the common law ground that EPA acted as a volunteer in discharging the estate's obligation. The court holds that because the trustee is the owner under CERCLA, EPA's postpetition claim for reimbursement cannot be defeated even if the claim actually arose prepetition. The court finally holds that EPA's claim should not be subordinated for its alleged bad faith in ignoring the bankruptcy court and in waiting until long after cleanup was completed before petitioning for reimbursement of costs, holding instead that EPA's malfeasance was due to its lack of bankruptcy expertise.

Counsel for Trustee
Larry A. Ver Merris
Day, Sawdey, Flaggert & Porter
Suite 300, 200 Monroe Ave., Grand Rapids MI 49503
(616) 774-8121

Counsel for Movant
Julie A. Woods, Ass't U.S. Attorney
399 Fed'l Bldg., Grand Rapids MI 49503
(616) 456-2404

Eva Herrernan
Land and Natural Resources Division
Department of Justice, Washington DC 20530
(202) 633-2000