ELR Citation: ELR 20290
No(s). 09-0482 (2d Cir. Dec 10, 2009)

The Second Circuit affirmed a lower court decision that held an energy company liable under CERCLA for costs incurred during the cleanup of two manufactured gas plants operated by a subsidiary of the company's corporate predecessor. The company argued that the lower court erred in concluding that it was derivatively liable under CERCLA as the corporate successor to the subsidiary's former corporate parent. But the court properly pierced the corporate veil between the subsidiary and the parent since the court's factual findings amply supported its conclusion that there was a "direct nexus" between the parent company's domination and coal tar contamination at the plants. Under the facts of the case, a decision to produce gas was, in effect, a decision to pollute, and that decision to cause harm was effectively the parent's. Nor does New York law prohibit a subsidiary corporation from piercing its own corporate veil to reach its parent under the facts of this case.