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United States v. TIC Inv. Corp.

ELR Citation: 26 ELR 20208
Nos. No. 95-1035, 68 F.3d 1082/41 ERC 1545/(8th Cir., 10/16/1995) aff'g corp. officer liab. on different grounds & rev'g parent corp. liab. under CERCLA §107(a)(3)

The court affirms a district court decision that the chairman of a farm implement manufacturer that contracted for the disposal of its waste at a dumpsite is liable as an arranger under §107(a)(3) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The court first notes that there is no dispute that the dumpsite is a facility within the meaning of CERCLA, that a release or threatened release of a hazardous substance from the site has occurred, and that the release or threatened release has caused plaintiff-appellees to incur response costs. The court rejects defendant-appellants' argument that arranger liability requires proof that the person had the specific intent to arrange for the disposal of hazardous substances. The court holds that direct arranger liability is imposed on a corporate officer or director if he or she had the authority to control, and did in fact exercise actual or substantial control, directly or indirectly, over the arrangement for disposal or the off-site disposal of hazardous substances. The manufacturer's chairman had the authority to control virtually every aspect of the manufacturer's operations and did in fact directly control many aspects of its operations and indirectly control others. He so tightly controlled the manufacturer that he left its employees no other choice but to continue the disposal of the manufacturer's wastes at the dumpsite. His lack of personal involvement in the disposal arrangement does not bar his liability.

Addressing the alleged liability of the manufacturer's parent corporations, the court rejects the district court's conclusion that the standard for determining whether a parent corporation is liable as an operator applies equally when considering arranger liability. A parent corporation need only have the authority to control, and exercise actual or substantial control, over the operations of its subsidiary to incur direct operator liability. To incur direct arranger liability, there must be some causal connection between the parent corporation's conduct and the subsidiary's arrangement for disposal or the off-site disposal itself. The court holds that the standard to be applied in this case imposes direct arranger liability on a parent corporation if the parent had the authority to control and exercised actual or substantial control, directly or indirectly, over the arrangement for disposal or the off-site disposal. The court finds a genuine issue as to whether the parent corporations exercised actual or substantial control over the manufacturer's waste disposal arrangement with the dumpsite owner. The court reverses the district court on the parent corporations' liability under §107(a)(3).

[Prior decisions in this litigation are published at 25 ELR 20574.]

Counsel for Appellees
Vicki Plaut
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Counsel for Appellants
Alan Wright
Haynes & Boone
3100 Nationsbank Plaza
901 Main St., Dallas TX 75202
(214) 651-5000

Before Loken and Van Sickle,* JJ.