"Successor" and "Parent" Liability for Superfund Cleanup Costs: The Evolving State of the Law
By Allen Kezsbom, Anthony E. Satula, and Alan V. Goldman
INTRODUCTION
In light of the rapidly evolving scope of environmental liability and the escalating expenses associated with even the most routine cleanup problems, the question is becoming ever more acute as to who must ultimately bear the cost. Due to the increasing amount of mergers and acquisitions of corporations in the last decade, the issue often quickly turns to the state of the law governing the liability of successor and parent corporations to pay for “Superfund” cleanup costs under The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The case law is rapidly evolving with many key decisions having come down recently which suggest that courts are interpreting CERCLA broadly to find successor and parent corporations liable for environmental cleanup costs.
Significantly, CERCLA does not mention either “successor” or “parent” corporations in its listing of persons who are liable for response costs. In fashioning a body of precedent for this area, therefore, the courts have relied on the sparse legislative history of the statute, including the perceived intent of Congress to make those who have “benefitted” from the pollution—rather than the taxpayers—bear the burden for its consequences.
This article will provide an updated review of the current state of the law regarding successor and parent liability under CERCLA. Part I of this article will address the issue of successor liability and discuss the judicial treatment of de jure mergers and asset acquisitions. In addition, this section will highlight the major exceptions the courts have fashioned regarding liability of asset purchasers. Part II will focus on parent liability for environmental violations of subsidiaries. In particular, parent liability as owner, by piercing the corporate veil, and parent liability as operator will be discussed and distinguished.
In light of the rapidly evolving scope of environmental liability and the escalating expenses associated with even the most routine cleanup problems, the question is becoming ever more acute as to who must ultimately bear the cost. Due to the increasing amount of mergers and acquisitions of corporations in the last decade, the issue often quickly turns to the state of the law governing the liability of successor and parent corporations to pay for “Superfund” cleanup costs under The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The case law is rapidly evolving with many key decisions having come down recently which suggest that courts are interpreting CERCLA broadly to find successor and parent corporations liable for environmental cleanup costs.
Significantly, CERCLA does not mention either “successor” or “parent” corporations in its listing of persons who are liable for response costs. In fashioning a body of precedent for this area, therefore, the courts have relied on the sparse legislative history of the statute, including the perceived intent of Congress to make those who have “benefitted” from the pollution—rather than the taxpayers—bear the burden for its consequences.
This article will provide an updated review of the current state of the law regarding successor and parent liability under CERCLA. Part I of this article will address the issue of successor liability and discuss the judicial treatment of de jure mergers and asset acquisitions. In addition, this section will highlight the major exceptions the courts have fashioned regarding liability of asset purchasers. Part II will focus on parent liability for environmental violations of subsidiaries. In particular, parent liability as owner, by piercing the corporate veil, and parent liability as operator will be discussed and distinguished.
