In Pennsylvania v. Conroy, the United States Court of Appeals for the Third Circuit affirmed the decision of the United States District Court for the Western District of Pennsylvania. The court held that cleanup expenses incurred by a state environmental agency to remove the threat posed by hazardous wastes should be treated as administrative expenses under the Bankruptcy Code. Thus, the Third Circuit afforded state response costs high priority when the assets of the bankruptcy estate were distributed. In addition, this case expanded prior decisions by holding that administrative and legal costs incurred by a state agency, usually around 10% of the total costs, should also be awarded to the agency. This expansion is the most important contribution of Conroy. This paper will suggest amending the Bankruptcy Code to include an express administrative expense priority for hazardous waste remediation. Such an amendment is necessary, since neither the courts nor Congress has resolved the issue. Since 1986, however, the trend in the federal circuit courts has been toward affording state cleanup costs a high priority.
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