''United States v. Bestfoods'', 524 U.S. 51 (1998), is a

United States corporate law United States corporate law regulates the governance, finance and power of corporations in US law. Every state and territory has its own basic corporate code, while federal law creates minimum standards for trade in company shares and governance ...

and

environmental law Environmental law is a collective term encompassing aspects of the law that provide protection to the environment. A related but distinct set of regulatory regimes, now strongly influenced by environmental legal principles, focus on the manage ...

case in which the

Supreme Court of the United States The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States. It has ultimate appellate jurisdiction over all U.S. federal court cases, and over state court cases that involve a point o ...

held that the

indirect liability Indirect liability refers to legal liability imposed on an entity which is facilitating an infringement of another's rights, particularly of intellectual property rights, but not accruing benefit (or loss) from the infringement. Indirect liability ...

of a parent corporation under

CERCLA Superfund is a United States federal environmental remediation program established by the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA). The program is administered by the Environmental Protection Agency ...

is to be determined by its control over a subsidiary's facility, rather than the relationship between the corporation and subsidiary.

Facts

A chemical manufacturing plant developed a significant

pollution Pollution is the introduction of contaminants into the natural environment that cause adverse change. Pollution can take the form of any substance (solid, liquid, or gas) or energy (such as radioactivity, heat, sound, or light). Pollutants, the ...

problem after many years of operation. The companies in charge of operations at the plant were wholly owned subsidiaries of, first, CPC International Inc. (CPC). Following ownership by CPC, the chemical manufacturing plant was owned by Aerojet- General Corp (Aerojet). In 1981, the

Environmental Protection Agency A biophysical environment is a biotic and abiotic surrounding of an organism or population, and consequently includes the factors that have an influence in their survival, development, and evolution. A biophysical environment can vary in scale f ...

ordered to have the site cleaned up. To reimburse the cleanup, the

federal government A federation (also known as a federal state) is a political entity characterized by a union of partially self-governing provinces, states, or other regions under a central federal government (federalism). In a federation, the self-governin ...

filed suit under Section 107 of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), 42 U.S.C. Section 9607(a)(2). Section 107 grants the federal government permission to seek reimbursement for cleanup costs from "any person who at the time of disposal of any hazardous substance owned or operated any facility." The question before the court, was whether a parent corporation that exercised control over the operations of a subsidiary be held liable under CERCLA Section 107(a)(2)?

Decision of the Court

Justice Souter David Hackett Souter ( ; born September 17, 1939) is an American lawyer and jurist who served as an associate justice of the U.S. Supreme Court from 1990 until his retirement in 2009. Appointed by President George H. W. Bush to fill the seat t ...

delivered the unanimous decision in favor of the United States. The Court found the CERCLA statute definition of "owner or operator" as "any person owning or operating such facility" to be a circular definition in need of clarity. To determine whether Congress intended to include parent corporations when imposing liability on an owner or operator, the Court examined the legislative history of CERCLA, but due to the Act's hurried enactment, there was not much history to interpret. The Court concluded that Congress did not intend CERCLA to displace all of the established principles of corporate law, including the principle that a parent corporation is not usually liable for the acts of its subsidiary, but a corporate parent that actively participated in and exercised control over the operations of the facility may be held directly liable in its own right as an 'operator' of the facility. The Court held that the corporate law principles read into the statute meant that liability will be attached under CERCLA for a parent corporation when the corporate veil can be pierced and when the parent actually participated in the operations of the facility where the release of hazardous substances was made.

Notes

External links

* 1998 in the environment 1998 in United States case law United States Supreme Court cases United States Supreme Court cases of the Rehnquist Court United States environmental case law United States corporate case law Muskegon County, Michigan {{SCOTUS-case-stub

Facts

Decision of the Court

See also

Notes

External links