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Emerging Tensions Between CERCLA and the Bankruptcy Code

May 1993

Citation: ELR 10268

Author: Patricia L. Quentel

The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or Superfund)1 provides for the allocation of responsibility for and cleanup of damage to the environment caused by hazardous substances.2 The policies underlying CERCLA assign responsibility for payment of cleanup costs to those who pollute. In contrast, the policies underlying the Bankruptcy Code3 attempt to provide a reorganized debtor the opportunity for a fresh start after certain claims against it have been discharged. These "competing objectives"4 have come into focus as the U.S. Environmental Protection Agency (EPA) has attempted to assert liability for cleanup costs against business entities which have filed for protection under the Bankruptcy Code.5

The juxtaposition of the Bankruptcy Code's policy of discharging debts with CERCLA's policy of making the polluters pay for cleanup costs of hazardous substances creates a tension between these two statutory schemes. The stakes in resolving this tension are high, as statistics on CERCLA's cleanup costs and bankruptcy filings illustrate. For example, it is estimated that the average cost of cleaning up a hazardous waste site on CERCLA's national priorities list (NPL)6 is over $40 million.7 Further, according to the Administrative Office of the United States Courts, more than 970,000 bankruptcy cases were filed during the year ended June 30, 1992. This figure reflects a 10.6 percent increase since 1991 and a 167 percent increase since 1985.8

Patricia L. Quentel practices commercial, bankruptcy, and real estate law as an associate with Buist, Moore, Smythe & McGee, P.A., in Charleston, South Carolina. The author received a J.D., cum laude, from the University of Wisconsin Law School, where she was a managing editor of the Wisconsin Law Review, and a B.A., cum laude, from Lawrence University. She served as a law clerk to the Honorable Donald Russell, U.S. Court of Appeals for the Fourth Circuit, from 1988-89.

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