Eight days after receiving an environmental violation notice related to bulk storage of petroleum on property that he owns in Chautauqua County, the former owner of a gas station and convenience store filed a Chapter 13 bankruptcy petition.

The petition made no mention of the violation notice. The New York State Department of Environmental Conservation (“NYSDEC”) was not notified of the petition and had no opportunity to object to the debtor’s repayment plan.

The bankruptcy court, unaware of the environmental issue, confirmed the repayment plan, including the owner’s proposal to surrender his property in the Village of Westfield to Chautauqua County for outstanding taxes.

More than a year later, NYSDEC filed a motion with the bankruptcy court to compel the owner to bring the property into compliance with New York’s environmental laws.

The owner claimed that since he had surrendered the property to Chautauqua County, any responsibility for environmental remediation is now the county’s problem. But the county, “perhaps due to a recognition of environmental problems,” declined the opportunity to foreclose and has no ownership interest, ruled Western District Chief Bankruptcy Judge Carl L. Bucki in Rochester, NY.

And even if it had, the court held, a surrender under the U.S. Bankruptcy Code amounts to a “proposed use or sale” and not a transfer of title. “Bankruptcy is not a tool for evasion of environmental responsibility,” Judge Bucki wrote.

He held that while he lacked the authority to compel the debtor’s compliance with environmental regulations, he can dismiss the bankruptcy petition if the owner does not address the problems and gave NYSDEC the option of either pursuing that remedy or commencing enforcement proceedings in New York State court.