In the case of Midlantic National Bank v. New Jersey Department of Environmental Protection, 1985, the U.S Supreme Court ruled that a bankruptcy trustee could not abandon property in contravention of state environmental laws. The case arose when Quanta Resources Corporation filed for bankruptcy and its trustee sought to abandon two properties contaminated with oil due to their low value and high cleanup costs. The State of New Jersey objected on grounds that this would violate its public health and safety regulations. The court held that while the Bankruptcy Code allows trustees to abandon burdensome property, it does not permit them to do so without regard for non-monetary interests such as public health or safety concerns under state law. Therefore, abandonment was disallowed unless compliance with these laws was assured.

In the dissenting opinion for Midlantic National Bank v. New Jersey Department of Environmental Protection, Justice Powell argued that the majority's decision to limit a bankruptcy trustee's abandonment power under Section 554(a) was not supported by either legislative history or policy considerations. He contended that Congress intended to grant trustees broad powers of abandonment in order to facilitate the expeditious resolution of bankrupt estates and maximize their value for creditors. By imposing environmental restrictions on this power, he believed that the Court had unnecessarily complicated bankruptcy proceedings and potentially reduced estate values. Furthermore, he suggested that any concerns about potential public harm could be addressed through existing state laws governing hazardous waste disposal rather than federal bankruptcy law.