ELR Citation: ELR 20016
No(s). 93-5021 (3d Cir. Oct 25, 1993)

The court holds that a state's attempt to force a debtor to clean up a waste site that poses an ongoing hazard is not a "claim" that, for purposes of bankruptcy, must have been filed by a date certain, and that the debtor is therefore responsible for cleaning up the site. After the deadline for filing a proof of claim against the debtor had passed, the state environmental protection agency issued an administrative order and notice of a civil administrative penalty assessment against the debtor relating to a hidden illegal seepage pit on the debtor's property that contained hazardous wastes that were allegedly migrating into local waters. The court holds that the debtor's obligations under the administrative order do not constitute a claim by the state. A state possesses a right, through its inherent regulatory and police powers, to force the debtor to comply with environmental laws by remedying an existing hazard, rather than a right to payment for which the state must have filed a claim by a date certain. Thus, although a state cannot act as a creditor and force a debtor to pay money to the state, it may demand that the debtor take action to ameliorate an ongoing hazard that is in direct violation of state environmental laws. The court holds that although the debtor is no longer in possession of the property, it has access to the site and, under New Jersey law, an ongoing responsibility for the waste it disposes to the extent the waste poses a continuing hazard.

Counsel for Appellant
Timothy P. Neumann
Wood, Broege & Fischer
25 ABE Voorhees Dr., P.O. Box 2, Manasquan NY 08736
(908) 223-8484

Counsel for Appellee
Rachael J. Lehr, Deputy Attorney General
Attorney General's Office
R.J. Hughes Justice Complex, CN 093, Trenton NJ 08625
(609) 292-4919