Liability of Corporate Officers Under CERCLA: An Ounce of Prevention May Be the Cure

Editors' Summary: Estimates of hazardous waste cleanup costs now reach $500 billion nationwide, or $2,000 for every man, woman, and child in the United States. And historically, estimates of cleanup costs have nearly always gone up. As the magnitude of the problem has become clearer, governments and private plaintiffs have searched for more deep pockets to pay for cleanups. CERCLA's liberal liability scheme has been a fertile ground for litigation seeking to expand the net of liability: banks, insurance companies, real estate developers, and corporate holding companies now regularly evaluate their environmental liability exposure.

So too should corporate officers. This Comment analyzes recent cases dealing with the issue of when individual corporate officers, rather than the corporate entity itself, can be held personally liable under CERCLA. There are still conflicts among the cases, but several distinct lines of cases are emerging. This Comment traces the lines of cases and concludes that urging good environmental practices may be the wisest legal advice a lawyer can provide.

[20 ELR 10377]

The cost of cleaning up hazardous waste sites under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)¹ can be staggering. With the pace² and cost³ of the cleanups accelerating, governmental and private plaintiffs have sought to expand the pool of responsible parties to conduct the cleanups or to reimburse plaintiffs for their cleanup costs. The courts have generally complied by interpreting CERCLA broadly.⁴

The corporation is generally the entity held liable for CERCLA response costs. However, in some cases plaintiffs have brought suits directly against corporate officers: the corporation may be bankrupt, no longer in business, or without enough assets to pay for the cleanup costs. The government may also choose to pursue corporate officers as part of its enforcement strategy.⁵ Plaintiffs are thus increasingly looking into the corporate boardroom to find corporate officers personally liable for CERCLA response costs.

This Comment analyzes the emerging standards for the liability of corporate officers under CERCLA.⁶ Although [20 ELR 10378] CERCLA does not directly address the issue, most courts have held that corporate officers may be individually liable for CERCLA cleanup costs. Corporate officers should thus be aware that the corporate form will not always shield them from liability for waste disposal practices and should take appropriate steps to reduce their exposure. This Comment concludes that the broad standard of liability established by several recent cases is consistent with CERCLA's purposes and is good public policy.

Traditional Corporation Law

The principle of limited liability is at the heart of traditional corporation law. It provides that shareholders are generally not liable for debts incurred in the operation of the corporation. A corollary of this rule is that corporate officers and directors are generally not liable for the tortious or unlawful acts of the corporation. Because limited liability is one of the principal reasons for incorporating, courts will not readily deviate from this rule.⁷

There are two generally recognized exceptions to the rule of limited liability. First, a corporate officer is liable for the wrongful acts of a corporation when he personally participates in the wrongful conduct. While the fact that an officer is acting on behalf of a corporation may make the corporation liable under the doctrine of respondeat superior, it does not relieve the officer of his own liability. Second, officers are also liable under traditional corporation law if they have violated corporate formalities or have breached certain fiduciary duties. Courts then "pierce the corporate veil" to hold the officer personally liable.⁸

Responsible Parties Under CERCLA

A responsible party under CERCLA is strictly and jointly and severally liable⁹ for cleanup costs and natural resource damages. A party is liable under CERCLA § 107 if there is a "release or threatened release"¹⁰ of a "hazardous substance"¹¹ from a "facility"¹² that causes the government to incur response costs.¹³ In addition, the party must fall within one of the four classes of responsible parties identified in the statute: (1) the current owner or operator,¹⁴ (2) owners or operators at the time of disposal,¹⁵ (3) generators,¹⁶ and (4) transporters.¹⁷

In the case of corporate officers, the issue is often whether an officer is an "owner or operator" under CERCLA § 107(a)(2).¹⁸ However, CERCLA's definition of "owner or operator" is not illuminating.¹⁹ Courts have broadly construed this phrase in other contexts to include states,²⁰ banks,²¹ and parent corporations.²² To promote its remedial purpose, the decisions on corporate officer liability have generally followed this pattern of liberally interpreting the ambiguous terms in CERCLA.

Case Law

With one exception,²³ the courts have held that corporate officers may be personally liable under CERCLA. Although some general rules can be gleaned from the cases, the results depend heavily on the facts in a given case.²⁴ The cases have generally been based on holdings that corporate officers fall within CERCLA's definition of responsible parties rather than on a piercing-the-corporate-veil theory.

The standards of liability established by the decisions range from the traditional rule of limited liability to liability based on an officer's overall management authority. The cases following the traditional rule represent the narrowest standard of liability, while the cases based on management authority represent the broadest standard that has been imposed by the courts. In theory, the broadest possible standard is liability based merely on one's status as a corporate officer in a corporation that is liable under CERCLA. Although no court has explicitly gone to this extreme, some decisions based on the management authority theory may be approaching it. These cases represent a significant expansion [20 ELR 10379] of the traditional scope of liability and have farreaching implications for corporations and their officers.

Most cases fall between the two extremes. They hold that an officer is liable under CERCLA § 107 if he exercises authority for a company's operations and personally participates in the waste disposal activities. Some cases emphasize an officer's authority to control operations, while others focus more on the officer's personal conduct. These cases are generally consistent with the recognized common law exception to the rule of limited liability for officers who personally participate in the wrongdoing. The level of personal participation required by the courts varies. Some emphasize personal participation in the overall management of the facility, some emphasize personal participation in the management of waste disposal activities, and some focus on personal participation in the specific activity leading to the CERCLA release.

Cases Following Traditional Rule

Only one case has applied the common law rule of limited liability to find that corporate officers are not liable under CERCLA. In Josyln Corp. v. T.L. James & Co.,²⁵ the purchaser of a hazardous waste site brought a contribution action under CERCLA and state law against the parent corporation of the dissolved seller. The district court held that the parent corporation was not directly liable under CERCLA or derivatively liable under a theory of piercing the corporate veil. The court explictly refused to follow the line of decisions holding corporate officers liable, reasoning that these courts have ignored the corporate form without an express congressional directive.²⁶ The court determined that neither CERCLA's language nor its legislative history provides authority for imposing direct liability on corporate officers or parent corporations. The court also refused to pierce the parent's corporate veil.²⁷

In its final footnote, the Joslyn court noted that if the parent corporation and its officers and directors had been actively involved in the day-to-day operations of the subsidiary, including hazardous waste disposal, liability would arguably attach.²⁸ The court observed that it would likely have reached the same result under traditional corporate law as several of the decisions holding corporate officers liable. The court's objection to these cases thus appears to be one of semantics, since many of the cases implicitly rely on the traditional common law exception to limited liability for officers who personally participate in the wrongful conduct.

Several cases rejected by the Josyln court even explicitly applied the common law exception, making it difficult to understand why the court rejected their analyses. For example, in United States v. Wade,²⁹ the district court rejected the argument that a corporate officer cannot be held personally liable for actions taken in his capacity as an officer. The court simply restated the exception to limited liability and went on to find that the government had not produced sufficient evidence to find the officer liable on a motion for summary judgment.³⁰ The court determined that testimony that the officer personally brought drums to the site is not enough to establish that he participated in the wrongful, injury-producing activity. Further, the fact that the president negotiated for disposal of wastes on the property was insufficient to establish personal liability.³¹ The court reasoned that wastes can be disposed of without creating CERCLA liability, and mere negotiation of an agreement to do so is not the injury-producing act.³²

Cases Emphasizing Personal Participation

Most cases have held that a corporate officer is personally liable under CERCLA § 107 if he personally partipated in the activity leading to the release. The Court of Appeals for the Eighth Circuit followed this reasoning in United States v. Northeastern Pharmaceutical and Chemical Co. (NEPACCO).³³ In the early 1970s, defendant NEPACCO manufactured a disinfectant at a plant in Verona, Missouri. Defendant Edwin Michaels formed NEPACCO and was its president and major shareholder. Defendant John Lee was NEPACCO's vice-president, the supervisor of the Verona plant, and a shareholder. Michaels and Lee knew that NEPACCO's manufacturing process produced toxic by-products, including dioxin, and Lee approved a proposal to dispose of waste-filled 55-gallon drums on a near-by farm.

The district court held that Lee was liable as an owner and operator under CERCLA § 107(a)(1) and for arranging for disposal of hazardous substances under § 107(a)(3).³⁴ Lee was liable under § 107(a)(3) because he supervised the disposal of the barrels. The court found that a "person" should be given a liberal interpretation to include both the employee and the corporation.³⁵ The court found Lee liable as an owner and operator under § 107(a)(1) based on his capacity to control the disposal of hazardous waste at the Verona plant and his active participation in the management of the facility.³⁶ The district court also held that Michaels was liable as an owner and operator under § 107(a)(1) even though the government failed to establish that he knew of the plan to dispose of hazardous waste at the farm.³⁷ Liability was based on Michaels' capacity and general responsibility as president of NEPACCO to control the disposal of hazardous waste at the plant, his power to direct the negotiations concerning the disposal [20 ELR 10380] of wastes at the farm site, and his capacity to prevent and abate the damage caused by the disposal.

The NEPACCO district court decision went well beyond the traditional common law rules to find an individual liable who did not personally participate in the waste disposal. On appeal, the Eighth Circuit reversed the district court's holdings that Lee and Michaels were liable as owners and operators under § 107(a)(1). The court of appeals determined that the farm site, not the Verona plant, was the "facility" for purposes of owner and operator liability, and that defendants did not own or operate the farm site.³⁸

However, the Eighth Circuit affirmed the district court's holding that Lee was liable under § 107(a)(3) for arranging for disposal of the waste. The court noted that CERCLA's definition of "person" does not exclude corporate officers or employees and that "construction of CERCLA to impose liability upon only the corporation and not the individual corporate officers and employees who are responsible for making corporate decisions about the handling and disposal of hazardous substances would open an enormous, and clearly unintended, loophole in the statutory scheme."³⁹ The court emphasized that Lee's liability was not based solely on his status as a corporate officer, but on his actual participation in NEPACCO's CERCLA violations. This decision appears to be in line with the majority of cases that follow the traditional common law rule.⁴⁰

Most of the district court cases to consider the issue have also held that an officer is directly liable under CERCLA if he personally participated in waste disposal activities. For example, in United States v. Ward,⁴¹ the court held the president of a company that rebuilt electrical transformers liable under CERCLA § 107(a)(3) for personally arranging for disposal of polychlorinated biphenyls (PCBs) with a transporter. The court stated that a "corporate officer . . . who exercises authority for the company's operations and participates in arranging for the disposal of hazardous wastes is liable under § 107(a)(3)."⁴²

Similarly, in United States v. Conservation Chemical Co.,⁴³ the court held that an officer who had founded the corporate defendant, served as its chief executive officer and majority stockholder, and was personally involved in many of the activities leading to the contamination, was personally liable under CERCLA. The defendant personally established the layout for the contaminated site, supervised its construction, conceived of several waste treatment processes that led to the disposal of waste into lagoons on the site, and administered the affairs of the corporation.⁴⁴

Cases Emphasizing Authority

Several cases have taken a step beyond those requiring personal knowledge, direct supervision, or active participation in the wrongful conduct. These cases based liability on an officer's control or authority over a facility's waste disposal practices. In New York v. Shore Realty Corp.,⁴⁵ the Court of Appeals for the Second Circuit held that the sole officer and stockholder of a realty company was directly liable under CERCLA based on his activities in managing the property. The individual defendant, LeoGrande, formed a corporation for the sole purpose of purchasing property for a condominium development. When he bought the property, he knew that 700,000 gallons of hazardous chemicals were contained in drums and tanks on the property. The Second Circuit held that LeoGrande was liable as an operator under CERCLA § 107(a).⁴⁶

The Second Circuit first noted that CERCLA defines "owner or operator" as "any person owning or operating" a facility, and that "person" includes individuals as well as corporations. Further, the definition of "owner or operator" excludes a person who does not participate in the management of a facility and holds indicia of ownership primarily to protect his security interest in the facility. The court reasoned that "[t]he use of this exception implies that an owning stockholder who manages the corporation . . . is liable under CERCLA."⁴⁷ Although LeoGrande did not actively participate in the generation or transportation of the hazardous waste, the court determined that he was liable as an operator because he was "in charge of the operation of the facility . . . ."⁴⁸

Several district courts have also focused on an officer's authority. In United States v. Carolawn Co.,⁴⁹ the court held two corporate officers personally liable because they were responsible for the day-to-day operations of a hazardous waste disposal business. The court stated that a corporate officer may be liable if he "has control or authority [20 ELR 10381] over the activities of a facility from which hazardous substances are released or participates in the management of such a facility."⁵⁰

A more recent example is Vermont v. Staco, Inc.,⁵¹ in which the court imposed personal liability on the principal executive officers of a company allegedly responsible for mercury releases at a plant that formerly manufactured thermometers. The court determined that these officers were liable because they participated in the general management and control of the company. The defendants testified that they made "decisions that related to the managing business and the marketing business and the selling business and the overall operations of the company."⁵²

Another decision emphasizing an officer's degree of control is United States v. Carolina Transformer Co.⁵³ The court held that an individual who was the sole shareholder, former president, and former chairman of the board of a company was personally liable under CERCLA. The company ran an electrical transformer repair and rebuilding facility where it disposed of PCB-contaminated fluid. The court noted that employees of corporations can be held liable for activities over which they had direct control and supervision and listed the following factors for determining corporate officer liability: sizeable stock ownership, active participation in management, presence at and supervision of the facility, whether the individual founded the company, capacity and general responsibility to control the disposal of hazardous waste at the facility, power to direct negotiations concerning waste disposal, and capacity to prevent and abate the damages caused by waste disposal.⁵⁴ The court found this individual liable as an owner and operator under CERCLA § 107 based on evidence that he supervised the day-to-day operations of the company, including the tearing down of transformers and the handling of the PCB-contaminated oil. This part of the decision is consistent with cases that base liability on personal participation in the wrongful conduct.

But the Carolina Transformer court also held a former president and director of the company liable as an operator under CERCLA § 107 even though he did not participate in the salvage operation that was probably the primary cause of the contamination. He admitted that he was responsible for the day-to-day management of the company while he was president, and salvage operations continued during his tenure as president.⁵⁵

In United States v. Northernaire Plating Co,⁵⁶ the district court held the president and sole shareholder of a company liable as an operator under CERCLA. This individual admitted that he was responsible for the disposal of chemical wastes for the company. The court found that he was liable "because of his role in directing the handling of hazardous substances."⁵⁷

The Prevention Test

One district court has formulated a new standard for corporate officer liability based on the cases that emphasize an officer's authority within the corporation. In Kelley v. ARCO Industries Corp.,⁵⁸ the parties asked the court to clarify a more precise legal standard for holding corporate officers liable under CERCLA. The court responded with a new standard that goes well beyond traditional common law principles and could significantly expand the scope of liability for corporate officers.

The court began by observing that although CERCLA does not explicitly address the issue of corporate officer liability, the weight of authority interprets CERCLA as imposing individual liability under certain circumstances. The court determinedthat "CERCLA's statutory scheme varies the configuration of traditional corporate principles" that prevent individual liability unless the court pierces the corporate veil or determines that an individual has had close, active involvement or direct supervision of the events leading to the alleged tortious harm.⁵⁹

The court then announced its standard: An individual in a close corporation is liable under CERCLA if he could have prevented or significantly abated the hazardous waste discharge that is the basis of the claim.⁶⁰ The court will examine two factors in determining liability under this test. First, it will analyze an individual's overall authority to control, and specific responsibility for, the corporation's health and safety practices, including hazardous waste disposal.⁶¹ In evaluating an officer's authority, the court will consider "whether the individual holds the position of officer or director, especially where there is a co-existing management position," and the "distribution of power within the corporation, including position in the corporate hierarchy and percentage of shares owned."⁶² Second, the court will weigh evidence of responsibility undertaken for waste disposal practices, including responsibility under-taken and neglected, and affirmative attempts to prevent unlawful hazardous waste disposal.⁶³ The court emphasized that it is important to credit the positive efforts of an individual who acted to avoid or abate the damage.

The court noted that "this standard is different, but [20 ELR 10382] more stringent on the whole than traditional corporate tort liability, yet it requires more than mere status as a corporate officer or director . . . ."⁶⁴ An individual's power or authority is not considered in the traditional standards. Under the prevention test, "active, direct, knowing efforts to prevent or abate the contamination may work for — not against — a corporate defendant where the acts suggest the individual tried but was unable to prevent or abate the unlawful waste disposal."⁶⁵

The court observed that this standard will further CERCLA's remedial purposes by encouraging increased personal responsibility as an individual's stake in the corporation increases.⁶⁶ This contrasts with the traditional standard, which may encourage high level corporate officials to avoid becoming involved in waste disposal activity.

The "prevention test" has yet to be applied to the facts of a specific case. This opinion was issued on a motion for clarification of the proper legal standard, and the case was eventually settled. The same court has twice restated the test, but found in each case that the factual record was insufficient to make rulings on motions for summary judgment.⁶⁷ At least one other court has adopted the prevention test.⁶⁸

If interpreted broadly, the prevention test could approach liability based on one's status as a corporate officer, since many high level corporate officials have at least some general authority over waste disposal practices. This interpretation would be an unwarranted expansion of liability and could discourage qualified individuals from becoming corporate officers and putting their personal assets on the line. The court did not intend this result, observing that the test "requires more than mere status as a corporate officer" and "allows the fact-finder to impose liability on a case-by-case basis."⁶⁹ An officer who acts directly to prevent or abate unlawful waste disposal will likely not be held liable under the prevention test, even if the officer was ultimately unable to prevent the unlawful disposal.

Conclusion

There are several policy benefits from the broad interpretation of corporate officer liability in Kelley v. ARCO Industries Corp. and other cases that base liability on authority rather than personal participation. These cases should promote corporate responsibility for the officers who control a close corporation's decisionmaking and deter other officers from acting irresponsibly.⁷⁰ Further, the threat of personal liability would help the government's bargaining position and motivate responsible parties to settle.⁷¹

It is too early to tell whether the prevention test will be the trend. Whether subsequent cases continue to require personal participation in the wrongful conduct, authority to control waste disposal practices, or the ability to prevent contamination, corporate officers should limit their personal exposure to CERCLA cleanup costs. Options include insurance against CERCLA liability⁷² and resigning from corporations that do not engage in proper waste disposal. But rigorous attention to proper hazardous waste disposal practices is the best cure for the prevention test.

Barnett M. Lawrence

1. 42 U.S.C. §§ 9601-9675, ELR STAT. CERCLA 001-075.

2. The Environmental Protection Agency (EPA) signed 68 CERCLA records of decision in fiscal year 1985, 84 in 1986, 75 in 1987, 152 in 1988, and 144 in 1989. CERCLA § 116, added by the Superfund Amendments and Reauthorization Act of 1986 (SARA), required EPA to commence remedial action at 175 national priority list facilities by October 1989 and at 200 additional facilities by October 1991. CERCLA § 116(e), 42 U.S.C. § 9616(e), ELR STAT. CERCLA 042.

3. One study of CERCLA sites concluded that cleanup costs can vary from several hundred thousand dollars to tens of millions of dollars per site. Data from 15 of the cleanups reviewed in the study indicated that cleanup costs can reach $500,000 to $1 million per acre. OFFICE OF TECHNOLOGY ASSESSMENT, ARE WE CLEANING UP?, 10 SUPERFUND CASE STUDIES (1988). CERCLA § 121, added by SARA, requires EPA to favor permanent, and thus generally more expensive, remedies. CERCLA § 121(b), 42 U.S.C. § 9621(b), ELR STAT. CERCLA 051.

4. See, e.g., United States v. Fleet Factors Corp., 901 F.2d 1550, 20 ELR 20832 (11th Cir. 1990). The Fleet Factors court broadly contrued CERCLA's definition of "owner or operator" to include secured creditors that are involved with the management of a facility to the extent that they could affect hazardous waste disposal decisions. The court noted that to achieve CERCLA's remedial goals, "ambiguous statutory terms should be construed to favor liability for the costs incurred by the government . . . ." Id. at 557, 20 ELR at 20835.

5. Memorandum from Courtney M. Price, EPA Assistant Administrator for Enforcement and Compliance Monitoring, to Assistant Administrator for Solid Waste and Emergency Response, et al., Liability of Corporate Shareholders and Successor Corporations for Abandoned Sites Under [CERCLA] (June 13, 1984) [hereinafter EPA memo].

6. Discussion of the liability of parent corporations for the violations of their subsidiaries is generally beyond the scope of this Comment. However, the cases construing parent corporation liability under CERCLA are instructive on the issue of corporate officer liability. The courts have employed similar standards in determining the liability of shareholders, officers, and directors, and a parent corporation is a shareholder in its subsidiary. Further, many cases dealing with parent corporation and officer liability construe CERCLA's definition of "owner or operator." See, e.g., City of New York v. Exxon Corp., No. 85 Civ. 1939 (KC) (S.D.N.Y. Mar. 30, 1990); United States v. Kayser-Roth Corp., 724 F. Supp. 15, 20 ELR 20349 (D.R.I. 1989); Josyln Corp. v. T.L. James & Co., 696 F. Supp. 222, 19 ELR 20518 (W.D. La. 1988), aff'd, 893 F.2d 80 (5th Cir. 1990); Idaho v. Bunker Hill Co., 635 F. Supp. 665, 16 ELR 20879 (D. Idaho 1986).

Discussion of criminal liability is also beyond scope of this Comment. For a discussion of the impact of the Federal Sentencing Guidelines on environmental crimes, see Starr and Kelly, Environmental Crimes and the Sentencing Guidelines: The Time Has Come . . . and It Is Hard Time, 20 ELR 10096 (Mar. 1990).

7. See, e.g., Kelley v. ARCO Indus. Corp., 723 F. Supp. 1214, 1218 n.2, 20 ELR 20264 20265 n.2 (W.D. Mich. 1989) (cases cited therein).

8. See generally 3A W. FELTCHER, CYCLOPEDIA OF THE LAW OF PRIVATE CORPORATIONS § 1135 (rev. perm. ed. 1986).

9. See, e.g., O'Neil v. Picillo, 883 F.2d 176, 20 ELR 20115 (1st Cir. 1989); United States v. Chem-Dyne Corp., 572 F. Supp. 802, 13 ELR 20986 (S.D. Ohio 1983).

10. CERCLA § 101(22), 42 U.S.C. § 9601(22), ELR STAT. CERCLA 008.

11. Id. § 101(14), 42 U.S.C. § 9601(14), ELR STAT. CERCLA 007.

12. Id. § 101(9), 42 U.S.C. § 9601(9), ELR STAT. CERCLA 007.

13. Id. § 107(a), 42 U.S.C. § 9607(a), ELR STAT. CERCLA 024.

14. Id. § 107(a)(1), 42 U.S.C. § 9607(a)(1), ELR STAT. CERCLA 024.

15. Id. § 107(a)(2), 42 U.S.C. § 9607(a)(2), ELR STAT. CERCLA 024.

16. Id. § 107(a)(3), 42 U.S.C. § 9607(a)(3), ELR STAT. CERCLA 024. This provision covers "any person who by contract, agreement, or otherwise arranged for disposal or treatment, or arranged with a transporter for transport for disposal or treatment, of hazardous substances . . . ."

17. Id. § 107(a)(4), 42 U.S.C. § 9607(a)(4), ELR STAT. CERCLA 024. This provision applies to "any person who accepts or accepted any hazardous substances for transport . . . ."

18. See, e.g., New York v. Shore Realty Corp., 759 F.2d 1032, 15 ELR 20358 (2d Cir. 1985). Some cases concern whether an officer is liable as a generator or transporter under CERCLA § 107(a)(3) and (4). See, e.g., United States v. Northeastern Pharm. & Chem. Co., 810 F.2d 726, 17 ELR 20603 (8th Cir. 1986) (plant supervisor individually liable under § 107(a)(3) for arranging for disposal of hazardous substances); City of New York v. Exxon Corp., No. 85 Civ. 1939 (KC) (S.D.N.Y. Mar. 30, 1990) (analysis for liability of shareholder under § 107(a)(3) and (a)(4) similar to analysis for § 107(a)(2)).

19. CERCLA § 101(20)(A) defines an "owner or operator" of an onshore or offshore facility as "any person owning or operating such facility . . . ." The definition excludes "a person, who, without participating in the management of a vessel or facility, holds indicia of ownership primarily to protect his security interest . . . ." Some courts have reasoned that this exclusion implies that an officer or stockholder with management responsibility is liable as an owner or operator. See, e.g., New York v. Shore Realty Corp., 759 F.2d 1032, 1052, 15 ELR 20358, 20368 (2d Cir. 1985).

20. See, e.g., United States v. Stringfellow, 20 ELR 20656 (C.D. Cal. Jan. 9, 1990); CPC Int'l, Inc. v. Aerojet-General Corp., 731 F. Supp. 783, 20 ELR 20712 (W.D. Mich. 1989).

21. See, e.g., United States v. Fleet Factors Corp., 901 F.2d 1550, 20 ELR 20832 (11th Cir. 1990).

22. See supra note 6.

23. Josyln Corp. v. T.L. James & Co., 696 F. Supp. 222, 19 ELR 20518 (W.D. La. 1988), aff'd, 893 F.2d 80, 20 ELR 20382 (5th Cir. 1990).

24. See Kelley v. ARCO Indus. Corp., 723 F. Supp. 1214, 1220, 20 ELR 20264, 20266 (W.D. Mich. 1989) ("The test for liability of corporate individuals under CERCLA is thus heavily fact-specific, requiring an evaluation of the totality of the situation.").

25. 696 F. Supp. 222, 19 ELR 20518 (W.D. La. 1988), aff'd, 893 F.2d 80, 20 ELR 20382 (5th Cir. 1990). This case concerns the liability of a parent corporation, not corporate officers. See supra note 6.

26. Id. at 224, 19 ELR at 20518.

27. Id. at 232, 19 ELR at 20522.

28. Id. at 232 n.20, 19 ELR at 20522 n.20.

29. 577 F. Supp. 1326, 14 ELR 20096 (E.D. Pa. 1983).

30. Id. at 1341, 14 ELR at 20102.

31. Id.

32. Id. Another case rejected by the Josyln court was United States v. Mottolo, 605 F. Supp. 898, 15 ELR 20444 (D.N.H. 1985). The Mottolo court held that the president, treasurer, and sole shareholder of a defendant corporation may be individually liable under CERCLA § 107(a)(3) for arranging for disposal of hazardous wastes. The court then stated that he "may be individually liable for the torts of a corporation if he directed or personally participated in the tortious activity." Id. at 15 ELR 20451; see also United States v. Mottolo, 14 ELR 20497, 20499 (D.N.H. Mar. 27, 1984) (applying exception to docrine of limited liability).

33. 810 F.2d 726, 17 ELR 20603 (8th Cir. 1986).

34. 579 F. Supp. 823, 14 ELR 20212 (W.D. Mo. 1984).

35. Id. at 848, 14 ELR at 20222.

36. Id.

37. Id. at 849, 14 ELR at 20223.

38. 810 F.2d at 742, 17 ELR at 20611.

39. Id. at 743, 17 ELR at 20611.

40. There are some indications that the Eighth Circuit would impose owner and operator liability under CERCLA § 107(a)(1) based only on an individual's authority to control waste disposal practices. In holding Michaels liable under the Resource Conservation and Recovery Act (RCRA) § 7003(a) for contributing to the disposal of hazardous substances that may present and imminent and substantial endangerment, the court observed that its analysis of the scope of individual liability under RCRA is similar to its analysis of individual liability under CERCLA. The court proceeded to hold Michaels liable under RCRA § 7003(a) even though he was not personally involved in the decision to transport and dispose of the waste. The court based Michaels' liability on his ultimate authority to control the disposal of NEPACCO's hazardous substances through his position as NEPACCO's president and major stockholder.

Further, although the Eighth Circuit reversed the district court's holding that Michaels was liable under CERCLA § 107(a)(1), the reversal was based on an interpretation of the relevant "facility" and not on a construction of "owner and operator."

41. 618 F. Supp. 884, 16 ELR 20127 (E.D.N.C. 1985).

42. Id. at 894, 16 ELR at 20131.

43. 628 F. Supp. 391, 17 ELR 20167 (W.D. Mo. 1986).

44. Id. at 416; see also United States v. Bliss, 20 ELR 20879 (E.D. Mo. Sept. 27, 1988) (corporate officer who exercised control over facility by giving permission to dispose of hazardous substances and by assisting in the unloading of drummed wastes liable under CERCLA § 107(a)(2)); United States v. Bliss, 667 F. Supp. 1298, 18 ELR 20055 (E.D. Mo. 1987) (corporate officers who exercised their authority in arranging for disposal of waste liable under CERCLA § 107(a)(3)).

Cases dealing with parent corporation liability under CERCLA are also illustrative. For example, in City of New York v. Exxon Corporation, No. 85 Civ. 1939 (KC) (S.D.N.Y. Mar. 30, 1990), the court held a parent corporation liable for the activities of its wholly owned subsidiary. The court noted that courts considering the personal liability of corporate officers under CERCLA § 107(a)(3) and (4) emphasize the degree of control and actual participation by the officer in the corporation's affairs.

45. 759 F.2d 1032, 15 ELR 20358 (2d Cir. 1985).

46. Id. at 1052, 15 ELR at 20368.

47. Id.

48. Id.

49. 14 ELR 20699 (D.S.C. June 15, 1984).

50. Id.; see also United States v. Medley, 17 ELR 20297 (D.S.C. Nov. 4, 1989) (corporate officer exercised control or authority over waste disposal activities and actively participated in management and day-to-day operation at time hazardous wastes disposed).

51. 684 F. Supp. 822, 18 ELR 20589 (D. Vt. 1988).

52. Id. at 831 n.5, 18 ELR at 20592 n.5.

53. 20 ELR 20935 (E.D.N.C. Nov. 17, 1989).

54. Id. at 20937.

55. Id. at 20937. The court also found these two individuals liable under the theory that a corporate officer may be held liable for the torts of a corporation when he participates in the tortious conduct. Id. at 20937.

56. 670 F. Supp. 742, 18 ELR 20712 (W.D. Mich. 1987).

57. Id. at 747, 18 ELR at 20714; see also International Clinical Laboratories, Inc. v. Stevens, 20 ELR 20560 (E.D.N.Y. Jan. 11, 1990) (company president and principal shareholder who had overall management authority is an operator under CERCLA § 107(a)(2)).

Several cases involving the CERCLA liability of parent corporations have noted their support for the "authority to control" line of cases. For example, in United States v. Kayser-Roth Corp., 724 F. Supp. 15 (D.R.I. 1989), the court identified a line of cases in which a "stockholder, parent corporation, or any person associated with a facility whether he or she has any ownership interest or not, may be held liable if that person . . . controls the management and operation of the polluting corporation. This approach focuses primarily on control." See also Idaho v. Bunker Hill Co., 635 F. Supp. 665, 16 ELR 20879 (D. Idaho 1986).

58. 723 F. Supp. 1214, 20 ELR 20264 (W.D. Mich. 1989).

59. Id. at 1218, 20 ELR at 20265.

60. Id. at 1219, 20 ELR at 20266.

61. Id.

62. Id.

63. Id.

64. Id.

65. Id.

66. The court noted that its standard will encourage increased responsibility for two reasons: "First, as power grows, the ability to control decisions about waste disposal increases; and second, as one's stake in the corporation increases, the potential for benefiting from less expensive (and less careful) waste disposal practices increases as well." Id. at 1220 n.3, 20 ELR at 20266 n.3.

67. Kelley v. Thomas Solvent Co., 727 F. Supp. 1532, 20 ELR 20684 (W.D. Mich. 1989); Kelley v. Thomas Solvent Co., 727 F. Supp. 1554, 20 ELR 20694 (W.D. Mich. 1989).

68. Quadion Corp. v. Mache, No. 89 C 3536 (N.D. Ill. May 17, 1990). The court restated the prevention test in denying a motion to dismiss a claim under CERCLA § 107(a)(2) against a shareholder in a closely held corporation.

69. Kelley v. ARCO Indus. Corp., 723 F. Supp. at 1220, 20 ELR at 20266.

70. EPA memo, supra note 5, at 2.

71. Id.

72. See Comment, Corporate Officer Liability for Hazardous Waste Disposal: What Are the Consequences?, 38 MERCER L. REV. 677 (1987).