Casenotes: Bankruptcy — Trustee May Not Abandon Property in Contravention of a State Statute or Regulation That Is Designed to Protect the Public from Identified Hazards. Midlantic National Bank v. New Jersey Department of Environmental Protection, 474 U.S. 494 (1986) (original) (raw)

1988, University of Baltimore Law Review

The name of the company is Quanta Resources Corporation ("Quanta"). Quanta was incorporated in Delaware in March 1980. In July of 1980, Quanta entered into an agreement to acquire Edgewater Terminals, Inc., which operated a facility for processing waste oil and oil sludge. Quanta also operated a waste oil processing facility in Long Island City, New York. Brieffor Petitioner at S-6, Midlantic Nat'l Bank v. New Jersey Dep't of Envtl. Protection, 474 U.S. 494 (1986) (No. 84-801). 2. Quanta was operating the facility under a "Temporary Operating Authorization" ("TOA") issued by the New Jersey Department of Environmental Protection ("NJDEP"). In August of 1980, Quanta received an administrative order from the NJDEP to repair serious maintenance problems. In May of 1981, the NJDEP ordered Quanta to remove all sludge from the site, improve maintenance procedures, and rectify the chronic spills and leaks at the facility. An injunction was also ordered, exnressly prohibiting the facility from accepting oil contaminated with polychlorinated biphenyls (PCBs), a toxic carcinogen. A month later, on June 23, 1981, NJDEP investigators tested Quanta's tanks and discovered unlawful concentrations of PCBs. Brief for Respondent at 3-4, Midlantic Nat'l Bank v. New Jersey Dep't of Envtl. Protection, 474 U.S. 494 (1986) (No. 84-801). 3. The illegal concentration of PCBs in Quanta's tanks was in contravention of the Spill Compensation and Control Act, codified at sections S8: 10-23.11 to-23.11z of the New Jersey Statutes Annotated (West 1982 & Supp. 1988) and the Solid Waste Management Act, found at sections 13:IE-l to-116 of the New Jersey Statutes Annotated (West 1979 & Supp. 1988). Environmental investigators also found illegal concentrations of toxic waste at the company's Long Island City facility in violation of New York law. This casenote, however, deals primarily with the violations of the New Jersey statutes. 4. On October 6, 1981, Quanta filed a voluntary petition for reorganization under chapter 11 of the Bankruptcy Code. The next day, the NJDEP directed the company to remove all hazardous waste, including all material contaminated with PCBs, and to prepare and execute a closure plan for the facility. One month later, the company converted the reorganization petition to a liquidation proceeding under chapter 7. Midlantic Nat'l Bank v. New Jersey Dep't of Envtl. Protection, 474 U.S. 494, 497 (1986). S. On October 8, 1982, the trustee filed the first of a series of notices proposing the abandonment of the PCB-laden waste oil at the New Jersey facility. Brief for Petitioner, supra note 1, at 8. The trustee claimed that the contaminated property was burdensome and of inconsequential value to the estate, and therefore may be abandoned pursuant to section SS4(a) of the Bankruptcy Code. Midlantic, 474 U.S. at 497; see also 11 U.S.C. § SS4(a) (1982).