1992-08-13_GENERAL DOCUMENTS - C1981017 (2)

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that the owner or possessor thereof would be bound to do if in possession thereof." The Colorado regulatory scheme provides support for the "ongoing obligation" theory. For example, as previously noted, the Mined Land Reclamation Board may require Resources to increase the amount of its bond for good cause shown. The Board presumably could require an increase in the bond after the filing of Resources' bankruptcy, and the obligation to increase the bond arguably.would arise post - petition and therefore be an administrative expense priority in Resources' bankruptcy case. Kovacs, supra, has been widely cited in support of the "ongoing obligation" theory. Prior to bankruptcy, the debtor agreed to entry of a judgment requiring him to pay $75,000 to the state for cleanup work. The debtor then filed bankruptcy, and the Supreme Court held that the judgment had converted a cleanup order into an obligation to pay money. This was a pre - petition claim which was dischargeable in bankruptcy. However, the court stated that: [W]e do not question that anyone in possession of the site . . . must comply with the environmental laws of the State of Ohio. Plainly, that person or firm may not maintain a nuisance, pollute the waters of the State, or refuse to remove the source of such conditions. In In re Wall Tube and Metal Products Co., 831 F.2d 118 (6th Cir. 1987), the Sixth Circuit held that environmental cleanup expenses are necessary "to preserve the estate in required compliance with state law and to protect the health and safety of a potentially endangered public," and therefore granted such expenses administrative priority. The court cited Kovacs in support of the proposition that bankruptcy law recognizes "the importance of complying with laws that protect the public health and safety." In re Pierce Coal and Construction, Inc., 65 Bankr. 521 (Bankr.N.D.W.Va. 1986) analyzed the priority of environmental claims somewhat differently. The court limited the state's administrative priority to the cost of reclaiming land which was disturbed post - petition by the debtor in possession. The court found that reclamation costs stemming from pre - petition operations matured as pre - petition claims, even if the costs became due post - petition. The court stated that it had no authority to elevate a pre - petition unsecured claim to an administrative claim, and therefore treated such claims as general unsecured claims. -6-