Bankruptcy and the Administrative State
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by
ROBERT KENNETH RASMUSSEN*
The main challenge currently facing lawyers and lawmakers is
integrating the public and private law regimes. These two systems start
from different premises and often appear to conflict with one an-
other.1 Nowhere is this conflict more evident than in bankruptcy law.
Although bankruptcy law is generally conceived to be a private law
regime, the filing of a bankruptcy petition does not remove a debtor
from the reach of public law: states attempt to force debtors to fulfill
their obligations under the environmental laws;2 banking authorities
strive to impose their regulatory strictures on bank holding companies
that have filed for bankruptcy;3 the National Labor Relations Board
(NLRB) still prosecutes unfair labor practice complaints against
firms that have entered bankruptcy;4 the Secretary of Labor still seeks
to enjoin firms from selling goods made by employees who were not
paid the minimum wage;5 the public utilities commission continues to
demand the right to approve structural changes contained in public
* Assistant Professor of Law, Vanderbilt University School of Law; B.A. Loyola
University of Chicago; J.D. University of Chicago. I would like to thank Barry Adler, Doug
Baird, Jim Blumstein, Ellen Wright Clayton, Barry Friedman, Margaret Howard, Jason
Johnston, Dan Keating, Peter Letsou, Randy Picker, Betsy Rasmussen and Nick Zeppos for
their helpful comments on an earlier draft of this Article. Aneel Pandey and Amy Stutz
provided valuable research assistance. Finally, I am grateful to the Dean's Research Fund for
generous support.
1. These divergent premises can be seen by comparing the work of Professor Richard
Epstein, who is perhaps the most ardent proponent of minimal governmental restraints on
private ordering, with that of Professor Cass Sunstein, who argues for an explicit rejection of
private ordering as the baseline for legal doctrine. Compare R.A. EPsTEIN, TAKINGs: PRIVATE
PROPERTY AND TIM POWER OF EmmENr DomAIN (1985) and Epstein, The Supreme Court 1987
Term: Unconstitutional Conditions, State Power, and the Limits of Consent, 102 HARv. L.
REV. 4, 102-03 (1988) and Epstein, In Defense of the Contract at Will, 51 U. Cm. L. REV.
947, 953 (1984) with Sunstein, Interpreting Statutes in the Regulatory State, 103 HAnv. L.
REV. 405, 408-11 (1989) [hereinafter Sunstein, Interpreting Statutes] and Sunstein, Constitu-
tionalism After the New Deal, 101 HARv. L. REv. 421, 437-46 (1987).
2. See, e.g., Midlantic Nat'l Bank v. New Jersey Dep't of Envtl. Protection, 474 U.S.
494, 504-06 (1986); Penn Terra, Ltd. v. Department of Envtl. Resources, 733 F.2d 267, 274
(3d Cir. 1984).
3. See In re MCorp, 101 Bankr. 483, 486-87 (S.D. Tex. 1989), rev'd sub nom. MCorp
Fin., Inc. v. Board of Governors Fed. Reserve Sys., 900 F.2d 852 (5th Cir. 1990).
4. See, e.g., NLRB v. Superior Forwarding, Inc., 762 F.2d 695, 696 (8th Cir. 1985).
5. See Brock v. Rusco Indus., 842 F.2d 270, 273 (11th Cir. 1988); Donovan v. TMC
Indus., 20 Bankr. 997, 1005-06 (N.D. Ga. 1982).
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Bankruptcy and the Administrative State
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