In the Matter of H.L.S. Energy Co., Inc., Debtor. State of Texas v. John Patrick Lowe, Trustee

JERRY E. SMITH, Circuit Judge:

At issue is the priority to be afforded a state’s claim on a bankrupt estate, for costs incurred by the state in satisfaction of the estate’s post-petition environmental obligations. Because we conclude that such costs are “actual, necessary costs and expenses of preserving the estate,” see 11 U.S.C. § 503(b)(1)(A), we affirm the district court’s order that they be given priority as administrative expenses.

I

In 1991, H.L.S. Energy Co., Inc. (“HLS”), filed for bankruptcy reorganization under chapter 11. A large part of its assets consisted of operating interests in…