ELR Citation: ELR 21365
No(s). 93-3284 (3d Cir. May 19, 1994)

The court holds that the Pennsylvania Department of Environmental Resources (DER) properly classified as administrative expenses response costs it incurred in contracting for the cleanup of abandoned hazardous waste in a printing facility. The owners of the facility ignored a DER order to dispose of the wastes properly, and filed a Chapter 11 bankruptcy petition that prompted DER to initiate an "interim response" under state law. Through a private contractor, DER cleaned up the facility and then filed an administrative expense claim with the bankruptcy court for the costs paid to the contractor and an additional 10 percent to cover administrative and legal expenses. The bankruptcy court denied the request for the additional 10 percent, but on appeal the district court awarded DER the entire amount it sought. The court first holds that Pennsylvania law effectively prohibited the owners from abandoning the hazardous wastes located at the facility. Therefore, if DER had not undertaken to cleanup the facility, the owners could not have escaped their obligation to do so. Furthermore, if the owners had arranged for cleanup after filing a Chapter 11 petition, the costs of cleanup would have constituted administrative expenses under 11 U.S.C. §503(b)(1)(A). The court next holds that the amount DER paid to the cleanup contractor was not excessive. The court holds that the Pennsylvania Legislature's implicit finding in Pa. Stat. Ann. tit. 35, §6020.507(b) and the evidence in the record sufficiently substantiated the 10 percent award for DER's administrative and legal costs. The court affirms the award of $113,622.30 in administrative expenses.

Counsel for Plaintiff
Edward S. Stokan, Kenneth T. Bowman
Department of Environmental Resources
400 Waterfront Dr., Pittsburgh PA 15222
(412) 442-4262

Counsel for Defendants
Reed J. Davis
Davis & Riley
1124 Frick Bldg., Pittsburgh PA 15219
(412) 471-8338

Before Stapleton and Cowen, JJ.: